Monday, 25 January 2021

New Year, New Challenge

Apologies for the lack of posts in recent weeks. As some of you will know from Twitter, I had an accident at the start of the year which means I shall be mostly laid up in bed or on the couch until mid-March, neither location being conducive to creating new posts. The phone works just fine for brief entries such as this one, but it’ll be a while until normal service is resumed. Surgery is this week, then recovery can begin, all being well. Stay safe. 

Wednesday, 6 January 2021

When 2 + 2 = 5

Artwork by Joe, age 41 3/4
The last post was a little rushed, but as at least one person is looking forward to an update I thought I'd clarify some of my thinking.

@CatsofOxford pointed out that because of the partial correlation between the two individual Senate races, no bookie would offer the double, and that's true, but we can still use the implied probabilities in each market to calculate the outcome in terms of overall seats.

It was very strange to me that the odds for the Special race Democrat were so much shorter than for the Democrat in the Regular race. There were differences of course, mostly that while both Republican candidates were incumbents, usually a big advantage, one (Loeffler in the Special) was appointed, and the incumbency advantage is usually lower. Perdue in the Regular race, had name recognition, but even so, for the two Democrats to be separated by so much seemed odd. The majority of voters would be expected to vote by party, so why did one Democratic candidate have an implied probability of 0.62 and another just 0.465? 

Anyway, the point I wanted to make was that these races only had four possible results and with the Democrats starting from 46 seats and the Republicans on 50, the Senate makeup could be easily projected. Two coin tosses have three net outcomes - Two Heads, Two Tails, One of Each, with the latter most likely at evens. 

To stay on 46 seats the Democrats would need to lose both races, a probability we can calculate from the odds available as 0.2033 (0.38 * 0.535).

To move to 48 seats, the Democrats would need to win both races, a probability of 0.28 (0.62 * 0.465), and to end up with 47 seats, and the Republicans with 51 seats, the probability would be 0.5167 (or 1.93 in Betfair terms), yet the price for this last outcome was 4.9. 

What gives? Even allowing for some wiggle in the prices, that's a big difference but if 4.9 intuitively seemed to high, what price was fair? And if 4.9 was too high, then the other outcomes must have been too low. Or the root prices of 1.61 and 2.15 were wrong. Warnock's (1.61) was probably reasonable, but Ossoff should have been closer to 1.94. Something to watch in the future perhaps, but as these events are so rare there's not much to be gained from analysing them to death. I made a little on all three markets by betting with my heart rather than finding an edge, but I can't help thinking I was too late looking at these markets and missed a bigger opportunity. It happens. The bigger picture is that the Democrats look to have secured control of Congress and the Presidency, a nice turnaround from four years ago when the Republicans ruled the roost. So much for all this winning by Donald Trump.

Georgia Arbs

A rather unusual opportunity in the markets surrounding the Georgia Senate elections, of which there were two - one Special and one Regular. 

The odds are fluid as the election is taking place currently, but as polls were closing the Democrats were around 1.61 in the Special and 2.15 in the Regular.

Based on these odds, the probability of the Democrats winning both seats and increasing their total to 48 was therefore around 0.28, the probability of winning one seat was around 0.52, and the probability of losing both races was around 0.2. 

The "Number of Democrat Senate Seats" market for these three outcomes respectively was 3.0 (too short), 4.9 (great value), and 2.7 (too short). There was also the mirror market for the "Number of Republican Senate Seats which offered similar odds, but strangely not identical. Backing 46 Democrat seats is the exact same as 52 Republican seats and so on.

Great value doesn't guarantee you a winner, but the odds seem way off. Be careful, because since I started this post, the Special odds have moved out, but there is opportunity here.

It maybe because some low-information bettors don't read the Rules for these markets, but good luck. 

Friday, 1 January 2021

Au Revoir 2020

2020 has certainly been an interesting year. Aside from my Mum's passing in April, which appeared to be non-COVID related, and the continued slow and steady decline in my 93 year old Dad's health, I have to say that this year has been pretty good to me.

