Hi all,

In a recent thread on Value, there was some debate on the accuracy of the SP market as a predictor or chances. I've said in the past that on average, across all races, the market is the most accurate predictor of chances. Some disagreed with that statement and irrespective of that, the ensuing debate bought out some extremely valuable punting principles.

At the end of it all, I think everyone agree that our task as punters is really to outperform the accuracy of the market on the races we select to tackle. Further more, the key to success is only to tackle those races where we are confident we can outperform the accuracy of the market. As the saying goes..."you can beat a race, but you can't beat the races".

Yesterday I put together some numbers of the performance of the market as a predictor of chances based on all Metropolitan racing in NSW, QLD, VIC & SA for the past 44 months.

I have grouped the prices into ranges to simplify the presentation of information. The table below shows the expected and actual win rates based on the actual market SP prices, and then shows the expected adjusted win % which is calculated by normalising SP's back to a 100% market standard (instead of the average 120%). In other words, if our markets were set to 100%, what should the strike rate be for that odds range.

Price Range	Avg. Price	Exp Win %	Act. Win %	Gap	Adj. Exp Win%	Gap	Sample
$1.10-$1.90	$ 1.71	58.5%	52.3%	-10.6%	53.0%	-1.3%	834
$2.00-$3.90	$ 3.03	33.0%	30.4%	-7.9%	28.3%	7.5%	9851
$4.00-$5.90	$ 4.77	21.0%	18.7%	-10.8%	17.5%	6.8%	14686
$6.00-$7.40	$ 6.51	15.4%	13.3%	-13.4%	12.7%	4.9%	12007
$7.50-$8.90	$ 7.94	12.6%	9.7%	-23.0%	10.3%	-6.2%	8843
$ 9.00	$ 9.00	11.1%	8.7%	-21.7%	9.1%	-4.3%	5951
$ 10.00	$10.00	10.0%	7.8%	-22.0%	8.2%	-4.4%	5047
$ 11.00	$11.00	9.1%	6.9%	-24.1%	7.4%	-6.8%	5836

At SP prices there is clearly a gap between the actual win rate and the expected win rate, which is as we would expect in markets set to approx. 120%. The longer the price the larger the gap which indicates the long shot bias previously spoken about. However in the context of a 120% markets, SP prices are the single most powerful indicator of performance and finishing order.

When we look at the gap based on the 100% market expect strike rate (adj exp strike rate), we see that the market is quite accurate at predicting chances across thousands of races. In some price ranges, the strike rate is actually greater than what we would expect.

In saying that, this adjusted strike rate analysis isn't really of any use to us as our markets are never set to 100%, but nonetheless it shows how accurate the market is across all races.

More than anything, this confirms a few things successful punters already know:

* The market is generally very smart at predicting chances, especially at low odds ranges. You need to have your act together if you are going to out perform it.

* In reality there is no single punter that can predict chances more accurate than the market across all races (regardless of how good you think your rating numbers and pricing algorithm is)

* The key remains to have the discipline to wait and pick the spots where you are confident you can outperform the market....based on sound for assessment and reasoning.

In my view, the fundamental question when deciding to tackle a race is whether or not you believe you can outperform the market in its accuracy and why? Any punter who does not approach their activities in this way has in my view a slim chance of long term success.

Comments?


[ This Message was edited by: osulldj on 2002-12-13 15:26 ]