Fooled by Randomness

Quick Pick:
Kansas City +6 - No comment

Currently, I am reading a very interesting book called Fooled by Randomness written by Nassim Taleb. The book is about "how we perceive and deal with luck in life and business". It contains a story about two people, one who got lucky in the stock market and 'explained' why his move was a 'smart' one after the fact. The other character who recognized randomness in the market, played it safe, and although never made huge amounts of money, never lost it all as the first character did once randomness kicked in. One got lucky period and the other had some knowledge, played it safe, and was well in the long run.

The same can be said with NFL gambling.

Say I create a methodology that is tested for 10 years to be 65% successful (which I have). I can then create a story behind the methodology explaining why it is a good strategy (something like the spread is overreacting to recent games or giving too many points to home favorites) to back up this strategy. Reality is that things change and so does the NFL. One should always play safe and not overreact to success. A method (even one very hard to replicate) that gives 65% for 10 years may yield 40% in the next 2 years, at which point anyone would go broke if they gamble at the same rate. In general, one can find even simpler methodologies that may be profitable like betting home underdogs, or betting against the line movement but you may have to wait 2,5, 10, or even 20 years to hit above 53%.

Part of the reason I liked having a computer make the picks is because there is no BS in why a pick is so good, it's good because the data says so. Explaining why a pick is such a good one is all boloni and if you hear an expert on the radio or the internet explaining why Kansas City is a great pick on week 17 over the 6-point favorite Jets, block your ears and bet with your instinct. The best part I have read from the book so far is when people try to explain why such a decision was a mistake. It is only a mistake if you catch it before making the decision, after the fact is too late. It's like the senators who voted for the war and are now campaigning on how the president made such a mistake in going to war. There is a saying in Puerto Rico: "It is easy to guess a dog is male after you have seen it's testicles", but can you guess with certainty before?

This is not a goodbye speech nor I am giving up. I still believe that a statistician of my caliber can beat the less-educated bookies in Vegas. All I am saying is that I will not be "fooled by randomness" by explaining why my Tampa Bay or Denver pick last week was a mistake. I will also not try to convince anyone that a pick is a gimme or certain, at most it would only be 65% certain. I will also continue my search for better predictors of the spread and superior NFL betting strategies.

I only have 1 pick for this week since most predictions from the model are not applicable due to teams that have already clinched the playoffs. In the past 10 years, this strategy has earned 62% and it only applies to one game in week 17. That is, Kansas City +6.

Until the playoffs,


Week 16

NFL Point Spread Picks:
Tampa Bay -6 - San Francisco is weak and inexperienced
Philadelphia +3.5 - Going against ESPN who chose NO to cover
Denver +9 - I wouldn't bet on this one, but it is what came out
Indianapolis -7 - Indianapolis knows what to do before entering the playoff, gain momentum.

Last week the model did not perform well going 2-3 ATS on the 5 yellow picks posted. Overall, the record is now at 58% for yellow picks and 60% for green picks since I started coloring favorite picks on week 9. This week I have built a more robust model I will use to verify the current model's picks. I have tested it and it does as well as the current pick and when both pick the same team, we get a 2% improvement when predicting games from 2000-2007, going to 55% for all games.

The purpose of statistically trying to predict games should be to find opportunities and not to try to predict ALL games successfully. I have found situations in which 30 and 40 games have been predicted correctly with more than 70%.

This week we have one pick above 60% and 3 yellow ones. I have excluded the Minnesota game since Collins has only played 2 games and the data used includes games where Jason Campbell played. Good luck everyone!

NFL Picks Week 16
<%image(20071221-NFL2007_week16c.jpg|668|459|NFL Picks week 16)%>

Week 15

NFL Point Spread picks:
Buffalo +6 Swimming against the current, it's not easy
Houston +1 Home underdog, same record, I like it.
NY Giants -4.5 My computer doesn't even know that Jason Campbell is not playing!
Indianapolis -11 I don't like hot streaks, but boy did they look good on Sunday!
Jacksonville +4 Tough pick, but I think JAC wins the game.

I started categorizing games into "green" and "yellow" since week 9. The purpose was to illustrate the success rate of the model for certain circumstances in which the game at hand fell into. Green implying a significantly good success rate, currently defined above 60% , and yellow an OK success rate currently defined at 55%-60%. Since then, the yellow picks have had a 8-4 ATS record and the green picks a 5-3 ATS. Overall, that is 13-7, 65%, huge right? Well, I am not convinced since it is only 5 weeks and anyone can get lucky.

This week, there wasn't a game that I could categorize as "green" even though the top one has a 61% confidence. Although I should not pay attention to wisdom of the crowds, I found at that 75% picked Cleveland to cover. I have been tracking these percentages and some weeks the crowd is right, like last week, but sometimes they are totally wrong. There is a scientific paper that 'proves' that betting against the line move is a profitable strategy giving about 54% within some time frame of games the statistician looked at. Meaning that if the line moves one way, you bet the other. Well, I am not changing my pick but I will not categorize it as green, Buffalo +6.

Here are the NFL week 15 computer picks:
<%image(20071211-NFL2007_week15.jpg|639|454|NFL week 15 picks)%>

Week 14

NFL Computerized Statistically robust picks:
Cleveland -3.5
Arizona +7
Philadelphia -3
Washington -3

Another week with huge and unexpected SUCCESS. Carolina and Pittsburgh were both picked last week with 'yellow' confidence. These "yellow picks" have covered the spread 4-0 in the past 2 weeks. Also the highest green pick, last week was San Diego, also covered for the 4th week in a row! Still, the model is not and probably will never be perfect and disappointed me with Cleveland's loss against Arizona.

This week I have some good picks for you as well. For those new readers, here' a quick explanation of the table below. The Estimate column is an estimate produced via a regression model of team rankings, off/def yards, and home field advantage. The team of record is the home team, which means negative favors the home team.

The success of these picks is cross-tabbed by 5 categories of the Vegas spread and 5 categories of the difference between the prediction and the Vegas spread. The Total Games column represents the number of games that have fallen into this category since 2002 and the percent is the success rate of the model for this cross-tab. For example, the MIN @ SF game falls into the "vegas spread is more than 6 points for visiting team" and "estimate is favoring visiting team more than 6 points than the spread" and this category has had 3 games, 2 of which have been predicted correctly (hence 67%).

I have not chosen Minnesota or Indi since total games (sample size) is very small. Here are the NFL Picks of the Week 14:
<%image(20071205-NFL2007_week14b.jpg|625|410|NFL Week 14 Point Spread Picks)%>