The purpose of the Ads

The purpose of the ads really isn't to make money.  It takes thousands of views and people clicking on the ads to get me even a dollar.  And I simply don't have thousands of readers.

The real reason is it gives me a small amount of data about whether or not anyone is viewing my website.

And on Thursday and Friday of last week, I wasn't near the internet and couldn't go to my blog; however, nine other people (at most) viewed it.  So there is hope!

And its been viewed a total of fifty times in the last week (at least half by myself).

And my BR articles have a total of 3,200 reads.

So my  message is reaching a few people at least.

Bubbles

Predicting sports outcomes and the weather have many similarities.  Both have lots and lots of previous data; both are frequently wrong; are they both craft?

Predicting sports outcomes, or more plainly, investing in sports, is a craft.  

Wikipedia describes craft as meaning "A craft is a skill, especially involving practical arts. It may refer to a trade or particular art".  Craft shall be the focus of my further studies.  Essentially, what I am doing is trying to create a craft.

Knowledge of the history of the craft is important.  To know whats going to happen, it really helps to know what has happened before.  Because of the amnesia of crowds, one can outwit a crowd by knowing history well and being able to converse about the many aspects of history.

The Black Swan taught me that not only is it important to know history; it is important to know past events as they occured to people during that time.  What people of any given time expected to happen, what actually happened, and how they reacted to what happened.  

This distinction is what makes sports investing a craft.

I also read in the papers about the stock market crash a report on the stock of the company which makes "Crocs".  Its stocks were selling at as high as seventy two dollars a share.  Apparently they continued to expand their production facilities by taking on loans.  

Predictably, crocs aren't that cool and the market is super-saturated.  Nobody wants to buy more pairs and their stock has plummeted to two dollars a share.  

That bubble has burst.

So maybe this new niche I am investigating of "bubbles" emerging in sports betting behavior is related closely to the concept of "bubbles" and mania in general.  

Essentially, find something trendy and bet on its bubble to burst.  Not all stocks go up; but every stock will go down.  The reason the dow jones goes up is because it constantly drops stocks that suck and includes stocks that are "on the rise".  So the DJIA increases while individual stocks drop.  

It seems the best strategy is to sell high first; then buy low.  

I don't know when Crocs will go out of fashion.  But I only had to take one look at them to know they were gay and I would never wear one.  I also knew they were a fad.  They aren't the a new mainstay of footwear where EVERYONE has at least one pair and goes through them quickly, requiring the purchase of more pairs.  

I was taking the red-eye flight from West Coast to East Coast and it really hit me hard.  Investing in a company that I knew nothing about and hoping it would go up was foolish.  But selling the stocks of companies that I know will crash is not.  Bubbles constantly emerge as fads spread and experience enormous growth before burning out shortly thereafter. 

 The list goes on and on:  hush puppies, beanie babies, magic cards, baseball cards, crocs, just to name a few.  And it stretches back throughout history.  I know because I've read books about it.  The Dutch tulip mania, the South Sea company, etc., etc., etc.  This is a repeatable event.  

I get so pumped up thinking about this new investment strategy.  I want to FIND bubbles and take advantage of them.    Bet against them and just hold until it drops.  Every bubble, by definition, must burst.  A bubble is an overinflation and over-evaluation.  It will be corrected sooner or later, and when it happens it happens fast.  

This seems to me like a great idea.  It takes balls to do it.  To sell all my stocks and start investing the money on my own, selling the stocks of companies that are rocketing to the sky, betting on fads to flop, of companies and fortunes to crash and burn.  

If you want what everyone else has, just do what everyone else is doing.  

Is that all I want?  

Marcus Aurelius

The purpose of this blog is similar to the purpose of Meditations was for Marcus Aurelius.  

Marcus Aurelius was a Roman emperor from 161 to 180 of this era.  He wrote Meditations while on campaign as a source for his own guidance and self-improvement.  The purpose of this blog is my own guidance and improvement in the areas of sports analysis, prediction, investing, etc.   

As sports investing is a craft, anything can come into play.  I value the scientific method and want to create rules and observations based on real data.  I want my conclusions and predictions to be based on reality and be verifiable when possible.  I always want existing data to support my methods and conclusions.  

I read parts of Meditations in high school and have read further portions of it in college.  He preached stoicism, rationality and clear-mindedness.  

Wins Produced in the NBA

I was reading the recent posts at Wages of Win.  That is a very informative website and I recommend it for anyone who wants to learn more about basketball and basketball analysis. 

