Strategy
Regression to the mean
The tendency of extreme performances to be followed by more ordinary ones.
A team shooting an absurd percentage from three, or a running back scoring on every other drive, is almost never doing something sustainable. Extreme results contain a large luck component, and luck does not repeat.
Markets price this in imperfectly. Public money chases hot streaks; sharper money fades them. Knowing which part of a hot run is skill and which is variance is a large share of what handicapping actually is.
See also
- Sample size — How many observations sit behind a number — and whether it means anything yet.
- Variance — The spread of outcomes around your expected result — why good bettors have terrible months.
- Square — A casual bettor, and by extension the predictable side of the market they bet.