Announcements of expected moves, like yesterday’s break in the 17 consecutive interest rate hikes by the Fed, are often accompanied by dialogue to the effect that ‘this by no means indicates that the end is near.’ I remember the ‘once is enough’ mantra that Larry Lindsay was always dispatched to repeat when the Fed began to increase interest rates in the past. One is also reminded of the Hungarian saying ‘the more they deny they are going to do it again, the more I count my silver.’The last two Fed announcements, which were seemingly bullish but were greeted with revulsion and bearish reactions in the news, bring to mind the ‘beaten favorite’ syndrome at the races — it is always good to consider betting on a beaten favorite after they lose, and their odds go up. The overnight move, after seemingly disappointing reactions to a Fed announcement is a horse from that same stable, frequently opening up, after the bears and the news boys beat it down in the favored race the previous day.

The Harness Eye, a racing paper, gives statistics on the money made by betting on beaten favorites. It will be interesting to see the outcome of today’s beaten favorites tomorrow.

Steve Leslie replies:

Your post on Good Odds made me think of corollaries.

One in particular, is in professional football. Sports bookmakers will tell you this is by far the most popular sport that the public wagers on and the most profitable for the casino. Year in and year out, pro football pays for the entire year for the casinos other wagering activities. As an anecdote, bookmakers generally lose big in baseball.

An interesting factoid about the wagering public is that they have a tendency to bet on the favorite, so they are consistently laying points. In a sport, where spreads are tight and teams are evenly matched, the results of the game usually hinge on intangibles such as turnovers and injuries. Therefore betting on a favorite can turn out to be a losing strategy in the long run.

Also, one other interesting fact about pro football is that the performance of a team last week is totally irrelevant as to what is going to happen this week with respect to the posted spread. So gamblers tend to fall prey to Gambler’s fallacy. They will bet against a team, because the team had a bad week and then find themselves on the losing end of the bet. This happens so often in pro football that the term “On Any Given Sunday” was invented.

This force is so powerful that many handicappers will never bet the spreads in the pros choosing instead the lines where it it at least more statistical. Or they will leave the pros alone and concentrate on college football, especially the smaller conferences such as the Mid American Conference or Big Sky where information is not so readily available and therefore edges can be found.

In the end, sports wagering is very difficult to win at and football is the most difficult of all, so if you do decide to wager, and we are a gambling public, keep the bets reasonable, accept the fact that you will probably lose your bankroll by the end of the year, and only bet for entertainment.





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