Melbourne is the
centre of Aussie Rules football, and you can’t live here more than about 10
minutes without being asked which team you barrack for. Most Melburnians
seem to develop a passion for the game that
transcends reason. I wrote last week of
my pastor, who is also chaplain to Essendon Football Club. As a
missionary in Ethiopia in the 1960s he used to sit next to a scratchy
shortwave radio each weekend to catch the footy commentaries on Radio
I’ve lived in
Melbourne for nearly 10 years, yet each time I take my three sons to a match
I find it as enthralling as watching the stadium grass grow. This year’s
thrilling soccer World Cup tournament only reinforced my indifference.
I know little about
the rules of the game and I could probably name all of about three players.
Yet, despite this lack of knowledge, last year I entered the
Crikey footy tipping contest. And I won! (My prize: a money order for
$200, a copy of Ken Layne’s thriller
Dot.Con, and two tickets to the Aussie movie “The
Bank”.) This year I entered again, and did less well, though still
finished in the top quarter of all entrants.
My point was to show
that you don’t need to know much to be an expert. In fact, we’re bombarded
with too much information. In the information age ignorance isn’t just
bliss. It can also be power.
I came to this view
while doing some research on the stock market. I came across the writings of
Professor Terrance Odean of the University of California, an expert in
the emerging field of behavioural finance - the psychology of investment
behaviour. He analysed the share market trading records of 88,000 investors
over 10 years at a particular US broking house, and his numerous conclusions
include the following:
* the more actively that investors traded, the less they earned;
* most investors are
unable to choose systematically between the many stocks available, with the
result that they tend to buy stocks that have been in the news or that have
recently experienced big price movements;
* other research
suggests that the availability on the internet of so much real-time data and
so many investor tools - such as the ability to sort stocks according to
numerous criteria - encourages investors to take action - any action - when
they would probably be best advised just to sit on their existing
In the words of
Studies show that, as
people acquire more information, their confidence in their ability to
predict outcomes rises far faster than the accuracy of their
predictions….Billions of bytes of market data give most investors no more
ability to pick individual stocks than to pick numbers on a roulette wheel.
It’s the same with
sport. And so, blissfully ignorant of what all the experts were saying about
teams and players, each week I simply consulted the previous week’s ladder
(the previous season’s finishing ladder for the beginning few weeks of the
season), and for each game I tipped the team with the higher number of
points, or the higher ratio. When two teams were equal on the ladder I
tipped the home team. And that’s about it. Simple (and extremely boring).
After I won the Crikey
contest last year I got an email from the Crikey Gadget Man: “…we may even
meet up for a beer and get a bit of a photo thing happening?
I replied that I’d
love to meet up for a beer. And I sent him an article I’d specially written
- explaining how I’d won the contest - that I thought Crikey might like to
The article was never
used. And I never got invited for that beer.
September 3rd, 2002