The World Cup is away, and the best cheap marketing hit a company can get is delivering as a major event broadcast partner. Given Optus has failed spectacularly at that one, the second-best marketing hit a company can get is piggybacking off a major event. When it comes to the World Cup, the big question is: who do you think will win? That one brings out all those who believe they can use their ‘skills’ of forecasting and picking winning stocks: investment banks and stockbrokers.
Despite some of these banks having their grass cut by stock picking polar bears, cats and octopuses in recent years, they temporarily diverted their attention away from their core focus to feverishly work away on reports that tell us who they think will win the World Cup. Investment bank UBS even put 18 people on the case to write a special World Cup/Emerging Markets report.
Paul The Octopus On The Job in 2010
UBS concluded Germany would likely be the eventual winner with Brazil the second most likely. Though don’t run to put any money on that outcome, UBS has been wrong for the past two tournaments.
Goldman Sachs ran their computer models over the World Cup countries and came up with Brazil on top over Germany. However, one glaring error that’s already popped up in Goldman’s outputs is a forecast of Russia failing to make it out of the group stage. Instead Saudi Arabia is forecast to take their place. Given Russia’s already won two games, thrashing the Saudis in one of them, it’s confusing how Goldman’s computers cooked up this scenario. Maybe Goldman were pandering to win some Saudi business.
Back in Australia, Macquarie Bank’s quantitative team used a model that considered ranking, ranking momentum, the squad, sentiment and innovative data. These factors shot out Spain as the eventual winner with Germany as the runner up.
Not wanting to be left out, we’ve done similar, albeit devoting significantly less resources and time to the cause. Our process involved picking out the top 16 ranked teams, (let’s be honest the bottom 16 are kidding themselves) writing their names on paper and then picking them out of a box. To make it a little more relevantly weighted to the genuine contenders we included the top 8 ranked teams twice. The process took all of 5 minutes.
The countries making the quarter finals were France, Uruguay, Spain, Denmark, Serbia, Argentina, England and Mexico. Not exactly the most likely quarter final round and the semi-finals became a little more unlikely with Uruguay, France, Denmark and Mexico advancing. However, it should be noted France and Uruguay are previous winners. Our rigorous paper and box method then threw up a Denmark v Mexico final with a France vs Uruguay third place play off.
The eventual winner? Denmark! Who knew the Danes had it in them? We’ll have to stand by our unlikely pick, but we’re more confident with our selection of France coming up trumps in third place.
Of course, this is all a little bit of fun to highlight how we perceive picking winners and forecasting, it’s no science. If stock picking cats have taught us anything, it’s that.
And Goldman’s disclaimer on their World Cup forecast.
“We capture the stochastic nature of the tournament carefully using state-of-the-art statistical methods and we consider a lot of information in doing so, but the forecasts remain highly uncertain, even with the fanciest statistical techniques, simply because football is quite an unpredictable game.”
Just like the direction of financial markets and fortunes of individual stocks.
At the end of the World Cup we’ll check in on how our crude picks fared.
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.
