How to (Legally) Rob the Market Blind
How to (Legally) Rob the Market Blind by Greg Guenthner – Daily Reckoning
The house always wins.
But if you’re smart enough, you can beat the casinos (and the markets) at their own game. Today, I’m going to show you how.
In the book Bringing Down the House, the MIT Blackjack team used card counting to gain a statistical advantage over the casinos, making profitable runs every single year.
The great minds behind one of the most successful blackjack runs in history prove you don’t have to pull an Ocean’s Eleven-style heist to skim cash from Las Vegas. In fact, it only takes the slightest edge to rob a casino blind.
Experts estimate that counting cards gives you about a 1% edge over the house. That’s miniscule. But in the long run, it can add up to a fortune.
Of course, casinos don’t like card counters. They add more decks to make it harder to keep track of all the cards.
But technology changes everything, as quant trader Jonas Elmerraji explains.
“For a computer, more decks aren’t a problem. If you could bring a computer to the blackjack table with you, you’d beat the pants off the casino,” Jonas says. “That’s why the iPhone Card Counter app is now illegal to use in casinos in Nevada.”
With gambling, the house has a statistical edge. It’s how they make money. If you play any casino game long enough with no technological assistance, you’ll lose. But throw an algorithm into the mix and you can rake in the chips.
Now imagine if you took this concept and applied it to the stock market…
That’s similar to the approach Jonas is taking with his algorithmic system.
In blackjack, players are looking for the best times to bet big so they can walk away from the table with huge winnings.
Just like there are certain hands at the blackjack table when you’re more likely to win, there are certain times of the year when you’re more likely to book gains in certain stocks.
(You’ve already seen the results.)
With his never-before-seen proprietary trading system, Jonas has created a way to visualize the strongest times to own stocks year after year.