Minus Pool.com

The minus index started out positive, but it did not do well for it’s first weekly update. The index failed to keep up with the broader markets for the week, despite the introduction of a bill that could legalize and tax internet gambling Overall the the index was down .01% point for the week compared to 0.65% for the S&P 500, 1.22% on the Nasdaq and 1.23% against the dow.

I think it’s crazy that people are allowed to invest capital in the stock markets, but they can’t make a bet online. If I go to a poker house I can gamble, but if I’m there and I’m using an internet connection then I’m breaking the law if I play online. These rules make no sense and need to be rethought.

I don’t give Frank’s bill much of a chance of passing, but if it did pass, I’m not sure if it would really be good for the Minus Index or not. On one hand it would open up potential markets to many of the companies in the pool, but on another level it would also open up their industry to a new breed of competition. The internet has done a good job of commoditizing the pricing for many industries and if it weren’t for many of these laws, I’m not sure that the casinos could earn the commissions that they charge.

Regardless of it’s impact though, I’d like to see online gaming legitimatized. I don’t think that whether or not someone is allowed to bet, should be based on their geography.

I’m not sure that many financial advisors would encourage you to use this technique as an investing strategy, but Bet on the dog is tracking the performance of what would happen if you bet on every underdog for the 2007 NHL Playoff games. It’s an interesting strategy and one that I’m sure others have used before, but at the end of it all, it will be fascinating to see if he would have been better off betting the favorites, the underdogs or on the house. My money is on the house, but when it comes to the sports books, you never know what to expect. After the playoffs are over, I will follow up and we’ll find out whether people would have been better investing in the Minus Fund or if we should be pulling our money out when the World Series comes around.

The minus fund is my attempt to create an index of all the gaming stocks that trade on the bulletin boards or public exchanges.  It was created on April 11th, 2007 and currently has an NAV of $10.18.  From time to time I will highlight the performance of the fund, but if you’d like to watch it in real time, you can follow it at Marketocracy.  You’ll need to register for the site to see the performance, but registration is free and they provide a lot of details on the fund.

One of the more surprising stats on the fund was the lack of large cap names in the gaming industry.  When I ran a style report on the fund, 36% was allocated to Micro Cap: value stocks and another 15% was Micro cap blended stocks.  I would assume that these weightings should increase the volatility of the index, but also has the potential to create higher returns.  I don’t recommend creating your own minus fund to invest in, but hopefully this index will help us keep track of the entire gaming industry and will help us to better understand what is working and what is not.