Variance as it relates to Sports Investing

var·i·ance

ˈverēəns/

noun: the fact or quality of being different, divergent, or inconsistent

We see the definition of variance above. The important concept here is two-fold. The inconsistency of human athletes and the difference between our results and expectations. When investing in sports games, poker, or any other casino table game one must realize these investments are mathematical equations that over time will have a median value.  In essence, there will be an average result. In the short term, there will be swings of variance that affect the average result both positively and negatively. These swings are usually described by players as being hot or being cold. These swings are short-term for the investor. An investor sees the process as a daily grind looking for ROI over the year. These short-term swings are not viewed the same way for those that are looking for a scratch-off ticket and wanting to make a fortune without paying their dues. It is certainly not true that everyone has to pay their due before good fortune comes their way, but it is true that if you invest long enough, you will experience variance and expose your bankroll to shortcomings that were not anticipated. 

The key to success is understanding truly what is happening. In general, there HAS to be this process. The reason is that there is a human element involved. You see, as humans, we are not perfect and have all kinds of things that prevent perfection. We have stiff necks, sore backs, bad knees, or just feel sick at times. All of these variables create variance or inconsistency in production. If we were investing in machines or robots, there would be less variance because the output is consistent. Since we humans aren't perfect, we investors must get smart around variance and the effect it has on our psyche. It is very true that you will have more success when your mindset is in such a way that you are viewing things with a positive outlook. Allowing a negative outlook sounds fun in all because you expel some energy, but it is the near-death of an investor. You see, when you are preparing for your daily games, you must have positive mindsets and opinions that are strong because you are about to put hard earned money out there on those opinions. You certainly don't want to support poor opinions and negative thoughts around your investments! 

Sports investing will never be described as beautiful. It is a grind that is not meant for everyone. If it was so easy, there would be hundreds of thousands of professional investors. Sports Investor would be listed on the "jobs to have" reports that college students are handed when they are trying to figure out what degree they should be working towards. We know this isn't the case. This is only for the few. However, as a person trying to benefit from the knowledge of investors, it is crucial to know the culture of sports investing. There are many down times. There are many up times also. As with anything, the up times are exciting and glorious. The down times are just plain a kick in the ass. They are no fun and have you questioning why you're investing in the first place. It reminds me of the picture of the lion where he has just made his kill and had dinner. The caption says "We all want to be a beast until it is time to do what beasts do". 

The investor knows there is a median or average expected outcome. The variance over a time frame is only part of the daily grind he must go through. There is no timetable for these variances. They can go on for only days or weeks, but they can also go on for months. This is a long-term endeavor. The basic rule is, for all the positive variance you enjoyed over that short run or negative variance you had to endure, the median average will ALWAYS rule the odds. If you are struggling, you will again overcome and enjoy a winning stretch. If you are winning, caution to you. You will eventually hit the regression back to the mean, but please maximize your winnings while that streak is happening. Once you truly understand and come to grips with the thought of a marathon versus a sprint, you will survive variance. The truth is, you are not long from being on the upside of the averages! Stay positive and grind out daily. When the variance moves in your direction, you will be more gracious, happier, and much more understanding of truly what it takes to be a sports investor.