Saturday, October 18, 2008

Invest With Harrah's

I spoke to a customer, in my role as a customer service rep for a major home lender, who was extremely irate. You see, the web site wouldn’t allow him to make a payment because it asked him why his payment was late. The answers it permitted didn’t include as an option the response: “Your f——g company caused the whole g———d economy to go into a f——g tailspin, and I lost most of my d——d money due to the fluctuations of the g———d stock market because of it!”

Because my professionalism (and my tenure) depends on my not making caustic replies to overheated emotional vomit, I couldn’t respond, “Sir, if you really attribute the current economic problems to my company’s investment in subprime home loans, you should probably leave stock investment to the professionals. No matter what the President said, it’s just not that simple.”

As I drove home—a thirty-five-mile commute one way—I reflected on the gentleman’s predicament. If he had lost his money shooting craps, I thought sourly, any impartial person would have seen his problem immediately: He stayed too long at a table growing cold, willing the dice to turn hot just one more time. I have two rules for myself: 1) Don’t bet more than you can afford to lose; and 2) Don’t walk up to a table you can’t walk away from just as easily.

But many people seem to be convinced that investments are different from casino games. After thinking about it, I must admit there are several ways a casino is different from other gambling institutions:
  1. Casinos are more strictly and effectively regulated by the local, state and federal governments.
  2. The odds inherent in almost every casino game, including the house advantage, are well-known, well-published and consistent from venue to venue. That’s because
  3. Casino games are also regulated by the Law of Averages.
  4. Casino gamblers don’t need to be told that past performance is no guarantee of future gains. In fact, good gamblers expect to lose at some point. That’s why casinos don’t hand their patrons prospectuses when they walk in.
  5. You’re far more likely to get a return of 9-to-1 on a “hard eight” bet than you are on an IPO.
  6. The only insurance bettors get at a casino is when the blackjack dealer draws an ace face up. But the house doesn’t require you to pay for it, and experienced players know that you pay more for it than you get out of it over time (a fact which makes private mortgage insurance providers happy), so why bother?
  7. Whoever heard of people filing a class-action suit because they lost everything on craps or roulette? Remember, good gamblers expect to lose at some point.
  8. Cheaters at a casino are more easily caught and more effectively punished.
  9. The chief officers and shareholders of a bankrupt investment house are not likely candidates for RICO indictments, no matter how larcenous their “golden parachutes”. On the other hand,
  10. There are still some parts of the world where an incompetent CEO who ran his casino into the red would be given “cement overshoes” rather than a “golden parachute”. In fact, it’s probably a better, more tangible incentive to excel. But then,
  11. You have to be truly idiotic to lose money running a casino. To lose money running any other corporation, you just have to make one or two bad choices … or suffer some bad luck.
  12. If you bet your retirement savings at Caesar’s Palace or the Luxor, you’ve got an obsessive-compulsive disorder. If you bet it at Merrill Lynch, you’ve got a 401(k).
  13. If you borrow against your house at the Trump Taj Mahal in order to bet, you’ve got a gambling problem. If you borrow against your house in order to invest, you’re using your equity effectively.
  14. The croupier doesn’t need to know your financial history or run a credit check on you in order to take your money or pay your winnings.
  15. You can take chips out of your stake to buy a sandwich, a drink, a pack of smokes or even a sex partner without effort, apology or explanation. But just try to get money out of your 401(k) to fix your car or buy a house!
  16. You can’t gamble with someone else’s money at a casino unless they give it to you first, nor can you bet with chips you don’t physically possess. At the stock exchange, “selling short”—selling stock you don’t own—is perfectly legal as long as you buy the shares back within three days.
  17. You can cash in your chips and call it a night without suffering a 20% penalty for early withdrawal.
  18. Conservatives don’t consider casino regulation to be unnecessarily stifling of free-market forces.
  19. Liberals don’t consider gamblers who lose to be victims of corporate greed.
  20. If one or two big casinos go under, they don’t drag the rest of the frigging national economy down with them! (But refer back to #10.)
  21. Casino gamblers consider the risks to be part of the fun.
  22. LAST BUT NOT LEAST: Casino gamblers know and admit they’re gambling.