Stathole Sports ETF - Racing The S&P 500 With A Portfolio Of Boring Sports Hedge Positions
Michael M. Santiago. Getty Images.Starting a little side quest. Given the state of flux of the stock market, I'm officially challenging the S&P 500 to a recreational invest off. By recreational investing I mean in no uncertain terms - sports betting with money I fully intend to lose.
I present to you the Stathole Sports ETF (STHL)
Here's the idea. Instead of trying to win Powerball parlays - why not go the mutual fund route and track it's growth over time? I'll run some squirely stats to pick multiple hedge bets (holdings) that are very likely to win and subsequently offer very modest payouts with disastrous downside. If 8% growth is good in real investing, STHL will look for holdings that offer this range of payout on a play and pray to god it doesn't lose (as all good fund managers do). If we lose on just one position, we will be miserable and it will take some overtime to catch up. If we win on any one position, we will be relieved. There will be no option for happiness.
At least not on any single holding. But perhaps… over time.
With this idea in mind - I'm investing $495 in STHL to match the market value of a single share in the S&P 500 ETF (VOO). I'll post all the plays using #STHL on Twitter as I conjure them up. Will do the occasional update blog graphing the progress. And - goes without saying - if I lose it all the ETF will vanish Berny Madoff style and never be heard from again. Until then, I'll be looking for both safe little parlay and future hedge combos that fit the boring STHL vibe.
Here's our official starting point. A stock style chart with a history of two days so we can at least see the idea. As more days and more bets get added, the orange shading will hopefully turn more green and not more red.
So let's get to it. We have an empty portfolio and it's time to build some positions. Here are two allocations to establish holdings in STHL.
Position #1: $65 on Boston Celtics to win the Eastern Conference (-155)
Position #2: $35 on Cleveland Cavaliers to win the Eastern Conference (+210)
Prospectus:
We're taking $100 of our $495 balance to hedge on either the Cavs or Celts to make the NBA Finals. If the Celtics make the finals, that bet would win $42. But don't get too excited. Actually, don't get excited at all. Subtract $35 from the loss of position #2 and gee willikers, we just net $7. On the other hand, if the Cavs win the East, the bet wins $73 $65 in losing bet fees for a net of $8. Basically, we win $7 or $8 if either team wins the East with the slight bugaboo of losing all $100 if neither make it out of the East.
Anyone still awake?
Let's talk about this position combo. The East is set with the Cavs the #1 seed and the Celtics #2. Notwithstanding some miracle series win by a play-in team, the Celtics and Cavaliers will make it to round two. Meaning any other team hoping to make the Finals will, not necessarily, but most likely have to beat both of them in a series. Without home court advantage.
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Let's due diligence the competition.
Threat #1 - Indiana Pacers
In all honestly, this is the only team I am actually somewhat concerned about. 2-1 vs the Celtics. And 1-1 vs the Cavaliers this season if we throw out their last two games where they faced the Cavs skeleton crew. The Pacers are a fun team and I think they can win another war with the Bucks in the first round. But they seem to be pretty much the same team as last season while the Cavaliers absolutely took off and the Champion Celtics seem assembled and ready to hit the NOS now with the relief of being the current champion. Jason Tatum is a changed soul. Sure seems he plays angry now. You can thank the best coach he ever had for that. Thanks Steve Kerr!
I don't see this happening. But a part of me will be happy for Pacers fans if they get to dance on my grave.
Threat #2 - Milwaukee Bucks
Same deal here with the Bucks. Two wins more than last season - just like Indiana. I could very well see them topping the Pacers this year, but sure doesn't look great for Dame coming back. You can pretty much forget them having any chance to beat either Boston or Cleveland. And certainly not both.
Threat #3 - New York Knicks
Threat might not be the right word here.
I would also love to see this team make the Finals. Knicks fans are objectively the best. MSG in the playoffs is iconic and the fans never leave a decibel on the voice box when finding the exits after the game. But what are we doing here? 0-6 vs either of our holdings and 0-4 vs OKC shows you this team is just good enough to win the games they should win and nothing else. And don't forget this is Tom Thibodeaux we're talking about here. The Knicks have two of the top two players in minutes played this season and three in the top-ten. As is tradition - they are set to win another first round before their unchanged oil with the viscosity of freshly poured cement finally breaks down.
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The New York Knicks:
To the stats lab I go to crunch some stats to find the most boring hedge plays possible.
#STHL
