{ in·deed·a·bly }

adverb: to competently express interest, surprise, disbelief, or contempt

Long shot

James sweated as his shaky fingers slid the signed withdrawal slip across the counter.

It was a request to withdraw $85,000. From his business bank account. That sum represented all the money he had in the world. Given the business was a separate legal entity, some would argue that money wasn’t his at all.

The bank teller checked the signature. Checked the account balance. Checked with her boss.

A sudden request for a large cash withdrawal. Made by a nervous-looking customer from out of town. It wasn’t the strangest request she had ever received in the bank. Probably not even in the top 5 come to think of it. But it was up the unusual end of the spectrum.

The branch manager arrived at her elbow, carrying the banknotes. James watched him carefully set the money out in neat stacks on the counter. $85,000 made a dishearteningly small pile.

James unzipped the cheap children’s backpack he had purchased at the neighbouring discount store. He hurriedly shoved the money inside. There would have been enough room remaining to hold a packed lunch, but the butterflies in his stomach fluttered nauseatingly at the mere thought of food.

He hurried outside into the searing Las Vega sunlight and searched for a ride. To the casino.

An hour later James had bet the lot on Tiger Woods winning the 2019 Masters golf tournament.

11 years since his last Major win.

5 years since he had last won anything.

James’s gamble may have appeared reasonable, had he placed the wager at the end of the tournament’s third day, once he knew Tiger Woods had made it through to the final round.

However, James had flown to Vegas to place his bet a week before the tournament began.

He had a feeling in his bones. A vision.

Perhaps it was the gods, or the voices in his head, that told him to do something that no rational person would do.

I just thought it was pre-destined for him to win”.

But here is the thing: Tiger Woods won.

Which meant James won. His $85,000 wager earned him $1,275,000.

The world celebrated. Everyone loves a redemption story.

In less than a news cycle, the narrative shifted away from Tiger Woods’ remarkable comeback to focus on James’s huge payout. Survivorship bias in all its glory.

When reporters asked Tiger Woods what he thought about James’s big win, he replied “Fuckin’ great bet…

James had won a life-changing amount of money. He could have used it to clear his eye-watering array of debts, and use the remainder to lead a comfortable existence for the rest of his life.

Instead, James returned to the same casino and doubled down. They were happy to take his wager.

He bet $100,000 on a 100 to 1 shot that Tiger Woods would go on to win not one but all three remaining Major tournaments in the calendar year. A feat no golfer has accomplished in the modern era. The payout if successful? $10,000,000.

When Woods was asked about this second bet, he grinned: “… dumb-ass for the Grand Slam part though”.

A month later, Brooks Koepka won the next Major. Tiger Woods failed to make the cut. James lost his money.

Long shot

This week the client site where I am spending my winter working hibernation reminded of me James’s approach to concentrating risk and backing long shots.

Some years ago the client was taken over by a private equity firm. A select few senior executives made fortunes selling their business for more than it was worth. They had found their “greater fool”.

The staff got nothing more than new business cards proudly displaying the company’s new name.

A made-up word. Invented by a high priced marketing agency. Who claimed it instilled feelings of dynamism, imagination and modernity amongst a focus group audience.

A name that autocorrect, predictive text, and spell checkers the world over would forevermore attempt to “fix” by changing it to an unfortunate choice of real word that meant none of those things!

The new owners followed the standard private equity playbook. Strip the assets. Load the firm up with debt. Extract the equity. Then try and flog it off for more than they paid for it, to an even greater fool. Possibly a stock market IPO. More likely another private equity firm.

They also sold a dream to the firm’s staff. Dangling a carrot of vast indeterminate potential riches at some undefined point in the future. Stock options in lieu of pay rises or performance bonuses.

Staff were even given the opportunity to invest their own funds into the illiquid and unlisted shares of the firm. Many did exactly that.

The firm offered the customary array of pension matches and salary sacrifice options. There was one small catch, a choice of just one pension fund. A high fee charging vehicle that invested a suspiciously high proportion of funds under management in the private equity firm’s own holdings.

