The First Quarter
(Editor's Note: This is an excerpt from Steve Fierro's new book, The Four Quarters of Horse Investing, now available in the NetCapper Store.)
If I were to become a retail clothing store owner tomorrow, here are a few strategies that would be common to the industry. These common strategies would be items proven to be necessary to run a successful retail clothing store. There just happens to be four of them.
The first key strategy is finding the correct inventory. I cannot be successful if I don�t have an inventory on hand that has the potential to sell... I believe I will get very little argument that this comparison of inventory selection to contender selection is a nice fit. In order to create a successful horse-investing portfolio, you must have a solid Contender Selection strategy. If you can�t pick clothes that will sell (horses capable of winning) you can�t make a profit.
When I address each of these four strategies I will give a very honest evaluation as to where I feel the vast majority of the current people that play the races fit.
This first quarter contender selection area is the strategy where horseplayers excel. They can pick winners. There is a high percentage of folks that attend the races daily that are truly solid handicappers. They have excellent methods of narrowing down a field to its true contention. They pick a fair amount of winners as well. They just spend too much time in this one area.
It�s too bad, because track takeout and breakage makes just picking winners not good enough. You can play favorites and have three winners on average on any nine-race card. Plenty has been written about favorites winning 33% of the time. It has also been substantiated that if you play every favorite you will lose money. This is because this is an investment market. You have to do more than pick winners. This is what the Four Quarters of Horse Investing will correct.
The fact that the majority of the players are very strong in this category is also the reason why they can�t be winning investors. They are investing with an approach that is only 25% of what needs to be done! They are "who do you like?" selection-oriented handicappers. There is a huge difference between being a successful investor and a handicapper. The handicapper dopes out the contenders, makes a top pick and heads to the window to play. They spend 90% of their time (generally right up to post time) looking for the secret to the race. They haven�t figured out that the answer to the race is that there is not singular secret. Every race carded has multiple secrets that can alter the outcome of the event.
This next statement will turn more than a few heads and is certain to spark some controversy: If you don�t have a contender selection process that gets to your contenders in any race within five to seven minutes, on average, you better get another one. I am sorry to disappoint you but this is stone cold reality. The majority of handicappers (notice I didn�t say investors) spend far too much time on unimportant items they have been led to believe are important. They scour the past performances horse by horse, line by line. You need to start making it easier on yourself. Develop a contender selection process that gets you to your contenders quickly. You will see there is a whole lot more to do with a race than selecting your contenders. Start avoiding the trap of looking and looking at the same facts and figures on a race. There are some handicappers who, if given another half-hour, will continue to look. Here�s a fun example:
There is a late scratch at the gate. When this happens, the crowd will fall into these categories:
1. I Don�t Care Player. I am not involved in this race so it doesn�t matter. This is by far the smallest percentage. You really have to look to find one of these types Before the scratch the race didn�t fit into their wagering plans anyway, so why care about it now? The facts about the other entrants that were uninteresting before the scratch are exactly the same now. Rare indeed is this individual.
2. I Better Look Again Player. This is the player that has already wagered. The horse involved in the scratch wasn�t even on any of their tickets yet they have to pull out the past performances just to see. Oh yeah, you can bet this type will find something. They will then go down and change their original wager. Here�s the problem. The amount of time available when this type of gate scratch happens is in no way enough to make any type of rational "new" wagering decision. This player is doomed. Remember, I am speaking of the handicapper that spends way too much time on any given race. They are not the types that make rational decisions in the five to seven minutes I spoke about earlier. They don�t have a process that allows them to accomplish this. Then why, when there is a late scratch, do they feel they can make those snap judgements in two or three minutes?
3. The Frenzy Player. They have a bet on the scratched horse and they have to run around bemoaning the fact they have the declared runner. Instead of accepting the refund graciously (and accepting the fact they should be glad the horse was scratched), they now fall right back into the "who do ya like" mode. They then proceed to run down and play their second contender or, sometimes, a horse someone gives them. Once again, this player is doomed.
4. The Investor. Rare, indeed, is the one (investor) that says, oh well, I will get my refund, let�s get on to the next race. This type is as hard to find as the type in the first example.
This book will spend very little time addressing the contender selection process. We don�t need to. Selecting contenders and picking winners is what handicappers do best. The problem is they spend 90% of their time on what should be 25% of their total horse investment portfolio. Then we have the fact that 90% of the everyday race players stop here. Very few venture into the area of true horse investing. This book attempts to correct that inequity. The Four Quarters of Horse Investing strategies balance the scale.
We now get to crunch time and you have a hard decision to make. Here is where you as a horse investor start on your road to becoming a winning player. You now have the opportunity to accept and put this into your personal belief structure. The First Quarter Contender Selection process is only 25% of what I do as a successful horse investor. I will make sure that I do not spend more than that amount of time and energy or on this strategy...
"The First Quarter Contender Selection process is only 25% of what I do as a successful horse investor. I will make sure that I do not spend more than that amount of time and energy or on this strategy."
Just as the retail clothing store operator has only so much time to deal with getting to the right inventory mix (contender selection), so do we as players. There is so much more to do to stay on top of a successful horse-investing portfolio.
The final call: 90% of the average handicappers spend 90% of their time here. It is all they do when they play the races. The successful horse investor will need to get this to 25%.NC
Copyright �2002 Steve Fierro. All rights reserved.