A Few Pointers for You

3rd July 2013

Disclaimer:RaceStrat are not financial advisers. Before acting on any advice in this Ramblings note, please seek your own advice from your own financial adviser.

I know we said last time we would coverclassas it pertained to horseracing, but instead we’ve decided to finish off from our last article, ‘There Are Some Things I don’t Get,’ dated 21stJune 2013. We want to touch briefly on ‘Investing and Wealth Creation.’

I read some material the other day quoting the latest statistics on gambling. It said in part, only five percent of gamblers win over a long period. I’m not sure how it is possible to come up with a set of reliable statistics on the percentage of people who win at gambling for the following reasons:

  • Wins and losses are not recorded by any central database or governing authority.
  • The Tax Office doesn’t record such data as you donotpay tax on winnings. The tax is removed from the betting pools -priorto you receiving any payout.
  • Totes, TABs, and On-line Betting Agenciesdonot provide details of individual betting accounts to the Tax Office. They may on request from the Police in the case of criminal investigations.
  • I can assure you, if Professional Punters were asked how much they won or lost, they would very quickly tell the asker to go jump. We get asked sometimes, and that’s what we say.

It begs the question, who writes this meaningless, unreliable rubbish and why do they bang on about it? In the main, statistics, which state only five percent or the like win at gambling, are touted by people selling tips. It’s a marketing ploy and has been around since Jesus played fullback for Jerusalem. These sorts of marketing ploys are designed to con a gullible public. Somewhere in amongst the marketing hype, there will be some reference to the fact that they (the tipsters) are in the five percent or whatever group of winners. Ho hum to that.Dropthem like a hot potato – enough said.

To be honest, we have no knowledge of how many people make money in the gambling game, or who regularly lose money. We know we win.Our subscribers know we win.

Commonsense tells us that more people lose - than win. We also know that regular winners don’t hold nine to five jobs; or any kind of a job. They don’t need to. You can bet London to brick that those whodowin consistently, know what we know – they don’t gamble, they invest. Investors have a whole different mindset to that of the gambler. Investors will never bet for the sake of having a bet in the hope that they’ll get lucky. Investors don’t have fun bets. The folks who make money out of this game run their betting as serious business. And let’s be honest, the business of making money is serious, it’s not fun.

The people who have this business-like approach to investing on the races also know the the end game doesn’t finish with collecting your winnings, there’s another step to the processcalledWealth Creation. That’s exactly what investing does, it creates wealth. If it doesn’t, you’re not investing. Gambling creates nothing of any value for you.

This is the bit we really love; you don’t have to get every investment right to create wealth, you only have togetsome of them right. For example, the last time we invested in horseracing was on Saturday 29thJune 2013. We nailed the winner in two of those races, and managed a second in the other race. After the races, the first thing we did wasnotcount our winnings, the numbers can wait. The first thing we did was to assess - why welostthe race we did. We knew why we won two of them. But what happened in the other one. The evidence was clear in hindsight. We had underestimated theclassability of the winner. The gambler wouldn’t have done this, the gambler would have continued betting his profits away on whatever. On this day, we earned a Return on Investment (ROI) of 97%, simply by grabbing the winner in two out of three races. The gambler on that day would have ended up losing.

You don’t have to be an Oxford University graduate or have a brain like Einstein to realise that if the guy down the street is making a lot of money from doing things, then it's very hardnotto think that maybe you should do the same thing - providing it’s legal. Ignore the tipsters and run with people who know what investing is about. Despite what some people may well tell you, it is possible to make money by betting on the race horses by patient investing, not gambling. The basic rules are:

  • Change your mindset and think like an investor.
  • Adopting a business model that:
  • Ensure you operate your investing as a sound business.
  • Utilises a well thought out disciplined financial strategy.
  • Employs risk control measures to mitigate any risks.
  • Maintains a betting bank.
  • Reinvests those profits.
  • Importantly, you must:
  • Not behave like a gambler, just because other people do.
  • Be happy with small profits. They build bigger profits.

Next time, we will coverclassas it pertains to horseracing. And later, we will coveranalysis. Analysis is not that difficult a subject to understand. Those who carry on about it being a specialist skill are usually the tipsters. And, most of them wouldn’t be able to analyse the inside of an empty jam tin with a flash light.

Till then,

Good Punting.

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