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Gambling or Investing? – Part two

About 6 months before I started Focus Ratings I also started a small blog which detailed my learning curve with all things Horse Racing.

Once Focus Ratings was under way though, I found that I didn't have time to do both and so I stopped updating the blog.

I am now shutting down the blog and have decided to move some of the content over here - purely for your amusement only.

Just over a month ago I published an article about whether we are Gambling or Investing? in which I drew some comparisons between "real" investors/traders who generally have a massive backup staff and are able to survive day to day difficulties, as a result.

And, in that article, I suggested that many people might have the wrong idea about what corporate investors do for a living (believe me, I've been there - it's not all screaming "Buy, buy, buy" or "Sell, sell sell" - it's about a million billion times more complex than that!)

So, in this article I want to propose some things that we can do to level the playing field and offer the same level of professionalism as the big boys are able to.

This is important whether we are striving to earn a portion of our income from betting on horses or whether we are offering our own analysis and tips to others (either on a free or paid basis.)

It might even propose some of the questions that we should be asking of people who we are paying for their advisories or other services.

A Warning!

Now, this article might come over as sounding a little bit pessimistic but....

Believe me, after 16 years in IT I've seen some horror stories that you wouldn't believe!

But, if you feel that it is too downbeat, please don't hesitate to comment.

This is the second of a number of articles about the crossover between gambling and investing and, taken in their entirety, the series of articles should give some common sense advice and help.

Please be aware, any comments about gambling on horse racing equally (or perhaps more so), apply to day traders and the forex chappies!

What can go wrong?


Hardware failure

Let me tell you a secret. Every hard disk that has ever been built is going to fail! Every single one. The hard disk in the machine that you are using now is going to fail one day (hopefully, not today!) The hard disks in the servers at your bank are going to fail (don’t worry, your bank’s IT department also knows that and they have taken precautions – I hope).

Modern hard disks are very reliable but anything that contains disks spinning at 7,200 RPM (or faster) is going to have problems, sooner or later. Every time you switch off your PC, it cools down. Every time you switch it on, it heats up. If you heat metal and then cool it, repeatedly, it changes.

You may be lucky, I hope you are. You may never suffer a hard disk failure but please be aware that it is something that is just waiting to happen.

In the corporate environment, hard disk failures are taken into account. Big companies (and many small ones, as well) use Raid arrays of multiple hard disks so that if one fails, no data gets lost and the users are not aware of the problem.

Take it from me – one day your hard drive will fail and all the data on it will be lost.

But hey, even if you never see any problems with your hard drive, your PC is still at risk from Power Supply failure, keyboard failure (and who hasn’t spilt a cup of coffee over their keyboard – or am I just clumsy?).

How would you cope with hardware failure?


Software failure

Modern software does an incredible job. However, the complexity that makes it so useful to us, comes at its own price.

We require our Operating Systems to seamlessly allow us to surf the net, play games, watch videos from YouTube and still be reliable enough to manage our accounts systems.

Our always on internet connectivity puts us at risk from Virus infection, Trojans and SpamBots.

Yet, even with the amazing reliability of modern software – it sometimes goes wrong.

If your software crashes and mangles all the data on your hard drive, could you go back to the un-mangled software that existed 1 hour ago?


Human error!

Yes, we’re human, we make mistakes. We sometimes delete a file that we don’t mean to. We sometimes amend a file and then find out that was a mistake.

As a hobby, I write fiction. Often I find that I have done something that, later, turns out to be a mistake. Let’s say, for example, I kill off Joe (one of my characters) and then, a week later, decide that I need him to rescue Jenny (another character) at the last minute from almost certain death – I’ll need to resurrect Joe. I’ll need to go back and find that old copy of the manuscript (you know, the one where Joe was still breathing and hadn’t yet been killed off). If I haven’t backed up – that’ll be difficult to do.

If you delete or overwrite an important file, could you recover it?


Theft

One day, and I hope that day never comes, you may lose your PC. How? Well, in the best case, Billy the Burglar may pay you a visit. He might take a fancy to your PC. If that is the case, you not only lose all your data but, someone else has your data, as well. Data security is another story but if, like me, you have all your life on your PC, how would you feel is you lose it?

It’s all very well to back up to an external hard drive but wouldn’t Billy the Burglar take that as well?

Could you survive a visit from BILLY THE BURGLAR?


Fire, Flood and Other Disasters

Of course, even if your hard drive doesn’t die on you, if your software doesn’t crash and destroy all your data, if you don’t make some silly mistake and wipe your vital documents and if Billy the Burglar doesn’t steal your computer – there’s always fire, flood and alien abduction to take into account!

