"There are no good or bad stocks, only cheap and expensive stocks."
"One of the quickest ways to lose money in the market is to listen to others and all of their so-called expert opinions. To succeed, you must ignore all outside opinions and predictions. Follow your own strategy!"
"The best speculators search only for the very best opportunities. To be truly successful, you must wait for the right opportunities to present themselves and this often means doing nothing for long periods of time."
"Perfection has no role in successful trading. No one can buy at the absolute lowest price and sell at the highest price. No time or effort should be devoted to that goal. "I never bought a stock at the low or sold one at the high in my life. I am satisfied to be along for most of the ride."
"You should expect to be wrong half of the time. Your goal is to lose as little as possible when you are. "I have no ego in the stock market. If I make a mistake I admit it immediately and get out fast. If you could play roulette with the assurance that whenever you bet $100 you could get out for $98 if you lost your bet, wouldn't you call that good odds?""
Source: http://www.minyanville.com/investing/articles/nicolas-darvas-darvas-trading-traders-trading/3/9/2011/id/33254
Are you making winning bets by using investment tools and theories? We show our research in this blog.
Wednesday 13 April 2011
Thursday 7 April 2011
Whether Football Betting is Speculation depends on Investment Style
There are many roads to Rome. There is not only one method to invest. Not everyone will agree that value investing is the right way. Famed hedge fund manager Michael Steinhardt, who recently criticised Warren Buffet, was very successful using macro trading.
Macro trading tries to predict how economies move and investing based on these trends. For example, if the world economy is growing too fast, you might predict that oil prices will increase. If oil prices increase, it would increase profit margins of energy companies such as Exxon and Shell. You would buy a few energy companies, anticipate central banks to fight inflation, then sell them for a profit.
In soccer betting terms, you would look at how many goals are scored weekly in the EPL and try to predict trends. If you think that there would be many goals in the particular week, you would choose a few teams which are high scoring and have good match ups. Instead of choosing one or two particular games, you will need to bet on a particular "industry". For example, "Champions League" industry, you are thinking that the top 5 teams are going to score many goals this week, you will place on at least 3 of the games to go over.
Macro traders will use different types of trading instruments, to achieve success. It would include more speculative instruments such as options and futures. In value investing, the first rule of investing is the preservation of capital. Thus options and futures are considered as speculation since there are no underlying assets.
We have previously stated that football betting has no underlying assets and is more closely related to options and futures. Your investment style and character should determine whether football betting is possible.
Macro trading tries to predict how economies move and investing based on these trends. For example, if the world economy is growing too fast, you might predict that oil prices will increase. If oil prices increase, it would increase profit margins of energy companies such as Exxon and Shell. You would buy a few energy companies, anticipate central banks to fight inflation, then sell them for a profit.
In soccer betting terms, you would look at how many goals are scored weekly in the EPL and try to predict trends. If you think that there would be many goals in the particular week, you would choose a few teams which are high scoring and have good match ups. Instead of choosing one or two particular games, you will need to bet on a particular "industry". For example, "Champions League" industry, you are thinking that the top 5 teams are going to score many goals this week, you will place on at least 3 of the games to go over.
Macro traders will use different types of trading instruments, to achieve success. It would include more speculative instruments such as options and futures. In value investing, the first rule of investing is the preservation of capital. Thus options and futures are considered as speculation since there are no underlying assets.
We have previously stated that football betting has no underlying assets and is more closely related to options and futures. Your investment style and character should determine whether football betting is possible.
Tuesday 5 April 2011
The Final Rule of Value Investing: Margin of Safety
The fifth and final rule of value investing is the importance of having a "Margin of Safety". In the simplest interpretation, it means to buy a stock that is worth more than it is currently priced.
The margin of safety rules are created by the individual investor. For example, some would suggest that the buying price should be 50% of your expected valuation. For others, they would think that 30% is sufficient.
Expected Valuation of Company A: $400
Margin of Safety 50%: $200 (You should buy Company A shares at $200)
We think that the most difficult part of this concept is calculating the expected valuation. You may think that Apple shares are worth $400, while someone else will think its worth only $300. Although nobody can ever predict the future accurately, you should at least have a reliable method of predicting.
APPLICATION TO SOCCER BETTING
In our last post, we pointed out that Manchester United and Blackpool are the teams that have 70% of their games finishing with at least 3 goals.
