30 Years of Wall Street Veterans: Horse Racing, Poker, and Investing Legends Taught Me Bitcoin Revelations

Written by Jordi Visser

Compiled by: 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 started teaching me how to interpret the information: past records, jockey records, track conditions. Those numbers and symbols are like a mysterious language to me.

For many years after that, we went there often. The racecourse became his “classroom”. He never asked me to “find the winner”, but always guided me to another thing: Is there any betting value in this game?

Whenever I finished predicting the odds for an event, he would ask me about the basis for my assessment. He then uses his own experience to point out the information I missed or the dimensions I should have dug deeper. He taught me:

Identify patterns from horse racing records

Weigh the weights of different influencing factors

Give odds that are realistic and not based on conjecture

Most importantly, the odds are continuously reevaluated based on new information

He inadvertently trained me to use Bayesian methods to predict the probability of future outcomes. This skill has been used in every decision I have made in my life, especially during my more than 30 years of hard work on Wall Street.

Today, this analytical framework has allowed me to lock in the most misvalued bet of my career: Bitcoin.

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

This valuation divergence is not only a huge disparity, but also a great opportunity that rarely comes across in a career.

Learn to bet on the future

This method taught me by my father is rigorous rather than casual. I had to put in a lot of effort before I could set odds on any horse. I study horse racing guides as a success lesson:

Past performance of horses in different track conditions

Jockeys who specialize in specific scenarios

Changes in horse participation levels, equipment and prediction of the rhythm of the event

Pedigree and training rules

He even taught me to be skeptical and not to trust the human factor easily. Not every horse will give it its all, some horses are “charging up” for subsequent races, and some trainers have a fixed tactical routine. These factors must be taken into account.

and then to the actual betting link.

I learned to watch for smart money entry and fluctuations in the odds in the last minutes before the game. But there is only one core rule: you must write down your predicted odds before you can look at the betting display.

This is not to make me guess, but to build a defensible logic for my judgment. For example, why should the horse have a 20% chance of winning (corresponding to 5:1 odds) instead of 10% (10:1) or 5% (20:1). Only after completing these homework and being able to explain his reasoning clearly will he allow me, a novice, to see the public betting situation.

It was at this time that a wonderful opportunity arose. Sometimes I predict a horse with 5:1 odds, but the actual odds on the betting screen are 20:1.

This advantage does not stem from being smarter than others, but because most people who set the odds have not put in much effort to study at all, and the biggest opportunity is hidden in their omissions.

He also repeatedly instilled in me another key principle: if the odds of a match fully reflect its value, simply drop the bet. “There will always be the next game.”

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

Betting thinking

It took me many years to realize that the methodology my father taught me was actually a professional methodology that professional poker players and decision theorists had studied for decades.

Anne Duke’s “Gambling: How to Make Smart Decisions When Information is Scarce” provides a theoretical framework for what I learned on the racetrack. Her core insights are simple but profound: all decisions are bets on an uncertain future; The quality of decision-making must be judged separately from the result itself.

You may have made extremely wise decisions that ended up losing. Even if the valuation is reasonable, the horse with 5:1 odds has an 80% chance of losing.

What really matters is:

Whether the decision-making process is rigorous

Whether the odds are set is justified

Whether you have an advantage when placing your bets

A few years ago, I spoke to Anne in person and told her that her book coincided with the ideas my father taught me at the racetrack. I’ve always known that this logic helps my investments, and it has even shaped the way I think about health and well-being.

We talk more about her psychology background than about poker or the book itself, because it’s all essentially connected. This framework applies not only to poker or investing, but to all areas of decision-making when information is incomplete.

But the core revelation is the same: we live in a world with incomplete information, and learning to make decisions with 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 put forward a point that connects all the logic together: the stock market is essentially a horse racing pot betting system.

In the pot betting system, the price is not determined by some objective intrinsic value, but is shaped by the collective betting behavior of all participants. The odds on the betting screen do not tell you how much a horse is worth, only the percentage of the total betting pool for each horse.

