I hate blackjack. First, because I lack the patience to count cards to get a real edge and if I did they’d try to ban me anyway. Second, because there are so many superstitious players who get all worked up if you do anything non-standard, it’s just not a relaxing game unless you play exactly by the book. If you want a more fun, slow-paced social game that won’t bleed you too fast, play pai-gow. But if you must play boring blackjack, here is the basic strategy to minimize your -EV. This is the strategy for the typical multi-deck “shoe” where the dealer hits on soft 17 (its better if they don’t) and blackjack pays 3/2 (Do NOT play the 6/5 blackjack tables…too big a house edge). H = hit, S = stand, SP = split, D = double down.

• Latest lines
  
• Get game schedules on Yahoo.
  
• This article Vegas oddsmakers do their tournament homework should be required reading for all March Madness bettors. The linesmakers are smarter than you think. Great article.
  
• The previous article talks a lot about the value of power ratings. My favorite power ratings are Sagarin’s and Pomeroy’s.
  
• USAToday has a decent blog with some skinny on the games in Gold Sheet style blurbs.
  

CORRECTION: USC did not cover the spread in their last 3 games. They got routed in their conference championship against Oregon…..which may actually bode well for them from a contrarian standpoint. So, DO NOT TAKE Arkansas as a contrarian. Fortunately that’s a Friday late game and so I had not locked it in yet.

UPDATE: I read today that Arizona’s backcourt reserve Dillon (7th or 8th player averaging 11 min/game) was arrested for a DUI. This is a negative chemistry/psychology factor for Arizona.

I’m headed to Las Vegas Thursday for the first round of the tournament and am giddy as a school kid. I’ve talked about the thrill of March Madness in Vegas and past betting success in a previous post.

Now that the JackandJacks.com blog is active, I thought I’d do an experiment and post our betting strategy ahead of the time and we’ll track the performance here. Instead of my analyzing matchups (which I will be doing) and posting my assessments here, I’m going to use real money to wager according to the strategies of a prominent sports bettor whom I respect…Wayne Root. Wayne is somewhat of a flashy guy and self-promoter so some may be turned off by that but his mindset is that of a true contrarian, a method I have used with great success for football for a number of years, but that’s a whole other article. Wayne has written a book called “The King Of Vegas’ Guide To Gambling” And in conformance to the positive expectation nature of this site, Wayne expounds upon the values of poker and sports-betting and avoiding the negative expectation games.

In his book, Wayne discusses some March Madness contrarian betting strategies that I will be following. These are:

Threes A Crowd - Bet AGAINST any team that is on a 3 game winning streak (vs. the spread) heading into the tournament and bet FOR any team that is on a 3 game losing streak (again vs. the spread).
Based on this:
Midwest:
Take ODU +1 (lost 3) vs Butler
Take Jackson St +27.5 vs Fla (won 3)
Take GT -1.5 vs UNLV (won 3)…must be bet online
East:
Take Ark +2 vs USC (won 3)
Take Vandy -3 vs GW (won 3)
West:
Take Duke -7 (lost 3) vs. VCU
Take Indiana -1.5 vs Gonzaga (lost 3)
South:
Take CConnSt +21.5 vs OSU (won 3)
Take Tenn -7 vs LB St (won 3)
Take Stanford +5.5 (push, loss, loss) vs. Louisville
Take Nevada -1 vs Creighton (won 3)…online only
Take Memphis -18 vs. N Texas (won 3)

Best Offense is a Good Defense - The crowd loves the flashy, high-profile scoring teams and stars so the value is on the other side. I’ll be looking for these opportunities as the tourney progresses.

Go Against Major Conference Champs and For The Unheralded - bet against the champs of Big East, ACC, SEC, Pac 10, Big 10, and Big 12 and bet on champs of WAC, Mountain West, and MAC. First round, I’ll wait and see.

David Vs Goliath - Determine who is the David in notable matchups and take the points. Bet on the teams heading into the tournament on a losing streak and vice versa. Bet on those coming in with a high profile loss and vice versa.

After USCs embarrassing loss to Oregon in the Pac-10 conference, Oregon faces a Miami of Ohio team that is only in the tournament because of a buzzer beater Saturday.
Take Miami +9 vs. Oregon

Marquette’s Tom Crean is taking on his mentor Tom Izzo. The teams are fairly evenly matched and Izzo is a masterful coach. Marquette more balanced team….I say Mich St is the Goliath here.
Take Marquette + 2 Vs Mich St

I’ve locked in a unit ($165) on each of the 14 games listed above (3/13/07 11PM PDT)

They did not make it easy….but it worked. About a year ago, I received a credit card application from Chase Manhattan informing me they would give me 20,000 miles on my United MileagePlus account if I would accept their Visa credit card. The card claimed no annual fee in the first year and since I was planning a vacation later in the year and could really use the miles, it looked like a no-brainer. It wasn’t easy to avoid any costs but I succeeded and here’s how it worked.

