Members of the DoBetter Club (Club), once it is established, will be able to bet amounts from $200, the Club’s standard betting unit, and select a betting period of 30, 90, or 180 days. Bets can be placed on the relative performance of a selected stock against any of the other stocks contained in the S&P 500. The Club will also arrange for other Club members to take the bet, perhaps altering the terms, but the Club will never act as the betting party.
Winners will receive $380, which includes: the loser’s $200 bet plus the amount of the bettor’s $200 bet, minus the 10% Club fee for arranging for the betting counterparty. That is a very high Internal Rate of Return (IRR) regardless of the selected period of the bet. Of course, the Club member that took the other side of the bet would have lost 100%.
It is possible that the Club will not be able to find a member willing to accept a flat performance differential. In this case the counterparty may suggest that the performance of the initiating member’s selection must achieve a 20% or greater premium to win the bet. The amount of the betting unit would be the same, however the differential performance would have to be better than flat. It is also possible that a member feeling strongly that their stock was in a favorable position versus the index might propose a bet that the index or selected stock would be 150% higher than either specific stocks or the index. This entire betting process will be virtual, and Club members will only be in contact with the Club, and never with other Club member counterparties. It is from this back and forth in arranging the bet that the Club earns its fees paid from the winner’s winnings.
Club members will be able to use the Club’s proprietary Perspective II information service to compare the historical relative performance of the selected stocks.
The operator of this Club will be able to profit without ever taking a market valuation change risk, and members will have an opportunity to achieve extraordinary returns.
Arthur Lipper, Chairman arthurlipper@gmail.co
British Far East Holdings Ltd.