Chris Stringman lost £130,000 on spread betting, sometimes losing and winning tens of thousands a day. He recognised that far from being an investment he was addicted to a form of gambling. He was brave enough to write a book about it:
I interview Chris to see how he got into spread betting, how it is gambling not investment, and how he suggests people who are already hooked kick the gambling addiction.
Okay well it's a great pleasure to see you again Chris, we actually met on Twitter because I saw you talking about your book which I really enjoyed. There'll be a link to that at the bottom of this recording if people want to take a look for themselves. So maybe you'd like to just explain your background and what actually led you to write the book in the first place.
Financial Spread Betting
Okay well my background I am, and I was a teacher, a primary school teacher, I have a degree in economics, just a regular guy really who decided in his thirties, as many men do I suspect, to try spread betting, financial spread betting. As I saw the adverts I took their offers their free 100 pounds to start trading which seems fair enough, almost like free money. And then I placed some trades and initially I won and then as I found out five years later it wasn't that easy to win in the end.
And that's despite the fact you're, you know, pretty well educated when it comes to economics, because I think you did a degree.
Yeah, and I suspect many people, most people who try financial spread betting are educated and that's the trick behind it looks like it's investing rather than just going in to Ladbrokes and betting which is more of a working-class thing. But really you're just a middle-class gambler but you think you're better than that because you have a degree but you're not.
So tell me a little bit about how you actually put one of these spread bets on so what does it actually involve physically? Is it easy or is it difficult?
It's easy, as easy as going into the bookmakers and putting ten pound on a horse. You log in, they phone you up just to check your address, your name and address, if you have any assets because they would like them, they tell you the warning because they have to legally and then that's it you're away. You get a trading platform which basically again is a trick, it's a sophisticated betting slip, you choose a market or a share price or commodity, you can bet on on anything: metals foreign exchange, whatever.
So let's say we wanted to put on a spread bet for something like the FX, the foreign exchange pair which is euro dollar or sterling versus...
I never went in for foreign exchange because for some reason I thought that was really slippery.
And the Dow Jones Index wasn't right?
There's something even more slippery than than that nowadays and that's Bitcoin but well I'll leave that.
Spread Betting Is Gambling Not Investment
Yeah that's something I've also been railing about on my blog. So why is it that the companies are actually selling this as an investment? They're marketing spread betting as an investment but that's really not the case is it?
They market it as an investment because that's what you want to hear because you don't want to bet you want invest. But I'll have to say if you put, you know, if I put a ten pound a point on the Dow, say the Dow was at twenty thousand, and I placed a ten pound per point bet (they call it a trade, and it's a bet) when it's at twenty thousand, they charge a spread. So, for instance, if I put a buy if I think it's going to go up I'll buy at 20,002 so I'm already 20 pounds down so I need it to go up past 20,002, the break-even point, and I make money they can easily go to.. say it goes to 20,102 which... I've done this many times.. therefore I've made a thousand pounds okay? From a ten pound, it's kind of a ten pound, investment. But you just need some stake, some equity, behind it but, you know, you've made a thousand pound in a day from a very small bet really. What sort of investment is that? Well if you put a thousand pounds in an account and got 1,100 pounds back a year later you'd be very happy.
It must be such a thrill when you kind of put the bet on and then you suddenly see you've won thousands of pounds maybe more than you'd earn in a month for some people.
There's the word, you said it, you've used the word "won". You don't make an investment to win, "win" doesn't go with "invest".
So gambling and investment are very different things, right? So investment you think long term and you think about your risk how much you could win as well as how much you could lose and you try and balance the risk and the reward. Whereas gambling is usually very short-term you're just betting over a matter of minutes and you have extremely high risk so the risk of losing a very significant amount of money is very high. So that's the fundamental difference I guess between gambling and investing, would you agree?
Yes I would say that but there are many other elements to it and the middle class are less, well, the middle class will are less likely walk into a bookies and they're happier with the term investment that's why it's marketed as an investment. It's not. Some people would disagree there are people out there who do make money from this kind of thing but most, the vast majority, won't.
FCA Reaction To Spread Betting in December 2016
I think the FCA study the Financial Conduct Authority study showed that over 80% of people lose money when they do spread betting which is I think what led them to do what they did on December the sixth last year in 2016. Could you explain a little bit about what happened?
