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When enough people guess, someone will always look like an expert

As Barack Obama’s favourite fantasy sports tournament has just shown in the US, somebody is always going to end up looking like a genius forecaster – but, ultimately, it just comes down to numbers

22/04/2019

Andrew Evans

Andrew Evans

Fund Manager, Equity Value

After eight long months, we are entering the business end of the Premier League season – and, by the same token, of the various ‘Fantasy Football’ leagues, whose millions of players can have their weekends mildly enhanced or completely ruined depending on how the real-life matches go.

Across the Atlantic, however, a similarly popular fantasy sports game is already done-and-dusted – and all in the space of just a few weeks.

‘March Madness Bracket Challenge’

Each year the ‘March Madness Bracket Challenge’ calls on its many participants to predict the winners of all 65 knock-out games in the NCAA Division 1 Men’s Basketball Tournament.

The ‘bracket’ aspect of the challenge stems from the way that, as with the Wimbledon tennis championships, say, all the entrants are paired off at the start and thus can see their potential opponents and route to glory mapped out ahead of them.

Former US president Barack Obama added a little extra stardust to the challenge by filling out a bracket throughout his time in office and has continued to make his efforts public since.

“My brackets have never been my one shining moment, but here we go again,” he tweeted this year – although it has been the efforts of far less well-known competitors that briefly caught the nation’s attention in recent weeks.

At the end of March, US media picked up on how Gregg Nigl, a neuropsychologist from Ohio, had called the winners of the first 49 ties in the tournament – although,  come the end of the second round, he had 50 successes out of a possible 52 (including four preliminary games).

Nigl had been overtaken by someone dubbing themselves ‘Ned Ryerson’, who – in bracket parlance – had ‘whiffed’ on just one call out of the 52.

If that name rings a bell, it may well be because he is a character in a well-known movie … the title of which we will come to shortly.

Once the semi-finals were decided, however, Ned was no longer in the running for bracket supremacy among the various leagues operated by the big US sports outfits – and indeed ‘Jus1cruza’, who was top of Ned’s league (CNBC) with just the tournament final to go, called that game wrong.

What does this have to do with investment?

The investment-oriented reason we are discussing this year’s March Madness Bracket Challenge is that, at different points over the course of the tournament, Nigl, Ned and Jus1cruza will have come across as genius forecasters and, for those who happen to know them, just the kind of people to consult before dropping by the bookies to place a bet.

The reality of the situation, however, is rather different – indeed, what a bracket challenge comes down to is people effectively making a number of calls on an extended series of coin-tosses.

And, if you have enough people making those calls then somebody, somewhere is going to end up having made just a handful of ‘whiffs’ – for example, Justin, the eventual winner of the CNBC league.

As we never tire of saying, here on The Value Perspective, the future is uncertain and therefore impossible to forecast on a consistent basis.

Indeed, to be fair to Nigl, after his streak secured him an appearance on the Today show, he attributed his then perfect run of 48 correct predictions in a row to “watching a lot of Big 10 basketball ... and a lot of luck”.

The 'genuis' forecaster. What would you do?

An alternative way of considering the maths in all this is highlighted by Jordan Ellenberg in How Not to be Wrong: The Hidden Maths of Everyday Life (2014), which we looked at in a different context in From shares to lottery tickets.

In his parable of the Baltimore stockbroker, he wonders what you would do if a broker has sent you 10 share tips in a row that all prove good and then asks you to pay him in advance for an 11th.

The odds against 10 correct up/down calls in a row is 1,024 to 1 so maybe the Baltimore stockbroker is a genius forecaster.

Alternatively, he could have sent out 10,240 tips in week one – half predicting one thing, the other half the opposite – then in week two only contacted the 5,120 who received the good prediction and then repeated the trick … 2,560, 1,280, 640, 320, 160, 80, 40, 20 and then 10 potential dupes.

Including you.

And Ned Ryerson? He was the irrepressible life insurance salesman grumpy weatherman Phil Connors would meet every morning in Groundhog Day.

That, we like to think, was a subtle nod by the bracket challenger towards the experience of fantasy sports participants everywhere, who at some point in another unsuccessful season swear they will never sign up to play again – which generally turns out to be one more dud prediction.

Author

Andrew Evans

Andrew Evans

Fund Manager, Equity Value

I joined Schroders in 2015 as a member of the Value Investment team. Prior to joining Schroders I was responsible for the UK research process at Threadneedle. I began my investment career in 2001 at Dresdner Kleinwort as a Pan-European transport analyst. 

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