1. #1
    135steward
    135steward's Avatar Become A Pro!
    Join Date: 07-28-11
    Posts: 171
    Betpoints: 565

    efficient market theory v. the adaptive market hypothesis

    I, like many here, have believed in the efficient market. That results are basically a random walk and that the martingale (in a probability context, not to be confused with that double-your-bet thing) applies in essentially all gambling situations. That said, I've been reading intriguing material re the Adaptive Market Hypothesis (AMH), which, simply put, claims that the market is efficient only after it adjusts; that news is not instantaneously absorbed. Therefore arbitrage opportunities exist.

    In fact, I practiced the technique in the futures market without knowing what it was. I busted in the market after making a bad decision on live cattle, but before then met with appreciable success in forex and coffee. But I digress.

    Obvious evidence of AMH working is news of an injury after lines are set. Another one is books setting lines in anticipation of emotional bettors favoring certain teams, adjusting lines as "smart money" recognises the discrepancy, meanwhile sopping up the gravy.

    So, this is the think tank, right? Anyone care to share thoughts on how us regular Joes can apply AMH to sop up a little gravy of our own?

  2. #2
    MonkeyF0cker
    Update your status
    MonkeyF0cker's Avatar Become A Pro!
    Join Date: 06-12-07
    Posts: 12,144
    Betpoints: 1127

    Try searching maybe?

  3. #3
    evo34
    evo34's Avatar Become A Pro!
    Join Date: 11-09-08
    Posts: 1,032
    Betpoints: 4198

    There is no such thing as an "efficient" market. Information is not standardized -- either in its dissemination or in how it is interpreted. If no two people are receiving/interpreting information in exactly the same way, there is always opportunity to be a better-than-average interpreter. That's all that is required to beat any market. Nothing easy about executing the concept (well enough to overcome transaction costs), but it's not a difficult concept to describe.

  4. #4
    135steward
    135steward's Avatar Become A Pro!
    Join Date: 07-28-11
    Posts: 171
    Betpoints: 565

    Quote Originally Posted by evo34 View Post
    There is no such thing as an "efficient" market. Information is not standardized -- either in its dissemination or in how it is interpreted. If no two people are receiving/interpreting information in exactly the same way, there is always opportunity to be a better-than-average interpreter. That's all that is required to beat any market. Nothing easy about executing the concept (well enough to overcome transaction costs), but it's not a difficult concept to describe.
    We agree on that. (I don't know what the hell moneyfocker is talking about, though). It's off the topic of AMH, though. Misinterpretation adds to the inefficiency as "noise."

  5. #5
    MonkeyF0cker
    Update your status
    MonkeyF0cker's Avatar Become A Pro!
    Join Date: 06-12-07
    Posts: 12,144
    Betpoints: 1127

    Quote Originally Posted by 135steward View Post
    We agree on that. (I don't know what the hell moneyfocker is talking about, though). It's off the topic of AMH, though. Misinterpretation adds to the inefficiency as "noise."
    It means what it says, Einstein.

    "Try searching" means trying searching the site for relevant EMH vs. AMH information/discussion since the topic has been discussed ad-nauseum. Very cryptic of me, I know...

  6. #6
    mathdotcom
    mathdotcom's Avatar Become A Pro!
    Join Date: 03-24-08
    Posts: 11,689
    Betpoints: 1943

    Take Bucks +6

  7. #7
    Br0nxer
    July 2012 Poster of the Month
    Br0nxer's Avatar Become A Pro!
    Join Date: 03-25-11
    Posts: 13,665
    Betpoints: 888

    Quote Originally Posted by mathdotcom View Post
    Take Bucks +6
    what happened to taking 24 hours off from posting

  8. #8
    MonkeyF0cker
    Update your status
    MonkeyF0cker's Avatar Become A Pro!
    Join Date: 06-12-07
    Posts: 12,144
    Betpoints: 1127

    Quote Originally Posted by mathdotcom View Post
    Take Bucks +6
    LOL.

