Game 162

With 161 games in the books, today sees the final regular season games in MLB and an interesting situation surrounding the American League Wild Card places.

As the MLB site explains:

Four teams -- the Yankees, Red Sox, Mariners and Blue Jays -- remain in the hunt for the two AL Wild Card spots, though the Yanks and Sox have at least guaranteed themselves an opportunity to play in a potential tiebreaker game. Both would clinch a spot in the AL Wild Card Game with a win. If the Yankees (hosting the Rays) and Red Sox (on the road against the Nationals) both win on Sunday, then Boston would host New York in the AL Wild Card Game on Tuesday (Red Sox won the season series, 10-9, giving them home-field advantage for the winner-take-all showdown).

Of course, if either of them lose, it would open the door for the Blue Jays and Mariners. Toronto needs a win at home against Baltimore and a loss by New York or Boston to set up a potential tiebreaker game on Monday for a chance to earn a Wild Card spot. Likewise, the Mariners -- who kept their postseason hopes alive with a dramatic comeback on Saturday night -- need to beat the Angels again on Sunday afternoon, and get a loss by either the Yankees or Red Sox, to put themselves in position for a potential tiebreaker game.

All games start at the same time today, 8pm BST. The Boston Red Sox and Toronto Blue Jays are both probable selections for the Hot Favourites System which looks to have a busy day with three other matches likely. The Yankees aren't a qualifier as they face the Tampa Bay Rays who won their 100th game of the season last night, the only AL team to do so this season. In the NL, two teams from the West Division have both achieved that - the Giants and the Dodgers.

We also probably have five selections for the NFL's Small Road Dog System today.

Good luck if following. 

Sobering September

It had to happen at some point and after ten consecutive months of gains, the recent market downturn meant a loss in September. Historically (which in this case means since 2010) September was already one of the two worst performing calendar months, and with a large loss this year, just over six figures, September as a month is actually negative overall across those 11 years. Fortunately it's the only such month, although a little concerning that October is the next worst month.

Of the stocks I've mentioned here previously, Tesla, Boeing and Lloyds Bank were all up on the month, while Bitcoin, Pfeizer and Berkshire Hathaway were down.

Regarding the sports part of my portfolio, and losses here (2.79%) due to the poor finish to the regular season for hot favourites and totals bets.

The Hot Favourites System ended September with an ROI of -3.8% (ML) and -10.5% (RL). Both are still nicely up on the season at 7.6% and 8.0% respectively.

In contrast, the T-Bone System was up in September (3.8% / 5.9%) yet remains down for the season (-5.4% / -2.9%). 

For the Totals Systems, the Overs were down 6.6% while the Unders were up 4.6%. 

There is still one weekend left in the regular baseball season before it ends on Sunday, with the playoffs beginning on Tuesday although there is the possibility of a tiebreaker game as discussed in great detail here. 

As I mentioned previously, the NFL Small Road Dogs System continues to be positive so far this season with 13 winners from 16 selections, and likely five selections this weekend. It's still early days and with so much media coverage about Road Teams in general, it wouldn't be a huge surprise to see this particular golden goose meet a sad ending by Thanksgiving, but as I've written before, old habits and biases die hard, and it may yet be a while before this goose is cooked. It's well worth having a gander at this system, and long time readers will know I'm not one to send you on a wild goose chase. 

The 2021-22 NBA season is just around the corner, with the first pre-season game on Sunday. The regular season opens on October 19th, a week after the NHL opens its season with an expanded 32 teams. The Seattle Kraken are the new franchise and are in action on opening night. The expansion means the Arizona Coyotes move from the Pacific Division to the Central Division, and as you should know if you read this blog regularly, Divisions and Time Zones are important in this sport.

In the EPL, the pain of the late equaliser against Crystal Palace on Monday night was somewhat eased by the match's qualification as a 'Toss-Up' selection, and a steady start for Draws this season. Below are the results so far for both "Close" and "Toss-Up" selections:

On a personal note, I shall be doing the Sober October challenge again this year, and hoping to shed some of the pounds I've put back on after regaining the use of my right leg which has mostly led to me eating and drinking too much. 

My data from the past two years tells me that on days I drink, I gain on average 1.1lbs, while on days I'm dry, I lose 1lb. If I intake fewer than 2,000 calories, (my Basal Metabolic Rate is currently around 1,921), exercise and abstain from alcohol, I'll lose an average of 1.1lbs a day almost 74% of the time, but the average gain is only 0.7lbs on 22% of the days with the others being flat. Target is 20lbs and, unlike some of my financial targets, this one is all up to me. 

Diving Into Retirement

Back in 2008, my how the years have flown, I wrote a post titled Kelly Criterion in which I concluded that:

Most gamblers are probably best served by using a flat 2% of their bank per bet, since figuring edges in sports is, as mentioned earlier, very difficult.

It's a number that I have stuck pretty close to over the years and which has served me well. While I also suggested that "Increasing this to 3%, or occasionally 4% on an especially good play, is reasonable", a naturally conservative person such as myself gets a little uncomfortable with 1/25th of the bank at risk on any one bet!

And now thirteen years on, a similar, but more important calculation is when to retire and how lavishly do I spend in those early years of retirement before old age replaces living with "existing" and ultimately "existing" with "death." 

Hopefully the "existing" period, if it occurs at all, will be brief, because it doesn't seem to offer too much in the "things to look forward to" category. [At 94, my Dad has this week moved out of the house he has lived in since 1955, close to 66 years, into a care home so excuse the depressing tone of this post so far.] 

