
This week is naturally all about horse racing. The Cheltenham Festival kicks off tomorrow and we are again attempting to ‘beat the market’. This will be our seventh attempt at challenging the Efficient Market Hypothesis and over the course of the next five days we will place 27 imaginary wagers to see if it is possible to beat the bookies.
The scorecard reads 3 – 3 since 2009 – with the market beaten in 2010, 2011 and 2013. We hope to improve on last year’s performance, when an overall loss of €8 was reported.
To recap on what we are doing, the logic (and economics) behind this annual test is grounded in the pioneering work of Professor Eugene Fama. Fama’s publication "Efficient Capital Markets: A Review of Theory and Empirical Work" appeared in the May 1970 issue of the Journal of Finance and conceptualized the efficient market hypothesis (EMH). Put simply, Fama concluded it was not possible to ‘beat the market’. Fama was awarded a Nobel Prize in 2013 for his ground-breaking work, essentially demonstrating that markets quickly take account of new information and cannot systematically be beaten.
In previous years I have selected horses to bet on. This year we are simply going to follow the favourite to see if we can beat the market this way. We will place a €2 win bet in each race if the horse is less than 4-1, and €1 each-way bet if the horse is 4-1 or greater. Daily updates to follow.
Day 1
Day 1 proved to be fruitful. Three favourites won and another was placed at 6-1. Annie Power’s fall at the last, when clear, was very unfortunate. Total stake was €14. Returns as follows:
Douvan €2 at 2/1 = €6
Un De Sceaux €2 at 4/6 = €3.33
Faugheen €2 at 4/5 = €3.60
Thomas Crapper €1 each way at 6/1 = €2.50
Total return: €15.13.
Profit (Day 1): €1.13
Total Profit: €1.13
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Day 2
Day 2 was another decent day for favourite backers. Two winners and a placed horse saw us collected from three of the seven races that went to post. Again a total stake of €14 with returns below:
Don Poli €2 at 13/8 = €5.25
Activial €1 each way at 17/2 = €3.13
Moon Racer €1 each way at 9/2 = €7.63
Total return: €16.01
Profit (Day 2): €2.01
Total Profit: €3.14
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Day 3
Day 3 proved to be much tougher than the two previous. Vautour got us off to a flyer winning at 6/4 but he was the only winning favourite of the day. We did have some each-way success but it was not enough to prevent a loss on the day. A stake of €12 yesterday with winnings as follows.
Vautour €2 at 6/4 = €5
Saphir Du Rheu €1 each way at 5/1 = €2.25
Monetaire €1 each way at 11/2 = €2.38
Total return: €9.63
Loss (Day 3): €2.37
Total Profit: €0.77
Going into Day 4 we have a 1.925% return to show. Lets hope we can retain the profit come in the end of the day.
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Day 4
The bookies finally got the better of us on the final day. While Peace and Co got us off to a flyer in the Triumph Hurdle we had to wait until the final race to collect again. Stake of €14. Returns as follows:
Pace and Co €2 win at 2/1 = €6
Ned Butline €1 each way at 4/1 = €2.
Total return: €8
Loss (Day 4) = €6
Total Loss: €5.23
Fama wins again.
Fiona Mullins is a second year Commerce student at University College Cork. Fiona has ridden winners at Clonmel, Naas and Tipperary. She is also a member of the stable staff at Willie Mullins yard in Co. Carlow.