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View Full Version : ROI - a fair look, or a deceiving marketing tool?


CamptownRaces.com
03-27-2002, 12:04 PM
I'm not trying to slam anyone, or say that the industry, (overall) is crooked, but I've been in the business of selling my books and sports and horseracing selections for quite some time now and I've seen both good and bad.

The problem I have with stating your ROI is how do I know what your total investment was to get that return? That information would help any player decide whether or not the software, tool, system, book, whatever is going to be worth their time, playing at their multiples.

ROI has been a great marketing tool that has proven very successful over the years, but to me, it's a deceiving marketing tool used to trick people into buying things.

I myself prefer to state my Profit Per Dollar Wagered... (PPD)

This allows anyone to be able to see what they would have made playing at their multiples.

The formula to figure out your PPD is simple.

Take your total return and subtract your total wager from it.

Now take the answer and divide it by the wager.

The answer is your PPD...

Your return
Minus the bet
And then Divided by the bet...

Just some food for thought...

I have seen many disclose their true investment! Many handicappers and people with programs and books are absolutely legitimate. It's the ones that won't disclose their total investment to reach that GREAT ROI that are hiding something.

Be Careful,
Play Smart,
God Bless,

Charles

ranchwest
03-27-2002, 12:21 PM
Properly stated, ROI is literally return on investment, which should not be ambiguous.

If you invest $1 and get back $1.30, your ROI is 1.30. Nothing mysterious or unseemly about it.

While there are likely many misuses of the term ROI and its computation, there should be no deception when it is properly reported and stated.

You really need to know the size of the test case, whether the test case was retrofitted, the win %, the ROI, the average pay price and the percentage of the test cases that were playable. Otherwise, you don't really know much.

anotherdave
03-27-2002, 12:54 PM
Originally posted by CamptownRaces.com

I myself prefer to state my Profit Per Dollar Wagered... (PPD)

Charles

I am confused. Why do you have a problem with ROI when you use PPD wagered. Unless I am missing something your number isn't any different. If my ROI is 0.20 then I am making 20 cents on every dollar wagered. What's the difference?

AD

GR1@HTR
03-27-2002, 12:59 PM
No difference...Should be the same thing...Guess there are many ways to compute roi but think 90% use the same one as stated above...


ROI as the way most of us understand it.

ROI= Amount Bet/Amount Won

sq764
03-27-2002, 01:11 PM
The problem is not ROI or PDW or TWA or PMS, the problem is in the way people report it.

I hate seeing people say that they had the winner listed in 9 of 12 races. Yet, they consider the winner listed as having them in the top 3..

Or "My ROI was 1.98 (If you boxed my 5th pick with the morning line favorite with any grey horse in the race)"..


It can be very deceptive.

Scott

CamptownRaces.com
03-27-2002, 01:42 PM
I've seen many throughout the years use the term ROI to sell their picks.

The say something like
"Yesterday produced +$2,100 ROI for the day"

What they don't bother to tell you is that it was one bet... a $100.00 straight exacta that that paid $22.00.

It's just misleading is all I'm saying...

There are people out there that you need to watch out for.

My PPD would show the same day as +$21.00 for every $1.00 wagered...

Doesn't that make things much clearer as to what you would have made playing at your multiples?

PaceAdvantage
03-27-2002, 01:42 PM
ROI to me = AMOUNT OF PROFIT OR LOSS / AMOUNT INVESTED

If I Bet $20 and get back $30, my amount of profit is $10 and my amount invested is $20. Thus (10/20) I made 50% on my investment. How much clearer can you get?? That 50% can be applied to any level of investment. Doesn't matter how much or how little one invests, the number is the same.

You can restate it as $1.50 for every $1.00 bet, or $3.00 for every $2.00 bet, but it is still always a 50% profit....


==PA

CamptownRaces.com
03-27-2002, 01:46 PM
The math always works out the same...

It's not the numbers, it's the way some advertise using the term.

Some won't disclose what the Total investment was unless you press them for it.

I know what the term is and means, it's just misused in the industry by many.

Looking at things PPD takes away their marketing angle.

anotherdave
03-27-2002, 02:00 PM
Originally posted by CamptownRaces.com
I've seen many throughout the years use the term ROI to sell their picks.

The say something like
"Yesterday produced +$2,100 ROI for the day"



Agreed, if they said that then it is wrong. The person that wrote that does not understand what a ROI is.

Also, if they are using ROI in the correct manner, then the total investment is not needed. (although I personally would like to know the number of plays the ROI is based on)

PPD is ROI

AD

CamptownRaces.com
03-27-2002, 02:16 PM
Sorry, those numbers are wrong!!!

The exacta has to pay $44.00 to boast that claim...

Falling asleep at the wheel...

I think you got my point though...

Not saying that PPD is any different than ROI if you know what the total investment was.

Using PPD, you won't even have to ask...

anotherdave
03-27-2002, 02:18 PM
Originally posted by CamptownRaces.com
..

Not saying that PPD is any different than ROI if you know what the total investment was.

Using PPD, you won't even have to ask...

No you don't have to ask. If the ROI is 50% then you make 50%. If I bet $100 I make $50. If I bet $10 I make $5. (See PA's post)

ROI is PPD

AD

ranchwest
03-27-2002, 02:41 PM
ROI is not profit. ROI is investment +/- profit/loss stated per unit. In other words:

Total amount won / Total amount wagered.

As can already be seen in this thread, the first problem is a lack of understanding and/or usage of the term. Then, of course, there's the problem of intentional misuse of the term.

As someone stated, there's always the problem of how one comes to the ROI figure (even assuming it is properly stated). Is it based on a single play per race? Multiple plays? How many plays? Is every race playable? No, then which ones are? What percentage of analyzed races are playable? Are the plays based on consistent rules? What percentage of winners were there? Did a few large winners skew the ROI? Do I have to play 5,000 P6 tickets per card to utilize the method?

This reminds me of the term "crime rate". The crime rate is the increase/decrease in the percentage of increase/decrease of crime. If there is a decrease in the crime rate, there can still be an increase in crime. Pretty interesting what you can do with words.

cj
03-27-2002, 03:33 PM
Did a few large winners skew the ROI?

ranchwest


I never really understand why people say this. If a few big winners produces a profit, then skew away. The few winning bettors I know can point to a few big payoffs each year that put them over the top. Who cares if someone has an ROI of 3.00 if they bet $100 last year and got back $300. All that matters is the gross profit, you can't spend a percentage!

CJ

ranchwest
03-27-2002, 03:54 PM
If the sample size is large enough and you can show that the extraordinary payoffs are common enough to be anticipated at times, then I'm willing to accept that the large payoffs are an integral part of the normal results. In small samples, I can only conclude that a large payoff has skewed the ROI because I don't have evidence of a pattern. I like to know the percentage of high payoffs involved so I can tell whether there is a pattern or the ROI is skewed.

I do understand what you're saying. My own program picks mostly short priced horses. However, on my last 3 wagering days, the program has picked horses paying from 21-1 to 36-1. I'm starting to conclude that I can anticipate mostly short prices and a few longshots, but time will tell. The longshots certainly shoot up the ROI.

andicap
03-27-2002, 03:56 PM
Originally posted by cjmilkowski
Did a few large winners skew the ROI?

ranchwest


I never really understand why people say this. If a few big winners produces a profit, then skew away. The few winning bettors I know can point to a few big payoffs each year that put them over the top. Who cares if someone has an ROI of 3.00 if they bet $100 last year and got back $300. All that matters is the gross profit, you can't spend a percentage!

CJ


Problem is, What if your win% is 15% so your wins aren't that common...If your average winner is $15..that's a 12.5% ROI ($225 win on $200 bet, say).
What if two of those 100 bets were $50 and $40. The other 13 equaled $135. What if I didn't bet those days??
Yeah, if you bet every single day and don't miss a card it doesn't matter. Andy Beyer bets every day. Eugene Dahlman (sp?) bets every day. Most of us have other things to do -- work, family, obligations -- It's quite possible I'll miss at least one of those bets.
Yeah, I know the other argument. Chances are you'll miss losing bets, but it can't make up for missing that 1 big winning bet.

BillW
03-27-2002, 04:04 PM
Rather than labling ROI good or bad, how about this:

When discussing among friends or peers, make sure the definition and context is understood.

When claim coming from someone who stands to profit from you believing the figure, just don't believe it.

Bill W.

ranchwest
03-27-2002, 04:31 PM
Originally posted by BillW
Rather than labling ROI good or bad, how about this:

When discussing among friends or peers, make sure the definition and context is understood.

When claim coming from someone who stands to profit from you believing the figure, just don't believe it.

Bill W.

Absolutely. Even if you get figures from a stranger that appear to be believable and reasonable, how do you know the figures are not ficticious? Until there's some credibility established, you just don't know.

GameTheory
03-27-2002, 05:38 PM
PPD is just ROI stated another way. Some of the other examples are not ROI at all.

And actually, Charles, I have a slight problem with the way you use PPD -- you only calculate it for a single wager, which is always a winning wager you are using for an example, like this:


This wager would have cost you $2.
The return was $4.

That's a profit of $1 for each dollar wagered.


The problem is that's totally meaningless! Without giving a hint as to the winning % of the wager over the long term, it's a useless number. And misleading too, because if you're not paying strict attention to what you saying, it will sound like you're going to make a dollar profit for EVERY dollar you wager, when of course that's only going to happen if the wager hits 100% of the time, which it ain't.

That sort of use of language is a red flag to me. Now I'm NOT saying you're trying to trick anyone, especially since you started this thread, but it is something to think about.


BTW, Charles did send me a free copy of one of his books, as promised. When I get a chance to do some research on the methods, I'll give a review...

Rick
03-27-2002, 10:36 PM
GameTheory,

So, the ROI on a free book would be .... infinity?

anotherdave
03-27-2002, 10:38 PM
Good one, but it depends on the book. Could be negative infinity.

AD

cj
03-27-2002, 10:38 PM
Could be negative infinity, if all it did was aid in losing!

CJ

I see great minds think alike dave (I hope)

anotherdave
03-27-2002, 10:39 PM
photo finish on that one cj! First one I've won for weeks.

AD

CamptownRaces.com
03-28-2002, 02:04 AM
Originally posted by anotherdave
Good one, but it depends on the book. Could be negative infinity.

AD

As far as the FREE book is concerned, as all as he has to do is "paper bet" and watch and see how the races come out. Yeah, he's not going to make anything if he doesn't bet anything, but at least he can "test drive" my method without spending any more than a little time! Who else has offered you folks that?

I'm a bit disappointed with some of the people on the boards. Here I try to make a nice gesture and end up getting flack for it. Go and take a look in the selections part of the boards and see what I left you guys for Monday's races at Phily Park.

I hit 2 for 2 exactas, and just missed the one trifecta by a nose.

On the Saturday before that I hit a nice exacta and just missed two trifectas by having my keys in the wrong positions. I did miss a win bet that day too, but ended up breaking even for the day.

I haven't given any of you anything that has cost you money! Why would you be the way that you are? That, I just don't understand...

I don't think I'll be coming in here for a while. For those of you that would still like to talk, just email me...

Charles

ranchwest
03-28-2002, 08:29 AM
Charles, this board is different from most. Many of the people here were born with $2 in one hand and a parimutuel ticket in the other.

A lot of the folks here are successful handicappers and in many cases that success was bred from being able to ask tough questions. If you're getting tough questions, maybe you might consider that a good thing. At least people are posting to your threads.

While I know your intention was that your picks were offered out of generosity, most of the people on this board shun using someone else's picks. This is generally not a place where someone is so desperate for a winner that they'll try your picks when you are an unknown factor.

Most of us have seen people who are selling things come and go, mostly go. If we seem skeptical, we are, not of you, but of every new idea that comes along.

I hope that you hang around. If not, maybe you'll find more enjoyable pursuits elsewhere.

GameTheory
03-28-2002, 08:55 AM
Yeah, I agree.

I haven't seen people around here give someone a hard time just for the hell of it.

This board is full of truth-seekers who will ask every question & examine every angle of an issue -- that's how you get to the heart of things...

Rick
03-28-2002, 10:28 AM
Charles,

Most, if not all, of the negative comments are just good natured kidding, like what one of your friends might say to give you a hard time. Although most of us have never met, I think people here generally consider the others to be friends. Thus the informal nature of the discussions, which occasionaly results in someone being offended. I can assure you that I've been on the receiving end of some of these comments in the past, and my ego has survived intact in spite of it.

Coincidentally, the Dilbert comic strip in my newspaper today is about ROI. Has anyone else seen it?

anotherdave
03-28-2002, 10:36 AM
Sorry if you were offended. You started the thread about ROI and someone made a joke about infinite return and I replied it might be negative infinity return. I certainly meant nothing negative about you or your product. In fact I was on your website and found it interesting. I was considering buying one of your books (they are certainly reasonably priced) I did question your comment about ROI because you seemed to be mistaken about what it was by what you posted. Perhaps that is because you had some literature by system sellers that didn't know what it meant.

In fact your posting on the selection board was nicely profitable, so I have no reason to question your methods. I don't question anyone's methods. There are many ways to win or lose at this game. I don't know them all. Certainly no offense was meant. But if I brought up a topic and someone disagreed I would find that intellectually challenging. That's what I am here for! To learn from everyone and maybe I have some info that might help others.

AD

Rick
03-28-2002, 03:11 PM
See, I told ya there's a good bunch of guys here. Stick around.

Lefty
03-28-2002, 09:21 PM
Rick, gotta love that Dilbert.
CAMPTOWN: We're tough, but fair.