The Null and Void Line 1947

My recent post on sports being interrupted by unexpected events, often weather related, omitted one football season in England which was extended through June 14th, although in the end only two games were scheduled in that month.

The season was 1946-47, the first season of regular league football since the Second World War, and after a "harsh winter and a government push to end midweek sport to drive up post-war productivity" the Guardian reported that:

“The league are asked in effect to choose between abandoning this season’s championship, which would be a sore blow to the clubs at the head of divisions, or playing on halfway through the summer, or (perhaps the best solution) playing behind closed doors the games needed to conclude the league programme,”

In those days, the season started on the last Saturday of August, and the 1946-47 season used the same schedule that had been started in 1939-40 before it was voided because of the War. Many clubs didn't have floodlights at the time, rationing was still in effect, there were fuel shortages and so when bad weather hit in late January, some clubs soon faced a long backlog of matches. 

“Associated with the problem of completing the fixture list – which seems insoluble in the circumstances – is the question of whether to call the big issues of the season – promotion and relegation – off, or whether to award the prizes and hand out the penalties despite the differing number of fixtures fulfilled,” wrote JT Bolton in the Observer. “The null and void line is the one likely to receive the greatest volume of support.”

Nulling and voiding the League would have cost Liverpool the title, although in some contrast to this season, the only time they topped the table was after their last game on May 31st versus Wolverhampton Wanderers.

Had Wolves won that game, they would have been champions themselves, or had Stoke City beaten Sheffield United in their final game, the title would have been theirs. Stoke lost and ended up in fourth place, still their (joint) best ever final league placing. Losing Stanley Matthews during the season wasn't the best of ideas perhaps!

Voiding the season would have meant that promotions for Manchester City, Burnley, Doncaster Rovers and Cardiff City would have never happened, but on the plus side, Leeds United, Brentford, Swansea Town and Newport County would have avoided relegation, with Southport, Halifax Town, Mansfield Town and Norwich City being spared the indignity of applying for re-election.

Breaking Momentum

Back in 2010, I wrote about trading the NBA that:

The thing about runs is that they come to an end. Typically a coach will call a timeout when his team is on the wrong end of such a run, the idea being to break the momentum, and re-group, so if you're on the wrong end of a run, it's important to keep a clear head.

Interesting to see that a scientific study has shown this perception may well be correct. University of Technology Sydney Economics Professor Lionel Page tweeted:

The study was titled Separating psychological momentum from strategic momentum: Evidence from men’s professional tennis with the abstract containing the following:

In tennis, converting a break point potentially triggers both strategic momentum—due to a change in the relative position of the players—and psychological momentum—due to a change in the perception of the players. To distinguish between these two momentum types, we employ exogenously given interruptions. Interruptions are predicted to affect psychological momentum negatively, while leaving strategic momentum unaffected. Using 4,930 game-by-game observations from 141 Grand Slam men’s single matches, we show that the breaking players’ probability of winning a game increases after converting a break point, which provides evidence for momentum. Moreover, we show that this momentum effect is negatively affected by an interruption. Thus, psychological momentum seems to be the main trigger leading to a performance increase after a converted break point.

The study isn't free, and I am too cheap to pay $35.95 for it, but tennis traders might find it useful. I've never been a trader of tennis due to the prevalence of courtsiders, but if this is a sport you trade, it may well be that the idea outlined here is something you have noticed. 

From my own experience of trading NBA basketball, opposing a team that had the "hot hand" once a timeout had been called was a longtime profitable trading strategy.  

Earlier in 2010 I had written:

A similar strategy that I use in a few two-team sports is to lay an underdog that gets off to a strong start. Bettors have a tendency to panic (i.e. overreact, or on the flip-side get greedy - fear and greed drive the market) but in the long run, good teams, certainly in sports where timeouts or built in breaks are a feature, tend to come back.

As it happens, that post ended with a tennis observation, but I'm not sure the statistic would have been useful. When trading in-play, interruptions of any kind were always good opportunities to close out a position or take a new one. Injuries can impact games in a big way, and tactical changes and adjustments are also key. 

While sports such as tennis, baseball and American Football have natural breaks in play, ice hockey and basketball don't. There are actually several types of timeout in the NBA, with different rules for locally televised games and nationally televised games. There are mandatory timeouts, there are "full" timeouts, and there are "20-second" timeouts (which are actually 60 seconds) so not all timeouts are equal. 

Managing timeouts and the clock in the NFL is a key part of the game, while in the NHL, only one 30-second timeout is allowed per team, per game. 

I look forward to seeing a study comparing all the different timeouts!

Flaw in the Fifth Column

A couple of weeks ago, I mentioned that I had just started reading Ben Cohen's 'The Hot Hand'. I rather wish I hadn't, although the book is actually very readable.

The problem I have is with Chapter 7, Section 4, p223 where the author writes about two researchers Josh Miller and Adam Sanjuro flipping a coin and recording the outcomes of a toss 'after he gets a head'. 

They order their beers, read the napkin, check the phone, and study the Hs - the heads after heads. They are shocked to see that their intuitive sense of randomness has led them astray. They realize that the proportion of heads after heads on a coin flip is not equal to the odds of getting heads on any old coin flip.

At this point my brain was struggling, but it gets worse. They then decided that to prove this, they:

...don't have to flip a coin hundreds of times... you only have to do it three times. The short version of the math behind their breakthrough is simple enough to fit on a real bar napkin. Here is every possible outcome in a sequence of three coin flips: 

TTT

TTH

THT

HTT

THH

HTH

HHT

HHH

Now let's take each of those three-flip sequences and look at the flips after heads flips. What percentage would you expect to be heads? It feels like the answer should be 50% - another coin flip. But lets' average the results from the fifth column.

Before I get to the table with the fifth column, yes I would expect the answer to be 50%. I had to read the previous section again to see what I was missing, it's been a rough few days, but this seemed complete nonsense.

Next followed a table with five columns; the three-flip sequence, the number of Flips after a Head, the number of Heads on those Flips, Heads / Flips and the Percentage of Heads after Heads:

I included the two lines of text because I see a flaw here in the logic. Yes, 250% divided by the six rows with data is close to 42%, but this isn't how averages should be calculated. (Simpson's Paradox?) 

The average should be the sum the number of heads divided by the number of flips, i.e. the sum of the third column divided by the sum of the second column, which in this case is 4/8 which is 50%, which unless I am missing something (admittedly not the remotest of possibilities), is the expected outcome. 

The text continues:

Miller and Sanjuro found the proportion of success after a streak is less than the underlying probability of success. If you were to generate a short, finite sequence like this string of coin flips and randomly select one of the heads, then the probability that the next flip would be a heads is closer to 40% than 50%. This is so trippy that Miller and Sanjuro could hardly believe it. Their brains weren't biased. The statistic was. They double-checked and triple-checked and would have quadruple-checked and quintuple-checked if they weren't already sure their careers were about to change forever.

Well, I'm not so sure. Clearly in that example you can see 8 Heads with a subsequent flip, four of which are an H and four are a T. 

Hopefully someone else has read this book, or will read it at some point, and let me know if I am completely mad or if the referenced study indeed contains a rather basic mathematical flaw.

The flawed conclusion was that:

...if a basketball player was a 50% shooter, and he was still a 50% shooter when he was hot, this was evidence against the hot hand. In fact that 50% was evidence for the hot hand.  

I'm not seeing this at all. Streaks will occur whether tossing a coin, spinning a roulette wheel, throwing a die etc., but past events do not change the probability that certain events will occur in the future. To believe otherwise is surely the Gambler's Fallacy which:

occurs when an individual erroneously believes that a certain random event is less likely or more likely, given a previous event or a series of events.

Whether this remains true when you add a human element to it - such as with shooting a basketball - remains to be proven, but this isn't proof.  

Sports: Suspended, Delayed, Abandoned

The current situation regarding the suspension of so many sports at the same time is unique.

While the scope of previous interruptions is limited, most sports have been delayed for one reason or another at some point.

The World Wars saw sport in England suspended or dramatically reorganised, but in the US, baseball and ice hockey continued with minor interruptions and changes although the latter's 1918-19 season fell victim to a pandemic after making some of the players sick, including one who died. 

"The Spanish influenza epidemic forced the Montreal Canadiens and the Seattle Metropolitans to cancel their series tied at 2–2–1, marking the first time the Stanley Cup was not awarded." 

The second time was not until 2005 when a labor lockout resulted in the cancellation of the 2004-05 NHL season, the only time (so far) that a major professional sport in the US has lost an entire season. 

A players' strike in 1992 was settled after 10 days and the season was completed and 1994 saw a lockout which lasted for three months before a 48-game season was started in mid-January. In 2012 a similar lockout delayed the start of the season to January 19th and another 48 game season was completed. 


While baseball played its World Series matches through both World Wars, the 1994 season was interrupted by a players' strike which started in August and the season was not completed. Previous strikes in the 1972 and 1981 seasons saw uneven and abbreviated schedules, but a delayed season was at least completed.

The NFL's 1943 season during World War Two saw the Cleveland Rams suspend operations, while Pennsylvania rivals Philadelphia Eagles and Pittsburgh Steelers combined their rosters to form Phil-Pitt the "Steagles." The Brooklyn Dodgers finished last in the Eastern Division that season. 

It is two other NFL seasons (those of 1982 and 1987) that are potentially the closest to the current situation, or will be should the suspended sports resume.

The 1982 season was a big mess, The season started as expected but:

Players began a 57-day strike following the completion of Week 2 of the regular season. As a result of the impasse, games were simply cancelled until a settlement was reached (ultimately, Weeks 3 to 10). Upon reaching that settlement, the NFL announced that Weeks 11 to 16 would be played as scheduled, and the games originally scheduled for Week 3 of the season would be played following the completion of the resumed regular season as a new Week 17, with the playoffs pushed back one week. Later, the NFL decided to use the final week 17 to hold various intra-division games from cancelled Weeks 3 to 10 instead of merely playing the Week 3 games.

Somewhat similarly, 1987 also completed its first scheduled games before:

A 24-day players' strike was called after Week 2. The games that were scheduled for the third week of the season were cancelled, reducing the 16-game season to 15, but the games for Weeks 4, 5 and 6 were played with replacement players, after which the union voted to end the strike.

The use of scabs would presumably have presented some betting opportunities, but I don't have any data going back that far.

The NBA didn't have any issues until a 1998-99 lockout resulted in a delayed and shortened 50 game regular season, followed in 2011 by another lockout and delayed shortened 66 game schedule. 

So other than the two NFL seasons of 1982 and 1987, it's hard to find examples in the sports I follow of seasons being suspended and later resumed. The 9/11 attacks of 2001 saw sports impacted for a week, although the NFL played seven games just two days after the assassination of President John F Kennedy in 1963, a decision that NFL commissioner Pete...

...Rozelle would later call that the biggest mistake of his 29 years in office.

The 'Big Freeze' of winter 1962-63 saw the Football league schedule interrupted with hundreds of matches postponed, and the season being extended by four weeks. Some lower leagues didn't complete their seasons, and there was no racing in England between December 23rd and March 7th. This was also when the Pools Panel was established. 

Bolton Wanderers didn't play a match from December 8th to February 16th, and other clubs had their fixtures similarly disrupted.

After defeating Millwall on Boxing Day, Crystal Palace (now confirmed as the world'd oldest professional football club) didn't play another home game until almost three months later although in the interim they did beat Brighton and Hove Albion away on January 12th, evidence that some things never change... 

Palace played 14 matches in 47 days once matches resumed, including eight in the month of April.

Bottom line is that we have no recent precedent or data for if the Football League, NBA and NHL resume, but if the baseball starts late, the opening day strategies should apply, just a little delayed!

Learn First, Trade Last

Those of you whose interest in trading extends beyond sports to the more traditional financial markets, will be aware that several companies including Charles Schwab, TD Ameritrade and E-Trade Financial last year reduced their commission on stocks and ETFs  to zero.

This year there has been some consolidation with a Charles Schwab / TD Ameritrade merger expected to close in the second half of 2020 and an agreement in February whereby Morgan Stanley agreed to acquire E-Trade Financial in a $13 billion deal.

Unsurprisingly the move to zero commission meant a "dramatic increase in transactions" although trading revenue declined.

Interest income is the key driver of Schwab's revenue and is even more vital after online brokers slashed trading commissions to zero.

In Asia, new entrants to the markets are signing up in record numbers:

In India, brokerage Zerodha has already opened a record 140,000 new accounts this month - double the average. 

CommSec, Australia’s largest retail broker, said account openings had increased fourfold in March. Brokers in Manila, Hong Kong, Bangkok, Tokyo, Kuala Lumpur and Jakarta reported surges as well.

In Korea, retail investors lifted their broker deposits 53% to a record 41 trillion won ($34 billion).

With much of the workforce now 'working' from home, not to mention a substantial number of people now unemployed, it seems likely that there has been an upswing in day-trading from new entrants into the markets. 

One of the blogs I follow is TraderFeed, written by Brett Steenbarger Ph.D. author of several books on trading psychology. The advice offered to these new entrants into the markets in his latest blog post applies to sports traders as well.

But the risk is that these new traders will start out by trading, not by learning markets. Enticed by self-appointed gurus, teachers, and coaches who offer little more than stale chart patterns and technical indicator readings as "edges", this new generation of traders is likely to take risks with their capital well before they have truly understood and mastered the markets and strategies they trade.

It all sounds very familiar. Learning how markets work isn't very exciting, but when trading with real money, be it in sports markets or financial, it always behoves you to consider when starting out that you are competing against others who have a lot more experience than you, have deeper pockets than you, and may well have more information than you. 

There is no shortcut to success, a fact that should be obvious because if this were to be the case, everyone would be doing it. 

If you get a sales pitch promising big trading success without a rigorous learning curve, know that you're being misled. Those making the pitch are selling hope, not trading expertise. The biggest mistake you can make as a new trader is to take short cuts in your learning process.

The markets are certainly interesting these days, and to my eyes are currently over priced given the uncertainty over when economies might get back to some kind of a new normal. 

For me, April is currently the best month ever in both percentage terms and actual gains, and I am less than 7.5% off my all-time high.

The S&P 500 is just 15.3% off its all-time high, although the FTSE 100 is 25.3% off, but as I told you in January 2018, US indexes are a safer bet for your money right now:

In more traditional financial markets, once again the main US benchmark index outperformed the UK's FTSE 100. Only 4 times in the last 24 years has the FTSE prevailed, and the disaster that is Brexit means the US and Overseas markets are where most of my investments will again be in 2018.

Since then, the S&P 500 'won' in both 2018 and 2019, and is currently leading in 2020 which, if it holds, would make a 23-4 record since 1994.

Mark Littlewood, whose erroneous tweets were the subject of my previous post said:

I wondered last night whether you would cherry pick our tweets and write a blog entry. Well sadly you have done that. Why in gods name would you deem our exchange of views on Nourishment and Covid worthy of a winge on your blog I have no idea.

I suspected I might be accused of cherry picking the Tweets in question which is why I put the two incorrect tweets one out there as screenshots. 

Why I felt the exchange worthy of a post is firstly that I don't like misinformation to go uncorrected, and his claims were clearly false.

• The curve is not flattened by people having a healthy immune system.
• Undernourishment is not an issue in the 'west'.

But secondly because Mark is someone who claims, albeit with no evidence, to be successful at horse betting. 

When evaluating such unverified claims, credibility is an important consideration, and if someone shows a lack of credibility in one area, that should give one pause.

To be clear, I think that what Mark actually MEANT (and I agree with both of these statements) is that a healthy immune system improves an individual's chances of a successful outcome having become infected, and that a 'western' diet can often have nutritional deficiencies.

Unfortunately that wasn't what he actually WROTE, and when you leave people to interpret your words for themselves, that leads to misunderstandings.

While it would clearly have been better to delete the erroneous tweets and start again when the errors were pointed out, it seems to be human nature not to want to admit you were wrong and attempt to defend the indefensible.  

No Immunity, Even in the West

Thank you to everyone who took a moment to send condolences during the past week, especially to those who went a step further and sent a personal message. 

Much appreciated. Before I came out to California and decided to ride out the pandemic in my wife's neck of the woods, I was concerned that my Dad might pass while I was away as he has been steadily declining for a few months, so it was a shock when it was my Mum, who had previously been in reasonable health for a 91 year old, who passed away.

After booking a flight back to the UK, I subsequently cancelled it as there is no date on a funeral at this time and as you can imagine, deaths from COVID-19 have swamped coroners and funeral services, so for now my plans are on hold. Visiting my Dad after a long flight is also not the greatest of ideas, but fortunately I have two sisters who have stepped up to help out. 

Obviously not the best time for a funeral, but we play the cards we are dealt in life.

I've mentioned Mark Littlewood in this blog before, for example last November when I wrote these words: 

This "@SmarterSig" chap (aka Mark Littlewood) might be worth following if you are into horse racing.

A quick look at some of his other posts show some quality content, something that is something of a rarity these days. He appears to be of a similar vintage to myself, although we differ in our opinions of Farage.

Unfortunately, first impressions can be wrong, and in January Mark showed an inability to argue logically, by employing the 'changing the subject' tactic:

Benefit of the doubt was given, anyone can have a bad day after all, but a couple of COVID-19 related tweets today made me realise that while Mark might be a knowledgeable source about horse racing (I really have no idea as I'm not a follower), he really has some confused ideas about COVID-19 and an inability to admit to being wrong.

Mark Tweeted the below:

Two important points here. 

1) The curve, actually the 'epidemic curve' refers to the number of cases.

2) The only way to accelerate the flattening of the curve is to prevent new cases

Unfortunately, while we all agree that it is good to have a healthy immune system, having one does not protect you from becoming infected with COVID-19, in other words your immune system will not flatten the curve since however great it is, it does not offer protection against a novel virus.

I pointed this out, actually giving Mark some help with how an immune system can be boosted, since he thinks it is possible with vitamins:

However, for most of us living in 'western' countries, additional vitamins aren't going to boost your immune system. If you are under nourished, they will, but countries where undernourishment is an issue almost certainly don't include wherever you are reading this:

Pretty clear? I thought so, but instead of admitting he might have misspoken, Mark comes back with:

Oh dear. This is not accurate at all. The United Nations have numbers on this, and I'm not seeing any 'western diet' countries at the top of any undernourished list:

At this point Mark tried changing the subject but the takeaway here is that Mark is clearly not a doctor and apparently incapable of admitting a mistake or two.  

Mark might well be knowledgeable about horse racing as he claims, but when people's claimed expertise in other areas is easily proven false, with no admission of error, credibility is clearly seriously weakened. 

Blog Adjourned

This blog will be taking a break.

My Mum passed away last night, age 91 in her sleep at the home she has lived in for 64 years.

Beryl Gwendoline Coleman b 25.May.1928, d 13.April.2020 

RIP.

Stay well, and stay home.

The Hot Hand

As I write this post, markets in both the UK and the USA are continuing to have a strong week with the S&P 500 almost 28% up from it's nadir on March 23rd and the less broad FTSE 100 up a little under 20%. From their highs, the two indexes are down just 17% and 24% respectively. 

At the end of yesterday my personal holdings were down 11.4% from their high of February 19th, which is a lot better than the 23.4% they were down on that miserable Monday 23rd March. Keeping this in perspective, I'm back to where I was last October. 

I'm one of the lucky ones during this 'lock-down' because I can continue to work remotely and in addition, have little to spend my money on, although when you get to my age and your net worth can move by six figures in one day due to the markets, saving a few quid by not going out for dinner or a few beers isn't exactly impactful although old habits die hard, and I do still track my spending. 

Technically the US stock market is now in a new bull market as it is up 20% from its bottom, but in my opinion there is a significant chance that this rally is a "head fake" and the lows of March could well be revisited. It seems that the market is reflecting a 'best case' scenario, expecting that 'V' shaped recovery and jumping on every bit of good news about the apex but there is a long way to go yet, and the possibility of a second wave of COVID-19 next winter.

Still no sports of course, and while I have plenty of time now for research, with no return date in the near future, motivation is an issue although I've just started reading Ben Cohen's "The Hot Hand" which I'm hoping will give me some ideas.

For decades, statisticians, social scientists, psychologists, and economists (among them Nobel Prize winners) have spent massive amounts of precious time thinking about whether streaks actually exist. After all, a substantial number of decisions that we make in our everyday lives are quietly rooted in this one question: If something happened before, will it happen again? Is there such a thing as being in the zone? Can someone have a “hot hand”? Or is it simply a case of seeing patterns in randomness? Or, if streaks are possible, where can they be found?

In The Hot Hand, Wall Street Journal reporter Ben Cohen offers an unfailingly entertaining and provocative investigation into these questions. He begins with how a $35,000 fine and a wild night in New York revived a debate about the existence of streaks that was several generations in the making. We learn how the ability to recognize and then bet against streaks turned a business school dropout named David Booth into a billionaire, and how the subconscious nature of streak-related bias can make the difference between life and death for asylum seekers. We see how previously unrecognized streaks hidden amidst archival data helped solve one of the most haunting mysteries of the twentieth century, the disappearance of Raoul Wallenberg. Cohen also exposes how streak-related incentives can be manipulated, from the five-syllable word that helped break arcade profit records to an arc of black paint that allowed Stephen Curry to transform from future junior high coach into the greatest three-point shooter in NBA history. Crucially, Cohen also explores why false recognition of nonexistent streaks can have cataclysmic results, particularly if you are a sugar beet farmer or the sort of gambler who likes to switch to black on the ninth spin of the roulette wheel.

Time Slowed

While the dates of 29th June to 12th July might seem a long way off, there will be no Wimbledon this year suggesting the shutdown still has a while to run. Even further out, with a scheduled start date of August is College Football, and the possibility of a cancelled season is now being openly discussed.

What was once unthinkable, even as recently as two weeks ago, is now being discussed openly throughout college sports: coronavirus could force the cancellation of the 2020 college football season.

College football brings in about 80% of the revenue for college sports so the loss of this would have a huge impact to those lower profile sports.

The NFL still plans to start its season in September, with a new play-off format meaning 14 teams will now play in the post-season, up from 12. Wild-Card weekend will now have six matches instead of the usual four. Time will tell whether the season actually takes place as scheduled.

The unprecedented shutdown of all sports and sports betting last month hasn't slowed the number of visitors to this blog, with last month seeing the highest number since October. I know at least two people are using this downtime to read through the blog from the start, which is a very productive way to spend your time in my completely impartial opinion.

For those readers stuck at home with spouses and / or partners, Malaysia's Ministry for Women, Family and Community Development advised the nation's women to help with the country's partial lock-down by not nagging their husbands.

The ministry also advised women to refrain from being "sarcastic" if they asked for help with household chores. And it urged women working from home to dress up and wear makeup.

Not sure that advice is totally PC, but feel free to share it if you don't mind getting slapped. For unknown reasons, the campaign has since been abandoned. 

We're probably all aware that our perception of time changes as we age. A term at school takes forever, whereas a year passes in a flash when you get old (so I am told).

A post from Collaborative Fund suggested that:

Time slowed in March because for the first time since childhood many of us are being bombarded with new and surprising experiences.

The writer goes on to say this:

I’ve heard people say the economic damage this leaves depends on how long the shutdown lasts. The idea is that if, in theory, everything reopens tomorrow we’d go back to business as usual; only if this drags on for another six or 12 months will we be forever altered.

But I think the amount of surprise we’ve all felt in the last month means this is already a life-defining event. The consequences will be different, but I believe more than ever that Covid-19 will end up similar to the Great Depression, World War II, and September 11th in its ability to reshape the world, driven by a generation that will go on to view everything else in life through the lens of their experience. Too many critical assumptions of the future have already been upended for it to be any different.

I have to agree. All of us will remember these weeks and months forever. The Spanish Flu pandemic was something of a footnote to the end of the Great War, and although most of us knew that something similar could happen again, I'm not sure many of us thought it ever would happen again.

My trip to South Africa seems to have marked the end of an era and seems a long time ago now. I returned with a pretty firm retirement date of March 2021 in mind, but after a first quarter loss of 10.2% (a record) and a poor start to Q2, that date is looking unlikely. We'll see. One of the consequences of COVID-19 may well be an appreciation of what is really important in life, and while accumulating money is certainly important, it's only important to a point. It can't buy time.

As bad as March was, perspective is maintained by seeing that I am simply back to where I was last June, and last June I was pretty happy. In other words, things could always be a lot worse.

Those of us who like our numbers and who have been looking ahead will know that April will be a depressing month with the below prediction for the US:  

I have the peak slightly later and slightly higher, but others have better data than me so I'll follow along. I'm not betting on it so my interest is purely academic. 

Stay safe, and stay home.