Friday, August 29, 2008

My Day Inside the Ropes with KJ Choi ...

Last Wednesday, I was fortunate enough to have the opportunity to play golf in the Barclays Invitational Pro-Am. It was the most amazing experience I've ever had. Please indulge me as I relive the experience...

When I received the invitation, I sent Barclays (BGI) my handicap. BGI sent me my info packet that listed directions to the parking lot. My tee time was 7:30AM. At the time, I had no idea who I'd be playing with, but the night before, I checked the tournament website to get a feel for the course. The link is here, and after looking through, I was pretty nervous.

Time to Head Out So I get up at 4:30AM, shower, and load the car up with my sticks and my shoes. I am on the road by 5:45AM and reach Ridgewood by 6:45AM. The attendant in the lot takes my bag and I ride in to the course on a shuttle with the other "lucky amateur bastards". We get to the course, and I have to register. The nice woman gives me two things, a pass for all access that marks me as a contestant, and a sheet that shows who I am playing with and what tee I am starting on. I get to play golf with "The Chairman" -- K.J. Choi. K.J. is the 15th ranked player in the world. Links to K.J. are here, here and here.

Pass for tournament with KJ's Autograph (click to enlarge)






















Sheet with Pro Pairings and Starting Tee
(click to enlarge)























Texting
my Buddy Jimmy
I sit at the locker they give me in the clubhouse, and I can barely keep my head on straight. The only thing I could think to do is text my buddy Jimmy two simple letters "KJ". I put the cell phone away and head out to look for my bag and the range. Once I find them, I grab a wedge, a 7 iron and my driver and head down to the range. The first person I see hitting balls? Freddy Couples. Next to him? Sergio. It's basically insane. I go to the tent to get my bag of balls, and they have every ball you could want to hit. I grab the bags marked Titleist because I don't hit "Bridgestones", and hit a few, then head back to the cart when they announce the time as 7:25 AM. Oh, on my way back, Phil Mickleson is being interviewed in a chair by the range. That was cool.

So our team heads down to the 17th tee box, still no sign of K.J. though. We're standing on the tee with Stuart Appleby's group, and he's ribbing us about K.J. being late. There's about 14 people standing around including all of our caddies. Honestly, I'm so nervous, I don't really remember what he said. But they tee off and K.J. and his caddie show up and Appleby points to his watch..K.J. just starts laughing.

The Chairman Arrives K.J. is extremely nice and introduces himself. His caddie, Andy, is a Scotsman and he's a freakin' riot. For example, he hands us "pin sheets" and states "in case your firing right at them." We stand on the 17th, and it's time to go. The 17th is a dogleg left, so K.J. tee's off from the pro tees. He nuts the ball with effortless power, which is truly what you realize with these guys. The ball turns around the corner and disappears. I say "good ball KJ" and walk up 20 yards to our tees, the fourth set.

First Tee Jitters I'll save you the suspense... I had hit 5 good drivers on the range, so I felt comfortable on the tee, all things considered. I remember picking out my spot in the distance, lining up, and then trying to stay relaxed and slow. I remember seeing the ball, hearing the ball, and KJ and the group saying, "great ball." We teed off into the sunrise, so I never saw it. We go up, and I outdrove KJ given that I was up 20 yards, and really tried to keep it together because I didn't want to be that dude that tried to show up the pro. But I did outdrive him, and it meant nothing other than my teammates took notice and so did the kid and his dad standing outside the ropes watching our group. You can't imagine how awesome it is to pipe a drive, pick up your tee, and there are people clapping and a pro saying "great ball". Oh, KJ made birdie on 17, I made bogey. Hitting a big drive is like getting a girl's number. You still have to make the call, so all that matters is the shot you hit from there.