If you believe there are going to be 3 goals, let's consider a few margin of safety options.
16% MOS: Over 2.5 goals
33% MOS: Over 2 goals
50% MOS: Wait till half-time only. If a game has no goals, you have a choice to place over 1.5 goals or wait for 1 ball to further increase MOS.
If the goal comes before you placed your bet, using a Margin of Safety means you have given up an opportunity cost. You should never let yourself be concerned about losing opportunities. In true investment, you should always think about preserving your capital.
The margin of safety rules are created by the individual investor. For example, some would suggest that the buying price should be 50% of your expected valuation. For others, they would think that 30% is sufficient.
Expected Valuation of Company A: $400
Margin of Safety 50%: $200 (You should buy Company A shares at $200)
We think that the most difficult part of this concept is calculating the expected valuation. You may think that Apple shares are worth $400, while someone else will think its worth only $300. Although nobody can ever predict the future accurately, you should at least have a reliable method of predicting.
APPLICATION TO SOCCER BETTING
In our last post, we pointed out that Manchester United and Blackpool are the teams that have 70% of their games finishing with at least 3 goals.
If you believe there are going to be 3 goals, let's consider a few margin of safety options.
16% MOS: Over 2.5 goals
33% MOS: Over 2 goals
50% MOS: Wait till half-time only. If a game has no goals, you have a choice to place over 1.5 goals or wait for 1 ball to further increase MOS.
If the goal comes before you placed your bet, using a Margin of Safety means you have given up an opportunity cost. You should never let yourself be concerned about losing opportunities. In true investment, you should always think about preserving your capital.
Friday 1 April 2011
Applying the Rules of Value Investing
Here we conclude the rules of value investing for soccer betting.
Rule #1: Only invest in what you can understand
Leagues that you do not understand should never be touched. We have recommended that the Dutch Eredivise and EPL are the best leagues in terms of goal scoring and also have sufficient information available on the teams.
Rule #2: Never put your eggs in one basket
Build a portfolio. Diversify your bets. If you lose just one big bet, you have to gamble to get back to your original position. By diversifying, you lower your risks and increase your margin of safety.
Rule #3: Invest only in undervalued bets of high grade teams
We suggest that you should invest only on high scoring teams at undervalued bets. For example, if a team averages 3 goals per game, odds at 2.75 or lower are undervalued.
Blackpool, WBA, Man United, Arsenal and Blackburn all have averages of 3 goals. However, this is still not good enough. The tables below give a better picture.
Blackpool and Man United are the best teams as they are at 70%. Hypothetically if you had managed to placed on over 2.5 ball every single game, you should have 40% returns. You will still realize that the margin of safety is not high. Nevertheless, you know that these are the best teams to bet on.
Rule #4: Do your quantitative or statistical analysis
Trying to predict results without any hard statistics is suicidal for any type of investment. When you lose, you will have no idea why you lost.
Rule #5: The final rule, the secret of sound investing, we shall reveal in our next post.
Rule #1: Only invest in what you can understand
Leagues that you do not understand should never be touched. We have recommended that the Dutch Eredivise and EPL are the best leagues in terms of goal scoring and also have sufficient information available on the teams.
Rule #2: Never put your eggs in one basket
Build a portfolio. Diversify your bets. If you lose just one big bet, you have to gamble to get back to your original position. By diversifying, you lower your risks and increase your margin of safety.
Rule #3: Invest only in undervalued bets of high grade teams
We suggest that you should invest only on high scoring teams at undervalued bets. For example, if a team averages 3 goals per game, odds at 2.75 or lower are undervalued.
Rule #4: Do your quantitative or statistical analysis
Trying to predict results without any hard statistics is suicidal for any type of investment. When you lose, you will have no idea why you lost.
Rule #5: The final rule, the secret of sound investing, we shall reveal in our next post.
Wednesday 30 March 2011
The Financial Statements
Previously, we wrote very briefly on how analysts use fundamental analysis to examine stocks. Typically these analysts would first analyze the financial statements of the firm. In the same way, every football team has such "report cards". We shall examine Manchester United's EPL record here.
We have upgraded the Goals Frequency Chart to include the scoring ability of a team over the whole season, past 10 games and past 3 games. You will observe that Man United's scoring ability has fallen over the past few games. Average goals in the whole game have dipped from from 2.1 to 1 for 10 games against 3 games.
