WINNING EDGE PODCAST

Lessons from Ray Dalio

Monday, 02 November 2015

Share post on

Relating the world of investing to betting.

In this interview conducted by Nadia Horne on RSN - Racing & Sports, Dean Evans from Winning Edge Investments discusses some lessons learned from Ray Dalio, one of the world's biggest investors, and how we can relate these to punting.

 

Read the Interview transcription here:

Nadia Horne: How are you Dean?

Dean Evans: I’m great Nadia. How is it going?

Nadia Horne: I’m going well. Today, we are going to take a bit a bit of a different tact. We’re going to look at the views and a lot of investor principles on working out how to win on a punt. One classic example is, 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 its 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 through the crisis. He is one of the richest people in America with a net worth of $US15 billion

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 Dean Evans is going to paraphrase some of his principles and apply them to punting.

There are many ways that you can use business principles in general. This is a good way to start this to give people a different perspective.

Dean Evans: Yes and that’s great to analyse some of the world’s biggest investors, we’ve discussed Warren Buffett in the past, and Ray Dalio is another great example because the principles these investors use to generate long-term wealth and success can easily be applied to punting. It is the same mindset and same strategy that you should be using if you want to succeed in any form of investing.

Nadia Horne: Let’s start off with one point, find the best answer, not the best one you have.

Dean Evans: Recognize the power of asking: “What don’t I know and what should I do about it?”

To succeed at betting you need to find the best answers, and most correct answers, not just give the best one you have.

Do you know the answers to the most important punting questions, such as the mathematics of betting, winning strike rates, profit on turnover, money management and whether various racing wives tales or punting myths have any element of truth?

For example, what kind of losing run can you expect from a 25% winning strike-rate? How much of your bank should you 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’s an unlimited list of questions, but have you made the effort to educate yourself on the correct answers to the vitally important ones?

Nadia Horne: Is your analysis better than the market?

Dean Evans: Bridgewater is known for producing huge amounts of research that help it grind out steady rather than spectacular gains from a very diversified approach. But that approach guarantees them a long-term successful and profitable venture

Ask yourself, 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?

Nadia Horne: Also you have to have a game plan.

Dean Evans: 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’, which includes doing the form, race replays, obtaining, maintaining and reviewing data, and betting, securing the best price, so having a game plan will make the ‘doing’ substantially 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 betting, you could 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 correct 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 and money getting involved in unsuitable races.

Nadia Horne: What about the maths of punting?

Dean Evans: 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 nonsense.

And 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 betting will test your psyche and personal resilience. Plan for it, expect it, and deal with it in a level-headed manner.

 

Nadia Horne: You also need to have the right mindset?

Dean Evans: If you don't mind being wrong on the way to being right, you will learn a lot.

A large impediment to punting success is emotional. Ego is the biggest single one, but you can probably get what you want out of betting if you can suspend your ego and take a no-excuses approach to achieving your goals with open-mindedness, determination and courage.

You shouldn't feel bad about your mistakes because:

1. they are to be expected,

2. they’re the first and most essential part of the learning process, and

3. feeling bad about them will prevent you from getting better.

Use mistakes as learning and growing experiences because the first step toward deep, fundamental improvement is feeling the pain of failing and accepting the responsibility for it.

While being open-minded is far more important than being bright or smart, not all opinions are equally valuable so don’t treat them as such. Many are worthless or even harmful so it is not logical to treat them as equally valuable. For example, the views of people without any proven record of profitable tips or ratings are not equal to the views of people with great track records and experience.

Just because the jockey, trainer, or TV/radio/print journalist gets a lot of media exposure doesn’t mean that their selections make a profit.

Still, all views should be considered in an open-minded way, but put in the proper context of experience and track record. Ask yourself whether they have earned the right for you to place any importance whatsoever in what they have to say.

Opinions are easy to produce, so there is an abundance of bad ones around.

Nadia Horne: Definitely. And also do the hard things because the rewards are a lot bigger.

Dean Evans: Force yourself to do the difficult things because the cost of not doing them is enormous. It’s a fundamental law of nature that you have to do difficult things to gain strength and power, it’s perturbation, how a rock becomes a diamond. A bit like pushing yourself extra hard at the gym, after a while you make the connection between doing difficult things and the benefits you get from doing them and with time you come to look forward to doing these difficult things.

This may be putting twice as much effort into analysing half as many races, shopping for the best available odds, keeping honest and detailed records, or learning exactly how to apply sectional times as part of your analysis. It’s a fact that for most people the thing they avoid doing is the exact thing they should be doing.

Nadia Horne: And also, understanding the concept of value?

Dean Evans: Most punters would agree that if you are not betting on the value runners you can’t win long-term. By definition, unless you are getting odds that are greater than their true chance of winning, you can’t possibly make a profit. You will back your share of winners, but will still be a long-term losing punter.

But how do you know what value is if you don’t have a set of rated prices? Do you just guess whether the $3 available about your top selection is good value, or whether it is well and truly under the odds?

Nadia Horne: And, you will get what you deserve.

Dean Evans: The results that you end up with will reflect how you handle everything to do with gambling. So take control of your betting life and hold yourself accountable. People who wish for a great result but are unwilling to do what it takes to get there, will fail. Getting more worked up and shouting louder at the TV screen or radio won’t improve your winning strikerate.

When trying to understand and diagnose problems, it’s important to avoid being a “Monday expert,” That is, evaluating the merits of a past decision based on what you know now, versus what you could have reasonably known at the time of the decision. Do this by asking the question, “What should an intelligent punter have known in that situation?”

Nadia Horne: You have some very good points. Thank you, Dean!

Dean Evans: Thank you Nadia!

 

 

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WINNING EDGE PODCAST

Lessons from Ray Dalio

Monday, 02 November 2015

Share post on

Relating the world of investing to betting.

In this interview conducted by Nadia Horne on RSN - Racing & Sports, Dean Evans from Winning Edge Investments discusses some lessons learned from Ray Dalio, one of the world's biggest investors, and how we can relate these to punting.

 

Read the Interview transcription here:

Nadia Horne: How are you Dean?

Dean Evans: I’m great Nadia. How is it going?

Nadia Horne: I’m going well. Today, we are going to take a bit a bit of a different tact. We’re going to look at the views and a lot of investor principles on working out how to win on a punt. One classic example is, 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 its 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 through the crisis. He is one of the richest people in America with a net worth of $US15 billion

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 Dean Evans is going to paraphrase some of his principles and apply them to punting.

There are many ways that you can use business principles in general. This is a good way to start this to give people a different perspective.

Dean Evans: Yes and that’s great to analyse some of the world’s biggest investors, we’ve discussed Warren Buffett in the past, and Ray Dalio is another great example because the principles these investors use to generate long-term wealth and success can easily be applied to punting. It is the same mindset and same strategy that you should be using if you want to succeed in any form of investing.

Nadia Horne: Let’s start off with one point, find the best answer, not the best one you have.

Dean Evans: Recognize the power of asking: “What don’t I know and what should I do about it?”

To succeed at betting you need to find the best answers, and most correct answers, not just give the best one you have.

Do you know the answers to the most important punting questions, such as the mathematics of betting, winning strike rates, profit on turnover, money management and whether various racing wives tales or punting myths have any element of truth?

For example, what kind of losing run can you expect from a 25% winning strike-rate? How much of your bank should you 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’s an unlimited list of questions, but have you made the effort to educate yourself on the correct answers to the vitally important ones?

Nadia Horne: Is your analysis better than the market?

Dean Evans: Bridgewater is known for producing huge amounts of research that help it grind out steady rather than spectacular gains from a very diversified approach. But that approach guarantees them a long-term successful and profitable venture

Ask yourself, 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?

Nadia Horne: Also you have to have a game plan.

Dean Evans: 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’, which includes doing the form, race replays, obtaining, maintaining and reviewing data, and betting, securing the best price, so having a game plan will make the ‘doing’ substantially 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 betting, you could 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 correct 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 and money getting involved in unsuitable races.

Nadia Horne: What about the maths of punting?

Dean Evans: 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 nonsense.

And 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 betting will test your psyche and personal resilience. Plan for it, expect it, and deal with it in a level-headed manner.

 

Nadia Horne: You also need to have the right mindset?

Dean Evans: If you don't mind being wrong on the way to being right, you will learn a lot.

A large impediment to punting success is emotional. Ego is the biggest single one, but you can probably get what you want out of betting if you can suspend your ego and take a no-excuses approach to achieving your goals with open-mindedness, determination and courage.

You shouldn't feel bad about your mistakes because:

1. they are to be expected,

2. they’re the first and most essential part of the learning process, and

3. feeling bad about them will prevent you from getting better.

