Long time, no blog – Week 12

It’s been a while since I’ve blogged, so it’s time to post the portfolio results. Since we’ve last chatted the San Diego Chargers have waged some type of personal vendetta against the portfolio and have attempted to single-handedly sink my returns. They are on a 5 game losing streak. Throw in the bye week and the Chargers have not posted positive returns since September. I’m starting to think that San Diego really does mean “a whale’s vagina”.

Look at that, the blog has entered the new millenium with an embedded video. We’re breaking new ground every day.

Unfortunately, it’s not looking good this week for the Chargers as they play Jesus’s brother from another mother, Tim Tebow. Here’s where you might be saying: “why are you complaining, the Packers are 10-0 and you must be cleaning up with them”. Yes and No – The issue is the same as it was for New England in 2007: the Packers have been heavy favorites in most of their games. Here are their last 4 games: -950, -750, -260, and -460. The total return from those 4 games was 0.86. It’s in the black so I’m not complaining but it takes 5 wins like that to cover one loss.

The Packers and Saints both have very tough match-ups this weekend against the Lions and Giants respectively. However we aren’t necessarily getting returns that reflect the strength of the opponent as the Packers are favored by 6.5 (-260) and the Saints are favored by 7 (-300).

Here are the results from the past weekend:

Green Bay: + 0.105

New Orleans: Bye

San Diego: -1.00

Total for the weekend: -0.895

Portfolio Return since Inception: -1.38 which equates to -15.6%

Green Bay: 2.72

New Orleans: -0.18

San Diego: -3.91

Dow Jones Return since portfolio inception 2.9%.  Inception open: 11000.  It is at 11,320 right now.

To be fair, the Dow had a great run up over the past few weeks and was quite a bit ahead of my portfolio.  However it has faded, just like the portfolio.

Week 5

The portfolio keeps chugging along.  Buoyed by great starts by the Packers, Saints, and Chargers the portfolio is up 17% since inception to date. Maybe that number is surprisingly low…. after all these three teams combined have only lost two games this season and only one game that they could have won (The Packers and Saints played each other for the other loss).  But each of these teams have been greater than a 4 point favorite every week with the exception of the Chargers/Patriots game which the Chargers lost as an underdog.  Picking the favorites to win every week does not make for a splashy resume, but for the time being, it is a successful resume.

Here are the results for the past weekend:

Packers +0.385

Saints +0.357

Chargers +0.526

Total for the weekend: 1.268

Overall here is where the portfolio stands:

Portfolio Return since inception: 2.37 which equates to 16.9% ROI.

Green Bay: 1.75

New Orleans: 0.52

San Diego: 0.09 (Positive territory!)

Dow Jones Return since portfolio inception 4.7%.  Inception open: 11000.  Today’s close was 11518.

The Dow has closed some ground on the portfolio by breaking back above 11,500 for the first time in a few weeks. Hopefully both the portfolio and the Dow continue to improve.

Another interesting week in the moneylines, I was able to get a bet down on Green Bay at -15 (-950). There has been a change in how the ‘Books are doing moneylines. Previously you could not invest in a game where the moneyline was much above 10.  This year all of that has changed and they are putting out moneylines for much larger spreads.  I wonder if that says something about the strength of the strong teams this year. For this week here are the possible returns:

Green Bay: 0.11 (-950 on -15 over the Rams)

New Orleans: 0.435 (-239 on -4.5 over the Buccaneers)

San Diego: Bye

Thanks for reading

Week 4 results

I didn’t get a post out last week, before the weekend. I’m blaming kid’s soccer, Indian summer, Badgers/Nebraska, the Packers, and the Brewers.  There was too much sports goodness going around Wisconsin last week and I didn’t get around to posting.  Not that it’s a big deal, the investing strategy runs itself at this point.  The routine was the same: invest in Green Bay, New Orleans, and San Diego.  Here were the possible returns:

Green Bay: 0.17 (-600)

New Orleans: 0.33 (-300)

San Diego: 0.31 (-320)

The Green Bay game was interesting in that the spread was 12.5.  Typically moneylines are not available when the spread is over 10 points.  So it was a nice surprise to be able to invest in that game.