  9. #9
    135steward
    135steward's Avatar Become A Pro!
    Join Date: 07-28-11
    Posts: 171
    Betpoints: 565

    fair enough

    Quote Originally Posted by MonkeyF0cker View Post
    It means what it says, Einstein.

    "Try searching" means trying searching the site for relevant EMH vs. AMH information/discussion since the topic has been discussed ad-nauseum. Very cryptic of me, I know...
    Thanks for clarifying. Maybe next time you can do it without coming off like a pretentious prick, but that's your call.

    Anyway, moving on: AMH probably has no practical application here, anyway, because we don't decide this market like traders decide financial asset value. The game ends at a set time with a clear winner.

  10. #10
    FourLengthsClear
    King of the Idiots
    FourLengthsClear's Avatar Become A Pro!
    Join Date: 12-29-10
    Posts: 3,808
    Betpoints: 508

    Quote Originally Posted by 135steward View Post
    Thanks for clarifying. Maybe next time you can do it without coming off like a pretentious prick, but that's your call.

    Anyway, moving on: AMH probably has no practical application here, anyway, because we don't decide this market like traders decide financial asset value. The game ends at a set time with a clear winner.
    I am surprised you reached that conclusion. When trading forex/coffee, did you quantify the effects of information being disseminated or were just using principles along the lines of "the trend is your friend" or "buy the rumour, sell the news"?

  11. #11
    hutennis
    hutennis's Avatar Become A Pro!
    Join Date: 07-11-10
    Posts: 847
    Betpoints: 3253

    Whats wrong with just using "the trend is your friend" principle?

  12. #12
    mathdotcom
    mathdotcom's Avatar Become A Pro!
    Join Date: 03-24-08
    Posts: 11,689
    Betpoints: 1943

    Quote Originally Posted by hutennis View Post
    Whats wrong with just using "the trend is your friend" principle?
    Quote Originally Posted by jjgold View Post
    If you guys are horny just light up the flame, douse the wood with some TD-4 jelly, lick your tongue a few times while waving your prey to come over and get some Liquor, show him a twizzler and show him how the grooves work and explain the pain in the cork is ok because it validates him as new generation Ice Cube, when your done throw him the cubes, cool down the wood and make sure you have 4 wooden corks just in case the tomato leaks. You guys are sick mother fukkers. Fuk me I am going to bed and laying it in the bed hole and falling asleep and waking up to a nice compressed sexual reaction while we wack the plastic and make love to the magazine. The fur is your friend, the cork is your enemy.
    I think you mean the fur is your friend.

  13. #13
    135steward
    135steward's Avatar Become A Pro!
    Join Date: 07-28-11
    Posts: 171
    Betpoints: 565

    Thanks for asking

    Quote Originally Posted by FourLengthsClear View Post
    I am surprised you reached that conclusion. When trading forex/coffee, did you quantify the effects of information being disseminated or were just using principles along the lines of "the trend is your friend" or "buy the rumour, sell the news"?
    When you say "that conclusion," do you mean the conclusion that AMH won't work here? Or what I said about traders deciding the value of a particular security? Or that monkeyfocker comes off like a pretentious prick?

    But to answer your question: no. I didn't assign mathmatical values to information, follow trends, or buy rumor/sell news. I used the gap between genuine news reports and the time it seems to take a fund committee to act to buy or short a product. For example, do you remember that Ivory Coast uprising? I bought coffee futures, which were already high. They were moving up anyway, and bouncing around, but supply lines were threatened. I moved off of the contract after it rose $1. As I recall, it was a $5k or $8k gain. (I don't remember exactly). Forex was acting crazy for a while between Bernanke's statements and stress on the Euro. I hypertraded a little then (it was, after all, exciting!), but still came out ahead. But, alas, I made a very bad decision when I shorted cattle last year. Hindsight, huh?

