Risk and Returns Part 1: What are your odds of success?

Statistics show that less than 50% of small businesses succeed. Statistics also show that 70% of mergers and acquisitions fail. So why do people choose to be entrepreneurs? Why do CEOs continue to pursue M&As?

This is because despite high risks, there are even bigger returns. In investment theory, the higher the risks being undertaken, the higher should be the expected returns. However, not everyone is rational. Gamblers are willing to take high risks, regardless the odds of success. Gamblers are ruled by greed and emotion, and the pursuit of thrill.

As an investor, you should take into consideration of risks, which is also the odds of success. Consider the statistics below:

Click Image to enlarge

Compare the 4 leagues above: Which statistics provide the best odds of success?

After analyzing, you know the risks for each league. In Risk and Returns Part 2, we will discuss the theory of calculating returns.

Feyenoord vs Groningen, NEC vs Utrecht

Manchester City vs Fulham

Goal Scorers:

Tevez - 18 Goals

Dempsey - 9 Goals

The Hard Truths of Statistics

In our match previews, we have presented 3 types of statistics (Scoring Minutes Chart, Goals Frequency Table, Top Goal Scorers). They all share a common characteristic, which is their reliance on historical data. One may argue, what happened in the past, does not reflect the future. In psychology, there are studies that say:

"Past performance is generally the best predictor of future behavior"

This statement holds a pound of truth. In the workplace, how does your boss judge whether you can perform on a new task? How does your boss judge whether you should be given a pay rise or promotion? They usually make these decisions based on your past performance. If you screw up something important in the past, they will probably never trust you with a major project.

However we also know that, this is not an absolute truth. People change, circumstances change and events in our lives will affect how we think and behave. Teams that keep winning will stop winning, teams that keep scoring will stop scoring somewhere.

In our previous post, we proposed that you should only invest if you can find a great opportunity. 

TRUTH: Statistics act only as a guide to great opportunities.

Past precedent only tells us how people would usually react in a given situation. As an equity investor, would you consider buying Microsoft stock? Looking at their poor record of successfully launching new products, do you think their partnership with Nokia will work out? Similarly, if a team has a consistent bad scoring record, ask yourself whether there is a great opportunity available.

TRUTH: Change Events are ongoing in the background that past statistics are not tracking

It is in the human psyche to try to change things around when things are not going well. Especially in a football match, there are many events that can change the outcome. A red card, a substitution, a tactical switch or bad playing pitch are all such events. The investor must constantly monitor to check whether the statistics are reliable for the new change events. 

How do you handle change events? The biggest dangers are emotions and greed. Statistics are unemotional as numbers cannot lie, but they are not perfect for real-time events. We will explain these in detail on future posts.

Willem II vs Heerenveen

Goal Scorers:
Lasnik - 4 Goals

Dost - 8 Goals
Assaidi - 7 Goals
Beerens - 6 Goals

Väyrynen - 5 Goals

EPL Preview: Newcastle vs Bolton, Everton vs Sunderland

Goal Scorers:

Nolan - 10 Goals

Best - 5 Goals

Barton - 4 Goals

Elmander - 9 Goals

Davies - 7 Goals

Sturridge - 3 Goals

Opportunities and Threats:

Strong scoring from 60 - 90 minutes goal frame. 

Goal Scorers:

Cahill - 9 Goals

Saha - 6 Goals

Beckford - 4 Goals

Gyan - 9 Goals

Opportunities and Threats:

Cahill and Saha are doubtful for today. 80 - 90 minutes goal frame looks good.

Last word of advice: Probability is not 100% possibility.Continue to monitor events on the pitch. Good luck guys!

Where should you put your money?

What should you invest? Should you invest in property or stocks just because where all the hot money is flowing? Warren Buffet made this statement:

"Investment must be rational; If you don’t understand it, don’t do it."

