World Cup 2014 – Trade Ideas and Analysis

FIFA World Cup 2014
begins on Thursday, June 12 and ends on Sunday, July 13

Group A

  • Brazil
  • Croatia
  • Mexico
  • Cameroon
  • Group B
  • Spain
  • Netherlands
  • Chile
  • Australia
  • Group C
  • Colombia
  • Greece
  • Côte d’Ivoire
  • Japan
  • Group D
  • Uruguay
  • Costa Rica
  • England
  • Italy
  • Group E
  • Switzerland
  • Ecuador
  • France
  • Honduras
  • Group F
  • Argentina
  • Bosnia and Herzegovina
  • Iran
  • Nigeria
  • Group G
  • Germany
  • Portugal
  • Ghana
  • USA
  • Group H
  • Belgium
  • Algeria
  • Russia
  • Korea Republic

Where is Poland ? Switzerland ? Romania ? Hungary ?

3/1
Brazil
9/2
Argentina
11/2
Germany
6/1
Spain
14/1
Belgium
20/1
France
25/1
Colombia
25/1
England
25/1
Italy
25/1
Portugal
28/1
Holland
28/1
Uruguay
40/1
Chile
80/1
Russia
125/1
Ivory Coast
125/1
Japan
125/1
Switzerland
150/1
Bosnia
150/1
Croatia
150/1
Ecuador
150/1
Mexico
150/1
USA
200/1
Ghana
250/1
Greece
250/1
Nigeria
250/1
South Korea
750/1
Australia
750/1
Cameroon
750/1
Iran
1000/1
Algeria
2500/1
Costa Rica
2500/1
Honduras

taken from the William Hill website : http://sports.williamhill.com/bet/en-gb/betting/e/1277216/World-Cup-2014—Tournament-Winner.html

The fixtures should see many bleary eyed Asians go to work the next day with all the 11 hour time difference between Singapore (and China) and Brazil.

Markets should be quiet in Asian time zones. We have Japan and South Korea carrying Asia’s hopes.

Yet the World Cup is also the best time for wagers, for that, I mean any world cup, with fond memories of the last 2011 Rugby World Cup.

For soccer fan me, the last time I seriously followed soccer was in my teens till my team got relegated to the Vauxhall Conference (now known as English League 1 or 2 ?). But I have all the World Cups of those times, sticker albums and all.

In recent years, it has just been limited to the trading aspect of football and my support is profit oriented which is not a sin, in my opinion, no matter what die hard fans say.

The strategy a friend conceived was to take all the underdogs as tournament winners and then bet against them in their games. It almost always pays off even if the underdog wins.

An example was the European Championships where I placed a 10 dollar bet on Greece which paid 100/1. The SingPools lady was thoroughly impressed with little old me when I marched in triumphantly to collect my winnings. (Winnings were less because of hedge against Greece in finals)

Sadly, that was also about the last time an underdog won a big tournament.

I further refined the strategy over the years to exclude obvious outliers, the 1000/1 tickets because there was simply no chance.

Now our eyes would all be riveting to the 125-200/1 teams at the moment, which means that if everyone adopted that strategy, the odds would be dropping.

Doesn’t that remind you a little of the junk bond market we are in ?

Squeeze, squeeze, squeeze the spreads. Grabbing for yields. The difference is that for the World Cup, the bets can be small for huge payouts. For the bond market, the bets are big but the payout is small although not all of them will lose, just one will make a big difference.

Therefore I am not about to take my chances with Ukraine 7.5% 9 y USD bond yielding 8.77% which has rallied some 10% in a month.

The run up to this world cup has been violent, with large scale riots in 2013 and recent riots against the Brazilian government overshooting their budget on the stadiums, spending 4 times more than they had estimated in their winning pitch in 2007. And a soccer fan killed by a toilet bowl earlier in May.

Compared to the South African 2010 World Cup and the German 2006 World Cup, Brazilians are not very happy about this one even if they are the hot favourites which brings us to the odds.

How did Belgium become 5th favourited to win when England is only 8th, along with Italy and Portugal – the great footballing nations ?

Probably because they aren’t in the “group of death” which makes it between England, Italy, Uruguay (leaving out Costa Rica).

This means that the odds would change dramatically if England or Italy or Uruguay made it to the 2nd round and thus, there are trades there – 100 dollars on each of them because when the pay out is reduced to say 15/1, you can take profit(25-15 = 10, 10 * 100 = 1000 !) by betting against on them to lose, although the major hindrance is that such a trade is not available in Singapore and  that you will not make a perfect 1000 after crossing the bid-offer spread.

What would be real interesting in the 2nd round would be a Russia vs USA match, if the USA(150/1) manage to wriggle past Germany and Portugal.

Group F with 3 dark horses – Iran(750/1), Bosnia (150/1) and Nigeria(250/1) after an almost assured Argentine win, could be profitable especially if you put a dollar or two just on Iran and then bet against them afterwards.

This Belgium thing again, at 14/1. Team starring African-Belgians, playing in Latin America, plucked out of their European clubs, hardly a good combination. Playing against teams they are hardly used to – Russians and Koreans. I am not so sure, really.

Belgium could be a potentially good short trade, given they have never won a World Cup. Selling at 14/1 (assuming that is possible) would be a 13 times return if they did not win. I will leave you to work out the math of the individual games.

Another factor to be aware of is that  sometimes soccer is a game of life and death. Some of these players are playing for the lives out there ! Remember the Honduran goalkeeper who was shot dead  back in 2003 ? And the rumours of the North Korean team who were thrown into jail or flogged or something ?

Cultural biases can also work in our favour. For instance, we do know that the Chinese will probably bet heavily against Japan, out of spite, which may sway the odds, allowing for an arbitrage.

Then to the nitty gritty weather patterns, referees and my favourite – the ball !

This year they are using the Adidas Brazuca ball, and scientific tests have shown that this ball favours the fast, passing focussed strategy. With 6 panels on this new ball, we could potentially be seeing more goals and more penalties won. For a layman report, read this.

I do not like the total goals and total yellow and red cards etc, wagers. Some people also like the dare devil parlay bets which I am no expert on.

Lastly, the witch doctor effect. I would dearly like to see the African witch doctors take on the South American shamans who are on home ground. So far, Mexico is ahead but he warns of a war of magic coming up (no one is laughing at him for all the ridicule the poor Malaysian bomoh got).

All I can say is, watch for the flying toilet bowls !

 

Afterword
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