If the future played out according to plan, a greater fool would swoop in to pay over the odds for the business. Vast sums of wealth would shower down upon all those who maintained the faith and believed in the private equity vision.

Life-changing amounts of money. Just like the founders had experienced the last time around.

It was certainly one possible outcome. But not the only one. Nor the most likely.

Incurable optimist

Some folks might respect James’s dogged optimism. His flouting of conventional wisdom. Stoically ignoring the naysayers and critics. He stayed the course. Saw things through. Toughed it out.

And won. Big.

Others may question his wisdom. His financial acumen. His sanity.

What are the chances of lightning striking when you want it to?

Four times?

In a row?

How much would you bet on such an outcome? How much could you afford to lose?

Many of them don’t realise it, but the staff at my client site are playing a similar game to James.

They depend upon the firm for their wages. These pay their rent. Clothe their children. Put food on the table. Keep them healthy, safe and warm.

If the firm were to go broke, then the staff would lose their jobs. An inconvenience, but for most people a survivable one.

Employment benefits, part of their remuneration package, provide private health coverage. The ability to jump the NHS queue. Obtain a timely second opinion. Select a specialist of their choosing.

At first glance, this appears to be another inconvenience. Collateral damage when losing a job. Yet it can have life-changing implications. Suddenly the former employee finds themselves at the back of that NHS queue they assumed they could skip. Their previously covered maladies now considered “pre-existing conditions” and potentially excluded from any future health insurance coverage.

Their retirement lifestyle was to have been funded by their workplace pension. Their contributions supposed to compound and grow under the diligent stewardship and prudent investment strategy adopted by the pension fund operator.

Except the pension fund invested heavily in the firm. The fund operator drinking the same kool-aid that the private equity owners had been guzzling.

Suddenly the retirement prospects of the now unemployed former staff would have taken a major haircut. The dream of retiring to a Bahamian beach house replaced by the prospect of a bedsit in Blackpool.

Not only have the original contributions gone, but years of accumulated compounding have also been lost. Time that nobody can get back.

Finally, there are those additional investments that many of the staff made in the firm. Demonstrating commitment and buying further into the dream by putting “skin in the game“.   

Now the inconvenience of merely losing a job has become an unmitigated disaster. A single point of failure resulting in lost wages, benefits, pension, and investments.

Those who are young enough can dust themselves off, learn from the experience, and view the scars as a constant reminder of the dangers of risk concentration.

However, the older staff must learn to live with disappointment. Those who thought they could see retirement hovering alluringly on the horizon have a problem. Their net worth cruelled by a shortsighted combination of greed, peer pressure, and rose coloured glasses.

When I read about James’s good fortune, my initial reaction was similar to Tiger Woods. Disquiet about the wisdom of taking the gamble, swiftly replaced by pleasure at hearing an underdog won the day. Good for him!

Yet when I learned of James riding his luck, and betting even more on a far less likely outcome, I can only shake my head at his folly and greed. As Tiger Woods so eloquently called it, making a “dumb-ass bet”.

I experienced a similar reaction when I learned about how concentrated the risk was amongst the staff at my client site. Many hadn’t just bet their jobs on the success of the company, but also the financial well-being of themselves and their families. In these circumstances a bit of diversification could work wonders.

Hopefully, one day, their gamble pays off and they get to experience an unlikely win like James did.

However, bookmakers set long odds on unlikely outcomes for a reason. For every Hollywood style Tiger Woods redemption story, there are a hundred events where one of the short priced favourites win.

100 to 1.

Possible, but unlikely.

Personally I wouldn’t bet my family’s financial future on a long shot. In the long run, the house always wins.


