Tag Archive: Money Ball


Pass the Maalox!

The Dow lost 651 points on Xmas Eve.

The Dow gained a record 1,066 points the day after Christmas.

The Dow lost 611 points Thursday morning only to finish up 260 points in the very same afternoon.

What’s the lesson for retail investors competing in an unfair market?

Don’t go all wobbly over the Dow Jones.

More to the point: Never panic.

And let’s not forget: Don’t morph into Gloomy Gus or Negative Nancy when the market gyrates downward.

Just as important, never become a Pollyanna when the markets surge. Stay grounded.

Since October 3, the ever-downward market psychology has resulted in traders selling the rallies as opposed to buying the dips.

Buy Low, Sell High has been redefined … at least for now.

Algos Giveth; Algos Taketh Away

Almost DailyBrett clearly recognizes the Wall Street playing field is not level; it tilts downward to the “institutions,” the Buy-Side and the Sell-Side traders.

Similar to Oakland Athletics general manager Billy Beane (played by Brad Pitt) in “Money Ball,” the Charles Schwab retail investor (e.g., me) is competing in an unfair game.

Isn’t the easy solution to simple not invest in Wall Street, stick your money in a bank with pathetic interest rates or maybe even under the mattress?

Having said all of the above, the markets remain the choice investment vehicle for the 54 percent of Americans who constitute the Investor Class. These optimists about America’s future devote discretionary revenues in stocks and stock based mutual funds to pay for retirement, health care, children’s education or that dream vacation.

There is a ton of advice out there about taming the markets – some counsel is sound, other “advice” is dubious.

What is the humble advice from Almost DailyBrett, who has invested in markets for 25 years and who taught Corporate Communications and Investor Relations at two major universities?

There are Bulls. There are Bears. And Pigs Get Slaughtered

 “Know what you own, and know why you own it.” – Investor Peter Lynch

  • Your author believes in building your own mutual fund, instead of always paying a fee for someone else (e.g., Fidelity) to manage your money. And when you do structure your very own mutual fund make sure you know why you own each stock (thank you Peter), and make sure you diversify these holdings (everything can’t be tech).

For example, Almost DailyBrett presently owns Apple, McDonald’s, Nike and Salesforce; just sold Boeing. Two are differing tech stocks, one feeds 1 percent of the world each day, and the swoosh just does it as the leader in athletic apparel.

  • Passive investing is a loser. Building wealth is work. Far too many just purchase mutual funds at work through pensions and 401Ks or IRAs at home and literally forget about them. Really? This is your money. What is being done with your money? What are your returns? Forget passive. Be active.
  • Use or consume the product/service of the companies you own (i.e., Apple iPhones, McDonald’s Big Macs, Nike running shoes …). Understand very clearly how a company makes money. If you can’t comprehend why shares are increasing (e.g., Bitcoin), don’t invest. There is a world of difference between investing and gambling.
  • The harder mental gymnastics is not when to buy, but when to sell. Think of it this way: On Wall Street, there are bulls, there are bears … and pigs get slaughtered. Set upside-and-downside sell targets for your stocks. When they reach these points, ring the register. Sure wish your author always followed his own advice.
  • Accept the algorithms. The big institutions (not you) have pre-programmed servers with instruction algorithms that automatically to the nanosecond buy or sell large blocks of stocks whenever certain market price points are triggered. The game is not fair. Accept it.
  • For the longest time the bulls have been running (e.g., November 2016 – October 2018), and corresponding market psychology has been optimistic (bad news discounted). Since the start of the bear market on October 3, the psychology has dramatically shifted to the negative (good news is irrelevant). If you invest, you will experience both moods.
  • Most of all: Don’t panic. Stay active. Remain calm. Sometimes strategic retreat is necessary. Sell underperformers and convert to liquid. Cash is always king. There will be a bottom. There will be a day to buy low with the hopes of selling high.
  • Know your level of risk. If you can’t accept gaining $10,000 one day, and giving $9,000 back in the next day (a $1,000 gain for those scoring at home), you shouldn’t be investing in markets. Pathetic bank interest rates or under the mattress is right for you.

Yes there will be a day when it is time to buy the dip, while those who try to sell the rally end up losing their … fill in the blank.

Every fall game day, I have a sacred routine.

My pilgrimage starts by walking over the Willamette River knowing that one day my ashes will be thrown off the footbridge into the north flowing current. Soon thereafter I will be partying with friends in the Moshofsky Center (Oregon’s indoor practice facility). Then about 45 minutes before kickoff, it will be time to head into the game. And finally, the three hours-plus of intensity and passion that comes from a no-holds barred game in the friendly confines of Autzen Stadium.

autzen2

I have it all figured out, or do I?

