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Thursday, 29 May 2014

Lawro - Smarter than Goldman Sachs?

Last year I had a look at how you would fare betting using Mark Lawrenson's predictions where I was surprised to see you'd end up in profit.  I also revisited it earlier in the season and found he was still in the black for the 2013/14 season.

Now the season's done, it possible to look to see how he performed over 380 games (well, 371 as 9 games were rearranged so don't have a prediction - or at least one made just prior to the match).  Figures use Lawro's predictions collated by My Football Facts, and odds data for Pinnacle (usually the best odds provider) from Football-Data.co.uk
I feel a bit daft looking at this considering I did the analysis last season and he was comfortably in profit last season as well but I chose to ignore it.

There's no fancy stats behind Lawro's predictions, an example of this can be seen in the fact that for 17 of Chelsea's 19 home games Lawro went for a 2-0 win (1 other v Cardiff he pushed the boat out and went for 3-0, with the only points Lawro expected them to drop at home were defeat against Man City).

This means that things such as Man Utd's expected position based on his predictions looks a bit daft, but was probably built on the assumption that things would 'eventually' come good for them so he keeps predicting them to win, similarly in almost any individual game you would probably expect Man City to win but that gives you a predicted points total far above what is really likely.
Lawro only predicted 1 win for Cardiff over the whole season
It's easy to mock Lawro but he's proved again that he's capable of turning a profit over an extended period of time.

With the World Cup only a few weeks away there have been a rash of pre-tournament predictions including one from Goldman Sachs which gives Brazil a 48.5% chance of winning compared to 25% from the bookies (or even less in reality once margin is taken into effect - total probabilities from bookies odds will be over 100%).
Goldman Sachs comparison of their probability and bookie odds
The Goldman Sachs document goes into more detail about the level of modelling/simulation etc., that has taken place but for me giving a nearly 50% chance is ridiculous in a 32 team tournament where a side needs to get out their group then be victorious in 4 sudden-death games

Looking at their % likelihood of getting past each stage, Goldman Sachs have Brazil at 91% likelihood of getting to the semis assuming they get to the quarters and an 80% chance of winning a final if they were to make it that far.

Ultimately either through modelling, gut feeling or a mix of the two, profitability comes from finding value that the market hasn't appreciated, but there's no point in a complicated model if what comes out at the end seems unreasonable, although this paragraph towards the end made me laugh considering the amount of description put into the describing the workings behind the model.