WINNING EDGE PODCAST

Do you treat betting as an investment?

In this interview with Nadia Horne on RSN - Racing and Sport, Dean Evans discusses what we can learn from Warren Buffett, the world's greatest investor with a net worth over $50 billion who started by learning how to price and bet on horses, and how we can apply his teachings and philosophies to the racing world.
 

Read the Interview transcription here: 

Nadia Horne: Dean the Trial Spy is about to join us and we’re taking a real different tact to this segment today. As most of us know, Warren Buffet is probably one of the most famous and successful investors. He is currently the 4th richest man in the world, with an estimated fortune to be around that $58.2 billion mark, which is unbelievable.

He has some famous, well known quotes that he has made over the years in relation to investing. So how can we take these quotes and apply them to ensure that we also treat betting on horses as an investment?

Dean the Trial Spy will help us go through some of Warren Buffet's most famous quotes and apply them to our own investment in horse racing.

Dean it’s an interesting tact, we often have to look at common business principles in investing and use things that have worked and provide them to horse racing for success.

Dean Evans: Absolutely, Warren Buffett is someone I've researched being the world's leading investor, and what a lot of people aren't aware of is he actually started as a horse racing handicapper using a mixture of speed and class ratings, and from learning how to price a horse he used those skills to learn how to value companies and stocks.

Nadia Horne: Let's talk about some of his famous quotes. First of all “A public-opinion poll is no substitute for thought.” Was one of his famous lines.

Dean Evans: Warren Buffet has made his fortune by being contrarian and taking advantage when the market has made a mistake undervaluing shares in a company. The key here with racing is don't simply follow the market, or the market movers. Back your own opinion or your own ratings, and don't be suckered in by the media or market moves.

Nadia Horne: "Many are in a cycle of fear which leads to people not wanting to spend and not wanting to make investments, and that leads to more fear. We will break out of it. It takes time."

Dean Evans:  He was referring to the Global Financial Crisis, but punters too can often end up in a cycle of fear during a sustained losing run. So, trusting your methods, processes and advantage over the market is key. You must avoid being afraid to pull the trigger.

Nadia Horne: Also, one that I think we have to take into consideration is "Beware of geeks bearing formulas, because there are plenty of them."

Dean Evans:  yes. Here he's saying he deals with people with whizzbang systems and calculations to value companies, but backs his own knowledge and experience above all else. I say, beware of services claiming to utilize solely computer generated ratings. The proven fact is that computer ratings alone simply don't work, and nothing beats the ability of a professional assessment of the data. What Buffett is saying here is whether it's punting or anything in life, computers can only do so much, and it's actually the ability of the analyser of the data to interpret it correctly, and that is the key to success.

Nadia Horne: "Chains of habit are too light to be felt until they are too heavy to be broken."

Dean Evans:  People don't often notice the little mistakes their making, or the money they're losing, until it's too late. Poor staking, not taking value and chasing losses are key determinants to long term failure, however often people will continually lose however much they set out to bet with each week. So, although they are satisfied with their losses, the reality is their losses are multiplying rapidly over the course of the year, until such point they realize that their punting bank is blown or life expenses come into play and there are no more funds available to bet with.

Nadia Horne: "Derivatives are financial weapons of mass destruction."

Dean Evans:  He's talking about options, CFDs and the like, but the punting equivalent of derivatives can be exotics bets, which can be disastrous for many. If you can't make a profit out of basic win betting, you are unlikely to have a strategy or methodology that will enable profits using quinellas, trifectas, first fours or quaddies, considering the tote take out for these types of bets is far greater than that of win betting.

Nadia Horne: One really interesting point is "Economic medicine that was previously meted out by the cupful, has recently been dispensed by the barrel. These once unthinkable dosages will almost certainly bring on unwelcome after-effects."

Dean Evans:  Yes, this is one of the topics we’ve spoken about. Incorrect punting myths (such as outsiders in small fields or avoiding wide barriers) passed down from generation to generation have resulted in most punters taking advice from other losing punters, lending themselves to make the same mistakes and losses.

Nadia Horne: "You only have to do a very few things right in your life so long as you don't do too many things wrong."

Dean Evans: With punting, I think, you only have to do a few things right, such as follow a successful strategy, utilize a betting bank, stay disciplined with the use of a sensible, mathematically appropriate staking strategies, and only bet when you're getting value, and you'll go a long way towards success

Nadia Horne: One other point is "Risk is a part of God's game, alike for men and nations."

Dean Evans:  Understanding risk, variance and the drawdown expectation of your personal punting are vitally important aspects, as is utilizing mathematically sound staking and bank protection strategies such as savers to minimise these risks

Nadia Horne: Also, "Our favorite holding period is forever."

Dean Evans:  The longer term the perspective you can have on your investing into racing, the greater your success will be. Allowing yourself to be affected mentally and financially by short term results will inevitably leave you with poor long term results.

Nadia Horne: One other point he used to bring up was "I have no idea on timing. It is easier to tell what will happen than when it will happen."

Dean Evans:  This is so true with betting in all forms. It doesn’t matter what level of bettor you are, or what level of professional you are, up to the largest global betting syndicates worldwide, none know when their big wins or big losses will occur. All they know is that they will win long term, but exactly when, the timing or in what manner, is a complete unknown.

Nadia Horne: And one thing that comes down to confidence is "I always knew I was going to be rich. I don't think I ever doubted it for a minute."

Dean Evans:  Successful punters always have a sense of confidence and certainty about their methodology and approach, because they know they are taking value and adopting sound mathematical betting and staking strategies to ensure their long term success.

Nadia Horne: He has been a very successful man and as you said he does come from a racing background, he has applied a lot of racing theory to his business, and it has ended up proving a successful one, so there is no reason why as analysts people should not follow suit in their own investments.

Dean Evans:  Yes, absolutely, that's right.

Nadia Horne: Dean, thank you for your time.

Dean Evans:  Thanks Nadia.

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