Never ever invest in what you do not understand. Before the financial crisis, financial advisors tricked many people to invest because they claim that the rates of return are high. The lesson learned is there no such thing as a free meal in life. Without analyzing, little knowledge of the investments and most importantly passion, your success will depend on luck. How many times can you get lucky? 

On another hand, stock picking or football betting is not 100% reliant on skill. First you need to stumble on the right opportunity, then you will need to execute well. What is critical is finding the balance between knowledge, opportunity and execution.

These are the questions to ask:

1. Is there an opportunity for a great investment?

2. Do I have a good knowledge of the market?

3. How much should be invested?

Let's apply this investment basics to football betting. We shall look at the yesterday's game: Arsenal vs Stoke (Final Score 1-0)

1. Is there an opportunity for a great investment? Arsenal continues to attack, Stoke are leaving gaps in their defense to search for an equalizer.

2. Do I have a good knowledge of the market? Arsenal looks attacking, statistics show that Arsenal score most of their goals in the 80-90 time frame (16.07%) and only 11.54% of the time Arsenal games do not have a goal in the 2nd half. Is this sufficient? NO! How many goal scorers are on the pitch? Van Persie is injured, Fabregas and Walcott are subbed out, Nasri just returned from injury and Chamakh (subbed in at 80 min) has not played in awhile. Does this justify opportunity?

3. How much should be invested? Have I calculated the risk and returns? We will be explaining this critical calculation soon, so stay tune!

Conclusion: Would Arsenal-Stoke game be a good investment for goals? NO!!!

Hopefully this will help you in your investment decisions.

Manage Your Capital (Money Market Strategy)

Always treat betting like investing.

You need to have a Money Market Strategy. Managing your cash flow is very important.

You wouldn't want it affect your own personal life.

Remember, never think that you can make a living out of betting. 

Okay, lets get back to the main topic:

1. The first point to take note of is, how much are you willing to lose?

Lets discuss an example: 

You bring home $3,000. Theoretically, you save at least half of what you earn. That means you are left with $1,500. In marketing, 20% of the profits would come from  80% of the customers and 80% of the profit should come from 20% customers. Using this 80/20 method to manage your money, no more than $300 should be use for betting. That would mean that no more than 10% of your wealth should be put at risk of losing them because of betting.

This is just an opinion that probably 10% of your wealth wouldn't make too much of an impact to your life. If it would, please adjust accordingly to your own comfort level.

2. How many percent of your capital should be placed per bet?

Lets say you have $300 for this month. Within 1 month, there are 4 match week. If you lose all the money on one match week, my advice would be to stop and restart again on the next month. If you win, you could bring the winnings forward to the next week.

Ever heard of this saying, the more you talk, the more mistake you make. The person who doesn't make any mistake is the person who does nothing. Therefore betting on too many games is not advisable. Using the "80/20" theory would be a good gauge. That would mean that you should not bet on more than 5 games per match week, placing only $60 per game. When your 5 games are over, stop and carry on the next week with what you have, at 20% of your new capital per game. When it is a new month, keep your winning and start all over again at 10% of what you possess.

3. Conclusion

It is important that you do not go beyond your limits when it comes to betting. I'm sure you have heard of cases whereby families were broken because of over-excessive betting.

Final words: If you manage your capital, your personal life would never be affected and you could enjoy betting more. If you win, its a bonus. If you lose, better luck next month.

Any comments?

The Fundamental Difference between Soccer Betting and Buying Stocks

What is the difference between buying stocks and soccer betting? The key difference is the underlying asset. This is also the reason why soccer betting is considered as gambling. Soccer betting is similar to financial derivatives such as futures and options. Future and options are used for hedging (doesn't exist in soccer betting) and speculation. (Traders such as George Soros made tons of cash through speculation)

The point here is without underlying assets to protect your investments, you always have a chance to lose 100% of the value of your investment. So even if the odds for Barca to win is 1.05, there is still a chance that you will lose 100%. Our conclusion is there is no such thing as a blue chip or surely win in soccer betting. So your should never mimic stock or bond strategies. Instead, you should use options and futures strategies to guide your betting strategy.