We will compare the Goals Frequency Chart to a firm's income statement. An income statement is a financial statement that gives operating results for a specific period. So the Goals Frequency Chart explains how well a team has performed for the whole season, 10 games and 3 games.
Our next post we shall cover more "financial statements" to give a comprehensive picture of a team's past performance.
Sunday 27 March 2011
Fundamental Analysis
If you do a wiki search on analyzing stocks, you will find that there are main 2 schools of thoughts. Fundamental analysis is concerned with analyzing companies Technical analysis studies market and stock trends.
For value investment philosophy, the investor should not be concerned about trends. It explains that one cannot predict trends and secondly, once a trend is established, it will be broken. Thus value investors should concentrate on using fundamental analysis to value stocks.
So what are the basics of fundamental analysis? Using Google Finance, you will find the income statement and balance sheet. Reading these "report cards" are very tedious, so to sort through thousands of companies faster, the stock summary from Google Finance helps you with your decision making.
The value investor will be mostly interested in P/E or price earning ratio and EPS or Earnings Per Share. P/E ratio is simplest way for investors to decide whether the stock is worth researching. You can find the explanations at http://en.wikipedia.org/wiki/P/E_ratio#Interpretation
FUNDAMENTAL ANALYSIS FOR SOCCER BETTING
How do we conduct fundamental analysis for soccer betting? In the same way, we first need to find the "report cards". Then we will need to have some ratios to decide whether a game is researching on. We will reserve this for the next post.
For value investment philosophy, the investor should not be concerned about trends. It explains that one cannot predict trends and secondly, once a trend is established, it will be broken. Thus value investors should concentrate on using fundamental analysis to value stocks.
So what are the basics of fundamental analysis? Using Google Finance, you will find the income statement and balance sheet. Reading these "report cards" are very tedious, so to sort through thousands of companies faster, the stock summary from Google Finance helps you with your decision making.
The value investor will be mostly interested in P/E or price earning ratio and EPS or Earnings Per Share. P/E ratio is simplest way for investors to decide whether the stock is worth researching. You can find the explanations at http://en.wikipedia.org/wiki/P/E_ratio#Interpretation
FUNDAMENTAL ANALYSIS FOR SOCCER BETTING
How do we conduct fundamental analysis for soccer betting? In the same way, we first need to find the "report cards". Then we will need to have some ratios to decide whether a game is researching on. We will reserve this for the next post.
Friday 25 March 2011
Ignoring Trends
In value investing, Benjamin Graham argues that stock market trends or fads are only short-term.
"Why should future returns of stocks always be the same as their past returns? When every investor comes to believe that stocks are guaranteed to make money in the long run, won't the market end up being wildly overpriced? And once that happens, how can future returns possibly be high?"
Therefore, the true investor should always ignore trends because after a period of time, it will no longer be valid. This is also why books that claim mathematical formulas can win big are never applicable. Formulas are created retrospectively and track trends that do not exist forever.
"The passage of time brings new conditions which the old formula no longer fits."
The truth is formulas do not work on the long-run in stock markets or soccer betting. Theory cannot replace experience and old fashion "Fundamental Analysis".
In our next post, we will discuss using "Fundamental Analysis".
In our next post, we will discuss using "Fundamental Analysis".
Wednesday 23 March 2011
Building a Portfolio for Soccer Betting
"Do not scatter your shot. The great successes of life are made by concentration" Andrew Carnegie
In the commentary of the "Intelligent Investor" by Jason Zweig, most of the richest people in this world have made their fortunes by putting all their investments in one single basket.
On the flipside, he also noted that "Most big fortunes have been by one investment, while no small fortunes have been made this way and not many big fortunes have been kept this way."
We are suggesting that you should make a small fortune in soccer betting by spreading out your bets.
ALLOCATION
In market investments, it is most ideal to spread out in stock and bonds. This is known as allocation. In soccer betting, you first allocate your bets in a few leagues that produce the more consistent outcomes.
For example, if you invest in goals, you will want to choose consistent goal leagues such as Dutch Eredivisie and EPL. If you like picking teams to win, you should focus on a few leagues that have big guns who keep winning.
Next, you set up the % of funds that you want to invest in each league. For each league, you should choose only up to 30% of the best games of each league to bet on.
