Fury, Fame, Frauds and Witch Hunts

I'm back, refreshed and recharged and although the hoped for 103,000 hits on my last post didn’t quite materialise, falling about 102,000 hits short, the post did generate a few comments and the target of 1,000 hits a day number for this month is still looking good. With so many comments, I'll probably address them over a few posts rather than just one, to keep topics fairly discrete.

First up was Aaron who wrote:

Hi Robert, a little one sided. It seems James doesn't like hyperbolic statements however the twitter storm erupted by his refusal to answer any comments as to why his book was removed by Betfair. Also — I don't see any "proof" on his site (or yours) on trading successfulness (and I note you shouldn't need to you have been round long enough). But why then is it demanded of Caan or whoever else is the subject of the current fury.

I think its also classic that between you, you think that PeeWee is some kind of fraud. Anyway, enjoy reading your blog (most of the time) I just feel recently your blog has gone a little biased and one sided and in support of James.

My nom-de-plume is actually Cassini, and on the subject of James’ book being removed by Betfair, I’ll jump ahead to his response on that topic which was this:

I only became aware that Programming for Betfair is no longer advertised by Betfair at one of the two locations when it was pointed out to me by someone on Twitter.

I have not asked Betfair why they stopped advertising the book at this location as I am not interested as to the reason why. I stopped being an API beta tester and being in regular contact with Betfair of my own volition over a year ago when Betfair decided to punish users of the API with a one-off £200 registration fee for live data. Still, it's cheaper than perennial subscription but off-putting for newcomers.

I am surprised I sold so many books. It rather took me by surprise and shows there is a large group of people looking at alternative trading methods.

I guess the "fame" has been hard to shoulder but my pending retirement will be as welcome to me as it will be to others. No doubt it will be seen by some as a victory for manual traders.

They would be foolish to think so. Sports trading gets harder every year, never easier.

As for the “I don’t see any “proof” on his site (or yours) on trading successfulness (and I note you shouldn’t need to you have been round long enough). But why then is it demanded of Caan or whoever else is the subject of the current fury” - I would say that there’s no “proof” on this blog for several reasons, the main one being that I have nothing to sell, so it’s unnecessary. 

At my age, I don’t feel the need to brag about wins or bleat about losses. This isn’t my life, it’s just a hobby. If someone wants to believe that I have spent nine years blogging on a topic that hasn’t been profitable, that’s fine with me. 

Logically, it wouldn’t seem to make too much sense, but if someone wants to believe it’s all made up, then I’m fine with it. I have no sales that would be hurt, and my feelings can take it at my advanced age. There’s also the question of what “proof” would be acceptable since screenshots can be faked easily enough.

I can’t speak for James, although I would say that he makes no claims of enormous wealth from his trading, preaching instead the message that profitable trading is very difficult. His books aren’t promoted with the message “buy this book, and make £100,000 a year”. 

The first book "Programming for Betfair" appeared to be very technical with a niche target audience, the second (the one that I have) - "Betfair Trading Techniques" - is more of a trading manual with ideas rather than any get rich quick strategies, which couldn’t possibly work anyway. 

It’s also worth mentioning that the outlet for James’ books is the reputable Amazon site, and if you are dissatisfied with your purchase, you can get a refund with no problem.

So why is “proof” demanded of Caan and others?

It’s not, at least not by me. No one is demanding proof. All this blog has ever suggested is that anyone considering buying manuals or video packs should, in the absence of any proof, carefully consider a few things before spending their money.

If you’re reading his blog for entertainment, who cares if he’s making the £2,000 a week he claims or not?

The problem comes when someone uses this claim as the basis for selling a product, especially one sold in the absence of a money back guarantee. Some buyers are more discerning than others of course, but trouble-free refunds are something I look for when buying anything online. 

With no guarantee available, one might look at other areas as part of the due diligence process - independent reviews of the product, for example. The problem here is determining whether or not a review is genuine. Then there’s the “gut feel” of the sales pitch, in this case the blog.

Caan Berry or others may well be making £100,000 a year as claimed trading horses from their living rooms. They may all be steeped in the horse racing industry, live in Newmarket and descended from a long line of trainers, jockeys, breeders, owners perhaps, or maybe they are quantitative analysts with degrees in Advanced Quantiness. Who knows, but if such traders exist, would they be selling their secrets for a few quid?

In this specific case though, the products are from an ex-Army, ex-BT cable installer, ex-salesman of solar panels, who left education at the age of 16.

Not the most impressive of qualifications for someone selling the dream of a £100,000 a year income perhaps, so the claims should assume even more importance. 

Are they realistic, or do they seem a little improbable? 

Are the claims backed up by any evidence at all?

Is the narrative consistent and specific? 

If evidence comes to light that a full-time professional trader was actually selling solar panels for several months, is it a little odd that this change in full-time trading status wouldn’t be mentioned in the blog at all? 

We are probably all guilty to some extent of putting ourselves into someone else’s shoes and asking what we would do with a few hundred thousand pounds, but many people would invest in a home. No mortgage required with that amount of winnings in the bank. Heck, buy more properties and rent them out. Being a landlord can be a pain, but property has always been a solid investment – as ‘safe as houses’ you might say. Caan may well have his reasons for not living in his own home but he has often mentioned the benefits in his blog.

A comment from G, possibly not his real name:

To me it is clearly obvious, if you're selling/pushing a product with claims of making a 6 figure sum per year, then you should be able to back it up with solid proof.

No witch hunt etc- a reasonable ask imo

I've seen that term 'witch hunt' somewhere else this week!
  

Enough about Caan. Ultimately it's for each of us to make up our minds on the veracity of his claims, especially of you are thinking of giving him money. 