  • Bain & Company (2019), ‘Global private equity report 2019
  • Chen, J. (2019), ‘Greater Fool Theory’, Investopedia
  • He, E. (2019), ‘Tiger Woods praises, then roasts gambler who bet on him to win Masters, Grand Slam’, Yahoo! Sports
  • Hennessey, S. (2019), ‘Gambler who won $1.2 million on Tiger Woods’ 2019 Masters victory: “I had never placed a bet on sports in my life”‘, Golfworld
  • Hennessey, S. (2019), ‘Report details criminal record of James Adducci, the gambler who won $1.2 million on Tiger Woods’ Masters victory’, Golfworld
  • Kindred, D. (2019), ‘Masters 2019: Tiger Woods’ 15th major was improbable and familiar all at once’, Golfworld
  • PGA (2019), ‘Full Leaderboard

Featured by
--- Tell your friends ---

Next Post

Previous Post


  1. [HCF] 22 October 2019

    This is sobering.
    Hit home.
    Raised some thoughts.
    An on spot parallel.
    And maybe applicable to the present.
    Have to ponder on this a little bit more.
    Thanks for putting this into a different light.

    • {in·deed·a·bly} 22 October 2019 — Post author

      Thanks HCF.

      Your thoughtful comment holds up a confronting mirror. Simple words and short sentences, PowerPoint sound bites for an audience poor of time or short of attention span. Who would have thought the lessons learned entertaining toddlers on long haul flights would prove so useful for boardroom presentations? Oh, the irony! ?

  2. Renae 22 October 2019

    I would never rely upon a single entity for my future, including the government. I’ve seen too many tales of woe like this one.

    • {in·deed·a·bly} 22 October 2019 — Post author

      Thanks Renae.

      There are more than a few unfortunate folks facing just such a concentration of risk. State pension, healthcare and housing benefits. A tough was to survive, but then their only alternative option by that stage is undoubtedly worse.

      Better to be prepared, and buy the luxury of choice. The social security safety net catching those who fall, rather than relied upon to provide for every need.

  3. SavingNinja 22 October 2019

    Only the winners get news coverage, it projects a warped view of the world. Long shots seem to only be attractive to people who won’t/can’t get to where they want via safer means, why would you risk it if you could?

    (check out WaitButWhy’s new mega-series if you haven’t already)

    • {in·deed·a·bly} 22 October 2019 — Post author

      Thanks SavingNinja.

      Winners make for a better headline, that is sure! “Hail Mary” plays can make sense when you have nothing else to lose, but that doesn’t explain why so many folks buy lottery tickets when the odds of winning are only slightly better than the odds of my kids leaving me a chocolate biscuit before they demolish the whole packet.

  4. gettingminted.com 24 October 2019

    The staff should avoid investing in the firm and should not have any previous pension rights invested in their current pension. In my view they could take the health benefit and the current pension contributions, but in the knowledge that the first is temporary and the second should be transferred away when the opportunity arises.
    I once worked at a client site where the staff share save scheme was popular but the shares later fell by around 90%. I dodged that particular bullet but it helped me to be something of an outsider.

    • {in·deed·a·bly} 24 October 2019 — Post author

      Thanks for sharing your thoughts GettingMinted.

      I wonder how much luck and hindsight bias play a part in this decision? Employees at Amazon or Apple would probably feel pretty good about their equity based remuneration over the last few years. However, those who worked for Toys R Us or Thomas Cook may have a different perspective.

      Diversification is certainly a great way to mitigate these risks, but I wouldn’t go so far as categorically ignoring the potential opportunities afforded by employee stock options on general principle. Too much risk of being the next Ronald Wayne.

    • ermine 26 October 2019

      There’s now’t wrong with being fully invested in sharesave, because those are only options you are buying. You have the right, but not the obligation, to buy in at the option price in 3 or 5 years time. Clearly if it’s underwater, you walk away and take your cash savings, ta very much.

      Of course if it’s employee share incentive plan, then you are buying the shares. Though the 40% tax relief (if you hold for 5 years) means you can eat a certain amount of downside risk. though not enough to get into bed with private equity IMO.

      I hit a big sharesave before leaving work, and it was a large part of my short term plans. As I got closer to the maturation date, I stared to use spreadbetting to hedge against a fall (also foregoing any rise). I lost money on the spreadbet, but that was fine. Insurance always costs money.