For example:
Dutch Eredivisie - 50% of funds (3 games)
English Premier League - 30% of funds (3 games)
German Bundesliga - 10% (2 games)
Spanish La Liga - 10% (2 games)
Along the way, you may change your allocation to keep up with trends. As trends will keep changing, never over-invest in one team or over-invest in one league. Unless you are controlling the game, there is no such thing as a sure result
You must have discipline to keep the structure of your portfolio.
In the commentary of the "Intelligent Investor" by Jason Zweig, most of the richest people in this world have made their fortunes by putting all their investments in one single basket.
On the flipside, he also noted that "Most big fortunes have been by one investment, while no small fortunes have been made this way and not many big fortunes have been kept this way."
We are suggesting that you should make a small fortune in soccer betting by spreading out your bets.
ALLOCATION
In market investments, it is most ideal to spread out in stock and bonds. This is known as allocation. In soccer betting, you first allocate your bets in a few leagues that produce the more consistent outcomes.
For example, if you invest in goals, you will want to choose consistent goal leagues such as Dutch Eredivisie and EPL. If you like picking teams to win, you should focus on a few leagues that have big guns who keep winning.
Next, you set up the % of funds that you want to invest in each league. For each league, you should choose only up to 30% of the best games of each league to bet on.
For example:
Dutch Eredivisie - 50% of funds (3 games)
English Premier League - 30% of funds (3 games)
German Bundesliga - 10% (2 games)
Spanish La Liga - 10% (2 games)
Along the way, you may change your allocation to keep up with trends. As trends will keep changing, never over-invest in one team or over-invest in one league. Unless you are controlling the game, there is no such thing as a sure result
You must have discipline to keep the structure of your portfolio.
Monday 21 March 2011
Value Investing Strategy: Building A Portfolio
In our research on value investing, we have used a book considered by Warren Buffet as the best book ever written on investment. "The Intelligent Investor" by Benjamin Graham is a must read. BTW we are not advertising for Amazon!
Portfolio theory, which is to hold a mix of investment assets, is used by all professional investors to mitigate risk. In investing terms, risks is the threat where your assets will decline in value. The idea behind portfolio theory is "don't put all your eggs in one basket".
If your portfolio allocation is defensive, your assets will be widely spread across the market, which will reduce the risk of your investments declining in value. In modern portfolios of mutual funds, which are generally defensive, they will likely consist of stocks, bonds and treasury bills.
If your portfolio is more aggressive, you will add more risky assets which are more speculative. Graham suggests that like a gambler you should only limit yourself to max 10% of your portfolio to be speculative assets. Hedge funds would often short the market to earn huge profits.
How will this apply to soccer betting? We will examine the possibilities in our next post.
If your portfolio allocation is defensive, your assets will be widely spread across the market, which will reduce the risk of your investments declining in value. In modern portfolios of mutual funds, which are generally defensive, they will likely consist of stocks, bonds and treasury bills.
If your portfolio is more aggressive, you will add more risky assets which are more speculative. Graham suggests that like a gambler you should only limit yourself to max 10% of your portfolio to be speculative assets. Hedge funds would often short the market to earn huge profits.
How will this apply to soccer betting? We will examine the possibilities in our next post.
Sunday 20 March 2011
La Liga Sunday Preview
SUMMARY
Sporting Gijón vs AlmerÃa
Racing Santander vs Real Sociedad
Málaga vs Espanyol
Athletic Bilbao vs Villarreal
Valencia vs Sevilla
Sporting Gijón vs AlmerÃa
Racing Santander vs Real Sociedad
Málaga vs Espanyol
Athletic Bilbao vs Villarreal
Valencia vs Sevilla
Serie A Weekend Preview
SUMMARY
Fiorentina vs Roma
Bari vs Chievo
Bologna vs Genoa
Inter vs Lecce
Napoli vs Cagliari
Saturday 19 March 2011
EPL Weekend Preview
SUMMARY
Tottenham vs West Ham (Saturday)
Blackburn vs Blackpool (Saturday)
Manchester United vs Bolton (Saturday)
Stoke City vs Newcastle United (Saturday)
West Brom Albion vs Arsenal (Saturday)
Wigan vs Birmingham (Saturday)
Everton vs Fulham (Saturday)
Tottenham vs West Ham (Saturday)
Blackburn vs Blackpool (Saturday)
Manchester United vs Bolton (Saturday)
Stoke City vs Newcastle United (Saturday)
West Brom Albion vs Arsenal (Saturday)
Wigan vs Birmingham (Saturday)
Everton vs Fulham (Saturday)
Dutch Eredivise Weekend Preview
SUMMARY
NAC Breda vs Groningen (Saturday)
Heracles vs Heerenveen (Saturday)
NEC vs De Graafschap (Saturday)
Excelsior vs Twente (Sunday)
NAC Breda vs Groningen (Saturday)
Heracles vs Heerenveen (Saturday)
NEC vs De Graafschap (Saturday)
Excelsior vs Twente (Sunday)
Friday 18 March 2011
Day Trading vs Value Investing: The Danger of Online Brokerages
Value Investing teaches you to spot undervalued assets, buy them low and sell them high. Value Investing requires you to find an opportunity, then do the necessary research such as Fundamental Analysis and understanding the stock's business. After that, you buy the shares and stay patient, not allowing yourself to be affected by the ups and downs of the market.
