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Using the Stock Market Portfolio Idea with Horse Racing Systems

For investors in the City, using a Stock Market Portfolio is a way of spreading your risk by buying a variety of different equities (shares). On , I came up with the idea of testing horse racing systems for members, with the ultimate aim to create a members’ portfolio of systems to use on a daily basis. The idea is exactly the same as the Stock Market Portfolio – it is simply a way of spreading risk. If you had let’s say 10 horse racing systems within a portfolio, it is very unlikely that all 10 would go through a losing run at the same time, (assuming they were any good). What is more likely to happen is that the systems doing well would balance any systems doing badly at any particular period in time. Assuming all 10 systems continued to be profitable in the long-term, the journey to long term profits would be much smoother. In other words one would hope that any losing periods would be kept to a minimum and most months would show modest profits.
After four weeks of testing, we came up with nine systems that had shown consistent profits over the period of 1990 to 2005. Six of the systems were systems connected with trainers and we decided to put them together in two groups of three so that we ended up effectively with five usable systems. The three “non trainer” systems were also quite different in order to give variety and “balance” to the portfolio. Below I have explained the systems in brief with their results’ record from the 16 years of testing.
System 1 – all weather system
This system utilised the fact that previous winners coming out within a week of their last success were essentially sound bets on the all weather. In truth the system is more complicated than that, but that is the general principle. The results for 1990 to 2005 were:

Bets : 771
Wins : 226
Strike Rate : 29.3%
Profit : +243.3 points (to 1 pt level stakes)
% profit : +31.6%
The system performed consistently as well – a key fact for any system – with 14 of the 16 years showing a profit. Added to that, all but one year saw a strike rate of 25% or more. Five years showed a % profit in excess of 50% which is highly impressive.

System 2 – Fitness system
The idea behind this system was to back fit horses that had sound chances of winning according to the forecast price in the Racing Post. It also pinpointed horses that would not be outclassed. One beauty of this particular system is the large volume of qualifying bets every year – indeed in 2004 and 2005 there were just under 550 qualifying bets:

Qualifiers 2649
Winners 667
Strike Rate 25.2%
Profit +348.6 points (to 1pt level stakes)
% profit +13.2%
Although the % profit is modest at just over 13%, one has to remember that this system produces a large volume of bets – hence points profit is high. There were 13 winning years out of 16, and every year produced a strike rate of 20% or more. 1999 and 2004 were excellent years, whereas 2003 was the worst year showing a 16% loss.
System 3 – Two and three-year old system

The first two systems did include these two age groups, but the majority of qualifiers were older. Hence it was decided to try and find a system for the younger end of the age range. This system pinpoints last time out winners and indeed has extremely simple rules. I was amazed at how successful it has been. The results for the 16 years of testing were:
Bets : 1062
Wins : 313
Strike Rate : 29.5%
Profit : +255.6 points (to 1 pt level stakes)
% profit : +24.1%

Remarkably there has been just one losing year for this system since 1990. That was in the year 2000 and the loss was minimal – just over 5 points to 1 point level stakes. The system results have been very consistent – no years showing massive profits, but with 13 of the 16 years returning a % profit in excess of 15%.
System 4 – Top trainers system
As I have written in previous articles, trainers can be worth following as they often specialise in certain fields. Some excel with sprinters, others have a strong preference for a certain course or courses, while others target specific times of the year or types of race. This system combines three of the biggest (and the best) trainers in the country. The results are as follows:
Bets : 1392
Wins : 281
Strike Rate: 20.2%
Profit : +589.5 points (to 1 pt level stakes)
% Profit : +42.3%
Any trainer system or combination of trainers used in a system is likely to produce a lower strike rate. That is the case here – roughly one win in five. However, there is more chance for bigger priced winners and that would explain the excellent returns in excess of 40%.
System 5Trainer system 2
This system utilises three trainers that are good at getting their horses fit after a significant break. The results were as follows:

Bets : 916
Wins : 190
Strike Rate : 20.7%
Profit : +395 points (to 1 pt level stakes)
% profit : +43.1%
The results are very similar to those seen for system 4. Again the reason for the decent profits is the fact that a few bigger priced horses have won over the years.
Putting the results from the five systems into a portfolio we see the following overall figures for 1990 to 2005:
Overall (Portfolio of systems)
Bets : 6790
Wins : 1677
Strike Rate : 24.7%
Profit : +1832 points (to 1 pt level stakes)
% profit : +27%
If this portfolio continues in 2006 in a similar fashion, the estimated profits for the year to 1 point level stakes would be around the 120 point mark.
Portfolio “live” results 2006
After all the research we targeted the beginning of the flat season to begin publishing qualifiers for the portfolio. After just over 5 weeks (to the end of April) the figures were:
Bets : 54
Wins : 11
Strike Rate : 20.4%
Profit : +10.8 points (to 1 pt level stakes)
% profit : +20%
Despite beginning during the notoriously difficult start to the flat season, the portfolio is holding up well. Both the current strike rate and the % profit are below expectations, but the portfolio is still showing a healthy return. If it continues in the same vein for the coming year, by the beginning of the next flat season in 2007 profits for the year would stand at 106 points. Indeed, the system has been a little unlucky as we have had two 14/1 seconds already! Of the five systems, three are currently in profit and two in deficit.
I have researched many systems in my time, but cannot say I have followed any system religiously. I have always used a form / stats based approach to my selections concentrating mainly on all age sprint handicaps. However, this portfolio idea has caught my imagination and I have personally researched a new set of systems that I intend to use in the future.

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