Thursday, 11 July 2013

Apophenia

Danny has the secret to successful investing:

But so what? What difference does the odds structure make? If the odds are smaller bet more, if they are bigger bet less.

It doesn't matter what the odds structure is if you are betting into 105% markets and failing to beat closing lines. Must I teach Cassini to suck eggs? Successful investing is about finding VALUE not worrying about what the odds range is.
Unfortunately for Danny, that there is ample evidence that the sports investing markets are not strongly efficient, so the 'odds structure' as he puts it, is critical, and very much does matter.

Danny does at least seems to have gleaned from this blog that successful investing is about finding value, but one thing at a time Danny.

On an earlier post, Danny commented:
I just wonder if it is a case of thinking the grass is greener on the other side of the pond? Put it this way would you have confidence in a system for the Championship written by a US guy with little interest in soccer? If it was anyone other than Nate Silver I would not be too enthusiastic.
The way I see it, if you don't have a lot of enthusiasm for the sport then it's too easy to miss things. Can you do well from a sport you don't know that well? It would be good to hear Cassini's thoughts on that.
I took Mastering Betfair down to the beach yesterday, not hard to see where Cassini got all his good ideas from :).
The question of whether it is possible to consistently profit from betting on a sport you don't know too well is an interesting one. My opinion on this is that without an in-depth knowledge of a sport, you should certainly not attempt to trade it in-play, because the likelihood is that you are competing against people who know far more than you do about it and you need to understand the subtleties of it so that you know what effect specific actions will have on the price. As for finding an edge pre-game, the data is there for all to see. My concern here though would be apophenia.

Without having a full understanding of a sport, it would be easy to detect a pattern in data that in reality doesn't exist. To use baseball as an example, a sport as well understood outside of the USA and Canada as cricket is inside those countries, i.e. not very, it might not be immediately obvious why the National League teams score less runs than the American League, or why American League teams win more inter-league games than they 'should'. Or why are so many runs scored at Coors Field? As mentioned a couple of days ago, data for games against divisional opponents shouldn't be lumped in with games against other teams in the same league, and both should be kept separate from inter-league games.

As for Mastering Betfair, I hate to disappoint Peter, but I have never read a page of his book. It came out in 2009, several years after I was already established and paying Premium Charge on Betfair, and I felt that my trading was already at 'the next level' as Peter phrased it. I just watched the promotional video, and related to my last piece on the role of women in investing, it did make me laugh that at one point Peter says to the camera:
 "it's not very nice having to ring up your wife and say 'sorry about this but I've just lost £500 on Manchester United not beating Crewe''". 
Why on Earth would anyone have to ring up their wife about any loss, never mind such a small one? We shouldn't have to answer to anyone but ourselves. Is the Betfair account in joint names? How can you make the right decision, either for stake size or selection, if you are answerable to someone else? It kind of reminds me of the subject of investing for others. Once you are beholden to someone else, you are not able to have a full disconnect between the money and the investment decision. And where was Peter's wife at that time of night anyway? Not doing the laundry apparently. Or perhaps those Mastering Betfair royalties add up and Peter has a big house, and she was in the East Wing doing the ironing at the time.        

2 comments:

Danny Murphy said...

"Unfortunately for Danny, that there is ample evidence that the sports investing markets are not strongly efficient, so the 'odds structure' as he puts it, is critical, and very much does matter."

Please point me to this "evidence" then Cassini.

The idea that Baseball, one of the most statistically studied sports ever, is not effeciently priced strikes me as somewhat ridiculous.

Ofcourse with 2500 games there will always be opportunity but that's where knowledge of the sport comes in.

Danny Murphy said...

Now you mention it Cass, that figure in the rock does look a bit like Pete Norstead :).

He sounds quite hard in those vids of his, he may consider your comments to be a "diabolical liberty".