My Random Thouhgts I won't go through every hole, because those who know me know I remember everything due to my photographic memory and really could. But here are some of my random thoughts about the experience:

  • KJ Choi could not have been cooler. He really kept us relaxed, it was hard to believe he was the same intense guy you see winning on TV at tournaments.
  • I've always imagined what it's like being inside the ropes. And you know what? It's exactly how I pictured it. Being inside the ropes beats standing outside the ropes any day.
  • I hit 10 fairways that day, and it was a blast having people watch you tee off.
  • TV doesn't do any justice to what these guys do. Their swings are beautiful, and the shots they hit from the places they do are unbelievable. And putting on PGA greens are heaven.
  • I made 2 pars for birdies in our team's effort.
  • KJ and his caddie were working on strategy the whole round, talking about what clubs to hit on each hole, and looking at the greens since this was the first time many had played at Ridgewood CC.
  • KJ signed about 50 autographs during our 5 hour round. The most inspiring moment was when KJ signed the hat for a girl who walked with two crutches because of a birth disorder. KJ really took time to show he was appreciative that she wanted his autograph. Watching her reaction after he signed her hat and headed toward his ball made me realize how much of an impact we all have on others, no matter what our status in life.
  • Funniest moment of round (for me personally): Walking from 13 green to 14 tee box, KJ was back behind us and signing more autographs. As I come up over the hill towards the tee box, some little kid looks at me and says "KJ, can you sign my hat?" His dad quickly looks at me and says "That's not KJ." It was pretty funny. I quickly realized that while I was inside the ropes, this kid's father reminded me my presence there was temporary.
  • On my 3rd hole (#1), I rolled my ball in for par, and stood off to the side and waited for the others to putt out. My eyes got watery because I realized how far I had come in my life to reach that point inside the ropes, and it has a very humbling moment. Thanks Jim, Duane and Willy for giving me the skills to hang with KJ and play one shot at a time.
  • Saying "good putt" and "nice drive" to KJ and having him look back and say "thanks" never got old the whole round. Thinking about KJ saying "good drive" after I hit my drives off the tee still gives me chills. I can still hear he and Andy.
I could go on and on, but I was on a high for three days. Below is the picture of our team and a signed "flag" by KJ. His agent and he also sent a card that I received this week saying thank you again, it was just classy. When the round was over, I took off my visor, shook his hand and thanked him again for making the day so much fun. I won't ever forget the experience. KJ was a true gentlemen.

Plaque of Our Team (-10 under, tied for 4th)























The Epilogue BGI invited me to play two days later at Liberty National. Liberty National is where the Barclays will be held next year, and the thought right now is that the Barclays will rotate between Ridgewood, Liberty National, and Westchester Country Club. Apparently, Bob Diamond, the president of Barclays, is a member there. Here is a link to Liberty National..here and here.

Liberty National I got to Liberty and met up with my contact and met Bob Diamond in the locker room. Bob was playing in the group ahead of us, and Tim Finchem, the PGA Commissioner was also in his group. (In the picture I took below, you can see Commisioner Finchem in the grey slacks with the black shirt...) There are just some beautiful views of the Manhattan skyline from the course. Liberty that day played much tougher than Ridgewood, no disrespect. There's fescue all around to look at off the tee, and when the wind gets going, it can wear you down. The greens are really crazy too. Should be a great venue next year...!

View from the 16th Tee Box...lots to look at

Finally, a word about the Barclays Tournament
Erin and I went to the Barclays on Saturday. We hung out at the hospitality pavilion, and I introduced Erin to Bob Diamond while there. We followed KJ from the 16th hole on in since he teed off at 9:40 AM. He was -3 under for the day and making a move, and had birdie chances on 16 and 17. I said hi to Andy and we followed their group in. Afterwards, we headed down to the driving range to watch KJ work out. I spoke with his friend who recognized me from Wednesday and introduced Erin to Andy as well. We hung out along the 17th fairway since that was where I started our Pro-Am round and watched VJ, Lumpy, Nick Watney, Sergio, and Phil hit their approaches into 17 green. It was simply awesome being inside the ropes. Kudos to Barclays, what a fantastic week. KJ, if you are reading this, you have a fan for life, ask Erin. She was laughing watching me run around the course following my pro.

