Are risk management and gambling are two side of the same coin? Both involve investing in an attempt to tip the outcome of future events in your favour so you are better off. The similarities between the two processes were highlighted in a Melbourne Comedy Festival show presented by English eccentric and holder of 4 world records, Tim Fitzhigham see: http://www.fitzhigham.com/
Apart from being a very enjoyable hour, we learned a lot about gambling in the 18th century around the time considerable intellectual effort was being put into understanding risk by mathematicians such as Gauss, Leibnitz and Newton. Most of the recorded bets involved the considerable redistribution of wealth, often involved one Lord’s ‘man’ doing something strenuous, dangerous or both against either the clock or another Lord’s ‘man’ and generally any horses involved in the bets did not survive. However, the amounts at stake would certainly focus ones attention on anything that may tip the odds in your favour……
Whilst the show was great fun, and the comedy festival wraps up this week for another year, I’m left wondering is there is any real difference between a bet on which raindrop will reach the bottom of the window first and responding to a bank’s suggestion to fix (or un-fix) the interest rate on your home mortgage which in Tim’s view is a bet against the bank on the difference between current interest rates and those that will be being charged in 5 or 10 years time??? I guess as he pointed out, we are all gamblers, only some of us know it! Certainly Tim’s effort to recreate 10 of the most bizarre recorded bets in history makes entertaining listening and involved some big stakes and some serious risk management…… or was that a just a bet????
Either way, the historical fascination with gabling has influenced modern language, bets were recorded in ‘Gentleman’s Club Betting Books’ – the origin of the term Bookie and Book Maker, and the original meaning of the term ‘stakeholder’ refers to the independent, trusted person who held the ‘stakes’ during the course of the bet.