The concept of value

[GameTheory]

I know we've debated this quite a bit, and this isn't intended to start another one, but oftentimes during our debates about "value", many people don't seem to quite know what it really means. This excerpt from Steve Fierro's book is the best explanation I've seen:

A Valuable Analogy (http://www.netcapper.com/TrackTracts.htm)

[steve fierro]

Thanks Game Theory,

Only in racing do the players tend to get confused when the topic of money versus picking winners is introduced. In other investment markets this is a not an issue. There is a group of players however that is taking their game to the next level. It is the level of money and not picking winners. Value is not a concept (I am now addressing more than racing) it is one of life's realities. We make many value judgements daily in our lives. Believe it or not these result in (hidden) finacial profit or loss results. Here is an actual non-racing example. True by the way. My kids car needs a brake job. They go to shop "A" because it's advertised nationwide as "certified". This is like a horse that gets lots of press because of past accomplishments. The price $900. They shop around and get it done for $401 (done well by the way). The just made $499. They attached value to their decision making process. The did not select a shop. They made a value judgement. The profit was $499. I know this is far off from a racing example but I do this intentionally to emphasize the point. Money is Money. When you play the races whenever you play them you are making Money/Value judgements. I have found by posting these non-racing analogies that it hits home with some players. I hope this one does as well.

[ranchwest]

I don't have a problem with value and profit. My problem is in the concept of finding value and profit on today's tote board.

1) Most of the time, I don't have an opportunity to look at the tote board.
2) Even when I can, it changes at the last minute and I have no control.
3) When I actually see the tote board and see my horse at long odds, it provides me with unwanted doubt.

Through historical analysis, I know that I'm likely to find winners with value from the context of either being very likely to win or else being very certain to win often enough at a price. My value comes from analyses of past odds as related to specific contexts.

Now, I'm not trying to criticize Steve or anyone who is successful watching the tote board and I'm not even recommending not using it. It is just generally not for me. Yes, there are a few limited situations, such as rare show bets and some exacta situations, where the board helps me, but I usually don't use it at all.

[GameTheory]

I get in trouble because I agree somewhat with both sides. Playing the Ranchwest way (just make your picks, bet 'em, AND make money) is really the dream for me -- the ideal way to play if you can do it, and I believe it can be done that way as I argued during the "war over Karl". The point of this posting was just to show what the meaning of concept really IS.

For many (most) people, I think that in this case "the perfect is the enemy of the good" and they could move to profitability much easier by making value lines, etc. In fact, it is probably just this process of forcing yourself to consciously attach a value threshold to each horse that will build the "value instinct" that Ranchwest has that enables you to pick value horses without referring to the tote.

[Rick]

The important thing in this whole argument is that whatever handicapping method you use, you must use information that is different than what the public uses. If you don't, it won't matter how much of an "overlay" you appear to have based on your calculated odds. If you do include contrarian information you can calculate a line if you want to, but it's usually not necessary. The most important information determining the overlay is known in advance, not discovered when you see the toteboard. The only exception to this is the effect of the morning line, which accounts for about 80% of the variance in actual odds. Many in the public define an "overlay" as a situation where the actual odds are higher than morning line odds and bet accordingly. It is possible to take advantage of this "dumb money" to a certain extent.

[ranchwest]

Rick,

Great post!

The public makes the same mistakes over and over. If they ever change to what you're doing, just be ready to move on to the next frontier.