Decoding 30 Years of Wall Street Experience: Asymmetric Opportunities in Horse Racing, Poker, and Bitcoin

Original author: Jordi Visser

English translation: Luffy, Foresight News

When I was five years old, my father took me to Monticello Racecourse in upstate New York for the first time.

He handed me a horse racing guide and began teaching me how to interpret the information: past results, jockey records, track conditions. Those numbers and symbols felt like a mysterious language to me.

For many years afterward, we frequented that racetrack. It became his "classroom." He never asked me to "find the champion," but always guided me to focus on something else: Was there any betting value in this race?

Every time I completed an odds prediction for a match, he would ask me about the basis of my assessment. Then, drawing on his experience, he would point out information I had overlooked or dimensions I should have explored more deeply. He taught me:

• Identifying patterns in horse racing results
• Weighing the weights of different influencing factors
• Provide odds that are realistic rather than based on conjecture.
• Most importantly, continuously reassess the odds based on new information.

He inadvertently trained me to use Bayesian methods to predict the probability of future outcomes. I've used this skill in every decision I've made in my life, especially during my more than 30 years on Wall Street.

Today, this analytical framework has allowed me to pinpoint the most misjudged betting target of my career: Bitcoin.

When I analyzed Bitcoin using the horse racing odds method my father taught me, I saw it as an asset with odds of 3:1, but many of the top intelligent people I know gave it odds of 100:1, or even thought it was worthless.

This valuation discrepancy is not only significant, but also represents a rare and exceptional opportunity that one rarely encounters in their career.

Learn to bet on the future

The method my father taught me is rigorous, not arbitrary. Before setting odds for any horse, I must put in a lot of work. I treat studying horse racing guides as a course of study:

• Past performance of horses under different track conditions
• jockeys who are good at specific scenarios
• Changes in horse competition levels, equipment, and predictions for race pace
• Lineage and Training Patterns

He even taught me to remain skeptical and not to easily trust human factors. Not every horse will go all out; some horses are "saving up" for later races, and some trainers have fixed tactical routines. All these factors must be taken into consideration.

Then comes the actual betting stage.

I learned to observe the timing of smart money entry and the fluctuations in odds in the final minutes before a match. But there's only one core rule: you must write down your predicted odds before looking at the betting display screen.

This isn't about making wild guesses, but about building a solid logical basis for my judgments. For example, why should this horse have a 20% chance of winning (corresponding to odds of 5:1), instead of 10% (10:1) or 5% (20:1)? Only after completing these tasks and being able to clearly explain my reasoning will he allow me, a novice, to look at the public's betting patterns.

It was at this time that a wonderful opportunity arose. Sometimes, the odds I predicted for a horse to be 5:1 would actually be 20:1 on the betting screen.

This advantage doesn't stem from being smarter than others, but rather from the fact that most people who set the odds haven't done enough research, and the biggest opportunity lies in their oversights.

He also repeatedly emphasized another key principle: if the odds for a match already fully reflect its value, then simply refrain from betting. "There will always be another match."

Choosing to remain inactive when there is no advantage is one of the most difficult disciplines to master in the market, and a lesson that many investors have never learned.

Betting-style thinking

Years later, I discovered that the method my father taught me was actually a professional methodology that professional poker players and decision theorists had been studying for decades.

Anne Duke's *Betting: How to Make Smart Decisions When Information is Insufficient* provided the theoretical framework for my experiences at the racetrack. Her core insight is simple yet profound: all decisions are bets on an uncertain future; the quality of a decision must be judged separately from the outcome itself.

You might have made an extremely wise decision, but still lost. Even with a reasonable valuation, that horse with odds of 5:1 has an 80% chance of losing the race.

What really matters is:

• Is the decision-making process rigorous?
• Are the odds settings reasonable and justified?
• Do you have an advantage when betting?

Several years ago, I spoke with Anne in person and told her that her book resonated with the principles my father taught me at the racetrack. I've always known that this logic has helped my investing, and it has even shaped how I think about health and happiness.

We talked more about her psychology background than about poker or the book itself, because they are all fundamentally interconnected. This framework applies not only to poker or investing, but to decision-making in all fields when information is incomplete.

But the core takeaway remains the same: we live in a world of incomplete information, and learning to make decisions using probabilistic thinking and separating the decision-making process from the outcome is the key to achieving long-term progress.

Munger: The market is like a racetrack

Charlie Munger once proposed a view that connects all the logic: the stock market is essentially a horse racing betting system.

In a pool betting system, prices are not determined by some objective intrinsic value, but rather by the collective betting behavior of all participants. The odds on the betting screen don't tell you how much a horse is "worth," but only the percentage of the total betting pool that each horse represents.

The same logic applies to how the market operates.

