Before we dive in today, I want to thank everyone who joined TradeSmith CEO Keith Kaplan and myself on Tuesday for our AI Predictive Power Event, where Keith unveiled Project An-E. I imagine you were as impressed as I was with the work Keith and his team over at TradeSmith are conducting to harnass artificial intelligence to make stock gains.
If you missed Tuesday’s event, simply click here for the replay.
In today’s Market 360, I’m going to share how TradeSmith’s Project An-E can give you “the house edge” on Wall Street.
How to Beat the House
Each year, the Nevada Gaming Control Board produces a report on the success of the casinos on the Las Vegas Strip.
We all know “the house always wins,” but this annual report – from the body that regulates Vegas casinos – tells us exactly how much.
In 2019, tens of millions of people flocked to Las Vegas to play casino games like blackjack, poker, and roulette. The Nevada Gaming Control Board says those folks flew back home a collective $6.58 billion lighter in the wallet.
That’s $6.58 billion Vegas separated from its previous owners – in just one year.
With giant revenue figures like that, it’s no wonder Vegas real estate is some of the most expensive on the planet. Land on the Strip can sell for more than $20 million per acre. Vegas casino operators regularly build gleaming mega structures for more than $1 billion a pop. The owners of these structures are some of the world’s richest people.
That long legacy of winning year after year after year… all those billions of dollars in revenue… all those mega structures… all those rivers of money…
trace their source to a phenomenon called “the house edge.”
The house edge is the reason why Las Vegas casinos make so much money with such regularity and such certainty.
The house edge is a simple mathematical concept. It’s the percentage of a player’s bet that the casino is likely to win – it’s the casino’s statistical advantage.
You see, casinos don’t win year in and year out because they get lucky.
Casinos have an ocean-deep knowledge of probabilities. Nobody knows more about probabilities and payoffs than those running casinos.
They use this knowledge to build an “edge” into every game they operate – to ensure the odds are always stacked in their favor.
The house edge is typically small – so small that it’s nearly impossible for the average person to notice.
A casino might win a game just 51% of the time. (If a casino won every game, players wouldn’t play.)
Rather than rake in money through big, eye-popping wins, casinos apply their statistical edges over and over and over in small, almost unnoticeable ways, “winning small” thousands of times a day, millions of times per year, to the tune of more than $6.5 billion in annual winnings.
All those small wins pile up to form a mountain of money.
This means the casino business is one of the only industries on the planet that has a business model based on mathematical certainty.
As long as they follow their own rules, casinos know they are 100% guaranteed to earn money because the odds are always in their favor.
Take the iconic Vegas game roulette.
There are 36 numbers on a roulette wheel plus a green zero.
When the roulette wheel is spinning, the ball can stop on any one of the 36 numbers or the zero. That’s 37 possible stops.
This means the mathematical odds of a player picking one of those potential stops is 1 in 37.
Even though the roulette wheel offers 37 possible winning numbers, a player will receive a payout of 35 to 1 for a bet on a single number.
For winning a bet of 1 unit, the casino will pay 35 units plus the initial bet (36 units in total).
For a straight-up bet, the probability of success is 1 out of 37, but the player will receive 36 units in the case of a win.
The difference of 1 unit (37 minus 36) is the house edge.
In this case, it’s about 2.7%.
It’s a small percentage but applied over and over millions of times per year, it creates a money machine.
You may not realize it, but playing casino games and investing in the financial markets are very similar…
Project An-E = Your “Market Edge”
It’s no coincidence that many of the world’s best investors and traders are avid poker players.
After all, success in both playing cards and playing the market is a matter of consistently stacking the odds in your favor, knowing how to balance risk and reward, and knowing when to play and when not to play.
The real secret to making a fortune on the Las Vegas Strip and on Wall Street is finding and applying AN EDGE… over and over and over again.
To be clear, Project An-E cannot predict the future.
Nobody can do that. No software program can do that. It’s impossible to predict the future.
The fact is, only a fool believes you can be right 100% of the time in the markets.
With Project An-E, Keith and his team didn’t chase the impossible dream of predicting the future or being right 100% of the time. What they did was look for an “edge” that they could exploit over and over again.
During the AI Predictive Power Project Event, I sat down with Keith and he shared the strategy TradeSmith has developed that provides investors with such an edge.
Billionaire casino operators know how powerful an edge is.
The world’s best traders know it as well.
Starting today, you can put this edge to work for you.
Click here to watch the replay now.
Sincerely,
Louis Navellier
