Punting vs Investing

[TheSchmile]

Hi there one and all,

I found these principles on the investopedia.com website and found them quite poignant in relation to horse racing investments.

Something to ponder as we enter a New Year, fresh and raring to go!!

Principle No.1: Always Invest with a Margin of Safety
Margin of safety is the principle of buying a security at a significant discount to its intrinsic value.

This statement is true for laying and basically we do the opposite for backing. Find the commodity at the best price.

Principle No.2: Expect Volatility and Profit from It
Because the stock market has these same emotions, the lesson here is that you shouldn't let Mr. Market's views dictate your own emotions, or worse, lead you in your investment decisions. Instead, you should form your own estimates of the business's value based on a sound and rational examination of the facts.

I find the same applies to horse racing markets as often the general market gets swept up in the excitement and hooha surrounding a particular new 'champion' or today's 'good thing'.

Principle No.3: Know What Kind of Investor You Are
You only have two real choices: The first is to make a serious commitment in time and energy to become a good investor who equates the quality and amount of hands-on research with the expected return. If this isn't your cup of tea, then be content to get a passive, and possibly lower, return but with much less time and work.

I believe understanding your comfortable level of risk is really important. I have a blend of low strike rate/high strike rate value strategies to ensure that my runs of outs are manageable.

I hope you find this interesting and something to get the brain juices flowing in the New Year. I'm really looking forward to it and thank everyone for their contributions this year, as I simply LOVE THIS GAME and extrapolating new angles to investigate.

HAPPY NEW YEAR!!!

The Schmile

Read more: http://www.investopedia.com/articles/basics/07/grahamprinciples.asp#ixzz1i48rSCUc

[Chrome Prince]

Thanks for posting this Schmile.
Been a pretty bad year for me allround, so am looking forward to what can only be a better year.

I found these trading tips quite pertinent to another angle I've been using successfully.
Trading in running on UK Hurdles and Steeples only.
Using small stakes to make lots of little trades with a trailing stop loss.
As opposed to the fast picture players and live viewers, I'm trading only on movement, rather than what I think a horse will do or not do.
The hiccup of course is a fallen horse, but with lots of little trades rather than two or three big trades, the damage is tiny by comparison.
There is also (unless a rider is unseated or a faller) plenty of time to take positions over and over again.

*I would never try this on a flat race.

So here are my variations in relation to in running trading:

Principle No.1: Always Invest with a Margin of Safety

Always have a stop loss, do not rely on your own decisions, it's too easy to hope the odds will come back in your favour. Most of the time it won't.
Use small stakes to make numerous trades, rather than exposing one lump sum.
It will happen that a horse will fall and you can end up losing the lot.
It will also happen when you least expect it.

Principle No.2: Expect Volatility and Profit from It

Prices never go straight up or straight down.
They trend up or trend down.
Set a limit to how far you let a loss go and set it as a stop loss, regardless of how things "look".

Principle No.3: Know What Kind of Investor You Are

Know your weaknesses (speaking for myself), if greed is a problem, lock in a profit and move to the next race.
Never mix trading with backing or laying, or do multiple trades at once without first closing all open trades.
Too easy to get mixed up when you're running out of time in the flurry.

[darkydog2002]

TheSchmile
Couldnt agree more.

[TheSchmile]

Hi Chrome Prince,

Thank you for your tips on trading in running and the like. I've always found it an intriguing market to play with. Reading your post, I can see that again discipline is required with all forms of horse racing investment.

Darkydog,

Thank you for your post and to both of you I wish you a very HAPPY NEW YEAR!!

I'm working on a few different angles of attacking the form guide for next year. Something for the newbies to sink their teeth into. I'm hoping I'll learn even more, like I did when I started to coach Soccer, I found it made me a better player by thinking about how I approached the game.

Keys to take into the New Year:
1/ Seek and attain value for selections, if price is not right, sit out or lay.
2/ Discipline
3/ Patience
4/ Constant self analysis - to ensure you're making the right decisions.

The Schmile

[darkydog2002]

The Schmile,
Thank you .
And a prosperous New Year to you.

Cheers
darky