what you see depends on where you are standing

Opening Shots

Haydock 14:55 River Alwen 8/1

Unpredictable Environments

The brain is an inference machine tasked with prediction error reduction in the face of a ceaseless stream of ambiguous exogenous and endogenous information. Inferential strategies are not made in a vacuum, but rather, they are moulded by factors such as time pressures (and the accompanying search for structure), the affective set of the agent (mood), situation/context, prior experience, the complex interplay between short and long term memory, and the cues for recall that are triggered by events in the current environment. Most people commit serious errors of inference, through relying too much on such things as the representatitive heuristic; the anchoring heuristic; the availability heuristic and the simulation heuristic.

Very little has been written about the extent to which betting exchange price volatility is driven by uninformed punters simply disagreeing about the significance of publicly available information. The greater the number of uninformed punters trading in a betting exchange market, the greater will be the dispersion of beliefs about the publicly available information, and the greater the excess volume and excess volatility. The most intelligent traders capitalise upon this fact by placing their trades far away from the inner quotes, whilst the most dumb traders take the price on offer in the false belief that they have an information advantage over the person offering them the quote. 9 times out of ten they don't and the betting market moves against them. They are taken to the cleaners by the betting exchange liquidity providers who act strategically based on a knowledge of betting market psychology and on the back of their market power = the sleight of hand merchants = and their confidence is quickly undermined when the price starts to move against them in a dramatic fashion.

Two recent winners from the Skelton stable Monsieur D'Arque and Prussia With Love demonstrate the extent to which uninformed punters face signal extraction problems (they are incapable of seperating the signal from the noise) and highlight the extent to which they are susceptible to overreacting to the sleight of hand trades that pop up in the order flow - believing them to be the actions of informed traders/insiders looking to capitalise upon their information.

The wild variation in the betting on the Dan Skelton trained runners.

The wild variation in the betting on the Dan Skelton trained runners.

The Usual-Suspect Experts

Nate Silver and his famous "Bernie is in a highly viable position tweet."

Aufer caput, corpus ne tangito.

Blinkers Off

USA - Presidential Election 2020 - Next President

The implied probability on Betfair that Donald Trump will win the Presidential Election in 2020 is 32%, down from 50% two months ago. We appear to be witnessing at first hand the implosion of the Trump presidency - but there remain some who believe that it is too early to write Trump off and that the incumbent will benefit from exploiting what has been dubbed in the media cancel culture.

OutcomeImplied Probability

Source: Bettingmarket.Com Analysis. 22/07/2020.

" Investing is a game of skill – meaning inferior players can’t expect to be above average winners in the long run. But it also includes elements of chance – meaning skill won’t win out every time. In the long run, superior skill will overcome the impact of bad luck. But in the short run, luck can overwhelm skill, and the two can be indistinguishable." (Howard Marks)