This is where calculating risk and returns is fundamental for betting. We shall discuss that in detail in future posts. Below is some useful info for Arsenal vs Stoke.

If you are bullish on Arsenal, take note on where they are strong at scoring. Don't forget to consider the motivation for Arsenal to score and who is playing on the pitch. The more goalscorers on the pitch, the better the chance to score.

The Factor Every Investor Must Consider

Do you think football is only 11 against 11? Or 25 people involved, if you include the referees and his assistants? Rumour has it that Nigel De Jong wasn't sent off against Spain in the World Cup Final was down to Fifa's directive to the referee that no player should be sent off during the 1st 30 minutes.

Look at the video footage, that was definitely a red card. Why did Fifa give these instructions? Football is not only a sporting event anymore, it is an entertainment business. Millions of commercial dollars are at stake for the "Beautiful Game". If you had knew this before the game, would you make different decisions?

Whether you are making an investment in stocks or football betting, insider esoteric information should be foremost in your analysis. Our observation tell us that football can be influenced by many factors, thus statistics alone do not tell the whole story. Sometimes one huge influence can change the whole game. Go google Moggi and Juventus.

Arsenal Statistics as of 21st Feb 2011

The Goal Scorers: 

Van Persie 10 Goals

Nasri 9 Goals

Chamakh 7 Goals

Walcott 7 Goals

Why do Gamblers always end up losing?

Wikipedia defines gambling as "wagering money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods." From this definition, is there any difference between betting on a sports event or the stock market?

The fact is you can never be certain of the outcome. As an ordinary gambler, there is insufficient information of the game or the stock, and even so u might have any information available, the outcome will still be unpredictable as there might be changes within the game or the stock market.

Getting back to the main topic, why do gamblers always end up losing?

Like in a soccer game, when you gamble, u either win, lose or draw. The bookmaker is the home team and you, are the away team. There is only 1 difference, a soccer game is 90 minutes, but betting, it could be a life time. With such a long timeline, what is the chance of drawing the game?

Lets break down the scenario in the most simplistic way:

Scenario 1 : You begin Small and start Winning

There is a saying, no one stops at winning, when you win some, you want to win all. As you win, you start increasing the bets because you are convinced that either you got the skill to win or  luck is with you. As mentioned, like stock market, the outcome is unpredictable. The probability is simple, either you win, lose or draw on that particular match week. So, what happens when you start losing? The following, scenario 2, would be the situation you will be in.

Scenario 2: You Break-even at a Certain point of Time

Confidence comes from success. When you are not losing, you will convince yourself that you can win, luck will be on your side, because if you are convinced that you are unlucky, you wouldn't have started betting in the first place. Now, you start losing. (If your winning streak is back, refer to Scenario 1 again). When you lose, you get emotionally unstable, especially if it is a big amount. You may try to double your stake and might find yourself back in the formal state that you were in. Do not be too happy, because this is the time when your confidence is back and you think luck is on your side again. You continue to bet and probability of losing or winning is on you again. So, what will happen to you if you are in bad luck and never had a chance to recoup your loss?

Scenario 3: Your Losses might be too much for you to Handle

If you are a responsible person, you will stop. No one stops at winning, but will only stop once you lose everything. But some people might think that they can't be unlucky all the time and might resort to borrowing or other form of financing to attain the cash flow. All you need, is just one more string of bad luck, and you probably have no way back and be forced to stop. 

If you are lucky, you might be determined to quit betting. Or you could drown in your sorrows for all we care. But either way, that's not the ideal ending you want.

Any of the scenario sounds familiar to you in any way? I am not trying to be exaggerating or say that I am completely right, but more importantly, a gambler must be fully aware of the situation and take control of it before it controls him, and that would be the most important point to take note of when betting. At least, your chance of falling into this scenario would be minimized.

Final Words:  When you are winning, know when to stop. When you are losing, know when to stop pursuing and reduce your losses instead. 

