This article originally published in The Northen Daily Leader on 18 February 2012.
When it was announced, a few years ago, that aspiring immigrants to Australia would have to pass a quiz on Australian history and culture in order to be allowed to settle here, there was both agreement and condemnation. Some people complained that not knowing our national flower (the Golden Wattle) was hardly sufficient grounds to be rejected as a potential Australian, while others thought it was only fair that every Australian knew Don Bradman’s highest test score (334 for all you bad Australians out there).
Instead of just multiple choice, perhaps the test should have incorporated a more hands-on element. It would have been more interesting if the would-be Australians were taken to the racetrack on a Saturday afternoon and asked to pick the winner of race 6 at Rosehill. Pick the winning horse and you’re in, get it wrong and you might have to settle for a life in New Zealand. Really, if you can’t pick a winner at the track and you don’t love to gamble, then you might have trouble fitting in, for nobody loves gambling more than Australians do. We spend more than $20 billion a year on gambling, making us the biggest gamblers (and losers) in the world on an individual basis.
Most of us, at one time or another, have gambled, even if it’s just the annual $5 down-the-drain on the Melbourne Cup. Others take it more seriously. A friend, lets call him ‘Dave’, has perfected the art of hanging around the gents toilets at the racetrack, where he’s learned that a casual conversation often rewards itself with a winning tip or two. Like a know-it-all at a pub trivia night, sometimes we just can’t help showing off, even if it means enriching that strange guy who hangs around the toilets a bit too often.
People often lump gambling and the stock market together, believing that the risks or chances of success in both are of equal magnitude. In fact researchers have found that there is a difference: gambling in casinos or on pokies means you will only ever lose in the long run, due to the nature of the odds against you. The stock market however, is more like the racetrack, where the more informed investor (or punter) can succeed at the expense of less well informed players. The message is that successful investing, like picking winners at the track, means talking to somebody who knows what they’re doing. It’s just that good investment advisers are hopefully easier to find than hanging around the toilets at the racetrack.