Monday 13 May 2024

New Chapter, Mindset, Addiction and Target

It's been a while, with the world being denied a post here for a full calendar month for the first time in more than 16 years. I ended my previous post with these words:
All being well, I shall be back on May 8th after my third Total Solar Eclipse, either employed or retired. How boring life would be if we didn't have such uncertainties in front of us. Stay safe and stay lucky.
In the end, I extended my trip by a few days due to the fact that my long awaited retirement finally became official midway through the trip. 

I've mentioned 'severance' a few times here, and while I'd like to say that I expertly negotiated a good 'voluntary' severance package for myself, the truth is that I ultimately had little say in the matter. 

For quite a while now, I've been telling anyone who's interested - in other words, basically talking to myself - that a year's salary would be great, but that I'd be happy with six months', and so the 39 weeks 'involuntary' severance package awarded, which also allowed to keep all my stock options, was more than satisfactory.

While I've been planning for this day for a few years now, it's one of those moments in life when you don't really know for sure how you'd feel until it happens but, so far at least, there have been no moments of panic or doubt. The transition to retirement will be an adjustment of course, - going from being responsible for a team of 60+ people to not even being the CEO of my own house - and will likely take a while to fully process, but at the age of 67 and after almost 49 years of working - my first job was with the NatWest Bank in Oxted in August 1975 - it's time.

It's definitely helped psychologically that the markets have been on a good run in recent weeks - my net worth spreadsheet hit a new high this week and that's not counting the package since I've yet to meet with my financial advisor and confirm that I should sign the agreement - but it will be interesting, and possibly quite challenging, switching my mindset after almost half a century from one of accumulation to decumulation, if that is even a word. 

That's the personal news almost out of the way, other than to say that the Total Eclipse was awesome, with totality lasting for 4 minutes and 11 seconds and clear skies in our viewing location (Russellville in Arkansas) and that I gained almost 11 pounds on the trip, a number which could have been worse given that my wife and I were unfortunately introduced to the previously ignored (I'm not a fan of yellow custard) world of Frozen Custard by friends, and developed an unhealthy addiction to the product with twice daily visits occurring more than once. I can resist anything but temptation.

Moving on to sports and there's a lot to catch up on. The club football season is almost over, with the lower leagues in the midst of their playoff games and the Premier League wrapping up in less than a week. The European club competitions have their finalists all set, with no English clubs involved for the first time since 2019-20.

In the US, the playoffs for both the NBA and NHL are in progress, while MLB is into its second month.

Starting with the National League playoffs, and the strategy for these games detailed in the Sacred Manuscript produced a profit for the sixth time in the seven seasons under the current format. The total profit increased to 15.68 units from 38 matches.

The National League playoff final (played on a neutral ground) finished as a Draw for the fourth consecutive season, and the ROI on backing this result over the last 21 seasons is now 38%.

The Regional Finals for each of the North and South Divisions are hosted by the highest seeded club, but as is often the case with Finals, the Draw is value nevertheless, and the ROI on this results over the 30 matches climbed to 39% with the South's Worthing v Braintree Town Final delivering.

Wrapping up the non-league season was the FA Trophy Final, and again the Draw delivered with the ROI on 20 finals now at 36% and the ROI on all English Domestic Finals (including play-offs) close to 20%:
If we include the Community Shield matches, the ROI does climb to 21.6% and while I see the match as more of a glorified pre-season friendly than a competitive fixture, the data suggests it's more the latter.

In Championship play-off Semi-Final First leg matches, the ROI on laying the Home team is now at 16%, and in Second Leg matches where the first leg was a Draw, the value is in backing the Away team (ROI of 62%) although the sample size of 12 is small. The more conservative approach of laying the Home side has an ROI of 4%.

For the European Competitions, the basic strategy for the Champions League knockout rounds made a profit with an ROI of 8% and 19% for matches between clubs from the Big 5 Leagues.

Results from the Europa League were very poor, with the ROI from 25 selections -9%. Rubbing salt into the wound, the selection process for this tournament is somewhat convoluted, so I'll be revisiting this system in the summer.

The Europa Conference League, which is still in its infancy as a competition, but for which I expect results similar to the Europa League, also had a losing season with an ROI of -5% from the 22 selections.

