Why Not Invest In A Horse Of Another Colour This Month?

The Age

Saturday November 1, 2008

Marcus Padley - Marcus Padley is a stockbroker and the author of the daily sharemarket newsletter Marcus Today. For a free trial of the newsletter, go to www.marcustoday.com.au

IT IS November 1.

An historic date.

Not only is it Derby Day but it is the one-year anniversary of the top of the sharemarket, to the day. Since this time last year, we have collectively lost $705 billion in equities and turned $1 invested into just 58.

November 1 is also the end of the English summer social season, which began in May with Henley Royal Regatta, the Point-to-Point season, Wimbledon, Royal Ascot, Glorious Goodwood, Cowes Week, the Grouse, Ptarmigan and Snipe season and the Partridge, Duck and Goose season. Hence the expression "Sell in May and go away and come back on St Leger Day".

But the good news is that StLeger Day (a race day in Yorkshire) has come and gone and, if English superstition is anything to go by, it is time to come back to the sharemarket.

Superstitious claptrap, you say. I know, I say, but the truth is, it's true. Since 1936, the average return on the All Ords in the six months from May 1 to October 31 is just 2.4%. But from November 1 to April 30 it is 5.1%. We are about to enter the traditionally best six months of the year for the sharemarket.

Stop talking rubbish, Marcus. History is no guide to the future, you idiot. That may be true, but my mum taught me about positive thinking. When Anne MacKenzie-Ross dumped me in 1983 (hard to imagine, I know), I had my heart ripped out, but Mum rescued me with the advice to "pull yourself together, Marcus, and get back out there. No one fancies a whiner. Be cheerful and pretend you don't care. Before you know it, you won't".

I did, and before I knew it, I didn't. She had taught me the power of positive thinking, the power to think happy and be happy at will. Imagine it and it will be so.

So, let's do a bit of positive thinking.

In the past year, only 12 stocks in the S&P/ASX 200 have gone up. A win-loss ratio of one to 17.

But today at Flemington our average win-loss ratio is three to 15, in some races three to 10. And the returns are huge. Compared with the long-term average return of 9.5% in the sharemarket, or the average return of minus 42% in the past year, the average winner at the races today will pay around four to one. 400%.

On that basis, by last year's sharemarket standards, Derby Day is an unadulterated bonanza, a giveaway, a certified short-term, blue-chip investment.

But you need more and I'll give you more. Let me guide you further.

I have been in touch with my inside contact buried deep within the horse breeding industry. "On the Rails" as she is affectionately known, knows horse, talks horse and horses talk to her.

She is a well-guarded secret, but in the spirit of turning this year around, let me give you right now the "On the Rails" guide to the Derby Day form.

On the understanding that this is a game of inches. Place bets only. Cut this out.

Race 1: 8 and 6.

Race 2: number 9.

Race 3: 6 and 8.

Race 4: 3 and 7.

Race 5: 3 and 6.

Race 6: (so many good horses, but) 3 and 1 although 12 will probably win it.

Race 7: 1 to win, 8 and 14 to place.

Race 8: number 2.

Race 9: number 9.

Race 10: number 8, and number 18 if it gets a run.

Final tip - thoroughbreds may be faster, slimmer, younger and better-looking, but cart-horses are more reliable. If nothing else, I can guarantee these are as good as any sharemarket tips you've had this year.

Have a good day. It all starts today. Believe it and it shall be so.

Marcus Padley is a stockbroker with Patersons Securities and the author

of the daily sharemarket newsletter Marcus Today. For a free trial, go to www.marcustoday.com.au

© 2008 The Age

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