In his 2005 book titled Moneyball - The Art of Winning an Unfair Game, author Michael Lewis chronicled the Oakland Athletics 20 game winning streak in 2002 with the second lowest payroll in the Major Leagues. To accomplish that, General Manager Billy Beane had learned a radical new formula for evaluating baseball talent.
He and assistant GM Paul dePodesta used the philosophy of Bill James and his Baseball Abstract newsletter and took it to the level of implementation in the 2002 player draft. James had discovered that the common wisdom for evaluating talent did not tell the truth about baseball success. The way Lewis tells it in his book, while other small market teams were rolling the dice on high school players at the craps tables, the Oakland A’s had become card counters at the blackjack table for minor league and college players. They had information that correlated to success.
What they were doing was turning the odds in their favor against the owners of the casino. In this case, the teams in the biggest cities were the house - and the odds were in their favor because they had the biggest payrolls for player development.
Of course, every gambler knows the casino has an advantage. They use the laws of large numbers and they program the rules of each game to favor the house - meaning themselves. However, a player can improve their odds against the casino by playing games with a thin edge - like blackjack, and by counting the cards played to know what remains in the unplayed part of the deck.
The Card Counter
But to do this consistently takes experience, discipline and capital. Even then, to walk away from the blackjack table with a huge profit is an outlier event. To clarify, outlier events are so rare that they fall at the extreme ends of normal distributions of outcomes. And in a log normal bell curve distribution, two standard deviations comprise 95% of all outcomes. The remaining 5% are split equally at either end.
This is where outlier events begin to show up - and that is important because outlier events change lives. What happens within one standard deviation, which comprises 68% of outcomes in normal distributions, doesn’t really matter.
In contrast, a card counter who scored a huge profit and got a lot of publicity was Don Johnson’s haul in 2012. According to The Atlantic, he walked away with $6 million in one night at the Tropicana in Atlantic City. In previous outings he won $5 million counting cards at the high rollers blackjack table at Borgata, another $4 million at Caesars before that, and his tactics game day tactics were written up as:
He was neither nervous nor excited. Johnson plays a long game, so the ups and downs of individual hands, even big swings like this one, don’t matter that much to him. He is a veteran player. Little interferes with his concentration. He doesn’t get rattled. With him, it’s all about the math, and he knows it cold.
At the Tropicana Johnson was playing a hand every minute, betting $100,000 per hand, won $800,000 on one hand - and $1.2 million total on a three-hand sequence. For him, these were not outlier events, but how is that possible?
Objective Information
To me, Johnson’s philosophy and process were much like Moneyball - both in baseball and in personal finance. Not only did the Oakland A’s minimize tactics like base stealing that might cost the inning, but objective investors minimize tactics like adding alpha or beta for outperformance that might cost spending capacity. In both cases, the tools for maximizing the odds of success were in place.
But it was not only Johnson’s game day tactics that raked in $15 - $20 million over a two-year period. His strategy was in place before he was ever dealt a card. He knew that casinos were desperate for high-stakes gamblers in the aftermath of the Great Recession. And as a professional himself, he knew casino math as well as anyone.
In that context, accommodations were made to high rollers to incentivize their patronage. One of those concessions was loss rebates. Johnson may have qualified for up to 20% forgiveness on losses incurred during each gambling session. That is a significant shift in the distribution of outcomes.
There were also rules variations such as a lesser number of decks from which the dealer was distributing cards. For card counters, that is significant for situational awareness. Also possible were changes in the total on which dealers must hit or stand, plus more liberal rules for splitting cards or doubling down. With all of this, an increase in bet limits would compound these player advantages.
However, it cannot be stressed enough that knowledge, discipline and capital are essential for the kind of success described above. The laws of large numbers prevail in gambling casinos and there had to be accountability for the casino managers who approved these negotiations.
The Stock Market
The temptation here is to equate blackjack card counters with stock market analysts and amateur stock pickers. And in that spirit, it must be stressed that the casino is a closed system. The rules are known in advance, each participant has access to the knowledge that exists during the game - including the uncertainty of games of chance, and for every winner there is a loser.
However, the US stock market is a complex system, meaning that there are millions of participants, billions of co-dependent variables, the rules change with every government regulation and tax scheme, no one has but a tiny fraction of the knowledge that is contained in prices - and it is a compounding sum game. However, the game day tactics of Don Johnson ring as true for Billy Beane on draft day as they do for an objective investor’s relationship with the stock market:
So, let’s break down The Atlantic quote from above - and do it in the context of the objective investor. We don’t get nervous or excited about things we do not control and cannot predict. We play the long game of risk capacity, spending capacity and funding status. The ups and downs of stock market values are opportunities to take risk off the table or rebalance at lower prices. We act like veterans who understand the American economy is the greatest wealth building engine in world history.
The Secular Foxhole
But is there a contradiction here? Are the capital markets, particularly the stock market, like a casino or not? I was directly asked this question on The Secular Foxhole podcast released on September 2, 2026. Here is the transcript:
Blair But I have one final question that I always ask every economist that comes on the show. Is the stock market a casino? Mark: No. Capital is attracted to talent and the stock market is driven by earnings expectations. And in the short run, it sure seems to have some casino aspects to it. But that’s an interesting idea. Casino. What I’m trying to do with The Moneyball Method is give the investor the same advantage as the casino.
To be clear, I am not an economist, but the definitions of both casinos and capital markets include strong elements of uncertainty. Another similarity is the institutions that rely on the patronage of their customers, but that offers a major distinction. For casinos, it is their owners and management that have the edge. But for capital markets, no one owns it.
Yet, the economists, strategists, and analysts who support State monetary and regulatory agencies are getting a piece of the action. However, Billy Beane dismissed the scouts, Don Johnson leveraged the casino owners - and objective investors ignore these magical market whisperers.
Ultimately, nothing interferes with our defined objectives unless values and priorities change with circumstances. With us, it’s all about the objective evidence of markets and the objective data of the important goals we plan to achieve. We know it cold. We are the house. The odds are in our favor.
