Finding a winning horse.

27 January 2018

Dear Fellow Investors,

Finding a winning horse.

Professional horse gamblers make money by looking for an undervalued horse. This would be a horse that will go off at long odds and can reward gamblers with a large payoff.

The true odds are masked to the public. For example, a high quality horse will be run out of the money a few times to make it look bad. 

This will raise the odds each time the horse lost as the crowd of gamblers would not be interested to risk their money. When the crowd lost interest, the insiders would bring the undervalued horse home first at high odds and reward those in the know with a huge payoff.

Another insider tactic is to plant fake news in the Daily Racing Form which rates horses, bad news would be planted by insiders to trick the public.

Horse racing just like the stock market is dominated by syndicates, smart money, fake news and insider manipulation.   

How do we identify smart money ? In horse racing we watch the tote board. The tote board records the money flow into the betting pool. There are patterns of money flow that will tell you when smart money is betting on an undervalued horse  When this happens, we follow the smart money and jump in with a large bet.  

In stocks we follow  price and volume.(IVSA) Insiders can not hide price and volume as it is reported to the exchange in real time.

Skill in reading price and volume can be learned by practice  There are simple patterns which can put the odds in your favour.

For example, some unloved Malaysian banks have been congesting for the last few months. The news flow has been negative and the investment crowd lost interest.

One fine day 3 weeks ago, Hong Leong Bank suddenly broke the congestion on high volume and a wide range price bar.

This was a sign, that smart money knows something.

I bought for all our clients and the share went in the money. There was no drawdown Risk was below support which is small compared to the potential return.

The crowd was not interested but I was.

This method works in all markets and short term does not need to focus on currencies/ politics or interest rates which we have no control over.

When I operated this money flow horse system in the US, I was able to earn a reasonable living.  

Of course to enhance returns, I did extensive research to know the fundamentals including the blood lines of the horses, the track conditions, past racing results the jockey’s backgrounds, etc. That further puts the odds in your favour.  

Now the crowd is chasing hot upstream oil/ tech shares and they may go higher but the odds are against you. Be on guard

In the US markets including the S & P, Russell 2000 and Nasdec there are over 500 shares with PEs stretched to over 150  Some are large caps. These are crowd favorites hyped in the media and the stock brokers. 

Look to other shares in Japan, Malaysia Hong Kong and Singapore where value does exist to protect your self when the bubble bursts-

Invest well and grow your wealth,

Bill

Today’s critter is a golden eagle from Canada. It is huge bird which waits patiently and strikes swiftly when hunting.  It is a good metaphor for us as investors. Strike quickly when the opportunity comes.