  14. #14
    MonkeyF0cker
    Update your status
    MonkeyF0cker's Avatar Become A Pro!
    Join Date: 06-12-07
    Posts: 12,144
    Betpoints: 1127

    Quote Originally Posted by 135steward View Post
    When you say "that conclusion," do you mean the conclusion that AMH won't work here? Or what I said about traders deciding the value of a particular security? Or that monkeyfocker comes off like a pretentious prick?

    But to answer your question: no. I didn't assign mathmatical values to information, follow trends, or buy rumor/sell news. I used the gap between genuine news reports and the time it seems to take a fund committee to act to buy or short a product. For example, do you remember that Ivory Coast uprising? I bought coffee futures, which were already high. They were moving up anyway, and bouncing around, but supply lines were threatened. I moved off of the contract after it rose $1. As I recall, it was a $5k or $8k gain. (I don't remember exactly). Forex was acting crazy for a while between Bernanke's statements and stress on the Euro. I hypertraded a little then (it was, after all, exciting!), but still came out ahead. But, alas, I made a very bad decision when I shorted cattle last year. Hindsight, huh?
    Let me get this straight. You're still crying because you couldn't figure out what "Try searching maybe?" means? No surprise that you can't figure out what another poster is asking especially when he specifically highlights/bolds the part of your post he is addressing. LOL.

    Unreal.

    P.S. - Nice conclusion. That really states a lot about how you've attempted to apply AMH to sports markets.
    Last edited by MonkeyF0cker; 01-22-12 at 06:59 PM.

  15. #15
    Professor1215
    Improve Everyday
    Professor1215's Avatar Become A Pro!
    Join Date: 11-28-11
    Posts: 216
    Betpoints: 3212

    That +6 post of his was good money...nicely done.

  16. #16
    subs
    subs's Avatar Become A Pro!
    Join Date: 04-30-10
    Posts: 1,412
    Betpoints: 969

    ... NM

  17. #17
    135steward
    135steward's Avatar Become A Pro!
    Join Date: 07-28-11
    Posts: 171
    Betpoints: 565

    Quote Originally Posted by MonkeyF0cker View Post
    Let me get this straight. You're still crying because you couldn't figure out what "Try searching maybe?" means?
    I was asking for clarification on another question, dumnass. It ain't about you.

  18. #18
    MonkeyF0cker
    Update your status
    MonkeyF0cker's Avatar Become A Pro!
    Join Date: 06-12-07
    Posts: 12,144
    Betpoints: 1127

    Uh huh.

    "Dumnass."

  19. #19
    Kindred
    Bitcoin=Freedom
    Kindred's Avatar Become A Pro!
    Join Date: 09-09-08
    Posts: 2,901
    Betpoints: 473

    Quote Originally Posted by evo34 View Post
    There is no such thing as an "efficient" market. Information is not standardized -- either in its dissemination or in how it is interpreted. If no two people are receiving/interpreting information in exactly the same way, there is always opportunity to be a better-than-average interpreter. That's all that is required to beat any market. Nothing easy about executing the concept (well enough to overcome transaction costs), but it's not a difficult concept to describe.
    In most markets better than average isn't good enough to turn a long term profit..sports/stocks/futures the cream rises to the top better than average cannot compete. The best will also have the information first, and they will be the ones with the most money so they can take advantage of any profitable opportunities before the better than average can even spot them. All markets work like a pyramid with the money flowing to the top.

  20. #20
    JohnAnthony
    JohnAnthony's Avatar Become A Pro!
    Join Date: 04-30-09
    Posts: 5,110
    Betpoints: 12

    MoneyF0cker, you were once an ass. A smart-ass, that is. You were an ass, but a smart pal. I had hard times (as a total monkey) arguing with you.

    Nowadays you just seem like a plain, dumb, ass. Or a smart ass that seems to insist on being dumb and totally unproductive.

    Now you can unleash your rage on me freely, I won't get into arguments with you. It's just sad that back then reading your replies was at least educating, somehow, and nowadays you're just another troll.

