Tao Te Cha-Ching: A Taoist Approach to Handicapping, Part 2

Embracing Individualism

There is value in thinking differently. And I am not talking about fading a perceived “public” or popular team to be contrarian. I mean that there is value in challenging the paradigms that guide the world in which we operate. In a world that increasingly pushes us towards consensus through the way social media algorithms (and the human brain) work, the pressure to conform can feel overwhelming.

When Einstein discovered the theory of special relativity, he was not having the same conversation leading physicists were having at the time. He was challenging the assumptions they were operating under and likely would have been laughed out of the room by the consensus if he had presented his idea before years of work showed the validity of his theory.

It doesn’t always pay off in such a dramatic way. Sometimes testing a consensus assumption leads you to the conclusion that the assumption is correct, and that generates no fanfare. But it’s equally important to recognize what’s valid as it is to find the flaws.

Taoist philosophy recognizes that when we label things we create the opposite of that label. If nothing was deemed good we would have no definition of bad. But there is also a playful double meaning here. The Tao Te Ching says that when everyone agrees that something is beautiful, it creates ugliness. To me, while making a point about balance, the implication is that everyone being aligned is not good. I agree.

But enough with the abstract nonsense. Let’s talk math and betting. Assume you have a 2% edge, on average, betting NFL sides. If your process is theoretically identical but superior to whatever processes create the market, you will have a 2% edge on every game. Great. The problem is that, to overcome -110 vig on standard bets, you need a 2.4% edge to break even. So you would either never make a bet or you would make only -EV bets.

But if your process approaches games from an entirely different angle, that 2% edge will be distributed unequally. In a given 9-game sample, you might have edges of 6%, 5%, 4%, 3%, 2%, 1%, 0%, -1%, and -2%. On average, you have the same edge as the bettor with the superior market approach. But this time, you have identified 4 bets that are +EV and 5 bets you can pass on. By using an approach that does not follow the market, you literally increased your opportunity to profit.

Having a unique process also helps reduce the negative impact of confirmation bias because you end up finding less value in the affirmation of others. Any time you can find ways to avoid bias in handicapping, that’s an improvement.

On a more personal level, embracing individualism is also about understanding your goals and how you operate. It only makes sense to challenge consensus paradigms if it comports with your nature and what you are trying to accomplish.

Let’s get concrete. Much discourse around NFL sides betting involves quantifying the relative strength of each team and adjusting as necessary for matchups. This approach typically treats games as units and assigns percentages to various outcomes to identify where they might be value. But what if, instead of treating games as units, a bettor recognized that a game is actually comprised of a million individual probabilistic events. Some of those will impact others in unique ways.

For a basic example, if a team has a highly condensed wide receiver room with extreme talent at the top but no depth, that team will likely perform at a higher level relative to their average when playing in bigger sets. So if some of the early probabilistic events put them in a position to where they have to spread the ball out, they might play relatively below average. The distribution of outcomes can create even more specific conceptions of value, both for pre-game and in-game betting.

My biggest edge comes from measuring performance independently of statistics. Stats are outcome-based measurements that must treat all results as one thing or another, but plays are much more complex than their outcome suggests. Quantifying this creates a unique measurement and a unique language for talking about football. Speaking this language might prevent me from ever being a famous football analyst but it does help me find edges in the betting market.

Or maybe you only play Wong teasers and play them indiscriminately. Books are catching on to the mathematical advantages bettors have when playing Wong teasers in the NFL and the bet will eventually be priced out. But, if instead of treating every Wong teaser as the same, a bettor was able to capture which advantages were more pronounced or less pronounced, that bettor could still find profit on teasers after they have been made more expensive by the books.

Ultimately, these types of specific advantages tend to last. Steam chasing, arbitrage, and picking off stale lines is one way to capture EV on your bets. And I have nothing against those who do this. But most books are unlikely to let bettors win a lot, in the long run, using those strategies. Uncovering a distinct, unique advantage derived from your own idiosyncratic methods is more likely to lead to a lasting edge in bigger, more mature markets. And that’s ultimately my goal. I find value in individualism because it helps me achieve my goal.

But also, embracing individualism makes me happy. The way we pursue things influences whether we enjoy those things. And whether you bet for a living, bet as a hobby, or don’t bet at all, it’s best to do it in a way that makes you happy, I think.

Leave a Reply