Anyway, back to those early years of retirement and the risk is that if you spend too much, you can be left with a shortfall in later years, but if you spend too little, you're not going to enjoy that retirement too much.

One frequently used rule of thumb for retirement spending is known as the 4% rule, or eponymously the Bengen Rule" after William P. Bengen, the retired financial adviser who first articulated the idea.

It’s relatively simple: You add up all of your investments, and withdraw 4% of that total during your first year of retirement. In subsequent years, you adjust the amount you withdraw to account for inflation. By following this formula, you should have a very high probability of not outliving your money during a 30-year retirement according to the rule.

Another way of putting it is that your portfolio should be at least 25 times your annual expenses (plus taxes) in retirement. 

Thirty years should be more enough for me. I've not led quite such a healthy lifestyle as my father, but these calculations really would be a lot simpler if one knew their date of death. I just depressed myself still further by using this stupid web site to calculate it, the result being:

I've made a note in my diary with a reminder. It appears that another ten years is added on by going from drinking "twice a week" to "never" but that's not really "enjoying" retirement, and while another ten years would be nice, that's a high price to pay. 

If I were to step up the drinking to daily, which doesn't seem unreasonable, and start smoking a pack a day (which would be idiotic), I can be done here in fewer than eight years! 

However my wife will be returning from abroad next week, and the Cassini tradition of "Sober October" will be in full force (extra tough this year since it encompasses five weekends), and with "Dry January" also a thing and just around the corner, I shall have to recheck the predicted date of my passing next year.

Anyway, 10-K Diver is one of the accounts I follow on Twitter and they had a very interesting thread on the 4% Rule, the basics for which are:

Suppose your retirement portfolio is a well-diversified basket of stocks, like the S&P 500.

Historically, such a basket of stocks has returned ~7% per year, plus ~2% in dividends. This is a total return of ~9%. 

Assuming your annual expenses grow at ~2% per year (roughly the rate of inflation), your portfolio -- which is growing much faster at ~9% per year -- should have no trouble financing your expenses in perpetuity.

This means you'll never run out of money.

Here's the chart over 30 years with those numbers:

Which is all well and good, but as most readers will be aware, that 7% increase each year in the stock portfolio is about as consistent as our betting returns. Of course over the long-term they are profitable but profits are not consistent from season to season, and edges can disappear over time or overnight. 

The chart to the left shows the annual percentage increases and declines over the last 29 years with the average and median actually above the 7% mark which goes back to 1871, before the Football League was formed and just 10 years after Crystal Palace FC was formed. If you know, you know. 

Anyway, I encourage you to read the thread in full for yourself, but 10-K Diver back-tested the 4% Rule going all the way back to 1871 and did a "what if Joe had retired in year...". The result was that Joe would have run out of money 13 times, most recently if he had retired in 1972 and lived to 2008, which is 36 years of retirement and not a duration I'm likely to experience. 

The shortest period before going bust was 23 years, when a 1968 retiree would have gone bust in 1991. 

Back to Bengen, and "based on his early research of actual stock returns and retirement scenarios over the past 75 years, Bengen found that retirees who draw down no more than 4.2 percent of their portfolio in the initial year, and adjust that amount every subsequent year for inflation, stand a great chance that their money will outlive them."

"A great chance" isn't certainty though, and unlike blowing a betting bank, it's a little harder to start again when you're in your 90s! 

Given that the 4% rule fails sometimes, what's the solution?

10-K Diver then applied a 3% rule, i.e. the portfolio was 33.3 times that of the annual withdrawal. This time there were no failures, not one instance where this rate of spending would have ended in disaster. 

So 10-K Diver took the idea a step further, and did some stress testing, a term some of you working in IT will be familiar with, and no, it doesn't refer to the weekly one-on-one with your manager. 

What this entailed was looking at the worst periods in history, so the worst one year period was 1930-31, the worst two years from 1929-31 and so on. 

For our stress test, we'll assume that in our first year of retirement, stocks will deliver the worst 1-year return in history.

And in our first 2 years of retirement, they'll deliver the worst 2-year return in history.

And so on, for the first 20 years.

After that, he assumes the average 7% growth and allows for inflation to be at 4% rather than the original 2%. His findings:

How well do our rules serve us in this stress test?

Well, the 4% rule runs out of money in 10 years.

The 3% rule runs out in 13 years.

The 2% rule runs out in 20 years.

The 1% rule never runs out.

Once again in life, the 2% rule looks likely to suit me perfectly. As 10-K Diver said in a reply "The 4% Rule will likely work most of the time. But it’s a bit too aggressive for me personally." 

After all, 

But when it comes to retirement, it's far better to overshoot than undershoot.

You do not want to run out of money in old age.

And even if it turns out you've been too conservative, that's not so bad. You get to do more charity, leave more money to your kids, etc.

The thread and replies also contain some interesting ideas, for example one was about maintaining a separate cash float to use instead of withdrawing from the portfolio after a bad year, which I like. 

The bad news as I get ready to post this, is that I don't have a huge amount of time left, but the upside of that is that I do have more than enough to last me, and fewer years to spend it in than I thought, although my wife, kids and grandkids would probably prefer I leave at least something behind.

Killer Update

If the emails in my Inbox are to be believed, and I have no reason to think they shouldn't be, then there is some good news to report: 

Killer Sports is under new management as of September 1st. Rest assured, Killer Sports and Killer Cappers will not discontinue despite what the banners on the sites communicated this summer.

Some loss of functionality during the transition is a small inconvenience in the whole scheme of things, and I hope things progress smoothly. 

Coincidentally since the new management took over, the baseball betting has taken a turn for the worse, with the Hot Favourites system down 7.7% for the month with lefties mostly to blame! 