  21. #21
    subs
    subs's Avatar Become A Pro!
    Join Date: 04-30-10
    Posts: 1,412
    Betpoints: 969

    ummm Bucks +6 was kinda helpful tho... thanks monkey

  22. #22
    135steward
    135steward's Avatar Become A Pro!
    Join Date: 07-28-11
    Posts: 171
    Betpoints: 565

    nope

    Quote Originally Posted by subs View Post
    ummm Bucks +6 was kinda helpful tho... thanks monkey

    that was math dot com

  23. #23
    MonkeyF0cker
    Update your status
    MonkeyF0cker's Avatar Become A Pro!
    Join Date: 06-12-07
    Posts: 12,144
    Betpoints: 1127

    Quote Originally Posted by JohnAnthony View Post
    MoneyF0cker, you were once an ass. A smart-ass, that is. You were an ass, but a smart pal. I had hard times (as a total monkey) arguing with you.

    Nowadays you just seem like a plain, dumb, ass. Or a smart ass that seems to insist on being dumb and totally unproductive.

    Now you can unleash your rage on me freely, I won't get into arguments with you. It's just sad that back then reading your replies was at least educating, somehow, and nowadays you're just another troll.
    Right. Telling a guy to search for what he's looking for is completely unproductive. When someone can't even decipher a post that tells them THAT, why should MY time be wasted attempting to hold their hand through it?

    I've already given out all of the information that I'm willing to share publicly. If people are unwilling to even do a simple search to find out relevant information regarding the topics that they wish to learn more about, why should anyone be helpful and/or even moderately insightful? The level of discourse in the TT has done nothing but degrade in the past several years. That's in no small part due to the same topics being rehashed for the 4029th time. If people have questions about something they've read regarding certain topics that have already been covered in previous discussions here, then I have no problems contributing "productively." But most posters that find their way here these days, are too lazy and/or ignorant to even do that much.

    --Signed,
    Dumnass

  24. #24
    JohnAnthony
    JohnAnthony's Avatar Become A Pro!
    Join Date: 04-30-09
    Posts: 5,110
    Betpoints: 12

    Quote Originally Posted by MonkeyF0cker View Post

    Right. Telling a guy to search for what he's looking for is completely unproductive. When someone can't even decipher a post that tells them THAT, why should MY time be wasted attempting to hold their hand through it?

    I've already given out all of the information that I'm willing to share publicly. If people are unwilling to even do a simple search to find out relevant information regarding the topics that they wish to learn more about, why should anyone be helpful and/or even moderately insightful? The level of discourse in the TT has done nothing but degrade in the past several years. That's in no small part due to the same topics being rehashed for the 4029th time. If people have questions about something they've read regarding certain topics that have already been covered in previous discussions here, then I have no problems contributing "productively." But most posters that find their way here these days, are too lazy and/or ignorant to even do that much.

    --Signed,
    Dumnass
    If you're not going to educate someone, why bust his balls? if you don't want to waste your time posting productive things (like you once knew), why post defamatory BS? some members aren't even aware of the search function, and while I agree that makes it technically impossible for them to build a model (for example), busting people's balls because they can't/don't/won't search just bumps a thread in the tank for nothing. Let it die if it's already been discussed.

    Hey, at least you didn't bust MY balls anyway, I totally see your point.

  25. #25
    mathdotcom
    mathdotcom's Avatar Become A Pro!
    Join Date: 03-24-08
    Posts: 11,689
    Betpoints: 1943

    Quote Originally Posted by 135steward View Post
    I, like many here, have believed in the efficient market. That results are basically a random walk and that the martingale (in a probability context, not to be confused with that double-your-bet thing) applies in essentially all gambling situations. That said, I've been reading intriguing material re the Adaptive Market Hypothesis (AMH), which, simply put, claims that the market is efficient only after it adjusts; that news is not instantaneously absorbed. Therefore arbitrage opportunities exist.