My opinion is that the evidence available doesn't support the claim, but then I am by nature skeptical. 

To Aaaron's final point - "I think its also classic that between you, you think that PeeWee is some kind of fraud" - I've certainly never used language suggesting that to be the case. 

PeeWee's software has many users, which is convincing evidence that it is a decent product, although I am not qualified to comment on how good it is relative to others in the market. 

The main problem I have with PeeWee is that his blog posts are misleadingly one-sided, with verifiably false statements, not to mention poorly written, and the courses he runs are not going to give you anything of value, since doing so would hurt PeeWee's long-term trading profits in exchange for a short-term £400.

Of course I understand that the blog is a vendor-blog with the sole purpose of attracting business, and telling the truth isn't going to do that, but lost in the message is the distinct possibility that the vendor's gain comes at a potentially large cost to the customer, many of whom can ill afford either the £400 or the likely additional losses chasing an improbable dream. 

As James says in a later comment on my last post:

I have always thought that selling subscriptions for software that in over 90% of cases will lose the subscriber even more money is like being a used car dealer who flogs cars where over 90% of the vehicles have no engines.

That's probably enough for now. Still a few more comments to address, which I will get to in time once I get back into my normal routine.  

Cops and Bloggers

As popular as this blog is, incidentally well on track for 1,000 hits a day this month, it's not often that I receive special requests for a post, but the above Tweet from @GeeksToy last night, read by his 103,000 followers, which is more than I have, couldn't be ignored. I'm expecting a bumper day.

The request came in the midst of something of a Twitter storm, with Geeks Toy surprisingly at the forefront. 

Whether Paul Spry himself was at the helm or not, it was surprising to see what I'd always thought was a reputable product, with a sense of humour,...

...get involved in some rather questionable behaviour, the details of which aren't important and won't be repeated here, although I don't see that any crime was committed. That it was late in the evening suggests alcohol may have played a part!

The trigger appears to have been this post from Betfair Pro Trader, which was in turn prompted by a comment from Boris which opened with:

James you have never been keen on showing the poolside life of trading, I understand why.

James wrote a post mostly about the future being algo-trading rather than manual, before concluding with:

I have no problem with people taking holidays. What I have a problem with is people using exotic holiday imagery as a marketing exercise to sell an unattainable lifestyle to the many.

Now if anyone was to have a problem with this perfectly reasonable observation, you'd expect it to be someone using exotic holiday imagery as a marketing exercise to sell an unattainable lifestyle to the many, but it was Geeks Toy who seemed upset about it, although others joined in later. Why would a software vendor care?

One can only assume that the comments of James are seen as a risk to their sales. He may well have commented on the merits of Geeks Toy, Bet Angel and whatever other trading tools are out there, but I don't recall him taking any strong sides, and it's not a topic I know anything about myself. Software is not one of my many strengths - far too nerdy for a normal person like myself!

So why should James' post, which at its core merely encourages readers to look carefully at claims and how realistic they are, before getting involved, trigger a reaction from Geeks Toy?

Understood that James is a "best-selling" author whose publications are available on Amazon, and James may have something to gain from encouraging people to move in an algo-trading direction versus manual, but that shouldn't hurt Geeks Toy's sales significantly unless I'm mistaken. Maybe their software is for manual traders only? 

Boris's 'poolside' reference was presumably to Caan Berry, who hints at a "£100,000 a Year" income, with a "No Boss. Better Living" lifestyle but as this blog as pointed out, the actual lifestyle doesn't quite match up with the claimed lifestyle. 

Caan's address, a distinctly average rental property, wasn't mentioned, in part because details of any company's address, including Talented Mavericks Ltd, are readily available for anyone who is interested, i.e. anyone performing due diligence before buying any products, but also because it seemed unnecessarily invasive. Who cares if someone lives at number 4, Acacia Gardens, Craptown?  

A quick look at the Geeks Toy (shouldn't Geeks have an apostrophe?) web page shows that all recent blog posts are written by Mr Berry. 

Are Geeks Toy sales that dependent on one trader? 

One other topic that came up in response to a Tweet from a none-too-impressed Geeks Toy customer, was that of selling.

The reply needs a little clarification:

James does sell books through Amazon which guarantees your money back in the unlikely event that you may be dissatisfied. 

As for 'one did', that would be me, although my service has long since permanently closed since a promotion at work meant that I no longer had the time (several hours a week) for it, but again, it was run with a money-back guarantee:

The refund clause was never triggered, which was fortunate given that inputting data each week, calculating new ratings, reviewing 49 matches each week, and compiling the emails, took up so much time that the service was a bargain anyway and halving my already miserable hourly rate would have hurt. 

Back to topic, and one curious Tweet was this one:

Although I have yet to see a Star Wars film, again - far too nerdy, I believe C3PO is a robot - but was it formed of a single large block of stone which is what monolithic means? Perhaps the intended word was monotonic - "speaking or uttered with an unchanging pitch or tone".

In summary, I have nothing bad or good to say about the Geeks Toy software, or Bet Angel's for that matter, since I am not qualified to offer an opinion. 

What this blog does do is offer unbiased, impartial opinions on many subjects, but is always open to a reasoned debate. 

If you think you can beat court-siders, explain why logically this might be so. 

If you think a course is going to really teach you anything of value, i.e. to the detriment of the course provider, explain why. 

If you believe someone has made several hundred thousand pounds trading horse racing from home, explain why their edge hasn't been identified, replicated, and eliminated long ago.

If you have experience of courses, video packs or trading guides, share them, good or bad. 

I'm away for a few days shortly, but keep the hits and comments coming, and I'll address them on my return.     

