Thursday, 4 March 2010

Value Opinion - At Any Odds

Greg said...

Anyone who doesn't bet odds-on is wrong? That goes against the strategy of virtually every long term profitable football investor I know of. It’s a big shout for someone who has no proven record in the game to say that the likes of mike from winabob, matt from football elite, dave regan, mike smith etc are all doing it wrong. I can see the point you are making but that is a very simplistic view of things. This isn't a criticism of you or your blog btw, just disagree with you on this subject. Keep up the good work with the ratings.
Thanks for the constructive, or at least, positively toned, comment Greg. My point about betting at odds-on is simply this. Odds-on is an arbitrary value, one where the implied probability of an event is greater than 50%, and emotionally significant to human beings because it marks the point at which the stake (risk) exceeds the potential winnings (reward).

In mathematics, a probability of an event A is represented by a real number in the range from 0 to 1 and written as P(A), p(A) or Pr(A). An impossible event has a probability of 0, and a certain event has a probability of 1.

There is nothing magical about P(A) > 0.5.

The idea that the laws of probability cease to apply when P(A) > 0.5, or that value ceases to exist here is simply wrong. Admittedly my statistics training was a fair while ago, but I’m willing to bet (at odds-on if necessary) that the laws are the same today as they were n years ago. Mathematics is like that.

It is only the human emotional response to the risk exceeding the reward that makes some people wary about investing, or rather gambling, in this range. It’s this difference between considering a bet an investment or a gamble that is perhaps the key. When it comes to sports investing, the idea of risking more than you stand to win perhaps seems counter intuitive at first, but it shouldn’t be.

I posed the question of backing at odds-on to Matt of Football Elite (I subscribe to his service) at the end of January and here is his reply in full:
The reason I don’t bet below 2.0 is simply that I just can’t make a decent profit doing so!

Year on year I would look at my end of season stats and it would be the bigger priced selections that did the majority of the work. The shorter bets would either be showing a tiny ROI or even a loss some seasons.

I was loathe to make the change for a long while since as you say in theory value should exist at any price but I couldn’t keep ignoring what the stats were telling me.

I wish I had a clever explanation as to why I don’t seem to be able to make a profit at that odds range but I don’t. Just doesn’t work with my style of betting I guess. There are quite a few of the more respected football tipsters that feel the same.

Maybe the market is too efficient at that end of the market?
I have no idea who the other names Greg lists are, but if he can get their input on this debate, I would love to hear their thought.

Matt openly concedes that logically, it makes no sense. “Just doesn’t work with my style of betting I guess”. That’s fair enough, and Matt achieves good results focusing on odds-against selections, but it’s not evidence that value doesn’t exist at odds-on, just an admission that Matt can’t find the value among the shorter prices.

"Anyone who doesn't bet odds-on is wrong?". I am not saying that - I am saying that anyone who rules out betting at odds-on is wrong.

Another Anonymous commenter said this:
It makes no sense for any clued up punter to say they would back an even money shot but nothing less. Perhaps they'd grudgingly be prepared to back a 1.99 but not a 1.98 shot. What about 1.97?

To back at only above evens is simply an arbitrary line in the sand drawn by people who have no concept of value.

If these same people knew, say, that a coin was biased and would land heads 75% of the time, would they still not be prepared to back evens for heads? Presumably not.

Not being prepared to back odds on shots simply shows they have no confidence in their ability to price up a market.
Quite. To me, value potentially exists at any price. If Manchester United are priced at 1.99 at home to Burnley, that price is value.

If Roger Federer is playing Wayne Odesnik and is priced at 1.98, that price is value.

(I'm assuming that Manchester United and Roger Federer are at full strength, and want to win their games).

I could go on, but I think the point has been made.

It’s not the price that you are backing at that is important. It is whether or not that price represents value, and clearly, odds-on can offer value as much as any other range of odds.

"Try not to become a man of success but rather try to become a man of value." - Albert Einstein

Update: With impeccable timing, Matt has just commented further on this subject, and it's worth including his comments here since they can easily be missed otherwise:
For me personally it is simply a case of the profits not being there for me when betting on short prices on football.

Why exactly that is I don't know but going back over my results in past years it was always the bigger priced bets that did all the work and the odds-ons would always make a loss or just a small profit and were dragging the overall results down.

My theory is the general public (dare I say the mug punter) will in general overbet the shorter priced teams as the general public tend to bet on what they think will win rather than what is the value price. There tends to be more mug money in football than other sports and that means most short priced sides are shorter than they should be and so obviously aren't profitable if regularly backing them.