More to come when the regular season ends, but these are atypical results for the final month of the season, and I include the three or four days of October that sometimes conclude the regular season. 

Unusually there are no really close division races to make the post-season. The National League West is the closest with the San Francisco Giants just two games ahead of the Los Angeles Dodgers, with my poor wife's San Diego Padres fading badly in the stretch. Both the Giants and Dodgers are guaranteed a play-off spot, even if the runner-up has to navigate a one-off elimination game versus the other Wild Card team, likely St Louis Cardinals. 

The American League is a little more interesting for the Wild Card, with five teams separated by fewer than six games and if the season were to end today, the AL Wild Card game would be between big AL East rivals Boston Red Sox and the New York Yankees. Despite playing all their games before the end of July away from their home stadium due to Canada's COVID rules, the Toronto Blue Jays are also still in contention in the AL East. 

The regular season ends on October 3rd.  

At least the NFL season has stated positively with the Small Road Dogs winning seven out of eight games, the sole loss being the New York Jets in Week One who fell short by two points. Seven more potential selections this weekend including the Monday Night game.  

Capping Losses

Courtesy of @PremiumCharged, my attention was brought to the announcement in the Sunday Times that PaddyPowerBetfair plan to introduce a £500 monthly cap on losses for younger customers between the ages of 18 and 25.

While details remain unclear, there are a few issues with this approach. 

First of all, the age and amounts are both completely arbitrary. Someone's age is irrelevant and coming up with a one amount fits all approach is ridiculous.

Many young people have larger disposable incomes than older people, and £500 to one person may be a lot of money, while to others, regardless of their age, it means very little. 

The approach appears to make no differentiation between types of bettor either. There's a world of difference between someone who has slowly and steadily built a bank up from a small initial deposit to five or six figures over a few years on sports betting and is paying the Premium Charge (yes, it can be done) and someone depositing £500 each month on pay day and losing the lot over the weekend after playing the Betfair Casino. 

Apparently this £500 limit applies to all under-25s and for traders, would necessarily mean their exposure would be limited to £500. Once you are down by that amount, your trading stops for the month, even if your balance is several times that amount. If you're 24 with a bank of £50,000, that seems rather silly and not close to addressing the real issue they are trying to solve, which is problem gambling, defined as...

an urge to gamble continuously despite negative consequences or a desire to stop. Problem gambling is often defined by whether harm is experienced by the gambler or others, rather than by the gambler's behaviour.

I never knew this was only an issue for under 25s, or that the harm can be determined as being at the £500 a month level.

Nut and sledgehammer anyone? 

Never mind that it's not the business of the sportsbook to tell someone how much they can spend, and in what period. A Big Brother world where my credit card is declined because I've spent more than a certain amount of money on beer or fast-food in a month isn't one I'd imagine many of us would want to live in (although it might be beneficial to my waistline and bank balance).

Fortunately, or unfortunately, depending on how I look at this, my advanced age means that I am not going to be affected, but I imagine more than a few people will find this initiative rather annoying if it is actually implemented as the article says. A more nuanced approach would seem far more sensible.     

August 2021 Review

August is behind us, and as I hinted at in this recent post, the month was a good one for baseball. Excluding the one-off pandemic season last year, Hot Favourites haven't had a losing August since 2010 and the "heart-of-the-season" months of May thru August are also extremely reliable with just two losing months from the last seven seasons:

September is the final full month of the regular season which includes three days in October, and the two months combined are usually profitable with just one losing year (2016) since 2011. 

The Totals systems are currently showing an ROI of 8.5% and a healthy profit with Unders now contributing about two-thirds of the profits from 267 selections versus Overs with 171: 

And while it's early days, the Draw is back in the English Premier League. For those following the 'close matches' system, the results so far are:

Overall it was another good month for the Cassini portfolio, with sports investments up close to 5%. 

Bitcoin continued its recovery, but Boeing and Lloyds Bank lost money for the second consecutive month, joined in the losers column by Berkshire Hathaway which was down nearly 13%. And still CMG hasn't split, although its price continues upward! 

It would be churlish to complain after ten consecutive months of gains though, and as long as the winners amount to more than the losers, I'm good. 

Individual stocks make up a small percentage (~8.5%) of my total investments so the 2.3% gain under 'Pension' is far more important in real terms, but it's so boring to be invested in Index funds. My (and hopefully your) preferred S&P 500 index is up over 20% already this year, while the FTSE 100 is up about half of that.

For most investors: 99% of good investing is doing nothing, the other 1% is how you behave when the world is going crazy. - Morgan Housel

Good luck to you all in September.

An Overrated Variable

The 2021 NFL season is a little over a week away, with a Thursday night opening game on September 9th, a couple of timely articles by ESPN's David Purdum and Kevin Seifer on the decline of home field advantage. 

If you've been following this blog for any length of time, you will know that taking advantage of the market's over-valuing of home advantage has been a nice earner in certain matches in this sport for many years. Since the league expanded to 32 games in 2002, the record is:

In Divisional games, the ROI increases to 6.8% which over a 19 season period is quite remarkable. Of course last season was unique with limited attendance due to the pandemic, but this decline in home advantage isn't new.

Home teams had a .498 winning percentage in 2020, their lowest since the NFL's 1970 merger with the AFL. But even with full attendance in 2019, they had produced the lowest such mark (.518) since 1972, as well as the lowest cover percentage against the spread (.437) since 1967.

According to ESPN Stats & Information research, in fact, home teams have had a losing record against the spread in 14 of the past 17 seasons. That has happened even as the average spread for home teams dropped 18% in 2015-19 (-2.03) compared to the previous five seasons (-2.47 in 2010-14).

The ESPN article in full: 

With stadium crowds limited last season during the coronavirus pandemic, home-field advantage dropped to an all-time low, based on the point spreads. ESPN's Kevin Seifert examined how the return of crowds could impact this season in a piece sports bettors should read.

Home teams were favored by an average of 1.10 points last season, by far the lowest average spread for home teams in the Super Bowl era.

Home-field advantage had been declining for years, even prior to the pandemic. From 2015 to '19, the average home spread was -2.03. In the previous 15 seasons, the average home spread was -2.47.

Home teams are struggling to cover even the smaller spreads. Home teams have had a losing record against the spread in 14 of the last 17 seasons, including six of the last seven, and three straight.

"I think it's the market catching up to home field being an overrated variable," Murray of the SuperBook said. "Look how many NFL teams have little if any home field advantage at all. Washington doesn't have a home field advantage. The Chargers don't. I feel like when I watch a Chargers game there's more fans of the opposing team in the stadium. I'm not sure what kind of advantage teams like the Jaguars, Dolphins, Rams, have either. There are a few teams we would say have a real home field advantage like the Chiefs, the Packers, the Seahawks. But there's just as many teams out there that it doesn't seem to make much difference for."

Although articles such as these draw attention to the market's inefficiency, they seem to have little to no actual impact so let's hope for another winning season, even if the four yearly cycle of losing seasons suggests 2021 is due a loss. There may actually be a reason for this, given that the NFL schedule does rotate on a four-yearly basis. 

Although we no longer have the Killer Sports database which made producing a verifiable record of results so easy, I'm hoping to be able to find the time to keep these numbers coming.  

"True investors can exploit the recurrent excessive optimism and excessive apprehension of the speculative public." - Benjamin Graham 

Statistics > Algebra

Morgan Housel, of whom I have written previously, tweeted:

Wonder if people would be better prepared for the real world if high schools cut back on algebra and doubled down on statistics.

Algebra was perhaps a bad choice of subject to be cut back on since there are other subjects far less useful in the real world, but the point that learning statistics is important remains valid.

As is mentioned in my bio, Pure Mathematics with Statistics was an A-level subject I took at school, a last minute choice necessitated by the blocking of my preferred History option by the teacher who told my parents that I was disruptive and didn't want me in his class. Full details were posted in this blog back in 2009 but the incident's aftermath ultimately proved to be hugely influential in my life.

To Morgan Housel's point, understanding statistics, at least to a basic level, is a subject that should be mandatory in school. 

I learned calculus and passed my A-Level but as Charlie Munger said:

“I never touched calculus, not once, after I was 19 years-old, I’ve lost it. The symbols would mystify me." 

In my case, I was 18 when I had my last dealings with the topic, and similarly all knowledge has long gone while statistics, on the other hand, has proven to be extremely helpful in life, not just in sports investing, but in other areas also. 

In his latest blog post Rules, Truths, Beliefs (well worth a read) he expands a little on the idea writing:

Statistics and probability are the most relevant but perhaps least-taught maths in schools. They have so many real-world consequences about how people think about everyday risk. And yet.

Personal Finance is another real-life skill that should be prioritised in schools, but many institutions make a lot of money out of people's ignorance in this area. I think if people understood compound interest, and how it can work for you (investing) or against you (borrowing), it would change some people's behaviour, though not all. "You can lead a whore to culture, but you can't make her think" is the expression that comes to mind. 

With less than a week to go until September, I'll wait until then before updating how the baseball systems are working for August, but if you are playing hot favourites you'll know you're doing pretty nicely which ever hand the starter throws with.

Perfect Head-Fake

A little over a month ago, I wrote a post about the error made by a sportsbook (Circa Sports) when setting the initial total for the WNBA's All-Star game.

At the time I mentioned that:

A couple of observations I found interesting were that the total was posted for two hours before the first bet was made, a bet on Overs which may well have been a spoof, and how many other books simply copied the line.

An ESPN article today by David Purdum confirms that a syndicate had suspected the total would be wrong, and that the first bet was indeed on the Over.

The full article is here, and makes very interesting reading:

They're called head fakes in the cutthroat world of high-stakes sports betting, and on an innocuous Wednesday in July, one syndicate unleashed an all-timer.

A team of bettors, with associates around the country, had been preparing for the release of the over/under on the total points scored in the WNBA All-Star Game for days. The betting syndicate thought there was a chance an oddsmaker would make a mistake.

The game featured the WNBA's top players against the U.S. women's national team, which was tuning up for the Olympics. The syndicate believed more defense would be played, leading to reduced scoring compared to traditional wide-open All-Star Games.

The syndicate sent one of its members to New Jersey in advance, and on game day (July 14) closely monitored the odds screen, waiting for the first sportsbook to post the total. At 10:29 a.m. ET, the syndicate got its wish. A mistake had been made. Las Vegas sportsbook Circa Sports opened the total at 248, a number reflective of a typical defense-optional All-Star Game, and not an intense, competitive affair featuring a team preparing to win a gold medal at the Olympics.

Everything had played out perfectly. The syndicate was in position to capitalize on the mistake by hammering the under, but the uninitiated might not believe what it did next.

A suggestion was sent to to the syndicate member in Vegas tasked with making the first wager: "Let's see what happens if you bet over."

That's right, believing the total was 30-plus points too high, the syndicate chose to make its first bet on the over. The strategy was not designed to dupe Circa as much as it was to create a smokescreen and not alert other sportsbooks that the number was off.

The head fake worked.

