Introduction to Profit, Part One
Ray Cotolo
June 25, 2014
Say there is a woman, now in her thirties, who grew up loving detective novels. She owned and read every part in the Sherlock Holmes series, Nancy Drew, etc. Then, her house is one day plagued with fire, all of her belongings now ashes. Those stories she loved and grew up with now fodder for the flames. The objects she is most distraught of losing are the novels she had read when she was a kid.
The introduction displays a personal example of value. While every detail from the story can't be transposed into handicapping, there is one main element to it: it's blind. In no way is it totally blind, though, since handicapping is using the past to predict the future. It is blind, in a sense, due to the fact that every piece of information one can gather on a horse to why he will win doesn't necessarily mean he will win.
Value is really just confidence in disguise. For instance, there is a race where Tom likes the one in a field of ten. To Tom, he'd bet the one to win if he was around 2-1 or 3-1. Gaining depth, odds are really just chances relative to the public opinion. The lower the odds, the greater chance a majority of bettors think a horse has of winning and vice versa. If Tom would take horse one at around 2-1 or 3-1, he thinks he has a decent chance of winning (around 25%-33%).
Not all value has to be in regards to short price. In another example, Tom looks at the next race and likes horse six, who is currently 9-1, meaning the public thinks he has around a 10% chance of winning. If Tom would like that horse at around 5-1, that might be his play in the race.
All these numbers and percentages can be confusing, but they're only necessary for analysis. There is no right or wrong way to find value. As many aspects of handicapping abide by the same rule, so does value: it's all in the gut. A seasoned handicapper like myself (does five years count?) eventually grows into being able to use his gut to determine what prices suit his contenders best. If that's how a seasoned analyst performs, how would one reach this feat? As cliche as it sounds, it comes with practice.
In part two, we'll delve into the idea of overlays and underlays; when they are worth playing and how to find them.
Ray Cotolo, long time follower of the harness racing industry, is a presenter on North American Harness Update.
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