Tickets vs. Tickers
One man's quest to find out if scratch tickets are a better investment than today's stock market.
– Homer Simpson
Lotto sales are way up across the country. In Massachusetts, the lottery hit a record high of $4.7 billion in sales. And in my home state -- New York -- lottery sales were up $177 million in the last 9 months of 2008. Scientific Games (SGMS), the largest purveyor of scratch tickets, reports that revenue is up in 25 of the 42 states that have lotteries.
None of this should be surprising. The less money people have, the more tempting the fantasy of hitting it big, quick.
I'll admit it - a few weeks ago, I bought a $1 scratch ticket. I thought, "Why not?" I ended up winning $7, and proudly announced the news to the Minyanville staff. Kevin Depew jokingly acknowledged that I had greatly outperformed the S&P with my little "investment."
And then an idea was born. With the market in the shape that it's in, which is the better investment? Scratch tickets or the S&P?
Over the next 4 weeks, I'll spend $100 on scratch-tickets. At the end of each week, we'll compare how I did relative to how that money would have performed in the S&P.
Let the games begin.
February 23: Day 1
Over at Minyanville, Terry Woo's got his eye on JPMorgan Chase (JPM). Todd Harrison's talking about Bank of America (BAC).
But I've got my eye on a little game called Lucky 7s. Here's all you need to know: "Rub 9 spots. Get 3 7s in any row, column, or diagonal and win 'Prize.' Get 2 7s and a $$ in any row, column, or diagonal, and prize doubles."
What's at stake? The chance to win $2,700 instantly.
I'll be seeing the newsstand guy a lot over the next month, so I introduce myself him. He tells me his name is Harry (Hari?). After a few pleasantries, he hands over my Lucky 7 ticket.
Back up in the office, I scratch away. And lose.
February 24: Day 2
A little perspective on odds.
According to the National Safety Council, the chances of dying from "contact with other and unspecified venomous animals or plants" is 1 in 635,191. That's actually better than my chances of winning $2,700 from a Lucky 7 ticket (1 in 678,461).
So instead of Lucky 7s, I opt for Take 5, a game with slightly better odds. The chances of winning Take 5's $5,555 grand prize are 1 in 529,200. That's markedly better than my chances of perishing from "ignition or melting of nightwear" (1 in 635,191).
I scratch off the Take 5. And lose again. I'm beginning to wonder if this whole scratch-ticket experiment is a fool's errand.
I'm also wondering how on Earth the odds of dying from an unspecified venomous animal or plant are exactly the same as dying from exploding underwear.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter