Speculative Investment: Risk and Return Evidence From Thoroughbred Auction Markets
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چکیده
Pinhooking is a speculative investment where investors assume a risk position in the purchase and resale of Thoroughbred horses. Thoroughbred auction markets provide a unique data set to analyze investment risk. This study estimates the profitability of weanling to yearling pinhooks sold at the Keeneland September Sale using three years of sale data. Maximum-likelihood estimates of probability distribution parameters show that expected pinhooking profitability follows a log logistic distribution. Profitability is highly sensitive to reserve not attained, (RNA). A restriction against all RNA sales results in statistically significant expected positive investment returns. The results illustrate substantial investment risk is associated with pinhooking investments, but identifies market segments with positive expected returns.
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