Or it could just be the market is very efficient at that end of the market and the bigger opportunities lie in the more overlooked sides.

Or it may just be I am crap at picking short priced teams!

Obviously it goes without saying that if say a full strength Man U were 1.6 at home to Portsmouth I would be all over it but I do think in general it is harder to find value at the lower end of the market in football and I don't know many that are able to consistently do it.

There comes a time when you have to act on what your past results are telling you and cut out those bets that are not performing no matter if they look value to you or not (bar the once in a blue moon way out of line price)
Thanks Matt.


nigelbleddfa said...

Anyone backing at odds on is a mug punter, it's no surprise you're losing.

I'm always happy to lay the mugs at odds on thinking they're buying money.

"If Manchester United are priced at 1.99 at home to Burnley, that price is value." whoopdy doo what a convincing argument you put forward. You know as well as I do that just wont happen and if anything the opposite occurs with odds on shots as people like you think you're buying value when in reality you just push the price in even further


Anonymous said...

I am German, therefore sry for some wrong sentences in this comment, i am betting for a living and I mostly bet on odds lower than 2, like 95% of my bets are such bets, because I don't like to much variance and if I could choose between 2 different systems, one with 9 out of 10 winners netting an overall 110% roi or a system with higher odds and 2/10 winners netting a 110% roi, I would choose the first one every time, because I feel more often that good feeling of winning instead of loosing. With that comment there should be some truth in the words that sometimes the shorter prices are no value because people don't want to have a market against them... I don't bet often one winner of football teams with odds higher than 1.4, instead of that I back the double chance because since the first minute of the game "my markt goes with me" and I don't need to hope for a goal... Sure that has nothing to do with value, maybe if I back the winners without the draw my roi would be little bit higher, but that's a mental blockade and the same thing is only to bet on odds higher than 2. I only want to say that you can for sure find value in smaller odds than 2 in football. Btw. Cheers for Matt, I think overall he makes good work and I am on of the subscriber, but even his strategies lack sometimes, especially in bundesliga, because the homeadvantage isn't so big like it is in serie a.
One more thing to think about, is that sometimes that "mug" money lies on the bigger prices, because nobody want to back federer @1.03 in the first round ofa grandslam, but for sure there could be value because he will win this game against someone ranked 150 like 100% of the time. So there could be some bets, where the mug money goes to the bigger prices, because "they can win nothing if they are betting in fed" in that example.

Have a nice day and keep up the great blog

Rob The Builder. said...

I'm amused by the transposition of ideas from recent posts - Maria's system netted her £100k laying at odds up to 11 ( that's a 1.09 bet to me ), yet anyone betting odds-on is a mug.

It takes all types to make a market, I suppose.

Cassini said...

"anyone betting odds-on is a mug" is hardly an idea worthy of the name, and certainly not something that Cassini would say.

Some odds-on shots are value to back, and some are value to lay. It's as simple as that.

SCM said...

nigelbleddfa -- I think you might be the reason I promised myself never to read comments posted at the end of blogs.

Congratulations on missing the point entirely.

CSL said...

The important thing is finding value in the price relative to the probability. Whether it's backing a 97% chance at 1.10 or backing a 40% chance at 2.60.
Saying "I won't back at odds-on" is equal to saying "I don't want to make as much money as I could".

Anonymous said...

Please excuse as me if i'm wrong as i'm fairly green with trading. Nigel says he's always happy to lay the mugs at odds on.

I'm pretty sure that laying at odds on would be mug punting too wouldn't it? Or has he just unearthed the most obvious system on earth that we've all been missing all the years!

Lol. Just lay off mug punters at odds on. Why didn't I think of that?

Azzmovic said...

Why can't people accept that there is value at any price, albeit harder to find at the sharp end of the market.

If Chelsea are priced at 1.40 and you consider it value (that they would win the match 3 out of 4 times for example) then it's value. On your judgement you would win overall if you put the bet on 4 times. Obviously you might not but is that what value is, a considered judgement, and there are no boundaries as to what price that starts and ends at.

Betting at 1.02 could be considered value if you think the odds should be 1.01.If your betting at 1.02 on 1.01 shots 100 times then you're going to make a profit. Simples.

I do agree with Matt from Football Elite (member myself)that you do whatever works for you (and Matt is very good at picking winners from over 2.0 selections).

But Cassini is completely correct here about value at any price.

Rob The Builder. said...

As head of the Wayne Odesnik fan club, can I just complain about your slight on our hero.......

Anonymous said...

It just goes to show you why people don't make money when they imply there can be no value at odds on. What a totally stupid statement.