Saturday, 6 April 2019

Flipping Nonsense and Accumulating Perception

Pinnacle have some excellent articles on their website, check out anything from Joseph Buchdahl as an example, but as I have written before, they also have some frankly awful ones.

Links to a couple of recent ones appeared on my Twitter timeline, and while I hate to be negative, I have to say they are probably two of the worst I have seen Pinnacle publish.

The first one is called "Flip a house, make a bet: Real estate vs. betting" and attempts to make a comparison between flipping a house and making a bet. 

I guess if you try hard enough, you can draw parallels between pretty much any two trading activities, be it physical things such as property or fine art, or more ephemeral trading on things such as stocks, bonds, options, futures, currencies or betting, but the goal when trading anything is always to buy low and sell high, and the market is irrelevant. This is not news. 

The article begins by misstating the definition of house flipping.  

What is house flipping?
Flipping a house refers to purchasing a piece of real estate at a low value, doing renovations or repairs and then earning a profit by selling it back on the market for a higher value. Professionals that flip houses look for real estate that fits a certain profile in a specific market condition before purchasing.

This is incorrect. The term for this is "fix and flip" and the "fix" part makes a huge difference. You can't just ignore it! Flipping involves no improvements!

The equivalent of "fix and flip" in betting terms would be to back a team, then go out and buy Wilfried Zaha, and lay off when the news gets out that he's playing. 

The article goes on to state the obvious - that traders look for something that is "underpriced". Brilliant. To make it sound a little more impressive, we get this quote:
Pricing models that account for matchups within the game generate estimated probabilities and return on investment is determines the edge.
Which of course makes no sense at all. There follows a lot of nonsense about "neighbourhood location or foundation repairs" but it's just meaningless filler to pad out the 'article'. Here's more garbage:
The equivalent in sports betting is betting on teams playing multiple games below their average at a discounted price against teams playing multiple games above their average. Millions of people make a living purchasing buy low homes in real estate, but in sports betting, the idea of buying low is often disregarded. Many bettors mistakenly believe value is only determined by the result. 
Oh dear. The writer seems to have no idea how accurate the football markets are these days.

The conclusion isn't even enlightening:
The goal is always to make an investment at a price that is better than what the rest of the market is willing to pay. If bettors can focus on getting a price better than market value – especially at Pinnacle Sports – they will always be a winner long term.
No kidding Sherlock! It's called 'finding value' and that's what trading is all about.  

However, if the rest of the market isn't willing to pay the price that you are willing to pay, if it's a liquid market you should think very closely about why this might be. 

Hint: It's probably not because you are the most knowledgeable person in the market. 

With house flipping, it's the same, especially if you are a novice. As the writer notes, lots of people flip houses full-time. If they are happy to let you buy one at a certain price, it's because they don't want it for that price. It is not value. 

So no, house-flipping (or fix and flipping) and betting have nothing in common other than being markets in which one can trade. One requires a rather large investment, a lot of paperwork on both sides of the transaction, and a lot of time (during which the entire housing market could collapse), the other requires very little money, and typically the profit (or more likely loss), is determined in a much shorter time-frame.  

The second article is titled "Using push and pull spots in betting" and is similarly awful with lots of impressive sounding phrases, but nothing that makes much sense. It reminds me of the stuff Mel used to write

The title is an anagram of "In a blighted pulping, snot punts us" and that would make far more sense. The article should be pulped for sure. Here's a sample:
A push and pull spot is one my preferred angles when handicapping sports. The main difference between a "buy low, sell high" and a push and pull is that a push and pull is a buy low and sell high going directly against each other. The market situation sets up when the market is heavily buying one team and selling the other.
The “pushing” of the value up and “pulling” of the value down stretches the market above and below the true price. Bettors who can spot the difference are able to squeeze out considerable value in their wagers.
Push and pull spots are most frequently created by accumulating perception. It is not a stretch to say that teams performing above average and winning will draw more money and attention than teams performing below average and losing, but the important thing to evaluate in push and pull spots is the odds movements in prior games.
If that makes sense to you, then you are a better person than me. Then the writer falls into the "Nordsted Nonsense" trap by looking for a signal where there is just noise: 

A good place to start looking for market precedence is in recent matchups between the two teams during the same season. Each price in a betting market is initially set based off of a bookmakers’ rating.

Unless there are critical injuries or major adjustments within the team, the odds between two matchups of the same team should be the same price with the difference of venue change and home field advantage.
Teams change all the time, and even if identical line-ups faced each other a week apart at the same location, I doubt that the prices would be the same for the simple reason that we have more data to use prior to the second game. 

The ratings / goal scoring expectancies for the teams will have changed. The days of looking at form and thinking WWWWWW is automatically better than LLLLLL are gone, or should be. If those Ws are from games against the likes of Huddersfield Town and the Ls against the likes of Manchester City and Liverpool, the team with the Ls might well be favoured. The writer completely misses this rather important fact, suggesting that:
Bettors should start by seeking out static prices in the betting market. An evaluation of the past five to seven matches should be done to see if one team is producing winning results while the other is producing losing results – remember to look for extreme streaks only.
Good luck with that strategy. You'll need it, and teams don't "produce winning / losing results" - teams are simply winning or losing.  

Following the 'advice' in either of these 'articles' will however, result in the production of non-positively oriented outcomes in the sub-zero range. Whoever is approving these 'articles' for release needs to start reading them first. 

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