Gambling vs. Trading, Part 62
Regular readers will be familiar with my take on the question of gambling vs trading (from ‘The Making of AmazonBay’):
In my eyes the difference between investing and gambling, betting and trading lies not in the underlying but in the approach of the person dealing in whatever instrument. Investing or trading involves a careful and analytical approach to decision making and risk taking. Betting or gambling involves a purely impulsive or emotional speculation. The irony is that many ordinary people are much more informed about sports or politics or the weather than macro-economic trends or the financial prospects of this or that company, and yet are encouraged by the prevailing culture and legislation to risk their savings investing in the latter through bonds or stocks while being chastised and in many cases legally prohibited from seeking to profit from their detailed knowledge of particular sporting or political outcomes.
So how do you trade (as opposed to punt) on American Idol? By creating and using sophiticated tools and algorithmns like this site called DialIdol created by Jim Hellriegel. The LA Times reports:
Hellriegel’s site provides two indispensable services for the 21st Century Idol fan. First and foremost, it provides users with a downloadable speed-dialing program they can use to maximize the number of votes they cast for their favorite contestant, allowing people to cast dozens or hundreds of votes in the brief window when the polls are open.
At the same time the statistics on those votes, as well as how many times a vote doesn’t get through because of a busy signal are sent back to the mother site. DialIdol then calculates the percentage of busy signals on each idol’s line. The site’s prediction is based on the assumption that the idols with more busy signals are getting more votes. The predictions are actually a tally of which idol has the highest percentage of busy signals.
Of course, DialIdol’s predictions are not foolproof. “It was never designed to get the results slot for slot right,” says Hellriegel. For starters, DialIdol only measures the voting patterns of people using its speed-dialing application, and it has no way of measuring the millions of votes cast by text message. Every time a call is answered by an operator saying “All circuits are busy” the site counts it as a vote. But, as Hellriegel says, “with a large calling base these factors should become moot points.”
Hellriegel adds that he would not recommend betting on DialIdol’s predictions. “That’s absolutely not the purpose of this,” he said. “I just had an idea in my laundry room one day and I thought, ‘Let’s see if this will work.’”
While this week his site correctly predicted the ranking of the idols with the three lowest scores, it has been less accurate in the past. Last week they picked Katharine McPhee to be out and placed Lisa Tucker in 5th place. Whoops.
Ok, so he has a big disclaimer on the site saying this is not scientific, etc. Still, I think it is a neat example of how demand (to know who will get booted off) and innovation marry to create something new.









