Chapter 5: Winning systems: Combining the crowd’s handicapping with money management

The cartoon here reprinted from an article about the Dr. Z place and show system in Fortune magazine, reminds us of one of the most important things to keep in mind: Do Not Bet Too Early. The systems presented in this book are based on toteboard considerations and handicapping using fundamental information and forecasting services. A bet is warranted when its payoff provides an edge of 10% or more in comparison to the fair price for the wager. A bet that is worth making with several minutes remaining may fizzle as post time nears. To be successful you must balance the chance of getting shut out by betting too late with the inaccuraries of betting too soon. Be sure to keep track of where the horses are. The betting stops when the horses enter the starting gate, not at the stated post time. Practice will tell you how long you can wait before making your bets. Positions in undesirable locations in the grandstands, clubhouse and turfclub often have the shortest or no lines. For big races, the window lines may clear out with a minute or so to go as people scramble to watch the race on TV. We have consistently been able to make bets on Kentucky Derby Day with literally fifteen seconds to go, in full view of the toteboard. Remember, once you have bet, it’s too late to turn your tickets back. Before you bet have confidence that your wagers will have a reasonable edge at the end of the betting period. The amount of the edge and the size of the pools guide you in this regard. Our experience is that the place and show pools usually are stable with about two minutes to go and the exotic pools stablize with about five minutes to go. However we cannot stress enough the wisdom of betting as late as possible. That is when the so-called smart money is bet camouflaged so as not to influence the odds much. The evidence we have is that last minute betting is very well informed…