Instead of going for the big win by trying to find undervalued companies that suddenly jump in value, the world’s biggest hedge fund concentrates on achieving small but consistent gains. This strategy makes Bridgewater Associates very different to it’s competitors.Ray Dalio started the company in 1975 and operated from an extra bedroom in his New York apartment. He turned it into the world’s biggest hedge fund, with $US80 billion currently under management.
The fund has returned an average of about 14% annually over an almost 20 year period, and even posted a 14% return in 2008 when 70% of hedge funds lost money.So what does any of this have to do with betting on horse racing?Dalio’s unofficial operations handbook was recently made public and many of the almost 300 principles discuss the ‘search for truth’. So I am going to paraphrase some of his principles and apply them to punting.
FIND THE BEST ANSWER, NOT THE BEST ONE YOU HAVE
Recognize the power of asking: “What don’t I know and what should I do about it?” Your goal is to find the best answer, not to give the best one you have. Do you know the answers to the most important punting questions, such as the mathematics of punting, winning strike-rates, profit on turnover, money management and whether various racing wives tales have any element of truth?
For example, what kind of losing run can I expect from a 25% winning strike-rate? How much of my bank should I outlay per race? Is there such a thing as 2nd up syndrome? Does dropping back in distance have a negative effect on a horse’s winning chance? How do favourites perform on wet tracks versus dry? Can you make money backing the top trainers or jockeys? Are staying events less predictable than sprints? There is an unlimited list of questions, but do you have the best answers to the most important ones?
IS YOUR ANALYSIS BETTER THAN THE MARKET?
Bridgewater is known for producing huge amounts of research that help it grind out steady rather than spectacular gains from a very diversified approach. Do you do sufficient research before placing a bet? Are you confident that your analysis is better than the market, so that you’re betting with an edge?
HAVE A GAME PLAN
You need a well thought-out game plan. Take your time in designing this and putting it on paper, because the few hours spent planning will be virtually nothing in relation to the amount of time that you will spend ‘doing’, and it will make the doing radically more effective. Finding the path to success is at least as dependent on coming up with the right questions as in coming up with answers. When faced with a problem, successful people:
• ask themselves if they know all the important questions about it
• are objective in assessing the probability that they have the answers
• are good at open-mindedly seeking believable people to ask in order to explore their reasoning rather than to just accept their conclusions.
Specifically related to punting, create a matrix of qualities you are looking for in determining (a) the type of race you want to bet in and (b) the type of horse you want to back. For example, you may avoid all races with less than eight runners, or on heavy tracks, or races where there are more than three genuine winning chances, or avoid any horse that is a backmarker regardless of the likely pace in the race. This matrix of must-haves should be based on you having initially asked the right questions and then researched the best answers.
By deciding on a framework for the type of race you want to get involved in and the type of horse you want to back, you can approach things in a business-like manner and avoid wasting time (or even worse, money) getting involved in unsuitable races. When you have established your strategy, get some expert advice and don’t worry about trying to solicit positive comments as those areas won’t be the ones that need further work. Get someone whose opinion you respect to play the role of ‘devil’s advocate’ and pull your plan apart. Successful people ask for the criticism of others and consider its merit.
THE MATHS OF PUNTING
It’s wrong to blame losing streaks on anyone or anything other than yourself. It is incorrect because periods of drawdown happen to everyone, and it is your challenge and test to successfully deal with whatever comes at you. Blaming bad outcomes on anyone or anything other than yourself is essentially wishing that reality is different than it is, which is silly. It also diverts your attention away from mustering up the work ethic, mindset and other qualities that are required to produce the best possible outcomes. Remember, the mathematics of punting will test your psyche and personal resilience. Plan for it, expect it, and deal with it in a level-headed manner.
Part two of this article next week will discuss mindset, the abundance of opinions, doing the hard yards and ascertaining value.
Good punting
David Duffield
Champion Picks
{ 3 comments… read them below or add one }
i always look at racing like that but never stuck to it now that i read that i will use my head and really think about it thank you
i think two of the must have fundamentals are 1/ have a betting bank that is completely seperate from household money – even open a seperate account for holding on to what you don’t need for punting in the near future – it can make interest for you too, and 2/ plan your day, do what is working for you and keep to it, one of the worst things a punter can do is chase a daily loss.
The answers are out there.
When I first started punting I was a complete noob and wouldn’t have known value if it slapped me in the face. Some years ago I decided i’d had enough of being a mug and started to do some reasearch. I’m far from being a expert and still make stupid punting mistakes but I’m a long way from the bloke who had to have a bet in every race.
95% of what I have learned over the years has been through the internet and articles like those put out by Champion Picks and other pro web sites so my advice is to dive in and read as much as you can.