Thanks for letting me share this experience. I know it was a long post, but for a once in a lifetime experience, I could've written a book.

KJ's Swing on CBS's Swingvision Slow-Motion Camera

Thursday, August 28, 2008

Morton Wins Against the Marlins

Charlie went 6 innings against the Marlins and got the win. The young rookie threw 125 pitches scattering 4 hits and giving up just 2 earned runs. It was a good win, great outing CM.

Wednesday, August 27, 2008

Presidential Predictions on Univ. of Iowa Futures Market

Courtesy of Iowa's Futures Market Website -- See Link










Here's another futures market where market participants can try and predict the outcome of the Presidential Election this fall. Red line is for the elephants, blue line is for the "donkeys". The time horizon is from 2006 to present (Aug. 2008)

It seems that lately, the red line is trending higher, and the blue line is trending lower, consistent with the futures prediction on Intrade's market (www.intrade.com)

Link to Presidential Market at University of Iowa

Tuesday, August 26, 2008

Biochemical Pathways...

Here is a link to a clickable, interactive chart that shows all of the body's biochemical processes or metabolic processes. The charts give you an appreciation of what medical science is trying to accomplish when targeting such diseases as Alzheimer's, cancer, etc. The chart shows that nature is both elegant and complex, and our search to find the cures for things that go wrong in nature is a humble, yet noble one.

Link to Metabolic Processes Chart

Monday, August 25, 2008

Rent vs Buy

Here is a link to a great calculator that determines which is better to do, rent vs. buy. The website allows you to input various values for home price, etc. and shows you how long you have to stay to "breakeven" should you decide to buy.

If nothing else, this shows you graphically another reason why home price appreciation is so important given the uncertainty of how long you live somewhere. Some people never leave the area they grew up in, so if you are one of them, don't worry, plunk down your money and buy. It won't matter, the chart says it all.


Link to "Rent vs. Buy" Calculator

A Very Cool Site -- S&P500 Market "Heatmap"
















Here is a link to a website that publishes a daily heatmap for the S&P500. The map uses color to show which companies are up or down, and the size of the box for each company represents the market capitalization of each company. The map is organized by sectors and subsectors.

The website is called "www.finviz.com" Check it out.

Thursday, August 21, 2008

Ass of the Week -- "The Promise of Alternative Energy"
























There are many candidates for this week's award, probably most notably Brett Farve (I know, I am still a fan, but I think the saga that played out certainly detracts from some of his reputation...More on this later.) There's also Bob Costas, doing the Olympics, whom Chris Collingsworth called out early in one telecast after it was implied that Costas hadn't been to any of the events he so eloquently expounds upon night in and night out. CC stated "You should go see these events. They're amazing..." Bob Costas, Chris Behrman, John Madden and Dick Vitale are dinosaurs, and flat out annoying. Costas apparently played baseball with Babe Ruth, Chris Behrman just rhymes every players name, but doesn't have an original thought to say, John Madden sounds drunk up in the booth, and Dick Vitale states the obvious in a high pitched squeal. It's bad. Oh and don't forget Dick Enberg. Jesus, grab a kleenex when that's guys bits start...

But while all are worthy, I would give this week's award to "the dude who wouldn't let go". This dude has no name, but a video of him in action has been all over the news since Tropical Storm "Fay" hit Florida. The video is posted below, and seriously, I couldn't stop laughing the first time I saw it, and it makes me laugh every subsequent time I watch it. Dude, just let go. You can get another friggin' kite/parasail.



The video proves that if this country could instill good energy policies and incentives for wind energy, we could kick our addiction to oil. I'm all for it. Mother Nature is awesome, ask this guy if wind power is real or not.

