what you see depends on where you are standing

Birds of a Feather.


Perception is an inevitable consequence of our active engagement with the environment. In the specific example of markets, people who actively engage with them are typically confronted by situations that are ambiguious and complex and in order to overcome the resulting level of disonance, they must choose to either walk away or to come up with explanations about current market behaviour and forceasts as to what market is going to behave like in the future. The latter process will invariably involve them making inferences about market prices at a particular moment in time, whilst also seeking out the hidden causes that lie behind sudden market moves. In their attempt to weather the storm, they will often build models and with these they will extrapolate from past information and ascribe probabilities to future event outcomes. In order to bolster their self-confidence, they may also even seek out fellow travellers on digital platforms, like twiter, which feed the behavioural quirk of homophily, and this will provide them with a platform upon which they can have their hypothesis reinforced rather than challenged.

13:50 Sandown December 7 - NUBE NEGRA One of these days somebody is going to get scalped, but for now, the lay the Skelton drifters mob collect once again.



Aufer caput, corpus ne tangito.


Political Betting Markets


In their article "The behaviour of betting and currency markets on the night of the EU referendum" Linton and Auld found that - " The betting market took 2 hours to reflect the information contained in the vote whereas the currency market took over 3 hours. There was a close to risk-free arbitrage opportunity in the two markets. The arbitrage result suggests that a violation of EMH in the weak form has occurred. " The mere mention of risk-free arbitrage always pricks up the ear and it has become very clear that arbitrage between GBPUSD and the Overall Majority betting market on BETFAIR has picked up considerably around the 2019 UK General Election with considerable spoofing noted in the Overall Majority betting market.



Aufer caput, corpus ne tangito.

There is little doubt that we have now come through a period during which people simply had an over-heightened expectation of what it was that political betting/prediction markets could and would deliver. In general, and certainly in relation to the two biggest and most liquid events of recent times - Trump and Brexit - observed trader behaviour in these political betting markets deviated starkly from prediction market model expectations. Bayes' rule, which holds that rational agents will always update their beliefs on receipt of new information was simply not followed. More often than not, traders were seen to be swayed by unconscious cues in the environment and to be prone to every cognitive bias in the book - as was evidenced by continual patterns of herding; over and under-reaction to breaking news and strong evidence of a collective confirmation bias at work, whereby a majority of traders were selectively sampling information in order to support their own preordained hypotheses - which were themselves based on incomplete information and indeed, often attended to irrelevant counterfactual information.

Looking forward to the 2019 UK General Election, and there are many people who believe that traders in the FX space are strategically manipulating the Overall Majority Betting Market on Betfair. They aren't. The political betting market on BETFAIR as to which party will obtain an overall majority is simply tracking the poll of polls and that is currently telling us that Tories are on track to achieve an overall majority. No more nor less. If the polls call it correctly this time, the betting market will simply follow suit. There is no magic. No wisdom of crowds. As arbitrageurs it is our job to strategically manipulate human biases - that's all. See you on the other side of the trade.



Aufer caput, corpus ne tangito.



Aufer caput, corpus ne tangito.


Blinkers Off



Listed UK Gambling Companies


Those that have followed our tracking of the listed UK gambling companies over the past eighteen months, will have seen that 2019 represented a significant year of recovery. With those that bought around the time of the 2018 lows richly rewarded with significant gains - despite a recent wobble in response to a UK regulatory threat. GVC Holdings leads the way - up 42%.


Companies Year Low Current Price Change (%)
GVC H 507 861 42%
Flutter E 5525 8892 38%
William Hill 132 182 28%

People are averse to the nuances of ambiguity or ambivalence, and this leads them to seek out experiences that underpin homophilic preferences. All digital platforms exploit the notion of homophily to provide experiences that ensure that previously held identities and positions are reinforced and concentrated rather than challenged or hybridized. Birds of a feather flock together.

Our content must be used for informational purposes only.

In all problems of inference the key is to be able to take account of our total state of knowledge. Goals, beliefs and behaviours into a meaning sytem. statistical certainty versus vague prognostications.