Spelling Blunder, Thunder Under

Having been gently prodded from my post-FA Cup Final emotional hangover, a few more (unrelated) observations from the past few days.

Not betting, but football related, and this charming individual (allegedly a Paul Grange from Worcester) is in trouble for going to the Brewers Arms in Worcester wearing this shirt:

I'm not surprised he's in trouble. When I first saw the picture I was appalled. Seriously, who goes out in public wearing a garment that's missing an apostrophe and with the name Rentokil spelled wrongly? No wonder the police were involved and he has been charged with a public order offence - presumably that of displaying offensive writing likely to cause distress. It's good to see these things being taken seriously at last. He has a second shirt which does show an apostrophe being used correctly, although he seems to have taken the easy way out of spelling whatever the word beginning with an f is...   Nice chap.

The NBA Finals are finally set, after the Golden State Warriors covered against the Oklahoma City Thunder in game 7 last night, and we have a re-match of the 2015 final in which the Warriors came back from 1-2 down to beat LeBron James and the Cleveland Cavaliers 4-2.

An interesting comment on ESPN touches upon the need for number /data-based models to be placed into context. Bill Barnwell writes:

By any measure, the Thunder will need to overcome the odds. FiveThirtyEight's model pegs the Thunder's chances of winning Game 7 at 32 percent, while ESPN's Basketball Power Index has them at 30 percent.

The consensus Vegas odds, meanwhile, are even less charitable to Oklahoma City, for understandable reasons: They involve humans. After adjusting for the vig, the initial Thunder moneyline implied that they had just a 19 percent chance of pulling out a series-decider in Oakland. That number continues to rise, and it's hit 26 percent, but it's still below the expectations of empirically derived models.

Betfair had the Thunder at around 25%, but as Bill Barnwell goes on to discuss in some detail, it was the nature of the Thunder's game 6 defeat that suggested to me that 25% might be too high:

One reason why that might be the case is that the models don't have eyes to see what happened to the Thunder in Game 6. The box score says the Thunder lost by seven at home on Saturday, but that fails to tell the story we all saw: Oklahoma City collapsed during the final few minutes of the game, with its offense crumbling into a writhing mass of hero-ball and turnovers. The Thunder led for the vast majority of the contest and had a 90 percent win expectancy with five minutes to go, only to fall to pieces during what might end up being Kevin Durant's final home game in Oklahoma City.

Road teams in NBA game 7s had an 18.5% winning record, and the Warriors don't lose much at home - 3 of 50 to be precise. As for the Unders bet, these have a strong record in game 7s with 50 of the last 84 going under.

Data is great, but it has to be applied in context. Similar to how a draw in football is viewed either as a point won or as two points dropped, there is more than one way of losing a basketball game. Losing by 7 points after leading by 7 points with about 5 minutes left is far more painful than losing by 7 points after coming back from 30 points down and running out of time.

But That Was Just A Dream, Just A Dream

I am accused of sulking. James writes:

This is a long sulk. It was only a meaningless piece of Victoriana with no relevance in modern soccer.

As many of you are aware, for almost 50 years, I have been a Crystal Palace fan. They were my local (league) club. They were the first club I ever saw (technically tied with Birmingham City I suppose). They have one of the, if not the, best names for a football club, and they had great colours. What they haven't had in that time is a huge amount of success. Our all-time major trophy haul is limited to the Zenith Data Systems Cup win at Wembley in 1991 (I was there), with other more modest successes consisting of promotions and since their introduction in the late eighties, play-off wins. We've had several of those, boasting the best record in the league for play-off wins (4) for promotion to the top level. We are also one of the few clubs to have won a championship in our first league season (Division Three 1920-21, I wasn't there). We used to have the outright record for most Premier League relegations, but we have to share that now with Norwich City. Four consecutive top division seasons is also a record we will be matching in 2016-17, and hopefully breaking after that.

So winning the FA Cup last weekend would have meant so much to the club but I'm honestly glad (all over) that I support my local club and can fully appreciate successes (usually modest) when they come along. United won the Cup for the eighth time. Great, but at some point along the way, when you become used to success, winning trophies becomes the standard - for most United fans, 2015-16 was a disappointing season. Liverpool fans might get excited about the Europa League, but qualifying for it is not a success for one of the elite teams these days.

