Thursday, 21 April 2011

Contrary To Popular Opinion


Continued from my previous post, and a couple of comments. The first from Nick said ...

shows how many guessers there are about!
and then Ben commented that the Newcastle v Manchester United games was...
One of those situations where it really did pay to go 'against the crowd'. Sometimes the case when there are so many people/tipsters/punters pointing towards an 'obvious' bet you should just stand up and swim against the tide.....
While the four gentlemen who all fancied Overs may well deny they were guessers, and could have reached their verdicts after calculating the probabilities of each team scoring 0, 1, 2 or more goals, I didn't see any evidence of that. Looking at previous head-to-head results back to 1904 may or may not be significant, (I suspect not, but even if it is, such a commonly looked at statistic would hardly offer an edge), but many stats I see considered seem to merely be a justification for the guess. Incidentally, when I see some blogs and their fancies for the day, I wonder what the posters have been drinking. I mean seriously, how can someone in London possibly have any edge on a match in, say, Argentina, Bulgaria or Croatia? It's hard enough to find value on your local team - never mind a team from an obscure league playing on a weekday afternoon. Tip - you don't have to bet every day.

The second comment about swimming against the tide is interesting. In traditional investment circles, contrarians will study balance-sheets, but they place more emphasis on behavioural factors in making investment decisions so for example if a stock is heavily recommended, the contrarian assumes that it is fully-valued. If a business is known to be in trouble, the contrarian hopes that it has already been beaten down. Why would sports investing be any different? The Bundeslayga system essentially works on the theory that the odds-on favourite is too short, and that does well enough, and several sports in-running see the price go too low too early on the leader, a case of the crowd stampeding perhaps rather than lining up in an orderly fashion for the bargain of the day.

Why do people follow the crowd?
Comfort - It is comforting to see other people doing the same thing we’re doing. When you’re lost and trying to find your way, it is comforting to see other people in the same location even though they are lost too. At least you’re all lost together.

Fear - It is scary to be alone. It’s hard to believe that everyone else, except us, could be wrong. Maybe we’re the one that is wrong. We caution pioneers – “they are the one’s with arrows in their backs.”

Risk Aversion - When you go against the crowd, you accept full responsibility for the results. It used to be said that nobody was ever fired for selecting IBM. When you invest with the crowd or invest in an index fund it is a safe way to avoid criticism.

2 comments:

blueorange said...

To get my odds for the unders/overs markets of Premier League matches I look up the form of the last 5 home/away games of both teams, look at what they've scored and conceded and using the poisson distribution come up with each teams chances of scoring goals against their opponents. This takes a long time and I certainly am not a guesser. If I judge something to be value going by my ratings then I'll have a bet. Out of the 10 matches per week only on average 2 show any value.

Mark said...

"I mean seriously, how can someone in London possibly have any edge on a match in, say, Argentina, Bulgaria or Croatia? It's hard enough to find value on your local team - never mind a team from an obscure league playing on a weekday afternoon."
A liitle harsh perhaps when one of the most sucessful, proven non-league (English) betting experts is Skeeve. He is Croatian and still lives in Croatia as far as I know.