Yeah, not just as statistics, but they had so many complaints from people like myself and they had to do something. It was previously the FSA who I think were not really on the ball. Now the FCA have stepped in and they're really gonna clamp down on it next year, it'll be next year. We'll see what happens. But the share price indicated that it really was gambling and the leverage, where you do not need much capital to place a bet and it's gonna be really tackled. And the share price of these companies like IG and CMC they halved on this announcement so it's clear that leverage is not in the interest of the gambler / investor it's the interests of the company, although they tell you the reverse.
Because normally when you put on a bet you just give some money over and then you can only lose as much as you bet. But leverage means that you actually amplify the losses so you can actually lose more than you gamble is that right?
Yes, it's a double-edged sword.
So you've got a combination of that gambling buzz combined with leverage, it's a fairly toxic combination. And do you think that's why the FCA decided to clamp down?
The FCA clamped down because of the complaints and the complaints were varied I imagine. People weren't warned sufficiently about what product it is. It's regulated by the Financial Conduct Authority. Every other aspect of gambling is regulated by the Gambling Commission because it comes under the 2000 Financial Services Act because, initially, if you look back at the history of it, it probably was in the seventies and eighties but now with the Internet it's just changed its nature and it's not what it was initially.
So when you say that the advertising is very much aimed at the working man could you explain what you mean by that particularly the advertising during sporting events... I loved your comments in the book about Bradley Wiggins, maybe you could talk about that?
Bradley Wiggins he had IG on his arse when he was winning the Tour de France. IG like to sponsor cycling then FX Pro sponsor football, they used to sponsor Fulham now I think they sponsor, yes I think they sponsor Watford now, have to check that one. They sponsor a team in the Premier League. But even like Man City it's not their main sponsor but they have a spread betting sponsor. Most of these big clubs do, they have like a high street sponsor even if it's not on their shirt they all have on their website a high street sponsor and a spread bet sponsor. So it's aiming more at the working man now not just the middle class because men obviously like a bet. You know you're far more likely get a mail gambler than a female, that's why they sponsor football clubs amongst other things, they sponsor mainly sports.
Male Overconfidence & Big Losses
And it is a matter of overconfidence isn't it? I mean if you look at behavioural economics you can see that men are much more overconfident than women so for example if you ask a man can you predict what will happen to the Dow Jones over the next 10 minutes he's much more likely to say yeah I can I can guess what's going to happen, I've got a gut feel for this. Whereas a woman is much more likely to be more more cautious, I think, more risk-averse, but also less overconfident, she knows she can't, whereas a man thinks he can. Do you think that's fair?
Yeah and also this applies to any form of gambling: fruit machines, anything, that women will take a small win, regularly, but a man will wait for, or take risks, and try and get that big, massive win.
I love the description in the Guardian interview which you did where it describes you sitting on the toilet betting on the Dow Jones while your wife was downstairs cooking the dinner, and how much did you lose on on that bet?
I think it was around £17,000.
And that was almost, most of that was instantaneous. Again it was within an hour but I was chasing and doing all sorts of things to try and win it back and even after I lost that massive amount of money I still ran over a massive bet the next day to try and get it back. And actually I actually did, it actually did work. And then you think, you know, you're gonna repeat this experience time and time again but you know my bank account told the story. I was getting you know, say 6,000 pounds payback from IG one day and then following week I might pay them 10,000 you know. So you get more minuses than pluses and when you add it all up there were a lot...
But you lost about £130,000 overall, hence the name of your book "Win, lose repeat" I guess?
Yes Win, Lose, Repeat because whatever form of gambling you do will whether you win or lose just repeat it you know. You just can't stop until you realize that the numbers don't make sense and you have to stop which I did.
Automatic Flagging System
One of the things you talk about in your book which I thought was interesting was this automatic flagging system so could you explain a little bit about what that is and how it could help gamblers?
Well you know I think any form of gambling in the high street or online there should be some link to income that you can't, especially with spread betting where they ask you for your financial details, Ladbrokes won't, they don't but I think they should. They should have some idea of where you're getting the money from Because for me, for my case I had the savings so in that respect it was okay. Some people steal from their employers you know? If they, if Ladbrokes or whoever discovered there's some guys on twenty grand a year and he's spending twenty grand a week there should be some sort of flagging system but there's no regulation which says I have to do this so they don't.