These last two days I was in Half Moon Bay at a bed and breakfast.  In the mornings I would read the sports section of the newspaper and was surprised at how limited the coverage was and how uninformed it was.  

The newspaper summarizes the game.  And thats it.

Wages of Wins on the other hand, discusses what happened and how it happened.  That is very important and the statistics that they produce help one understand what is happening in the league throughout the season.  

The statistic wins produced measures how helpful someone is at making his team win.  It doesn't measure how easily he can rain in thirty foot shots, if he can tomahawk jam while driving the lane, or if he can get ten steals a game.  

It measures the "whole player" and if what he is doing on the court helps his team win.  

Wins produced measures the importance of playing good defense, getting offensive rebounds, shooting efficiency, drawing fouls, not fouling, etc.  

Its really a wonderful statistic.  While there is debate over which players are most skilled, fastest, best on-ball defenders, or have the highest combination of all skills possible in the NBA, there is little doubt about who is producing the most wins.  

A good analogy is me playing basketball.  I'm tall (6'4") and can't dribble well or shoot well.  But because of wages of wins, I focus on rebounding, shooting easy shots, and not making mistakes.  

After all, not making a mistake is as valuable as making a good play.  It allows someone else to try to make a play.  

It also clarifies who the Least Productive Players are.  Read this article here.   It is very informative.  You will find a certain type of player here.  The high volume shooter who doesn't play defense very well.  Its really an interesting list of players.  And some of them make MILLIONS of dollars.  

Further Advice from Warren Buffet

I've spent the last thirty minutes reading articles about Warren Buffet, his investment philosophy, and some quotes from him.

This includes reading his Wikipedia page, and various articles about the man.  

To summarize he believes the main skills in picking a stock correctly are correctly valuing the company (either above or below current appraisals) and being detached from the opinions of others, which will influence your thinking.  

The following six paragraphs are all from the article cited above:

"[It] comes about from having an investment philosophy grounded in the idea that a stock is a piece of a business. If you look at it that way, there's no reason to get excited whether some analyst is recommending it or the company is splitting the shares two-for-one, or whatever. The only way to drive the extraneous thoughts out of your mind is to have a philosophy. And for us that philosophy comes from Benjamin Graham and The Intelligent Investor, especially chapters 8 and 20. It's not very complicated stuff."

"It doesn't make any difference what other people think of a stock. What matters is whether you know enough to evaluate the business," he opined.

You should be able to write down on a yellow sheet of paper, 'I'm buying General Motors at $22, and GM has [566] million shares for a total market value of $13 billion, and GM is worth a lot more than $13 billion because _______________." And if you can't finish that sentence, then you don't buy the stock.

The key is not to be seduced by crazy ideas, but instead just stick to the fundamentals year after year. Academia doesn't get too interested in us -- we're too simple. What would the professors do? A great many of the formulas [they use to analyze securities and markets] are dead wrong. They exist purely to give the intellectual class something to do. We don't do anything just exercise our intellectual proclivity for mathematical formulas.

Instead, if you are a true investor, you should shop for stocks the same way you shop for anything else: Look for sale prices, and never regard falling prices as inherently bad news. Instead, falling prices create the opportunity to buy even more of something that was already worth owning.

In that single sentence Buffett captured the difference between investing and speculating: An investor, like Buffett, wants the price of a stock to fall below the value of its underlying business so he can buy even more and hold for as long as possible.

********

So to summarize, one wants teams to perform poorly, to have their "stock drop" below their true levels. 

Smart man, a lot to learn from him.

What Can I Learn From Warren Buffet?

What can I learn from Warren Buffet?  Warren Buffet has been the world's most successful investor of the last half century.  But rather than simply list his biography, which can be found here, I want to focus on which of his teachings can be transferred to sports analysis.  

1)  Are the fundamentals of the company strong?

Warren Buffet emphasizes buying the stocks of companies that have had a run of bad luck but for whom the fundamentals are still strong.  They have assets, a market, and advantages, etc.  He tries to buy companies that have value but are struggling to work in the market.  

The transfer to sports analysis is to find teams that have good players, a good coach, a good system, but for whatever reason they have been playing poorly.  Maybe they have not had the energy.  Or they have had some bad bounces.  They've been the victim of the other teams extraordinary plays or catches.  

2)  Understand what you are investing in.

Warren Buffet only invests in companies, markets, and geographical regions that he understands.  He doesn't invest in things that confuse him.

The transfer here is that one should never invest in teams that one has not followed.  Foreign teams with their own struggles, competing interests, goals and expectations are difficult to gauge, track, and predict.  

3) Make accurate comparisons.

