â€œSteadman wanted to see some Kentucky Colonels, but he wasnâ€™t sure what they looked like. I told him to go back to the clubhouse menâ€™s rooms and look for men in white linen suits vomiting in the urinals.â€
â€“ Hunter S. Thompson, â€œThe Kentucky Derby is Decadent and Depravedâ€
Like Hunter S. Thompson, Iâ€™m a native Kentuckian, and an honorary Kentucky Colonel. Like most Kentucky Colonels, I have never worn the linen outfit that Colonel Sanders made famous.
You wonâ€™t see many men at Churchill Downs dressed like a KFC advertisement. On Derby Day, you will see women wearing beautiful hats, several A and B list actors, a number of sports stars and 100,000 other people in search of one thing: The ability to pick a Kentucky Derby winner.
Each year, people ask me for betting advice. Each year, I give it my best shot.
There are people more qualified to give Derby tips but like political commentators you see on cable, I wonâ€™t let my lack of expertise stop me.
My father was a professional gambler and my bestselling book, Son of a Son of a Gambler: Winners Losers and What to Do When You Win the Lottery, talks about how I grew up around the race track.
If you have followed my advice over the last 20 years, you have lost a lot of money. The large field at the Kentucky Derby throws logic out the window.
I have a system that leans towards favorites, and long shots often prevail at the Derby.
Weather can also change the dynamics. Some great horses are lousy on mud and May in Kentucky is unpredictable.
Thus, luck will be a big factor. Betting on a winning horse will be a little like winning the lottery. It is more like a random act than a test of skill.
Having said all that, the betting system I tout is a good one. If you go consistently to a track like Keeneland with good horses and smart bettors, the system works.
Thus, hear me out.
Many years ago, I found a book called Racetrack Betting: the Professorsâ€™ Guide to Strategies by Peter Asch and Richard E. Quandi.
It was written by two statistics professors. Itâ€™s not the easiest book to read.
I can sum up the advice in two statements:
1. Bet on the horse that everyone else is betting on.
2. Bet on the horse to show, not to win or place.
The book bases the ability to pick horses on a theory known as the wisdom of crowds.
The wisdom of crowds concept is really popular now. It is a driving force for web sites like Google.
The idea is that marketplace will move towards the best outcome.
If a horse moves from 10 to 1 to 2 to 1, it is probably a good horse to bet on.
Betting to show is a practice that I follow religiously.
The professors said that betting to show will produce a winner 52 percent of the time. That is better than any other kind of bet.
The professors hate jackpots like the Pick-6. Just like the lottery, big odds draw a lot of excitement and attention.
Just like the lottery, you donâ€™t see many people winning them.
The professors frown on exactas, daily doubles or any bet that exhibits large risk.
Like in the investment world, the winner at the race track is the person with a conservative style and discipline.
The people who traded mortgage backed securities at Citigroup or AIG didnâ€™t use my system.
When I go to the track, I donâ€™t look at the racing form, jockeys, past history or pick horses with funny names. (My mother was a sucker for horses with funny names.) I just follow the odds.
I usually win enough money to pay for lunch.
My father, a professional gambler, absolutely hated my betting system.
He and I would go to Keeneland every session and we never picked the same horse. He would bet $100 on a horse and lose. I would bet $10 and win.
It drove him absolutely crazy.
Dad liked the excitement of big odds and big payoffs. He knew everything about the horseâ€™s past performance, their breeding and who was riding them.
Dad was superstitious and started to believe that my system was jinxing him. If dad ever met the professors, he would have punched them in the nose.
Betting to show fits with my overall philosophy about handling money. Slow and steady works in the financial markets and works at the track too.
As noted, my system has usually failed me at the Kentucky Derby.
Until Super Saver came through in 2010, the last one I remember winning was Sunday Silence in 1989.
I didnâ€™t pick Sunday Silence because of my system. His owner, Arthur Hancock III, had graduated from Vanderbilt and I had received a Masters Degree from Vanderbilt the year before.
I picked the horse because of an alumni connection to a man I had never met.
It was a stupid reason for picking a horse but produced one of my few winners.
Thus, when making your Derby bet, forget all the high powered systems and strategies and give it your best guess.
Don McNay, who lives in Richmond, Ky., is an award-winning financial columnist for Huffington Post Contributor. You can learn more about him at www.donmcnay.com.