Friday, June 26, 2009

Thus Sprak TheSimpsons

Bloomberg reports on a story that The Simpsons command more money from advertisers on the segments appearing on the website than for their broadcast television version. To be fair this is not an apples-to-apples comparison. If you advertise on television there are about 9 1/2 minutes of ads per half hour show. When you reach out to a web audience it is anywhere from 40 seconds to just over a minute per show. So there is a lot less space, thus it should be more expensive to advertise. Additionally, Hulu makes its members fill out survey data such as age, income, zip code to allow the marketers better information as to who is watching the show before they pony up their advertising dollar. However, The Simpsons as one of televisions leading programs in America for the past 20 years would be the most obvious leader of the vanguard in switching their audience over to the Internet medium. Thus spoke The Simpsons that television will continue to lose its grips on its audience as gradually all programming moves online. Now, I am not bold or stupid enough to predict that the moment is imminently upon us, but rather it will be a gradual process that takes a decade or more to complete. Still, it makes me smile to have cancelled my cable subscription almost three years ago.

A Space Odyssey 2001

A friend recently showed me a YouTube video of Pink Floyd's Echoes and the last 24 minutes of Kubrick's film 2001: A Space Odyssey. I have not seen the movie in probably 4 years but watched it on my Netflix Instant Watch after viewing the sync.

Now, I will be the first to proclaim that this movie is very, very difficult to watch but not difficult to enjoy. The movie is 143 minutes long but the story, the drama, doesn't really begin until HAL malfunctions. The beginning prologue is imminent in its lengthiness, while Jupiter and Beyond the Infinite, seems strangely short. Here is an offering of explanation of the film.

Unlike Kubrick I would begin in media res with the drama. I would add one caveat first. In general the film is about man’s evolution and the ability to use tools to aid his well-being. As he masters an increasingly large tool set, he masters domain over the spaceship Earth. However, it is once man decides to leave the bosom of earth that man must face his tools not as corporeal, that is an extension of his self, but as a contemporary. The first subtle beginning in man’s battle over his tools is the chess game.

The chess match pits astronaut Frank versus HAL9000. Hal is the computer aboard the spaceship that is rocketing towards Jupiter. Hal does not make mistakes. Until… late in the match Frank misses not only the correct move, but also when Hal explains the end game to him he misses that Hal makes a mistake in its explanation. It should have been Queen to Bishop 6 and not Bishop 3. Now, it is far easier to assume that the chess game is not a major part of the film. It takes all of 90 seconds of time in the film, but… Kubrick was a chess hound and in his youth was a hustler in New York's Central Park. He would not have allowed the mistake unless this was intentional. Thus, it was intentional. What does it imply? It implies that Hal is breaking down. We watch on...

Next Hal queries about the mission and its secretive nature. That is, he knows a secret but wishes to find out how much the astronauts know. He even implies that the other astronauts did not need to be put in stasis, but that it was a ruse to keep them from conversing and sharing their isolated and separate mission trainings. Therefore Frank and Dave, the conscious astronauts, do not yet know the goal of the mission. Then in the midst of the conversation, Hal segues into an antenna fault alert.

The antenna is retrieved and no fault is found. Ground control, says that Hal's twin on Earth has detected no fault. Frank directly asks Hal what can be the meaning of this since no 9000 has ever made a mistake. Hal correctly states that it can be attributed to human error. That is, the programmers allowed Hal to know the true purpose of their mission. However, he has to keep it secret from the crewmembers. Thus, the programming done by Man has created two opposite commands in Hal's logic. One is to keep the mission secret and the other is to not distort information. These opposite commands cause Hal's breakdown and cause him to error in the Chess game and in predicting the antenna’s fault. Since the other unit does not fail, without a doubt the conflicting programming causes Hal to begin to error.

Hal realizes now that he will be shut down once the crew has confirmed his error. This may be why he segued to the antenna control error. His solution is to put it in until it fails, once transmission stops he will be free to remove the humans from impacting his mission directives. Thus, we enter the end game. First, the Pod under Hal’s control disconnects Frank’s life support hose. Dave goes off in pursuit, meanwhile the other crewmembers' life support systems are disabled, leaving Hal in complete control of the mission and removing the less than fully logical humans impact from the mission.

Thus, man confronts the evolution of his tools. Hal represents the ultimate tool that man created and now this subplot has brought about the drama of the movie. You should take care to notice the breathing of Frank's as he goes out to diagnose and repair the antenna. There is no other sound but his breathing, just as it would be if any one were in the same situation. It is frightening and it should be because here man is likened to a fish out of water. This is Kubrick’s space baby theme. Man has become ultimately reliant on his tools to accomplish any task in space. However, tools fail and this is exemplified as Hal continues to make mistakes. He underestimates the ingenuity and courage of man and does so to his peril.

Dave is seemingly in a no-win situation stuck outside the pod bay. However, he tries the emergency hatch and propels himself in and is able to turn the knob so as to bring air into the hatch, while closing the outer door. Thus, man must disconnect his ultimate tool. In Hal’s defense, he was performing in the most logical manner possible, trying to reconcile the improper logic in his programming. His solution is to remove the cause of the discrepancy, i.e. the “human error.”

Upon disconnecting Hal's upper logical functioning a pre-recorded message begins to play. Finally, telling the astronauts about the mission's true intent. So from here it sounds as if we have a great space drama but there is much more to the film including Kubrick’s exploration of the evolution of man. So now we dive in at the beginning.

