Monday 29 March 2021

Play Ball

MLB is back this week, with a full slate of matches scheduled for April Fools' Day. 

Due to the pandemic, the 2020 season was like no other, for example:
  • The normal 162 game schedule was shortened to just 60. 
  • Teams played just nine opponents all season, instead of the typical 19 or 20. 
  • The season didn't start until late July. 
  • The Blue jays played their home games in Buffalo. 
  • The play-offs were extended to 16 teams, and all post season games after the first round were held at neutral venues. 
  • The Designated Hitter (DH) rule was used everywhere, and the doubleheader rule was changed in mid-season after one had already been played under the normal rules. 
  • The extra innings rule was changed
All in all, it was a bit of a mess and a season that meant meaningful comparisons with previous seasons were pretty much impossible.

The Opening Day System was again profitable, but that was about it. The perennially profitable T-Bone System couldn't cope, registering its second losing season since 2010:
This strategy was profitable in matches hosted by American League teams versus a National League opponent, which were matches unaffected by the DH rule change. In fact 2020 was the best season for these matchups although it is a relatively rare scenario. 

'Hot favourites' managed the rare feat of consecutive losing months although July was a short month with just 22 qualifiers:
With some rule changes remaining in place, the big question is whether last season was a blip or whether longstanding inefficiencies have coincidentally corrected.

Seven-inning doubleheaders and runners on second base to start extra innings will return this season, but the universal Designated Hitter rule has been dispatched as has the expanded play-off format.

On a personal note, my wife is very excited about the prospects of her home town team (San Diego Padres) this season, as they are third favourites in the betting to win the World Series behind the Los Angeles Dodgers and the New York Yankees. 

Last season they reached the playoffs for the first time since 2006 and were eliminated in the NLDS (aka Quarter-Finals) by the eventual winners - and local rivals - Los Angeles Dodgers. 

Fun facts: The Padres are the only team in MLB yet to throw a no-hitter, but on the other hand, last season they did become the first team in MLB history to hit a grand slam in four consecutive games. So there's that.

Thursday 25 March 2021

Target Folly

One of the investment based accounts I follow on Twitter is that of @SJosephBurns, and his content is usually fairly innocent inspirational quotes with the occasional link to an interesting article or other account.

However, this post from last week was a little different and, in my opinion, flat out wrong:
I've covered this idea of targets, whether they be daily, weekly, monthly or whateverly, previously and they make no sense unless achieving the target means you'll never be returning to the fray again. 

For most of us, we should be making hay while the sun shines, not stopping on the 15th of July just because the sun has shone for two straight weeks. 

The shining sun in our case is that elusive edge, and depending on your market or markets of choice, it may be one that, on average, shows up once a day or once a month. The point is that we don't know when an opportunity will present itself. An edge that shows up on average 'once a day' isn't an edge that can only show up once a day. I replied as below:
I can't see a scenario where the advice proffered makes any sense unless you are gambling in the aforementioned casino, in which case walking away while ahead is good advice. Some days my systems have no qualifiers, while on other days as many as seven - most recently Feb 27th when the basic NHL System had that number of qualifiers. Six won, so stopping at a winner would have been costly, but even had the day been a losing one, the idea is to maximise your opportunities, not to minimise them. 

If you have an edge, invest. Another, more rational, Tweet from Steve Burns today says this:

Wednesday 24 March 2021

Year 14 And a Lesson in Maintaining Perspective

I am finally vertical, although the foot / ankle is still swollen and somewhat uncomfortable, and likely will be for several months, but at least I'm now somewhat mobile and working through the physical therapy 'step' of the process. 

It's been an interesting 12 months. Exactly one year ago today, my spreadsheet was showing a record drawdown due to the overreaction in the financial markets to the pandemic, but a year on and it is close to 64.6% higher, setting its most recent all-time new high on March 15th. 

Some of that increase was thanks to $TSLA which jumped 762% from an adjusted price of $86.86 to $662.16 but the markets in general have rebounded strongly from those March 2020 lows.

One annual birthday tradition these days is a meeting with a Financial Advisor who yesterday advised that I was too heavily weighted in $TSLA but with investment experts such as ARK, which "focuses solely on offering investment solutions to capture disruptive innovation in the public equity markets" now looking at a price of $3,000 by 2025, it's not a stock I am in a hurry to sell. 
Last year, ARK estimated that in 2024 Tesla’s share price would hit $7,000 per share, or $1,400 adjusted for its five for one stock split. Based on our updated research, we now estimate that it could approach $3,000 in 2025.
Some of you may be aware that Tesla CEO Elon Musk recently invested $1.5 billion of the company's money in Bitcoin ($BTC) which is a play I am happy to be involved with. My efforts to buy actual Bitcoin were abandoned as the process became far too complicated for a simpleton like myself who has trouble remembering the most basic of passwords, but I have invested in a Bitcoin Trust which is far simpler. The $TSLA angle is another way of being involved. 
Tesla’s investors, whether direct through the company shares or indirect through active or passive funds, have now effectively become holders of cryptocurrency Bitcoin, without actually buying it. This happened as Tesla’s famed CEO Elon Musk invested a staggering $1.5 billion of the company’s money into buying Bitcoin. Elon Musk also said that Tesla will accept Bitcoin as a form of payment soon.

This gives Tesla shareholders exposure to the popular cryptocurrency — some might welcome it, considering the meteoric surge in Bitcoin prices; yet, some others may not like the risk and volatility that come along. Notably, it’s not only the direct Tesla shareholders that now have Bitcoin exposure, but those with indirect and passive investments too, such as S&P 500 index, several Vanguard index funds, Fidelity group funds, and many more.
As for betting, the NHL System I mentioned in my last post has continued to perform well, although it did have two consecutive losing days last week which triggered an email from the reader I mentioned may have retired rich. He wrote that the...
NHL strategy we discussed before was doing OK until recently - do you think it is just variance or should I maybe move the threshold from...
I'm highlighting this because I think maintaining perspective, even after the smallest of setbacks, is incredibly difficult for many people. Stake appropriately with money you can afford to lose, and stay the course.

Some facts for consideration here are that for the NHL we have 15 seasons of data, including this current season, and this system has had one losing season which was back in 2007. It's pretty solid, but yes, on Wednesday and Thursday last week, four of the five selections lost. It happens. In fact, the system has lost money in 46 of the 116 months so a two day losing run is far from the worst that can be expected, but after 4,174 selections, an ROI of 6.7% is hard to dismiss and the idea that one of the primary qualifiers should be changed after a losing couple of days is irrational. While such simple systems shouldn't persist successfully indefinitely, one needs more evidence than this to make an accurate assessment. As we've seen from the NFL, the markets can stay inefficient for a very long time.
In fact it has a p-value of zero, but slow and steady systems like this aren't sexy and exciting, but require discipline and patience.

Just the one (losing) selection for the EPL Draw (Toss-Up) system with Arsenal v Tottenham Hotspur last week.
The ROI for the season drops to 67%, and all-time (since 2000) to 8%, but be wary of getting emotional about small samples, whether they're positive or negative.  
Incidentally, this post marks the start of year 14 for this blog, with the inaugural entry made back on March 21st, 2008.
2.3 million hits all time may sound like a lot, but if you break it down by day it's fewer than 500. But please keep reading. Now that I'm mobile again, I'll endeavour to post more frequently.

Thursday 4 March 2021

Breaking Updates

Obviously not the start to 2021 that I was anticipating, and I'm still a few days away from being able to put weight on my leg which now looks like a Meccano project, but I'm a lot closer to walking again than Tiger Woods who, by all accounts, did even worse damage to his right leg.

My surgery took place in January and with screws and plates in place (permanently), I'm hoping to be an upright citizen again soon. 

While it wasn't on my bucket list, if I had to break a leg at some time in my life, it's hard to think of a better time than now, given the restrictions on life and work that continue to be in place. I'm extremely fortunate that work was hardly impacted at all, and I was able to move seamlessly from a work-from-home situation to a work-from-bed one. 

At the time of my accident, I was in the process of a post reviewing some interesting trends in the EPL markets during the Xmas / New Year holiday season, but the time sensitive nature of that means it'll have to wait, and I'll probably include it in the end of season summary. The rationale for looking at this was that with games coming thick and fast at this time of year, the market would be expected to be less efficient than usual, and that certainly seems to be the case. 

While I have taken time away from blogging, the investing has been able to continue with another NFL season now complete, and the EPL, NHL and NBA seasons in full swing, albeit with various restrictions and changes in place due to the ongoing pandemic.

Starting with the NFL since the 2020 season ended last month, and the strategy of backing small underdogs playing away continued its run of success with no impact to profits from the COVID changes other than fewer selections than usual, just 59 this season but generating a decent ROI of 10.9%
As I have been talking about this bias for many years, I hope some of you were along for the ride, but I suspect its value isn't fully appreciated or maybe 59 selections in a season is considered not worth bothering with. The Divisional qualifiers added a little extra, and the six play-off qualifiers added another four winners from six.

The idea that there is a market bias against away teams is also persistent in the NHL this season. One reader wrote to me at the start of the season confused as to why there were no selections showing up for him. The reason was that the pandemic had forced the NHL into restructuring its Divisions, so the criteria he was looking for was no longer present.

His disappointment was palpable, and whether it was the painkillers or a fleeting moment of rare generosity I'm not sure, but I rashly and, more concerningly, freely offered an alternative that used the basic principles of the former system which had been profitable in every season since the NHL last reorganised its Divisions, and I thought would continue to be profitable.

While I haven't head from him since, the reason may well be that he has retired rich, with the basic system currently up 23.9% and 35.09 points after 112 selections:
While the 2019 NBA regular season was cut short, the theory that away teams might benefit from the absence of crowds showed some merit, at least for games where they were a small underdog. This has continued into the 2020 season, and these selections are hitting at a rate of 58.2% to date and at 65.3% (after 50 selections) if you factor in the previous outing, which often is overreacted to by the markets. The NHL system mentioned earlier is also one where the market doesn't accurately reflect previous results, and the basic ROI can easily be improved upon.

Also hitting in the 65% range are the Overs when the total is 'high' - high being a relative term since the game has changed quite dramatically over the past few seasons and what was once considered high is now quite low. 

My usual strategy here is to take the previous seasons average, and add 10 points, and this has served us well during the era of higher scoring over the past few seasons.
The bias at work here should be obvious, but it appears to take a while for the market to recognise that the game has changed.

And finally, the EPL and a season like no other with more Away wins than Home, continuing the theme that there's no place like Away these days.

For the Draw backers in 'Toss-Up' matches, it's so far so good with the 11 selections generating 9.06 points so far although the 'Close' category matches are down by 19.67 points. 
Some of you may have also noticed that six of the Big 6 matches played so far have ended 0:0, not including the Liverpool v Chelsea game currently in progress.