I was given a gift the other day. And as soon as I opened it, I knew it was special.
It came from a reader, in an e-mail. His note was simple, along the lines of "Thought you might enjoy this."
He was right.
The single coolest trend in sports betting is the advancement in the use of algorithms. For the past decade the Strip has been filling up with reformed financiers and ex-accountants and actuaries who are applying all the math they spent their lives perfecting to predict who will win and by how much. Lately the bookmakers, like the guys doing in-running wagering at the M and the financiers in London who recently started a sports betting hedge fund, have been trying it too.
It makes sense, then, with the World Cup just two weeks away, that the brightest minds at the biggest bank on the planet would do their own quantitative study of who will win that golden FIFA trophy. What else are they going to do with all that knowledge? (Spare me any moaning about how these Richie Riches should be spending their time trying to make sure we don't suffer another global economic meltdown. If you say you don't blow off steam at work, you're lying.)
The report -- which is what my very kind degenerate reader had e-mailed me -- is officially called "A Quantitative Guide to the 2010 World Cup." It was put together by bankers at JP Morgan who are based overseas. I e-mailed Matthew Burgess, whose name is at the top of the list of authors, but he declined my request to be interviewed. And, while the analysts included a disclaimer on the title page that says "This report should be taken with a pinch of salt," it's a brilliant look at how to think about the tournament. And, as the authors also wrote, "an interesting exercise and ideal opportunity to lightheartedly explain Quantitative techniques."
To build their model, the bankers used data that was readily available to the public, no differently than what they do when determining a company's valuation. They based their results upon the following factors (Warning: If you don't have the stomach for lists and long division, skip to the end now to find out who will win the World Cup. I won't be offended):