    In fact, I practiced the technique in the futures market without knowing what it was. I busted in the market after making a bad decision on live cattle, but before then met with appreciable success in forex and coffee. But I digress.

    Obvious evidence of AMH working is news of an injury after lines are set. Another one is books setting lines in anticipation of emotional bettors favoring certain teams, adjusting lines as "smart money" recognises the discrepancy, meanwhile sopping up the gravy.

    So, this is the think tank, right? Anyone care to share thoughts on how us regular Joes can apply AMH to sop up a little gravy of our own?
    Instead of getting into all that theory, the real answer is all about liquidity.

    More liquid betting markets are going to be more efficient but you can also bet more in those markets. Shitty tiny markets like Arena football are going to be less efficient but you won't be able to bet 100k on a single game. That's why even Justin7 was able to beat it.

    I have never tried nor will ever try to model game lines for MLB/NFL/NBA/NHL. It is 20% because I'm not skilled enough and 80% because I am lazy and there is still plenty of low fruit to pick.

  26. #26
    subs
    subs's Avatar Become A Pro!
    Join Date: 04-30-10
    Posts: 1,412
    Betpoints: 969

    Quote Originally Posted by 135steward View Post
    that was math dot com

    Quote:
    Originally Posted by mathdotcom
    Monkey give us a winner

    01-20-12, 10:48 PM #29
    MonkeyF0cker

    Bucks +6

    01-20-12, 10:50 PM #30
    mathdotcom

    I got +5.5 is that ok?


    01-20-12, 10:53 PM #31
    MonkeyF0cker

    It's a lock. I promise.
    it is ok, u weren't supposed to know...

    but when people say use the search function it means that there is some awesome info there if u look. instead of typing half assed answers, people r giving u a valuable clue that there IS much good info already here... i remember reading some of it, so u can get a nice answer like mathsy's OR u can find a whole thread with many different opinions, up to u really.


  27. #27
    Cruizer
    Cruizer's Avatar Become A Pro!
    Join Date: 01-15-12
    Posts: 211
    Betpoints: 149

    Math, whats the low fruit in your mind?

  28. #28
    FourLengthsClear
    King of the Idiots
    FourLengthsClear's Avatar Become A Pro!
    Join Date: 12-29-10
    Posts: 3,808
    Betpoints: 508

    Quote Originally Posted by Cruizer View Post
    Math, whats the low fruit in your mind?
    Shallower markets. Think of things like European Ice Hockey, Volleyball, Snooker, Darts or Arena Football. Much lower betting volumes and less refined markets. Much lower limits too though.

  29. #29
    135steward
    135steward's Avatar Become A Pro!
    Join Date: 07-28-11
    Posts: 171
    Betpoints: 565

    I was gonna let this go, but since I started it, I feel obliged to explain: I discussed in my original post one aspect of AMH: info doesn't absorb immediately; and I gave a few examples. But that seemed to lead to discussion about inefficient markets. Note the first word in AMH is adaptive. As I see it, another aspect of AMH is that it precludes backtesting: by the time you find a pattern, it changed.

    When I asked (not looking for a handout, but to stimulate conversation) how we may exploit sports betting with AMH principals, I meant "how can we expolit an ever-adapting market?" Not "how do we find inefficiencies?" It will be much more difficult in an area like sportsbetting, where every game ends, than in the basically perpetual financial markets.

  30. #30
    illfuuptn
    illfuuptn's Avatar Become A Pro!
    Join Date: 03-17-10
    Posts: 1,860

    Quote Originally Posted by 135steward View Post
    I was gonna let this go, but since I started it, I feel obliged to explain: I discussed in my original post one aspect of AMH: info doesn't absorb immediately; and I gave a few examples. But that seemed to lead to discussion about inefficient markets. Note the first word in AMH is adaptive. As I see it, another aspect of AMH is that it precludes backtesting: by the time you find a pattern, it changed.

