Opinion: The Ultimate Guide to Betting Portfolios: Part 4 – ROI & Losing Streaks

In this guide to date, I have outlined how to set up a betting portfolio, analysed the risks, issued a stark warning about leverage, and wrote about the pros and cons. In this final part of the series, it is time to get to the nitty-gritty: The amount you can expect to win using a betting portfolio, along with a note on winning and losing streaks.

What Kind of ROI Can I Expect?

I hope you are sitting down because it is not the blockbuster figure you are hoping for. I have read about all manner of ‘systems’ that promise an ROI of 20%. What these shysters often fail to mention is the sample size. Sure, the system may yield a profit of 23% from 120 bets, but what about the ROI after 500 bets, or 1,000? The risk of hitting a long lengthy streak is exponentially higher the bigger the sample size, a fact I will outline later on.

As for your likely ROI, let’s just say that professional syndicates operate on an ROI of as little as 3% per annum. At this stage, you probably think that it isn’t worth your while. First of all, there are hardly any betting sites that are capable of exceeding these returns in the long-term. At Football Advisor, Jon and his team have achieved an ROI of 2.5% in the FA Full Portfolio from almost 3,700 bets.

Secondly, an ROI of 2-3% is a LOT higher than you think. Let’s say you like to bet £20 stakes. The FA Full Portfolio’s real money return is £3,816 in just ten months. If you don’t mind larger stakes, the actual return is extremely good. With £100 stakes, you would have earned £19,080 of tax-free profit in the last ten months. This equates to £22,986 per annum.

For reference, you would need to earn a salary of just under £29,000 a year to get the same amount after tax. Suddenly, an ROI of 2.5% isn’t so bad, is it?

Arguably a more important measure is the Return on Capital (ROC) figure mentioned earlier in the series. With an ROI of 2.5%, your ROC is almost 51%. In other words, you would have 1.5 times your initial capital. If you began with £10,000 for example, you would now have £15,000. ROI figures from hedge fund investments, for instance, may seem higher, but the real profit is below what you can earn from a well-thought-out betting portfolio.

What About Winning Percentage & Losing Streaks

Your strike rate depends entirely on what you cover in your portfolio. If you remember, I recommended a mixture of low, medium, and high-risk assets. For instance, backing all home favourites in the Belgian league would likely be classified as a low-risk asset because of a relatively high win rate. Backing the draw in English League 1 matches would be a medium or high-risk asset because of a low win rate.

Likewise, the potential for winning and losing streaks depends on the odds of your bet. Actually, it depends on the ‘real’ odds of a win rather than the odds provided by a bookmaker. As I’ve mentioned countless times, you need to determine whether or not bets are value to have any chance of success. It goes without saying that backing long shots with a 15-20% chance of winning will result in longer losing streaks than backing favourites with a 70% chance of winning.

Calculating the expected hit rate of your betting portfolio is relatively easy (incidentally I recommend making sure the complete hit rate is above 50%). Begin by multiplying the number of expected bets by the expected strike rate of each system. Once this is done, add them together and divide by the number of total bets:

Let’s say you have the following five portfolios:

  • Horse racing: 72 bets with a win rate of 30%. 72 x 30% = 21.6
  • Boxing KO artists: 40 bets with a win rate of 40%. 40 x 40% = 16
  • Long shots in Latvia: 18 bets with a win rate of 15%. 18 x 15% = 2.7
  • Estonian match goals: 56 bets with a win rate of 70%. 56 x 70% = 39.2
  • Premier League home favourites: 90 bets with a win rate of 65%. 58.5

The five systems reach a total of 138 wins. There are 276 bets. As it happens, the likely winning rate is exactly 50%. If it is lower than this, take a long hard look at your portfolio.

There is a stark difference between ‘expected’ and ‘observed’ losing streaks. There is a possibility that you hit a freakishly good or bad spell. Remember, each bet is independent of all the rest. This means you are no more ‘due’ a win after ten losses in a row, than if you were riding a wave of eight consecutive wins.

When it comes to judging risk for the future, it is always best to prepare for the worst-case scenario. Earlier on, I mentioned that your maximum winning and losing streaks would increase when you have more bets. For instance, a system with a 10%-win rate could have 37 consecutive losses and two consecutive wins within a 50-bet sample. However, your losing streak increases to 66 while your winning streak is three in a 1,000-bet sample.

A system with a 70%-win rate offers the potential for 11 wins in a row and three straight losses in a 50-bet sample. Your possible maximum winning streak swells to 19 while your losing streak is at six in a 1,000-bet sample.

As you can probably guess, however, it isn’t as cut and dried as that. I am now looking at a horse racing system I developed as an example. The system involves last time out winners in National Hunt and All-Weather races who ran 1-7 days after their latest win. Overall, they won 34.26% of these races for a profit of 5% on the Betfair Exchange from 2,271 races since 2012.

With so many bets over such a long timeframe, fluctuations are inevitable. Statistically, the maximum losing streak should be between 15 and 20 with a maximum winning streak of between 6 and 9. While the maximum losing streak was 16, and it happened only once, the maximum winning streak was six, and it also happened only once.

In reality, if you include systems with a win rate of 15% or below, it isn’t unusual to suffer a losing streak of 100 bets once your sample is in the thousands. If you aren’t prepared for this eventuality, your betting bank will be running on empty in rapid time.


Final Conclusion on Betting Portfolios

Hopefully, this four-part guide has provided you with helpful information in choosing your assets and setting up your betting portfolio. It is an uncomfortable truth that it takes a significant amount of effort, time, and cold hard cash to create a winning portfolio. It may even be a good idea to ‘test’ out your assets without risking any cash.

Remember, it is imperative that you diversify your portfolio. If you place all your eggs in one or two baskets, you could lose everything. With diversification, you mitigate the risk because a failing asset or two will not spell financial ruin. Make sure you also include assets that carry varying levels of risk. The long shots can make you a fortune, but the sensible short-odds bets are what keep you afloat.

In the end, a detailed betting portfolio can act as an investment in much the same way as the stock market. If you don’t have confidence in your own ability to make the right choices, or else you are time poor, you can always get in touch with an expert such as Football Advisor who will do all the hard work on your behalf.


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