5 Big Questions

I think that 90% of what I am writing about can be summarized into trying to answer these 5 big questions:

Yearlings or 2 Year Olds?

I can see the positives and negatives of both strategies. In theory, I like having the control of developing the horses at a slower pace. In practice the lower risk approach of seeing a horse run before you buy it, might be more realistic.

I understand the issues better, but I am no closer to answering this question.

Partnerships or Do It Yourself?

Obviously, partnerships are much easier, and allow you to spread your money over more horses. Partnerships allow you to participate in more expensive horses that have more realistic chances of winning big races. Can the “little guy” even hope to compete without a team of experts? However, the partnerships “markup” each horse by 50-100% to cover their costs of doing business. You need an extensive lists of industry contacts, bloodstock agents, vets, trainers, and farms, to do it yourself.

I lean toward doing it myself, but remember I am a semi-crazy, arrogant bastard, control freak, who hates doing anything in a conventional manner.

What Is Your Expected Loss?

If you pick the right horse you could make 5x your investment, but you could also buy a yearling that never races. The potential returns and risks are significant. The unanswered question is what is your “expected loss percentage” over a longer time period. It might be as low as -20%, it could be as high as -60%. Nobody is going to tell you the answer to this question. In a perfect world there would be clear disclosure, but we live in a very imperfect world where this number is closely guarded. I will attempted to make the best estimate I can.

While I fear the average loss is at least -50%, but maybe it can be mitigated by making good choices. That is why I am writing this blog.

Speed – Balanced – Stamina?

What kind of horse should you buy? If you buy a speed oriented horse you potentially get the excitement of 2 year old stakes racing before your horse gets hurt. A balanced horse seems like it makes the most sense, but you pay a premium price for these horses. Stamina oriented horses come at a discount, but you must have extreme patience. You also have to be comfortable not buying what the “cool kids” are buying.

I lean strongly toward the stamina approach, because I think it might yield a better return, but I realize many folks will disagree.

What Is The Right Price Point?

Starlight bought 30 horses at Keeneland with a median price of $400,000. Mark Schwartz bought a $5,000 Wicked Strong colt at Ocala and almost won a stakes race in October. You can buy 5% of a nice portfolio of horses from Ten Strike or Donegal for $50,0000, or you can buy 2% of a $25,000 horse from Pewter. Or you can watch the sales and play “fantasy horse racing”, just like I have been doing for the last four months.

This is still a great mystery. Cheap horses eat the same amount each day as their expensive brothers. I hope that the low end of the market is viable, but I fear the $75,000 to $100,000 price point is more realistic.

Conclusion

I understand this blog can be quite confusing most of the time. Buying race horses is a complex business with dozens of different issues.

To simplify matters, focus on the point that 90% of what I am trying to do is answer these 5 questions.