Seriously; a burst water main, a small kitchen fire, a ceiling falling in (all of the preceding occurring with out any harm being suffered by anyone!), could ruin your computer.

What would you do if aliens abduct your computer?


So, stop with the pessimism!

Perhaps it seems that I’m being over pessimistic – after all, the data on your computer might not be important to you. Being able to continue trading after an disaster might not be of any interest. Hey, if you lose clients (current or future) because of an IT problem, there’s always unemployment benefits and social security payments to look forward to.

Isn’t that right?

If you can't bet because you can't onto Betfair, isn't it Sod's Law that your 20/1 outsider will come in?

If your business relies on your access to email and the internet, think how devastated you’d be should that access be removed.

I’m going to take a quick look at possible solutions to a number of Disaster scenarios – perhaps one or more may be useful to you?

What are the solutions?


Hardware failure

Starting with hard disk failure, the obvious solution is to back up to second hard drive. This could be internal, external or in a different machine. I shall take a quick look at the benefits and drawbacks of each of these options.

1). Installing a second hard drive in your Computer : This is probably the cheapest option.

You would need to set up a regular copy job to sync data from Drive 1 to Drive 2.

The easiest way to do this would be to use RSYNC – for details on how to use this utility, take a look at www.mikerubel.org/computers/rsync_snapshots/

Windows users should take a look here… http://www.gaztronics.net/rsync.php

This would be the fastest (in terms of data transfer rates for backup and restores) but recovering from a failed primary hard drive would still require replacement/repair of the original hard drive with possibily a re-installation of the operating system.

This solution would not protect against hardware failure of other components (such as power supply/memory.)

My advice would be to re-use that spare old hard drive in this way (rather than leave it to get dusty in that box on the top of the cupboard) but, this should not be the mainstay of your Business Continuity planning.

2). Backing up to an external USB Drive : This is probably the easiest option.

I use this as part of my backup strategy.

Although data transfer rates are not particularly high, this is a simple solution to backing up the data portion of your hard drive. A catastophic hard disk failure will require replacement and/or repair of your hard drive prior to the re-installation of your applications and data; as with option 1). this should be considered a Disaster Recovery strategy rather than a Business Contiuity one.

3). Backing up to a Server : This option shares much in common with option 2.

I am using this as part of my Business Continuity/Disaster Recovery planning. I back my workstations up to a server and then back the server up to an external USB drive. Please not that, whilst this might seem to be the ideal solution, it does not protect from natural disaster (such as fire or flood) or un-natural disaster (such as a visit from Billy the Burglar.)

4). Backing up to a Web Server : This option seems to be the ideal solution.

However, although I use this option in various forms, bandwidth restrictions reduce it’s usefulness to me. This one might work for you is you are sitting at the end of a high speed internet connection.

5). Backing up to CD/DVD : This option should be part of your regular backup process.

Even a weekly backup to DVD won’t cost too much – the trick is to identify your vital data and get into the habit of backing it up on a regular basis.

My advice…

To be absolutely honest, none of the above will provide you with complete Business Continuity should you suffer a hardware failure.

My advice would be to use whichever of the above is appropriate in conjuction with…..

6). Backing up to another live PC :- This option is the obvious one (at least to my jaded eyes!)

Not only do you have a copy of your data in another place, if that data is on another working PC (with all your applications already installed), and your main PC dies; all you need to do is cross the room and sit down at the live spare machine.

You can be up and running in minutes, if not seconds. Now, that’s what I call real Business Continuity!

What do you need to implement this strategy? Just a spare PC, configured with all your vital apps, connected to your network and a backup script that copies over your data from your main PC overnight and also, during the day, should you require an interim backup (perhaps during lunchbreak after a hard morning’s work?)


Software failure

If your software crashes and mangles all the data on your hard drive, could you go back to the un-mangled software that existed 1 hour ago?

As long as you are backing up your data, you stand a chance of recovering from a fatal software error.

By having a replacement machine, pre-configured with all your software and waiting in the corner of the office, the amount of time that you spend recovering from a major software error is minimised.

You should consider what software you are using for each specific task and then, ask yourself if that software is appropriate. Whilst I’m not going to tell you that Spreadsheets are evil!, I have seen, so many many times, spreadsheets being used to perform the tasks that should really be managed by databases or financial recording packages. If you are using the right software for the job, it is less likely to go wrong and let you down!

You should also ask yourself whether it is the time to change your software to free Open Source software such as Open Office/GnuCash/MySQL?

Open Source software is free, so there are no cost restraints to having that spare PC hidden under the desk.


Human error!

If you delete or overwrite an important file, could you recover it?

