• 11 Jul 2014 at 12:21 PM
  • Banks

Goldman Sachs Also Did Not See Germany 7, Brazil 1 Coming

It didn’t see a lot of things coming in this World Cup. And even the things it did see coming (Argentina in the final), it changed its mind on after it did so badly seeing things coming in the group stage.

Goldman Sachs’s World Cup predictions, outsmarted to some extent by an octopus, have been caught out by reality. A complicated model that predicted Brazil to win the tournament after facing down the Netherlands now looks wanting after both teams were knocked out….

Looking at those original, pre-tournament predictions, only 37.6% of the group stage matches ended the way Goldman Sachs’s original model forecast. That is, it correctly calculated one of three possible outcomes—win, lose or draw—just over a third of the time, hardly better than predicting it at random. From those calculated correctly, they managed to foresee the scoreline 17% of the time, meaning three occasions: Argentina-Bosnia, South Korea-Russia and Algeria-Russia.

When the bank updated its predictions at the end of the group stages, it got the result of the match—win, lose or draw—right 60% of the time. But it failed to correctly guess the results of both semi-finals at that stage, and hence ended up predicting the wrong teams for the final.

What’s the model say now? Germany fans might want to stop reading now.

The bank has been updating its positions as the tournament has progressed. It now “narrowly” favors Germany to win in the final.

And you know what that means: Argentine fans will be back in the streets Sunday night, reprising a little ditty about Paul Singer.

In the aftermath of Argentina’s semifinal World Cup win last night, crowds broke into the usual victory chants, praising the homeland and poking fun at the British, their longtime nemesis in the Falkland Islands.

But a less traditional song could also be heard in the streets of Rosario, Argentina’s third-biggest city and the birthplace of team captain Lionel Messi: a profanity-laced taunt of the hedge funds that have battled the government over defaulted debt since 2001.

“Vulture funds,” a group chanted amid celebrations at the city’s National Flag Memorial. “Stop messing around and agree to the swap.”

Goldman Sachs’s World Cup Predictions Model: Successful? [WSJ MoneyBeat blog]
Argentines Taunt Hedge Funds After World Cup Victory [Bloomberg]

7 comments (hidden to protect delicate sensibilities)
Show all comments ↓

Comments (7)

  1. Posted by Captain Oblivious | July 11, 2014 at 12:33 PM

    I had inside sources tell me that Gary Cohn and Master Lloyd orchestrated the Neymar back breaking John Kriese style so they could sell brazil to clients but go long Germany. Was that wrong?

  2. Posted by Guest | July 11, 2014 at 1:14 PM

    Wow. Argentinian football fans are quite intelligent. Here in the UK the chants are racist and homophobic. They should gets some points knocked off the swap for their cleverness.

  3. Posted by guest | July 11, 2014 at 1:15 PM

    Model my ass. It's all finger to the wind.

  4. Posted by Single in FiDi | July 11, 2014 at 1:38 PM

    Beats finger to the a$$

  5. Posted by Day Trader | July 11, 2014 at 1:51 PM

    I'm cancelling all my equity research from Goldman's and going with the octopus stock predictions.

  6. Posted by E. Texas Gas Trader | July 11, 2014 at 2:47 PM

    Never use the phrase "finger to the wind" around natural gas traders and marketers.

  7. Posted by Clients | July 12, 2014 at 2:19 PM

    Wont' be the same b/c the octopus won't front-run you