Some people bet like investors, some people bet like addicts, but most people bet like both.
A google search of this title returns a flurry of sob stories, “how to’s” about addiction, Gamblers Anonymous propaganda, and a host of pseudoscientific garbage. It’s a sea of misinformed opinions, and wading deep enough to find the truth in this madness is a daunting task with no guarantee you’ll come away with anything useful.
It’s a Complex Issue
The reason that I think there’s so much murkiness here is that we’re dealing with two entangled problems. Part of the game is finding or improving a betting methodology, and the other part is dealing with addictive tendencies and harmful emotions. There are straightforward answers when looking at these problems independently, but the solutions step on each other’s toes when looked at on the same grounds.
I’ll acknowledge that there are simple steps for someone who truly wants to give up gambling/investing/Fanduel-ing but is unable to do it, and that answer involves some amount of introspection or therapy or even possibly treatment. There’s also a fairly easy answer for someone who feels no addiction, but simply wants to get better at money management and investing. They can correct logical flaws, do more research, and learn better math skills.
But the people who fit into one category or the other seem to be exceptions, not the rule. Most people who bet seem to be struggling with the overlapping nature of these problems. They want to bet and they want to win. They are not experts, but they have expertise. They are not addicts, but they are addicted. I’ve found myself all over this spectrum at various points in my life, and I can say that maneuvering in this space can be as stressful as it is confusing. Understanding how to win money while also understanding how to not lose your mind is a grueling pursuit (and when you figure it out, please let me know how you did it).
Grasping the Problem
The first step in solving anything is to figure out what needs to be solved. Appropriate solutions are not possible without appropriate diagnoses, so let’s start there: What is your goal?
The goal in any form of investing is to use the combination of your brain power and your resources to create a positive money-making proposition. Going further, the goal is to experience some of the emotional roller coaster, but to reliably win while doing it. The reason this is necessary is that there is some element of predicting that almost always needs a human element. Even if you have statistics at your disposal, you still have to choose which statistics to deploy. As far as I’m aware, there is no perfectly robotic methodology.
The biggest challenge then is to be able to incorporate your own subjectivity while simultaneously keeping that subjectivity from getting the best of you. And a higher degree of tactical awareness is easier when you’re winning, but what about when things aren’t going well? How do you make coherent decisions in the face of suboptimal circumstances? The real question is: What do you do when you lose?
Finding Solutions
I think there are two interpretations here that are both important. There’s the question of how to correct losing strategies and turn them into better ones, and then there’s the question of how to emotionally handle losing. These are not entirely independent, but it’s a relevant distinction nonetheless. So keep in mind that each component has some impact on the other.
When it comes to reversing losing, it's pivotal that you don't let the losing cloud your judgement. Profitable investing strategies can quickly be derailed by emotionally driven decisions, both in terms of bankroll management or even the selections themselves.
My personal philosophy is that each bet should be made as though it exists in a vacuum. Here’s how you do this: You make believe you have unlimited funds, and then you try to just make “good bets”. A “good bet” is a gamble that is based on calculated logic, and it effectively contains no personal biases. It’s like splitting 8’s or doubling down in BlackJack. You are nearly certain your move is warranted and would be supported by mathematical analysis.
I’m not saying that you should pretend your money is unlimited and give free reign to your impulses to bet large. I’m speaking to the selection process, where optimal strategy and ultimate gain are the goals, rather than quick runs for riches and fearful hedges against losses. Your betting procedures should exist independently of your money.
While this type of calculated thinking is sure to improve your results, it’ll also cover that second component of this difficult question. The reason I’ve spent so much time mapping this out is that part of the answer to “What do you do when lose?” must in some way involve correcting the processes by which you lose.
So let’s now assume you’ve eliminated chasing, betting with your heart, over-exposing your bank account, and all of the other emotionally dangerous betting tactics. Even in that world, it’s still going to hurt when you lose. Even if you’re gambling with perfect logic and mental control, losing money still is going to harm your psyche. How then, do you deal with that?
Getting Past Losing
The easy answer is to simply stop playing, but I think we’re above that (although I will acknowledge that breaks help, and stopping for good is the right call for at least some people). I think what we really want to know is how to overcome the suffering of losing in a way that enables us to move on and resume making profitable decisions.
Acknowledging that the money is gone for good is an important start. The gambler’s fallacy, the idea of being “due” for a win, is as catastrophic as it is wrong. Aside from the fact that a loss doesn’t make you more likely to get a win the next time, ruminating about the loss is bad for your mind. A loss within a profit-generating venture is just a setback, which means all you need to do to move on is recalibrate your bankroll and start fresh the next day.
Beyond that, there really is no exact answer for how to get the emotional sting of a gambling loss to subside. My firm stance is that preventive measures like the ones I’ve outlined here are the key to handling your gambling mind. Pre-emptively strike against those corruptible thoughts, and you may just be able to accomplish the impossible.