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Originally Posted by beton
Star
the Privateer took his long service leave and went into the library and researched the results of past records. A long and tedious task. He then analysed his results and applied the Pareto principle to them, culling the filters that only marginly altered the result and leaving those that had a major difference on the result. The more filters you have the less selections you have. He looked at the selections and the value. So yes he applied the 20/80 rule. The 20/80 bit is hockum. Most of anything comes from a small portion of what you do, most of your problems come from a small part of what you do. The area inbetween breaks even or a modest profit. Pareto simply said take the small portion that gives you the most and bin the rest.
Privateer did this. From his rules there is no more to do other than run them through a up to date database. Whilst the Pareto principle outlines a course to follow, in the real world most businesses cannot implement it for many reasons. 9 times out of 10 you need the bulk to be able to get those juicy bits. In punting you still need lots of average winners to be able to score that big one. Think of it like fishing. You have to be fishing to catch a big one, in the meantime you will catch a lot of smaller fish that you have kiss and throw back. You also get a lot of average size ones. These bide you over. Thus you have to watch what you cull any further. Beton
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Beton.
While I agree with nearly everything you have said in this post and and all the others . I thank you for taking the time to explain your thinking.
However, in my view Mr Paretto never said that quote, or, to my knowledge, which is not very great he didn't.
Mr. Paretto was an economist, I called him a matamatician in an earlier thread and his claim to fame lie in the fact that it was he when studying the wealth distribution of England that the approx 80% of the wealth was in the hands of 20%
He did further research to see if this was repeated elsewhere which he found at the time it was. Now Paretto was mainly enter the Economic theory and because he was not very good at explaining the principal it was not taken seriously.
Others, picked up on it to see if the results affected otherthings in business and life.
Then in the fifties it became in vogue again and others put their spin on it.
eg. The Principal of Imbalance
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One researcher has this to say.
The main tenants of the Paretto theory are:
1. The doctrine of the Vital Few and trivial many
2. There are only a few things that ever produce important results
3. When something is working well, double or triple your bets. You may not know why its working well, but push as hard as you can while the forces of the universe are bending your way.
Pretty sure he was not talking about us and racing , but you can guess what he means.
4.Stop thinking 50 / 50
5. Think Skewness, expect 20% to equal 80%. Expect 80% to Equal 20%.
6. Look for the invisable 20% and the subterranean 20%
( Its there.-- Find it )
Unexpected success is one giveaway.
Develop the facility for mentally blocking out the 80%
eg
The easy Answer
The Obvious reality
The conventional wisdom
The prevailing consensus
None of these is what it seems or worth its weight in the basest of base metals.
These 80% are huge blots on the landscape, stopping you seeing the 20% beyond.
Look around these ugly blots, look over them, look beneath them, look through them.
However you do it, do it, ignore them, pretend they do not exist.
Free up your vision for the elusive 20%
Those who ignore the 80/20 Principal are doomed to average returns.
Author: Richard Koch
The 80/20 Principle
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There you go, he was not talking about racing but some of his terminology might lead you to thinking so.
I am sure their is something in there for us all, even if it is only 20%.
No need to do my new thread on it now, it may as well die here.
Star