As with recovering from software errors, a strong backup policy will also get you out of trouble if you tosh things up yourself.


Theft

Could you survive a visit from BILLY THE BURGLAR?

So, you gone back to the UK to visit some relatives; you’ve told half the world on Facebook and Billy the Burglar comes to visit.

Now, Billy is really only interested in high value items so; yes, he takes your TV, he takes your Hi-Fi and yes, he’s going to love your computers.

Even if you’ve backed them up to an external USB drive, the odds are that Billy will want to take that as well!


Fire, Flood and Other Disasters (including aliens!)

What would you do if aliens abduct your computer?

Well, I think that we can discount the alien threat but, we should all bear in mind the risks of fire and water damage.

This is where having a decent offsite Disaster Recovery strategy comes in handy.

OK, I’m convinced – what do I do?

OK – you’re either convinced that it’ll never happen to you, you’re actually not that interested in ensure that you can continue trading following an IT problem (in which case you’re probably not even reading this but… I’ll buy you a coffee the next time I’m passing the Job Centre.)

If you’ve made it this far and are starting to wonder how much you’d lose by

(i) not being able to place your bets (or email your selections/tips to your clients),
(ii) not responding to that email enquiry (and thus, potential client figures you’re not very motivated and decides to give the contract to your competitor), or
(iii) not being able to bill those people who’s work details you’ve been logging on a spreadsheet on that PC that’s just crashed/blownup/been nicked/been abducted by aliens!

So, now that we’ve looked at what can go wrong and what we can to survive an IT outage, what are the next steps?

Not all of what I detail on these pages will be relevant to everyone. What I shall attempt to do is to look at some of the ways that we can protect ourselves against what I am going to call… Business Loss. Why Business Loss? Well, we should be looking at IT failure as just that; a loss of trading ability, an opportunity for our competitors to beat us to new business or a chance to embarrass ourselves in front of current or potential clients.


Putting things into perspective.

If you are a Gardener and your lawnmower breaks down, gets stolen, bursts into flames or gets abducted by aliens – YOU ARE NOT GOING TO BE BE TO CUT LAWNS!

Unless, or course, you have a spare lawnmower.

It’s the same if your IT fails.

This is where we build a spare lawnmower.

How do we protect against business loss?


Identify your data

Well, the first thing is to decide what data is important to you and where it lives. I don’t like to think of the people I’ve visited in order to help them recover from PC problems only to find that their backups weren’t happening, or worse, the data they were backing up wasn’t the data they needed to back up.

1). Email

If your mail comes via Gmail or Hotmail, it is on a server on the internet (in fact it is on a number of servers on the internet), and you don’t need to back it up – right?

Sure…

• If you can trust your mail supplier never to have a glitch (they all do, even the mighty Gmail!)
• If you can trust yourself not to accidently delete that mail that you realise you actually need – the next day (we’ve all done it – we’re human and humans make errors!)
• If you can be sure that your internet connection is always going to work (God bless France Telecom!)

Better be safe – better make sure – hey?

This is what basically happens for me...

• POP3 (webmail) gets downloaded every 10 minutes from my accounts at Gmail, Hotmail, Yahoo etc. to the Thunderbird mail client on my PC. Thunderbird is a free, Open Source mail client that handles multiple accounts without any problem and is easy to backup and manage – it’s easy to use, as well!

• At 2am every day, my PC (all of my PCs get backed up in the same manner), gets backed up to my server. My server is just an old PC that runs a simplified version of the Linux software that I use on my main machine. It has a screen and keyboard but it doesn’t really need one.

• At 3am every day, the Server itself gets backed up to the USB drive and also to A-Drive (an online free backup facility.)

• And then there are the weekly backups to DVD.

• What I can't show is the actual mechanics of the backup process. I have written a script that maintains the last 10 days copies of my mail on my hard disk (and, of course, backed up to the server), so that if I realise I now need a copy of a mail I deleted 3 days ago, I can easily get to it by looking at the relevant backup.

2). Web

I don’t know about you but, my installation of Chrome is very personal to me. I have bookmarks set up just so and the right (for me), mixture of extensions and addons. I’d hate to lose it all. Thus, my Chrome configuration gets backed up every night, in exactly the same way as my email.

3). Financials

My static financial data mainly consists of a number of spreadsheets on my main PC (the live data lives on a LAMP server which is backed up to my data server every night.)

This gets backed up in the same way as my mail, with one major difference…. It also gets zipped up and automatically emailed to a Gmail account (the address is a secret but think of something like financial.keckstein@gmail.com)

4). Business

In exactly the same way as my financial data, my business data is backed up to the server (just as my email is) and also zipped and emailed to a Gmail account.