I'll review the other leagues in Europe as well as the Premier League once the season is over.

In the NBA, the regular season finished last month with ROIs of 2.4% (from 476 selections), 10.2% (171), 10.3% (69) for the primary systems, -0.5% (55) for the Rested Team System, and 4.2% (164) for the Totals System, a total profit of 42.38 units for the season.

Unfortunately the NHL Systems lost a combined 14.64 units this season, but ahead overall in the US for these two sports.

I'll look at the MLB later, but a quick review shows that both the Hot Favourite and T-Bone Systems may be cooking again, at least in the National League, but for now I'm just observing this sport following the significant rule changes. 

I did attend my first College Baseball game in Arkansas last month with the then number one ranked Razorbacks beating Florida in game one of a double-header, and speaking of College Sports, and one subscriber has very generously donated a College Basketball System for my review, with the possibility of it being added to the Sacred Manuscript for next year. 
IF you find it has value and you would like to add it or a version of it to the Manuscript, as surely it is good to add another league to bet on, please go ahead, but do not divulge details on the blog
It would indeed be good to have another sport included and I'll be taking a look in the next few days while, of course, remaining respectful of the request not to give anything away. I think I've mentioned that I'll be working on the 2024-25 manuscript over the summer with a view to having it completed by the end of July following the Euros, and if anyone subscribes today, they will automatically get the updated document for free at that time. 

Finally, Jim Simons "The Man Who Solved the Market" - as his biography by Gregory Zuckerman was titled - has passed away at the age of 86. Many of you reading this probably know his story, but he was a gifted mathematician who turned his talents to the financial markets with huge success.
Medallion, the largest of these funds, earned more than $100 billion in trading profits in the 30 years following its inception in 1988. It generated an unheard-of 66 percent average annual return during that period.

While hedge funds typically charge 2 and 20 (2% fixed fee and 20% of profits), Simons' fund was able to charge 5 and 44! An inspiration to us all and with more time available to me now, I need to up my game, although beating that 66% average could be a challenge.

Thursday 28 March 2024

Daniel Kahneman RIP

I've often mentioned here the importance of psychology in investing, and probably the top expert in "the field of psychology of judgment and decision-making" passed away yesterday.

I've mentioned Daniel Kahneman him several times over the years, and if you haven't read his book Thinking, Fast and Slow, you should.

It’s a book that will take some effort to read because the ideas are dense, and even though they are well-presented, they’re not cloaked in the clothes of story. If you’re willing to do the work, though, Thinking Fast and Slow may be one of the most important books you ever read.
His Prospect Theory explains why investors typically consider the loss of a specific amount twice as painful as the pleasure received from a gain of the same amount.
When they made decisions, people did not seek to maximize utility. They sought to minimize regret.
Michael Lewis wrote a great book about Kahneman's relationship with Amos Tversky, called "The Undoing Project: A Friendship that Changed the World" which I also recommend. 

Some light reading for you while I am away for six weeks as I mentioned a few days ago. 

Although I have yet to receive a response to my mentioning that I might be open to a voluntary severance agreement should one be on offer, I have been immersing myself in the topic of retirement finances by listening to podcasts on my daily walks and reading while less active and I suspect much of my time away will be spent on this topic. 

One of the more interesting papers I've come across on the topic of how retirement funds should be invested (many experts say that one should move from stocks to bonds as you get older) is a recent one (October 2023) titled "Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice" by Aizhan Anarkulova, Scott Cederburg and Michael S. O’Doherty which suggests that a 100% equity allocation may be the safest asset allocation even in retirement.

I've always been of this mindset myself, although my more risk averse wife is not, but fortunately I make the financial decisions. Yes, the 38% expected drawdown would be emotionally challenging, but I've been through a few of these in my time, with the lessons of Black Monday (October 18th) 1987 coming at a very good time in my life. More recently, on March 23rd, 2020, I was down 23.4% but never sold a single share and markets have bounced back as they always have done.

The odds that my next post will be penned as a retiree have moved to slightly odds-on, with an announcement coming on April 18th if rumours are to be believed, but once I've got my head around the sequence of return risk, the 4% rule and switching my mindset from accumulation to decumulation, I should be good to go. With Bitcoin halving around that date, it could be an interesting week.  

