Nibbling Headlands

A certain Zooot (possibly not his real name) had this comment on the Betfair Forum, which includes a rather eloquently phrased final sentence: 

Identifying value with confidence and consistently is very hard. The market punishes you if you step outside the value zone and all the while commission is leaking away your profits. Plus the market is continually shifting and adjusting for a host of reasons so just as you pin something down it shifts.

I once had a system working for thousands of bets and it all seemed logical and predictable and riches beckoned. Then it shifted for no reason I can pin down and became loss making. Even a large sample size is no guarantee. You need thousands of bets to know if you have a genuine edge. Analysing past data with sample sizes of say 1000 races, will show up apparent patterns all over the place that will slowly disappear as the sample size grows. Some were real and changed over time, some were just wrinkles in the randomness.

By the time your sample size is large enough it is quite possible the market has shifted or adapted and your edge is gone before you were ready to scale up to target it.

The market has a quite amazing ability to adjust itself to remove any advantage someone(s) may spot. Just like the ocean likes straight and slightly curved beaches and works away at headlands and outcrops to create these, the market nibbles away at the value points to remove them to move towards accuracy.

The key here is that third paragraph. By the time your sample size is large enough to 'prove' an edge, paradoxically, the edge will no longer exist. The fact that markets are ever-changing is exactly why a purely statistical approach can't work. You're not competing against the market. You, and all those you are competing against, ARE the market.

Returning to the argument about passive versus active funds, I recently found the below quote:

As Scott Adams famously said:

I can think of many cases in which I would recommend active money managers over index funds. For example, I might be giving the advice to someone I hate or—and this happens a lot—someone I expect to hate later. I would also recommend active money managers if I were accepting bribes to do so, if I were an active money manager myself, or if it were April Fools' Day. And let's also consider the possibility that I might be drunk, stupid or forced to say things at gunpoint. I've also heard good things about a German emotion called schadenfreude, so that could be a factor too.

It's a topic much discussed here previously, but the spin on the 'long term' seemed apt in regard to finding an edge in betting.

I think the cognoscenti among us, those in Super Premium Charge territory or with a proven track record of success, would agree that the 'blink' aspect of betting is under-estimated. If not a 'blink' component, certainly there's an element of a bet 'feeling' right. I've written before that I know I'm in trouble when I place a bet and my body reacts:

While I don't consciously have an amount that I am comfortable betting, my body soon lets me know if I've over committed - and my wife can hear my breathing pattern change to heavy, so she knows as well and stays away! A side benefit of this is that I am able to watch hours of "When Girls Go Wild" videos without fear of interruption, although they are nowhere near as exciting as "When Bots Go Wild". So I'm told.

Another thought is that the perfect is the enemy of the good, an issue previously discussed here. In my experience, it's better to jump on a trend (staking sensibly) and ride it until the (almost) inevitable end than sit around waiting for the 'proof' that never comes. Good is still good, and lots of good adds up. If the trend appears to be fading or gone overnight, move on. Better to have bet and made something, than waited and made nothing.

Finally, I had an email from Flash, who wrote:

Hi, I tried contacting you on Twitter but you may have missed it.

I have started a sports betting blog: http://winnerswinonsports.com/

I was hoping that we could exchange blogroll links?

I had indeed missed the request as I seldom use Twitter other than for announcing the latest newsletter or for sending out an occasional brilliant or witty observation. Several Twitter users seem to have too much time on their hands, and with nothing positive to say, it's best to simply ignore a lot of the rather repetitive and boring Tweeters out there. Block and mute works well too!

I'll add Flash's blog if it survives the test of time, as I don't add blogs to my blog roll until they have been around for a while. I find that a lot of people start blogs full of enthusiasm and then after a few losses, give it all up. The link is in this post if you wish to check it out, although the latest post doesn't bode well for longevity, opening with:

A couple posts ago I wrote the best post this blog has ever seen; about my NBA bets. I mentioned that basketball is my favourite sport to watch, and to bet on. Unfortunately my recent basketball bets haven’t been very good. I’ll be honest with you, they’ve been ball-breakingly bad. I’m currently in the mist of my worst losing streak betting on hoops. I’ve gone 4-22, which includes a losing streak of 10.

"The best post this blog has ever seen" sounds good enough, until you see that there have been precisely FOUR previous posts. Well, there's that enthusiasm. Let's hope the profits come. There was also a typo mist by the proof-reader.

Another new blog is Bet Catalyst which covers many sports (Golf, MLBaseball, Football, Rugby Union, Cricket, NBA Basketball) as well as Horse Racing.