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Some Lessons from a Harness Outing, by Victor Niederhoffer
'I might miss the big one'
My daughter Kira is 14 years old now, and I confess that Saturday, April 20 was the first time that I have taken her to a Harness Meet at the Meadowlands. For someone in my profession it's important to teach all the kids at an early age that gamblers die broke, so there was not a moment to lose. We went by bus to get the flavor of the persona and talk of the dead beats and compulsive gamblers down on their luck that use such transportation and at first I was surprised because many of the passengers were well dressed Asians and affluent yuppies but we soon learned that these ladies and gents were going to the adjacent Ice Show and that the remaining passengers, who were involved in a screaming battle with the bus operator over possible delay in getting to the track on time were more typical. This remnant certainly suffered from the tendency of all gamblers to completely lose their sense of balance and priorities in a desperate attempt not to miss even one chance to get even. I once had a client from the Mediterranean who insisted on selling the stock market futures short whenever it set a five-day low. He lost about 20 times in a row after 1987 and I advised him to take a break. "I can't. The big crash might come while I was away." he said. I remember Artie's telling me that one of his best friends missed his wedding and never married because he got into a card game on a train going to his own wedding with a wonderful girl.
Lawton not there
When we got to the track I immediately wanted to buy a tout sheet so that I could compute past handicapping performance but the newspaper stand only carried a single 5 by 8 sheet from Bailey's. "Yes he's the best" the attendant said. "And he better be because all the others have gone out of business. Yes. Even Clocker Lawton and Jersey Jim. There's just no demand for them at the track anymore." Fortunately the Harness Eye newspaper remedied that omission by giving the selections of Trackman, Rick Weiner, and Rocky Derosa, (any relation to the great Paul?), as well as Staff Spot Plays from Derick Giwner and Matt Rose. Derick's record appears to be better than most of the advisers in my field, and there's no monkey business about its documentation as he's hit 23 of 83 this meet for a total payoff of $163.20. Regrettably, I cant tell if that's the return from a $1 bet or a $2. But as Artie told me, he once was asked to go into business with the best tout in the land and when Artie asked him "How come you need me to back you, a mere policeman if you're so good?" the tout answered that people are willing to pay him thousands of dollars if he can just keep the losses down to three hundred or a thousand dollars a year. I explained to Kira that most advisers can't make money with their own speculations and that's why they gravitate to giving others advice.
The problem is that if you don't speculate on your own advice then you lose touch with the factors that enter into the nitty-gritty of the trade such as execution costs, and uncertainties and potential for grave risk, but if you do trade on your own advice then the receivers of the advice are much disadvantaged because you would not be able to let them come in before you if you had a big following, because the money you lost from bad fills would be so much more unfavorable than the money or gratitude you got from giving the advice. I also explained that I stopped giving advice to others when I realized that I had a tendency to remember my past winners much more than my past losers, and that I wasn't able to explain to my advisees what the full gamut of reasons that made me want to do a certain trade, so that they were always in much greater uncertainty than I and that if I told them when to enter a trade, and they did follow me, I was up to creek because then I'd have to tell them when to get out of the trade, and their actions would hurt the price that I received by much more than I could make in gratitude or payment for any advice that I had given them. I always tell people I'm fond of to beware of even free advice for these reasons. You see, often the people that give the free advice have an ulterior motive, for example to get feedback on the state of your thinking about a certain trade, or to move their own positions along, or even to get you committed so that they can squeeze you on the other side. For this reason I am even very reluctant myself to give advice on specific trades even to the people that work for me as I suffer from the same human frailties and qualities that the next guy is likely to have also.
A richer palette
I have always felt that the level of systematics and number of variables considered is much greater in sports betting and race betting than in the markets that I trade and the Computerized Past Performance contained in Harness Eye did not disappoint me. Here are some of the factors they reported for the horse in each of the 13 races:
There are so many obvious applications to market handicapping someone could spend a lifetime with many meals for a day just by applying a handful of them. I like to think of the race during the day for a given market or horse as being divided into four quarters and a stretch the same way horses times are classified. I also like to think of the race as between different market moves during the same day like gold racing against bonds, stocks, et al.
The clinical versus the subjective.
As an example of the care and thoughtfulness with which the average harness handicapper expects from his sources consider this from Harness Eye. "This list (of speed ratings) has been compiled using data acquired from different tracks. Unlike other so-called "official " speed ratings, Harness Eye's has been established after three years of analysis using the minds of some of the sport's top professional handicappers. Others have attempted to develop accurate speed comparisons by strictly using final times form track to track. We believe in most cases using mathematical studies exclusively can omit key variables necessary for rating a tracks true level of speed." Even the Clocker himself couldn't have said it better, nor could I in issuing a similar injunction to colleagues in my field.
Well, I will have to leave the lessons learned from the "all horses have participated in a pre race stakes barn since 1100 PM Friday" for next time as I don't know if this is to protect the horses from drugs or from outsiders but I would recommend that all officials who are connected with the gathering of economic reports be similarly sequestered regardless. I will also have to refrain from commenting on what the taxi driver going back told us in that the driver he had a fight with for our fare would have taken us quickly to our destination and then used our fare to rush back to the track to bet on one more race in a desperate hope to get even after 20 years on the job, as this is an example of the kind of compulsive behavior that gambling can lead to. Remember what Artie told me many years ago, "All gamblers die broke" and never marry a gambler.