Randomness cannot be excluded from handicapping

[46zilzal]

After reading Fooled by Randomness, by Nassim Taleb which relates to others how predictions of the stock market are simply a matter of luck, NOT SKILL, it is refreshing to see this author come back to cover his life's work as a knowledgeable skeptic in the wonderful, thought provoking book,THE BLACK SWAN .

He,like many authors of late (i.e The Drunkard's Walk: How Randomness Rules our Lives), shoots gigantic holes in probability theory and the use of databases to predict future events. One of my favorite expressions he used as related to the Bell curve which all database gurus take as being GOSPEL, he calls the GIF, or gross intellectual fraud.

Using countless examples in situations ALL of us have confronted, he repeatedly shows that we know FAR less than we think we know and cover up those deficits (often by "experts" he refers to as empty suits) by psychological mechanisms of narration (giving bogus, unproven answers to the times when the data misses the mark).

He shoots many holes in the idea of conditional probability (i.e if this, then
that is true) by enlightening the reader to aspects of that conclusion we might never have considered before.

A remarkable tour de force that will get you thinking about ANY DOGMA you hold dear particularly in the racing game. A must read.

[Hanover1]

Sounds interesting, and I buy into it.....Gives credence to the often berated comment: " We will let the horse tell us".

[formula_2002]

I READ TALEB'S BOOK AND A FEW OTHERS OF THE SAME ILK.
I COME AWAY WITH THIS.
MOST EVERY THING WE EXPERIENCE IS NOT RANDOM, WE SIMPLY ARE NOT SMART ENOUGH TO FIGURE ALL THINGS OUT, AND WHEN WE DO FIGURE SOMETHING OUT, AND IT’S NOT TO OUR LIKING, WE IGNORE IT AND CALL IT A RANDOM EVENT

[46zilzal]

Originally Posted by formula_2002

MOST EVERY THING WE EXPERIENCE IS NOT RANDOM, WE SIMPLY ARE NOT SMART ENOUGH TO FIGURE ALL THINGS OUT, AND WHEN WE DO FIGURE SOMETHING OUT, AND IT’S NOT TO OUR LIKING, WE IGNORE IT AND CALL IT A RANDOM EVENT

You have quite a bit of enlightenment to add to your "sure thing" analysis of $2.20 winners my friend.....

Ilk is not what I would call genius

[Robert Goren]

Talab is right that a lot of stuff gathered from data bases applies only in the short run or in small markets. The size of the market effects the sample and sometimes the outcome. But how do you bet randomness? Throw darts. The thing to remember is not to think something pulled from a a data base is law.

[garyoz]

Here's another: The Invisible Gorilla.

http://www.amazon.com/Invisible-Gori...2156710&sr=1-1

I don't buy "black swans." Perceptive/cognitive denial. Trying to connect the dots while ignoring information.

[Greyfox]

If randomness cannot be excluded from your handicapping, can anyone tell us how to include it? (Playing a table of random numbers will take you to the poorhouse.)

[lsosa54]

Only way I see how to do it is to allow a certain amount for randomness in your betting line, whatever it may be, 10%? 20%?, or maybe vary it by type of race. That will make the betting odds you require on contenders higher and give you a bit of hedge.

[formula_2002]

Originally Posted by 46zilzal

You have quite a bit of enlightenment to add to your "sure thing" analysis of $2.20 winners my friend.....

Ilk is not what I would call genius

nothing is for sure, but there is a good probability that the 10 horse in sar's race 6 today (08-18-2010) will hit the board, and long term, I expect horses that fit this model to return a .95 to 1.05 roi..
I could be wrong about that :

right again, the beast finished 4th. There was a good probability it would hit the board and a ( 1-good probability) it would not.

[ArlJim78]

Originally Posted by 46zilzal

A remarkable tour de force that will get you thinking about ANY DOGMA you hold dear particularly in the racing game. A must read.

highly recommend it, I would say that he probably does qualify as a genius.

there is hope for you afterall, especially if you use Talebs way of thinking to challenge other dogma you hold so dear like climate change, big government social programs, financial schemes, etc. You might just find out that many of the convictions you espouse in off-topic are on shaky ground.

[CBedo]

Originally Posted by 46zilzal

After reading Fooled by Randomness, by Nassim Taleb which relates to others how predictions of the stock market are simply a matter of luck, NOT SKILL

If this is what you took away from this fine work, then you need to reread it. He doesn't say success is matter of luck only, he says that we just tend to take too much credit when things are good, and apply too much of the blame to randomness when things are bad. There is information to be gained from past experience (and data for that matter), but we just have to be careful about quantifying and relying exclusively on known risk measures and categories, and should acknowledge that there is an unknown risk as well.

[46zilzal]

Originally Posted by CBedo

If this is what you took away from this fine work, then you need to reread it. He doesn't say success is matter of luck only, he says that we just tend to take too much credit when things are good, and apply too much of the blame to randomness when things are bad. There is information to be gained from past experience (and data for that matter), but we just have to be careful about quantifying and relying exclusively on known risk measures and categories, and should acknowledge that there is an unknown risk as well.

http://old.nationalreview.com/nrof_g...0406230851.asp
Fooled by Randomness is loaded with crackling little insights, but the best one is that what looks like skill is often plain old luck, so beware of investment geniuses. They will get their comeuppance, just as Solon warned. Solon was an upright ancient Greek legislator, known for speaking his mind. When King Croesus of Lydia, the richest man of his day, bragged to Solon about his wealth, Solon admonished, “The uncertain future is yet to
come, with all the variety of future.” And it did. Cyrus defeated Croesus and nearly burned him at the stake.

My own view is that it’s not all luck, but it’s mainly luck. Much of what investors do in picking stocks — the research, the listening, the talking, the reading — is nothing more than wheel-spinning. It wastes time and gets them nowhere special.

[markgoldie]

Okay. Let's all agree that there is a tremendous amount of randomness in any given event. This means that you were lucky whenever you cashed a ticket and unlucky when you did not.

But I think all of us know that. And it's why we don't commit half of our bankroll to a given event.

And despite all of this randomness, how do we account for the fact that year after year at track after track, the winning percentage of favorites hovers right around that 30% mark? Since we are talking average field sizes well in excess of 3, this would seem to prove that the form means something.
One of the greatest keys to handicapping success is knowing one thing: When you have made a good bet that turned out badly.

Why is that so important? Because bad results should not automatically have you altering what has been a successful approach. In this regard, I think that gimmick bettors have a decided edge over short-priced win players and that's because they are used to losing streaks. It comes with the territory. On the other hand, you must keep religiously analyzing what you see out on the track. Randomness can be accepted, but missing track biases, for example, cannot.

And so it goes. Tough game. Get big rebates if you can.

[Charlie D]

Originally Posted by markgoldie

And despite all of this randomness, how do we account for the fact that year after year at track after track, the winning percentage of favorites hovers right around that 30% mark? Since we are talking average field sizes well in excess of 3, this would seem to prove that the form means something.
.

Around 70% of favs finish ITM, most races, i believe are won by the first 3/ 4 in the market, which seems to suggest in horse racing, randomness does not have a significant impact.

[therussmeister]

What randomness in horse racing comes down to is: You can't beat the race, but you can beat the races.

How do you incorporate randomness in handicapping? By never giving any horse a 0% chance of winning. By staying focused only on long-term results, not this race's results.