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]

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7 Responses to “Goldman Sachs Also Did Not See Germany 7, Brazil 1 Coming”

  1. Captain Oblivious says:

    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. Guest says:

    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. guest says:

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

  4. Day Trader says:

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

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