Friday, 31 March 2017

Concerning Big Data

Marty commented on my post regarding Pyckio's plan to create the biggest sports betting hedge fund in the world, suggesting:

'Big Data' my arse. He just has what he considers to be a large number of observations... that doesn't make it Big Data.
Marty does have a point. The definition of Big Data Analytics is this:
The process of examining large and varied data sets - i.e., big data -- to uncover hidden patterns, unknown correlations, market trends, customer preferences and other useful information that can help organizations make more-informed business decisions.
Clearly, this doesn't appear to be anything close to the proposed strategy for bet selection outlined by Daniel Mateos Vazquez detailed here, which relies on tipster's recommendations, and you don't need Big Data to look at how good a tipster's record is.

In my experience, throwing buzz words such as "Big Data" around tends to impress those who don't understand them, but when a term is used inappropriately, it raises concerns about the viability of the entire presentation / project to those who are better informed.

Even the use of the term Hedge Fund should be questioned. A Hedge Fund is defined as:
a limited partnership of investors that uses high risk methods, such as investing with borrowed money, in hopes of realising large capital gains.
Again, this isn't what Pyckio's plan is, and I certainly hope that none of the investors are playing with borrowed money!
The intention is to build a portfolio of great analysts for each sport and competition we will be focusing on, and offer a variable remuneration depending on the actual results achieved though their picks. If picks are successful, (circumstance that will be based on several factors and in no case will be absent of risks), this remuneration might be higher than the amount received by selling individual picks to punters.
While I can see how remuneration for a successful tipster from Pyckio might be higher than that from selling picks, especially for an unproven tipster, it's hard to understand why a profitable tipster wouldn't invest his own money at the best price before advising Pyckio of the selection. 

Presumably this profitable tipster would be restricted to either the exchanges, which are not that liquid for many markets, or to the books that do not limit bets from winners, because as Daniel says "it helps them fine-tune their quotes" - but the outcome of "fine-tuning" their quotes is unlikely to be that the price will lengthen!

It's hard for me to see how such a collective enterprise can be successful long term. As James pointed out, sports betting markets are miniscule relative to financial markets, and the competition these days is tough - some of the enterprises out there really do use Big Data! 

While we don't yet know what fees and expenses will be charged by Pyckio, if they are in-line with those of managed financial funds, (my thoughts on these should be well known by now) investors are going to be relying on Pyckio finding an edge significant enough to overcome these, never mind all the other costs involved, and if these include fees to betting brokers as mentioned by Daniel, well good luck. 

A true Hedge Fund may have "hopes of realising large capital gains" but for a sports betting fund, such hopes seem highly improbable. Financial hedge funds and markets essentially exist to enable the economy to function and without them we:
would be far less developed, individuals would be significantly less wealthy than at present and global standards of living would be significantly reduced.
Sports betting markets serve no such purpose.

As retirement approaches, I have an appointment next week with a Financial Planner. Perhaps I should mention this new Fund as an option? 

Update: While I hadn't seen Betfair Pro Trader's latest post on this topic before I wrote and posted the above, many of the points I raised are addressed there also, so take a look. 

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