Goldman, Macquarie tip rival horses to win Melbourne Cup. UPDATE: Oh dear...
UPDATE: The $A6 million race was won by Green Moon, a horse that did not feature in Macquarie nor Goldman Sachs' respective top three picks, let alone being the winner predicted by their financial modeling.
"Stick to abacuses and the sharemarket," said TAB bookie Mark Stafford when NBR ONLINE asked him if he had any advice for the dilettante bankers.
Dunaden and Americain have been neck-and-neck as the bookies' favourites – and are also tipped by two equity houses that have used financial modelling tools to make Melbourne Cup picks.
Macquarie Equities quantitative strategists or "quants" used a quality yield measure (sverage prize money per race) and calculate a yield for the horse's owner and predict Dunaden win.
Dunaden placed first in last year's cup, making it the third time in a row Macquarie had successfully predicted a winner.
Macquarie's top picks after Dunaden are (in order) Kelinni, Maluckyday, Lights of Heaven, Americain and Galileo's Choice.
Its modelling predicts the "donkeys" of the field will be Unusual Suspect, Tac de Boistron, Winchester, Zabeelionaire, Precedence and Niwot.
Meanwhile, the institutional trading team at Goldman has picked French horse Americain (the 2010 winner).
The bank points out that since the cup was first run in 1861, favourites have won 22% of the time or placed 66% of the time.
For the trifecta, Goldman picks Americain, Dunaden in second, and hedged bets on third place across six horses: Maluckyday, Galileo’s Choice, Red Cadeaux, Niwot, Kelinni and Mount Athos.
RAW DATA: Macquarie's 'quant' analysis (PDF)