Two financial-services giants, Goldman Sachs and UBS, have put their analysts to work on the outcome of “the beautiful game's” most anticipated event, the World Cup. The results? Two wildly different predictions.
Goldman Sachs, in a 50-plus page report on the World Cup and economics, supported bookmakers' bets that defending champ and No. 1-ranked Brazil is the “undisputed favorite.” Goldman's probability model gives Brazil a 12 percent chance of winning. The firm has an uneven record when it comes to World Cup bets. It correctly predicted three of the four semi-finalists in 1998, but none in 2002. Besides Brazil, it puts Germany, Italy and either Argentina or England in the semifinals.
UBS also puts Brazil in the finals, but goes out on a limb with its choice of a winner.
“Using scientific methods comparable to those used by experts to make economic and financial-market forecasts,” UBS' simulation predicts Italy will beat Brazil. The 12th ranked Azzurri haven't won since 1982 and were runners-up in 1994. But UBS says the simulation has been “tested for reliability by applying it to past World Cup and European tournaments.” The Swiss bank says its model has accurately predicted 89 percent of the finalists in the last nine World Cups. Advantage: Goldman Sachs.