Revisiting William L. Scott
Published in 1981, “Investing at the Racetrack” is based on the simple premise that, via the application of logic and sound money management principles, one can turn the gamble of horse racing into a legitimate investment opportunity.
“You can make money in the stock market, they say, but playing the horses leads to a certainty of losses as truly inevitable as death and taxes,” Scott noted. “But if, buried in the myths that surround the racetrack, there is indeed a method of putting money on horses that will produce a steady, consistent profit, that would be investing wouldn’t it?”
Obviously, Finley penned all this before Enron, the dot-com implosion or the demise of Lehman Brothers. Had he foreseen those tragedies, perhaps he would not have used Wall Street as a stellar example of sound wealth accumulation practices. Nonetheless, two key aspects of Finley’s method intrigued me:
1) Its theoretical underpinnings were that one of the top three betting choices won approximately 2/3 of all thoroughbred races — a ratio that still holds true today (and, in fact, may be growing).
2) “Investments” were based on a horse’s Ability Times, unique pace ratings that didn’t rely on total speed, class or other common handicapping factors.
I would be remiss if I failed to point out that Finley’s overall selection process, as detailed in “Investing at the Racetrack,” did not work when I gave it a trial run at Longacres as a youth. Part of the reason for this was undoubtedly due to the fact that the Renton oval always seemed to produce a rate of winning favorites well below the national average (typically around 26 percent, if memory serves).
Still, the idea of building a methodology around a verifiable fact — mainly, the pari-mutuel prowess of the top three betting choices — made sense to me, especially since so many other handicapping books I’d read up to that point had presented only theories (oh, how little times have changed).
So, this week, I thought I would take a crack at modifying Scott’s method for the new millennium. Here’s how it will work:
Scott advocated finding the best two Ability Times a horse had recorded and assigned them points. We’ll do something similar, except that we’ll use my speed rations instead of computing Ability Times and we’ll confine our search to a horse’s last three races run within the past 90 days over today’s general surface (turf or dirt/synthetic).
Then, we’ll determine Ability by subtracting a horse’s early speed ration (ESR) from its late speed ration (LSR) — the higher the number, the better.
Instead of using Scott’s rather cumbersome form rules, we’ll keep it simple: To qualify on form a horse must have finished in the money (third or better) last time or been beaten by less than 10 lengths (within the past 90 days). If the horse did not race in the past 90 days, it can still qualify on form if it shows at least three workouts — at least one of which was five furlongs or greater — within the past month.
The Unknown-Ability Horse
When a horse whose Ability (see above) is unknown is an odds-on favorite, pass the race or play the odds-on choice to place.
Use of One Race
If one of the first three favorites has but one race on which his ability is based, while the other horses have two, then rate all three off their best overall race (this is explained above).
Play the horse with the best combined speed figures from its rated race(s).
Wager to win and place on the top-rated contender provided he/she is among the top three betting favorites (see exception for unknown ability above).
Now, let’s take a look at the method in action. Below is a look at all nine races from Aqueduct on Friday, January 13, 2012. In the interest of space, I considered only the top 3-5 morning line favorites in each race. However, those interested in analyzing more entrants can click HERE to download a free copy of my Pace Profile Report for the “Big A.”