So you say in your book "if they were really concerned they might have raised the fact with me that my stated annual income was twenty to twenty-five K but in one day I could lose ten K or fifteen K. Did anyone contact me about this at the end of the year when I had lost 65 K? Did anyone contact me? Did they f**k?"
Yeah there you go no one contacted me at any point no one contacts the bingo gambler or anyone online. So for regulatory reasons you have to state your salary and then... Yeah only for financial spread betting, for other forms of gambling you don't.
So you think there should be some kind of limit to how much you can gamble?
I think it should be if you lose a quarter of your annual salary. There should be, you should be allowed to gamble anymore on any site, it should be linked across all sites. But that's the this would take decades I think.
It would be a big change in culture, right, because the culture just assumes that gambling is just a way of letting off steam or something that people do but it's really ruining people's lives, right?
And yeah, ruining and killing people. Suicides every week and plus the gambler or the investor it doesn't just affect the person they say my decision to do it okay but family members and work colleagues everything. It affects a lot of people not just the gambler and they never made a decision to be affected by gambling or investing.
But one of the things you also talk about is the information illusion so you talk about something called sucker literature...
Sucker Literature, you can buy many books out there on financial spread betting if you go on Amazon my book will be way down the list. They generally have a pseudoscience a scientific title with graphs on which makes it look like it's science i.e. its fact yeah you know.
So they talk about these systems which can always win or some kind of pattern in markets which always happens which is supposed to generate a kind of consistent way of winning.
Yeah, but it's like buying a book on poker you know if you want to be a top-quality world-class player I don't think you can do it by reading a book, and I don't think you can be a spread better by reading a book but these books sell very well and my book doesn't. I tell you what's likely to happen people don't want to read that they want to read what they want to happen so they read the other books.
So you can get rich if you read this book or if you read this book it'll tell you actually the odds are really stacked against you, and you'll probably not win.
I'll tell you why you're not gonna make money you know.
How To Stop Gambling
Yeah, so let's assume that somebody's fallen into kind of cycle of lose money, reeducate and then lose even more as you describe it. I think it's a really nice way of describing that kind of destructive pattern, how can you break out of that behavioural loop?
Well you've basically joined a cult, you can actually, I went to a seminar once when it just became, it is a cult, in effect, you listen to a speaker and you believe them you donate part of your money to them then eventually you donate some or possibly all your money to them, you think of nothing else all day like you would in a cult, they motivate and encourage you like in a cult. How do you get out of it? You just have to wake up. Read Chapter 2 in the book that tells you the tricks they use to convince you, but it has similarities to a cult you are brainwashing you know we are brainwashed in many ways, what we eat, television we watch and we go along with this cult because we want to. We want to believe it, we need to believe in it because this gives us if we're in a pretty boring job or frustrated we need this cult, so we're willing victims. But you just have to realize that an investment which you think and they sell to you as making a thousand pounds a day, a hundred pounds a day can be an investment, surely, not unless you're a, not a legal investment and don't do that.
Now I know you're not keen on Gamblers Anonymous because you described it as an almost semi-religious group I've never heard that before, can you explain what you mean by that? Well they they follow a 12 step strategy and one of the steps is giving yourself over to a higher power yeah.
Do they say what the power is? It's not the FCA? Because I often feel as if there's a higher power controlling my life and it is the FCA.
Well the FCA weren't around, it comes from Alcoholics Anonymous, there are every sort of anonymous you can imagine, Narcotics Anonymous and these were from America I think in the twenties so church attendance was a big deal then and it's, you know, it's the same idea. It works for some people. I have been I did attend one once this year just to see what it was like. There is not much religion in it but you do say a prayer some sort of thing at the end, which was a bit odd, you know, so for me and I suspect most people there are not religious and they go along with it because it's part of the deal but Gamblers Anonymous works because gamblers talk to other gamblers, which is a good thing, but the religious element is not my thing, I don't think you need it. You know you have to just realize what you're doing. And for financial spread betters, they're not, I suspect many are not even gamblers, you know, they're just investors that accidentally become gamblers.
You're kind of drawn into it, right?
Yeah they sleep-walk into it really, you know.
Okay anyway that's great, I mean it's been great talking to Chris and the name of your book "Win, Lose Repeat: My life as a gambler from coin pushers to financial spread betting" which is available on Amazon, right?