Trends, Tears and Takeaways

My Future Savvy post of last week was triggered by a comment from Tony Stephens, and Tony returned to say:

Thanks for the detailed response on this. I think your answer explains what I suspected was meant when discussing trend trading, so I’m glad I asked.

There will be some, maybe many that will see the words trend trading and interpret this as trying to identify a trend on a market by market basis. Some might state they are not a scalper of certain markets, but more of a trend trader where they are waiting to see the fav in a particular market getting backed in and trying to follow the trend in.

Just to clarify my “sad” opening. I do feel a small amount of sadness that someone who probably enjoyed the game at one point has taken the decision to not continue at all. I completely understand that the right decision was made for them so I’m happy about that!.

Maybe I’m lucky that can I go to the races and not bet a penny as I just enjoy predicting the potential winner safe in the knowledge that I’m not very good at spotting value but enjoy trying anyway. I probably spend more time thinking about trading/betting than actually being involved in it. So, it may seem like a massive waste of time but if the wife is watching x factor or ant and decs sat night takeaway I don’t feel like I’m missing out on anything :-)

To the first part of Tony's comment, my use of the term trend is used as a long-term concept, something identified over a period of time that far exceeds that of one sports betting market. 

As for the second part, it's not clear whether 'enjoying the game' refers to the sport itself or to betting / trading.

If the 'game' is betting, there's nothing sad about leaving it behind.  

If it's literally the 'game', there's no reason why Statsbet can't continue to enjoy the sport while not having money on it. Most sports are enjoyable enough on their own merit without requiring a financial interest to make them so, or they wouldn't exist. When I go to watch Crystal Palace or Bath Rugby, it's for sporting or social reasons and I don't (usually) have money on the outcome. Some would say that this season that's a good thing! 

The one exception to sports and betting is Tony's example which exists purely because of betting. 

For me, watching horses running around a field is not entertainment, more like a torture. Having a financial interest on the outcome is mandatory if I am to watch it, except I understand that as an outsider, I am never going to be getting value, and as I don't like losing money, I don't do it. 

Finally, for anyone who has a wife who likes to watch garbage on television, my advice, as an experienced married man, is to leave her to it and go out for a pint and a curry with the lads and talk about politics. Ant and Dec! Have some self respect man!      

Weirdly Calm

My last post (of about three hours ago) got me wondering why the VIX is actually so low right now. It hardly seems like the global economy should be at its most stable in thirteen years, but one possible explanation appeared in my Twitter timeline linking to an article in the New York Times :

The Stock Market Is Weirdly Calm. Here’s a Theory of Why by Neil Irwin

When Donald J. Trump won the presidency in November, one bet seemed like a sure thing: We were in for a volatile few years. And in Washington, that forecast has come true. This unconventional presidency is creating an avalanche of uncertainty in areas including global trade, taxes and health care.

But on Wall Street, these are the quietest of times. Prices for stocks and many other assets are less volatile than at any time since before the global financial crisis a decade ago, and volatility is, by some measures, near record lows.

Consider this: In 2015, the Standard & Poor’s 500 index moved by more than 1 percent on 29 percent of trading days. Last year that fell to 19 percent. So far in 2017, there has been a 1 percent or greater swing in the market in only three trading sessions, or 3.5 percent.

And the Volatility Index, or Vix, which captures expectations for future stock market volatility based on prices in the options market, finished Monday at the lowest level in its 27-year history other than three days in December 1993.

This sense of calm would be notable in any event, but the contrast with the sheer variance in the policy world makes it particularly unusual. In a single week, the Trump administration might flirt with exiting the North American Free Trade Agreement, roll out an outline for a multi-trillion dollar tax cut and push legislation that would overhaul the health care sector, one-sixth of the United States economy.

There are some technical explanations for what is going on. The advent of products that let people easily bet on the Vix and other volatility indexes may be distorting their prices, and there have been changes in how major investors are hedging their portfolios against losses that may be making the index artificially low.

But while they do a good job of indicating why indexes like the Vix are so low, these technical explanations are less effective at explaining why the actual fluctuations in markets have been so subdued — realized volatility, to use the traders’ term, as opposed to expected volatility.

Something is causing the shares of the most widely owned companies to jump around less than they almost always have in the past. And they also don’t do a great job of explaining why many other markets have also become less volatile than in the recent past, including international stocks, currencies and bonds.

Dating to the 2008 financial crisis, markets have swung on every hint of news out of world capitals — Washington, especially, but also Berlin and Tokyo and Beijing — because the very future of the global economy seemed to hang in the balance. From the financial crisis to the eurozone crisis to the efforts by Japan to reflate its economy to the effort by China to de-leverage its economy, the policies set by central banks and national governments were the prime mover of investor sentiment and the global outlook.

Rarely have stock prices been as stable as they have been in 2017, according to a commonly used measure of expected stock market volatility.

Those days are over, at least for the moment. In normal times, markets are driven much less by what governments do and much more by, well, the economic fundamentals. How many people are working, with what level of productivity and savings levels, and what are the resulting economic growth rates, levels of corporate profitability, and interest rates?

Even though it is a historical aberration, doesn’t the very low stock market volatility of 2017 make more sense than the kind of wild swings we saw until recently? Why should the collective value of major companies swing by more than 1 percent three days out of 10?

After all, the assets of those major companies — Exxon Mobil’s oil rigs and Google’s search algorithm and all the rest — don’t really change from day to day. All that changes is investor perception about what kind of cash those assets will generate in the future. Isn’t it actually fairly rare that a piece of news should change the fundamental outlook by that much?

What makes this moment unusual is that there really are policy choices in play that could have hugely distortive effects on those fundamentals: what happens to trade policy, taxes and health care in the United States; what terms Britain achieves in its exit from the European Union; even whether the E.U. as we know it survives.