Enjoy Spring. All being well, I shall be back on May 8th after my third Total Solar Eclipse, either employed or retired. How boring life would be if we didn't have such uncertainties in front of us. Stay safe and stay lucky. 

Saturday 23 March 2024

Towel Throwing

Back in November, I mentioned a fairly well known tipster who, during a poor run of results, suggested that increasing stakes might be a good idea.

We're currently a few points down for the season with both official and unofficial picks, so if you've been thinking about upping the stakes at some point, this should prove to be a great time to do that.
I pushed back on this idea for what I hope are obvious reasons, but if anyone did actually follow this poor advice, they would be seriously regretting that decision. Hopefully many took a 'good money after bad' approach and scaled down the size of their investments. 

The ill-advised recommendation was made after 10 bets and a manageable loss of 4.02 units, while the subsequent 27 selections have now resulted in further losses of 14.76 units, a total ROI for the season of -50.8%.  

These are the 'official' bets with the towel having been thrown in this week on the 'unofficial' bets after 82 selections and a -24% ROI.  

All this is to point out that chasing losses is not a smart strategy rather than anything else, but with the National League less than four weeks from concluding, a losing season is now guaranteed.  With the acknowledgment that the edge has gone for unofficial picks, I'm sure some subscribers must be licking their rather deep wounds and wondering whether the edge has gone for official picks also. 

It happens. Markets are Darwinian - rather than Newtonian - in nature, and they evolve, and it's quite likely that the increased interest in the National League has sped this process up. We'll see how the remaining weeks go, but end of season games can be tricky with the motivation for teams ranging from nothing to play for to must-win for a play-off spot or to avoid relegation. Chesterfield have now won the League and promotion, but eight teams are realistically in with a chance of making the six club playoffs, while at the bottom Oxford City have gone with a tight battle between several clubs to avoid filling one of the other three relegation places. 

Friday 22 March 2024

16 Down

This blog is now into its 17th year, and not too many sports investing blogs can claim this longevity. 

Matekus' Sports Trader blog has been going since September 24th, 2009 which by some incredible coincidence is the exact same date as Steve Mullington posted his first entry on the Horse Racing oriented Mull it Over blog. The latter is updated almost daily while Sports Trader is a little less frequent with his posts.

Wayward Lad began posting in March 2010, with his Pension Builder blog making its debut in August 2013. There may be other long-standing blogs out there, and if you know of any that should be added to the blog roll here, let me know, and check out those long-runners I've linked to. 

Not so much these days, but in the past I would regularly receive requests along the lines of "Hey there, I've started a new blog. Please add me to your blog roll" but my experience told me that almost all of these would dry up in a very short time, so I would politely decline until a significant amount of time had passed. 

Whatever happened to Steve at daily25? With the benefit of hindsight, his last post is a bit concerning since he seemed to have fallen for the NFT scam. Perhaps 'scam' isn't the right word, but very few people have made money from NFTs. The idea always seemed a bit silly to me and I've never been tempted to go anywhere near these, and I'm still on the fence about crypto although I do have a fairly small FOMO investment in Bitcoin as I've mentioned. Hopefully Steve is doing well as he was one of the good guys and I still remember him sending me a Xmas hamper back in 2012 after my XX Draws had made him a lot of money. Steve wasn't shy about betting big, which is why the NFT thing is a little worrying.

I'm pretty certain the blog won't last for another 16 years given my age, but I still enjoy writing and, as I mentioned the other day, the challenge of finding edges. I'm still working, with nothing yet from my enquiry into a voluntary severance package, but I'm not in a hurry. My suspicion is that cuts are coming and by broaching the subject I've pretty much guaranteed I'll be included in the next round. 

We are off to Arkansas next week for the Total Eclipse on April 8th, the third one I will have experienced following Cornwall 1999 and Idaho 2017. Hopefully the skies in Russellville will be clear. The next one on my list is August 2026 in either Spain or Iceland, and if you have never experienced totality, you really should make sure to add this to your bucket list. 

Thursday 21 March 2024

Seoul Split

Major League Baseball is back, sort of, with a couple of games this week in South Korea before the season starts for real next Thursday with all 30 teams in action. With the recent rule changes, years of data has become pretty much valueless, and the last couple of years have been challenging to say the least. 

