Part 4: Finding Low Odds Horses to Toss
Dave: I actually published this somewhere. In our software we have built something that we typically call the False Monty Object. It is made up of 5 factors. I will even tell people what they are.
The first two are PSR (Projected Speed Rating) and Cramer Power which are two different versions of the same factor. Cramer Power is the older version of the PSR, and both of them are similar to BRIS Prime Power.
Those are all very high level factors or what you call a very complex rating. It correlates very high with the tote board. So we have those two, what we call rating RTG. (I was very creative back with names then and it has been with us for a couple decades.)
Again RTG is a high level factor but it correlates highly with the tote board. The hit rate on those first 2 factors (PSR and Cramer Power) on the top horse is somewhere between 29-31%. The third factor (RTG) drops down a little bit to about 26% and correlates a little less with the tote.
The fourth factor is an early speed factor that indicates the likelihood of going to the front and it is far more complex than just using Quirin Early Speed Points.
The last is a class factor that is either level based class or earnings based class whichever is better. We have these 5 factors.
- PSR (Jim Cramer’s Projected Speed Rating)
- CPwr (and older version of PSR)
- RTG (composite factor made up of 32 factors weighted together)
- CES (composite factor predicting lead at 1st call 28 factors, weighted)
- CCls (composite class rank; the better of Earnings Box Class or Level-based class)
If you are listening to this you want to write this down. These are rank factors. What we have found is that a huge percentage of the winners can be predicted by using the best 2 ranks for each horse.
About 80% of the winners come from this qualification. An amazing number of low odds horses do not pass this test. I have been using this as my primary contender selector for over 2 years and the $net on those horses that ultimately go off at 3:1 and below is 89 cents for every $2 wagered so they are losing big money for their backers 55%.
The real point here is if you are going into a race where you have recovered 55% of the amount of the money bet on the low odds horse and that applies towards your takeout, you could theoretically play all the other horses and be profitable. Of course getting to that is where it is hard.
Derek: That is the beauty of it because those are great numbers. You actually brought something up which we had not talked about earlier that we need to look at. Early speed: I cannot make this work as an angle and the reason I cannot make early speed work is because it is so over bet. I actually love this idea as a way of finding some of those lousy favorites and that is the moment I have to put it in the database. The problem is that the moment you start doing this stuff (I should do this), you wind up divorced and estranged from your kids.
Dave: Back on this track for a second, I think the target is about 40%. Just so people do not misunderstand, we are not saying that if you just throw out a low odds horse you now have a winning proposition. You have to work hard to prove that when you throw out a low odds horse it really is a losing proposition and most people will just not do that.
About Derek Simon:
I love numbers and analysis and have been able to parlay that into an exciting career writing about two of my greatest passions business and sports.
In addition to working as a freelance financial writer for Newsmax, The Motley Fool, Investopedia/Forbes, Beacon Equity Research and Investor Concepts (among others), I was also the editor of Small Cap Insider, a monthly newsletter highlighting investment opportunities in the small cap sector.
Currently, I am the editorial director for US Racing where I contribute written, audio and video content and oversee a team of talented and passionate writers.