But if the last few years have taught investors anything, it is that those with a hair-trigger reaction to political news stand to lose, while those who bet on a continued steady and unexceptional expansion will win.

You see a bit of that in how subsequent conflicts over United States fiscal policy during the Obama years generated less market volatility. The debt ceiling standoff of 2011 generated huge market swings as traders bet on the risk of a default; the standoffs over the “fiscal cliff” at the end of 2012 and a government shutdown in October 2013 caused mere murmurs.

Investors learned a lesson that it’s easy to overreact to political developments, and the same seems to have happened globally in the last several months.

The risk, of course, is that this generates complacency.

Low volatility could make banks, hedge funds and other institutions more comfortable taking on extra leverage, paradoxically making the financial system less stable and more subject to large swings over time.

And perhaps most worrisome, sometimes big financial market moves are the mechanism by which policy makers receive the signal that they’re doing the wrong thing. We saw that again and again in the global financial crisis and the eurozone crisis, when it was big market swings that got governments’ attention.

So the biggest risk of this period of ultra-low volatility is that by looking past the latest headlines out of world capitals, investors won’t send the signals that might prevent political leaders from making a mistake in the first place.

Political leaders make mistakes? Who knew? 

Pretty Soon

It's a good time to update a couple of recent and rather unusual trading moves highlighted in this blog, as both are in the news today.

First, 50 Cent's strategy detailed last month doesn't appear to be too successful with CNBC today reporting that:

On Tuesday, the CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded below 10, near levels not seen since December 2006.

Trader Steve Burns reported the close yesterday as the fourth lowest ever, with only December of 1993 seeing lower:

The second was the crazy Apple (AAPL) guy from January who supposedly claimed to be making an all-in attempt to recover some losses by shorting the stock ahead of first quarter results:

He's certainly convinced himself that Apple will disappoint the market, and needs the current price of $121.63 to dip below$120 to start making some money.

At the time of writing, Apple is at 154.24 now up 33% on the year:

That $120 is looking a long way off, although the put options have likely long expired by now.

Meanwhile Apple is now valued at $800 billion, closing in on being the world's first trillion dollar company:

Apple's stock is currently trading above the $153 mark for the first time ever, after factoring in a 7-for-1 split in 2014, giving the company a record-high market cap of roughly $800 billion. That means Apple is within $200 billion of becoming the world's first trillion dollar company.

Apple analyst Brian White of Wall Street investment firm Drexel Hamilton continues to believe Apple "remains among the most under-appreciated stocks in the world," with "attractive upside" for investors. White raised his 12-month price target for Apple's stock to $202 today, up from an already bullish $185.

That twelve month price target would value Apple at $1.05 trillion. 

There's a quote attributed to US politician Everett Dirksen:

"a billion here, a billion there, pretty soon you're talking real money"

which sounds good. The only problem with it is that he never actually said the "pretty soon" part of the quote.

When asked about it, Dirksen said:

"Oh, I never said that. A newspaper fella misquoted me once, and I thought it sounded so good that I never bothered to deny it."

Choice or Necessity

I’m not sure Laurence Stanley (@LaurenceStanley - author of "Make Money Betting on Sports") is trying to suggest that Warren Buffett, the third richest man in the world, according to Forbes, with a net worth of $60.8 billion, and someone renting a house in Essex have much in common, but he comments on my Mistakes Were Made post:

"Those are facts. Circumstantial evidence leads a rational person to question why such a high earning individual would live so shabbily relative to their claimed income, and question whether his living arrangements mesh with the claim that he's in the market for a new car."

From Warren Buffet's Wiki:

"In 1957, Buffett operated three partnerships. He purchased a five-bedroom stucco house in Omaha, where he still lives, for $31,500.

I would suggest that there’s a world of difference between living a certain lifestyle by choice or out of necessity.

Many extremely wealthy people live far beneath their means. As Warren Buffett put it in the Becoming Warren Buffett documentary I recommended a few weeks back, money is just a way of keeping score. 

"In a sense, the game that I'm in gets more interesting all the time. It's a competitive game, it's a big game, and I enjoy the game a lot"

While Warren Buffett is famous for living in the same home he bought back in 1957, he does actually have another house, although he is currently in the process of selling it for a mere $11 million.

Berkshire Hathaway CEO Warren Buffet has put his six-bedroom house in Laguna Beach’s Emerald Bay on the market for $11 million.

“For the first time in nearly 50 years the legendary ‘Oracle of Omaha’s’ home (at) 27 Emerald Bay is now available!” says the listing by Bill Dolby of Villa Real Estate.

Buffett, 86, has owned the ocean-view home since 1971, when he paid $150,000 for it. He’s used the house for family vacations for the past 46 years, Dolby said.

Built in 1936, the 3,588 square foot home in the guard-gated community has been renovated over the years. Most rooms have views of the surf and rocks, and five bedrooms have en suite bathrooms.

Admittedly this second home isn't mentioned too often, presumably so as not to spoil the narrative of living in the same house exclusively for 60 years, but Warren Buffet did also sell another vacation home he owned in Laguna Beach, California in 2005 for close to $6 million.

As for Warren Buffett’s lifestyle, this Investopedia article explains it:

Buffett is also happy with what he has in terms of his modest standard of living. He isn't interested in a bigger house, a newer car or owning his own island. He simply doesn't care about the Joneses and what they have.

Why not a mansion? - he was asked.

“How would I improve my life by having 10 houses around the globe? If I wanted to become a superintendent of housing … I could have as a profession, but I don’t want to manage 10 houses and I don’t want somebody else doing it for me and I don’t know why the hell I’d be happier.“

This house does just fine, he says. “I’m warm in the winter, I’m cool in the summer, it’s convenient for me,” he said in the interview. “I couldn’t imagine having a better house.”

In February, Buffett shared further non-materialistic sentiments with Charlie Rose. “I have every possession I want. I have a lot of friends who have a lot more possessions. But in some cases, I feel the possessions possess them, rather than the other way around.”

Another example is the founder of Walmart (Sam Walton) was famous for driving around Bentonville in Northwest Arkansas in an old pick-up truck and living his life just like everyone else in town. 

At the time of his death in 1992, he had a net worth of $8.6 billion. This Washington Post article from a few years before his death details his lifestyle and his attitude to being the wealthiest man in America.

Warren Buffett is an extreme example of the philosophy of living within your means, and no rational person knowing anything about him would question his net worth based on the fact that he hasn’t moved from his roots, and lives in a home that is perfectly suited for him.

Other billionaires are a little flashier with their lifestyles, Oracle’s Larry Ellison likes his planes and his racing yachts for example, but the book “The Millionaire Next Door” is essentially about how a person’s wealth is often not revealed by outward appearances.

Most millionaires do not live ‘millionaire lifestyles’. They live within (often well within) their means, frugally but not miserly, and don’t care about buying a flashy new car every year or living in the most expensive house they can afford.

I would however imagine that for most people, on attaining a certain level of wealth, a priority would be to invest in a home. It’s one of the best investments most people can make, and you have to live somewhere!

"The Millionaire Next Door" talks about UAWs (Under Accumulators of Wealth) and those who are PAWs (Prodigious Accumulator of Wealth).

On car shopping habits, the book concludes that:

…a common UAW drives a current model car, purchased new, and may have financed it on credit. PAWs rarely purchase new model cars and are less likely to own foreign or luxury vehicles. An example from the book details a UAW that spent roughly 60 hours researching, negotiating and purchasing a new car. In the end, while the car was purchased "near dealer cost," in the long run the UAW's time and money could have been more efficiently spent creating wealth rather than collecting possessions notorious for depreciating in value. The authors contrast the story with a PAW who decided that the pride of owning a brand new car wasn't worth the $20,000 price difference.

The book also talks about ‘million dollar choices’:

Some of the financial choices that UAWs make are considered to be “million dollar choices” because if the choice hadn’t been made, the UAW would have in excess of a million dollars. One example of a million dollar choice is to smoke. Smokers and drinkers tend to be UAWs because instead of building net worth, they spend their income to purchase alcohol or cigarettes.

I can’t say I’m averse to the occasional pint or two as a social activity, but smoking is a ridiculous activity on many levels.

I’m not talking about any one individual here, but for many people coming from backgrounds where they are not used to having money, the arrival of sudden relative riches can be hard to handle. There’s a reason why many lottery or pools winners or sports stars end up broke.

Life, if you’re lucky, is a long journey, and those wins or relatively few years of high income while you are at the top of your sporting career, have to last a long time. Invest, and let compounding be your friend. Spending on luxuries at the expense of your future is very short-sighted.

When I had my recent meeting to discuss preparedness for retirement, the advisor made it clear that there are two sides to the equation – your savings and future income are one side, but are meaningless without knowing your expenses on the other side.

Back to the topic of Laurence’s comment, and the question a discerning mind should be asking is does someone rent a house from choice or out of necessity? Does Warren Buffet continue to live in his home of 40 years from choice or out of necessity? I don't think any reasonable person would draw the conclusion that Warren Buffett lives there for any reason other than that is where he wants to live.

It’s also worth pointing out that the net worth of Warren Buffet is well established, although it probably fluctuates by the odd billion or two as the market moves. The accounts of his holdings are audited and can be relied upon.

This is not always the case, which is why we often have to rely on circumstantial evidence. Blog posts are the claim, not the evidence, and all I’m suggesting is that before giving anyone your money, perform your due diligence. Does the available evidence support the claim?

When it comes to selling religion / mediums / fortune telling or making easy money schemes, people tend to believe what they want to believe.

This blog simply encourages its readers to think critically before acting.

On religion, Carl Sagan said that "Extraordinary claims require extraordinary evidence". 

The standard of evidence required to back claims of trading success may not be at quite the standard required to prove a deity, but some ordinary evidence would be good.  

Pension Builder

One of the Horse Racing blogs on my blog roll is that of Wayward Lad, and his hit rate appears to be phenomenal:

A slip of the keyboard though, as the blog actually started in March of 2010, not 2017.

Another blog by the same author is Pension Builder, which started back in 2013 and has the summary description of:

Having given up on the professionals, this is my own actively managed UK private pension (SIPP). I have a target for annual growth of 15% which - should I achieve it - will give me a Pension fund value of over £500,000 when I reach my 65th birthday on 8th November 2024.

In his opening post, Wayward Lad wrote:

Why am I writing this blog?

For over 3 years I have written a horse racing blog 

When writing that blog, I quickly realised that by putting my thought down on paper (ie, the blog) that my focus became more rational and I was less likely to make reckless wagers. I became a better judge of risk and reward, which meant that my profits went up from my gambling investments. I am hoping that the same will happen with my stock-picking for my pension.

I'm also hoping that readers of the blog will contribute their own ideas and information with regards stock-picking and pension planning and that everyone will benefit.

Wayward Lad doesn't post on Pension Builder too often, 35 posts since its inception, but I agree that the act of putting thoughts down on "paper" greatly helps you to focus. 

In addition to finding writing relaxing, I get far too much pleasure than is healthy from updating my spreadsheets. In addition to all the sports sheets related to ratings and betting, I keep records which are purely about the sports themselves, just because it interests me. 

Then there's the "NetWorth" spreadsheet where I track everything related to my (our) finances. (Actually it's 'my' because as I've written before, financial matters are best left to the man of the house). Ask me what I spent on breakfasts in 2014, or what our (my) rental income was that year, and it's all there. 

While at university, my son wrote a thesis about the maxim that  'what gets measured, gets done'. The quote appears to have been attributed to several people over the years, and there's no doubt that it's true. If you track, record, and make realistic projections, goals will be met. Aside from regulatory obligations, there are good reasons why companies track every detail and set targets. Metrics matter.   

It's always worth remembering that some things are beyond our control, for example you can control your spending, but you can't control the economy. 

I'm of a similar age to Wayward Lad, (i.e. we are both in our prime...) and have been tracking my investment numbers for a while, but from a retirement perspective only since 2010. It's a very helpful exercise, not only keeping you disciplined, but also in coping with bad spells as they come along, as they always will. I only wish spreadsheets had been around when I was starting out in life.

Wayward Lad mentions a goal for annual growth of 15% which seems a little ambitious, although I don't believe he's including contributions in that figure, even if they will become less significant as the pot grows of course.

Over the last 20 years, the FTSE 100 has averaged exactly 4.0%, and over the last 10 years just 2.5%. The 15% figure hasn't been exceeded since 2009, but Wayward Lad has around 15 individual holdings rather than index tracking funds, so the benchmark might be beaten by some distance!

I've added Pension Builder to my blog roll so that it's easy to keep up to date with Wayward Lad's progress.     

Slicer's Secret Bet

Is Slicer's 'Secret' Bet a secret these days? 

Slicer came to prominence around 2010, and I've written about this subject before, my conclusion being that there was no such thing as a combination of bets that would guarantee a profit, as was claimed.

One (of course) Anonymous commenter had written about Slicer's system that:

No doubt you're clever enough to figure it out yourself but there is a mathematical edge in those games and it's not that hard to exploit.

Presumably Anonymous has long since retired with his millions and a Fields Medal while I continue slowly, but inexorably, towards mine, unfortunately not smart enough to figure out such a mathematical edge.

In the above-referenced post, I wrote:

As someone on the forum commented, you can be pretty sure that anyone who claims an edge, and is happy to talk about it, is one of three things:

1. Very, very stupid - so unlikely to be in this position

2. A charlatan - looking to profit from the gullibility of others

3. A smart individual who is attempting to manipulate the market to their advantage

I would add:

4. A sufferer of an attention seeking disorder 

Undeterred by logic or common sense, work groups were formed around the globe, forums dedicated to the project sprang to life, and several thousands of hours were spent chasing the elusive third (if necessary) bet that was needed to secure guaranteed profits every time.

Except that it never existed as there was always a small chance of the strategy failing, as revealed by the suggestion that for the third bet, you:

Try to find CS that have little chance of happening and at the same time as low odds as possible.

What could possibly go wrong? 

I came across this manual and its companion spreadsheet during Operation Retirement, where one of my old files was a PDF - "The SS BET brought to you by TheProjectForumTeam" with the details. 

That I have no idea how I came about this, and had completely forgotten about it tells you all you need to know about it's worth, but I'm sure I didn't pay anything for it.

And apparently, I am one of just 200 people in the world to know the secret! 

Refund Policy: This product is limited to a short number of people and in order to keep the information which is available throughout this manual as secret as possible, our refund policy has to be strict. Therefore we do NOT accept any requests for refunds.

Exclusivity: This manual will only be available to 200 people in the world.

I suspect it is known to a few more than that these days, as I found this article on it on the SportsTradingLife website: 

He claimed the method was completely risk free but what he failed to mention was that it wasn’t actually risk free.

Apparently, the Slicer’s bet involved…

Laying Half Time 0-0

Backing Full Time 0-0

Then if 0-0 at half time you would have to lay an unlikely correct score at incredibly high odds.

So for example, you could lay 0-3 to the underdog @ 70 in order to lock in your “risk free” profit.

Along with the small problem that it is not a risk-free system and that "unlikely" doesn't mean "impossible" is the time you need to spend.

You have to monitor the game until either a goal is scored or Half-Time and be available to place the high-risk / low reward 'adjustment bet'. 

Good luck if you decide to try this at home. 

Opportunity Cost

Opportunity cost has been covered in this blog before, here for example, but here is another article on the topic from February 2016 by Kim Iskyan, on the Stansberry Churchouse site. I'm not sure it needed the stock example in so much detail to illustrate the point, but maybe the writer had to hit 500 words to get paid (I make it 509):

WHY YOU NEED TO ACT WHEN AN INVESTMENT ISN'T WORKING OUT

In economics, “opportunity cost” is the value you give up by making a choice. The real cost of a choice is not just the time and money you spend on it; it is the value of the alternative. Investors face opportunity cost in every investment decision.

Let’s say that on November 1, 2014, you bought $10,000 worth of Baidu (ticker BIDU on NASDAQ), the Chinese web services company. Earnings were surging, the company’s growth outlook was exceptional, and analysts were pounding the table to buy.

You did some research and bought at $242 per share. But things didn’t go well and sixteen months later, Baidu traded at $145 per share, a loss of 35 percent.

Another stock caught your eye that fateful day. It was Nippon Telegraph (NTT on the New York Stock Exchange), the Japanese telecom company. You could have bought it at $31 a share. The stock, and market, seemed boring, and a major analyst had just downgraded NTT. So you passed.

Sixteen months later, NTT was at $45 per share, for a gain of 42 percent (not including dividend payments of nearly 3 percent).

Your $10,000 Baidu investment is now worth $6,500. Had you invested in NTT, the same $10,000 would be worth nearly $15,200.

Your unfortunate decision to buy Baidu shares resulted in a $3,500 loss. Add that to the $5,200 you did not receive by investing in NTT, and you have an opportunity cost of $8,700.

