How do you measure your handicapping?

[DeltaLover]

Originally Posted by traynor

I think that depends on whether ROI is used as a "real" value (actual money earned in the real world) or a fantasy value ("paper profit"). It is an interesting point, because most seem to think "ROI" means whatever they think it means (or want it to mean).

I do not agree.

I think that ROI is very well defined and it equals total payoffs over total amount of bet. Do you know of any other alternative definition? (I do not)

[therussmeister]

I measure profit divided by number of races handicapped.

[Capper Al]

Originally Posted by DeltaLover

I am not referring to positive vs negative here.

BUT

a model with a 1.10 ROI will be WAY more profitable from a model with a 1.20 ROI if it is able to find three times more frequent bets.

The key point is that we measure profits in conjunction to time and not as an abstract concept.

I only suggested a few ways to look at things and requested that other points of view be added. You're right. Opportunity to use a system matters.

[DeltaLover]

Originally Posted by Capper Al

I only suggested a few ways to look at things and requested that other points of view be added. You're right. Opportunity to use a system matters.

I understand..

[Capper Al]

Originally Posted by traynor

I think that depends on whether ROI is used as a "real" value (actual money earned in the real world) or a fantasy value ("paper profit"). It is an interesting point, because most seem to think "ROI" means whatever they think it means (or want it to mean). That may be why many bettors (to their dismay) find that the strategies they discover by studying the past do not function (as well) in the present or future. It might help to understand that "return" does not mean "woulda coulda shoulda"--it means "money that came back as a result of money that went out."

Perhaps a more realistic term than "return on investment" should be used in regard to horse races. I have never really thought about it, but the term "ROI" seems to be used in a different context by serious bettors (who tend to consider it only in "real" terms of actual money won) and by more casual bettors (who consider "paper profit" and "actual money won" as essentially equivalent).

This issue was discussed on another thread, with the overall impression that some (or most, unfortunately) believe a "paper profit ROI" of 1.2 is equivalent to a guarantee of exponential growth on future wagers (each and every one of which operates with a 20% advantage--"POI").

I'm always surprised by how paper and real can differ.

[Capper Al]

Originally Posted by therussmeister

I measure profit divided by number of races handicapped.

Similar to the ROI folks.

[AndyC]

Originally Posted by Capper Al

Of course, in the end it will always be ROI. Can anyone see this like tuning a piano? (Increase my hit rate here, improve my Quirin style UDR there, improve my overall TTC score, and hopefully eventually my ROI will go up.)

If you bet the same amount each and every year then ROI is certainly an accurate measure of success. Would you rather have an ROI of 1.05 betting $1,000,000 or an ROI of 1.25 betting $100,000?

[traynor]

Originally Posted by DeltaLover

I do not agree.

I think that ROI is very well defined and it equals total payoffs over total amount of bet. Do you know of any other alternative definition? (I do not)

"Well defined" does not mean accurate, when the definitions are subjective. ROI involves more than total amount of bet. TCO has to be factored to make ROI meaningful. Calculating ROI on any business endeavor involves considerably more than "sale price of goods" divided by "raw cost of goods." ALL costs associated with selling the goods, from storage, to transportation, to TVM used to maintain supplies must be included to generate a meaningful value. Unless one happens to be a student of the Arthur Anderson College of Creative Accounting.

[Greyfox]

Originally Posted by traynor

"Well defined" does not mean accurate, when the definitions are subjective. ROI involves more than total amount of bet. TCO has to be factored to make ROI meaningful. Calculating ROI on any business endeavor involves considerably more than "sale price of goods" divided by "raw cost of goods." ALL costs associated with selling the goods, from storage, to transportation, to TVM used to maintain supplies must be included to generate a meaningful value. Unless one happens to be a student of the Arthur Anderson College of Creative Accounting.

The question was "How do you measure your handicapping?"
For that ROI is well defined as Delta Lover pointed out.

The question was not "What profit do you earn with respect to horse handicapping?"
Obviously, you'd then include other expenses such as program, bus ticket,
gate entrance, coffee, snacks or computer cable costs etc.

ROI is exactly as Delta Lover defined it x 100.

[traynor]

Originally Posted by AndyC

If you bet the same amount each and every year then ROI is certainly an accurate measure of success. Would you rather have an ROI of 1.05 betting $1,000,000 or an ROI of 1.25 betting $100,000?

That is getting closer to a "real" ROI--based on wagers actually made. My contention is that bettors who look at past results, see X mutuel total divided by (number of bets * $2) and define that as "ROI" are seriously misleading themselves. I also agree (with certain exceptions involving TCO) with DL's formula of amount won/amount bet--which implies something in the real world as opposed to "paper profit."

I don't think "ROI" based on the (hypothetical) "result" of wagers not made is anything more than deceptive.

[traynor]

Originally Posted by Greyfox

The question was "How do you measure your handicapping?"
For that ROI is well defined as Delta Lover pointed out.

The question was not "What profit do you earn with respect to horse handicapping?"
Obviously, you'd then include other expenses such as program, bus ticket,
gate entrance, coffee, snacks or computer cable costs etc.

ROI is exactly as Delta Lover defined it x 100.

I think you made my point. The overwhelming majority of bettors are unwilling to use an accurate measure of their handicapping--and prefer the ego-saving metric of "ROI" on paper profits.

[Greyfox]

Originally Posted by traynor

I think you made my point.

I don't think I made your point.
ROI is not subjective, and strictly refers to actual bets made and income received from them.

Profit is larger issue in scope.

[traynor]

Originally Posted by Greyfox

The question was "How do you measure your handicapping?"
For that ROI is well defined as Delta Lover pointed out.

The question was not "What profit do you earn with respect to horse handicapping?"
Obviously, you'd then include other expenses such as program, bus ticket,
gate entrance, coffee, snacks or computer cable costs etc.

ROI is exactly as Delta Lover defined it x 100.

Calculation
For a single-period review, divide the return (net profit) by the resources that were committed (investment):
return on investment (%) = (Net profit / Investment) × 100
where:
Net profit = gross profit − expenses.
investment = stock + market outstanding + claims.
or
return on investment = (gain from investment – cost of investment) / cost of investment
http://en.wikipedia.org/wiki/Return_on_investment

The latter value is more often considered POI rather than ROI.

[traynor]

Originally Posted by Greyfox

I don't think I made your point.
ROI is not subjective, and strictly refers to actual bets made and income received from them.

Profit is larger issue in scope.

Only in the minds of those who want to believe such. "ROI" is not a horsey term--it is a fairly common term used in many other areas of endeavor. Tweaking it to mean "this and only this" when applied to horse races is misleading. Or--perhaps more accurate a term--subjective.

[Greyfox]

Originally Posted by traynor

Calculation
For a single-period review, divide the return (net profit) by the resources that were committed (investment):
return on investment (%) = (Net profit / Investment) × 100
where:
Net profit = gross profit − expenses.
investment = stock + market outstanding + claims.
or
return on investment = (gain from investment – cost of investment) / cost of investment
http://en.wikipedia.org/wiki/Return_on_investment

The latter value is more often considered POI rather than ROI.

True, but when at the track if you are asking handicappers their ROI they will strictly refer to monies on wagering.

If you have a company that is interested in Profit (loss) margins then they will use what you have presented above.

The specific question of this thread was "How do you measure your handicapping?"
It was most reasonable that horse players here would respond with ROI as defined by Deltalover, as we are not in a company boardroom meeting with Directors.

I think that your response simply complicates the issue for most horse players as you are focusing on net profits and total investment as a businessman would.