Unusually for me, I took a vacation early in the year, and had a great two week trip to South Africa with my son in January / February to watch cricket, parasail, swim with sharks, jump off 700' bridges with a rubber band fastened to my legs, taste wine, see wildlife including a lion which was rather neat and basically just enjoy life. Retirement was a real possibility at this stage, with a trip to Queensland in July next on the agenda, but then two things happened. 

One was I got promoted at work, and two, the pandemic hit which meant the Queensland tickets were cancelled and there was little point in retiring if I couldn't do any traveling anyway.

My job isn't really work these days. It's all meetings and management and if I can do it full-time from home, and by full-time I often mean for two to three hours a day, then I might as well hang in there until the next bonus and stock options are doled out at least, which is next month. Were my job hacking away at a coal face, my attitude to retirement might be a little different.  

So since March, like many readers I suspect, I have mostly worked from home, with the exception of three business trips later in the year, meaning a large saving in travel costs although slightly offset by now having to pay for my own coffee! 

More significant than the cost saving perhaps is that of the extra time I now have to myself, rolling out of bed five minutes before my first meeting and sliding my chair across the floor to my non-work desk within seconds of the last meeting ending. Of course, I have too much integrity to ever think of looking at personal projects during work hours.

Financially this year has been second only to 2013 with the US Indexes yet again leaving those of the UK in the dust, as I've mentioned before on this blog. This year the difference between the two was the largest ever, well at least since 1992, at more than double the difference in 2013.
Worth pointing out that £100 invested at the start of 1993 in the FTSE100 Index would now be worth £93.23, while $100 invested at that time in the S&P500 Index would now be worth $255.65.

Note that my sports investments these days are a very small part of my portfolio, with most of my money tied up in US-Index funds, property, and with play money invested in companies I've mentioned in this blog such as Tesla, Lloyds Bank, Boeing, and Pfizer, plus a few I haven't. David Sumpter suggested that:
Well, it's for old men too, or at least this one. Hard to argue against a stock that increased by 652% in a year. Bitcoin's mere 260% gain on the year seems rather tame by comparison, plus it seems that not only is it still incredibly difficult to use, but is also open to unregulated abuse as told in this sorry tale here

Overall, it was a volatile year for me as I expect it was for others. Q1 was the worst in spreadsheet history, with a 10.2% decline including my all-time record losing day of 16th March when I 'lost' six figures for the first time. 'Lost' is in quotes, because it was a paper loss only. I didn't sell anything, which is when you would actually take a loss, but it was a bold red entry on the spreadsheet and a record I don't want to see beaten any time soon. I've been around long enough to know that such days historically present buying opportunities.

In complete contrast, Q2 was the best in spreadsheet history, +14.3%, while Q3 was relatively quiet with a 7.7% gain. Q4 was the best of all, +13.2%. Six figure gains in both November and December made this the best quarter in real terms, if not quite by percentage.

As for the sports betting systems, the very selective EPL "Toss-Up" Draw System had a great 2020 winning us 12.05 points, but with just 25 selections, the 48% ROI is rather meaningless. With the over-round adjusted to a standard 3%, this system since 2000 has an ROI of 7.8%is overall, but 23% when the favourite is the Away side (or both Home and Away). Results are also improved by ignoring mid-week matches, but that's for another post.

Unfortunately the 'Close' selections ended the year with a small loss of 3.5 points from 64 selections, falling victim to the empty stadiums and a 15 game losing sequence in which the average goals per game climbed above 2.9. 

The Small Road Dogs in the NFL went 34-23-1, while the NBA version of this method was 56-47. Adding in the Time Zone filter I mentioned a few days ago, and the record improved to 21-13. 

Overs on high totals was again profitable, with around 54% or 55% depending on your entry point, but the one sport that was terrible last year was baseball.

The season was drastically different to usual, a mere 60 games in the regular season which didn't start until July. The long profitable T-Bone System lost between 8.8% and 10.5% depending on whether you played Straight Up or the Run Line, while backing "Hot Favourites" lost 4.8%.
The lines may yet move, but currently it looks like the final two matches in the AFC East on Sunday will be the final selections for this season's Small Road Dogs. 