I applied for and received the card in January 2006. I was required to make a purchase and then I would receive the miles 30 days after the purchase. I did so and when the bill came I immediately paid off the balance so that I wouldn’t have any interest fees. About 6 weeks later, sure enough the miles showed up on my account. I then called to cancel the card. I was told that if I canceled, I would have to relinquish the miles but if I kept the card for the full year I was OK. I called back in December to cancel and was told I had to wait until January 2007. In January 2007, I received a bill for a $60 annual fee. I called the Visa number and was told I could indeed cancel and that I would not have to pay the fee. The card is now canceled and it was a success. If I had waited too long though, I would not have been able to avoid the $60 fee. So, that is the game. Pay on time and be diligent about canceling and the frequent flier mileage is yours.

I only play craps on rare occasion and then it is only for the crowd excitement and fun. Craps is not a +EV game (read that, craps is a losing game). At times when I’ve played, a colleague will say, if you’re playing the pass line, “you have to place an “odds bet” behind the pass bet. Its a much better deal.” In fact, I once got into a heated argument with a relative about this and was told “if you’re not going to play craps right, you shouldn’t be at the table”. Puhleeze. Well, I want everyone to know that the odds bet is no great deal.

Here’s why: Pass Line: The pass bet has a house edge of 1.41 percent. That is the equivalent of the pitboss Stan offering you to reach in a bag of 1000 marbles (507 red and 493 black) and saying, “if you can pick one of black ones you win, if you pick a red we win.” That’s not bad. Its still a negative expectation, but not bad. Odds Bet: Now, Stan continues on, “if you take us up on this “pick a marble” game which happens to be in our favor, we’ll let you bet on a fair coin toss. Heads you win, tails you lose and we won’t take any juice on the bet.” The coin toss game is meaningless in the grand scheme of things. It is not an advantage to you and it is not an advantage to the house. That is what the odds bet is. It is just an additional bet with fair odds that is activated after the point has been chosen and that is only offered after you take a bet in the house’s favor. If they offered the odds bet as a standalone bet I would take it every time while I am waiting for my friends at the craps table and enjoying free drinks. However, that is just not going to happen. The only way I will ever agree that it is a “good deal” is if someone put a gun to my head and said you must bet $300 per roll. Then, I will put $100 on the pass line and $200 on the odds bet. Short of that requirement, my best bet is to bet the minimum on the pass line until my friends are bored enough to go back to playing poker where I can get a real edge.

Disclaimer: Craps is not a +EV game.

Taxes are due April 17, 2007 this year so we have a couple extra days to fund our IRAs. IRAs do not have to be funded in the tax year (2006) but can also be funded for the tax year 2006 up until tax date (April 17, 2007). If you are not an IRA advocate, you should be.

Here’s a summary of the critical numbers you need to know before funding an IRA this year:

• The contribution limit for both Traditional and Roth IRAs is $4,000. If you are at least 50 years old, you can contribute an additional $1,000 for 2006 for a total of $5,000.

• ROTH IRA
  A Roth IRA is funded with after-tax money and withdrawals are 100-percent tax-free if you’ve had the account at least five years and wait until you are 59-1/2 to make withdrawals. The income limit for funding a 2006 Roth is $95,000 (with partial up to $110k) as a single filer or $150,000 (with partial up to $165k) as a joint filer.

• Traditional IRA (Deductible)
  If you are eligible for a retirement plan offered at work, you’re not allowed to deduct your IRA contribution regardless of your income. Otherwise, the deduction is allowed only if you’re single with income below $62,000 or married and file a joint tax return with an income below $100,000.

• Traditional IRA (Non-deductible)
  If your income precludes you from funding a Roth or deductible IRA, you should strongly consider funding a non-deductible IRA this year due to the “loophole” for non-deductible IRAs that will be available to us only for the next few years. I wrote about the non-deductible IRA loophole here.
  

In our household, we’ve gotten hooked on sparkling water. The only problem is they’re expensive. Even in bulk at Costco, the price per bottle is at least 3 times what we pay for bottled water or soft drinks. That just didn’t seem right. Plus, with regular water at least we avoided using too much plastic by using Brita but not with sparkling water. So, looking around on the web we found a home carbonation system that makes sparkling water as well as a wide range of carbonated soft drink flavors (cola, lemon-lime, root beer, etc.) and cocktail mixing flavors (tonic, cranberry-raspberry, grapefruit, etc.). We’ve been using it now for a month and couldn’t be more pleased with it. It costs a little over a hundred dollars for a full kit to get started but we expect to easily save over a hundred dollars a year on the sparkling water purchases plus it’s a lot of fun to make your own flavors whenever you have the urge.

We got ours from SodaClub.com. If you google for a promotion code before you purchase you can save a few bucks too.

About a year ago, I felt certain that the broad market had lots of upside left even after the excellent runup that occurred over the prior 3 years. I based this largely on the low valuations I was seeing relative to earnings and also on the bearish sentiment I was seeing all around me. (Note: I’m a big advocate of the contrarian school of thought that says if the crowd is positive on the market, there are no buyers left, and in this case….vice versa.) I was willing to bet that a healthy rise was going to occur. However, I still had linger fears of external events rocking the markets related to the war in Iraq or unforeseen terrorist actions.