Tuesday, August 19, 2008

Fed Funds Futures Predict Rate Hikes in 2009

How to read this chart*


The futures market for Fed Funds Futures
are currently predicting a 36% chance of a +25 basis point rate hike in January 2009. This move would change the current Fed funds rate of 2.00% to 2.25%. The probability of a +25 basis point rate increase goes to 92% in March of 2009. The contracts are here.

This key rate is the Fed's primary tool to balance inflation risks with economic growth. As we all know, the Fed cuts this discount rate when times are "bad" to stimulate spending and investment. And conversely, the Fed raises this rate when there's "too much money" out there in supply, which often leads to inflation. Too much money results in people bidding up prices of things (like oil, food) and as a result, inflation erodes the future earning power of cash flows. Think about it this way; an interest rate (discount rate, etc.) is just the cost or price of money. Money's "price" ebbs and flows just like anything, in response to supply and demand. The Fed can lower this rate to encourage people to borrow money (seek credit), and this money will be put to use in assets that produce a greater return than the cost of the money. That's why the yield curve is so important, and a leading indicator of economic sentiment. The yield curve just shows the "price" of money across different time periods. We'll leave the yield curve for another day.

The reason that the discount rate is watched so much these days is that there is a battle going on in the capital markets. The Fed was raising rates last year due to economic growth that was mostly due to the easy credit available out there. This easy credit was creating inflation in all kinds of assets (think housing and the stock market for the easy examples, but food and oil were the other two.) So to control consumption, the Fed can raise these rates to curb consumption, thus controlling prices. But a funny thing happened. Bear Stearns forced the Fed's hand, and rates had to come down, liquidity (money) had to be injected into the system. Anytime you create an oversupply of something, its price falls. The price of short-term money fell from 5.75% to its current price of 2.00%.

However, the value of the dollar was already so low, that all this did was add more money to the system that encouraged another asset bubble to appear in commodities. Commodities are an inflation hedge, so this was a positive feedback loop. Now the Fed has its current dilemma: Rates at 2.00% were too low to cut any further to "keep the US from going into a recession" since the housing/credit/corporate profit bubbles were popping. However, if the Fed raised rates to fight the inflation that was occurring in food and oil prices, (which it helped sustain due to the extraordinary actions it took to bail the financial system out by lowering rates), then it risked pushing the US into an economic contraction (recession) without prices coming back to earth since the dollar is still so low in value. Stagflation is a situation where prices still climb but economic growth is flat or low. Japan went through this in the 90's.

The Fed will need to raise rates, and the futures market predicts the beginning of this change in sentiment in 2009. Raising rates in response to inflation expectations will have all kinds of implications for US equity markets, namely, market values will fall because the 10-year treasury yield will move higher, discounting all future cash flows to lower values. Some think that once 10-year yields move above 4.5%, the Fed will have to raise rates, no matter what the financial sector is doing.

But if you want to assume away the discounting mechanism of the markets, all you need to know is that the presidential election is in November 2008. After all the promises have been made, it won't matter. The Fed will no longer be working for the politicians, and will do what they were created to do.

* The blue line represents the current "implied" fed funds rate for each month going forward. The y-axis on the right is related to this blue line. Market participants predict, for example, that at the Sept. 2008 Fed Fund meeting, the Fed will leave rates at 2.00%. You can see what the market predicts over the longer time periods.

* The other lines represent the probabilities that the Fed will raise the current 2.00% rate by 25, 50, or 75 basis points. (25 basis points is 0.25%). The pink line shows the probability that the Fed will raise rates the current rate at 2.00% by by 25 basis points to 2.25%. The y-axis on the left matches with these scenarios. In Feb. 2009, the pink line shows that the probability the rate moves 25 basis points to 2.25% is 72%. In March, it goes to 92%. The way you calculate this probability is as follows:

Subtract the implied rate in Feb 2009 (2.18%) from target rate (2.25%) = (2.25-2.18)= 0.07
Divide 0.07 by rate increase (+25 basis points) = 0.07 / 0.25 = 0.28
Subtract 0.28 from 1 = 1 - 0.28 = 0.72
This is the probability that in Feb 2009, the Fed will raise rates from 2.00% to 2.25%...