Stock prices, bond yields, and Bitcoin valuations are not determined by television commentators or social media narratives, but by the actual flow of capital.

When I examine Bitcoin from this perspective, the real odds are never the statements made by a few wealthy individuals on CNBC, but rather reflected in the relative size of various asset pools:

• Comparison of Bitcoin and Fiat Currency
• A comparison between Bitcoin and gold
• A comparison of Bitcoin with total global household wealth

These proportions and relative trends reflect the true views of collective bettors, and are unrelated to public statements.

What's even more interesting is that if someone says Bitcoin is worthless, from the perspective of betting on the lottery, they are not entirely wrong.

Despite Bitcoin's impressive performance, continued user growth, and the global experience of monetary experimentation and fiat currency devaluation over the past decade, its overall size remains small. Compared to traditional stores of value, the amount of capital allocated to Bitcoin is negligible.

In the parlance of pool betting, the public has already shown their stance through their actions: they have hardly placed any bets on Bitcoin.

And this is precisely the starting point for my odds prediction.

Jones, Druckenmiller and the Power of Positions

The core principle of the careers of two of the greatest macro traders in history—Paul Tudor Jones and Stanley Druckenmiller—is something most investors overlook: position allocation is often more important than fundamentals.

Jones once said, "The masses are always a step behind." Druckenmiller's view is even more incisive: "Valuation cannot tell you when to enter the market, but position can tell you all the risks."

Once everyone is on the same side of the trade, marginal buyers disappear. Market movements never depend on opinions, but on passive buying and selling behavior.

This aligns with Munger's insights into pool betting. The truly crucial factor isn't just the size of the pool, but also:

• Who is betting?
• Who is watching?

When I analyzed Bitcoin from this perspective, a noteworthy phenomenon emerged: the wealthiest group in the fiat currency system, that is, those who control the most capital, are mostly not optimistic about Bitcoin.

Demographic statistics clearly show:

• The older you are, the lower the probability of holding Bitcoin.
• The higher one's level of traditional financial education, the more likely they are to view Bitcoin as a scam.
• The more wealth you have, the greater the potential loss when betting on Bitcoin.

That's why I never talk about Bitcoin at Wall Street dinners; it's as sensitive as a political or religious topic.

But Jones and Druckenmiller's experience tells us: you don't need to determine the future of Bitcoin.

All you need to realize is that global capital holders are creating an asymmetric opportunity that they have been exploiting throughout their careers by positioning themselves extremely low.

Predicting Bitcoin like predicting a horse race

So, how do I predict Bitcoin odds?

I started with the first step my father taught me: do your homework first, then look at the market odds.

Bitcoin was born in an era of exponential technological growth. It emerged from the global financial crisis and stemmed from people's distrust of governments and centralized control.

Since its inception:

• Government debt is growing explosively.
• Traditional system repair solutions have been exhausted.
• Future development will heavily rely on technological innovations such as artificial intelligence.

I believe that artificial intelligence is a force that accelerates deflation, but paradoxically, it will further force governments to increase spending and accelerate currency devaluation, especially in the context of the global AI race with China.

We are moving toward an era of material abundance, but this path will upend almost all large institutions.

Those companies built on code and wielding current power and wealth are now forced to act like governments:

• "Printing money" through massive data center capital expenditures.
• Taking on more debt
• Overspending in advance to seize future dominance
• Short sellers focus on bubbles, I focus on the despair of the rich.

Ultimately, artificial intelligence will also make such spending deflationary, squeezing corporate profits and triggering a massive redistribution of wealth.

In such a world, financial regulatory frameworks need digital currencies that can keep up with the speed at which artificial intelligence agents operate, and this is precisely where the value of network effects lies.

But Bitcoin is no longer just an innovation; it has evolved into a belief system.

Innovation can be disrupted by even better innovations, but the operating logic of a belief system is quite different. Once it reaches a critical scale, it behaves more like a religion or social movement than an ordinary commodity.

When I assign probabilities to different future paths of Bitcoin, the risk-reward ratio is approximately between 3:1 and 5:1, which incorporates risk factors such as the threat of quantum computing, a shift in government support, and the emergence of new competitors in the cryptocurrency space.

Only then will I look at the "betting screen".

I'm not focused on the price of Bitcoin itself, but rather on the position allocation of the group of people I know best—those asset allocators who have substantial wealth, are well-educated, and have successfully achieved compound interest on capital over decades.

Most of them still give Bitcoin odds of 100:1 or even lower, with many stating it's worthless. Their portfolios reflect this view: either no Bitcoin at all, or a very small percentage.

The difference between my judgment of odds and theirs is enormous.

According to Druckenmiller's framework, this is a combination of "high-quality assets + extremely low position size," and this is precisely the moment to pay the most attention.

Control your betting size to avoid losing everything.

