Bookmakers are certain Brazil will win the World Cup, and this is reflected in the odds they have placed on the home team.
You can back a clear favourite, but you won’t get much of a payout. So Deutsche Bank has picked some good “value” plays to consider when laying wagers.
Like Goldman Sachs, Deutsche has a light-hearted note providing some pseudo-economic analysis of the likely outcomes in the World Cup. They use subjective interviews to predict England as the likely winners because their team are mainly Premier League supporters, and for an expert view they interview a guy who once made “11-12” caps for the Swedish youth international squad.
Anyway, there are three teams from the lower half of the draw the investment bank says could surprise, after comparing its own probability data with bookmaker odds, which strongly reflect a home-continent bias.
For example, this chart shows the disparity between bookmaker odds and the DB probability of each team winning the tournament.
DB picks bets that could potentially do well for a value-based investor.
“A quick look at the draw, and the lower half of the draw suggests bets on the winner of Group E to reach at least the quarters are particularly attractive (France or Switzerland),” the note says.
It is a manageable group. And the winner then plays the runners-up from Group F, which — if Argentina comes out on top as expected — will be one of Bosnia, Iran or Nigeria, teams with some of the lowest bookmaker, and DB odds.
These are the top three “value” picks from the note:
The real “long shot” is Switzerland at 100/1 to win, and a still respectable 3/1 simply to reach the quarterfinals. It received a favorable draw and fields a decent squad decent, with a number of players in clubs such as Juventus, Napoli, and Bayern Munich.
The “good value” trade is France at 25/1 to win. Most of its team are at top clubs around Europe, and have played key roles for their teams this past season. Also, or probably therefore, it appears to be the most ‘underpriced’ team on our metrics.
The “insider tip” is Portugal at 25/1 to win. With Ronaldo in goal-scoring form and a decent keeper, strong defence, and solid midfield, there appears to be no material defect in the team. They also share language/culture with the hosts, so winning probabilities arguably fail to take account of what should be a home/continent bias.
Sadly for Australia, DB gives them slightly more chance than the bookmakers — 0.71% to 0.07% — but the Socceroos still have virtually no chance of winning.
DISCLAIMER: This is just some fun. The bank, and Business Insider, does not intend the above to be taken as investment or wagering advice.