Cup Final day will certainly live long in the memory. The train ride into London from Surrey was lively, and I met up with friends at Victoria for a couple of beers. Gaining access to a pub in the Wembley area proved mission impossible, but upon reaching the stadium, rather bizarrely, among a crowd of 89,000+ people, I ran into three people I knew within the space of five minutes. It's a small world.

"That's me in the corner, that's Pardew in the spotlight"

The atmosphere in the stadium (west end anyway) was fantastic, as anyone watching on TV would have seen. Taking the lead with 12 minutes to go was incredible, but when the big screen showed Pardew - "He's Alan Pardew, he shags who he wants" - gyrating on the touchline, I had a bad feeling. Seriously, your team has just taken the lead in a Cup Final, and rather than calm the players down, warn them of the pressure that now must come, make some adjustments etc., he's out there dancing "hey world, look at me". I thought he didn't want attention these days. Less than three minutes later, and the lead was gone. Only one club has played in more FA Cup Finals than Palace without winning it, and our wait to become the fourth south London club to have their names on the trophy (actually the latest trophy was only introduced in 2014, certainly not Victoriana) goes on. It was rather depressing to have an old school friend later suggest that if the next Palace final is another 26 years away, we won't be here to see it. I might be old, but I plan to still be here!

Thanks James for bringing me out of my mild depression.

On betting / investment related topics, I have received a couple of emails requesting more details of the Cassini Portfolio systems and bets that have been mentioned on here, so I will be putting these together in a single 'user guide' for anyone interested.

Included will be the Bundeslayga and BLUnders systems of course - the 2015-16 Bundeslayga system has wrapped up, with the lowest ROI% since records (i.e. Pinnacle Sorts) began, but profitable. The BLUnders is still technically active for this season, although it is hard to imagine any qualifiers coming out of the Finals Series which starts on Thursday.

Glass Houses

My verbification of the colour red in this post caught the critical eye of Baz who wrote:

Your slipping Cassini, double d in redding !

"My slipping what?", I thought, as I pondered that comment, (the double-D reference side-tracked my mind for a moment) before realising that English language expert Professor Baz had, rather deliciously, fallen victim to Muphry's law, which states:

"If you write anything criticizing editing or proofreading, there will be a fault of some kind in what you have written"

As Ducky McDuckface (above) observes, it's hard to take someone seriously when they don't know the difference between "your" and "you're".

No names, (it wasn't James), but in the past week we saw these examples from a regular blogger:

Because the reality is your probably going to lose the first one.

Oh dear. It wasn't just a one-off mistake either - the final line of the post was this:

Take you’re time!

Here's a helpful guide:

How apostrophes and the words "their, there and they're" are used, or often abused, is also a useful guide to how seriously to take someone.

Moving on, and I'm not sure a word for locking in a loss on all outcomes exists yet, or at least is in common use. While there are plenty of references to 'greening up' to be found - in guides to Betfair trading for example - the optimistic message in such writings (everybody always wins) appears not to want to consider, and thus doesn't mention, the possibility of locking in a negative outcome.

There was much debate in the early days of exchanges about whether a bet was 'laid' or 'layed' but I think the latter has over time become the accepted word.

I wasn't the only one to notice Baz's faux pas. James (he of Betfair Pro Trader fame) commented:

@Baz - Not to mention 're in you're. ;)
@Cassini - I always try to be positive.

As I (not James) wrote almost three years ago on being positive:

The other thing is that successful people tend to be more positive. You could argue that it's a lot easier to be positive when you have achieved some success, however modest, but I think that earned success (as opposed to winning the lottery for example) is often the result of a positive attitude rather than the cause.

I'm not sure I understand fully the negative attitude that so many people seem to have towards others who manage to be relatively successful.

Envy is obviously part of it, (I am a little envious of Ian's £1.4million for example), but I would rather use that envy in a positive way, a benchmark for what can be achieved, and as an incentive to keep moving forward and improving my strategies, than use it in a negative way, by spending hours writing comments suggesting the numbers are made up, that Elo ratings don't work, that workshops are a waste of time etc.

