In last month's issue I discussed two laws which will play an important part in your punting. One will help you lose, the other will help you win. They are known as the Law of Averages and the Law of Frequency.
If you missed the discussion, here is a brief explanation of them, bad news first: Punting on the Law of Averages, one never knows how many bets will be required before a winner is struck. A 'Losing Streak' can run on interminably.
Punting on the Law of Frequency, one always knows the maximum number of losers that will be struck in a sequence. That number is one. A 'Winning Streak' will come to an end with just one loser.
We always seem to realise quite early in proceedings when we are on a 'Losing Streak' and most of us tend to take immediate steps to make it worse: we chase our losses, we lose confidence in our selections, we change our philosophies, we switch from one plan or selection to another, we start to "run with the mob", even though we don't normally, believing we are out of form and they must be right and, worst of all, we bet in the belief that the Law of Averages will save us.
We believe that, since there has never been a day (or two days in a row. or three, or whatever) when we have not backed at least one winner, then - based on the Law of Averages - eventually we must back one today (or two days in a row, or three, or whatever) and it will put us in front.
If you believe things like that, don't believe them any further. Eventually, I suppose, we must find one, but there will come a day when it arrives too late and it will not save us from a heavy loss.
Using a progressive staking plan - one where stakes continue to rise while you're chasing that winner you will discover that you need to find several winners before you get into 'the black', but there's nothing to say that those winners will not also be infrequent and still result in your going broke.
That's the problem with most progressive staking plans you read about: they tell you the 'bank' you need and how many losses it can withstand under the staking plan, and how, on the average rate of winners, that number of losses never occurs. They very seldom tell you what will happen if you continue to back several losers after striking that one winner.
I'll tell you: almost without exception you will go broke, which is why, with many staking plans, punters are relying on a lot of old codswallop.
As an example of how foolish it is to follow the Law of Averages, here is a quote from an authoritative gambling book called The Guide To Good Gambling, written by Clive Allcock (now a long-term PPM columnist) and Mark Dickerson, published in 1986. In the section on gambling myths, the pair write:
"For instance, when heads comes up seven times in a coin-spinning game, the number of people betting on tails will increase because tails is due.
"In reality, the odds are the same as they were in the seven previous spins: even money.
"Similarly, at the racetrack, if seven favourites lose, people will bet more on the eighth-race favourite, but the horse's chances have nothing to do with the previous seven results."
The same rule applies no matter what odds are being offered about a runner. The horse's chance is not improved one iota by the fact that you have not backed a winner from your last fifty bets.
When on a race-day (say, two meetings) you pick out nine horses that you think all have about equal chances of winning, and you have one unit on the first and it loses, then the second, third and fourth lose too, what sense is there in having seven, eleven, fourteen, twenty units on the fifth, sixth, seventh and eighth runners as your losing run continues, when you considered all chances equal.
So much for being concerned with 'Losing Streaks'. Let's look at what we ought to be thinking about -'Winning Streaks'.
Strangely, when we get on a 'Winning Streak' very few of us take advantage of it. Instead of increasing our bets when it's running (as we do with a 'Losing Streak'), some of us tend to cut back the size of our bets, believing that we're not likely to back three or four winners in a row.
That is totally the wrong way to go about punting. We must capitalise on the winning streaks. To be a winner, follow this motto:
Capitalise when winning and let losing take care of itself.
Does that sound too simplistic? I assure you it's not.
Let's see how it worked for an American turf writer of some years ago named Les Conklin, who I mentioned briefly last month. At the same time, you will get an indication that you don't have to be rich to get rich.
His bank when he started operations prior to his highly successful betting spree was just $10.
Conklin had developed a system of picking winners in certain types of races and, reviewing his results over a considerable period of time, he found that he averaged about two winners in seven bets - a strike rate of about 28 per cent.
He reckoned on not being as successful in the future as he had been in the past, so he imagined that, at the worst, his system of selection would average him just one winner in every five bets only a 20 per cent strike rate.
His stake was to be one-fifth (20 per cent) of his capital once his capital reached $20. Until he hit that $20 target he would bet only $2 per horse.
If he reached the $20 mark his next bet would be $4 (one-fifth of $20). If that lost, he would then reduce his bet back to $2 until his bank once again reached a minimum of $20.
On the first day he operated, he lost. (Don't we always when we try some new plan or system?)
His loss was $3.20 and his bank at the end of the day was, therefore, down to $6.80. At the end of the second day it stood at $15.20. He had two 3/1 winners from his next 10 bets and his bank dropped back to $11.50.
He then struck two reasonably priced winners and, after taking losses into account, his investment fund was $51.
His staking plan required him to invest one-fifth of the bank, so his following wager was $10 and, from there, he never looked back.
Admittedly Conklin's selection method brought him in a number of relative longshots (around 8/1 and 10/1) - but that had not been an unusual occurrence for his method. Also, he did hit a streak of more than 50 per cent winners for a short period, but we all do that from time to time - the operative words being "short period". But that's what the Law of Frequency is all about. It allows us to strike while we're running hot.
Sure, an average punter these days may riot be as lucky as Conklin was, but if you are betting and your selection method doesn't come up with an occasional 8/1 or 10/1 winner on a not-too-irregular basis, then you had better change your method.
Nevertheless, it is not the price of the winners that is most important. It is the regularity with which they arrive - the frequency. If you consistently support runners at relatively short odds, you will need to strike winners far more frequently than 20 per cent of the time if you are going to make your fortune.
Two winners out of every ten bets, as Conklin sought, does not seem a lot to ask, but for some punters it will be too much. They simply will not be prepared to put in the very minimum amount of effort and diligence that is required to consistently achieve even such a low strike rate.
All I believe you need to be a winner with the plan I operate to and over the next couple of instalments in this series will reveal to you - is consistent reliability in each of three areas.
You will need:
- Reliability in undertaking your process of selection
- Reliability in executing your investment strategy
- Reliability in the results you achieve.
You should not have much trouble at all in complying with the first two of the above. The third is a different kettle of cod, though. What selection method could be guaranteed to give you the kind of results you seek?
The truthful answer is ... none. With the kind of weather we've had in the eastern states this year I don't think it is even guaranteed that the sun will rise on every day.
But I will suggest two possibilities - one in particular which I have found to be a real winner.
Click here to read Part 5.
Click here to read Part 6.
Click here to read Part 7.
Click here to read Part 8.
Click here to read Part 9.
Click here to read Part 10.
Click here to read Part 1.
Click here to read Part 2.
Click here to read Part 3.
By Ben Richards
PRACTICAL PUNTING - MAY 2000