Issue #33 - Sports betting epidemic and don't miss the discussion on Warren Buffet hitting $1 Trillion and what he tells people to invest in.

Read time: 3 minutes

Hey everyone! Beginning today with something I've been reflecting on.

What goes around comes around.

I was fortunate in my early career to be introduced to a lot finance professionals and many of these relationships have had profound impacts on my development as a finance professional in my own right, and just as a human being.

In the last couple of years, I’ve had the privilege of talking to many young career folks that are interested in breaking into finance and making connections.

Making introductions for university grads to high-level investment bankers, portfolio managers, analysts, and entrepreneurs has been super fun and rewarding.

First of all, it is great to see people later in their careers, busy as hell with family, work and living, take time out of their day to talk to others that might be inspired or find value or develop unique relationships with them.

I salute everyone that does this and simply pays it forward. I’ve never been one for “karma” per se, but as I get a little bit more gray hair, I certainly appreciate all the help that I’ve received in my life.

So for everyone out there, either young workers or seasoned career professionals, open up, share a little, make some introductions, you never know who you might stumble upon that could change your life.

Have a great long weekend!

PS any friends in Victoria reading this, come by Sannich Fair Saturday/Sunday/Monday - MJ and Patty will be there showcasing their new Casa Maria Jewelry collection. 

1. Personal Finance

This might annoy some people I know - sorry in advance.

But, there is a MASSIVE sports betting epidemic occurring right now.

I look around and I see a lot of people placing large bets on various sports day in and day out. UFC, Soccer, Hockey, NFL, NHL, what colour the Gatorade is going to be, whether the sun is going to shine or what colour arm band someone is wearing. 

You name it, you can bet on it. 

My problem isn't against betting per say; I love a game of poker, in between, blackjack or a bet on a personal golf game. And yes, I have bet on some sports games, it is fun! Even though I usually lose.

But I do have a major problem with how rampant it's become.

Since sports betting was legalized in recent years, the proliferation of the industry has been nothing short of monumental.

According to a recent study, the industry for sports gambling is now “generating over $120 billion in total bets and $11 billion in revenues in 2023 alone. While a small minority of households are able to consistently win, the profitability of the sports betting industry suggests that the marginal consumer is engaging in a negative expected value activity when they place a sports bet, which is supported by evidence showing bookmakers systematically exploit bettors' biases and relative lack of skill.”

Did you know that 20% of every professional sports game is spent watching gambling advertising? 

This is extremely, and I mean, extremely disturbing.

Set aside the fact that PRO sports are somehow 'not entertaining' enough that betting becomes the entertainment. And set aside the fact that betting lines are in the aggregate fairly accurate, and therefore a winning bet is essentially a 50/50 proposition, tilting towards the house.

No, the worst is that all this gambling is taking a major toll on personal household finances.

The study continues, “not only does sports betting lead to increased betting activity, but it also leads to higher credit card balances, less available credit, a reduction in net investments, and an increase in lottery play."

This means that those in need of the most financial help are making the worst decisions with their money.

People are diverting cash flow away from the stock markets (which have doubled in 5 years) and other sound investments and even going into crippling debt to keep up the betting.

Thinking they will hit it big on a parlay because someone we know bet $100 and won $40,000 when Phil Mickelson won a PGA Championship (true story).

These are pie in the sky, EXTREMELY unlikely scenarios but somehow the public has been convinced that they can hit it big, too.

Now, we all have our skills, some of you are probably decent betters edging past the house over time. But on average, most of you are losing. Thats fine, just call it entertainment. Your version of fun, placing a few bets is probably fine.

Just be careful how much you are betting. Make sure to pay yourself first - pay down your high interest debt, automatically fund your investment accounts and buy stocks, pay your living expenses and go do fun things with your family.

If you have to bet, set a strict fucking budget AFTER you've budgeted for everything else. 

Thank you to a friend and subscriber for inspiring today's topic.

2. Stock Markets

Frequent readers of the Goodwill Investing Journal and those close to me know my inspiration and passion for investing started with Warren Buffet.

His company Berkshire Hathaway just became the first non-tech company to hit a $1 Trillion Dollar valuation, and his net worth at $145 Billion puts him at #6 wealthiest in the world. 

He didn’t do this being a tech genius.

He didn’t do this day-trading.

He didn’t do this via real estate.

He did this with good old-fashioned business sense along with a very calm demeanor.

With a 20% annualized return over some 65 years, Warren Buffett is the undisputed champion investor of all time.

But did you know Buffet also owns the S&P500 ETF? 

Even the greatest investor of all time believes in diversifying elsewhere in a portfolio of wonderful stocks. And he has stated many times that most people should just own the S&P 500.

So, as I've said before, I don't care whether you invest in real estate, individual stocks, or in your business, if you don't own the S&P500, you should. Warren does.

That is all.

PS if you have 2 hours, I have an investment course available that goes in depth on investing using ETFs. Plus a bunch more stuff that might be useful to you as well. Learn more here.

3. Real Estate

Inflation data is coming down, analysts are predicting further interest rate cuts for the BOC and Jerome Powell sounding very dovish earlier this week is bringing vendors back to the table saying, ok, now is the time to gear up for sale.

Indeed, I've been hearing from broker contacts they are ramping up valuation and pitch work which should lead to more commercial product coming to market.

This is a good thing for buyers like us that have seen a dearth of overall transaction activity since interest rates began marching upwards in early 2022. 

For the past two years, cap rates have stayed persistently low while interest rates climbed and essentially took us out of the game as the 'spread' between buyers and sellers has been massive. Although we did manage to acquire two great properties in Alberta over the last two years.

Anyway, we shall see if this gap actually narrows and more commercial investment activity ensues.

Stay tuned. 

1 Quote

"Hoping to recoup is what ruins the gambler." - Anonymous

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Thank you

Eddie Gudewill, CFA
 

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