Any bets on which team is going to be hoisting the national championship trophy on January 10: Bulldogs? Sooners? Crimson Tide? Are the Cincinnati Bearcats really for real? For local fans, both the Ducks and Beavers have had very strong starts to the year as well, with Oregon still in the hunt for the college football playoff.

Already this season we’ve seen some incredible games and nail-biting finishes, but that’s not always the case in college football, where mismatched teams can sometimes make the outcome a no-brainer. Just ask me about my 0-7 Arizona Wildcats and some of the drubbings we’ve experienced this season.

And yet, whether wagering on sporting events or investing in capital markets, you can’t expect to consistently score when chasing after those “sure bets.” Both the bookies and the stock market are too smart to let you reliably come out ahead by simply betting on the better team.

Sports Betting Is for Fun, Not Profit

Many sports fans enjoy studying the field—its coaches, players, location, past performance, and so on. But just because a team is favored to win doesn’t mean you’ll do your pocketbook any favors by betting they will.

That’s because sports gambling is not just a matter of predicting which team will win or lose, but which team will beat what’s known as the spread.

Consider if the #1 Georgia Bulldogs played my woeful 0-7 Arizona Wildcats. Most fans would expect the Wildcats to lose, so the sports bookie’s job is to figure out how big an incentive to offer to encourage bettors to wager on the underdog. The point spread provides the answer.

Point Spreads in Action

Let’s look at the early-season game between the Oregon Ducks and the Stony Brook Seawolves as an example. The early line had the Ducks favored to win by 39.5 points. As more bets were placed, the spread moved as high as 42 points to account for bettors’ belief the Ducks would win big.

At kickoff, the spread settled at 41.5 points. This meant a bet on the Ducks would only pay out if Oregon beat the Seawolves by more than 42 points. Interestingly, oddsmakers pegged bets on the total number of points to be scored (the “over/under”) at 54.5, which means a good prediction of the final score was somewhere around 47-7.

In a nail-biting outcome for those wagering, the final score was 48-7. While the Ducks still won by a hefty margin, they didn’t cover the 41.5-point spread, so fans wagering on the winning Oregon team still lost.

As it turns out, the sports favorite often fails to beat the spread. Researchers analyzing the results of betting in professional sports leagues have concluded that betting favorites beat the spread about half the time. This is what we should expect when the “collective wisdom” of bettors informs the spread.

Investing vs. Speculating

What does this have to do with investing?

The world’s highly efficient capital markets incorporate the world’s aggregate “win” or “lose” forecasts almost instantly whenever new information comes to light. Think you’ve found a good company with a strong brand and competitive advantage? That company is likely priced at a premium relative to its peers.

To profit, you’re not just betting that company will continue to be successful, but rather it will be more successful than what collective market participants have already priced in based on their analysis of public information. This makes consistently profiting from stock-picking or market timing exceedingly difficult.

Extensive research into professional fund manager performance indicates that in any given year, 40% to 60% of actively managed funds underperform the broad market. Sound familiar? Extend that time period to 10 years, however, and roughly 70% of funds underperform. Over 20 years, the number of professional fund managers who fail to beat the market reaches a staggering 80% to 90%.

A sports gambler wins if their team not only wins, but also manages to beat their spread. Likewise, stock-pickers and market timers can only score based on unique knowledge of future events. As the evidence suggests, much like sports gambling, stock-picking and market timing remain games of luck, not skill.

Can betting on sports or picking stocks be entertaining pastimes? Sure. Are they likely to lead to long-term investment success? Frankly, I think my Wildcats have better odds of going to a Rose Bowl.