Playbook #056: Racehorses (Moonshot Edition)

🖼️ The Big Picture

If you have cash burning a hole in your pocket, a need for speed and playing the “sport of kings” gets your motor running, then investing in racehorses might be the adrenaline rush your Investor DNA has been waiting for.

With upfront costs to acquire a horse of $60,000+, annual maintenance and training around $55,000 or more, and minimal odds of your horse becoming a winner - which is the sole factor for them earning money in the short and long term - these are close to the odds the Avengers face every time they’re called on to save the world. No wonder it’s been called the “sport of kings” for generations.

Like the Avengers, with horseracing… you either win BIG, or you lose. Like this year’s surprise Kentucky Derby winner, “Rich Strike,” who wasn’t even in the field until the last minute when another horse was scratched… and came from behind (4th last in the last minute of the race) to win with 80-1 odds!

Here’s the lowdown on how you can make money with this exciting, and risky opportunity:

First, and most obvious, your horse can win prize money, which is considerable. However, as you’ll see in the “By The Numbers” section, the odds are very slim of winning.

If your horse does become a winner… Well then you hit the jackpot, because after their short 2 - 4 year racing career, they can become a “stud” for 20 years or more, earning $8,000 - $200,000 per one night stand 😊.

Most studs will only get this gig after a successful racing career, so the game here is similar to investing in startups… you want to build a portfolio of horses to increase your chances of hitting a big winner (knowing that most won’t generate any returns).

Other investors will “pinhook” horses, which is kind of like flipping houses. You buy a young horse, train them, and then sell them once they hit racing age (usually 3 years old).

As you can imagine, if you’re going to invest in a single horse, you need to have a high degree of confidence that they could be a winner. That requires a massive amount of industry knowledge and due diligence, which most investors or horse racing fans simply don’t have.

If doing research on horses is fun for you, you could look at buying fractional shares of horses for as little as $80 for 0.01% share.

You could also invest in a syndication where a team of experts buy, train, and race a bunch of different horses, and sell shares of 5-10% (or more) of the pool. This can be an effective way to hedge your bets, especially if you don’t have the background or interest needed to do strong due diligence and pick horses.

In addition to the high risk / high reward potential, buying fractional shares or participating in a syndication gives horse racing fans the opportunity to meet their horses, trainers, jockeys, and fellow owners in behind-the-scenes events that few traditional fans get to experience.

If you have any interest in horses or horse racing, this is an exciting moonshot opportunity that you’ll definitely want to read up on.

🔢 By The Numbers

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