The transfer here is to compare the units of teams accurately.  In basketball, compare each team's players at each position and determine who has the "3 out of 5" advantage.  Then also check the coach's time management skills, and various bench players, whose sum is maybe only equal to one or two starting player's value.  

4)  Be a historian of the market.

Warren Buffet knows more about the future of the market because he knows so much about the past of the market.  He is a prolific reader.  He listens first, talks second.

The transfer here is to not only watch sports unfold, but go back and re-read sports analysis, observe team's seasons in the totality, with the knowledge of what happened but re-living the feelings of the moment.

Clippers Season Recap

I posted an article on Bleacher Report about the Clippers' remaining games and which games I thought they would be blown-out in.  A blow-out to me is losing by 15 or more points and definitely not covering even the largest NBA point spreads.

The article can be found here.

I made six picks about the Clippers.  

Clippers hosting Cleveland.  Lost 83-87.  DID cover spread.

Clippers playing at Detroit.  Lost 108-90.  DID NOT cover spread.

Clippers playing at Boston.  Lost 90-77.  DID NOT cover spread (was 8.5).

Clippers playing at Denver.  Lost 120-104.  Did not cover spread (was 14).

Clippers playing at Utah.  Lost 106-85.  Did not cover spread.

Clippers hosting Oklahoma City.  Lost 126-85.  Did not cover spread.

So for five of the six games they failed to surpass expectations and lost badly.  

They lost all four road games badly.

The first home game was very close, the last home game was against the fourth-worst team in the league.  

Anyways, I was 5-1 for that article.  The predictability of losers?  

I think that when teams that have quit play good, focused teams they really struggle and will give up, especially against the better defensive teams.  

Reading a Book about Day Trading

I've been reading a book about day trading and its really gotten me thinking about sports betting as a market, the spread as a "price", etc.  

I also had a very intriguing conversation with my Dad and we happened upon a great idea.  

Essentially my theory (which is not backed up with data yet) is that a team won't cover the point spread for ever.  A team might under-perform a long time if everyone is quitting or they are disorganized (applies more to football).  Now a team in college basketball might win 30 in a row (Memphis 2007-2008) but I can be damn sure they didn't cover the spread thirty games in a row.  

Because the spread relates to expectations instead of skill, the spread will grow and grow (what kind of growth?  interesting question) until it surpasses even the best performance of a good team having its luckiest night.  The Patriots went 16-0 bit didn't go 16-0 against the spread.  

So essentially, a Martingale style system betting against a team to cover the spread could very well make consistent money long term because of the impossibility of a long, long losing streak.  A team might go 30-0 but they won't cover the spread nearly that many times.  And the advantage of the Martingale system is that it doesn't require you to win more than you lose, it merely requires that you win before you run out of money.

Now even ten iterations of the Martingale system (starting on a ten dollar bet ) exceeds $1,000.  That is a pretty steep climb.  But I would love to see what the chances are of a team pulling off a ten game spread-beating run. 

I tried the Martingale system in roulette when I was younger.  Obviously, my results were mixed.  

But the Martingale system applied in a human-expectation system will have a natural counter built in because its humans who make the spread and they will over-expect.  Turning the behavior of bettors against themselves.  

Likewise, with enough statistical data, one could wait for a three or four game covering streak to start betting against that team to cover as a means of decreasing instances bet and decreasing the preceding "tail" of a run.  

APBR metrics board

I think these guys do valuable stats work but jeez....they are way to obsessed with numbers.  Basketball isn't a science with verifiable mathematics and elegant formulas.  Its a craft.  There is a huge difference, with Nassim Taleb discusses in his book Black Swan.  But they want  more and more numbers and quantifiable ways to discuss who is a "great passer" and who is an "elite passer" . 

It makes no sense to me.  They are obsessed with numbers and don't understand that its a craft to play and a craft to analyze.  Anecdotes and stories count just as much as numbers do.  

Are there certain situations where a team always wins?

I was wondering if there were situations where a team always wins.  Essentially, I mean where a strong team is at home against a very weak team.  A team with a winning percentage of over .800?  Playing a cellar-dwelling team?  Celtics vs. Clippers at home? 

Certainly road games are any less than predictable wins for the visiting team.  Most major upsets occur on the road (in the NBA).  In football I'd assume that is likely as well, but there is a lot of difficulty in determining a team's true skill.  

but perhaps there are instances where a good team hosting a really bad team on the end of a road trip has virtually no chance to win.  This would require some research but is very interesting.  

Conversely, perhaps really bad teams have a better chance of upsetting or covering the spread against a *really* good team than just a good or above average team.