Best Golfer, Bad Bet
By Tom Dyson
April 4 , 2007

Tiger Woods is the best golfer in the world... and arguably the most dominant athlete to have ever competed in professional sports.

There are four major professional golf tournaments per year. He's won the last two. He also won the last six PGA tournaments of 2006. Only two other golfers have ever won six professional tournaments in a row. This was the second time Woods has done it. 

Earlier this year, Woods missed a couple of tournaments. He took time off to practice and relax. Last week, he returned to tournament golf and won the tournament.

In short, Tiger Woods is in fantastic form... maybe the best form of his career. The U.S. Masters starts on Thursday in Augusta, Georgia. It's Tiger's favorite tournament. Here's how he's performed over the last 10 years:

Given his consistent performance at the Masters and his current form, Tiger Woods is the overwhelming favorite to win the tournament.

This week, I looked up the betting lines offered by some online sports betting bookmakers. I found Woods is an even money bet to win the tournament. In other words, the bookies think there's a 50% chance he'll win. These are the lowest odds bookmakers have ever quoted for a player to win at the Masters.

I think these odds are preposterous...

Firstly, with 106 entrants, this year's Masters field is the biggest ever. Furthermore, the distance between the best and the worst pros in golf is narrower these days than it's ever been before. This makes this year's field the strongest ever.

Second, randomness plays a huge part in golf, especially at Augusta, where the greens are as slick as billiard tables. It's one of the hardest golf courses in the world... if not THE hardest. Anything can happen out there... even to Tiger Woods.

With 50:50 odds to win the tournament, the bookies are pricing Tiger Woods for perfection and underestimating his competitors, the golf course, and the influence of luck.

I found bets on one site that work like stock prices. The worse Woods performs, the more money someone who bets against him would make. One interesting bet follows this pay scale (on a $100 wager):

This bet against Tiger Woods is an example of the limited-downside, large-upside bets we look for in the financial markets.

Steve's Japanese real estate play is one example. Property prices in Japan have been falling since 1990, the yen is trading 17% below fair value, and mortgage rates are so low, almost anyone in Japan can afford a house. Limited downside, unlimited upside.

Or how about our agriculture recommendations last year? The grains had been falling for years, so downside potential was slim. At the same time, an ethanol boom and the threat of drought offered huge upside.

Tiger Woods may be the best golfer in the world, on top of his game, and playing a course he loves. But betting against him would be the right play. It's the same in finance. Whenever you find a 'Tiger Woods,' remember... it's often good policy to bet against him.

Good investing,

Tom

Editor's note: Tom Dyson is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.

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