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How I Predicted India's 2-1 Win Over Australia (And the Implications for Investors) - Views on News from Equitymaster

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The Equitymaster Research Digest

How I Predicted India's 2-1 Win Over Australia (And the Implications for Investors)
Mar 31, 2017

  • A prediction dream run
  • No fancy stories
  • Fantastic News for SCOREFAST Followers

I am on a prediction dream run!

After calling the UP elections, another of my predictions has come true.

Mid-way through India's first test match against Australia, when we were down in the dumps, I predicted we would win 2-1.

It was a bold call given the situation. But lo and behold, we won 2-1.

Perhaps I have a career in astrology!

The Base Rate Miracle

To be honest, my first prediction bordered on speculation. The second, however, was backed by logic.

In statistics parlance, it's called a base-rate prediction. Base rate is nothing but the prior probability of an event or a phenomenon.

Historically, Australia dominates India in tests. Excluding draws, Aussies win 60% of the time.

On the pitches in India, however, it's even stevens. India's base rate of victory in India is 50%.

To this base rate, let's add two inputs. First, this was arguably the weakest Australian team to visit India in a long time. Second, team India was in great form going into the series.

It was clear which team had the better odds.

We beat the Aussies 4-0 the last time they toured India. But as the base rate shows, that was more an exception than the rule.

Longer term, the series between the two in Indian conditions has always been closely fought.

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