It ended up being a really good weekend.  All three teams won for a total return of 0.81. It’s nice to have the portfolio break above 1.0 for the first time this year. We can suffer a down week by one of the investments and still be in the black. Here are the following YTD returns for the portfolio along with the Dow Jones:

Portfolio Return since inception: 1.10 which equates to 10.0% ROI. ROI is calculated by dividing 1.10 by the number of games in which we were invested: 1.10/11 = 0.10

Green Bay: 1.37

New Orleans: 0.163

San Diego: (0.44)

Dow Jones Return since portfolio inception (3.1%).  Inception open: 11000.  Today’s close was 10655.

Thanks for reading

Week 3 Results

Just a quick post with the portfolio results from this week.  I’m in the black for the first time this year.  The Packers and Saints both won today for a total return of 0.53 + 0.5 = 1.03.  On the year that puts me at 0.29 (3.6%).

I’m going to add something to the blog: I’ll compare my portfolio to the Stock Market over the same time period. I got this idea from one of the BadgerBets loyal readers and commenters: Big ‘Ern. For simplicity I’ll use the DJIA (Dow Jones Industrial Average). Most of the public considers the DJIA a measure of the health of the stock market, and you are considered a good professional investor if you can produce returns that consistently “beat the index” (produce returns at a higher rate than indices such as the DJIA and S&P 500). On Tuesday, September 6, which was the week that I started the portfolio (i.e. the first week of the NFL season) the market opened at 11000 even.  That’s good, I may be able to remember that number througout the year. The close on Friday, September 23 was 10, 771 so the market has lost 2.1% over the same time period.

Portfolio Return since inception: 0.29 which equates to 3.6% ROI. ROI is calculated by dividing 0.29 by the number of games in which we were invested: 0.29/8 = 0.036

Green Bay: 1.2

New Orleans: (0.167)

San Diego: (.75)

Dow Jones Return since portfolio inception: (2%)

Week 3

For the first time this year I won’t be able to invest in a game.  The Chargers/Chiefs line is Chargers -14.5 and no moneyline is available through my broker.

Last week the portfolio was down 16% due to the Chargers expected loss to the Patriots.  One encouraging sign from the game is that the Chargers were in the game until the 4th quarter. But New England puts so much pressure on their opponents to play a flawless game and the Chargers were far from that. They couldn’t score in the red zone and they had a killer fumble in the second half that allowed the Pats to ice the game. Somebody can beat the Pats, but it is going to take an almost perfect game.

The Packers tried to lose the game to Carolina but Rodgers, and the passing game was too much for the Panthers, even with Cam Newton making the D look terrible.  And the Saints beat the Bears handily.  There was a point at about 12:45 pm CST where the Packers were down 13-0 and the Saints were down to the Bears where it looked pretty bad for the portfolio. But NFL games are 4 quarters for a reason.

For this week, here is where we stand for possible returns:

0 – Chargers/Cheifs (-14.5)

0.52: Packers -190 Bears (-3.5)

0.5: Saints -200 Texans (-4)

Both of these games will be tough.  It’s a little surprising to see the Saints favored by 4 points, based on how well the Texans have been playing.  The Packers should beat the Bears but this game will be ugly. The Bears seem to make every game ugly.

Thanks for reading

Week 2 – Stick to the system

Here are this week’s potential portfolio returns:

0.20 for Green Bay -500 (-7) vs. Carolina

0.33 for New Orleans -300 (-6.5) vs Chicago

2.55 for San Diego  +255 (+7) vs New England

This is a good test week for the portfolio. If left to my own prognosticating I would not pick the New Orleans game or the San Diego game.  Chicago looked good last week in dismantling, what was thought to be, a good Atlanta team.  And San Diego did not look good against the Vikings while New England looked almost unstoppable against Miami.

This is all part of the deal.  I do think New Orleans will beat the Bears, but it doesn’t matter, that game would be selected regardless of what I think right now.  New Orleans were selected before the year and it’s important to stick to the system. With regards to the Chargers if San Diego were able to pull off the win it would be a huge boost to my returns. One of the primary advantages of the system is that is removes one week biases from your thinking.  New England got upset by the Browns last year, and nobody predicted that. With the NFL trying to pick one game at a time is a losing proposition. As the saying goes: “They don’t build casinos out of sand”

One more note: At this point in the season we don’t know very much, so the games look riskier. Atlanta may be terrible, Chicago mediocre, and New Orleans above average.  We don’t know the order of teams right now.  The same goes for New England/San Diego. Now that I’ve sufficiently eased my pain over this week’s portfolio, I’ll let you go.

