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Seaboard Corp. Message Board

• slide_rule24 slide_rule24 Oct 29, 2005 9:15 PM Flag

okcub,

Here's the answer. BTW, this is very well know amongst most of the mathameticians of the world, that study probability theory and stochastics, but is generally not known to about 99.99% of the public. Which is why so many people still lose so much money each year in Vegas.

First you have to define winning. Winning is not the person with the best cards, but he who "takes the money."

OK, assume you play the way the house does; you take a hit at 16 and below, and stay at 17 or above. You'd guess that the night would be even ... that you and the house would each win 50% of the hands, each, and you'd go home even. Right?

Wrong.

There are four possible outcomes, in terms of money exchange.
You win and the House wins. We call this a tie.
You win, and the house loses.
You lose, and the house wins.
You lose and the house loses.
Mathematicians call this the sample space: the sum of all possible outcomes.

However, here's the very subtle way in which the house stacks the odds in it's favor. When you draw a 10, and a 5, and take a hit ... and draw a king .... you bust. The house immediately takes your money. But wait, later on the house deals itself a third card (because it was on a 16 or below), and also busted. But ... it kept your money.

So, let's look at the sample space again:

You win, house wins. No money exchanged.
You win, house loses. You take the house's money.
You lose, house wins. House takes your money.
you lose, house loses. House takes your money.

We throw out the tie, since no money was exchanged. Therefore, in the 3 possible outcomes in which money was exchanged (which is all that's really important), the house takes your money two out of three times. Thus, even with 50/50 odds in the cards, the house will take your money on better than 66% of all hands played. That's the secret to Vegas. Try it at home with your kids, and a pile of penny's. Be the dealer. You'll end up with better than 67% of the pennies within an hour of playing.

And when you go to a party down the street, and everyone wants to play blackjack, and some guy out of no-where just happens to show up with two thousand dollars in his pocket, and offers to be the dealer ...... he knows the secret. He'll take 66% of all hands played that evening. That's the way the game is set up.

The point here, is that all games (including investing) are not always what they seem. Most games are rigged one way or another. If you're going to play blackjack at a Saturday night party, make sure you're the dealer; or just don't play. Let other suckers lose 70% for the evening.

There are similarities in the market. You don't think those millionaires on wallstreet are getting so rich playing a 50/50 game ... do you?

slide

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