The syndicate partner who made the first wager is sharp, regularly causing lines to move after placing a bet. When the account placed a limit bet on over 248.5, Circa oddsmakers moved the number to 252. Shortly after, sportsbooks from Costa Rica to Colorado to New Jersey to Nevada copied Circa and posted the total at around 250.

The syndicate went to work, this time betting the under at as many sportsbooks as it could. The total got as low as 191, before closing at 197. The WNBA All-Stars won 93-85, with the total staying under by 19 points. The syndicate did well.

"That was just a unique one and not a typical case. It doesn't usually work that way," said a member of the betting syndicate, who spoke to ESPN on the condition of anonymity. "It happened to be the perfect storm."

And perhaps the perfect head fake.

The original ESPN article has more about head-fakes and some entertaining examples and stories about their history including a quote from this blog's friend in Las Vegas:

"It only works if you're convinced other people are going to copy it," said iconic Vegas oddsmaker Roxy Roxborough. "And people copy it."

UEFA Super Cup

Since UEFA's Super Cup went to a single game, the 24 matches have produced 10 draws with a noticeable increase in recent seasons.

Hopefully some of you took advantage of this bias yesterday as the Chelsea - Villareal game became the fourth consecutive Draw in this fixture, the sixth in the last seven, and seventh of the last nine. If any one category is in form for this strategy, this is it! 

I have historical prices for the matches since 2005 and not since 2014 has the game been decided by more than one goal. 

After yesterday's result, the ROI of backing the Draw increased from 116% to 125%. 

The numbers do show that clubs take this game seriously, with English and Spanish clubs making up the majority of appearances. 

It's interesting that adding in the larger sample of UEFA club Finals (Champions League and Europa League) featuring English and Spanish teams, the Draw ROI increases from an already solid 37% to an even higher 69%:

Olympic Finals and Community Shields

Hopefully some of you made a profit backing the Draw in the two Olympic Football Finals, matches which have historically produced Draws at the rate required to be profitable. For the Women three of the six Finals had finished as Draws, with this year making it four of seven, while in the Men's Final three of eight have now finished even.

Excluding the Bronze Medal games where laying the draw is the recommended strategy, (none of the 15 matches have ended as a Draw) 36.6% of Women's knockout matches have been Draws, while in the Men's (U-23) the number is 28.6%. 

The Community Shield game is also one where the Draw is historically value and we came close again this year, with the Draw broken by an 89' penalty. Results since prices have been available:

The ROI drops to 32% from this small sample size of matches.

Olympic Football

At least one reader has been paying attention this summer to the Knockout Draw System in International tournaments, which is good to know. Whether Hareeba has been investing or not I have no idea, but he's been taking an interest in the Olympic Football competitions currently being played in Tokyo.

Hareeba noted that in the Men's tournament, 4 of the 6 knockout games have ended as Draws, as have 3 of the 6 in the Women's competition. Since the Men's tournament became an Under-23 event in 1992, the 56 matches have produced just 12 Draws before this year, while for the Women there have been 11 Draws from 40 matches. 

While backing the Draw in third-place playoff games isn't usually a good idea, it might be logical to think that with a Bronze Medal at stake, these games in the Olympics might be a little more competitive compared to what might be considered a meaningless inconvenience, but the results suggest this isn't the case. 

The Women have never seen a Draw in this match, and the Men not since 1972 when East Germany and the Soviet Union were both awarded Bronze medals after a 2:2 draw in the time when Eastern European countries dominated Olympic football from 1952 to 1980. Apparently the attraction of a Bronze medal isn't strong enough to overcome the disappointment of missing out on Gold in football. 

Unfortunately I have no historical prices for any of these matches, but other than backing the Draw in the Gold Medal game, aka the Final, there was nothing to get too excited about. Of the 13 finals to date, five have finished as Draws and none have been won by more than a single goal. Sweden play Canada in the Women's Final while Brazil play Spain in the Men's.

  

Buying the Farm

On May 5th 1978, a young Warren Buffet (age 47) skipped the annual celebration of Cinco de Mayo to attend a seminar at Stanford Business School which was held as part of an Investment Management course being taught by Professor Jack McDonald. As of 2016, McDonald was still teaching the class.

I was reading through some notes from that day, and some of young Buffett's thoughts from that event seem to me to apply equally well to sports betting markets as they do to the financial markets that were being discussed that day. For example, his opening statement:

The game of making money in the stock market is deceptively simple. It is one of the few businesses where one makes offensive decisions and is not forced into making defensive ones. You play the game only when and where you wish to. You need only swing at the fat pitches which are over the plate and belly-button height.

In other words, be patient. Wait for the market to offer value and only play when it does. As punters or investors, we have the huge advantage of not having to bet in every event. Buffett gives an example of a farmer, who...

only sells or buys a farm once. Therefore, he must be right when he does. In contrast, the stock market gives tremendous choices. Most people turn this vast array of choice into a disadvantage rather than an advantage. Be patient and wait for the right buy.

In a theme which has recently been well documented by Morgan Housel in his excellent book The Psychology of Money which I mentioned in my last post, Buffett touches on the fact that when it comes to investing:

There is absolutely no correlation between hours worked or intelligence and money management success, but that there is a tremendous correlation between approach and temperament, and investment success.

As Housel puts it:

In what other industry [finance] does someone with no college degree, no training, no background, no formal experience and no connections massively outperform someone with the best education, the best training, and the best connections? I struggle to think of any.

Buffett lists four basic rules: 

1) resist the temptation to be in every game all the time 

2) maintain an even temperament 

3) have a reasonable knowledge of the subject and interest in it and 

4) be disciplined 

There are other nuggets hidden away in the notes, including the advice to "learn what you can’t value" and that he "would absolutely never invest in any of the largest 50 companies in the U.S. The market is incredibly efficient at this level."

