Saturday, September 26, 2020 12:14:09 PM
"Buffett formed many lifetime principles as a 16-year-old horse handicapper, including the importance of information, sizing bets, and having an edge over the opposition."
Buffett Learned Core Principles At The Racetrack
The most powerful investment instruction for the sixteen-year-old Buffett took place at the race track. Still back in Nebraska he and a friend started by "stooping" the floor for "place" and "show" tickets discarded by naive bettors disappointed that they didn't have the winner. In their naivete they didn't realize that their tickets paid out modestly for 2d and 3d place as well. There's a value investing metaphor somewhere in this which closely resembles Buffett's original model of picking up "cigar butt" stocks which were discarded but had one more puff in them.
What Buffett did next was more interesting. He and a friend put out a tip sheet called Stable-Boy Selections. To do this he began to study handicapping, and in the process learned such things as the fact that you could handicap by speed or by the class the horse had competed successfully against. They sold their tip sheet for a quarter until the race track shut them down. A year later with a teacher who was also interested in horses, he returned to the racetrack and instead of "stooping" or selling a tip sheet, he bought the best tip sheet, studied, and formulated a plan.
I'd get the Daily Racing Form ahead of time (he told biographer Alice Schroeder) and figure out the probability of each horse winning the race. Then I would compare those percentages to the odds. But I wouldn't look at the odds first, to avoid prejudicing myself. Sometimes you would find a horse where the odds were way, way off from the actual probability. You figure the horse has a ten percent chance of winning but it's going off at 15 to 1 (implying only a 6.7% chance so that the payout probability exceeded the odds by about 50%)."
What Buffett had stumbled upon was the concept of having an edge, in this hypothetical case a 50% edge on what was admittedly a long shot, although betting on a large number of such long shots would likely be highly profitable. The basis of success was that you were betting against people who based their choices on the jockey's colors or the names of the horses. Implicit in this process was the most important principle behind any kind of betting, using edge/odds as a guideline for sizing bets or deciding whether to bet at all..."
https://seekingalpha.com/article/4376207-buffetts-surprising-new-moves-fit-core-principle-edge
Recent BRK.B News
- Intel Loses Pentagon Funding, Shell Plans 20% Business Team Reduction, and Latest News • IH Market News • 03/13/2024 11:02:03 AM
- Expedia Announces 1,500 Job Cuts; Hims & Hers Surges 19.8% Post Financial Results, and More News • IH Market News • 02/27/2024 11:15:07 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 02/26/2024 06:53:12 PM
- Form 10-K - Annual report [Section 13 and 15(d), not S-K Item 405] • Edgar (US Regulatory) • 02/26/2024 11:08:31 AM
- Broadcom in Talks to Sell Computing Unit, Alcoa Acquires Alumina for $2.2 Billion, and Latest News • IH Market News • 02/26/2024 10:55:58 AM
- Uniswap Skyrockets 55% with Incentive Proposal, Avalanche Confronts 4-Hour Shutdown, and More • IH Market News • 02/23/2024 06:26:18 PM
- Nvidia’s Earnings Skyrocket by 769%, BuzzFeed’s Pre-Market Shares Surge by 85%, and Other Highlights • IH Market News • 02/22/2024 11:08:52 AM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/14/2024 09:46:01 PM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/14/2024 09:40:04 PM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/14/2024 09:39:50 PM
- Form 13F-HR - Quarterly report filed by institutional managers, Holdings • Edgar (US Regulatory) • 02/14/2024 09:02:18 PM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/05/2024 10:27:17 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/12/2024 10:08:12 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 01/10/2024 09:16:32 PM
- Wall Street Highlights: Google Rejects Union Negotiations, Exxon Mobil Announces $2.5 Billion Accounting Write-Down in California • IH Market News • 01/05/2024 11:14:00 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 12/19/2023 12:41:33 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 12/14/2023 11:45:55 PM
- Apple Stocks Reach Record, Adobe Faces Stock Drops, Berkshire Hathaway Increases Stake in OXY, and More • IH Market News • 12/14/2023 10:59:57 AM
- Hasbro Job Cuts, Oracle’s Stock Decline, Google’s Epic Antitrust Loss, and More • IH Market News • 12/12/2023 10:50:47 AM
- Batteries Plus & Duracell Ignite Children's Holiday Spirit With Annual Toys For Tots Partnership • PR Newswire (US) • 12/05/2023 03:07:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 12/01/2023 02:11:02 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 11/29/2023 09:50:02 PM
- Amazon Unveils Innovative Services, Okta Discloses Data Breach, Textron Plans 2% Global Workforce Reduction, and More • IH Market News • 11/29/2023 11:18:11 AM
- Monday’s Wall Street Highlights: Walmart, Disney, Lloyds Banking, Mitsui Financial, HSBC, and more • IH Market News • 11/27/2023 11:29:25 AM
- Wednesday’s Wall Street Highlights: Nvidia, Broadcom, Berkshire Hathaway, Guess, Virgin Galactic, and more • IH Market News • 11/22/2023 11:49:26 AM
NanoViricides Reports that the Phase I NV-387 Clinical Trial is Completed Successfully and Data Lock is Expected Soon • NNVC • May 2, 2024 10:07 AM
ILUS Files Form 10-K and Provides Shareholder Update • ILUS • May 2, 2024 8:52 AM
Avant Technologies Names New CEO Following Acquisition of Healthcare Technology and Data Integration Firm • AVAI • May 2, 2024 8:00 AM
Bantec Engaged in a Letter of Intent to Acquire a Small New Jersey Based Manufacturing Company • BANT • May 1, 2024 10:00 AM
Cannabix Technologies to Deliver Breath Logix Alcohol Screening Device to Australia • BLO • Apr 30, 2024 8:53 AM
Hydromer, Inc. Reports Preliminary Unaudited Financial Results for First Quarter 2024 • HYDI • Apr 29, 2024 9:10 AM