Not picking on Danny specifically, since there are many others like him, but I think that until your attitude changes from negative to positive, you will never have the mindset needed to be successful.

Even Jordan Spieth has admitted as much this week:

I just need to do a little bit better job of being positive with myself and smiling a bit more, having a bit more fun.

Effectively Retired

Smithlondon asked:

Do you declare your profits from "trading" to the local tax man? In the UK there is no tax on "gambling" as HMRC and case law see it as not carrying on a trade. https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim22017

If you are going to start arguing that traders are not gamblers then that's a slippery slope for tax purposes and a lot more "full timers" will find themselves back working for someone else than those leaving because of the PC charge.

In my opinion each bet placed is a bet. Not one half of a trade regardless of your future intent. A second bet merely closes out an open position for a profit or loss. It doesn't change the nature of the first bet.

While I have sympathy it always amuses me when people get on Twitter and scream at the Betfair help desk when the site goes down saying that they are not "gambling but trading" and can't close out a position. No, you've had a bet. On of the factors you are betting on is that you may be able to close out at a stop loss or profit. But in so doing that doesn't alter the fact that the first thing you did was have a bet.

I'll let James respond to the tax question shortly, but I don't think I have ever argued that traders are not gamblers; only that a trader will close out a position rather than let his bet run to expiry. The outcome for the trader might result in a profit, a loss, or breaking-even. Any time you take a position in a market, you are gambling, which is how the tax authorities see it.

Betfair Pro Trader James responded:

@ Smithlondon - You are going off on a tangent. All trades or bets within sport bookmakers and exchanges are regarded as gambles as far as tax is concerned.

Further, most financial trades are speculative and are therefore gambles but as far as the government is concerned they are financial trades and subject to tax.

I argue the difference between trades and bets in sports on an intellectual level that has nothing to do with tax. I just like to differentiate between trades (bets) that go to expiry and those trades which are closed or hedged ("greened up").

Perhaps it's a sign of James' success or optimism that he doesn't mention "reding up", something I've done on many occasions, and an important part of trading.

"Always try to make your wins as big as possible and your mistakes recoverable" - Laura Harris

Marty questions the bet / trade definition, posing:

If I leave a position to run to expiry then haven't I effectively just 'traded out' at the price implied by the result (i.e. 0 or 1 in probability terms)? What difference does it make to anything what we call it?

It makes little difference as I wrote in my last post:

I think... that there is a clear differentiation between a bet and a trade, but... what matters is if your chosen strategy is profitable or not.

It's hard to disagree that a bet expiring is 'effectively' trading out at 1.00 (or 0.00) but it's akin to dropping dead at work from a heart attack and then arguing (from heaven) that you 'effectively' retired.

Except that you didn't retire - like your bet, you expired!

In response to my previously referenced latest post, James wrote:

Thank you for clarifying that I had little input in today's missive and where I did contribute it was more than adequately referenced.

I must point out though that the neck injury was probably picked up the night before the tennis match whilst sleeping due to arthritic neck vertebrae. The tennis merely exacerbated the injury.

To help (or confound) the bet/trade definition further. In derivatives trading one can leave a position open and take delivery of the oil, the wheat or the cash equivalent (in market futures or stock options) or pay the margin if the position goes against. Alternatively, you can trade out prior to expiry for cash only.

I prefer to keep to strict financial trading definitions. Those who only sports trade/bet tend to grab at financial terminology to sex-up their activities without fully understanding them.

"Scalping" is another such word. Say you are a scalper in the financial markets and you might get a visit from the FSA and the City of London police.

One of my concerns when I first entered the world of futures trading was the horrifying prospect of a consignment of pork bellies (I'm using these here as a pars pro toto for commodities in general) turning up at my front door one day because I forgot to trade out of a position. It never happened of course, but as James made clear, you do have the option of taking delivery. Futures trading was a short-lived interest - rather early on, it dawned on me that perhaps it was unrealistic to suppose that I knew more about pork bellies than the full-time traders I was competing against, a lesson I believe I have shared here in regard to active stock trading.