      I’m with indeedably on the big picture though. If private equity is selling, don’t be buying. Particularly if it’s your workplace. Similarly, if you get workplace shares or buy them through ESIP or sharesave, get rid of them as soon as the options are executed or the tax embargo lapses. It’s bad enough having your income at risk with your employer. Having your capital at risk in the same place is nuts unless there’s a very good reason for it.

  5. David Andrews 25 October 2019

    Having spent 20 years in IT I’ve been in-sourced, outsourced, right sized and finally I was encouraged to seek opportunities external to my former employer. This has meant that I’m acutely aware that at any time an employer can experience issues beyond your control which can result in a significant change to your circumstances. Be aware and plan your own destiny accordingly. Build up a decent sized emergency fund, continue to keep your skills up to date whilst looking for the next market trends. I agree that company stock options / share save can potentially offer good returns but don’t make them the bedrock of your future. The shares I held in a former employer increased ten fold but alas fell back to their initial offer price before I was able to sell. However, that was more than offset by the DB pension scheme (now deferred) that I accrued in the 14 years with the former employer. My gamble is will the deferred scheme actually survive until I can draw it at 55 ( 8 years time ) or should I take the money and transfer it into my own control with the attendant risk/ reward that offers.

    • {in·deed·a·bly} 25 October 2019 — Post author

      Thanks David. That sounds like quite the rollercoaster ride you’ve experienced.

      Your Defined Benefit pension puzzle is an interesting one.

      Today the employer wears the risk (in theory) and the employees enjoy the benefits. Though, as many can attest, appearances on that front can be misleading and potentially life altering should the employer fall on hard times. Assuming control via you own pension vehicle mitigates that particular risk, but brings with it a whole world of others. That is most definitely a tricky puzzle.

      There would be a fascinating case study in there somewhere for someone who knows a thing or two about pensions.

      @Mr YFG, how about dusting off your Details Man costume and scribing a follow up to your “Defined Benefit to Defined Contribution pension transfers” post?

      • David Andrews 25 October 2019

        Thanks for your reply. Yes, it’s a bit of a conundrum. Retaining the DB scheme would be beneficial in terms of the LTA too. In theory a retained DB scheme is valued at 20 x the annual sum promised which would leave me some headroom to contribute further to my existing SIPP. However, if I took the transfer out value ( which is a significant sum ) I’d have very little scope to contribute further to my SIPP as even modest growth would likely see a breach of the LTA before 55. My partner has her own pension provisions and my son will no longer be considered a dependent when the DB scheme becomes available. Of course, all this could change on the whim of the government of the day.

  6. Hariseldon 26 October 2019

    Bad things happen in bad times, diversification is our only protection. Company pensions, SAYE, BAYE and employer shares as a bonus ,in the good times look great, splitting these off into independent, uncorrelated assets, pensions, shares is vital, as soon as is practicable.

    Did anyone say Enron ?

    • {in·deed·a·bly} 26 October 2019 — Post author

      Thanks Hariseldon. Your diversification message is a sound one.

      It is worth remembering that bad things can, and do, happen at any time. Companies rise and fall, making some folks rich and leaving others poorer for the experience.

      Awareness of the risks we face, and our exposure to them, is an important part of any investment strategy. The successful management those risks is where our investment returns come from. Holding equity in your employer isn’t a bad thing necessarily, it is just raises your risk profile.

  7. weenie 29 October 2019

    Interesting read.

    There will be changes at the company I work at next year – I reckon the ‘greater fool’ has been lined up already but us peasants haven’t been told yet officially.

    Shares have been mentioned but in light of this, I will be thinking twice about it, whereas in the past, I would have jumped at the chance to invest.

    • {in·deed·a·bly} 29 October 2019 — Post author

      Thanks weenie.

      I think each investment needs to be judged on its own merits. In this case you have an insider’s knowledge (for good or ill), which makes you better informed than most.

What say you?

© 2024 { in·deed·a·bly }

Privacy policy