Fundamentals, Focus and Working Memory

In a previous article we looked at how, in a globalised betting world of data overload, it can be difficult to filter the mass of information coming our way.  We also saw that our in-built cognitive biases may not be the best at sifting the diamonds from the detritus: often seeing us prefer information that is novel and clandestine over the mundane and freely-available.

What drives an outcome

The problem for punters is that, for the most part, it is the mundane and freely-available information that drives the outcomes of most sporting events.

Take, for example, a one-day cricket match.  Our cerebral antennae may be drawn to rumors circulating in the social media sphere that a player is having an affair with another player’s wife.  We might assume that this will lead to chaos and infighting within the team.  We might bet accordingly.

Unfortunately for our gossip-primed brain, whilst an internecine love triangle may have some affect on the mindset of some of the players, it is unlikely to be the factor that determines the outcome of a match.  Relative player ability, and relative team form, is what will.

This concept – that it is a small number of factors that drive most of an outcome – is encapsulated in the Pareto principle, a term coined by the American management consultant, Joseph M. Juran.  In his work with various companies, Juran observed that too much attention is given in business to features that have a limited impact on the profitability of a company, with fundamental drivers of organisational performance often undervalued or ignored.

Putting in the effort

Juran’s work spawned what has now become a cliché of the business-world. Whether it’s Richard Koch’s 80/20 rule, or FedEx’s Fred Smith recommending that, “the main thing is to keep the main thing the main thing,” it has become a business truism that the most effective companies have a simplicity of vision that sees them focusing their attention on the areas of their activity that have the biggest impact on long-term profitability.

Adopting the same approach to your punting is the most-likely route to long-term profitability.  If we take horse racing as an example, it seems obvious to say that races are won by the horse who can run fastest over the distance, in the conditions.

This statement is self-evident, and we would expect, then, that all punters would dedicate their study to assessing the relative historical form of the horses participating, and the likelihood of the horses reproducing that form in the conditions of the race in question.

Unfortunately, doing these things accurately takes a lot of effort, and not always straightforward.  A robust system of ratings needs to be developed, carefully applied, with new results re-fed into the model.  An understanding of how to turn the outputs of this model into a betting tissue and assess likely value punts is also needed.  Only careful application of a rigorous staking plan will maximise returns. Profits can be slow to come, and the work – as well as being hard – can seem dull at times.

Some factors trump all others

Perhaps this is why, despite the self-evident nature of the factors that are most likely to determine the outcome of a horse race, punters will spend a disproportionate amount of time considering information that is – whilst not wholly irrelevant – nonetheless at the periphery of what is important.

Eavesdrop on the discussions of groups of losing punters in any pub and you’ll hear their obsession with this peripheral data:

“Jockey A is riding well at the moment.”

“Trainer B wouldn’t have sent his horse all this way if he didn’t think he would win.”

“Stable C hasn’t had a big winner for a while.”

“This track favours front-runners, so Horse D will be hard to beat”

It’s not that this data doesn’t have a value – it does – but compared to more fundamental predictors of a horse’s performance, they are at most ancillary.

To fully internalise this, it’s worth a short thought-experiment. Imagine a race between two horses. One is Winx. The other an emaciated Brumby. Which horse will win? Easy, huh? But hang on a second… look back at each of those statements above and now imagine that they apply to the Brumby. Have you changed your mind about the race’s likely outcome?

Of course you haven’t, because you realise that there are certain fundamental factors that trump all others in this case.

Be selective to succeed

An investor who is often heralded as a proponent of a fundamentals-first approach is Warren Buffett. Chairperson of investment firm Berkshire Hathaway, Buffett seems to favour stocks where the underlying business basics are strong, ignoring short-term market reactions and fashionable investing trends.

And a focus on fundamentals is not all that Buffet has to teach punters. A story that has done the rounds of the business self-help journals in recent years – which may or may not be apocryphal – involves a discussion between Buffet and his long-time pilot, Mike Flint.

