

Bob Stoll: the man who shook up Vegas (2007) - Rod
http://online.wsj.com/public/article/SB116796079037267731-wjPu4ACcg5J5Qvjh05IYEI_Ooeo_20070112.html

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nsoonhui
Is this survivor bias?

I mean, there are thousands of handicappers, or bettors, who employ
"scientific methods" and "mathematical models" to try to win at betting. But
only a few succeed. And the successful ones will get featured in wsj and news
media. Why we should attribute Bob's success to skills, rather then luck?

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Rod
I think you should stop reading Taleb and Gladwell's pseudo-deep books.

The difference between luck and skill is consistency. If one is "lucky" for 20
years straight, then it's not luck, it's actual skill. Sure, if you have
enough monkeys typing, one will type a Shakespeare's play, but that is just an
academic example. Probability is just a way of modeling uncertainty...

~~~
TrevorJ
Or at least the likelihood that it is luck goes way down. There is still a
small statistical chance that somebody could have a crazy winning streak by
chance.

Really good point though.

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Rod
I agree with your analysis, but I disagree with your assumptions.

For starters, I don't see any difference between Bob Stoll's publishing his
handicapping analyses and Wall Street analysts publishing their analyses.
Well, I actually see one difference: Bob Stoll is probably more trustworthy
than a Wall Street analyst.

It's tempting to think of investing as tossing coins, i.e., as random
experiments. If that were the case, then, yes, after 20 years of consistent
results there would still be a small chance that such success were due to
luck.

However, investing is not tossing coins. The market changes all the time, so,
in fact, one is not playing the same random experiment over and over again.
One is playing different random experiments each day, and each day is pretty
much unique.

Let us not get carried away by probability and statistics here. Probability is
a way of dealing with uncertainty. Lacking information, one assumes _a priori_
that the probability that the coin toss will he heads / tails is 0.5, but
that's just a model, it's not the real world.

If you toss the coin using a mechanical device that applies always the same
force to the coin, and that is rigidly attached to a table, for instance, then
you don't have a random experiment. You have a reproducible experiment.
Knowing the force applied to the coin, and the geometry of the problem, you
can solve Newton's equations and fluid dynamics equations to predict how the
coin will land. There's still uncertainty and error, but I doubt the
probabilities will still be 50% heads and 50% tails if you toss the coin
always the same way using the mechanical device. Stanford professor Persi
Diaconis wrote a beautiful paper on it years ago...

So, if coin tossing in the real world is not even a true random experiment,
how can investing be?????

I used to be a trader. Let me tell you. Trading is not coin tossing. Trading
is basically legalized piracy. It requires skill. So does investing.

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blang
One thing I get from this article is that the US is missing out on a lot of
tax revenue by keeping online sports betting illegal.

~~~
TriinT
That's how powerful the casino lobby is...

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xenophanes
Stoll's website says he's 56% lifetime record on football "best bets" and 54%
accuracy on "strong opinions". (The article omits this and just shows a chart
with some unusually strong years.) The article says:

> Gamblers wagering against a point spread must win more than half their bets
> (about 53%) to make a profit and must be closer to 55% to make a comfortable
> living.

So even if we accept everything we're being told, he's only barely ahead.

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miracle
When I was studying in Zurich, I also met someone who created a similar
program: <http://www.rogerkaufmann.ch/dsa.htm>

He never tried to make any money out of it though, and never shared the
informations with anyone.

