Bongo owners in the winner’s circle

Thrill Of The Race
The next time someone complains about gas prices, tell them you just bought a horse. Seriously. If you’ve reached the tippy-top of the financial pyramid (nice base of cash and savings, a tier or two of equity and income investments), it might be a fine time to go in for something speculative. Racehorse ownership, generally assumed to be the sport of movie stars and millionaires, is surprisingly accessible, and a lot sexier than collecting rare stamps.

Total wagering on U.S. races in 2006 hit $14.78 billion, leading to some healthy purses — up 3.3 percent to $1.11 billion.

For the racehorse owner this translates into hefty earnings. Take Lava Man. Claimed for $50,000, the 6-year-old California-bred gelding has earned over $5 million. Even Google shares won’t deliver that kind of return.

If you’ve got a passion for the sport and want to get involved, consider starting with a partnership. "I think it’s a good way to get into this business without having to sit down and write a very large check," says Joe Harper, president and general manager of Del Mar Thoroughbred Club.

Thoroughbreds are expensive to buy and maintain. Claiming a mid- to high-end horse can run $50,000 and up — and that’s just to get in. Stable fees, food bills, vet expenses, and training will run you around $3,500 a month. The joy of partnership is that these costs get distributed among the group.

A lot of people who enjoy racing can’t afford to go in 100 percent on one horse," says bloodstock agent and thoroughbred industry expert, Gayle Van Leer. "By pooling their money together, everybody can get a piece of the horse and have fun."

There are a variety of ways to invest, everything from buying a yearling with the hopes that it will someday win the Triple-Crown, to claiming a horse that’s already running for more immediate returns. Alternatively, funds can be pooled to buy into a group of horses, spreading the risk across a few promising prospects. It’s the difference between investing in an individual stock versus a good mutual fund.

For the newcomer, partnering with professionals is a good way to go. You can leverage off the years of experience they bring to the table and benefit from having someone there to help with the big decisions.

Bob Feld, president of Bongo Racing Stables, has been in the business for over 25 years. He bought his first racehorse before he had a driver’s license. He and the Bongo team take care of all the nitty-gritty details, freeing you up to enjoy ownership on a high level. "We step in and oversee the day-to-day business with the horses, dealing with the trainers and what have you."

Bongo’s clients are free to have as much or as little participation as they like, though ownership has its perks. "We’ve had clients that show up for workouts all of the time, go to all the races, and then come and feed carrots," Feld says. "As an owner you get backstretch privileges, so you can visit your horse anytime you want."

Having fun is about the only sure bet in horse racing. "It’s is a high risk, high reward business," says Feld. "Thoroughbreds are athletes. You’re dealing with the same risk as if you owned a professional sports team." There are no certainties. He adds, "It’s a business of educated guesses."

Can you make money? Sure, but it’s not guaranteed. Chris Closson, Bongo’s vice president, makes sure investors go in with their eyes wide open. "We’re very upfront about the risks involved. We want people that are doing this because they love the sport and they want to be involved in it."

When choosing a partnership, make sure you do your homework. "You want somebody that’s been in the business for a while," Harper says, "somebody that’s been around and has a track record and a good reputation."

Also consider the expenses incurred from management fees and markups. "A lot of partnerships mark the horses up big time when they buy them," Van Leer says, "so that’s a question to always ask. You should be able to get a breakdown sheet on each horse that you’re interested in investing in."

A 20-30 percent markup is reasonable, a stable that doubles the cost should send up red flags. Most of all, beware the filly fortunetellers. As Feld says, "If you call someone and they say they guarantee you a winner, just hang up and move on."

Maybe start with a trip to the track though, lest you put the cart before the horse. Del Mar welcomes the general public on weekends. Come out, have breakfast, and watch the horses run. After that, give Bongo a call. Jim Kellogg, their San Diego sales rep, is happy to field questions and usher you into ownership. (619/203-4653, www.bongoracing.com) — Paul Stuart


Janet McCulley with Lulu

Top Dog
Janet McCulley, co-founder of the pet specialty boutique Muttropolis in Solana Beach, was recently awarded the Ernst & Young Entrepreneur Of The Year 2007 Award, given to individuals who are building and leading dynamic, growing businesses. "I am incredibly fortunate to be part of a company that provides a significant dose of euphoria for the pets and pet parents who experience our products, people and retail environments," says McCulley. "Muttropolis strives to create a sense of community in each of our stores and is proud to have a positive impact on the communities in which we operate, whether through our in-store events or support of local shelters." McCulley already has five Muttropolis locations in San Diego. She plans to acquire over 100 more in the next five years. The stores offer design-driven, yet functional dog, and cat supplies, (www.muttropolis.com) — Ryan Thomas
Market Schmarket
The greatest investors of our time pay little or no attention to the market. They are focused on opportunity, not volatility. They measure risk by the potential for permanent loss of capital, not temporary price fluctuations. They know that quoted prices in the stock market rarely represent the true value of a company. Prices are either inflated or discounted, and only occasionally are they in line with "fair value." The market is inefficient due to human emotion, and the biggest money is made by educated unemotional investors who understand this. In other words, market schmarket.

Bottom Fishing Tips
Thomas Bulkwoski, the author of the Encyclopedia of Chart Patterns, appeared recently on Business Talk Radio discussing his research on repeatable patterns in the markets and stocks. His Web site, Thepatternsite.com, is filled with interesting data based on tested probabilities that can be helpful for anyone looking to buy low and sell high. For example, Bulkwoski found that when a brokerage firm downgrades a stock, it may be near its low already.

Some ratings changes are timely, others are not. But basing your buying or selling decisions on analysts upgrades and downgrades is generally not a good idea. In a bull market, he found that only 25 percent of downgrades occurred within a third of the yearly high, right where they would do the most good. In a bear market, it was worse with just 13 percent near the yearly high. A week or two after downgrades, prices generally begin to recover. Bulkwoski’s advice: "If the price drops, wait for it to bottom and begin recovering in a few weeks." More evidence that successful investing is counterintuitive. (www.sfomag.com)

The Secret To Successful Investing
The truth is, there are no secrets. As with success itself, investing profitably requires discipline and persistence. The ability to take action and do difficult or uncomfortable things that others are unwilling to do is generally the "secret" to success in any endeavor, including investing.

In every market cycle, the average investor takes comfort by following the crowd. If the crowd is fearfully avoiding the stock market because of perceived risks and volatility, the easy and comfortable path is with the masses. Ironically, Wall Street is the only place on earth where no one wants to buy when the merchandise has been marked way down. It’s the predictable nature of human behavior that allows successful investors to prosper in any kind of market environment.

As J. Paul Getty said: "Buy when everyone is complaining, and sell when everyone is celebrating. That has been my secret to success."

Market volatility and declines can offer you the greatest opportunities for increasing wealth. When high quality stocks and bonds decline to significant discounts, we call them "fallen angels." Fallen because they are down, and angels because they can rise. However, your biggest enemy over the next 10 to 20 years probably isn’t market volatility; it’s more likely going to be the permanent loss of your purchasing power due to inflation.

Think about it: ten years ago, oil was $10 to $15 dollars a barrel — it’s $60 plus now. Ten years ago, a U.S. postage stamp cost 32 cents — it’s 41 cents now. Ten years ago, gold was approximately $300 an ounce — it’s $600 plus now. — Gabriel Wisdom, host of Financial Wisdom on the Business Talk Radio Network (www.gabrielwisdom.com)

 


© 2007 Rocket Publishing Company, Inc.    760.942.2330     P.O. Box 676130, Rancho Santa Fe, CA 92067