Thanks for reading

 

Results – 9/11/2011

It was a negative weekend for returns, but that was somewhat to be expected since the Saints and Packers played each other.   Had the Saints won it would have been a positive weekend, but the Packer fan in me is willing to accept a bit less in returns for a head-to-head win against a strong conference rival.

The Chargers played a sluggish first half before putting together a couple of second half drives to put away the Vikings.  The Vikes look like they are going to be bad on offense.  Peterson looked good but McNabb didn’t do anything to move the team. The Vikes only scored 17 points against what was not thought to be an exceptional San Diego defense and 7 of those were on Harvin’s opening kick off return. The return was funny in one aspect: All preseason the pundits have been picking San Diego to be much improved. Part of their rationale was that the updated kick-off rules should make it so there would be more touchbacks. More touchbacks means San Diego’s horrible special teams wouldn’t have to attempt to cover so many kicks.  Well, so much for that. Harvin took the first kickoff of the season back for a TD.

Here are the results:

Packers: 0.476

Saints: (1.00)

Chargers: 0.25

Week Total: (0.274)

Season Total: (0.274)

Here are next week’s lines.  I’m still trying to figure out when is the best time to invest on a weekly basis. Right now the moneylines are not available so that makes it easy.

Saints -7 Bears

Packers -10 Panthers

Chargers Unknown Patriots – I’m assuming the line isn’t out yet since NE just played last night.

All of the lines are courtesy of sportsbook.ag

Thanks for reading

Weekend of 9/11

Here are the investments for this week:

Packers: -210 (Return: 0.476), spread is -4

Saints: +175 (Return: 1.75), spread is +4

Chargers: -400 (Return: 0.25), spread is -9 against Minnesota

A couple of notes:

1. My model are based off of -200/+170 for a -4 spread so it’s good to see that the returns are coming in close to the model.  A little better for the underdog, a little worse for the favorite.  This is something I want to keep an eye on this year.  The model was right on for -9 (-400), again, that’s good to see.
2. On a game note: it’s interesting that the Pack is favored by that much.  NO is a good team, and it was thought that they did well in Free Agency.  Plus the Packers could not stop their offense a couple of years ago in NO. But the game is in Green Bay and in the NFL home field is worth 3 points, so goes the prevailing wisdom.  -1 seems about right for this game
3. The Chargers spread seems about right.  I think the Vikes will be better than people think.  By “people” I mean Packer fans. I’m excited to watch the game
4. I just realized the true benefit of investing like this: I now have 3 teams that I really care about.  3 times the rooting interest on Football weekends. I got shorted one game because the Saints/Pack but I’m really looking forward to this season. Cross your fingers, sacrifice a live chicken, pray to Joe-Boo, etc… that Brees, Rivers, and most of all, Rodgers stay healthy this year.

Thanks for reading.

2011 Portfolio

It’s time to identify those teams that are going to produce returns this year.  I don’t have a lot of rules to go by in picking teams for my portfolio but there are two that I’ve identified:

1. Pick teams that Vegas is predicting to win 10 games.  As we’ve talked about in the last couple of posts, teams that win 10 games have a 77% chance of returning money. Also if we look at the top 10 teams, based on returns, over the last 10 years: 74% of them won at least 10 games.  So 10 game winners produce higher returns as well as being less likely to produce negative returns
2. Pick teams that did not finish in the top 10 in returns from the previous year.  The top 10 teams, on average, finish with fewer wins the following year.  And rarely repeat in the top 10 in the following year.

At the end of this column I’ve posted the returns from last year. It isn’t suprising that the Buccaneers and the Bears were the top two in returns. Both teams outperformed expectations last year, as a result they were able to win games as underdogs and produce multiplied returns. Two suprises though were that the Packers and the Colts both produced negative returns.  This is because they were both expected to be very good last year.  As a result both teams were heavy favorites in many of their games. Remember that when a team is a 7 point favorite (-7) they will only return 31% of the wager.  So winning when you are heavily favored only return 0.3 whereas losing returns -1.00.

Now on to picking the portfolio.  I am going to follow Warren Buffet’s right hand man, Charlie Munger’s advice on diversification: don’t do it. There are, on average, ten 10 win teams every year. I’m not trying to prove anything as a fortune-teller, I’m simply looking for value, so I’m not trying to pick them all. This year, my rules dictate that I select a portfolio of 3 teams.  I would love to find more teams for the portfolio but no other teams match my selection criteria.

