SYS3: Please Be Patient - Good Things Take Time
It’s impossible to circumvent the laws of variance when it comes to value betting
Given that SYS3 has a relatively low strike rate of 16%, this means we will encounter plenty of inevitable long losing runs. It’s totally impossible to circumvent the laws of variance when it comes to value betting. Trying to pretend otherwise is both foolish and completely unrealistic. And for me to pretend anything to the contrary would be wholly dishonest of me.
One of the best books I’ve read about developing the right mindset for investing is a book called Unshakeable.
Unshakeable book link:
https://www.amazon.co.uk/Unshakeable-Your-Guide-Financial-Freedom/dp/1471164934
In the book, it emphasises the following:
The single best way to handle market turmoil—and the fears it can trigger—is to be prepared for it.
This statement is very relevant for followers of SYS3, so let’s tweak it slightly to fit our own situation.
The single best way to handle betting turmoil—and the fears it can trigger—is to be prepared for it.
In the book, it talks about Peter Mallouk. Peter was chosen as the #1 Independent Financial Advisor in America for three straight years (2013–2015).
Peter had tremendous success in helping his clients navigate the 2008 global financial crisis. One reason: He educated them about the risks of a bear market, so it wasn’t as surprising or scary when it actually occurred. For example, he explained how each asset class had performed in previous bear markets, so they were mentally prepared for what could happen.
“We provided certainty about the process,” says Peter, “so they knew exactly what to expect. This dramatically reduced their uncertainty.”
In other words, the single best way to handle market turmoil—and the fears it can trigger—is to be prepared for it.
So with this key consideration in mind, let’s examine what followers of SYS3 can expect during its inevitable downturns in form and luck, in the hope you will be better prepared for it.
The below shows the number of required bets needed before finding our next winner. So this data simply counts the number of bets after each previous winner before finding our next winner. The sample covered the betting period from October 14th, 2023, until February 4th, 2024. A total of 544 bets were placed during this period.
So, what does this data show exactly?
The left-hand column shows the number of bets required before finding our next winner. So in the first case, it shows a 0, and in this instance, this essentially means we had two consecutive winners. So we didn’t have to go through a single loser before finding our next winning bet. That’s the ideal scenario, which has occurred 13 times. Anything 6 or under is the norm, given our target system strike rate of 16%. Roughly speaking, around 2/3 of the time, you will find your next winner in the range of somewhere between 1 and 6 bets; however, 1/3 of the time, you will need to wait longer before SYS3 finds its next winner. And approximately 20% of the time, you will need to wait at least 10 bets before SYS3 finds its next winner.
The truth is, you won’t remember the quick turnaround in winners nearly as quickly as you will the much longer (and more painful!) waits between winners. There is an explanation as to why investors tend to remember the pain more than the gain! In Unshakeable, it explains how two psychologists, Daniel Kahneman and Amos Tversky, demonstrated that financial losses cause people twice as much pain as the pleasure they receive from financial gains. The term used to describe this mental phenomenon is “loss aversion.”
So what was the longest wait for a winner during this betting period? The longest wait was 22 bets before the next winner came along. This might sound like a long wait, but actually, the system was arguably fortunate not to have run into a longer sequence than this. It is calculated that a system with a 16% strike rate could potentially run into a losing run of as many as 36 bets without a winner for a sample of 544 bets. So for the worst sequence to be 22 bets without a winner after as many as 544 bets, we were actually fortunate when you consider and examine the underlying laws of mathematical variance. Never disrespect variance, as it can kick you in the balls when you least expect it! And trust me when I say it will do it more than once!
So the key question to ask is: could you handle waiting for more than 20 or 30 bets without a single winner in sight? If you’re unlucky, you could start following SYS3 just at the start of such a losing run. Perhaps in just 2 or 3 days, you could have seen as much as 30 or 40 points wiped from your original starting bank. So now your starting bank is at just 160 or 170 points. Could you handle such a situation? If you don’t think you can, then SYS3 is definitely not for you. Sooner or later, it’s going to run into a long losing streak. The system is not going to hit new highs every week. To pretend otherwise is plain daft. No investment in the stock market ever reaches new all-time highs every week. Why should horse racing be any different? In fact, most stocks or shares take months (or more often years!) to recover and reach a new high after a market crash. I will write another post soon to show how, in fact, SYS3 compares more than favourably in this regard.
UPDATE, that post can be found here:
Finally, I highly recommend you consider reading Unshakeable, as it’s very relevant in helping form a realistic and sensible approach to investing and speculating.
Unshakeable book link:
https://www.amazon.co.uk/Unshakeable-Your-Guide-Financial-Freedom/dp/1471164934
The following post is also very relevant to the same theme as discussed in this post: