If you watched, it was a nail-biting final to the Qatar 2022 World Cup.
Argentina led 2-0 most of the game. Yet, in the last 10 minutes of the second half, France tied the score, sending the match into overtime.
In extra time, Lionel Messi gave Argentina a 3-2 advantage. But once again, with just minutes remaining, Kylian Mbappé scored, making it 3-3.
It was on penalty kicks that Argentina finally ended up beating France, giving Messi the coveted trophy.
You can hear the reaction in Buenos Aires here as it happened.
As we’ve seen time and time again, anything can happen in the World Cup.
The Socceroos qualifying to the final 16…
Saudi Arabia beating Argentina at the group stage…
…and even Morocco making it to fourth place after beating Portugal and Spain in the knockout stage…
All in all, it was a thrilling World Cup with plenty of surprises and great moments, and with a trophy that was up for grabs until the last minute.
The World Cup is one of the largest sporting events in the world. More than 200 countries participate in the qualifier rounds, yet only 32 teams make it to the main tournament, and only one wins the game.
And predicting the winner has also become a big part of the game.
Of course, here, bookmakers are big winners. The estimate is that there was US$35 billion in bets over the tournament.
But it’s not just sports experts or betting agencies providing predictions. Everyone is getting involved…and I mean everyone.
For example, one of the best out there was Paul, who predicted the winner in eight out of eight matches during the 2010 World Cup in South Africa.
Of course, Paul was an octopus…
But…
Even the financial world gets caught up in it
Yep, you heard right.
The financial world has also been known for using many of the fancy tools it has at its disposal to predict the winner of the World Cup…and they aren’t always very accurate.
In early November, for example, Lloyds used data like player wages, age, and playing position to calculate a team’s insurable value and, from there, develop a model to pick the winner.
Lloyds said they used this method back in 2014 and 2018 and got the winner right.
But not this time….
Lloyds estimated England was the most valuable team, predicting they would win against Brazil in the final after knocking out Senegal, France, and Spain.
Of course, Lloyds isn’t the only one with epic fails here.
In the 2018 Word Cup in Russia, UBS, Goldman Sachs, and ING gave us their predictions before the start of the tournament.
UBS used 18 analysts and editors, machine learning, and algorithms to run more than 200,000 models and chose Germany as the winner.
Goldman Sachs used plenty of data and four machine-learning models to pick Brazil.
And ING tried to gauge a team’s market worth to predict the winner, Spain.
As you can see, no one got it right. In 2018, France went on to beat Croatia in the final.
So if you had followed their advice and placed a bet, you would have lost your money.
To be fair, though, not everyone got it wrong. An investment strategist from Liberum Capital did pick Argentina to win.
But my point is…
‘Experts’ don’t always get it right
It’s that time of the year again when everyone in finance comes up with their predictions for what the next year will bring and where to invest your money.
Take all this with a grain of salt.
Investment banks may do the research, study the players, the history, and the finances. They may have plenty of data and advanced tools available…
But much like in sports, it’s hard to predict what will happen in the economy. There is a whole range of unforeseen factors that can influence the future.
What’s more, investing with the herd doesn’t usually pay off.
In fact, a study by Nicola Gennaioli showed just that.
As they found, if during the last 35 years to 2018, you had invested in the 10% of US stocks analysts were most upbeat about, you would have made an average of 3% a year.
But if you had invested in the 10% at the bottom of the barrel, you would have made an average of 15% a year.
Bottom line, no one has a crystal ball. Predictions may come true. They can also be very, very wrong.
At the end of the day, take them for what they are, predictions.
All the best,
 |
Selva Freigedo,
For Money Morning