When it comes to sports betting, I think the lesson is that accurately valuing the outcome of an event is very difficult, and when it comes to football or big sporting events, your opposition includes some highly sophisticated participants with access to far more useful data than yourself. 

One Tweet appeared on my timeline at the weekend from an account claiming to offer "Powerful tools for experienced players" and these words:

In the Advanced Goals Statistics module, select a live game then the score and the minute will be taken over automatically and used to calculate the next 5 minutes percent to see what happened on previous seasons similar games

Further, you can also apply other complex filters

Who knew that investing was so simple? I won't give any publicity to this vendor - you can find the thread on Twitter if you are interested - but of course the idea that this kind of thing is useful is based on the flawed logic that what happened in previous seasons has some kind of bearing on future matches and similar games. 

Common sense should tell you that Manchester United v Liverpool in August 2020 has no relevance to the same fixture played in May 2022 due to, for a start, the fact that players, tactics and sometimes managers may all be quite different a week apart and certainly a season apart.

So I asked the question:

Help me understand how what happened in a previous season with different players, managers, weather etc. has any predictive value?

It will come as no surprise that what followed was not an answer, but deflection - "I will help you if you tell me why for a given event (even live event) the odd 2.10 may be good to play and let's say 1.90 may not be good."

Oh dear. Expected Value is a basic concept for anyone taking betting seriously, but in exchange for my answer giving a clear example of why 2.1 might be value and 1.9 not, I never did get an answer as to how a game from a previous season could be relevant in any way to a current game. 

The software can be licensed for just €27 for 3 months and apparently lets you enter a game state and in return will give you historical outcomes, which might be interesting as a curiosity but is absolutely useless as a predictor for how a current match might play out. 

A couple more thoughts and observations. Entering the number of minutes elapsed is meaningless, because what is important is how many minutes remain in a game, not how many have elapsed as I have explained before. The 90th minute in a game with several minutes to be added on is quite different to the 90th minute in a game with none.

There's also the problem with these in-play bets that you are competing against some extremely sophisticated models which actually are profitable. The money they are consistently winning is the money from those who think that matches from previous seasons have any relevance. If profitable betting was really this easy, we'd all be millionaires and Premium Charge payers, but this use of historical data is not an approach that will get you to that point.     

July 2021 Review

July is now in the books, and another profitable month in the MLB for 'hot favourites' although for left handed starters, some regression to the mean has not unexpectedly taken place this month.

Overall the system was up another 23.55 units taking the season total so far to 82.95 units, recovering nicely after a shaky start in April. 

The return for left handed starters is now at 22.5% on the Money Line, and 26.7% on the Run Line after a small loss in July. 

The T-Bone System had a losing July, dropping 1.87 units from 64 bets, and is now currently down 6.05 units (ROI -2.8%) on the season. 

The Totals Systems are now both in profit for the season although Unders is contributing 85% and for reasons previously discussed, this percentage will likely continue to drop.  

I've already covered the Euros, the Stanley Cup Finals and the NBA Finals which reached their conclusion last month, and advised that the Gold Cup was not a place to try the knockout Draw system. 

With all six knockout matches so far being won by the favourite, anyone looking for Draws would have been out of luck, but all competitions are not created equal as I cautioned.

The final, for the seventh time, is between Mexico and the United States with Mexico shortening from around 2.71 when the finalists were known, to a current price of ~2.32. Across all international tournaments, when the fair probability of the favourite is less than 0.5, backing the Draw has an ROI of 27% which initially makes this a tempting proposition, but in Final matches the ROI is only 6%, and in Gold Cup matches is negative, which makes it far less tempting.

As previously mentioned, sports investments now make up a very small percentage of my income, and as would be expected for someone of my age, my monthly spreadsheet update is far more about pension and property investments than the outcome of a few football or baseball games. 

Some of the individual stocks I've mentioned in this blog are included (left) but in real terms, 1.18% of my pension is far more than 2.36% of sports profits. 

One company I've not mentioned before is $CMG (Chipotle Mexican Grill) which I bought last September, primarily because I suspected a stock split might be imminent. 

Only five companies in the S&P 500 have higher share prices but no split has yet been forthcoming. 

While stock splits don't, in themselves, create any value, "a stock split can influence share price and valuation in a number of ways. The action signals management's confidence in the company's growth outlook and it can be viewed as an indication that they believe the business is in position to expand in a way that will push the stock back up to its pre-split levels." This benefited my holding in Telsa last year, and similarly Apple although I don't directly hold any of that company's stock.

Given that the stock is up 55.75% since I invested, I'm happy to wait this one out.

Tesla had a flat month, while my Bitcoin investment remains in the red despite a decent July.

"Investing becomes so much simpler when you're willing and able to measure progress in years and decades instead of weeks or months." 

Overall July was the ninth consecutive positive month, but wasn't quite up to the numbers from March to June. 

As Morgan Housel puts it in his excellent book The Psychology of Money "Two topics impact everyone , whether you are interested in them or not: health and money", and on that theme what wasn't so great in July was a 10.6lb gain in weight. After breaking my leg, I dropped 27lbs in the first quarter of the year, but since then 14.5lbs has been regained. Walking again is great, but perhaps my destination shouldn't be the pub so often! 

Making money is great, but without good health it's all rather pointless, so a new month and some new health and exercise goals.

Good luck to you all in August.

