Musing on the Hedge

April 4th, 2008 Posted in Anti-Experiment, Gambling, Money

In the 1930s Philadelphia an informal gambling market developed at professional baseball games. Around 400 mature men would gather in the left field bleachers of the old Shibe Park and bet with each other over the outcome of the game they were witnessing. There was no house. Every one kept his own book. Except for the shouting out of offers of bets, the gang was orderly. They were mainly regulars, local people who knew each other so they could make bets on visual contact–establishing odds, amount bet and who was giving and who was talking the odds. At the end of the game everyone milled around settling in cash. I only witnessed one attempt to welsh on a bet. The man who refused to pay got his nose bloodied.

My father was a rational gambler. He always knew the odds, strictly limited his financial commitment to what he could afford to lose, and only played with punters like himself. He hated casinos. His one concession to bureaucrats: he would bet the parimutuel machine at the racetrack even though with the state taking the house cut the true odds were always thrown off. It was a case of the machine or nothing.

At baseball he always kept his book (marking down each bet he accepted) in the margins of a page in the local evening newspaper, the Philadelphia Bulletin. He made a few bets, the amount of each bet in the range around $5.00. He was always alert to the possibility of what is now called the hedge. He had no name for it so when he explained it to me even though it was the rational consequence of a consistent method it also had the persistent magical aura in which all non-bureaucratic, non-fixed gambling is drenched. The simple action of making several bets during a game can lead to a situation where no matter the outcome of the game the gambler wins. The gambler’s nirvana, a successful hedge every day.

A simplified hedge…Start. Take odds on long shot. Say $5.00 to $10.00 (team A over team B). As the game progresses if the underdog scores first (takes the lead) the odds offered shift and you can bet the reverse (team B over team A) say at $6.00 to $11.00. If in the final outcome B wins you get $11.00 from your second bet and lose $5.00 on your first bet…a net gain of $6.00. If A wins you get $10.00 from your first bet but lose $6.00 on your second bet..a net gain of $4.00. With the hedge in place you can’t lose.

The hedge requires a constantly shifting market with changes in the odds offered. It can involve a complex sequence of bets. Essentially in the hedge you trade a portion of your potential win to minimize your potential loss.

Not everyone looks for the hedge. Some are willing to accept the risk of the single bet or series of consistent bets. They are loyal to team A and stick with it hell or high water. They win big or lose big, follow the main chance.

The hedge does not always turn up. If the team you bet on originally scores first the odds never shift enough to offer the possibility of the lay-off. That’s the luck of the game–the actual concrete unrolling, what happens.

In the financial world large players like investment banks have panels of agents buying and selling stocks (and options and whatever else fluctuates in value) around the clock looking for a constant hedge nirvana, a cornucopia consisting of profit on profit, an assembly line of money, like a printing press at the mint.

Beyond the hedge is the sure thing, essentially the fix. To the ordinary person it looks like a game of chance. We know the rules and the players but the outcome can only be reached through the actual interaction. We only know that when it is over. But with the fix, the situation is rigged, set up. The play is a play, a make believe. The outcome is not in doubt. The game becomes a ritual for those in the know.

^^^^^

My father and his companions had day jobs. A few might have made a career as bookies but on the whole these were working stiffs, one foot before the other into the future that the politicos keep assuring us is rosy. Gambling, playing with money, was a distraction, the stuff of dreams, the idle shuffling of numbers, the intellectual life. A sideline, a vacation, a weekend fishing or rowing a boat. But Monday morning they are all at work pushing the boulder up the mountain.

Somewhere there is a large financial institution where thousands of people work counting money, looking for the next hedge, alert to the possibility of the fix going down, watching for the edge. Except for the workers at the mint who make the money nothing material seems to be happening. With electronics a lot of the paper is discarded and the book, the ledger, records all with electrical twitches. A world of non-material acts.

Somewhere else there is a material world. The place you return to on Monday morning. We make real things that we need to continue to exist: farm and garden crops, shelters, transportation, raiment (the coat of many colors) and so on. Though we measure these things in terms of price (money), they are not money. In the desert don’t sell your camel.

There’s a disconnect here isn’t there. Money as a medium of exchange and money seeming to chase after itself.

What then is the question?

Notes.

*Like everyone I am taken up with the continuing economic (financial) crisis. This is a concrete news story ripe for social analysis.

*Shibe Park was eventually renamed after Connie Mack, the long time manager-owner of the A’s. After the 1920s, when Mack sold off the star players of winning teams, he was cordially disliked by a large portion of the local population. A lean dignified man dressed in a business suit he looked more like a basketball manager than a baseball manager.

*On returning to work on Monday morning: there is a French movie on this subject called “Lundi Matin” AKA “Monday Morning.” (2002) writer/director Otar Losseliani, starring Jacques Bidou. A welder at a large industrial plant who is an artist during his off-time (as my father was a gambler) leaves home and family and travels to other places, sends home little watercolors of what he sees that his wife tears up and his children paste together and save, and eventually he returns to another Monday morning.