The same is true of the operating logic of the market.

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

When I look at Bitcoin through this lens, the real odds are never the statements of a few wealthy people on CNBC, but the relative size of various asset pools:

Bitcoin vs. fiat currencies

Bitcoin vs. gold

Bitcoin vs. the total wealth of households worldwide

These ratios and relative performance trends reflect the true views of collective bettors and have nothing to do with public statements.

What’s even more interesting is that if someone says Bitcoin is worthless, they are not entirely wrong from a pot betting perspective.

Despite Bitcoin’s impressive performance, continuous growth in user size, and a round of currency experimentation and fiat currency depreciation around the world over the past decade, Bitcoin is still small. Compared to traditional stores of value, the amount of capital allocated to Bitcoin is minimal.

In terms of pot betting, the masses have already shown their attitude with actions: they hardly bet on Bitcoin.

And this is the starting point of my odds prediction.

Jones, Druckenmiller and the power of position

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

Jones once said, “The public is always one step slower.” Druckenmiller’s point is even sharper: “Valuation can’t tell you when to enter, 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 coincides with Munger’s pot betting insights. It’s not just the size of the pool that really matters, but also the size:

Who is betting

Who is watching

When I analyze Bitcoin through this lens, a noteworthy phenomenon emerges: the richest groups in the fiat currency system, that is, those who hold the most capital, are mostly not optimistic about Bitcoin.

Demographics clearly show:

The older you are, the lower the probability of holding Bitcoin

The more educated you are in traditional finance, the easier it is to dismiss Bitcoin as a scam

The more wealth, the greater the potential loss of betting on Bitcoin

Because of this, I never talk about Bitcoin at Wall Street dinners, it’s as sensitive as political or religious topics.

But the experience of Jones and Druckenmiller tells us that you don’t need to be sure about the future of Bitcoin.

You just need to realize that the extremely low position allocation of global capital holders is creating an asymmetric opportunity that they have been exploiting throughout their careers.

Predict Bitcoin like a horse race

So, how do I predict Bitcoin odds?

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

Bitcoin was born in an era of exponential technological growth, sprouting from the global financial crisis and stemming from people’s distrust of governments and centralized control.

Since its inception:

Government debt has exploded

Traditional system repair solutions have been exhausted

The future development path will be highly dependent 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 expand spending and accelerate currency devaluation, especially in the context of the global AI race with China.

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

Companies built on code and holding the power and wealth of the moment are now forced to act like governments:

“Printing money” in the form of large-scale data center capital expenditures

More debt

Overdraft expenses in advance to seize future dominance

The bears focus on bubbles, and I focus on the despair of the rich.

Ultimately, AI will also make such spending deflationary, squeezing corporate profits and triggering large-scale wealth redistribution.

In such a world, financial regulatory frameworks need digital currencies that can keep up with the speed of AI agents, and this is where network effects come in.

But Bitcoin has long been more than just an innovation, it has evolved into a belief system.

Innovation may be subverted by better innovation, but the logic of the belief system is very 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 Bitcoin’s different future paths, the risk-reward ratio is roughly between 3:1 and 5:1, which takes into account risk factors such as quantum computing threats, a shift in government support, and the emergence of new competitors in the crypto space.

After that, I will go to the “betting screen”.

I’m not looking at the price of Bitcoin itself, but at the position allocation of the group I know best, that is, asset allocators who have a lot of wealth, are well-educated, and have successfully compounded their capital for decades.

Most of them still set odds of 100:1 or even lower for Bitcoin, and many outright say it is worthless. And their portfolios confirm this view: either no Bitcoin allocation at all or very low allocation.

The gap between me and them in terms of odds judgment is huge.

According to Druckenmiller’s framework, this is a combination of “high-quality targets + very low position allocation”, and this is precisely the most noteworthy moment.

Control the size of your bets to avoid losing all sets

Even if the odds are favorable and the position allocation is extremely low, it does not mean that it is possible to act recklessly.