 

NBA 2020-21 Over

The 2020-21 NBA season wrapped up this week with the Milwaukee Bucks winning the final series against the Phoenix Suns in six games. For those of you following my Totals System it was another profitable season, in fact the best ever since totals started climbing, with the final numbers as below:

Roughly the same number of selections as last season, but an ROI of 22.5% was the best ever by some distance. There were only four qualifiers throughout the whole of the playoffs, and three of these went Under, but it would be churlish to grumble about that. 

For anyone following this system, the Total for next season will be 234.2 points, the smallest increase in a few years. The other metrics I track also show a likely slowdown in the increase in points, with the number of possessions showing a decline for the first time since at least 2012 and the number of three-point attempts only up by 1.5% which, by some distance, is the smallest in that time. 

 

Shots, Bucks and Graeme

In their first game back after the All-Star game, my wife's hometown San Diego Padres scored a club record 24 runs beating the Washington Nationals by an American Football score of 24 to 8 on Friday night. This is also the most runs by any team this season. 

On track to win the second game of the series last night, the game was suspended for the most American of reasons - a shooting outside the stadium in Washington with reports saying that four people were injured. Not my joke, or a joking matter, but some have said that one American pastime was interrupted by another American pastime.  

Backing the favourite in the first game after the break added another 1.11 units to our total, and since 2004 this simple system is up 49.22 units on the Money Line and 26.54 units on the Run Line, ROIs of 14% and 13.1% respectively. This was mentioned in 2019 so hopefully some of you took note:

Sports Insights has found that blanket-backing favourites had been profitable before and after the break in recent years, although those studies only look at the one game either side.

In the NBA, the first four games of the Finals went to the home team, but Game Five last night was won by the visiting Milwaukee Bucks . After winning the first two games, the Phoenix Suns traded as low as 1.23 to win the championship, but they are now outsiders at 3.94. Game Six is on Tuesday in Milwaukee where their record since mid-April, including the play-offs, is an impressive 17-1 straight up, and 12-6 ATS. 

I layed the Suns at 1.59 before the Finals started, and I'm happy to let this investment run. 

Finally some sad news that I stumbled across earlier today. In the early days of this blog I exchanged thoughts and ideas with Graeme Dand, who I described in this 2009 post as "very personable".

Graeme was also an entrant in the Friendly Tipster League and was famous for his (often extremely) lengthy blog posts often accompanied by screenshots of carefully compiled spreadsheets complete with pivot tables.

Check out some of his posts here. 

Even when communications with someone are all electronic, you get an idea of who the good guys and decent people are, and Graeme was definitely in that category. 

Our paths haven't crossed for several years, but it came as a shock to find out this morning that Graeme is dealing with a serious illness with a bleak prognosis.

Graeme was also an entrant in the Friendly Tipster League and actually one of the "Bounty Boys" as I called them, donating additional money to the prize fund.

Graeme was one of the winners with his TFA Draws finishing in eighth place but I can't recall if he came out ahead in the end.

Graeme also appears to have collected a small sum with his TFA_Raz entry, but after six years I have no recollection of what that was about.

All of this of course pales into insignificance when compared with the only really important thing in life, which is health. Making money is great, but without good health it is meaningless. I wish Graeme the very best and will be following him on Twitter with positive thoughts. You should do the same. 

After The Break

With no MLB All-Star game last season, some of you may be forgiven for forgetting the strategy of blindly backing favourites in their final game before the break. As I wrote in 2019: 

Certainly blindly backing all favourites in the final game before the All-Star Break is a profitable strategy, +6.7% Money Line, +12.1% Run Line

This year the success of this strategy continued with another 4.15 units won. 

Baseball was scheduled to resume after the All-Star game last night, but the New York Yankees v Boston Red Sox game was postponed for COVID-19 reasons. There are 17 matches tonight, including two double-headers, but in the first game back after the break, since 2004 backing the favourite has an ROI of 14.5% on the Money Line and 9.2% on the Run Line.

The break gives us a good excuse to look at results for our systems to date, and overall it's been a winning one so far:

As I've mentioned before, I'm not sure why lefties are having so much success with our systems this season, but the numbers don't lie and are included above. This is a new trend this season so it could be just noise, but unfortunately with the pending demise of Killer Sports it will be a lot harder to track once this season ends. 

Who will take the second shot in this snooker match? We'll find out, after the break.

When the Draw is Winning

For those who took the Draw and Under in the two finals this past weekend, another profit and the final numbers for the Draw system for the two 2021 tournaments are 11 Draws from 22 matches and a profit of 15.96 units.

For Copas, Euros and World Cups combined since 2004, 153 matches have resulted in 60 Draws, and 60.92 units of profit, an ROI of 40%. 

Sixty Draws is 39.2% of matches and while we, or more specifically I, only have prices going back to 2004, I do know that the percentage of Draws in the 401 matches going back to the 1919 Copa America tournament (the first year that a knockout match was played) is 34.2% with an average goals per game of 2.64.

Goal expectancies were higher in those early years, with the probability of a match finishing as a Draw consequently lower. Prior to the 1976 Euros, the Draw percentage was less than 22% with an average goals per game of 3.6.

Since 1976, the Draw percentage is over 38% with an average goals per game of 2.34. The average has stayed pretty much the same over the past ten years (2.36), twenty years (2.27), thirty years (2.38) and forty years (2.33) with the percentage of Drawn matches over that time 41%, 38%, 37% and 37%. 

It seems reasonable to conclude that the system would have been profitable for longer than the 17 years for which I have data. A Draw percentage of 37% means an implied price of 2.70 and not one Euro, Copa or World Cup match has been priced at that level. A couple of Africa Cup of Nations matches featuring Egypt had the Draw as favourite in 2017 at an average 2.61 and 2.65 but this is highly unusual.  