5). Personal

My personal stuff gets backed up but, to be honest, if I lost it all I could still continue to work – so, is it that important?

I’m talking of things like photos, music, videos. If I lose them, they can always be replaced. They don’t get backed up to the A-Drive offsite server.

Instead I rely on the weekly backup DVDs to do the trick.

For personal photos, you can always use the services of Photobucket (or similar) to put a copy online.

Putting it into practise

1). Backup your data to another machine on a daily basis.

Use that old PC as a backup server. Make sure that it can also operate as a workstation so that when your PC dies, you can move to the server and carry on working.

If you haven’t got an old PC lying around, buy a second hand one – decent kit can be had for pennies these days.

2). Now backup your server to a USB drive on a daily basis.

If you need to get to yesterday’s data, better make sure that data is backed up as well. A decent sized USB hard drive costs about 100€ now – how much would a lost job/contract cost?

3). Backup the core data to an offline server on a daily basis.

You can use A-Drive (or similar) for this, or you can create an account at Gmail and use them. Why not do what I do and use both?

4). Ensure that you have installation CDs for your software.

Don’t rely on being able to download the software you need from the internet – if you can’t re-install your operating system following a crash, how are you going to get on the internet?

5). Backup everything to DVD once a week.

Ensure that you don’t lose your personal data by backing it up to DVD once a week and keeping those DVDs somewhere safe.

Make sure that your photos are stored online on a service like Photobucket.

A Confession...

Look, I'm sorry but...

Unless you've got a really serious IT setup with a backup/support regime that one could expect to find behind a Trading Desk in the city...

You'll be an amateur when it come to betting on/trading on Horse Racing.

But, if you take note of some (if not all) of the issues that I've raised here....

You should be better able to cope with the hiccups that are part of day to day life.


There should be another post in this series in about a few week's time; watch out for it as it will contain important information (and a few tricks of the trade) about the mindset that you need to develop if you wish to take your study of, and profit from, horse racing, to the next level.

How do you feel?

Gambling or Investing, where do you stand?

Am I Paranoid Percy or do I have a point?

Feel free to leave a comment either way?

Your opinion is valued!

 

keith-eckstein  the horse racing scholar

 

 

Links and further study...

1). "A Bloody Good Winner: Life as a Professional Gambler" - Dave Nevison is doing, every day, what thousands of punters dream of doing - living the dream of life as a professional gambler. Since taking the plunge in 1993, Nevison has made his living, a very good living, from backing racehorses. He has taken on the best bookmakers in the world, and won. It has not been easy, or a smooth journey, but a roller-coaster ride full of spectacular highs and testing lows. Nevison's frank account is full of entertaining stories of his rumbustious life, and reveals how he has succeeded while most punters fail. Heed what Nevison has to say and you will become a better bettor; ignore it, and you will still have been richly entertained, for his is a life out of the ordinary.

Get the book here... A Bloody Good Winner: Life as a Professional Gambler

2). "Mastering Betfair" - Trading the Betfair sporting markets in-play is rapidly growing in popularity thanks to the increased sporting coverage available on many different satellite and cable channels. Enthusiasm for sport is a must, but there is much more to mastering Betfair. Many people start by just using Betfair to obtain better odds than those available at the traditional bookmakers. They then perhaps do a little more research and learn to trade the markets. But to make a regular profit to win and keep on winning a serious, disciplined approach and careful planning need to be employed. Mastering Betfair takes the reader through many low-risk strategies developed by the author over the past three years, showing how you too can benefit from these approaches to the betting exchanges. It also explains in detail why and how the Betfair user should employ disciplines such as managing risk that are normally associated with trading the financial markets. Indeed, through doing this it is hoped that the book will draw the attention of financial traders to the unique opportunities available on Betfair. This book is essential reading for anyone looking to take their Betfair trading to another level and start making some serious money.

Get the book here... Mastering Betfair

3). "Enemy Number one" - This is the sensational inside story on how professional punter Patrick Veitch overcame adversity to take the bookmakers for over GBP 10 million in an eight year period. Veitch studied maths at Cambridge alongside becoming a major league punter. A comfortable life as a professional punter looked assured until his world was torn apart. He was the victim of an extortion attempt by a dangerous criminal who would subsequently be tried twice for murder and later convicted of attempted murder. Veitch was forced to flee and go into hiding, returning to Cambridge to testify in a bulletproof jacket with police protection. With his tormentor behind bars, Veitch took on the bookmakers on a greater scale than ever before. Over the following eight years, he would come to be known as the bookmakers' public enemy number one as he and his followers relieved the bookmakers of colossal sums.

Get the book here... Enemy Number One

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