Of course, you had no way of predicting the two stocks would perform so differently. However, as the chart below shows, an investor would have had many opportunities to sell Baidu shares and buy NTT shares.

If the investor admitted that he had chosen the wrong stock and swapped the “dead money” in Baidu to buy NTT stock, he would have had a lower opportunity cost.

Cutting losses is one of the most difficult decisions an investor has to make. 

As we’ve said previously, the sunk cost trap is a pitfall where an investor judges an investment based on the time and money already “sunk” into it. It’s hard to admit failure, so you keep soldiering on, hoping things will get better, despite evidence to the contrary.

Seasoned investors always look at each portfolio holding and ask: “If I didn’t already own it, would I buy it today?” If the answer is “yes,” then holding a stock that’s lost value may be warranted. If the answer is “no,” it makes sense to sell and move on.

It’s important to establish rules before buying shares to avoid the pitfalls of emotional investing. In particular, a trailing stop is an easy, effective way to limit your losses.

At the same time you buy a stock, enter a trailing stop order that will fill when the share price falls by say, 25 percent. No hand-wringing or anguishing over what to do – you’re out automatically.

As an investor, it may be painful to take a loss, but doing so may allow you to find a better opportunity and reduce your opportunity costs.

In case you're interested, in the 15 months since the article was published, Baidu has recovered somewhat to $177, while Nippon Telegraph is back to $43. 

Whether "cutting your losses" means closing out a trade for a loss, or accepting that the time spent on sports investing would be better spent building a career or with your family (divorce and child support are expensive) isn't the point. The point is that it's not an easy thing to do, but there is likely a cost to the activity, even if you are lucky enough to be profitable.   

Future Savvy

Tony Stephens had a fairly long comment, actually more of a question, mostly on the theme of ‘blip or trend’:

Sad to see people walk away from sports betting/trading (whatever you want to call it) but if something stops being fun or too costly then you must ask the question of why you want to continue.

It would be interesting (for me) to get a bit more understanding around what we should consider to be good or bad trends if such a thing exists. Trends exist all the time possibly over various dimensions/overlays of time periods.

In say greyhound racing we see the sp fav opened up as fav at 2.0 and SP'd at 1.5 with a straight line inbetween. The trend there was very much a downward trend and you would pat yourself on the back (or some other form of celebration that takes your fancy) if you got on near the 2.0 or even 1.75. Now, if we then looked at the trend of all the dogs that opened up in the market as a fav over the past year we might determine that 75% of them actually tended to drift more than they shortened up. So a trend that occurred within the 1 race for maybe thousands of seconds looked like a good trend initially but in fact may be more likely to be a bad trend to follow race to race.

So can a good trend be identified within an individual race / match / day or should a good trend generally always be over a much longer period? Does this make sense?

Just a quick comment first on his opening paragraph before addressing the main point.

I think statsbet’s decision to walk away from sports betting/trading is actually laudable and quite the opposite of sad. Spending 40 hours or so a week away from home working is bad enough, but if you are bringing in a salary or wage, i.e. providing for your family, and investing in your and their future, it's a necessary evil and most of us who are employable and want to better ourselves do it without too much complaint. 

However, spending your additional leisure time in the evenings or weekends and probably slowly giving some of that income back is not. If you have small children, as statsbet does, that time is irreplaceable.

What is sad is the amount of time and money that most gamblers waste pursuing unrealistic dreams. This pastime seems to attract more than its fair share of young and undereducated individuals, looking for a short-cut to success. Some have children that they no longer see on a daily basis. To me, that's what is sad. 

Betting / trading is for most of us, a hobby, and hopefully one that doesn't prove too expensive, either in financial terms or in time, which is arguably more important. Unfortunately it is not a victimless hobby as Joseph Buchdahl eloquently puts it:

Science is teaching us that the uncertainty of rewards, rather than the rewards themselves, is what drives a curious mind. Gambling presents itself as a kind of elixir of knowledge; ultimately it disappoints but has us coming back for more. This is the addictive power of maybe.

Credit to statsbet for understanding the realities of it all and where his priorities need to be, and a thank you to him for sending my hit count through the roof this month. The unrealistic dream of a 1,000 hit daily average might actually be possible. After four days of May:

Now to Tony's question about trends. In the context I use the term, a trend cannot be identified within an individual event, but over a period of time or number of events. 

It's important to understand that a trend is something that is usually long term in nature, for example there's a trend for people to marry later in life, or to have fewer children. You wouldn't identify a trend based on one month or one year of data, but after several years.

In a sporting context, a trend might be that there are more or fewer goals being scored on average. 

It is not a trend if Crewe Alexandra have scored one goal in each of their past three games, or Swindon Town scored early against a northern team starting with the letter B on a Tuesday night in the past two Novembers. That's noise. You can find patterns everywhere if you look hard enough.

However, what we're really interested in is finding a weakness in the market that we can profit from. 

The term “blip or trend” can be seen everywhere, e.g. in economics, property, currency, stocks, bonds, etc. here and for anyone who is interested in the topic, there’s an excellent book called Future Savvy: Identifying Trends to Make Better Decisions, Manage Uncertainty, and Profit From Change by Adam Gordon which defines a trend as:

…a sequential pattern of change in record data – a change evidenced by a rise or fall of variables when measured between two points over time. To be commonly considered a trend, rather than a fad or a blip, a pattern in the data must pass basic tests of significance.

Now the problem with sports markets is that they change, sometimes literally overnight. Even the most casual of users on the exchanges will tell you that, for example, horse racing markets are not the same today as they were five years ago, maybe not even one year ago.

They have evolved, track-siders may have moved in while Premium Charge payers have moved out for example, and will continue to evolve, so there is little to be gained from looking at markets from too far back.

