Tuesday, May 02, 2006

Reminiscences of a Stock Mumbler: IV

How bad is your bad luck?

Last April there was an article on the Edge Weekly:
The run of bad luck

  • Or perhaps it is the fact that as an industry, the expectation is that there will be one bad quarter in every three or four, where Magnum's bad run for several consecutive quarters has stuck out like a fetid sore. Reasons offered by Magnum that its risk management is not questionable (as has been asserted by several analysts) and that the bad run is a statistical anomaly, have not been well received by analysts. Magnum has argued that it cannot reduce the limit of sales on a hot number (8888 for example, or 2828 — for the interested, that's "prosperous" four times or "easy prosperous" twice) just because it's hot. This is because the statistical reality is that the hot number has as much chance of winning as a suay number (such as 4444 or 2424 — that's "die four times" or "easy die twice").

    Analysts argue, however, that other NFOs have limited sales of the hot numbers. One who did his own quick survey found that when the hot numbers were closed by the other NFOs, one could still buy them at Magnum. "This either means that Magnum has become the last choice for a lot of punters or that Magnum is keeping the number open for longer," he says. And another analyst points out: "If Magnum has been selling certain numbers up to and maybe beyond the prudential levels, it also seems to indicate it is losing market share. Top-line growth has been unremarkable year-on-year at 5.56% compared with BToto's 5.98% and Tanjung NFO's 4.85%. "If it is risking high payouts and not limiting sales of hot numbers, it sure is not showing in the top-line numbers. Does this then mean that if it were being prudent, its top-line growth would be less? Or maybe there would be a decline?" asks the analyst. Even with all the questions and the general distrust, one plus in favour of Magnum is its current share price.
I found this part to be extremely confusing and strange to say the least:
  • Magnum has argued that it cannot reduce the limit of sales on a hot number (8888 for example, or 2828 — for the interested, that's "prosperous" four times or "easy prosperous" twice) just because it's hot.
this is because if I surf Magnum's own website: http://www.magnumit.com/magnum4d/MDfaq.htm#07

and click on How much can I buy for each 4D number?

I would get the following...

Question

How much can I buy for each 4D number?

Answer

To limit its' exposure, Magnum imposes Big and Small limits on each 4D number. For each 4D number, these limits amount to thousands of dollars each per draw. For any 4D number, you can therefore buy as much as you wish until the imposed limits are reached. Once the imposed limits on a 4D number are reached, you can no longer buy tickets for that 4D number irrespective of which 4D outlet you go to.

Strange and confusing, eh?

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