So…….I wanted to take a position that had limited loss but would profit from a healthy runup. I decided to base my predictions on the S&P 500 and its mirroring ETF called SPY. For those not familiar, SPY is traded like a stock and is priced roughly at 1/10 the price of the S&P 500 index. So, at that time when the index was 1250, SPY sells for 125. I decided that I was willing to bet that SPY would exceed 140 within a years timeframe.

After doing some research I decided a Bull Straddle was the bet that I wanted to make. A bull straddle provides limited loss at the low end, limited gain at the high end, and graduated profits in the middle. A bull straddle involves selling (short) a call option at one strike price and buying (long) a call option for a higher strike price. Here is a graph of the profit for a Bull Straddle.

If the price of the entity, in this case SPY, goes above the higher strike price, the value of the two positions will be the difference in the strike prices minus the difference in the options’ purchase prices. If the price of the entity (SPY) hovers near the lower strike price, the value of the two positions will be the same as if the SPY was worthless….that is the loss will be the difference in the original purchase prices.

Here’s the position I took last year. I sold a Jun 2007 130 call option (for $270 per contract) and bought a Jun 2007 140 call option (for $760 per contract). (Note: an option contract represents 100 shares.) My maximum loss per contract would then be $760-$270 = $470. My maximum gain per contract would be $1000 (100 times the $10 difference in strike prices) minus the cost difference of $470 which comes out to $530.

Well, fortunately I was right and the S&P 500 has risen above 1400 (it is at 1490 as I write this). I could wait until the expiration date (3rd Friday in June) and if the price doesn’t change I would lock in my $530 per contract. However, I decided to take the position off the table today. Since there is still a time element left (the S&P 500 could crash between now and June), I will get something less than the full $530. Today I sold by long position for $17.10 per contract and closed my short position for $5.80 per contract for a grand total net profit of……$370 per contract. It was a valuable experiment. I felt I played a relatively safe position given the loss limit. And I now have a good feel for how the options move over time relative to the underlying stock. My next foray into options will be documented here when I open the position.

I’ve recently been receiving more and more phishing scams in my email box and they are getting better all the time. Now, you and I know better than to click a link in an email telling us to login to our bank, right? Further, you and I certainly know not to provide our bank information to an unknown person who is letting us in on a deal. But, I bet a lot of our parents or grandparents or wives or husbands or…you get the idea…the less tech savvy need to be aware.

Email “from addresses” can be spoofed. Easily. Everyone needs to know that. Here’s an easy way to show someone. Go to prankmail.org and send yourself an email from “fill in the blank”…..how about Bill Gates, bequeathing you a billion dollars (he wouldn’t miss it right?).

I’ve gotten phony emails pretending to be from EBay telling me “If the request information is not provided to us then we will regret to inform you that your account will be suspended from our database until required the information is provided.” followed by instructions to login with links to a bogus website. I’ve received phony emails pretending to be Washington Mutual telling me “During our regularly scheduled account maintenance and verification we have detected a slight error in your billing information on file with WASHINGTON MUTUAL BANK ( WAMU )”…..telling me to login (again a bogus link to a non-WaMu website). The web addresses linked in the emails of the spoofed website are usually just ip addresses or else a variant on a company name (e.g. somecompanybilling.com).

Today I stumbled across a humorous and yet educational email exchanged about a Nigerian email scam. I supposed I can see if this is sent to 100 million email addresses, at least someone is going to fall for it. Paul Phillips archived the whole humorous back-and-forth email exchange as he tried to have fun the unsavory scammer with his own outrageous claims.

Here’s an excerpt. Its fascinating to see how these operate.

THE PROPOSITION: A Foreigner an Australia, Late Eng. Steve Moore (Sir.) an Oil Merchant with the Federal Government of Nigeria, until his death months ago in Kenya Air Bus (A310-300) Flight KQ431, Banked with us at STANDARD TRUST BANK LIMITED, Lagos and had a closing balance as at the end of September, 2000 worth US$35,500,000.00 (thirty five Million five hundred thousand United State Dollars), the bank now expects a next of kin as beneficiary.Valuable efforts are being made by the STANDARD TRUST BANK LIMITED to get in touch with any of the Moor’s family or relatives but to no success. It is because of the perceived possibility of not being able to locate any of Late Engr. Steve Moore (Sir.)’ s next kin (He had no wife or child that is know to us). The Management under the influence of our Chairman and Members of the Board of Directors, that arrange has been made for the fund to be declared “Unclaimed” and subsequently be donated to the trust fund for arms and ammunition to further enhance the course of War in Africa and the World in General. In order to avert this negative development some of my trusted colleagues and I now seek your permission to have you stand as next of kin to Late Engr. Steve Moore (Sir.) so that the fund US$35.5 Million will be released and paid into your account as the Beneficiary’s next of kin.

…in a later email, they ask for this:
1, your bank name and address
2, your bank account number
3, your bank’s swift code numbers
4, your account name and the beneficiary’s name
5, your company’s name and address
DON’T EVER GIVE THAT OUT!

Give a man a fish and you feed him for a day. Teach a man to phish and you best ignore his emails. I wonder how Phish feels about the meaning their name has taken on.