Being financially savvy may give false sense of security

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#1
Oct 23, 2010
the SHENTONITES
Being financially savvy may give false sense of security


BY DAY, Mr Cheong, the director of a major financial firm, manages other people's wealth prudently.

After dark, the 40-something turns into a daredevil gambler at Resorts World Sentosa (RWS) casino's VIP rooms, where he wagers thousands of dollars on each hand of baccarat.

He refuses to give his full name as he is worried his clients will think he is irresponsible with money.

Mr Cheong says he gambles once a fortnight to help himself 'destress' from his demanding day job. He picked up gambling when he was studying in Australia, as he had free time on his hands.

Before the casinos opened in Singapore, he would have a flutter on the cruise ships. Now that Marina Bay Sands (MBS) is across the road from his office and RWS is about a 10-minute drive away, the temptation is 'too close to home', he says.

Indeed, in the evenings, the casinos are crowded with Shenton Way-types like him, both men and women, whose office attire, work satchels crammed with files, and beleaguered faces give them away.

Bruising day at work? Unreasonable clients? They unwind by turning to card games or the jackpot machines.

Being finance professionals, they often reason that they are capable of assessing risks, instituting safeguards and keeping out of harm's way.

Dr Derek da Cunha, the author of Singapore Places Its Bets, says that because these executives are financially savvy and earn enough to make sizeable bets, they might be lulled into a 'false sense of security' and be even more daring with their money.

Mr Cheong does not want to reveal how much he puts on the table. All he will let on is that his largest win at RWS was $140,000, but overall, he is down tens of thousands.

'I do not limit how much I gamble each time, but I do not go to the extent of borrowing money to play.'

He adds, in mitigation, that his losses at the casino are less than those he has suffered speculating on shares.

He says that to restrain himself, he signed up for an annual levy pass at RWS instead of at MBS - as the former is slightly farther away.

Also, he does not usually gamble for more than two hours at a go. 'Discipline is key to winning. The longer you play, the more likely you are to lose,' he says.

'I know people who have gambled and lost millions of dollars and whose families have broken up as a result. But I am an analyst, I am rational enough to know when to stop,' he maintains.

His wife, though, wishes he would stop - right now.

'She does not like that I gamble, but I take care of my family and I provide for them so she leaves me alone,' he says.

Still, she is taking no chances with their nine-year-old son, and has repeatedly cautioned the boy against following in his father's footsteps.

Mr Cheong says with some measure of pride: 'The other day, my son told me he will not gamble.'

It was a comforting statement to him. 'I do not encourage people to gamble. Once you get in, it is hard to get out,' he admits.

Indeed, for many white-collar gamblers with cash and time to spare, it is proving hard to escape the lure of two casinos on their doorstep.

Mr Roy Leong, 35, a bank executive, was spotted at the MBS casino on a Monday at 9.30pm. The bachelor was about $1,000 in the red after three hours.

He had managed to stay away from the casino for two months, after losing about $20,000 on his last visit.

'Maybe it is not a good idea for me to return. It is very hard to win, but very easy to lose,' he says with a sigh.

Still, he was betting on a change of luck that evening and a chance to recoup his losses.

Dr da Cunha, whose research interests include socio-political issues in Asia, says the proximity of Shenton Way and HarbourFront offices to the casinos may prompt professionals working in the area to visit the casinos more frequently.

'We cannot underestimate the convenience factor.'

HUANG LIJIE

My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
(23-10-2010, 06:51 AM)Musicwhiz Wrote: Mr Cheong does not want to reveal how much he puts on the table. All he will let on is that his largest win at RWS was $140,000, but overall, he is down tens of thousands.

'I do not limit how much I gamble each time, but I do not go to the extent of borrowing money to play.'

He adds, in mitigation, that his losses at the casino are less than those he has suffered speculating on shares.

And his job is to manage other people's monies prudently?!?

No wonder Buffett once said that Wall Street is the place where people go in a Rolls Royce to seek advice on making money from people who take the subway.

I wonder who it reflects worse on? The guy who takes the subway or the guy who takes the Rolls Royce? I say it's the guy with the Rolls.

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#3
Quote:'I know people who have gambled and lost millions of dollars and whose families have broken up as a result. But I am an analyst, I am rational enough to know when to stop,' he maintains.

Actually, if he were rational, he should have never even started. In gambling, the odds are always against you. The optimal bet size when the odds are against you is zero. In other words, one should never ever visit the casino. The only way to win in gambling is to be lucky (unless you are a professional card-counter). Is luck something that one can depend on?

Quote:He adds, in mitigation, that his losses at the casino are less than those he has suffered speculating on shares.
.

In shares, the odds can be in your favor with good stock selection and/or market timing. In gambling, the odds are always against you. If the person in the article continues gambling, I am sure his gambling losses will one day exceed his losses in shares.





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Trust yourself only with your money
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#4
That's right - gambling is an activity where the odds are stacked against you; so by the law of averages, if you continue to keep playing at the casino, you'd lose everything eventually. Even those people who were interviewed who said they were "positive" and "in the black" - let me ask whether they were actually tracking each and every bet and result? Some of them may be deluding themselves.....

The guy's excuse that his losses from gambling do not exceed those in shares is a very poor one. If for example he loses $100,000 in shares, it could mean he lost $99,999 in gambling; while in his mind he feels this is still OK as he lost less than in shares. But the point here is not about the $, it's about the act. If you were gambling in shares, and now gambling in casinos, then you're in for much deeper trouble as time goes by......
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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