Moving on, and James concluded his comment with:

And finally... You are far braver than I. Squash is a no-go area for me. Even as a fit twenty-something I could walk into a squash court feeling more than capable of beating an obese female on fifty cigarettes a day and yet step out of the court later, a dishevelled wreck.

Sadly, that was probably my last ever game of squash, but what an ending - holding your 25 year old son to 'effectively' a draw...  

Squashed

Baz (and I want to be absolutely clear, not James) writes:

But isn’t a trade just a bet on which way the market will move? Get it wrong and you lose like any other bet.

No it isn't. By definition, a trade requires two opposite actions, buying and selling – although not necessarily in that order.

In the context of sports betting, the initial action is a bet. You now have a position in the market. This remains a bet unless you make a second bet to close out your position.

If a second and opposing bet is made, your two bets comprise a trade, and your trade may be for a profit, a loss or it may break even.

If you let your initial bet run to expiry, that’s not a trade, even if your intention was to make this a trade. Again though, your bet either wins or loses or is a push.

Although I know what Baz (not James) means when he says “get it wrong and you lose like any other bet”, I should point out that a losing bet (or trade) doesn’t necessarily mean that you “got it wrong”.

Similarly, a profitable bet or trade doesn’t mean that you got it right.

It’s all about expected value.

If you are getting 5.0 (4/1) on a 4.0 (3/1) shot, the reality is that you are still going to lose 75% of the time. Does that mean you get it wrong 75% of the time?

No, because you have a positive expected value and thus, on the other 25% of the time when you win, your profits more than cover your losses.

Baz (not James) adds: 

Perhaps we are kidding ourselves by trying to differentiate between bets and trades.

I think, as I’ve tried to explain above, that there is a clear differentiation between a bet and a trade, but to Baz’s (not James') point, what matters is if your chosen strategy is profitable or not.

I do suspect that the ability to trade out of positions these days perhaps leads to less than optimal decisions being taken.

For example, while the initial bet might be taken after much research and consideration, the temptation to lock in a profit, or at least eliminate the possibility of a loss, can be hard for a novice or ill-disciplined trader to resist after just a small movement in the ‘right’ direction.

Behaviour which of course goes completely against the golden rule of trading - keep your losses small and let your winners run.

Betfair Pro Trader James has another post up, less technical than many and one that I can identify with as someone who is also close to 50 (although not as close to 50 as I was yesterday...) 

Poor old James managed to hurt his neck playing tennis, but had a few kind words:

At least the pain was relieved by a post from Cassini at Green All Over (America's #1 Sports Blog!). It was good that a recent comment of mine on his website inspired another old boy back into action. The sports trader blogosphere will be all the more barren if Cassini hangs up his quill.

Pain in the neck James' tales from the tennis court have prompted me to write about my own recent sporting adventures. 

Last month, I decided it was time to teach my 25 year old son some of the finer points of squash. Never mind that I hadn’t played in about 25 years myself, experience matters more than enthusiasm, surely. Just to be sure of success, I gave myself home advantage and arranged to play at the club in Coulsdon where I played in my youth.

It was a little surprising that the court appeared just as I remembered it, same door, same floor, same everything really, except with a quarter of a century of wear and tear and general deterioration added in. (At least the squash courts were playable – the tennis courts outside, on which I also spent many summer afternoons and evenings, were in an even more depressing state - see above).

I thought I acquitted myself rather well for the allotted forty minutes, diving to the floor a couple of times, placing delicate drop shots into the corners, avoiding getting hit, and with the 'time's up - get out' knock on the door surely imminent, was readying myself to shake hands and leave when my son pointed out that we’d actually only been on the court for five minutes, and that what we had been doing was called ‘warming up’. 

Well that's a little disappointing, I thought to myself, as pools of sweat accumulated by my feet, my head span dizzily and my heart pounded at a rate not seen since my days of running the mile in four minutes something, but there was no way out. 

Perhaps I should clarify a couple of things written above - by 'diving to the floor' I mean going into full cardiac arrest and collapse, and by 'placing delicate drop shots' I mean smashing the ball as hard as I could, but at my age, shots barely make it to the front wall sometimes.