Even with favorable odds and extremely low position sizes, it doesn't mean you can act recklessly.

My father never let me bet all my money on a horse with odds of 20:1, and that principle applies here as well.

Druckenmiller has a simple rule of thumb: quality assets + very low positions = larger bets, but "larger" should always be linked to the strength of conviction and risk tolerance.

For most people, this tolerance is determined by two factors that are rarely mentioned in discussions about Bitcoin:

• Age and investment period
• Future expenditure needs and responsibilities

If you are young and have decades of human capital, your ability to cope with volatility is vastly different from that of someone in their 70s who needs to withdraw retirement funds from their investment portfolio. A 50% drawdown at age 30 is a learning experience; a similar drawdown at age 70 could escalate into a crisis.

Therefore, I believe that the allocation ratio of Bitcoin should follow the principle of gradient:

• The longer the investment horizon, the higher the future income, and the lower the short-term debt, the more reasonable it is to increase the allocation ratio.
• Shorter investment horizons, fixed income, and tangible short-term expense obligations (children's tuition, medical expenses, retirement withdrawals, etc.) require a more conservative asset allocation.

In fact, the industry is gradually moving towards a new normal. Institutions like BlackRock and major banks are now publicly recommending that 3% to 5% of a diversified investment portfolio be allocated to Bitcoin or digital assets. I don't think this figure is something everyone should blindly follow, but it's a useful reference point—it shows that the focus of market discussion has shifted from "zero allocation" to "how much to allocate."

My point is clear: everyone needs to do their own homework and find the right allocation ratio for themselves.

However, I also believe that the "suggested allocation range" proposed by institutions will not remain unchanged. As time goes by, the exponential disruptive development of artificial intelligence will make it more difficult to predict traditional cash flows for the next three years, and asset allocators will be forced to look for growth opportunities in a world where business models are constantly being rewritten by algorithms.

At that time, Bitcoin's appeal will not be limited to digital gold, but will become a kind of "moat of faith" rather than a traditional "moat of competitive growth".

Competitive growth moats rely on code, products, and business models, which can easily be disrupted by better code, products, and new entrants. In the age of artificial intelligence, the lifespan of such moats will be significantly shortened.

The moat of faith, built upon an ever-solidifying collective narrative, represents people's collective belief in the value of a particular monetary asset in an era of currency devaluation and rapid technological iteration.

As artificial intelligence accelerates its development, selecting the next top software or platform winner will become increasingly difficult. I anticipate that more asset allocators will shift some of their "growth asset allocation" to targets that leverage network effects and collective belief to build advantages, rather than industries vulnerable to the impact of AI. The exponential growth of AI is constantly compressing the lifespan of innovation moats. Bitcoin's moat of faith, however, possesses a time-defensive quality—the faster AI develops, the more powerful it becomes, like a hurricane sweeping through warm waters. It is the purest trading instrument in the age of artificial intelligence.

Therefore, there is no single configuration number that works for everyone, but the framework is universal:

• The initial position should be small enough to ensure that even a 50% to 80% drawdown will not jeopardize the future.
• Determine position size based on age, investment horizon, and actual needs.
• It's important to recognize that as artificial intelligence makes traditional growth targets more difficult to predict, and Bitcoin's strong market appeal continues to deepen, the "acceptable allocation ratio" of Bitcoin in institutional portfolios is likely to gradually increase.

You wouldn't bet your entire fortune on a 3:1 bet, but you shouldn't treat that opportunity like a small $5 wager either.

Eternal wisdom beyond Bitcoin

Looking back on those afternoons at Monticello Racecourse, I can't recall the specific races or horses, only the analytical framework.

My father never taught me how to pick champions; he taught me a mindset that can grow exponentially over decades:

• Do your homework first, then look at the market odds.
• Establish an independent probability assessment system, rather than blindly following the crowd.
• Focus on position allocation and fund flows, rather than just following narratives and headlines.
• Choose to wait and see when you have no advantage
• When your research findings differ significantly from the consensus and your target position is extremely low, decisively increase your bet.

The racetrack taught me how to predict odds, Anne Duke taught me to make decisions with a betting mindset and to separate process from results, Munger made me understand that the market is a betting system, and Jones and Druckenmiller taught me that position allocation is sometimes more important than valuation.

Examining Bitcoin through this framework, it's like the horse my father described as "actually a 3-to-1 odds horse, but labeled as a 20-to-1 horse." What's even more unusual is that very few investors with substantial sums of money are betting on it.

My father often said that it is just as important not to bet when you have no advantage as to bet boldly when you have an advantage.

At this moment, in my view, Bitcoin is in a rare moment where research findings, odds predictions, and position allocations are perfectly aligned.

The masses will eventually enter the game; they always have. And by then, the odds will have changed dramatically.