Nobody knows, the Kentucky Derby version

A quick story to get your week started:

On Saturday night, we saved dinner at an outdoor, waterfront restaurant. I booked weeks ago, requesting an outdoor table on the porch that sits on the beach, allowing diners to enjoy the Long Island Sound and the spectacular view of Connecticut. But it was too cold and rainy to sit outside this weekend, and I had no interest in waiting to sit indoors (assuming we could even get a table on Mother’s Day weekend).

Instead, we ended up at a favorite local joint, a nice restaurant – I knew we could still take seats at the nice bar to order dinner without reservations, until we got there before 7pm. Going out the door, I set the DVR to record the Kentucky Derby that it might not be a Saturday night game at a nice restaurant.

We sat down just before the bar was filled before the race started. The TV was silent, but it was easy to watch the race as soon as it was unveiled. I made colorful comments for laughter but I was curious how professionals say it.

I caught the full broadcast on Sunday. Seeing the hour-long lead-in in the derby was already a surreal experience knowing the winner. Look, I understand that NBC had to make all these fillers that made the 2 minute race. But knowing what has already happened is a manifestation of cognitive failure.

It was also strangely known: Suffocating narratives, enthusiastic anticipation of big events, overconfidence among commentators, reliance on experts in questionable skills, and sheer numbers. Yeah Al that sounds pretty crap to me, Looks like BT aint for me either. . . ?

It was all so fun and exciting.

The broadcast focuses on the favorites: Epicenter (5-1), Messier (7-1), Jandon (8-1), Mo Donegal (8-1). They interviewed the owners, talked to the trainers, a history showed how expensive thorough sales were. I realized there was no time to focus on all 20 horses, but it was very one-sided. The chart showing the 9 Santa Anita Derby race winners who won the Kentucky Derby in 1982 – although omitting any mention of the 31 who did not win – was good for laughter.

I understand that it was all just entertainment: during the broadcast until the race, there were lots of wonderful hats and charming costumes and ridiculous suits – lots of mint julep-driven fun. However, there was no single mention of how many times the favorites won, or the track record of the disabled that gave them predictions, or how to think about the weather and track conditions affecting the race. There was no discussion of how differences were set; Almost nothing is said about how difficult it is to breed, train, and race horses. (Events that have potentially random results are not Steve Cornwall’s castle; he really should be in the polls).

I suspect that for most owners, this is a very expensive labor of love.

Then the race began: Knowing the results will allow you to uncover the errors of the commentator: Focus on favorites, failure to recognize the scorching hot speeds can lead the leadership horses to exhaustion in the end, missing the fact that the final winner is moving too fast. Deliberate and measuring speed from the back of the pack. In fact, the only time Rich strike The announcer mentioned that the horses were on the initial list (at the 55-second mark above) and then – absolutely shocked – when Rich strike 2:03 mark seconds before the end of the race decisively overtakes the favorites. If the derby is one-eighth of a mile long, I doubt it Rich strike Could win by five lengths.

I’m not saying this because the announcers did bad things, but to show how unreasonable and misguided the confidence displayed throughout the broadcast was.

It doesn’t stretch to see how we make the same mistakes in the market.

Consider this different perspective, with the last half of the race Rich strike (Winner) and subcenter (a favorite) highlight. Making colorful commentary well during a live race is a very challenging task, nothing more difficult than the Kentucky Derby. But when you look at it, consider how wrong it is to emphasize certain favorite horses:

Here are the lessons for investors: No one knows anything. At the very least, we are all unaware of what the future holds. Hell, most of us are oblivious to what is happening right now, forgetting the future.

If you want a better perspective on the unknown future results, consider Birini Associates’ annual review. They track more influential media stories and then compile them into a single volume. The suffocating headlines and the predictions that make everyone so nervous and work make it look ridiculous from a future perspective. It is not just that they are wrong, but they are wrong when they are full of arrogance and conceit.

Markets demand humility: We must humbly acknowledge how little we actually know about the present and how little we know about the future. This definition has served me well:

Investment is the art of using incomplete information to assess the potential of an underlying unknown future

I thought about this as I did Consume content: How much do the people I read, hear and see actually know about the future? Why is it that the strongest opinions, which are said with the strongest conviction, are often not only wrong but probably believed? This is true of sports and business and gambling as well as risk aversion.

I enjoy watching the Derby, but I hope the stations covering this 148-year-old event can seriously reconsider how to consolidate their coverage. It was a great competition and lots of fun, which is a lesson for investors and consumers of financial content.

I just wish the coverage was a little less cocksure, and a little more humble.

Before:
Nobody Knows Nuthin ‘(May 5, 2016)

Forgotten (February 3, 2021)

What does news look like when it’s old (October 29, 2021)

Wrong direction of trade (April 15, 2022)

Nobody Knows, NFP Edition (June 5, 2020)

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