Some of you may be wondering if this system works in the CONCACAF Gold Cup, which is the North, Central America and Caribbean equivalent of the Euros, but is equivalent in name only as it is a tournament of a much poorer quality.

Only Mexico (11th) and the USA (20th) are ranked in FIFA's top 40, and knockout games where the favourite is as short as 1.06 aren't exactly the competitive games this system is looking for.

Either Mexico or the USA have won 14 of the 15 previous tournaments (Canada with the one other title) and these two countries have met in the final six times. 

The 2021 tournament began last week, with the knockout stage starting on July 24th, but with an ROI (since 2009) of -15% (-6.03 units from 41 matches) it's not a tournament that sets the pulse racing. The ROI is positive at 13% on matches where the favourite has a 'true' win probability of less than 0.667, but none of the six matches where the Draw is considered most likely have ended that way, but six is a small sample size of course. 

Wrong Number

A great story yesterday about a major error made by Las Vegas Sportsbook Circa Sports when posting the opening points total for the WNBA All-Star Game, a total which subsequently moved by some 50 points.

The error was that the sportsbook director, Matt Metcalf, failed to take into account that the All-Star game wasn't the typical All-Star game which usually see no defensive play and ridiculously high totals. With an Olympic Games coming up, the game this year was between the WNBA All-Stars and the US Women's National Team, and as a result the game would be taken rather more seriously than usual. 

The game finished under the closing total by 19 points and under the opening total by some 70 points. A couple of observations I found interesting were that the total was posted for two hours before the first bet was made, a bet on Overs which may well have been a spoof, and how many other books simply copied the line. 

Credit to Circa Sports for honouring the bets they took, and if you haven't seen their sportsbook in Las Vegas, I've heard it's worth checking out at three floors and more than 30,000 square feet. I had a ticket offered to me for the Tyson Fury v Deontay Wilder III fight later this month, but unfortunately that has now been postponed to October 9th. If my ticket offer still holds, I shall check out Circa Sports for myself at that time. With the NFL season underway, it should be a great atmosphere. 

 

The full story from ESPN is here:

The over/under total on the WNBA All-Star Game moved more than 50 points Wednesday, a historic line movement on a number that a Las Vegas oddsmaker calls the "worst I ever made."

Las Vegas sportsbook Circa Sports, the first to hang an over/under on the total points scored in the game, opened it at 248.5. An hour before the game tipped off, the total was sitting at 195.5.

The 53-point movement was the largest shift that multiple veteran bookmakers could ever recall, and it wasn't caused by any attempt at corruption or by a rush of big wagers. Instead, it was simply a mistake by an oddsmaker who was short on time.

On Wednesday, around 7 a.m. PT, Matt Metcalf, sportsbook director for Circa Sports, saw an opportunity to post the first total on the WNBA All-Star Game on the betting market, he told ESPN. He had a morning meeting at 9 a.m. and still needed to get showered and dressed for work. Rushing, Metcalf said he looked at the total points scored in the previous All-Star Games and landed on 248.5 as the opening number for this year's game.

"At worst, I don't think this was more than 15 points off. That's as bad as I think it could be," Metcalf said. "I didn't think it would be the worst number ever."

Metcalf said he didn't take into account that WNBA All-Stars were facing the U.S. women's national team, which is tuning up for the Olympics and expected to take the game more seriously than traditional high-scoring All-Star Games that are often played with reduced intensity and lackadaisical defense.

"This is very different than a [typical] All-Star Game," Las Vegas Aces coach Bill Laimbeer told Sports Illustrated. "Normally everybody is kind of goofing around. That's not what USA Basketball wants. USAB wants a very competitive game."

The 248.5 opening number was up for a couple of hours at Circa before the first bet came in, and it was on the over from a respected account that pushed the total up to 252.5. Metcalf said he believed the bet on the over was designed to "dummy up" the market, a tactic used by professional bettors to mislead bookmakers about which way they're going to bet.

At that point, sportsbooks in the U.S. and internationally began posting over/under totals similar or identical to Circa's number. With more sportsbooks having the total on the board, bettors started to bet the under, and the line began to plummet.

"I've been monitoring this stuff since 2004, 2005," said Rex Beyers, risk manager for the SuperBook at Westgate Las Vegas, "and, off the top of my head, I can't think of a bigger move. It's certainly in the top five."

The SuperBook opened at 251 and moved the number 32 times before it settled at 197. Beyers said they hadn't taken any limit bets on the under but were just trying to stay in line with the market.

"We have more money on the over than the under," Beyers told ESPN a few hours before the 7 p.m. ET tipoff.

The WNBA All-Stars ended up handing the Olympic squad a rare loss for a final score of 93-85, with the total 19 points shy of the closing over/under.

In the past when some bookmakers have posted bad point spreads or totals resulting from a typo or mistake, the sportsbooks have voided the bets on those numbers, claiming "palpable error." Metcalf emphasized that this wasn't the case with his WNBA total: "I made a horrific number, hung it and took bets," he said.

Metcalf estimates Circa took only six to 10 limit bets on the under that caused the line to drop so significantly. The opening limit was $2,000 and later reduced to $500.

Circa, which caters to professional bettors, has earned a reputation in the industry as having sharp lines and totals.

"I always say a bad number is better than no number," Metcalf said. "I think we earned some trust by the numbers we've put up in the past -- granted, we may have blown that all today.

"I think the market respects our numbers for the most part, but we're not perfect. We're going to make some bad numbers. That said, I would never expect that we'd put up a number that's 50 points off on a total."