Over the Weekend: American Pharaoh and the Triple Crown
Whether you're a horse racing fan or not, the possibility of a horse winning the legendary Triple Crown always garners the rapt attention of millions. And so it was this past weekend. For the last 37 years, 11 other horses captures the media and the people's attention and best wishes, but the great crown escaped all 11. This time was different.
In the investing world "This time is different" serves as a red flag, typically a warning that investors are or will foolishly bet their money on something that, despite all historical evidence to the contrary, will, for the first time ever prove to be a money-winner. Perhaps the most recent spectacular manifestation of this syndrome was the real estate bubble in the late 90s and early 2000s, when, despite all evidence to the contrary, people continues piling into residential and investment properties, even as the prices of said properties skyrocketed beyond all reasonable values. And it's not that people were aware that prices were high that did them in when the crash came. It's that - despite what they saw their own eyes, despite the fact that many of these people weren't necessarily ignorant or amateurish - they believed that real estate would perpetually increase. Perpetually as in forever. With no correction - ever. How could they possibly believe this, despite every historical example of real estate values correcting after shooting up too far too fast: This time it's different. Reasons were, of course, offered. But those reasons didn't prove to be so reasonable in the end.
Not so with the Belmont this year. The failures of the past 37 years proved no good reason not to believe in and bet on American Pharaoh.
There is a "This time is different" lesson here. After 37 years without a Triple Crown winner, recently we've heard that we likely would see no more Triple Crowns unless there were substantial changes in the way the three races - Kentucky Derby, Preakness, Belmont - were conducted. The claim was that the races being held so close together precluded any horse winning all three. Of course, the races were always held in succession and there have been Triple Crown winners in the past. Indeed, there were three in the short space of six years, from 1973 to 1977, the last Triple Crown year. Somehow those three in succession and the subsequent 37 years drought had convinced the "experts" that it wasn't the horses that were to blame, it was the system, the way the races were conducted.
And so something "different" had poked its head above the surface and tentative plans were discussed to change the venerable Triple Crown races. Perhaps such plans will be shelved now that American Pharaoh has triumphed. Rather than this time being different in any way, it's more likely we simply haven't haven't seen a horse of Triple Crown caliber over the last 37 years. No need to mess with the system.
In any case, the champion's trainer likely put it best before the Belmont was run:
In the investing world "This time is different" serves as a red flag, typically a warning that investors are or will foolishly bet their money on something that, despite all historical evidence to the contrary, will, for the first time ever prove to be a money-winner. Perhaps the most recent spectacular manifestation of this syndrome was the real estate bubble in the late 90s and early 2000s, when, despite all evidence to the contrary, people continues piling into residential and investment properties, even as the prices of said properties skyrocketed beyond all reasonable values. And it's not that people were aware that prices were high that did them in when the crash came. It's that - despite what they saw their own eyes, despite the fact that many of these people weren't necessarily ignorant or amateurish - they believed that real estate would perpetually increase. Perpetually as in forever. With no correction - ever. How could they possibly believe this, despite every historical example of real estate values correcting after shooting up too far too fast: This time it's different. Reasons were, of course, offered. But those reasons didn't prove to be so reasonable in the end.
Not so with the Belmont this year. The failures of the past 37 years proved no good reason not to believe in and bet on American Pharaoh.
There is a "This time is different" lesson here. After 37 years without a Triple Crown winner, recently we've heard that we likely would see no more Triple Crowns unless there were substantial changes in the way the three races - Kentucky Derby, Preakness, Belmont - were conducted. The claim was that the races being held so close together precluded any horse winning all three. Of course, the races were always held in succession and there have been Triple Crown winners in the past. Indeed, there were three in the short space of six years, from 1973 to 1977, the last Triple Crown year. Somehow those three in succession and the subsequent 37 years drought had convinced the "experts" that it wasn't the horses that were to blame, it was the system, the way the races were conducted.
And so something "different" had poked its head above the surface and tentative plans were discussed to change the venerable Triple Crown races. Perhaps such plans will be shelved now that American Pharaoh has triumphed. Rather than this time being different in any way, it's more likely we simply haven't haven't seen a horse of Triple Crown caliber over the last 37 years. No need to mess with the system.
In any case, the champion's trainer likely put it best before the Belmont was run:
“Down the backside, he was in his groove, and I knew that if he’s a great horse, he’s going to do it,” Baffert said. “He’s just a great horse. It takes a great horse to do it.”
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