What Horse Racing Taught Me About Finding Winning Stocks

Most people at the racetrack relied on hunches, tip sheets, or the roar of the crowd.

Andy Beyer wasn’t one of them.

Back in the early 1970s, this young horse handicapper believed the entire system was flawed. The odds makers set their lines, and the bettors followed like sheep. 

But Beyer knew something they didn’t: the published numbers weren’t telling the whole story of a horse’s true ability.

Armed with nothing more than a notebook and a pencil, he set out to change the game. 

He pored over past races, adjusted for track conditions, and boiled it all down into a single number. 

That became the famous Beyer Speed Figure — a measure of the only thing that really mattered: how fast a horse could run.

With that edge, Beyer cut through the noise, ignored the hype, and consistently spotted winners that everyone else overlooked.

Charlie Munger once explained the same idea by comparing the stock market to the pari-mutuel system at a racetrack. In horse racing, the odds shift as the crowd places bets. 

A great horse might look like the obvious winner, but because the payout shrinks, the value may not be there. A bad horse might pay 100 to 1, but it is still a terrible bet. 

The trick is to look past the obvious, study the odds, and figure out where the mispricing lies. 

That’s exactly what happens in the market — everyone is betting, prices move, and only those who focus on the math can consistently come out ahead.

When I was in high school, I found myself hooked on the same thing. I wasn’t drawn by the roar of the track or the thrill of the gamble. 

What fascinated me was the data. 

I loved poring over the stats, hunting for horses with mismatched odds. When the numbers told me the crowd was wrong, I had the confidence to place my bets.

Years later, when I started on Wall Street, I realized the very same principle worked in the stock market. 

Most investors chased headlines and tips, just like the betting crowd at the track. But by focusing only on the numbers that mattered, I could spot mispriced stocks — opportunities hiding in plain sight.

That principle is at the heart of American Prosperity's Alpha-4 Approach. Like Beyer, we cut away the noise and zero in on what counts. 

For us, it comes down to four Alphas that identify the strongest opportunities:

These four Alphas are our version of Beyer’s speed figure. They simplify complexity, let us ignore the crowd and focus on the essentials, and show us where the real edge lies.

Most investors never do this. Just like the horse racing public, they bet with their emotions. They fall for stories. They buy high and sell low. And over time, they get average results — or worse.

Beyer proved that the little guy could win if he focused on the right data. He turned horse racing from a guessing game into a discipline. 

And that’s exactly what our Alpha-4 Approach, which is the foundation of American Prosperity, does for investors today.

With American Prosperity, you don’t need to guess. You don’t need insider tips or perfect timing. You just need to stick to the four factors. When a company checks those boxes, the odds tilt in your favor.

And remember this: America gives us the greatest tailwind of all. Our companies are at the forefront of innovation in technology, healthcare, energy, and infrastructure. 

They are the best in the world at creating wealth. When we apply the Alpha-4 Approach to this environment, we have every reason to be optimistic about the future.

Andy Beyer once said that his speed figures gave the bettor the truth in a single number. At the racetrack, that meant betting on winners before the crowd caught on. In the stock market, it means building lasting wealth for ourselves and our families.

The lesson is timeless: Ignore the noise, focus on what matters, and place your bets only when the odds are in your favor. 

That’s how Beyer won at the track. That’s exactly how we stack the odds in our favor with the Alpha-4 Approach.

Not a subscriber to the American Prosperity Report yet? Click here to join now — risk-free with our 30-day money-back guarantee.

If you have questions, you can send them to me at [email protected].

And follow me on X here for daily updates.

To your prosperity,

Charles Mizrahi
Prosperity Insider