Five Investing Tips I Learned at the Track

August is one of my favorite times of the year. I like to spend most of the month at my vacation house, which overlooks Lake George, N.Y. From there, it's easy to get to the horse races on the beautiful old thoroughbred race track in Saratoga.

I have been an avid horse racing fan since high school and have been going to the Saratoga track since 1981. I even appeared in "The Replay," an original painting by Anthony Alonso, which also appeared on the Saratoga visitor's guide a few years ago.

In that time, I have been very successful at winning money at the races, even though I'm not a big bettor. For me, going to the races is a form of entertainment, not income generation. Nevertheless, there are many lessons I've learned at the race track that are also applicable to trading and investing. Here are five.

1. Don't Bet Every Race

A typical horse racing card has 10 races. The most exciting minute-and-a-half in sports is a thoroughbred horse race. However, the wait between races can be as much as 30 minutes. There is a tremendous temptation for bored bettors to place a wager on every single race. This is a mistake. Not every race is worth betting on. Some may be too hard to pick, while others may have a high risk/reward profile. The same can be said for trading and investing.

There is a temptation to want to trade each and every day. Sometimes the best trade is the trade not made. Disciplined traders and investors will wait for a buy or sell price level to materialize before making a move. This could take days or weeks, so you need to be patient and selective.

2. Do Your Research

Picking a horse to come "in the money" -- "win" (first place), "place" (second place) or "show" (third place) -- is no easy task. There are many variables that come into play in determining which horse to bet on. These include, but are not limited to, past performances, Beyer Speed ratings, track conditions, the jockey, the trainer, bloodlines ("sire" is the father and "dam" is the mother), length of the race, post position and surface type (dirt, synthetic, grass turf). It is pure folly to bet on a horse based on name, number or jockey silk colors, though many people do. You need to do your research. This means that, as a bettor, you must read the Daily Racing Form, the horse racing equivalent of financial statements and analysts' reports.

The same diligent approach is necessary for stock investing. We would not invest in a company solely based on its logo or company symbol. Think of it: If your name was Joe, would you invest blindly in St. Joe Co.(JOE)? If your favorite color was blue, would you invest in IBM(IBM), which is known as Big Blue? Of course not. As I have emphasized in the past, in order to make an informed investment, you have to read company financial statements and listen to earnings conference calls.