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November 10, 2011

Stocks, Bets, and the LDS

Would you be willing to forfeit 12 million dollars for a chance at earning 13 million? If you answered yes, congratulations, you are one-third of the way to becoming a professional basketball player (If you happen to be tall and black, email me, I'll be your agent.)! In addition, you deserve praise because if you're willing to gamble on a paycheck of that size, you officially have more balls than the vast majority of humans.

Thoughts of gambling have been raffling through my mind a lot lately. Perhaps it started with the news of the man who bet on the Cardinals to win the World Series when they were 10 and a half games out of playoff position. The Vegas odds at the time were 999 to 1 against St. Louis winning the Series, making the mystery gambler's bet of $250 turn into a filthy $375,000 payout. Or perhaps accounting has bored me to the point that I crave risk. Or maybe it really has been the fortitude of the "former" NBA players who, despite being part of a struggling economy, despite playing for a system that is financially unstable, despite having virtually no leverage as a union, continue to risk losing their paychecks in the hopes of retaining their no longer viable contract terms.

One man celebrated even more than this when the Cards won the series (AP/Jeff Roberson)

For better or worse, their example is starting to rub off on me. I want to gamble. I'm surprised too, considering the theory of loss aversion has historically impacted me more than most. Loss aversion suggests that the average man will work harder to protect what he already has compared to the effort he will exert in trying to gain something new. This is the reason that golfers putt better when facing the prospect of a bogey versus that of a birdie - gaining a stroke hurts more than losing one feels good. One would think the combination of this inherent precaution mixed with my cheapness would render me unable to gamble my precious funds, but there are other factors present as well. Namely ...

A. My love of money (Superimpose my first initial over my second and you get the money symbol. Coincidence? I don't think so.)

B. My hate of work (My first job? Coldstone. Lasted two days. I'm still blacklisted there.)

These two pillars form not only the mantra of my life but a paradox that changes my earlier statement from wanting to gamble to needing to gamble.

The decision to do so is laden with moral implications, however. We start off with my church which frowns upon gambling, based on the dual misdeeds of 1) earning something from nothing and 2) developing an addiction. I have to disagree with both of these points. Remember the man with the $250 bet on the Cardinals? How stressful do you think it was for him watching the Cardinals' post-season run? Twice they were one strike away from elimination! How hard must it have been to watch knowing that one pitch could be the difference between $375,000 and nothing? So don't tell me that man did nothing to earn his money. He paid for it in sweaty mental anguish. And as far as developing an addiction goes, well, who ever got addicted to gambling? Please.

I think the real reason my church discourages gambling is because they'd rather the members risk their money in the stock market. After all, gambling and investing are brothers of the most intimate relationship. Their practitioners both rely on tips from complex equations, historic trends and the wisdom of your in-the-know-neighbor, and at times the two even overlap. Surely you've heard of the idea that the Super Bowl winner will dictate bear or bull markets?

So why would a religious group prohibit one and allow the other? My theory is that the LDS church wants its members to punish the government in any covert way possible (and you thought Romney was running to fix the economy. Oh the naivete.). By way of refresher course for the non-doctrined, the early church was abandoned and driven out of the states by the very government that had established the idea of religious freedom only 70 years earlier. How to pay that government back? By encouraging investing rather than gambling. You see, an investor who loses money can deduct such losses and lower the amount of taxes he has to pay. Meanwhile a gambler who loses money has no such chance to screw the government. In addition, the greater the number of gamblers, the greater the revenue of casinos, and the greater the casino tax payout to the government. By prohibiting millions from gambling the church ensures that that tax revenue is just a little bit smaller. Think I'm joking? There has to be some explanation why Nevada has the fourth highest percentage of LDS members nation-wide.

Church disobedience isn't the only moral issue at stake with gambling. What happens when the odds encourage you to bet on your rival? Or even worse, what if your favorite team tends to underperform (ahem, BYU) and you feel the wise thing financially is to bet against them? Is free money worth the price of surrendering one's soul?  I can't think of any financial reward that would be worth betting against my Cougars. And if I'm going to get in trouble with the church if I gamble, how much trouble will I get in for betting against their team? Ugh, this idea is looking worse and worse.

I've considered channeling my gambling desires into investing, yet the stock market isn't a world free of ethical dilemmas either. What if my investing research suggests that instead of playing the slots I buy stock in the company that relies on them? The Wynn Casino's stock is currently trading at a mere $125.45 a share. Decisions, decisions.

In the end, the Green Bay Packers saved the day. The squad from Wisconsin is the only American sports team I know of that is publicly owned, which means one can bet on the success of the Packers without actually gambling but by purchasing stock in their team. In this way I can satisfy my desire to risk money on sports while upholding the church's mission that one invest rather than gamble.

Of course, following that route returns us to the root problem that started me off on this whole gambling business - lack of funds. I suppose I could continue to mooch off my girlfriend and her three jobs, or I suppose I could bite the bullet and actually get one of my own. But knowing me ... well, I wouldn't bet on it.

(Yes, I feel embarrassed reading that too.)

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