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Value Betting vs Value Investing

By Ankur Shah. Originally published at ValueWalk.

Value Betting vs Value Investing

The comparisons between gambling and investing are unavoidable. They both involve choice and risk. However, when it comes to the differences between the two, many will point out the ability to diversify your investment options and the fact that you base investments on historical data and trends. Yet, if we take casino gambling out of the equation, at both real-life and online casinos, and look at sports betting concerning investing, then these two reasons disappear.


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Value Betting vs Value Investing

Serious sports bettors place wagers on multiple events or markets to spread out their risk. They also have detailed knowledge of the events they are wagering on, their circumstances, and past occurrences that act as indicators that guide their prediction. A great example is the Soccer Widow, a statistical expert that one day decided to apply her knowledge helping her husband’s Premier League betting decisions. It worked, and she created a blog to track her predictions.

When we look at things like this, we see multiple similarities.

One difference that is still active is that betting is usually a short-lived activity. Even though there are career bettors, you can’t stay with a particular bet for a long time, while investments can live on for years. There is also a negative expected return to bettors, on average and over the long run. Conversely, the stock market carries a positive expected return on average and in the long-haul.

Players in both fields use different types of strategies to get ahead. Investors may use deep value investing, choosing stocks that are cheap and offer great value, while bettors may utilize a martingale system, where you double your bets after every loss. An investor may look at a stock beta value, its volatility to the overall market, while a bettor may wager based  on ATS records, how teams fare against the spread, taking the underdog.

What is beneficial to both is the ability to recognize value where others do not. Warren Buffett is the poster-child of the concept of the value investing movement, while more and more sports traders are embracing the concept of value betting.

So, what’s the value bet definition? It is a situation where the bettor recognizes that the oddsmaker has set the odds incorrectly, and they do not accurately reflect the most likely outcome, due to a myriad of reasons. It is when you compare your guess with the bookmaker’s odds, and you are confident enough that you are correct and can make money.

It’s not easy being a bookmaker. They offer lines on all kinds of games in an effort to maximize profits. Guessing sports results isn’t as easy as one would think. Therefore, it is in their best interest to provide more options, as in the long term, the edge is on their side. Nonetheless, when they do this, they provide the chance for people to bet on games they do not have sufficient information to place correct odds on. Games/matches from lower-league teams or those involving amateurs carry inherent difficulties in finding team news and accurate statistics.

Punters with time on their side, can precisely research this information, and form a better prediction as to who is more likely to win. You should never assume that a bookmaker’s odds are correct and that they don’t make mistakes, because they do, often.

If you’re curious as to what are the best value betting sports, MMA and Boxing come to mind. One of the main reasons why these two sports offer such opportunities is because public perception and hype frequently mold the odds, rather than actual, current, fighter ability.

Something truer for MMA (Mixed Martial Arts), where upsets are more likely to happen due to the many ways one can lose. Sports betting writer for SafestBettingSites.com and MMA specialist Gustavo Santiago likes to exploit his deep knowledge of the sport to provide insights of when to bet on an underdog, or what prop bet to go after, which tend to pay more. His tips on MMA betting are rare but accurate.

A good case study is Amanda Nunes’ title quest and 2016 UFC-run. Nunes is the reigning UFC bantamweight and featherweight women’s champion. In 2016, she was on a three-fight winning streak heading into a title shot against then-champion Miesha Tate. The odds were in Tate’s favor, as she was a -250 favorite. The consensus was that Tate would outlast and out-grapple a fatigued Nunes on-route to an easy win, neglecting the fact that Nunes had superior stand-up skills and punching ability. Nunes won via submission in three minutes after doing damage standing up.

Five months later, Nunes faced off against Ronda Rousey, who was coming off a KO loss. Still, Nunes was again the underdog, despite many experts claiming she could win via KO. Those in-the-know assumed that Rousey stood a substantial chance to lose, yet, she was a -320 favorite. Nunes won via KO 48 seconds in the first round.

The fact that she wasn’t recognizable, marketable, and that most bookies hadn’t seen her fight, led to them favoring overmatched opponents, who had more notoriety. They picked fighters they knew, over someone they didn’t, leading them to underrate her chances, due to public perception.

Today, many services offer value betting software that provides a statistical-based approach that sniffs out opportunities, as it analyses billions of data points. Those serious about the activity, pay for technology to let them know the real chance of an outcome. The software scans sites for odds and compares them with those it comes up with based on its library of data. If the software projects a specific percentage that is higher than the available price, bettors then look to place an appropriate bet.

The concept of a value bet is not limited to sports wagering. It is present in other forms of gambling. There’s such a thing as a value bet in poker, where you expect to have more equity than your opponent. A player employs this strategy to up the worth of the pot. If successful, it will get your opponent to call because they believe the expected merit of their hand is stronger.

The search for value investments follows a similar premise as its counterpart in the betting world. You look for mistakes in the market that you can take advantage of and profit. It is an erroneous assumption that the market is always correct. The success of famous value investors suggests otherwise. People make mistakes, and most of the time, they follow patterns that are not foolproof and do not apply critical thinking when assessing opportunities.

There is no such thing as a perfect investing or betting system. The software can mine an extraordinary level of data, though sports can be extremely unpredictable, and anything can happen during a given event. While it is possible to find quality bets consistently, without the help of technology, it is also very time-consuming. So, an ideal scenario does not exist.

Value investing requires far more patience and a bigger budget. You benefit from much higher liquidity than with betting. Both bookmakers and the stock market don’t always get things right, but there is no doubt that the stock market is way more accurate than the betting industry. You also won’t get banned for being good at investing, and it’s legal everywhere, unlike sports wagering. Though gambling may have a tax-free status in some places, and the betting market is decentralized, meaning you can get different odds at different places for the same market.

The post Value Betting vs Value Investing appeared first on ValueWalk.

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