Henry G Manson puts forward his curriculum
There is a rare moment of consensus in British politics right now. It’s not over the deficit, Europe or reforming the health service. It’s about teaching young people about odds in the classroom and Gove and Twigg are in agreement . If forewarned is forearmed then I think it’s a very good idea.
It set me thinking what should they teach? Gove can have these for free from me:
1. It’s about percentages not odds. It’s easier to think rationally about the chance of something happening (or not) as a percentage rather than a price showing a proportion of stakes returned. It’s straightforward to convert. Add up all figures in the fraction and divide the right hand figure by the total.
I’m surprised how many people think 3/1 represents a 1 in 3 chance. So 3/1 is 25% 8/13 is 62% and 1/10 is 91%. Thinking about percentages forces you to consider what can go wrong. It allows you to calculate multiple events occurring which are never as likely as the human brain suggests. If the above odds are accurate then the chances of all three coming off are 14%.
If you want to calculate the odds instead then add 1 to each percentage when multiplying and deduct 1 at the end. So a treble of 3/1, 8/13 and 1/10 is 1.25 x 1.62 x 1.91 then minus 1 making 2.86/1. Young people should do this exercise when thinking about the chances of getting the grades they need for each different college or university.
2. Understand the value of the market and what’s driving it. Bookmakers don’t make money from ‘predicting winners’ and coaxing the rest of us to back losers. Instead they aim to have a balanced book whereby their losses are spread evenly on all outcomes. Why? Because their in-built profit is in the price they offer. Typically the more outcomes to a bet, the worse value it is for the punter.
Don’t believe me? Using the conversion method above add up the percentages with a bookmakers for a 11 horse race, a 3 outcome football match or a 2 outcome tennis match. Take the 11 horse race in the 4.10 at Wolverhampton on Friday with William Hill. Thatâ€™s a 130% book. Meanwhile the 2 outcome UK Championship match between Mark Allen and Ricky Walden on Saturday was 105% with the same firm. You donâ€™t have to work as hard to get value when youâ€™re betting on 105% book because the bookie is taking less profit.
So seek our markets that are close to 100% as you can get using sites like Oddschecker.com or Besbetting.com that allow you to get the best prices per outcome with each firm. A current good political market to bet on for that has been the Scottish Labour Leadership that has been below 100% on a number of occasions meaning you could back all runners across the bookmakers and make a small but guaranteed profit.
Beyond this you should be seeking value where a 6/4 or 7/4 priced outcome chance is in fact an evens chance. There’s still a 1 in 2 chance you’ll lose the next bet but over the long-term you’re almost guaranteed to make money. Open up accounts with all the bookies and go after the best odds. It can make the difference to profit margins in the long-run. Bet with stake levels so that you can be around for the long-run.
Then consider what is driving the odds. Bookmakers make an assessment then the weight of cash drives the direction. Of course the market can get things wrong and punters over-react more often than under-react or bet more with emotion and for enjoyment than objectively. Never ever back England to win a football match at home. The odds are always much shorter than the true chance. Don’t be afraid of swimming against the tide and challenging assumptions and the perceived wisdom of the day. Why learn French at school when you can be tutored in Mandarin outside of class? Is that really so controversial?
3. The biggest power you have is your ability to be selective. Those poor bookmakers have to price everything up these days from whether Ken Clarke falls asleep again in next year’s Budget, to who will be kicked out of X Factor and what will be the half-time score between Forfar and East Fife. They have huge resources at their disposal, amazing data and enormous experience. But you don’t have to take them on in all of these markets. Fewer bets often means more profit in my experience.
Bookmakers inevitably make mistakes and overlook factors. Your job is to find out where they are weak and where you are stronger. If several players of your non-league football team has come down with food poisoning then find a bookmakers to bet against them. If a new development hasn’t been fully factored in to thinking then ask what difference it could make. Mike’s example over legislating for fixed term parliaments and when the next election will be called is a good example.
If you can’t explain to yourself where you have an edge or what the bookmaker or market has overlooked then it’s unlikely you’ve got value, merely an opinion. Restrict your betting to where you have an advantage. No point throwing away your value on some bets with junk bets elsewhere because you are bored, impatient or greedy. This discipline that will limit your losers is as crucial as your ability to spot winners.
In life the lessons are the same. Identify your niche and work damned hard at it. Make assessments of the world as it is, not as youâ€™d like it to be. Don’t be a generalist betting on all and sundry or following the tide. Make your own judgements and back yourself. If it comes off then you can win big.
HenryG Manson @henrygmanson