However, in our internet age, the ease of buying and selling shares through brokerages and betting on sports online websites, makes us ignore the importance of doing research and having patience.
Many become Day Traders or people who buy and sell shares within a single day. They buy at any opportunity and sell at every small profit. For soccer bettors, we are 100% confident that more than once, you have clicked on any random game that you have no idea about, and say "its 50/50 anyway, just go for it".
Professional traders do not do day trading as its proven not to be profitable. Similarly if you are betting to win, you should never engage in such behavior. Use analytical tools and stay patient. A football season is 9 months. Invest to win on the long run.
However, in our internet age, the ease of buying and selling shares through brokerages and betting on sports online websites, makes us ignore the importance of doing research and having patience.
Many become Day Traders or people who buy and sell shares within a single day. They buy at any opportunity and sell at every small profit. For soccer bettors, we are 100% confident that more than once, you have clicked on any random game that you have no idea about, and say "its 50/50 anyway, just go for it".
Professional traders do not do day trading as its proven not to be profitable. Similarly if you are betting to win, you should never engage in such behavior. Use analytical tools and stay patient. A football season is 9 months. Invest to win on the long run.
Thursday 17 March 2011
What is Value Investing?
Value Investing is the buying of shares that are underpriced. To know whether these shares are underpriced, Fundamental Analysis has to be conducted.
Non-finance students may have hard time understanding the above. In simple terms, this means buying low and then selling high. Warren Buffet is perhaps the most famous value investor ever.
WHAT IS AN UNDERVALUED BET?
In the stock markets, there are many methods to value shares that are underpriced. As you graduate from football betting to investing in stocks, you should be keen to understand valuing methods such as P/E ratios, Cash Flow Analysis, Dividend Discount model etc.
In football betting, every weekend we have been posting statistics that we think would be useful. From the statistics, we analyzed that a bet is undervalued when the probability of winning is greater than the odds.
For example, if a team were to score 1 goal every 10 minutes, the chance of scoring between 80 - 90 minutes is 11%. If you were to refer to Scoring Minutes Chart and find that a team scores 25% of its goals between 80 - 90 minute, this may be an undervalued bet.
We do believe there are other methods to find undervalued bets. If we find them, we will definitely post them here.
Wednesday 16 March 2011
What you need to know about Warren Buffet: Value Investing
So far we have been using Warren Buffet's ideas to find parallels between investing and football betting. However it is important for our readers to note that there are many different types of investment styles that are successful.
Warren Buffet's strategy is called "Value Investing" which was created by his mentor, Benjamin Graham. In the next few weeks, we will explore how to use the concept of value investing in football betting.
Tuesday 15 March 2011
How to Invest Successfully
In Warren Buffet's preface to Benjamin Graham's book (his mentor), The Intelligent Investor, he wrote this:
"To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework."
Football betting and investing stock is the same in this aspect. Two questions here:
"Do you have a framework for making decisions?" - What is your strategy in making decisions?
"Are you letting emotions corrode the framework?" - Do you stick to the plan even when results are against you?
"To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework."
Football betting and investing stock is the same in this aspect. Two questions here:
"Do you have a framework for making decisions?" - What is your strategy in making decisions?
"Are you letting emotions corrode the framework?" - Do you stick to the plan even when results are against you?
Saturday 12 March 2011
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