Friday, August 8, 2008

Morton Goes 7 Innings, Beats Diamondbacks

Look at that arm angle, head's up and the world is yours...






















The kid went 8 complete innings, scattering 5 hits while giving up 1 walk with 4 SO. He gave his Braves a chance to win last night, and they backed him up with runs. Charlie also got his first hit, a double, that was roped out to left field. The swing looked sweet (I'm looking for it on YouTube as I write this), staying back and on top of it. (We won't talk about what happened after, but read the re-cap to hear Bobby's take on it.) Curve ball was devastating tonight, and CM had nice movement on his fastball, and changed speeds nicely throughout the game. The proof is in the ground balls, the double plays, and the broken bats after jamming guys and running things in and away.

Nice job Charlie. As tough as St. Louis probably was, and we felt for you, it looks like it was good for you. Going through the tough times gives you the gut check you need to decide how much you like to do what you're doing, and how bad you want to get better. Most wilt, your last two starts show us you've chosen a different path. All I saw on Fox Sports Network tonight when they came out of commercial was "a kid with a towel on his head, smiling and having fun on the bench." That's what this is about, and it's always up to you.

Keep it going brother. Tomorrow don't matter, and the next batter don't matter. It's just like golf, one shot at a time. The Braves believe in you, and tonight it showed why it's a team game. You are a Major League professional pitcher for the Atlanta Braves.

Great outing and great win Charlie. Welcome to The Show.


Thursday, August 7, 2008

Walmart -- A Visual Map
















I've posted an interesting link to a website that creates visual representations of data...It's called Flowing Data (www.flowingdata.com). One visualization was for Walmart, the link is below. The visualization shows the history of Walmart's stores, and plots a point for each place a store opened. From their roots in Arkansas, the Walton's built their business from the bottom up into the low cost provider of all things, mostly consumer staples, but recently into higher margin goods like electronics, etc.

It's a neat visualization, if nothing else. But the map and the history represent what any true entreprenuer sees in their dreams. Starbucks no doubt had the same visions, but recently came to understand that growing too fast can sometimes hurt too, since same store cannibalization can happen when you just grow for the sake of growing. Quality suffers, and the dilution of your brand ultimately occurs, since SBUX set out to sell the experience of Italian coffee shops, but has come to shift its focus on an ungodly product mix (food and trinkets) that customers no longer stay in the store to drink or experience. (A perfect example, they sell gift cards now as a result of the pressure they feel to grow same store sales over and above the trend...classic growth company problem.) Starbucks has also realized that the market can't always support a premium price when competition comes in to drive your returns to the cost of your capital.

It's an age old story, which again, is why innovation is the key to any long-term business success. If you can innovate beyond your competition, you win. It's another way of saying, "if you can stay one step ahead of your competition, you can beat your competition." Gretzky said it best, "Don't go where the puck is. Go where it will be."

Link to Walmart Map

Up Down Website


If you think you can pick stocks, here's a great way to get noticed. The website is called "Up-Down" and it allows you to pick a virtual portfolio of stocks. You can create portfolios and track on any finance related site (Y!, CBS Marketwatch, etc.) but the key difference here is that the site is a community of users that you can publicly look at their holdings and see what people think. The ultimate difference is that each month, you get "graded" within your peers, and it builds street rep...

I like it, and will create my portfolio shortly.

And lastly, I have to plug Stumble Upon again (www.stumbleupon.com). It's how I come across these sites, and it's tremendous.

Link to Up-Down

Wednesday, August 6, 2008

Organized Religion

This makes me laugh...Organized religion cracks me up.

"Morton to Start Against Diamondbacks" 8/7/2008

The kid had a good start last Saturday versus the Brewers, throwing 7 innings, scattering 4 hits. He unfortunately posted the loss, but his control was back and he was hitting his spots and changing speeds well.