Buffet – the story goes – feels he has failed Flint. If Buffet had been a better boss, he would have ensured Flint had grown his career, left the investor and progressed to something new.

He therefore asks Flint to list 25 things he wants to achieve. Next, he asks that Flint prioritises the top five. Once this is done, Buffet asks Flint what he should do with the remaining 20.  Apparently, Flint replied that he would work on them when he could, but would give most of his attention to the top five.

Buffet castigates him for the response. Flint is told that the bottom 20 priorities are to be given no attention at all. The business lesson is that if you want to succeed, you must be selective in your focus.

And the analogy transfers easily back to punting: it tells us that we need to focus on the essential aspects of betting analysis that drive profits, and not the inconsequential and trivial information – think pub chatter – that can so often divert our attention.

These business clichés that relate to our need to focus on what matters – whether it’s the 80/20 or 5/25 “rules”, or Fred Smith’s main-thing thinking – have a secure grounding in cognitive psychology, too.

Know your limits

Since the 1960s, in a series of experiments, academics have demonstrated that humans have a limited capacity when dealing with simultaneous stimuli. In what has become known as “working memory”, these experiments demonstrate that the more we try to focus on, the less efficient and successful we become.

For example, a 2005 experiment by Graeme Halford and his colleagues found that when presented with statements about the relationships between three variables, all subjects seemed to overheat when asked to consider more than four at the same time.

This should act as a warning for us as punters, because we are constantly dealing with relational information of the sort: “When Player X competes on grass, they serve fewer aces, but when player Y returns on grass, they have a lower percentage of 2nd-serve return winners”.

Understanding that there is an in-built limit to the number of such statements that we can cognitively cope with at any one time, then, becomes crucial. If we try and focus on too much at once, the cerebral wheels will come off and we’ll make bad punting decisions.

Let’s go back for a moment to the pub conversations to recognize the dangers of our cognitive limitations. Not only are those punters focusing on the wrong kind of data – the peripheral and largely inconsequential – but they are being asked to consider the relationship between a dizzying array of information that will eventually make their brains implode. The alcohol doesn’t help, either.  Is it any wonder they are destined to a life of unprofitable punting?

Where does all this leave us?

Well, as with most of our cognitive shortcomings, the best way to overcome them is to put in place processes that recognise their existence and seeks to combat them.

As we develop our betting models, then, we need to ensure that we are focusing on the fundamental drivers of sporting chance, and ignoring the peripheral stuff.

In recent years, I have improved my profitability by disengaging from the 24-hour sporting media. There is information I need to know, for sure, but I don’t need to listen to hours of often uninformed commentators filling air-time with half-thought-through opinion and gossip. I know my brain is primed to overvalue such information, so it’s best that I just don’t hear it.

We also need to support the limitations of our working memory. Knowing that there is an upper limit to what we can consider at any one time, we need to make sure that our betting decisions are broken down into discrete stages and, where possible, that we support these stages with technology that is able to store things for us.

As an example, an ex-colleague had a flow-chart pinned above his punting workstation. Step 1 asked him to update his speed ratings, with a numbered list of what he needed to do to accurately complete this task. Step 2 asked him to do the same for his handicap ratings. Step 3 asked him to combine the ratings into a likely-performance range spreadsheet he had developed. And so on, and so on…

Each step was discrete, and watching him work through them was like watching a concert pianist in performance: it was a masterclass in how to remain attentive to a single task.


In previous articles I’ve recounted how, in my years working with a variety of long-term profitable punters, I rarely came across one who wasn’t introverted and analytical by nature. One used to tell me, almost proudly, that he was undiagnosed autistic.

He had no interest in the thoughts or feelings of other humans, he said, and so wasn’t swayed by the nonsensical conjecture that informed most people’s punting. He also had the capacity to obsessively focus on a single task for hours at a time. His profits were staggeringly consistent.

Most of us, though, are unlikely to have those qualities as standard. We must work on them, with focus.

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