The totals markets are the ones where the most disruption would be expected and the table below shows the results over the past ten seasons for a couple of Totals systems (one Overs, one Unders) that, once upon a time, were good:
2020 was the shortened COVID season, but the golden years of 2016 - 2021 are clearly over. 

We do have two full seasons of data from the new world, which is a little over 5,000 games, and there are a couple of edges that seem to be showing themselves so far.  

The two games in South Korea between the Los Angeles Dodgers and the San Diego Padres were split.

Wednesday 20 March 2024

39 Months of Imminency

On September 21st, 2020, I bought some stock in a company called Chipotle Mexican Grill at a little under $2,000 per share ($1,196.45 to be precise). As I explained almost a year later:

One company I've not mentioned before is $CMG (Chipotle Mexican Grill) which I bought last September, primarily because I suspected a stock split might be imminent.
Finally, it was announced yesterday that the stock would indeed by splitting, at 50:1 no less, the largest ratio I can recall, and as you can see from the Tweet below, it has been worth the wait:
Up another 4% on the news today -  
and up 143.3% since I bought it, the stock is the second biggest individual gainer I have behind $TSLA which continues to lead the way at +718% despite a poor start to the year. 

The loosest of definitions for 'imminent' are unlikely to include a wait of almost three and a half years, but it's an investment that has been worth that wait, and I'll probably not be selling any time soon. 

Patience is sometimes rewarded, and as I mentioned in that August 2021 post:
"Investing becomes so much simpler when you're willing and able to measure progress in years and decades instead of weeks or months."
No news from Berkshire Hathaway on something similar for their Class A stock which currently trades at a mere $622,777.12 a share...

I've owned their more reasonably priced Class B stock since 2020 also, and this investment is up 84% right now, and sits fifth in the table of best performers.  By way of comparison, the S&P 500 is up by 38% since the end of 2020. 

Tuesday 19 March 2024

For Only Metal, What a Bore

I also took a further look at how Big 6 matchups played out when the teams meet in the late stages of domestic cups (FA Cup Quarter-Finals, Semi-Finals and Finals, League Cup Semi-Finals and Finals, and Community Shield games) and the Draw over 76 matches has an ROI of 39%. Manchester United host Liverpool in the FA Cup Quarter-Final this weekend, with the visitors currently odds-on favourites.
Once again, the Big 6 produced a winning Draw for us on Sunday, taking the ROI from now 77 matches in the above categories to 43%

For the 2023-24 season, in all competitions, the ROI is an incredible 173% (41.45 units from 24 matches):
There are another nine Premier League games this season between these clubs, as well as at least one FA Cup tie, probably two, and possibly a pair of Champions League semi-final games. 

These results aren't normal I hasten to add. The same strategy last season would have lost 9.83 units, although in 2021-22 it would have been up 6.83 units. The Draw is a fickle fellow, but 

My last post about Anonymous Fan being inspired to dig into the data and find a nice NHL system triggered a subscriber to the Sacred Manuscript to write:
Hi Cassini!

Hope you are doing well. I was quite inspired by your last post and no, I am not writing to ask about the query that was sent to you :)

But I might have found another good one and was interested in your opinion. * If it is as good as it looks, please don't share the details of it on the blog right now. *
I don't have Excel at home (using Open Office) so I can't put it through Joe Buchdahl's system to test its validity.

But unless I have done something wrong, it shows a 13.21% all time ROI over 1123 bets since 2006 with only 2 seasons resulting in a small loss.
If we include the 2023 season although it is not yet over, 10 of the 18 past seasons show double-digits ROI, including 6 above 20%.

Once again, it was very encouraging to hear that this blog, the manuscript or perhaps a bit of both have inspired someone to do some research.  

For the record, the probability that these results were from luck as generated by Joseph Buchdahl's spreadsheet was just shy of 1 in 50 million, i.e. very unlikely, and the best part of it is that the market bias it takes advantage off also applies in the NBA, which is similar to the NHL in many ways, including often shared arenas. 

I must admit to being somewhat inspired myself, and was happy to exchange ideas and observations.  As I've mentioned many times, it's not the money so much as the challenge of finding an edge. For only metal, what a bore. RIP Steve Harley, another teenage legend gone.