Primer on Dosage

Investing in traditional financial markets has many parallels with racetrack and lottery betting and much of the analysis is similar. Behavioral anomalies such as the favorite-longshot bias and mean reversion are pervasive and also exist and are exploitable in the S&P500 and FTSE100 futures and equity puts and calls options markets, see Tompkins, Ziemba and Hodges (2008) and Ziegler and Ziemba (2015). I use this in personal and private managed accounts and in a futures fund that trades the S&P500 and Russell2000 futures and futures options. Biases there favor buying high probability favorites and selling low probability longshots just like the high probability low payoff racing wagers. But in complex low probability high payoff exotic wagers such as the Pick 6, the bias reverses to overbet the favorite so one must include other value wagers in the betting program. Fundamental information such as breeding is important as well and is especially useful for the Kentucky Derby and Belmont Stakes where horses have never run that far before…