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Successful sports gamblers view the sports betting marketplace like a business or investment opportunity. How do the “sharp bettors” profit in the long run? How do they get their edge? In this article, we look at how professional money managers earn long-term excess returns and how we can apply similar techniques to help us in our sports handicapping.
Some investors seek value by being contrarian investors. Others are momentum investors. Another strategy is to follow the lead of “smart investors” such as successful fund managers or famous investors like Warren Buffett. Below, we’ll see what similarities we can find in the sports investing arena.
Contrarian Investing and Value
Many of us have heard the phrase “contrarian investing.” What’s the thinking behind being a contrarian investor? If everyone hates a stock (or other investment), that stock might be undervalued and be a good long-term investment. Historically, buying “value stocks” has been one of the best methods of investing in the stock market.
Similarly, we can profit in the sports marketplace by finding value and betting on undervalued teams. Some handicappers follow sports closely and can find value in various match-ups and games. Another method is to use the Betting Percentages available to members of Sports Insights. If a certain match-up has more than 75% of the bets on one side, it often means that the general Public is overvaluing that side. As a result, there is often “value” on taking the other side of that bet. This has proven to be a profitable strategy when sports investing in the major US sports.
Some sports investors note that this tool is particularly useful for “big games” such as nationally televised games, rivalries or other games that attract the attention of the “general public.”
For example, say that the New England Patriots are playing the New York Jets and 85% of the bets are coming in on the Patriots. This is often an indication that the sports marketplace is overvaluing the Patriots (and undervaluing the NY Jets). Historically, taking the NY Jets and “Betting Against the Public” would be a profitable play.
Some traders like to ride the “hot stocks” or “follow the trends” in the financial markets. Other traders find success by using “counter-trend” trading systems. Similarly, many sports investors actively follow the line movement and point spreads in various sports. Some handicappers try to follow “steam moves” and watch for material line moves. Others look for value as the point spreads fluctuate in the sports marketplace.
Smart Money: Invest with the Best
When news that Warren Buffett has taken a position in a company, that stock often makes a big move that day. Investors want to emulate the “stars” and often buy some of the same stocks that top mutual funds and top hedge funds own. In the sports investing world, there are “sharps” or “smart money” players who are profitable over the long-term. How can we “follow the smart money?”
Using the Betting Percentages and Line Movement data that is available at Sports Insights, you can get an indication of where the “sharps” are betting. If the general public (based on Betting Percentage) is on one side of the game, but the point spread moves in the opposite direction, it is often an indicator that “big money” (and most likely “smart money”) is taking a position in the direction of the line movement (and opposite to the Public).
For instance, say New England plays Green Bay in the Superbowl and the line opens at New England -14.5. Say that 80% of the bets are on New England but the line moves down from -14.5 to -13.5. Although 8 out of 10 bets are coming in on the Patriots, this might be an indication that big money bets are coming in on the Packers. This “smart money” indicator has proven to be a powerful tool to sports investors who use our sports marketplace information.
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