Any comments?

Using the tools available: Soccerway.com

Investors must always know the tools, news sources and databases to develop their strategies and tactics. Here we show a popular and useful website, soccerway.com. Inside Soccerway, there is a useful tool that you should consider using when playing in-game betting.

Click on any major league game and you will find a tab labelled as "Statistics". Scroll down and look at the "Scoring Minutes Chart". 

This particular chart shows today's game between WBA and Wolves. Reading from the chart, you will find that the most optimum time frame for WBA to score is in the 70 - 90 minutes, where the % of their goals is 38%. There are many ways to interpret this data. This article proposes one strategy to use, is to place on over 0.5 goal during the 70 minute if the circumstances required for WBA to score, or you are bullish about WBA.

At this moment, WBA is losing by 1 goal and as a punter you are certain that there will be a goal but you are unsure when to place your bet. Using soccerway's tool, you now know that WBA does not score any goals in the 60 - 70 minute frame. What you should do, is wait till 70 minute where the 0.5 ball is available at your acceptable rate of return. WBA goes on to score in extra time and Viola!, you take your winnings.

Know the Statistics!

In any investment, you should know the statistics, whether you trust it or not!

A word of caution, in investment one should never only choose a project only based on a qualitative measure. Think about the quantitative measures! (We will discuss this in further posts.)

Why you cannot beat the Bookmaker?

Have you ever wonder why you can never beat the bookmaker? In investing, there is a theory known as efficient market hypothesis. It states that you can never consistently beat the market because the market will always catch up once information becomes publicly known.

In any type of gambling, the bookmaker is the market. Isn't it strange that the odds they set are always unbeatable? Here is our explanation:

Bookmakers have information that gamblers do not know. Similarly in the stock market, many hedge funds which outperform the market indexes always have first-hand information, whether obtained legally or illegally.

Consider this: If its a 50% chance to win, why do bookmakers always win?

What type of soccer bets are the best?

With so many types of bets offered by bookmakers, which type of bets should you choose?

First question:  Do you choose the pre-game odds or in-game live betting?

Answer:

Always choose in-game live betting. Firstly, by waiting you get your chance for better odds. Statistics show that the first 15 minute of a match has the fewest goals. Secondly, you never know what the condition of the game is like. (if you are watching a live game) Events like key players are missing, tactics used by managers and pitch conditions all may change the outcome of the game.

For example, if Messi is injured during warm-up, this odds will only be reflected in the in-game live betting odds. Real time information is the most important whether in the stock market or betting.

Second Question: Which in-game live betting bets should you choose?

Answer:

Typical choices are 1x2, Asian Handicap and Goals. Of course there are many other type of exotic bets offered by bookmakers. (Like Financial Derivatives, these exotic bets are difficult to predict) We will discuss this exotic bets in the future.

You should always choose GOALS. Why???


Probability when all factors are equal

• 1x2: Probability shows that you have only a 33% chance to win. 
• Asian Handicap: Probability is 50%
• Goals: Probability is 50%

Explained: A simple calculation shows that we should always eliminate 1x2 as it has the lowest probability of victory.

Goals vs Asian Handicap


Every type of investment or gamble requires a  prediction method. For goals, you are predicting whether a game has many goals. For Asian Handicap, you are predicting the outcome of the game and whether the team can outperform the odds set by bookmakers.

Which is more difficult to predict? Predicting results or goals? Results are more difficult than goals.

Here's is an illustration:

Wolves vs Manchester United

If you had flavored Man U to beat Wolves, you would have lost. If you had played goals, you would have won.

Our argument here is although Man U was top of the table and Wolves were bottom of the table, football results are unpredictable. If you flavored Man U to thrash Wolves and you chose goals instead of Handicap, you would have won.

Consider this: A goal is a goal, it cannot be revoked. A lead can be diminished. Arsenal led 4-0 against Newcastle and the end result? 4-4.

Do you believe? Comments?