Charlie starts tomorrow night, 9:40 PM versus the Arizona Diamondbacks. Hopefully the Braves can give him some early run support.

Here we go CM...do what you do.

Link to Press Pass for Game (when available)

Saturday, August 2, 2008

Hadron Collidor Ready to Go, "End of the World Near"

The Hadron collidor is ready to go. As a refresher, the collidor being used to accelerate sub-atomic particles towards each other, and then study the energy released. Here is a link to some pictures to the accelerator, that will supposedly end the world.

Yeah right.

Another good link that documents the arguments...

What might the Hadron Collidor Find?

Friday, August 1, 2008

The Election, Taxes, and Why Corporate Profits Have to Fall

Economic theory suggests that the long run growth rate in GDP (Gross Domestic Product) is around 3%. GDP growth is a proxy for corporate profits. If you agree to this premise, then read on as to why corporate profits have to fall.

GDP can be approximated by the following:

GDP = Corporate Profits = (C – DI) + (Investment) + (G - T) + (E – I)

Consumption - Disposable Income: If term is negative, then consumer is "saving"; if consumer is "consuming more than they have in disposable income, then the term is positive, and this is a positive for corporate profits, i.e. GDP.

Investment: Related to business and private investment, think housing and projects that create shareholder value for corporations. Housing boom drove a lot of the GDP expansion...

Gov’t Spending Taxes: Gov’t generates revenues to spend on programs through taxation. If this term is positive, then the gov't runs a fiscal deficit; conversely, if negative, the term represents a fiscal surplus.

Exports – Imports: This is the trade balance...we've been running a trade deficit in the recent past, which means we import more than we export from a value perspective. The trade deficit was the only drag on GDP growth in the run-up to the bubble, and now may reverse its effect going forward, but it's still a largely negative effect.

Currently, three out of the four items are net negative, as consumers cannot spend as much, so net, we begin to save our money. Credit is not as available, or is more costly, so again, savings rate goes up and consumption goes down, both bad for corporate profits and GDP (i.e. we won't buy as much stuff...) Investment is contracting because credit is too costly and scarce for consumers and businesses. Housing drove most of this investment during bubble, so investment's effect has to be smaller going forward. The trade balance continues to be unfavorable, and as such, the only lever the government can pull to stimulate the economy is to spend. The government can raise taxes to cover its spending, or it can borrow from other countries to cover it’s spending (think Medicare, Social Security, or infrastructure) but either way, Gov’t Spending – Taxes must be (+), to expand GDP, and this means the gov't will run a larger deficit than currently or raise tax receipts to offset the spending it will incur.

Ultimately, the change in Savings, the change in investment, the change in Budget Deficit, and the change in the trade balance drives the change in GDP, which is a proxy for corporate profits.

Therefore, going forward and to summarize:

1. Savings has to go up, because our relative consumption has gone down.
2. Investment has to go down, since housing industry has slowed (residential investment) and business investment has gone down.
3. Fiscal deficit is higher than it was 4 years ago.
4. Trade balance has gotten less negative, since the dollar has helped over seas profit. However, the trade balance is still negative, which contributes to neg GDP.

The gov't could lower corporate taxes to stimulate investment by industry that eventually translates into jobs and income for its workers making terms 1 and 2 go up. However, my bet, given the rhetoric out there, is that taxes will be raised, and both candidates know it, it's the only direct lever the gov't really has in the equation above. The difference is that the gov't sees itself as jump starting the economy by spending vs. corporations, the gov't just gets the money through tax receipts versus the way corporations get the money via tax breaks. That's why the "windfall profit" tax is getting so much air time, it serves the politician's purpose two-fold with a struggling consumer that believes they do not benefit from corporate tax breaks.

Taxes are a way to transfer wealth, and it can happen along lots of different vectors. If you received a stimulus check, enjoy it. It wasn't free.