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

Druckenmiller has a simple rule of thumb: quality underlying + very low position = bet up, but “up” is always tied to the strength of belief and risk tolerance.

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

Age and investment horizon

Future expenditure needs and responsibilities

If you’re young and have decades of human capital, your ability to handle volatility is very different from that of someone in their 70s who needs to withdraw from their portfolio. Encountering a 50% drawdown at the age of 30 is a growing lesson; The same drawdown at the age of 70 could turn into a crisis.

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

The longer the investment period, the more future income and the less short-term liabilities→ the allocation ratio can be reasonably increased

The shorter the investment period, the fixed income, and the existence of practical short-term expenditure obligations (children’s tuition fees, medical expenses, pension withdrawals, etc.), → allocation needs to be more conservative

In fact, the industry is gradually moving towards a new normal. Institutions such as BlackRock and major banks have now publicly recommended that 3% to 5% of the funds in a diversified portfolio be allocated to Bitcoin or digital assets. I don’t think this number is worth copying blindly, but it is a useful reference - it shows that the focus of the market discussion has shifted from “zero allocation” to “how much allocation”.

My point is clear: everyone needs to do their own homework to come up with a configuration ratio that suits them.

However, I also believe that the “recommended allocation range” proposed by the agency will not remain static. Over time, the exponential disruption of artificial intelligence will make it more difficult to predict traditional cash flows over 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 also become an existence similar to a “moat of faith” rather than a traditional “competitive growth moat”.

Competitive growth moats rely on code, products, and business models that can easily be disrupted by better code, products, and new entrants. In the era of artificial intelligence, the survival period of such moats will be greatly shortened.

The moat of faith, built on a solidified collective narrative, is people’s collective belief in the value of a certain monetary asset in an era of currency depreciation and accelerated technological iteration.

As AI accelerates, it will become increasingly difficult to pick the next top software or platform winner, and I expect more asset allocators to shift some of their “growth asset positions” to those that rely on network effects and collective belief to build their advantages, rather than those that are vulnerable to the impact of AI. The exponential development of artificial intelligence is constantly compressing the duration of innovation moats. Bitcoin’s moat of faith is temporally defensive - the faster AI develops, the more powerful it becomes, like a hurricane sweeping through warm waters. It is the purest AI era trading target.

So there is no one configuration number that works for everyone, but the framework is generic:

The initial position should be small enough to ensure that even a 50% to 80% drawdown does not ruin the future

Positions are determined by age, investment horizon and actual needs

It is important to recognize that as artificial intelligence makes traditional growth targets more difficult to predict and the moat of Bitcoin’s belief continues to deepen, the “acceptable allocation ratio” of Bitcoin in institutional portfolios is likely to gradually rise

You don’t bet your entire net worth on a 3:1 odds, but you shouldn’t take this opportunity as a small $5 bet either.

Beyond the timeless wisdom of Bitcoin

Thinking back to those afternoons at Monticello, I can’t remember the specific events or horses, only the analytical framework.

My father never taught me how to pick a champion, he taught me a way of thinking that can grow over decades:

Do your homework first, and then look at the market odds

Establish an independent probability assessment system instead of blindly following the public

Pay attention to position allocation and capital flows, rather than just staring at narratives and headlines

Choose to wait and see when there is no advantage

When your research conclusions differ significantly from the consensus and the underlying position allocation is extremely low, decisively increase your bets

The racecourse taught me how to predict the odds, Anne Duke taught me to use betting thinking to make decisions and strip away the process and the outcome, Munger taught me the market-i-pot betting system, and Jones and Druckenmiller taught me that position allocation is sometimes more important than valuation.

Looking at the current Bitcoin through this framework, it is like the horse that my father said “it should actually be 3 to 1, but it was marked as 20 to 1”.

My father used to say that it is just as important not to bet when there is no advantage and to bet boldly when there is an advantage.

At the moment, it seems to me that Bitcoin is in one of those rare moments: research conclusions, odds predictions, and position allocation are all in perfect harmony.

The public will eventually enter, and they have always been like this. By then, the odds were already very different.