My best friend’s son, who loves college football as much as me, will almost never go to a stadium, any stadium. Presumably, he begins his autumn Saturdays with ESPN’s “College Game Day,” followed by a series of jousts at noon Eastern, and then the first set of west coast contests at 3:30 pm Eastern, and then the featured Saturday night epics at 8 pm Eastern and finally the late West Coast bouts at 10:15 pm Eastern. To wrap it up, he checks out ESPN “Sports Center” to cap off the day.

Does he appreciate what he is missing? Or is it me who doesn’t know what I am missing?

This coming August 15, the Pac-12 Conference will join the other major conferences (e.g., Big 10) in debuting its own network, ensuring that every football, men’s and women’s basketball game of each conference school is televised in high definition with superior video and audio. As welcome as the universal access to all of your alma mater’s games may be, it brings up an obvious question:

Why go to the game?

When I first purchased my Oregon season seats, 15 rows behind the opponent’s bench near the 30-yard line back in 1990; maybe…just maybe…one Oregon game would be televised each year. ABC had a virtual hammer lock on college football and only televised the glamour teams, but that quickly changed with cable.

Even with that change, perhaps four or five Oregon games would be televised each year in standard definition and those were usually the games against teams from the large media markets (e.g., USC, UCLA, Washington, Stanford, Cal). Now all of the games are televised in high definition, including this year’s body-bag game with Tennessee Tech.

The ones-and-zeroes mastery of digital television teamed with telecommunication satellite technology and HDTV with LED, LCD and plasma screens resulted in a viewer experience that absolutely blows away standard definition. We can now actually see the puck during Stanley Cup playoffs. Many times the problem with progress is the unintended consequences.

Even the staid Economist this week noted that better television broadcasts combined with escalating ticket prices have resulted in the NFL seeing a drop off in its attendance.

This perfect storm has to cause even the most devoted fan (I qualify) to question spending $1,000 to participate in the Duck Athletic Fund (substitute your own school’s athletic supporter fund), and then spending $81 or more per seat for the best games (e.g., $345 each for the BCS National Championship game) for the privilege of standing up for the entire game in either 94-degree heat or 32-degree freezing temps. And let’s not forget the slow crawl home with 60,000-plus of your most intimate friends.

Sure, the live game includes marching bands with fight songs and ornamental cheer leaders or as the late (ABC college football announcer) Chris Schenkel said, “What better way to spend an autumn afternoon.” Well, there is an option even for the most devoted fan.

The alternative is the living room with superior sound and picture. The game is free. There is no line for the bathroom. It is easy to dash during a time out for your personal refrigerator. The networks provide replays of key plays for not only the game you are watching, but for all of the other big games. Heck, you can even watch two games at once with picture in picture technology.

espncamera

Maybe this conundrum has prompted many professional franchises and college athletic departments to go slow (e.g., Oregon) in expanding the capacity of their respective stadia or in certain cases actually reduced the capacity (e.g., Stanford). Too many seats (supply) can depress demand (fans), while too few seats (supply) may stimulate demand (fans). Call this the Beanie Baby effect.

Perfect examples in beisboll are the Chicago Cubs (e.g., Wrigley Field), the Boston Red Sox (e.g., Fenway Park) and the San Francisco Giants (e.g., AT&T Park). In contrast, the Oakland Athletics have too many seats in the Oakland Coliseum, prompting the franchise to cover whole sections with embarrassing tarps. How’s that for “Money Ball?”

Oregon has sold out every game at 54,000 seat Autzen Stadium (60,000 with standing room) since 1999. And as long as the Ducks keep winning (e.g., three straight conference championships and three straight BCS bowl games), Oregon fans will pack Autzen even when Tennessee Tech comes a calling. But what happens (and it’s inevitable) when some sub par seasons creep into the mix? It wasn’t that long ago when the Ducks were weak sisters and they were not seen as ultra cool. I don’t want to see a fall off, but I have to be reasonable.

Will hardy fans be tempted to follow their team (and college football in general) by means of the superior quality and convenience of HDTV? The Pac-12 network will reportedly bring up to $30 million in additional revenue to each of the dozen schools in the conference. That is good news to the green eyeshade crowd. One must wonder long term whether this influx of cash will be counterbalanced by dwindling attendance in the face of high ticket prices and awesome high definition sound and picture.

Doesn’t that sound like an unintended consequence?

http://www.economist.com/node/21555606

http://en.wikipedia.org/wiki/Chris_Schenkel

http://en.wikipedia.org/wiki/Pac-12_Network

http://blogs.mercurynews.com/collegesports/2012/05/20/pac-12-network-what-it-worth-heres-one-projection/

http://seattletimes.nwsource.com/html/budwithers/2018252077_withers21.html

http://world.ty.com/catalog/catPage.cfm?status=Current&lineid=3

%d bloggers like this: