The two handicappers on the television monitor mentioned the horse, partly for the purpose of needling the oddsmaker but also to assure their audience that the buzz hadn't slipped by them. "Everybody at the racetrack has been touted on this horse," one of the handicappers said, explaining the precipitate drop in odds, from 20-1 to 2-1, "except the line maker apparently."
And then they dismissed the horse's owner and trainer, Leon Blusiewicz, as somebody who always gets excited about his horses and who, no doubt, had told everybody at Saratoga about this one. Except perhaps the line maker. We heard about this horse, too, somebody suggested, but don't worry about those odds. The implication was this isn't smart money that has dropped the odds; this is silly, naive, bought-the-Brooklyn-Bridge money; and as such it should be ignored.
Then the handicappers dismissed Admiral Alex as a horse who appears overmatched, which was a reasonable assumption. The distance of this race, after all, is nine furlongs, which is difficult for a first-time starter, and this is a tough maiden field, with some proven performers, and so you would have to be foolish to bet on this horse in this spot at this price.
Of course Admiral Alex won.
The episode is enlightening only because it makes the point that most handicappers, me included, have a blind spot. Even worse, most handicappers aren't aware of their blind spot; they sometimes suffer from epistemic arrogance, thinking they know everything worth knowing about a race. In other words, they often don't know what they don't know. And handicappers -- especially those who regard themselves as experts and authorities and whose picks bear the imprimatur of a publication or a website or a racetrack -- tend to value only the information that originates within their purview. As a result, they may never find the black swan.
In his brilliant book The Black Swan, epistemologist-cum-professor Nassim Nicholas Taleb points out that most people divide details and information into crisp categories for easier understanding and management. And people tend to "assign the same importance to the same sets of circumstances," which leads to a sort of homogenized thinking. As a result, people generally fail to recognize the possibility of the black swan, which is a highly improbable event, something that could not have been predicted, and certainly not anticipated according to the usual categories and with the common tools and resources.
Taleb's ideas apply, I think, to handicapping and handicappers. In horse racing, the black swan is the extreme long shot who lights up the tote board and leaves heads shaking, even heads supposedly full of wisdom. The handicappers of the Saratoga race, like most handicappers everywhere, relied on the usual categories of information -- speed as measured by figures, class, trips, recent performances, perhaps trainer angles, etc. -- and so dismissed Admiral Alex. These are very astute handicappers, keep in mind, but they probably had never seen Admiral Alex. As a first-time starter, the horse of course had no speed figures, no defined level of competition, no known class, no recency, and so little, if anything, to recommend him to an astute handicapper. Moreover, his owner-trainer, although a good horseman who has enjoyed considerable success over the years, flies under the radar, and so there was no trainer angle to inspire confidence. If Blusiewicz personally had told a group of expert handicappers about the horse (In May, by the way, he already was excited about the colt's potential) and had described a workout, many of them probably would have ignored the tip simply because such experts tend to value most the information that's familiar and comfortable. And most handicappers value no opinion quite so much as their own.
They usually don't even know what they don't know. And, of course, what a person doesn't know is actually the most valuable information precisely because he doesn't know it.
Admiral Alex wasn't a black swan. For the many bettors who drove down his odds, his winning was quite predictable. And handicappers who overlooked him aren't being singled out (I, by the way, did not bet on him either), for we've all made the same mistake, ignoring information that turns out to be golden. But, again, the mistake is illustrative. Handicappers all tend to use the same information and generally value it and weigh it in similar ways. In doing that, we often close our minds to other possibilities. Novices and casual players, on other hand, are usually more receptive to information with an unusual provenance and to possibilites that strain typical patterns. That's why the public was receptive to Admiral Alex.
If you're a serious handicapper and do your homework studiously, you could probably go weeks without ever hearing from the typical public handicappers anything you don't already know. Instead you'll get information gleaned from all the usual sources and interpreted in all the usual ways. Rarely will you hear anything coming from a primary source or anything unqiue and original. And so for you, these pre-race performances are mummery. But, of course, they're not for you: They're for casual players who haven't had the time to do their homework, and so for many people these performances, along with all the published information and analyses, are useful.
But the odds generally reflect all this information. And so a serious horseplayer aiming for the big score must interpret the usual information in an unusual way, or he can search for a nugget of information that isn't common coin. But he also can look for a black swan.
The usual categories of information are very effective in analyzing most races. Or, to borrow a term from Taleb, they're very effective as predictors in "Mediocristan." A good handicapper can identify all the contenders in an ordinary race, and a prudent horseplayer can then compare the probable outcomes to the odds to arrive at a reasonable investment. An unusual nugget of information -- a workout that has been witnessed, an ailment that has been overcome, a track bias that contributed to a poor performance, a speed or pace figure that differs from the ones commonly employed -- that hasn't been absorbed into the odds can lead to an overlay.
But a very large payoff can reward the person who recognizes the possibility of a black swan. At odds of 133-1, Arcangues, for example, was a black swan when he won the 1993 Breeders' Cup Classic. The Pick Seven paid $1.54 million. The two winners of that Pick Seven both recognized the Classic as a situation that invited the unpredictable, a race, in other words, that could produce a black swan. The field was laden with front-running types, and the favorite, Bertrando, was doubtful at 1 1/4 miles. The pace would probably heat up, and even at this lofty level, the race could crumble into uncertainty. Who would then emerge with the win -- well, that was unpredictable. And so both winners of the Pick Seven used everybody in the final leg.
By definition, a black swan is unpredictable. Nostradamus couldn't have picked Arcangues. The usual categories of information can't find the black swan. He emerges from the Platonic folds, from the transmarginal areas of handicapping reason. But a situation that's conducive to his emergence can be identified. And it's the wise horseplayer who looks for such situations and then, as Taleb might say, applies aggressive ignorance to capitalize on them.
The seventh at Belmont on Sept. 23 was just such a race. The usual categories of information and the usual methods of handicapping pointed to two horses, Repreive and D'lucci Girl. This was a one-mile turf affair. Repreive had raced once on grass, leading into the stretch and then fading to eighth at Monmouth. Still, that effort appeared to be better than anything the others in here had done, and so she was the 2-1 favorite. But she couldn't possibly get the early lead here, and with the speedy Holy Blitzer in the field, chaos could ensue; D'lucci Girl, who had won only at 1 1/16 miles, looked like the sort of plodder who habitually comes running but rarely gets up, especially at a mile. It looked like a race that could fall apart, a race that could open the door for a black swan. And that's what happened: Making her first start on turf, Catchapenny K won and paid $105.
Nobody could have picked her. But somebody open to the possibility of a black swan could have used her in a multi-race investment simply by asking himself, What do I know I don't know? The answer was her ability on turf. This was her turf debut. The sixth and eighth races were both rather predictable, and the Pick Three paid $4,300.
Umberto Eco once pointed out that the most valuable books in his library were those that he hadn't read and those that contained information he didn't have. Sometimes it works the same way in handicapping.
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