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Archive · Monday, June 29 · 6 min read

The 1980 US hockey team and why short prices on overconfident favorites still happen

The Soviets were the heaviest favorite in modern tournament hockey history. They were also the most-overrated team in the bracket by every quantitative measure that the markets weren't using yet.

Every betting market reflects the information being priced and the information being ignored. In 1980, public opinion was reading the brand. Quantitative markets were not yet reading the schedule. The Soviets had played eleven exhibitions against the same opponents in shifting orders; their margin against equivalent NHL all-star sides had been falling for two years. The market never adjusted.

The modern version of this trade is futures markets in any sport where a single big name carries the price. The number gets locked in by reputation and slow-moving consensus. The lesson is older than the chart: when the price reflects the brand and not the schedule, something is going to break the price. The hard part is being early enough to catch it.

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