Thursday 8 April 2010


Not much time for posting at the moment, nor for the next couple of weeks most likely, with my son paying his old Dad a visit during his Easter holiday, but thanks to Anonymous for his recommendation of The Book - Playing the Percentages in Baseball by Tango, Lichtman and Dolphin who might sound more like a firm of solicitors than baseball writers, but the book looks like fascinating reading. A copy has been ordered.

My son showed me this passage from his Essentials of Investments text book:

An interesting question is whether a technical rule that seems to work will continue to work in the future once it becomes widely recognised. A clever analyst may occasionally uncover a profitable trading rule, but the real test of efficient markets is whether the rule itself becomes reflected in stock prices once its value is discovered. Once a useful technical rule (or price pattern) is discovered, it ought to be invalidated when the mass of traders attempts to exploit it. In this sense, price patterns ought to be self-destructing. Thus the market dynamic is one of a continual search for profitable trading rules, followed by destruction by overuse of those rules found to be successful, followed by more search for yet-undiscovered rules.
Although written about the financial markets, the points made appertain to sports markets just as much. Anonymous went on to say this correctly about the (ante-post) markets for US Sports:
...the markets are extremely mature and efficient. I would suggest they are far more efficient than markets on non-US sports. There have been many more academic studies on US Sports than others and I believe general value will be minimal at best.

No comments: