Dave Schwartz Teaches Hybrid Handicapping (Podcast Transcript, Part 3)
Over the years there have been a handful of key handicapping concepts that have dominated horse racing. In my lifetime it was Class, then Speed took over in the 1970s, then Impact Values in the 80s, Pace in the 90s, andÂ powerful regression systems in the new millennium.
What will be next? Where can you begin now to get an informational advantage over the competition?
What if you could get ahead of the curve?
Think of a spectrum that runs left to right. The eye ball Synthesizer is on the far left, the Systemizer on the far right, and the Free-Styler in the middle.
Suppose you are on the left hand side. Move towards the center a little and try to be a little more systematic. In other words, make your selections and then look at the reports and try to let them dictate their own selections instead of you trying to interpret everything into your brain.
Let the reports speak for themselves. I am not a pick purchaser. I cannot imagine that I would ever buy someone else’s picks. You have probably heard my (perhaps infamous) quote, as follows: “I have a bone in my head that prevents me from betting other people’s picks.â€
But I can build a case for the third party; the picks of others. The fact is that instead of getting your picks from a software program you can get them from a third party. The key for the free-styler is to calibrate the other sources of information with your own information. That does demand that you look at both sides of that equation – both the third party and yourself – with an objective eye.
The whole idea is to learn when to listen to the third party stuff and when to trust your own thinking. It is kind of like that saying: â€œa defendant that has himself for a lawyer has a fool for a client.â€ I hope you get the idea. If you are so blinded by the belief that you have to do it all yourself and you are not doing it very well, then you have to change your method. You have to be open to a new method.
I used to be a guy that completely bought into the concept of getting your percentages, probabilities and final odds and that is all you needed to accomplish. My entire world changed last year when I stopped looking for what I call “pure valueâ€ which is based upon hit rate times payoff.
Instead, I created two simple numbers for each of my contenders. The first one was hit rate rank. I take my contenders, whether I have two, three, four or more, and simply order them 1, 2, 3, 4 or 1, 2, 3. Then I look at them again relative to the tote board.
Of course, I do this systematically and have a number that is crunched to tell me the order. I do the same thing for value. (Do not confuse â€œvalueâ€ and â€œhigh price.â€) The fact that a horse may go off at a high price does not automatically make him a value play. I wind up with these two columns, hit rate and value, for each contender, and multiply them together.
So the best horse I can have would likely be a 1 x 1 = 1 and the worst might be a 4 x 4 = 16. Thus, all of my contenders fall between 1 and 16.
If you work at it you may find that your 1 x 1 is just gold and your 3 x 1, your number 3 horse with number 1 value, may be playable. Just multiply the two together and bet the two lowest numbers.
Make sure you chart them. Find out how good you really are. If you are using a computer software program, do the same for the output of the software. Take two outputs, one is hit rate and the other is perceived value.
I am sure the computer software you are using will generate that in some way. Then ask yourself the following: â€œIn this kind of race which side should I listen to?â€
Ultimately, you will end up with one number per horse. We call it in our software the order of preference (OOP). When I changed last year and multiplied them together everything suddenly became clear.
This is about gaining an informational edge. We said that before. Now, how do we do this? As we have said, we need information that is not available to everyone. Where do we get that? How do we get our own private information?
Let me relate a very short story. Recently, I had a conversation with two interesting guys. One guy was a player from Hong Kong and the other was from Australia. These were two separate conversations centered on pace handicapping. Both wanted to know if my NewPace handicapping system would work in Hong Kong and Australia respectively.
The conversation then moved to whether or not I had speed and pace ratings available. They wanted to know if my numbers could help their handicapping. Itâ€™s worth noting that in both countries they only have turf racing. If turf racing in the US is any indication, speed ratings are not going to be as valuable as they are on the dirt.
The real question is whether having good speed ratings provides an informational edge if you are the only one that has that information, even though the race is on the grass. I imagine the answer would be â€œyes,â€ especially if you could spin off pace ratings from them, even using simulated pace.
By the way, after the conversations, I actually put a little effort into looking for ratings and contacted some people I knew in both places. I found that there were some numbers available, but the opinion was either the numbers were not very good or the horses did not run back to them very much. It was not overly encouraging.
What if you could go back in time (in US racing)? What if you were the only one that had a set of unique ratings? What if you were Andy Beyer in 1965 and you were making speed ratings or you were Howard Sartin in 1975? You could rule the world? Well, at least the handicapping world.
Hereâ€™s a reality check. There probably is no absolutely new information available within your own reach and scope. And by â€œreach,â€ I mean financial resources. It is not likely that you are going to hire someone to make speed ratings for every single track, every single day. By â€œscope,â€ I mean your skill set and time limitations.
I write software but even I do not have unlimited programming time. I still have a certain number of hours in every week that I can set aside for programming.
If there is no such thing as new information, what can I rework that will have potential value? What will give me an informational edge? This is actually meant, as a thinking exercise for you, but I want to give an example to get your mind working.
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