Lotto Lie #2

This is the second article in the Lotto Lies series. This				premise was that the profits earned from carefully
article is about a single word; the word Random. The				selecting five stocks based upon a detailed analysis
word 'Random' is so misunderstood and misused, that				of their past performance would fare no better than
I consider its meaning to be a Lottery Secret. So,				five randomly selected stocks.
read on and all will be revealed.				The general public seemed to accept this point of
Lotto Lie #2 - The lottery is a random game of				view for many years and left stock market investing
chance.				to the professionals. Today, however, from the top
Random				Wall Street investment firms down to the individual
What does this sentence mean? Let's break it down.				investor, no one is taking a random walk. Stock
The words 'game of chance' refers to the fact that				analysis software abounds. Hundreds of millions of
probabilities are involved. People all over the world				dollars are spent each year on computer analysis of
play games of chance every day. Professional				past stock prices with the overall goal of predicting
gamblers do too, and are quite good at it.				tomorrow's prices. In fact, today, to invest in the
Professional gamblers are successful because they				stock market without thoroughly analyzing the
thoroughly understand the game and they are				stock's past performance would be considered
experts at applying the laws of probability.				amateurish, naive and foolhardy. So, what's the
There are some who believe that the phrase 'game				secret to successful stock market investing? If you
of chance' is simple code for 'you're going to lose'.				invest intelligently, study the past performance of
But, Professional Gamblers know that it means				each stock and apply a basic understanding of
'Opportunity'. This is true for all games of chance,				probability you can gain an advantage.
including the Lottery. Yes, you can improve your				Random Abuse
chances of winning the lottery.				So, what's up with the word random? Why all the
The definition of the word random is, "a process of				confusion? As with most words, over use and misuse
selection in which each item of a set has an equal				of the word tends to dilute its meaning. Over the
probability of being chosen." If it were actually				years, scientists, mathematicians and engineers have
possible to implement this definition in the real world				misused the word random by automatically applying it
then:				to any observation or analysis that was too complex
- In Black Jack, it would be impossible for a player to				to describe with simple mathematical formulas. In
improve his chances of winning by card counting.				almost knee jerk fashion, anything they didn't
- In Poker, it would be impossible for a player to				understand and couldn't explain must be random.
decide how much to bet.				For example, the paths followed by two colliding gas
- In the Stock Market, it would be impossible for an				molecules are easily predicted; not random. But,
investor to make any money.				predicting the paths of trillions of gas molecules is
The word 'random' doesn't fit well in the real world				rather daunting. So, for many years, the vibrations of
because it is a theoretical mathematical tool. It cannot				gas molecules was said to be a random process only
be realized or achieved in any game, on Earth, in our				because of the shear vastness of the problem and
Solar System, in our Galaxy nor the Universe. This				our inability to analyze it. But, today, scientists
should be intuitively obvious. How can anyone claim				understand that it is not random.
to be able to randomly select numbers from a finite				The same is true of the Random Walk theory. It
list? Shortly after the process begins, trends and				remained a valid theory only as long as the problem
patterns begin to emerge. The mathematicians				remained too complex to analyze. Also, winning at
respond by saying, "Well, you haven't run enough				Black Jack or Texas Holdem is no longer considered
trials."				pure luck. So, one by one, the validity of so called
Let's Flip a Coin				random games of chance is being challenged.
Case in point: A coin is flipped 100 times. The results				Over the last forty years, state sponsored lotteries
are 65 Heads and 35 Tails; an obvious trend here. So,				have trumpeted the random draw theory; everyone
the mathematician says, "You have to run more trials.				has the same chance to win and nobody has an
And, eventually the results will be equal." So, the coin				advantage. If this were true, why have the lotteries
is flipped 10,000 times and, lo and behold; 5008 Heads				been trying to make their random games of chance,
and 4992 Tails. For all intents and purposes, the				MORE RANDOM? Isn't random, random?
occurrences of Heads and Tails are equal and the				The answer is NO. In fact, in recent years, the
mathematician happily sends us on our way knowing				concept of lottery randomness has been challenged
that he has proven the game is random.				and, like the casinos, the lotteries have responded
But it wasn't very random after 100 trials. It was				with various actions. First, any possible mechanical
somewhat more random after 1,000 trials. It looks				advantage due to lotto ball design was addressed.
pretty random after 10,000 trials. You see, random is				The lotto ball was made more uniform. The numbers
not an absolute; its applicability changes based upon				were no longer painted on the lotto balls because this
situation and circumstance. There are degrees of				unbalanced the ball. Air blower design was improved
randomness. To further make my point, follow this				and motor speed was regulated to insure air speed
real world example.				did not vary with power fluctuations. Multiple
BlackJack				machines were used and selected at random for
Prior to thirty years ago, the common belief was				each drawing. This has had the effect of making the
that if you went to a Casino to play Black Jack, you				lotteries appear more random. You see, random
would lose. After all, it was a random game of				doesn't mean that trends do not exist; it simply
chance and the odds were in favor of the Casino.				means that trends are hard to identify.
But, after some MIT wiz-kids figured out how to play				Computers Ride a White Horse
properly, the bottom line at the Casinos turned red				Thank goodness for computers. Without them, the
and started leaking like a sieve.				universe would be more mysterious. The Random
So, how did the casinos respond? They took action				Walk theory would still be the accepted norm.
to make the game MORE RANDOM. Automatic				Vibrating molecules would be considered a random
shufflers were installed. Cards were dealt from a				process. Black Jack would still be considered a
boot. Two decks of cards were used; then multiple				random game of chance and most people wouldn't
decks. Profiling was used to identify card counters				even know what Texas Holdem is. The myth that
and ban them from the casino. In other words, as				lotteries are random games of chance would still be
long as you don't know what you are doing, you are				generally accepted as fact.
welcome to play Black Jack in a casino. But, the key				So, if you're going to play the lottery like a pro, you
to this discussion are the words 'MORE RANDOM'. If				will need a computer and the Best Lottery Software
it was already a random game of chance, how could				that provides what you need when you ask for it;
it made MORE RANDOM?				like a genie. Well, the best genie isn't in a bottle; she's
Stock Market				on your computer. Her name is LONA(TM).
Yet another example is the Stock Market. A few				Look for the third article in the Lotto Lies series;
years ago, the common belief was that stock prices				"Winning Lotto Strategies - The Lottery is a fair
were a random game of chance. This idea was				game. The odds of winning the lottery are the same
formally put forth in 1973 in a book by Burton Malkiel				for everybody.
called 'A Random Walk Down Wall Street'. Malkiel's

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Lotto Lie #2