Portfolio betting (the good and the bad!)

It might seem that having a portfolio of betting strategies might seem to be a perfect answer to minimising risk but...

Are there inherent risks involved within a Portfolio Betting Strategy?

You might think that it was a sensible, grown up (and maybe a bit boring) road to riches?

But I have to tell you, there can be risks to splitting your betting funds across a number of systems.

Having said that, it's almost certainly the right thing to do...

As long as it's done properly?

So, I'll start off by telling you a cautionary tale before moving on to explain how, in my humble opinion, you ought to set up a portfolio of systems to ensure long term profitability.

A Cautionary Tale...

In October of 2011 I launched a website called www.PrecisionBetting.com

I intended that it would use a portfolio of systems to select the best 3 selections a day and pass those on to my subscribers to profit from.

Well, all started very well; October 2011 was a very profitable month but...

As I developed more and more micro (or niche) systems to add to the portfolio, it became more and more difficult to select the best three selections each day.

PrecisionBetting.com quickly became unprofitable....

I reacted by developing (and testing) more and more micro systems to add to the portfolio.

The more systems there were, the more difficult it was, each day. to select the three best selections (some days there were multiple. but different, selections in the same race!)

Ultimately I decided to develop a ratings based methodology for PrecisionBetting.com which has gone on to great success!

But I've been a bit wary of portfolio systems ever since.

The Right Way To Do it...

Of course, there's a right way and a wrong way to do anything; generally (at least, in my experience), the right way takes longer but the wrong way always costs more?

The right way to design and implement a betting portfolio would be to examine your attitude to risk, to evaluate the possibilities that are available to you, to decide what proportion of your portfolio be focussed on growth and what proportion on income and, finally...

What markets you want to play in.

What is a portfolio?

Broadly speaking, a portfolio is a collection of financial instruments selected & grouped in such a way as to minimise risk and maximise the overall investment strategy.

"Think of an investment portfolio as a pie that is divided into pieces of varying sizes representing a variety of asset classes and/or types of investments to accomplish an appropriate risk-return portfolio allocation."

Read more: http://www.investopedia.com/terms/p/portfolio.asp#ixzz2BuKFhik9

Thus, a betting portfolio is just an arrangement of systems and tipster services that, when combined in the right proportions, can produce your long term aims (whether they be growth, income or, more commonly, a mixture of both.)

The aim would to be to avoid putting all your eggs in just one basket or over aggressively focussing on just one part of the market.

At the same time, you need to manage your money (boring, I know!) so that you don't expose your betting bank to the risk of total loss.

But, before you can do any of that, you need to ask yourself...

What are your long term aims?

I hope that you are betting for fun - if you're not enjoying what you do, then why do it?

At the same time, I also hope that you are betting intelligently with the aim of consistently making money from betting.

Each and every one of us will have a different idea of what our long term goals are but they will all be influenced (to a greater of lesser extent) by the following factors...

a). Age : I'd like to make money to put aside for my retirement.

b). Disposable Income : I'm currently working so I have a regular disposable income.

c). Risk : Whilst I am not risk averse, I prefer to clearly identify and manage the risk components of my portfolio.

d). Income : It would be nice to have a £100 profit each month that I could take out so that I could take out the Missus for a romantic meal every now and again.

Once we know what our long term aims are, we can then start to think about...

Designing a portfolio...

In a betting portfolio I would like to emulate the sort of financial investment portfolio that I might be encouraged to set up if I visited a Personal Financial Advisor.

He (or she) would probably advise me to...

a). Own property - renting means giving your money away.

b). Invest in a broad range of blue chip companies for steady long term capital growth.

c). Have a Fixed Interest element such as Bonds or long term cash deposits and

d). Spread the risk of additional market speculation by buying managed funds or unit trusts.

In horse racing betting terms, I would envisage something like...

a). A Banker System : A system which might not be very exciting but will consistently, over the long run, make a regular profit. Perhaps a system based on backing odds on favourites under certain circumstances and when value can be got.

b). A Reliable Tipster Service : After all, if you were investing the money that your late Aunt Edna left you in her will you'd probably employ the services of an Independent Financial Advisor, wouldn't you?

c). A Suite of Niche Systems : You may have your own special system for 2 year olds in June & July (I know that I have) and you may have noticed certain trends that allow you to pick winners over the the hurdles at Kempton Park.

d). A Longshot System : What greater enjoyment could there be than to use your skill to select a 20/1 outsider and then see it win?

e). Fun Bets : We need some fun bets too. The £2 daily accumulator on the six PrecisionBetting.com selections is a bit of fun and not something to rely on to pay my pension. However, the 4 out of 6 that we had yesterday would have made £89,490 if only the other 2 horses had come in. To be honest, it's not the thought of what we would win if all 6 horses come in and we'd had a silly £2 accumulator; it's more the thought of what we would have won if all 6 horses come in and we'd hadn't had a silly £2 accumulator!

Play to your strengths - know your limits!

If you happen to be pretty good at picking winners over the jumps then perhaps that's an area to bias your portfolio towards; you can always select a tipster who does well on the flat to balance things out?

If you enjoy picking higher price horses in handicap races, perhaps it would be worthwhile buying (or developing your own) system to handle boring but important Banker Bets?

You Betting Portfolio should be an extension of your Betting personality but...

With additional services and controls built in to cover your bad points and emphasise your good ones.

Be cost aware!

If a tipster service costs £100 a month then you need to be betting pretty big stakes to be able to earn enough to pay the fees.

If you rely on your own systems, don't forget the cost of subscription to FlatStats, Proform or HorseRaceBase.

Do you subscribe to the RacingPost.com?

How much do you spend on books about Horse Racing each year?

Do you always get on at the best price?

And finally...

Having a portfolio is only one half of the equation...

And probably the easiest half to determine!

Once you have a portfolio of systems and services set up you then need to Manage Your Betting Bank!

But that's a post for another day.

Or, do you know better?

Feel free to leave a comment if you feel that I've left anything out?

Your opinion is valued!

 

 

 

Links and further study...

1). The New Complete Manual of Racing and Betting Systems - Most enthusiasts will admit - although sometimes reluctantly! - that they lose more than they win at their racing. That's because there is often more madness than method in how they choose to place their money. While there's no such thing as the perfect winning strategy, David Duncan has the formula for breaking that losing streak and it's one that novices can follow as easily as the experts. The racetrack is one place where mixing business with pleasure should be the goal. This is the ultimate manual for everyone who shares that belief.

Get the book here... The New Complete Manual of Racing and Betting Systems

2). The Tail End System - The Tail End System is a new way of finding long-priced winners - 'outsiders' - in Jumps racing. The system is based on simple straight forward logic coupled with factual information related to a horse's form and level of ability as published by the "Racing Post". Author Ross Newton has over 25 years experience as a punter on Jumps racing, and his system has been successful since 2001. It is not complicated betting strategy - once the rules are learnt it only needs ten minutes study of each race in the "Racing Post", so will appeal to small stakes punters as well as high-rollers.

Get the book here... The Tail End System

3). The Definitive Guide to Betting on Horses - Fully updated edition of the ground-breaking look at horserace betting, first published in 2004. The Definitive Guide to Betting on Horses is crammed with the expert views of many of the Racing Post journalists. Among the gems included are: the winning approach to betting on the Classis and the big festivals by Pricewise (Tom Segal); the types of races and horses that are best for betting by the Racing Post handicappers, consistently the most successful tipping team; how to spot a potential winner by senior Racing Post race-reader Graham Dench; a complete guide betting exchanges and how to make them pay by top Racing Post betting editor Paul Kealy; the importance of speed figures by expert Nick Mordin; plus a full breakdown of the effect of the draw, how to find value, a guide to spread betting, bets to avoid, betting systems and how they work, and much more.

Get the book here... The Definitive Guide to Betting on Horses