You’ll read about people who claim to have huge databases with tens of thousands of records going back to the dawn of, if not time itself, the exchanges, and how certain patterns can be seen, but looking at markets from way back is of little relevance to today. It might impress someone unfamiliar with data processing, but once the parameters of a market change, old data is worthless. Garbage in, garbage out, I seem to remember from my programming days.

So the quote from Adam Gordon “when measured between two points over time” has to be modified for sports to ensure that the two points are comparable. Looking at football as an example, looking at matches in the two points for a win era, or prior to the change in the offside law, has no value.

Football is a good sport to look as an example in this debate. I’ve previously revealed that blindly backing Away teams in League Two has been profitable in recent seasons. 

Not only is there a trend showing that Away teams are winning more games (from 2000-2011 the average was 28.3%; for the six subsequent seasons, it was above 30% every time, with an average to date of 32.3%) but more importantly, the Away price is currently under-priced. It's useless hitting at 50% if the price on winners averages 2.0 or less.  

The data doesn’t lie, but the nature of sports betting means that by the time any statistical “basic tests of significance” have been passed, it’ll be too late. The edge will be gone.

Incidentally, while it would be unrealistic to expect to be able to always match the Maximum Odds, note the difference to your returns that a little shopping around can potentially make. Pinnacle may be the best in the business for most of us - generally competitive prices and a business model that doesn't close accounts - but they are not always the best on price.

Betting on League Two has a couple of advantages – markets are liquid, prices are widely available, and the standard of players is still high, but the amount of interest in the league is much less than that for the top European Leagues. The markets are less efficient.

If you go too far down the football pyramid, you run into problems not only of liquidity, but also the problem where the VORP (Value Over Replacement Player) of certain key players becomes critical. 

For an example of this, just follow Skeeve and his detailed analyses of games at the National League level (one down from League Two for any non-UK readers, the league where pro meets semi-pro).

At this level, you need to emulate Skeeve, and since not many of us have either the time or inclination to spend hours reading injury reports and tracking suspensions, back-four combinations, weather conditions etc., you’re better off just signing up to his service and watching the money roll in. And before anyone asks, no I am not in any way connected to Skeeve.

Back to trends, and if you can explain why your trend might be occurring, the trend driver, you will be more confident in its veracity. A drop in weight can be positive (you’re watching your diet and exercising regularly) or negative (you’ve got cancer) – having an explanation for your results is always a good thing.

I should also mention that a trend needn't necessarily be on the results side of the equation, but can be on the supply (price) side if they change as a result of different expectations from the market.  

In other words, the strike rate is important, but equally important are the prices available. It's as useful to us if there is an increase in Away wins while prices stay the same, as if the Away wins remain constant, but the market adjusts its prices in our favour. 

Football is a little different from many sports though, and changes more rapidly. Many sports are run with teams as franchises with no promotion or relegation, but in the Football League for example, every season sees a turnover of at least 25% of the teams. This is a significant disruption each year, bringing with it new managers, new ideas, new players and new venues.

This is good though - with change and disruption comes opportunity.

And things don’t stay constant within a season in football either. Aside from injuries, transfer windows and suspensions which affect the playing side of things, there were no less than 18 managerial changes for the 2015-16 League Two teams, either prior to the season or during it. Four were pre-season, seven were before the end of 2015, and seven more were before the end of season.

This was quite an increase from the eight changes during the 2013-14 season and consequently very disruptive.

I’m not claiming this as a reason for the Away bet showing value over the past five seasons, just giving an example of the thought process behind trying to determine a trend-driver.

League Two is also the most competitive division of the Football League. Over the last five completed seasons, the average point differential between 1st and last (24th) is 50. 

In League One, this number rises to 55.8 and in the Championship to 56.2. This difference will increase again after this season with League Two currently at 50, League One at 63 and The Championship at 70, with one round remaining.

As for when to start acting on what appears to be a trend, I take the approach of starting slowly and allocating a certain amount to the project. One losing round of results isn’t important, perhaps even one month of losses isn’t, but in the same way that you use trailing stops in the financial markets, there’s a line that once crossed says enough is enough.

Ideally once your profits start to build, you can increase your stakes, but adjust the line at which you are going to pull the plug as you go. All trends will end, and it would be folly to build up 100 points of profit over a couple of years, and then see it all disappear. How much you take off the table is a personal choice, but waiting for the trend to return can be lengthy and costly.

In the long run, we are all dead – John Maynard Keynes

Anyone verifying my numbers, all calculations are courtesy of Joseph Buchdahl's excellent Football Data web site, may have noticed that the system has slumped since the turn of the year, -13.87 points in 2017 using Pinnacle's Closing Odds, and up a slender 1.85 points at best odds. 

I’ll be updating the final numbers for the League Two Away system after the final round this weekend, and it'll be an interesting one. 

In my youth, Hartlepools United became Hartlepool AFC before the United was restored, although not the 's'. I rather like curiosities like that. The story of how Queen's Park Rangers lost their apostrophe is interesting too, but that can wait for another day. 

Hartlepool, whatever their name at the time, seemed to always be seeking re-election back then, and every time (a record 14) they were successful. 1924, 1929, 1939, 1960, 1961, 1962, 1963, 1964, 1970, 1971, 1977, 1978, 1983, and 1984. Phew! 

Their luck may have finally run out. If Newport County win, the Poolies are down. If Newport slip up, a win for Hartlepool United over already promoted Doncaster Rovers would save them. Doncaster might be less than fully committed in front of a packed Victoria Park if news filters through that Plymouth Argyle are winning at Grimsby Town and the title is out of reach, but it doesn't look good for Hartlepool to continue their Football League career.