    When I asked (not looking for a handout, but to stimulate conversation) how we may exploit sports betting with AMH principals, I meant "how can we expolit an ever-adapting market?" Not "how do we find inefficiencies?" It will be much more difficult in an area like sportsbetting, where every game ends, than in the basically perpetual financial markets.
    Are you saying that exploiting financial markets is easier than exploiting sports betting markets? lol

  31. #31
    135steward
    135steward's Avatar Become A Pro!
    Join Date: 07-28-11
    Posts: 171
    Betpoints: 565

    Quote Originally Posted by illfuuptn View Post
    Are you saying that exploiting financial markets is easier than exploiting sports betting markets? lol
    Yeah. lol

  32. #32
    subs
    subs's Avatar Become A Pro!
    Join Date: 04-30-10
    Posts: 1,412
    Betpoints: 969

    i'm def not anywhere near qualified to answer, but for the sake of conversation:

    r u talking about speed in ur 1st post? as in: if u can adapt (receive and process information) quicker than the market...maybe injuries, or line up changes etc. i'm pretty sure that there r fast ways of doing this. but if u r beating them to the big news line moves they won't be overly impressed... even the good 1s? there r a bunch of services that include this information... don't know how fast it is or who is the fastest.


    or r u talking about a new set of circumstances? rule changes, makeshift players out of position etc. sadly being able to quantify something like that is way out of my depth. if i were to make a guess, i'd say bet it at slow moving books or against it if it happens live.

    hope u get somewhere with ur ideas.

    GL

  33. #33
    illfuuptn
    illfuuptn's Avatar Become A Pro!
    Join Date: 03-17-10
    Posts: 1,860

    Quote Originally Posted by 135steward View Post
    Yeah. lol
    You're just one of those people who I can't even try to level with because you're just too incredibly stupid. Go buy stocks then. It's just SUUUUUPER easy, right? Everyone is scared of Europe so buy US bonds, right? Easy game.

  34. #34
    135steward
    135steward's Avatar Become A Pro!
    Join Date: 07-28-11
    Posts: 171
    Betpoints: 565

    Quote Originally Posted by illfuuptn View Post
    You're just one of those people who I can't even try to level with because you're just too incredibly stupid. Go buy stocks then. It's just SUUUUUPER easy, right? Everyone is scared of Europe so buy US bonds, right? Easy game.
    So how's that RedSox thing working for ya? Good series with Tampa, huh?

  35. #35
    135steward
    135steward's Avatar Become A Pro!
    Join Date: 07-28-11
    Posts: 171
    Betpoints: 565

    Hard to say, really

    Quote Originally Posted by subs View Post
    i'm def not anywhere near qualified to answer, but for the sake of conversation:

    r u talking about speed in ur 1st post? as in: if u can adapt (receive and process information) quicker than the market...maybe injuries, or line up changes etc. i'm pretty sure that there r fast ways of doing this. but if u r beating them to the big news line moves they won't be overly impressed... even the good 1s? there r a bunch of services that include this information... don't know how fast it is or who is the fastest.


    or r u talking about a new set of circumstances? rule changes, makeshift players out of position etc. sadly being able to quantify something like that is way out of my depth. if i were to make a guess, i'd say bet it at slow moving books or against it if it happens live.

    hope u get somewhere with ur ideas.

    GL
    A lot of work's been done with AMH re financial markets, but I haven't seen anything on its application to sports. It may not apply at all because every game is final and you'd probably never know if you were right, anyway, because of variance factors.

    With corn, for example, even after crop reports come out, it's still corn. But the team itself changes after injury reports or even when going between a home and away game. And be careful when you speak of quantification, because there you're looking for inefficiencies, which is discussed at great lengths in this forum.

    Remember, the main thesis of AMH is that the market adapts, so inefficiencies disappear.

    Thanks. I'll probably let this thread die. Let the math whizzes bury it with their threads.

12 Last
Top