Finally, a big thank you to @beigemartin who let me know that my latest post had been reproduced without permission or credit on another blog. Perhaps not the biggest issue in the world, but annoying that someone thinks this kind of behaviour is acceptable. At least they were quick to remove it when I requested them to do so. 

And with that, Happy New Year. 2021 will be the fourteenth year for this blog.

Tuesday, 29 December 2020

Inevitable Profits

It was not the best of weeks for followers of the NFL Small Road Dogs system with the three selections all losing. I'm beginning to regret making my comment last week regarding the remaining selections that:

Even if all seven lost, we'd still have a healthy ROI.

The ROI drops to 16.15% with one week, and probably three selections, remaining in the season.

If you're following the Small Road Dogs in the NBA as I suggested last week, you're probably thanking me, in spirit at least, given the start to the season they have made - i.e. six winners from seven selections, with four more over the next couple of days.

In the Premier League we had plenty of Draws, which isn't unusual in the December part of the holiday season. Blindly backing the Draw gives a return of 3.78%, while limiting yourself to "Close" matches increases the ROI to 30% since 2000.  

I'll update the Draw numbers in a couple of days once Wednesdays games are complete.

A few days ago, I was kindly sent a copy of a book called "Inevitable Profits" written by Dave Holdsworth which he says: 

was inspired by David Sumpter's book [Soccermatics] and your blog 

Dave's approach is to: 

"look for systematic bias in the odds. We can do this by modelling the betting market rather than the underlying sport. Instead of trying to predict which team will win we can try to understand under what circumstances the bookmakers’ odds are skewed away from true, showing us where to bet."

Readers of this blog will understand why such an approach is music to my ears. 

Dave outlines a strategy based on the stage of the season, comparing results from different stages of the season, and finds some interesting trends.

I've looked at results by month before, and noticed some interesting trends, but Dave inspired me to drill down still further, and while my interest remains primarily on the Draw, I'll share some findings in the next few days.

With the US markets open today, no doubt many of you are happy with adding another 1.92% to your balances as Tesla climbed again. Just three days remain in 2020 and I'm pretty sure this will be another category ending the year with a healthy ROI!  

Friday, 25 December 2020

Tampa Raptors

I mentioned yesterday that paying attention to Time Zones in the NBA can make a difference to your bottom line. By way of example, backing Small Road 'Dogs ATS travelling across two or three time zones since 2015 have an ROI of -4.39%, compared with an ROI of 6.27% when playing within one time zone of home. 

The NBA is a little complicated, given that some Western Conference teams are located two time zones apart, while some Eastern Conference teams are in the same time zone as Western Conference teams. Also this season, the Toronto Raptors are not playing their home games in Toronto, but at least for the start of the season, will be playing in Tampa due to complications crossing the US-Canada border during the pandemic.

Obviously this is an issue which will impact the NHL more seriously, with seven of the NHL's 31 teams based north of the border. The schedule for the 2020-21 season, although as there are no games scheduled in 2020, it's really just a 2021 season. Opening games begin on January 13th and the league will reorganise to reduce travel and to avoid the need for crossing the border, all seven Canadian teams will play in a new North Division, with the 24 US teams divided into three Divisions of eight - East, Central and West. Next season there will be 25 with the new Seattle Kraken franchise. All regular season games will be Divisional, with the top four in each Division making the playoffs. The first two rounds of the playoffs will also be Divisional, all of which means that this season will be unlike any previous one. Whether trends will continue remains to be seen, but Road Favourites have been good since the league re-aligned in 2013:
In Divisional games this ROI decreases slightly to 5.2%, but by taking into account the previous result for both teams, the ROI can be more than doubled to 11.6%, with the only losing season being the last one.

Merry Xmas.  

