Monday, February 01, 2010

Have the markets over-reacted to Arsenal's weekend loss?

I always look for market over-reactions to a loss (or succession of losses). Try as a I might, I can't understand why the bookies have pushed out Arsenal from 9/2 to 12/1 after their loss today.

I still think Chelsea will win the Championship, but I think that it is much more likely that Arsenal will shorten rather than lengthen from the current price of 12/1. I don't think a team mid way through the season who lose to one of their two rivals should lengthen this much.

If the market adjusts to what I believe to be the correct price now (or some time in the future) I'll close out the position.

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