Use mistakes as learning and growing experiences because the first step toward deep, fundamental improvement is feeling the pain of failing and accepting the responsibility for it.

While being open-minded is far more important than being bright or smart, not all opinions are equally valuable so don’t treat them as such. Many are worthless or even harmful so it is not logical to treat them as equally valuable. For example, the views of people without any proven record of profitable tips or ratings are not equal to the views of people with great track records and experience.

Just because the jockey, trainer, or TV/radio/print journalist gets a lot of media exposure doesn’t mean that their selections make a profit.

Still, all views should be considered in an open-minded way, but put in the proper context of experience and track record. Ask yourself whether they have earned the right for you to place any importance whatsoever in what they have to say.

Opinions are easy to produce, so there is an abundance of bad ones around.

Nadia Horne: Definitely. And also do the hard things because the rewards are a lot bigger.

Dean Evans: Force yourself to do the difficult things because the cost of not doing them is enormous. It’s a fundamental law of nature that you have to do difficult things to gain strength and power, it’s perturbation, how a rock becomes a diamond. A bit like pushing yourself extra hard at the gym, after a while you make the connection between doing difficult things and the benefits you get from doing them and with time you come to look forward to doing these difficult things.

This may be putting twice as much effort into analysing half as many races, shopping for the best available odds, keeping honest and detailed records, or learning exactly how to apply sectional times as part of your analysis. It’s a fact that for most people the thing they avoid doing is the exact thing they should be doing.

Nadia Horne: And also, understanding the concept of value?

Dean Evans: Most punters would agree that if you are not betting on the value runners you can’t win long-term. By definition, unless you are getting odds that are greater than their true chance of winning, you can’t possibly make a profit. You will back your share of winners, but will still be a long-term losing punter.

But how do you know what value is if you don’t have a set of rated prices? Do you just guess whether the $3 available about your top selection is good value, or whether it is well and truly under the odds?

Nadia Horne: And, you will get what you deserve.

Dean Evans: The results that you end up with will reflect how you handle everything to do with gambling. So take control of your betting life and hold yourself accountable. People who wish for a great result but are unwilling to do what it takes to get there, will fail. Getting more worked up and shouting louder at the TV screen or radio won’t improve your winning strikerate.

When trying to understand and diagnose problems, it’s important to avoid being a “Monday expert,” That is, evaluating the merits of a past decision based on what you know now, versus what you could have reasonably known at the time of the decision. Do this by asking the question, “What should an intelligent punter have known in that situation?”

Nadia Horne: You have some very good points. Thank you, Dean!

Dean Evans: Thank you Nadia!

 

 

Related Posts

Thursday, November 18, 2021

Podcast - Dean Evans with Andrew Bensley on SEN 18 November 2021

In this episode, Dean previews The Gong and The Ballarat Cup. Dean Evans, the analyst behind Dean's Tips and Trial Spy joins Andrew Bensley every Thursday morning to provide his expert analysis on Saturday races. Dean's TipsAustralia's 2nd most profi

Thursday, November 11, 2021

Podcast - Dean Evans with Andrew Bensley on SEN 11 November 2021

In this episode, Dean previews The Hunter at Newcastle on Saturday. Dean Evans, the analyst behind Dean's Tips and Trial Spy joins Andrew Bensley every Thursday morning to provide his expert analysis on Saturday races. Dean's TipsAustralia's 2nd most

Saturday, November 6, 2021

Podcast - Dean Evans with Gareth Hall on RSN Central - 5 November 2021

Dean Evans previews the Mackinnon Stakes, runner-by-runner. Dean Evans, the analyst behind Dean's Tips and Trial Spy joins Gareth Hall every Friday afternoon to provide his expert analysis on Saturday races. Dean's TipsAustralia's 2nd most profitable

Saturday, November 6, 2021

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Our Western Australia Tips & Ratings service is headed up by full time professional punter Cameron O'Brien. Cameron was bred to be a pro punter, with his father responsible for the Victorian weight & class tables and ratings for Don Scott's classic b

Thursday, August 19, 2021

Dean Evans on Banter with Bensley

Winning Edge Investment's Dean Evans joined Thursday's Banter podcast with Bensley to chat everything horse racing form and analysis Winning Edge Investments  is committed in providing the highest quality tips and education whilst always remaining op