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The Chairman
Victor Niederhoffer

Haru-urara is an 8-year-old Japanese filly who has lost at least 106 races in a row, the longest losing streak in Japanese history. Her record strikes a sentimental chord among the Japanese; after 15 years of hard times, they empathize with a loser who refuses to quit. Some observations:

1. An opportunity to dutch the race she's involved in might arise. In one race, she went off at 1.7 to 1, the favorite, as fans bought tickets on her as a lucky charm against job loss or as a sentimental symbol of never giving up. Presumably her real odds should be 100 to 1. The 37% chance implicit chance that she will win means that the other horses are given only a 63% chance to win. By betting on each of the others, you have a 37% edge less the track take of say 15%, and thus should win 22% on each dollar bet.  The handle for her race is about US$2 million.

The handle for the race without your bet would be $2 million. Thus (and we round), there is $750,000 of money bet on her that would be divided up by all the other horses. But the track takes $300,000 of the total, leaving $450,000 to be split among the other winners who bet $1.25 million. That’s a return of 37% on the $1.25 million bet on non-Haru.

If another $500,000 were bet on non-Haru horses, there would be $75,000 additional taken off the top by the track. A total of $1.75 million would now be bet on non-Haru. There would be $450,000 less $75,000 = $375,000 to be split among the $1.75 million non-Haru bettors. That’s a return of 37.5%/1.75, or 22% of the total money bet on the non-Haru horses.

The new bettors would receive $500,000/$1.75 million of those winnings, or 28% of $37,500. That’s $10,500. The old bettors would receive $270,000 of winnings. Thus, the new money bet would reduce the advantage of the old bettors from $50,000 to $270,000 = 18%. The old non-Haru bettors would have their take reduced to $270,000/$1.25 million = 22%. Thus, each additional $100,000 bet reduced their take by 3%. The new bettors would also receive a return of 22% on their new bet of $500,000.

2. The Japanese have a great sense of humor. When she runs, the papers say, "She’s doing what she does best: losing.” “Bettors pushed up to the screen when the race began, chuckling as the dependable Haru-urara started in the middle of the pack but quickly dropped back,” wrote a reporter for “The Japan Times.” A racing official told an interview, “We take pride in her losing record.” The track says it will try to have her recognized in the Guinness Book of Records. “The only unlucky thing that Haru can do now is win,” concluded the racing magazine “Standardbred.”

3. Pop culture spreads. Haru-urara is the subject of a pop song and two upcoming books. Her likeness sells ads. A movie a la Seabiscuit is planned.

5. The thoughtful producers at Japanese national TV are doing a special on the horse’s losing ways. They did a similar two-hour special on me four years ago about my losses in 1997, featuring helicopter photographs of my stately home, mortgaged to the hilt as I retreated to the Mt. Fuji of research to try to mend my errant ways.

6. In our book, the Haru-urara award should go not to the Japanese, but to Alan Abelson. He's been bearish, as far as I can tell, in every one of his columns for Barron’s since 1966. That’s about 1,400 consecutive weeks, with breaks only for vacation, while the Dow went from 750 to 10,500. I have recently read each of his 2004 columns, and found no trace of bullishness.

What makes this most respected commentator so consistently bearish? How much destruction of value have he and his bearish friends caused?

I did find one column where the bullish consensus dropped below 50% where he said that the extent of his company now bearish along with him below 50 made him a bit nervous. And I also find two columns in which he was content to talk about the weakness in the economy or the hype in an individual speculative stock without directing his sharp pencil at the stock market per se.

It was in one of the columns about speculative stocks that I learned of Haru-urara’s losing streak. But there must be a deep unconscious reason, perhaps explainable by Dr. Freud or Dr. Brett, as to why the journalist with the crackling wit did not see that he and not Mamma.com should win the Haru-urara award.

9/22/04
Re: Haru-urara...Tom Printon Adds:

Sometimes I think it's easier to be bearish and hard to be bullish. It may not even be about the stock market but the future in general. Possibly a new behavioral bias yet to be diagnosed past down from our Paleolithic ancestors. Perhaps his market views are just a variant of past and present religious and eschatological movements that envision the "End of Time," where doom abounds. After the financial apocalypse, then and only then will there be a market completely rational and consistent with "reality." In a world of uncertainty, the Abelson meme is highly contagious.

9/22/04
Re: Haru-urara...Kim Zussman responds:

What about a different world where every investor and commentator, glib and otherwise, were consistently bullish? Perhaps it is healthy for the system, in the way that disappointments beget hope and sorrow leads to joy, that there are cheerleaders on both sides. Likewise, one might add, for the legions of investors making continual mistakes (I hold a card) being misled by the crowd of experts, seminarians, authors, brokers, bloggers, etc bent on lining own pockets. Perhaps in such a large ecosystem we all need each other-there cannot be only predators or prey in the menagerie.