Wednesday, 23 December 2020

Zoning Out

After Sunday's shock win by the New York Jets in Los Angeles, we didn't have to wait long for another double digit upset with the Cincinnati Bengals win over the play-off bound Pittsburgh Steelers on Monday night. The Bengals were getting 13 points, and won by 10.

It was opening night in the NBA last night with matches being played in the team's arenas rather than in the 'bubble' as at the end of last season, but with no fans.

Small Road 'Dogs have been profitable in the NBA for the past four seasons, and this is a trend I expect to see continue this season, based on the results in the NFL with reduced or eliminated crowds. I've written before about the effect of time zones on games in the NBA, and results can be significantly improved if you put in the time to differentiate between teams travelling from East to West versus teams playing within their own zone or travelling East.

Tesla's indexation slump continued yesterday, but the entire US market is ending the year with a whimper rather than a bang although today is trending higher.

Some of you may recall that a big reason why I invested in Tesla was because it was so heavily shorted. As I wrote in June 2018: 

However I do own some individual stocks, the most recent portfolio addition being that of Tesla last November.

The trigger was seeing articles about the company being the most shorted stock in the USA. Shorting stocks is a risky business, and the more I read, the more it seemed that there are several misconceptions about the company. I also happen to like CEO Elon Musk's sarcastic, flippant, sometimes rude, approach to those trying to spread a false narrative about him or his company.

So it was interesting to read on that:

Tesla short-sellers are effectively admitting defeat after the company’s first trading days in the S&P 500 Index after new data from Ortex Analytics shows that short interest hit record lows.

At one time, TSLA stock was one the most-shorted stocks on Wall Street, but the company’s record year has had bears rethinking their strategy to put money on the downfall of the automaker, which has never really occurred.

Ortex Analytics has new research that shows that bets against Tesla have fallen to numbers that haven’t been seen since 2017. After an estimated $28.5 billion in losses, Tesla shorts are calling it quits on being bearish toward the stock. 

Monday, 21 December 2020

Toss-Ups and Teslanaires

After almost seven weeks stuck on just four selections for the season, we had not just one "Toss-Up" Draw selection but two this weekend, with Newcastle United v Fulham delivering for followers. 

The Away team was favourite in both matches, and since 2000 these selections have an ROI of 22.8% from 264 selections.

The NFL's Small Road 'Dogs also had two selections in Week 15, and both were winners, taking the season record to 33-20-1 (ROI 21.4%) currently the second best season since the league restructured.

2006's record is likely to survive given that we probably only have another seven selections this season and we'd need six winners, but we live in hope. Even if all seven lost, we'd still have a healthy ROI.

The biggest shock of the round was the New York Jets getting 17 points on the road against the Los Angeles Rams and winning straight up - their first win of the season. This was the biggest upset in the NFL since 1995.

Tesla made its debut in the S&P 500 today but it was an inauspicious start, although most markets were down across the board. A down day was to be expected after being purchased prior to indexation, as MarketWatch explains:

The reason Tesla stock is down Monday is probably because some index funds have already bought Tesla shares. With the buying done, there is a greater chance of some post-indexation dip might occur. It’s happened in the past when other stocks have been added to the S&P 500—although Tesla stock always seems to defy convention. Shares are, after all, up about 750% over the past year. 

A 6.49% drop wasn't what I was hoping though, but with with my gains at over 1,000% as of Friday's close, I think I can handle it.

The volatility of Tesla's stock price is likely to lead to the same in the S&P 500 Index, with an $11.11 change in stock price equating to a one point move for the Index. 

There was an article on Bloomberg at the end of last week, reporting on "Teslanaires", those people whose holdings are now, or were, worth over a million dollars.

Now Smith has joined the ranks of the “Teslanaires,” as some of the company’s investors call themselves, with a holding that he says has ballooned to over $1 million, fueled by a rally of nearly 731% this year as of Friday’s close.

If the company is to become a trillion dollar company, as many experts predict, the stock price will hit four figures, unless there is another split, and if it's to become a $2 trillion company as at least one investor predicts, the upside is even bigger. One to hold.