I don’t want to talk too much about the match itself; suffice to say that I did score a few points in the eight games we completed, and that we sadly ran out of time to complete our best-of-seventeen match, which means that technically speaking, the match ended as a draw.

Admittedly it started off as a best-of-five contest, but as I felt stronger and stronger, decided to extend the match, first to a best-of-seven, then best-of-nine, then… you get the picture.

I’ll be better prepared next time. I should perhaps also mention that for the best part of the following week, I had a great deal of trouble with stairs, getting in and out of cars, and generally just moving. My parents (not James) generously loaned me their walking sticks for a few days while my muscles slowly regained some semblance of normality. Apparently it's a different set of muscles that are called into action when playing squash than those used for a little jogging (shuffling) around the park or riding my bike.

Pain in the neck James' (yes, James) then wrote:

I have only one negative thing to say about Green All Over and that is Cassini's habit of quoting you and then adding a few more quotes from other people only without attribution. This creates the impression that every quote in his post was by yourself, which is not the case in today's post, Bold Ambition. Still, it's a good article as are all the posts on Green All Over.

This is certainly not intentional. I usually put a link to the source of the quote, even if I don't explicitly name it. I find referencing the source in the text can interfere with the flow of the post, but I'll be more careful in future.

Finally, and I just knew this would happen, I (Cassini, not James) wrote yesterday that:

The BLUnders this season had an ROI% of 2.46% from 142 selections. (There could yet be more picks, but as we move deeper into the play-offs, it becomes less likely).

And just like that, selection #143 comes along, with the Golden State Warriors 12.5 point favourites in their home game versus the Portland Trail Blazers tonight. At 3-1 up in the best-of-seven series, the Warriors are hoping to clinch the series, while the Trail Blazers are probably hoping for a rule change and a best-of-seventeen series...

Bold Ambition

James is back, once again in agreement with me, this time on the topic of what differentiates a bet from a trade. I opined that a bet only becomes a trade when it is not allowed to run its course without an off-setting bet or bets, and James says:

That follows my definition too. A bet is a single leg of a trade allowed to go to expiry. A trade has a return leg in the opposite direction to the entry to realise a profit before expiry.

Far more eloquently stated than my effort. James adds - and if you haven't read this post of his on the subject of "reality versus fantasy", you should, that:

Sports and financial trading is littered with people of bold ambition. Survivorship bias means we only hear from those who succeed. It is, after all, a zero sum game.

Nothing wrong with bold ambition of course, but the ambition needs to be grounded in reality:

While it is all very well to be optimistic, it’s probably more important to be realistic, and the logical conclusion is that with all the resources at the bookmaker’s disposal, any success by an individual is likely to be very short-lived

In James' opening paragraph, he writes:

I never discuss the details of my trades because winning strategies are hard to come by. Share a winner and it becomes a loser because the market will arbitrage the edge out of it.

I'm not actually convinced that most readers recognise a good thing when they see it, or at least lack the patience or discipline to follow through. I've given away a few secrets here over the years, but unless the selections have a 100% strike rate (ideally more) and an ROI somewhere north of 25%, the information appears to mostly be immediately forgotten.

The forums regularly have posters starting new challenges - 2% a day for a year and the like. 2% a day? 2% a day is massive. Actually, it's more than massive. 2% a day on a starting bank of £100 would make the bank over £137,740 by the end of the year. Is this realistic?

That was a rhetorical question.

The BLUnders this season had an ROI% of 2.46% from 142 selections. (There could yet be more picks, but as we move deeper into the play-offs, it becomes less likely).

This was actually the third worst season of the past ten, and the worst since 2010-11, but a 2.46% ROI for a system that takes maybe five minutes a day is, by my reckoning, great. The time spent is key - as Webbo wrote four years ago:

It's interesting that you say punting profits are more value when you factor in the hourly rate as it's for this reason I'm trying to turn my attentions more to these. It's obviously much harder but if I'm honest I am starting to resent the amount of my free time I spend betting inplay and I do fear each time another blog opens of a young person who aims to make a living from inplay trading. Their lives will consist of staring at a screen 24-7 and if I had to price it up, I'd say it's 1.01 that they don't make anything close to a living out of it.

The Bundeslayga is several seasons old now, and for the first time since I revealed it, in danger of a losing season:

Only one selection this weekend currently, which would at least guarantee another season in profit.

And then there's a baseball system that is also historically efficient - it takes about five minutes a day, and over the last ten seasons its record isn't perfect, but it's pretty darn good with a double digit ROI% in nine of those ten seasons:

But it's 'only' 50 to 60 bets, the ROI% is 'only' 12%...

I think I'll pass - I'll go for the bank job on tonight's Romanian Third Division game - much more exciting.

And in the unlikely event that I lose, I'll open another bank. Brilliant.

Sports Investor Wins Although Afterwards Decides Upon Pastures Anew

For those of you thinking that the Betting Exchanges are a viable alternative to a career, there is an interesting thread - "Another boring 'goodbye' after 9 year here" - on the Betfair Forum this week, as another full timer realises they are not.

Siwaadupa (possibly an acronym?) opened the thread (spelling and grammatical errors corrected, and readability enhanced) with:

So the time has come for me.

In 2008 I was saying Betfair is the best thing in world, I will always have something to do (work)

Middle 2008 - Cross-matching - I hate it, it privileges fastest stream person who is happy to pay high charges or it's Betfair themselves

Late 2008 - 20% PC - I could have lived with that - still had plenty to do

I believe 2011, PC2 - shock, completely changed my mind - I started to become worried for the future. 

Then Sportsbook appeared - significantly less customers, particularly on sports like basketball and volleyball.

Tennis bots + basketball bots + football bots are taking significant part of my previous activity - destroying me in some way.

I don't want to moan that it's not possible etc. - In my case, its not worth it- when you add all figures, hours spent in front of PC you will figure out that elsewhere I will have more for less. I want to add that I'm not a mug:

80,337 Exchange points = 52% Commission Discount

So I'm pretty active. I won't be any more from tomorrow. I'm not quitting, but as a full timer its over for me. It's another boring exit for £12 per hour elsewhere.

While there is no confirmation that Siwaadupa actually reached PC2 status, it wouldn't be an unrealistic expectation for a full-timer after nine years.

£250,000 sounds like a lot of money, but when you break it down over nine years, it's not so much at all; a little under £28,000 a year. If you work 46 weeks a year, that boils down to £600 a week.

While that number is net and exceeds the median UK gross earnings (ASHE 2015) for full-time employees of £27,600, not many of us want to be 'average', and career development, annual bonuses, pension considerations and other benefits also need to be factored in.

As I've written here before, sports investing is far better suited to being a part-time activity than a full-time one.

The thread contain a couple of other interesting observations too. One Ghetto Joe posited:

Yep I think PC2 has driven loads away, margins getting smaller and penalised at least 42% of your winnings. All those early players who promoted and extolled the virtues of the exchange now paying 9 times more than any newcomers who do exactly the same thing just because they've been long standing customers who probably won around £17k for each of those 15 years the exchange has been up.

I think I might have written that before here too. Joe later added:

Never understood the mentality of people wanting more charges, we're all using the same exchange, if some are gaining unfair advantages you should close those loopholes down not increase charges to cash in on them too.

Exactly. Again, as I have previously said, Betfair introduced the Premium Charges as their response to those gaining 'unfair advantages' and took a share in the ill gotten gains, rather than close the loopholes.

Finally, forumite fixed states that:

every bet is a trade and every trade is a bet

Not really. In my opinion, a bet only becomes a trade when it is not allowed to run its course without an off-setting bet or bets.

If you backed Leicester City to win the Premier League at 5000-1 (didn't we all?), and let it run, that's a bet.

If you subsequently layed Leicester City, (i.e. made another bet), then those two bets combined make it a trade.

The dictionary agrees with me. 

As a noun, a trade is defined as "the action of buying and selling goods and services". The 'and' is important.  

As a verb, to trade is defined as "buy and sell goods and services". Note the 'and' there.