Quote:
Originally Posted by BJennet
Hi Houndog,
No offense, but I think this piece conveys the opposite of the way that Soros' intended his concepts to be used. Specifically, it's aimed at reminding his colleagues and competitors on Wall St., where people use highly sophisticated and often very effective models to predict financial performance, that their models are limited by the kind of flaws that are endemic to human judgement - reflexivity. As one of the greatest investors of our time, he's sending a message that even he makes mistakes - and thus is extremely careful and conservative in his own decision-making. Given the context, he's not saying 'the crowd is dumb, but you're smart'. He's saying, 'Realize that you're just as dumb as the rest of the crowd.' Like the brilliant Nassim Taleb, whose 'Black Swan' preaches a similar message, and might be of interest to you, he's the opposite of a motivational speaker.
Soros' point that the equilibrium model is imperfect is true, but that didn't stop William Benter from making hundereds of millions of dollars using one, nor does it hamper his proteges, or others users of databases from making huge profits today. The crucial point you seem to miss, is that one doesn't need a perfect model to win, just a better one (software of mental) than your opponents.
And as Benter pointed out, your mutuel-pool competitors may be limited as individual bettors, but as a group the 'wisdom of crowds' kicks in and makes them a very tough collective opponent. This is why 99+% of all horseplayers are losers. This is also very much Soros' point.
I agree that the term 'overlay' is basically meaningless, but the term 'value' is not, even if it's often misused. The only thing that matters, in this regard, is whether or not one is playing with a long-term edge - if not, one is never receiving value, if so, every horse is an overlay, i.e. has value.
Re practical application, you mentioning checking the final odds of the horse you guage as the most likely winner. What does this mean? If you don't care about value, what's the point of checking the odds? Why worry about how low the odds are? You contradict your whole argument.
In fact, the people who profit from this game are those who have the most precise and accurate idea of what the true odds on each horse should be, and thus know best when they have an edge, and how big that edge is. But that can only be determined through long-term research, Something you never mention.
Cheers,
B. Jennet
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I'm the author of the piece in question and appreciate the comments and critcism.
To answer a few of your points, which are well taken, let me first say that the roughly 1,500 word limit doesn't allow for the type of depth necessary to adequately convey and reinforce certain concepts.
As far as the delineation between value and overlay are concerned, you have an apt point. I do believe there is a very (very) small percentage of the horseplaying world that is truly capable of creating a value line and exploiting that relationship in a meaningful way to be profitable. This is likely the result of decades of study and reserved for only the best of the best.
Please keep in mind, the article was not written for an advanced audience (say for example, members of a Sartin Methodology forum), but rather a typical horseplayer that gets force-fed terms such as value in a horribly erroneus context on a regular basis. They are rarely challenged with anything other than the same recycled concepts, many of which are utterly useless and entirely DRF and Beyer fig centric in nature. This was intended to provoke thought on a different level, whether or not the reader agrees or disagrees with the content.
My methodology as it relates to the 10:1 qualifier is based on several years of pouring over my individual results bet by bet and coming to the conclusion that is where I can optimize my play. Do I always conform to this? No. However, without setting strict guidelines based on my historical performance, I'd be much less disciplined as a horseplayer and would be much more likely to repeat past transgressions.