As you’ll see from the 2010 top 10: perennial favorites as the Steelers, Patriots, and Ravens won’t be in the portfolio. The Jets and Falcons will not be selected either. Only three teams match my criteria, therefore the portfolio will consist of the following teams:

1. San Diego Chargers
2. New Orleans Saints
3. Green Bay Packers

These three teams were selected for the following reasons:

1. They finished outside the top 10 last year in returns
2. They are predicted to win 10 or more games this year
3. San Diego and New Orleans are flying under the radar this year due to last year.  San Diego missed the playoffs entirely due to horrendous special teams and the Saints got beat in the first round of the playoffs by the Seahawks, which were a 10 point underdog.
4. They have fantastic QBs.  Although not a predictor of financial success, a good QB is a critical component to on-the-field success and therefore necessary to get to 10 wins

To be honest the Packers scare me and I wasn’t going to select them even though the match my criteria. I’m concerned that they are going to get unfavorable spreads this year because they are a public team and they won the Super Bowl last year which gives them even more favorable buzz.  Good buzz means bad spreads and bad returns. Their phenomenal playoff run made everybody forget that they were lucky to make the playoffs last year.  They would have fit perfectly with the Chargers and Saints had they not gotten hot at playoff time (or as Packer fans like to say: Played up to their potential). At least the Eagles went crazy in free agency and took some of the NFC attention away from the Packers.  So I can hope for decent spreads at the beginning of the year.

There are two more items to consider:

1. Investing goals: When you buy a stock you will likely not hold it forever.  There is a price target that will produce a desired return.  At that point you sell the stock.  The same thing goes here.  The average return for 10 win teams was 2.0 (12.5% return).  I know there is some sort of financial calculation, based on the risk of the investment, for how much return I should require.  If I find my financial accounting text book, I’ll look that up and calculate it.  For now I’m going with 2 times the average, or a return of 4.  If any team in my portfolio reaches a return of 4 throughout the season, I’m “selling” that team.
2. Head to head match-ups:  This sounds kind of stupid, but I’m going to play it both ways. The entire point of this exercise is to try and remove human judgement from the process as much as possible. Therefore, for this week’s game between the Packers and the Saints, I’ll be selecting both teams. Which basically reflects my opinion anyway.  I have no idea who is going to win.

I’ll be tracking my portfolio in this blog.  If I get ambitious I’ll create a website that will track the returns of every team in the NFL.  Thanks for reading

	Team	Wins	Return
1	Tampa Bay Buccaneers	10	6.29
2	Chicago Bears	11	6.15
3	New England Patriots	14	6.15
4	Atlanta Falcons	13	3.95
5	Pittsburgh Steelers	12	3.36
6	New York Jets	11	2.75
7	Jacksonville Jaguars	8	2.09
8	Kansas City Chiefs	10	2.06
9	Oakland Raiders	8	1.44
10	Baltimore Ravens	12	1.36
11	Philadelphia Eagles	10	1.28
12	Washington Redskins	6	1.00
13	St. Louis Rams	7	0.28
14	Miami Dolphins	7	-0.04
15	New York Giants	10	-0.10
16	New Orleans Saints	11	-0.29
17	Seattle Seahawks	7	-0.31
18	Green Bay Packers	10	-0.60
19	Indianapolis Colts	10	-1.11
20	Detroit Lions	6	-2.47
21	San Diego Chargers	9	-3.25
22	Arizona Cardinals	5	-3.54
23	Tennessee Titans	6	-4.06
24	Dallas Cowboys	6	-5.08
25	Cleveland Browns	5	-6.15
26	Cincinnati Bengals	4	-6.25
27	Houston Texans	6	-6.48
28	Buffalo Bills	4	-6.66
29	San Francisco 49ers	6	-6.79
30	Denver Broncos	4	-7.32
31	Minnesota Vikings	6	-7.46
32	Carolina Panthers	2	-12.38

To calculate dollars, multiply return by single game wager for total season dollar return

More excellent Charlie Munger Quotes: http://www.gurufocus.com/news/119820/30-of-charlie-mungers-best-quotes

Citation – public teams

Just a quick note: when I referenced the public teams I did not give credit to the originator of this theory.  Chad Millman from ESPN is where I first heard about public teams.

The post has been updated with a citation.