My Boy Jack is a 3 year old race horse who finished 5th in the Kentucky Derby.
Mendelssohn is a 3 year old race horse from Europe. He finished last.
It is not the results that interest me the most, it is the back stories which happened the day of the race and peoples reactions to these stories before the race even started.
The main story was the weather. Not only did it rain and was raining for the race, but Kentucky had about 3 inches of rain. That, is a lot of rain. And the track was very wet and very muddy.
FYI, Just in case you do not know who won, it was Justify.
My Boy Jack is an experienced race horse who had won some races; including one in the mud. His owner and trainer were all smiles during morning interviews and publicly stated that they were really glad to see all those rain clouds. They felt good about their product and their chances of success in these conditions.
The day before the derby, before their statements and all that rain, My Boy Jack was sitting at 30:1 odds. By race time he was 6:1. That my friends is a huge swing. This is like Warren Buffett saying he is buying more and more Apple Stock because he likes the product and the favorable conditions for success. People tend to pile on the Buffett bandwagon.
Between a good earnings report, conference call and Buffett’s endorsement, Apple rose nearly 8%.
Mendelssohn on the other hand was not a race horse with a lot of experience, he has won, but has never even ran in the rain or raced in the mud. He also is a European horse, and I don’t even know how one can transport a horse across the pond without totally stressing him out. His owners and trainers were very much subdued in their interviews and even said they did not even know if he was going to win or not. They did not like the rain, nor the mud and really did not want to talk to the media about it.
This is like Elon Musk not wanting to talk about boring financial and economic stuff like cash flow and debt. You know the muddy, dirty side of running a business that is burning through cash.
Tesla’s stock sank nearly 10% after his horrendous earnings call. People, and Wall Street, tend to jump ship if you ignore the messy stuff and refuse to answer key questions.
Interestingly, Mendelssohn’s odds did not change that much. Probably because he was still getting hyped by the media. For some reason, people were still believing the expert commentators instead of looking at the research. I even heard one commentator state that the only reason My Boy Jack was gaining in popularity was because folks liked the name.
The moral of this story is that one should follow the money but do your research and don’t always buy into the hype. After all, there was a reason why Jack was rated at 30:1 at one point.
My wife and I are not big gamblers, but we do enjoy the occasional horse race. In fact, we have a bit of a tradition of going to Charles Town each year for our anniversary. We avoid the one armed bandits and even the card tables and instead head to the all you can eat buffet, grab a bottle of wine and watch the races for the evening. And yes, we place small wagers, usually a $2 across the board bet.
Our method is just as good as anybody else. We look for consistency in both history and odds, who the rider and jockey are, and of course the horse has to “look” good and have a catchy name. 😉
So this year when the Kentucky Derby rolled around, we did essentially the same thing. Ordered pizza, grabbed a bottle of wine and placed our bets online.
My wife has a soft spot for “greys” but since there were no grey horses, she looked at the names and the jockeys. Ultimately she picked Good Magic (9:1) but thought that Audible (7:1) sounded familiar. I told her that it was the name of a company which published and streamed audiobooks. I liked her suggestion but in the name of competition, I chose Audible.
How did we do?
My wife’s horse came in second, and mine in third. Our $12 of wagers returned $21.60. An 80% return on our money.
The moral of this story, always listen to your wife.