For over 40 years, Arnold Kirkpatrick has been an editor and publisher (of The Thoroughbred Record), a breeding-farm executive (of Spendthrift Farm), a racetrack president (of Latonia Race Course), and a successful bloodstock adviser and breeder.

At all times, he has been a peerless raconteur, a keen observer of the horse business, and a vivid writer who pulls few punches in describing the industry he has labored in and loved for these many years.

Kirkpatrick has distilled some of his wisdom into a book, Investing in Thoroughbreds: Strategies for Success (Eclipse Press, 2000, $29.95). This is not your standard "how-to-make-money-in-horses" volume. In often humorous and earthy prose, he lays out some of the most important lessons before anyone invests in Thoroughbreds. Kirkpatrick's rule number one: "Don't check your brains at the door."

In writing this book over the course of a year-while managing and building Kirkpatrick & Co., a Lexington-based real estate and Thoroughbred brokerage, appraisal, and consulting firm-he modified and elaborated on an earlier work, Successful Thoroughbred Investment in a Changing Market, which he wrote with the late Jack Lohman in 1984. That volume was derived from How to Make Money Investing in Thoroughbreds, written by Lohman in 1978.

Those three years are important benchmarks in the Thoroughbred business, and especially the commercial breeding industry. In 1978, the commercial market was on the launch pad of a rocket ride that would take it to unprecedented and unsustainable heights. In 1984, the market was at its peak, and Kirkpatrick did not hesitate to warn that the rocket had flamed out and was heading for a crash.

A very hard landing

Even he, though, could not have anticipated the depth and length of the ensuing recession, which lasted almost a decade.

As he completed his latest book last year, Kirkpatrick again was the industry Cassandra, warning anew that the commercial market was trying to break the law of supply and demand.

Is he pessimistic about the short-term outlook? Sometimes, yes, despite the strength of both the Kentucky July sales and the recent Saratoga yearling sale. Does he see similarities between 1984 and the current market? Definitely, but he also notes very important dissimilarities as well.

Is he optimistic about the future? Yes-after all, he is in the horse business, where hope springs eternal-but he has a vitally important caveat about his guarded optimism as well.

Perhaps Kirkpatrick's most important insights are into the very essence of buying Thoroughbred racehorses. Is it an investment like buying stocks, or bonds, or certificates of deposit? Not at all. He wrote: "The economics of the horse business as a whole do not make any sense … never have, never will."

In an interview, he said that Thoroughbred investment can and should be enjoyable if it is conducted in a businesslike manner, with a realistic plan, a good-faith profit motive, and solid advice from a team of trusted, experienced, honest advisers. But, he said: "The only consistent reason for Thoroughbred ownership is that it should be fun to participate in it. Ownership should have an element of fun to it. It's still a hard game to make a buck in."

Some people have been making a good buck in the commercial Thoroughbred business over the past few years as the market turned upward and reached new heights. Some of those industry members are young enough that-like the youthful stockbroker who never experienced a stock-market correction-they do not remember the agony of the late 1980s. Kirkpatrick remembers vividly.

The two years in which his books were published, 1984 and 2000, were marked by overproduction of foals, he said. The current overproduction is not as serious as in 1984, however. In the peak year of 1986, the Jockey Club registered 51,296 North American foals. The 2001 foal crop is estimated at 37,300. Also, the current market has an overabundance of stallions (another similarity to 1984), as well as too many huge stallion books. Moreover, as in 1984, stud fees are rising to the point where they carry the risk of eliminating a commercial breeder's profit margin.

Seen in buy-backs

Kirkpatrick sees the dual effects of overproduction and high stud fees in the number of buy-backs at leading sales, where the accepted norm has quickly shifted from one-quarter of horses through the ring to one-third. Either the horse is not finding a buyer at any price, or the breeder is unwilling to part with the horse at a loss.

The similarities between 1984 and now generally end there, Kirkpatrick said. In the early 1980s, demand for well-bred racing prospects was thin and mostly coming from across the Atlantic Ocean. In fact, Kirkpatrick traces the market crash to the apparent decision by Robert Sangster and Sheikh Mohammed bin Rashid al Maktoum in March 1985 to stop competing against each other for prized yearlings, especially those carrying the Northern Dancer blood that overseas horsemen wanted so badly.

Unlike 1984, the demand for Thoroughbreds remains strong today even though the stock market went into a slump last year. The Thoroughbred market's current base of buyers is significantly wider than in 1984, and more Americans populate the leading buyers lists.

Kirkpatrick noted that any shakeout is ultimately healthy for an industry because less efficient operators either fall by the wayside or walk away. As one well-known horseman observed early in the 1990s as the yearling market turned around: "This is better now. The prostitutes are gone."

Indeed, Kirkpatrick observed that in the past some industry participants were more than eager to take advantage of newcomers. "This may astound you, but some people in the horse business will take advantage of you, given the chance," he writes.

Some neophytes, usually arriving in the Bluegrass with outsized egos to match their temporarily outsized bank accounts, still get taken to the cleaners, he said, but they are the exceptions because the commercial industry has become much more professional as a younger, better-educated generation has moved to prominence.

"Now, you have hard-working, well-educated, and committed people working on these farms as managers," he said. "They're younger, and now they're getting paid salaries commensurate with the amount of work they do."

Bloodstock agents and advisers also have become more professional, for a few reasons. First, a lot of the ethically challenged agents moved on to other scams when the market evaporated, leaving those who knew the business, had references to back up their banter, and records of accomplishment.

Information revolution

Perhaps the biggest change, Kirkpatrick said, has been the information revolution within the industry. "The computer and the Internet have done more to help the owner and prospective owners than anything I can recall," he said. "You can't hide things from people anymore."

That information comes in many forms. "The sire lists are so superior to what they used to be," he said. Moreover, buyers' guides such as those published by Thoroughbred Times-listing all siblings of auction yearlings and their sale prices, for instance-have helped to create a far more sophisticated and informed generation of buyers.

One aspect of the business worries Kirkpatrick, however. "Something has to change if this business is to survive," he said. "Everybody says they are the backbone of the business. The breeders say they are the backbone. The owners say they are the backbone. The trainers say they are the backbone. The jockeys say they are the backbone. The only people not represented are the real backbone of the industry, the fans."

Taking care of the fan is not quite as complex as quantum physics. The essentials, he said, are finding out what the customer wants and then providing good customer servi