The dawn of man shows exactly that. Man, or his evolutionary precursors band about in extended family units for protection. Life is extremely hard; witness the leopard killing a family member and the group’s forcible removal from their original oasis by a rival group of apes. Overnight a monolith is placed in front of their rock outcropping by an alien presence. In the movie there is a high-pitched choir singing an evocation as Man first touches the monolith. The monolith does not at this time create a noise, although later its brother on the moon will. In fact the inert monolith does nothing but represents a challenge. The four monoliths placed in the Earth's solar system are merely milestones for humans to reach.

The next scene shows man learning to use tools. Again this is not directly caused by the monolith, but given the humans latent characteristics the aliens most likely felt that the apes would have the best opportunity to evolve. This is because the apes have no noticeable advantages like a leopard with its quickness, camouflage and sharp teeth & claws. Instead the humans have over-sized brains that allow them to premeditate their actions and make tools to assist them in their survival. A bone then flies into the air and the film segues into the future with humanity having conquered Earth and now moved has ambitions towards space.

There is an interesting theme in the lengthy docking scene that I would like to highlight. Exhibit A -The very precarious manner in which the flight attendant retrieves the doctor's pen. She has on "grip shoes" that have Velcro on them to keep here attached to the floor. No longer is man in control in Space, instead of the easy sway and swagger that s/he imposes on the Earthman must cling to his tools much like a baby in a walker. Now man must rely further on tools to support his survival. It is an evolutionary leap. Our tools have evolved so far that they can exist without us, at least after we have created them, but we cannot exist without them. Now on the space station the situation is different as the station spins as it orbits so as to create gravity. Now man can again walk just as he is entitled to on Earth. Which brings me to a third point, if they can create "artificial gravity" on the space station, there is no reason that they could not do it aboard the smaller craft as well, a small tether weight could be placed out and spun so as to allow the humans aboard the flight to walk about freely. The point is that this is an overt choice by Kubrick to show that Man is no longer in control of his environment as he is on land and point out how infantile his movements are in space.

The scene with the Russians is merely a plot device to keep people in their seats. Nothing to see here, move along.

However, in the next scene where the doctor is shuttled to the Moon there are two more choices that Kubrick expounds. First, he shows the doctor eating food out of a straw and then learning to use the toilet. These are things humans learn to do by the age of two on Earth, if the parents are lucky. So Kubrick is again showing how out-of-control man is in Space. He must learn to walk again, he must learn to eat again and to control his bowel movements. The point in all of this is that man though dominant on Earth is a Space child.

The next scene again is a plot device to move the story along. The deepest irony in this film is that the dialogue matters the least out of any of the film's elements. Of course back in the late sixties when this was released films consisted of more dialogue than the special effects bonanzas that we enjoy today, so Kubrick may have just been before his time.

As the doctor then shuttles to the site of the excavation, the audience finds out that the site has a deliberately buried object that is 4 million years old. Funny, this was the same time that the 1st monolith showed up in pre-historic Africa. Again not much here, but we do here the same high-pitched choir start up again as the doctor approaches the site. An evocation? As the sun rises over the moon's horizon the monolith unleashes a loud radio emission. The second step is now complete and the third monolith beckons from Jupiter. This scene also shows that the monolith bestows no qualities to the doctor. In fact he is not aboard the mission to Jupiter that entails the last half of the film. The monolith is just a marker or milestone for the achievement of man not a to be mistaken as a Prometheus bearing knowledge.

The next portion of the film continues to elaborate on the theme of man being a Space baby. Outside of his natural environment on Earthman must recreate the environment unto his liking using his ingenuity and tools. We learn about the most essential tool, HAL9000 from a BBC interview that the two-man crew watches after earlier giving the interview. HAL is "the brain and central nervous system" of the ship, that is man has ceded his control to his tool. Now when I say two-man crew, I mean the two men who work and live on the ship, there are three other member in a state of stasis until the ship arrives in Jupiter's orbit. This is to conserve food and air or so the conscious astronauts are led to believe. The next scene we see Frank tanning again trying to recreate his environment on Earth instead of adapting to Space's environment.

We have already covered how man overcame his ultimate tool. Now Dave after entering Jupiter’s orbit leaves the spaceship in a pod. As Dave approaches the third but not final monolith his mission and man's evolution is about to be complete. As Dave nears the monolith it turns out to be a star gate, which propels him through the universe and finally into a bizarre dimension that appears to be from Louis the 16th's time period.

What does it all mean? Well following the tool discussion, man has now evolved beyond his tools. He has reached the logical upper limit of how far he can go with his tools into space. To travel the stars he then must follow Dave's path and become the star baby. Thus, he must face his destiny just as Dave does in the extra dimension. Dave becomes older as the point of view of the camera changes. He sits down for his last supper and he knocks over his glass of wine. The vessel shatters but the wine remains. He looks up to his deathbed and the same story is repeated. His vessel will be shattered but his essence, the wine, will remain. He then ultimately defeats death and becomes the newly evolved star baby. He has reached the last monolith/milestone/marker and has reached the final evolution of man. Queue Thus Sprak Zarathustra and fin.

Wednesday, June 24, 2009

I said I would try not to do this but...

To good to resist. Below is the link to Felix Salmon's Blog, which is a must read for me everyday. He is counter-intuitive, clever and always takes apart a situation and sees most if not all of the angles.

Jack Welch likes to cultivate an image as a straight-talking kinda guy who would never say something to an enclave of CEOs that he wouldn't be happy putting his name to in one of his books or columns.

Except, according to the Economist (a/k/a Matthew Bishop):

This columnist once heard Mr Welch tell a chief executives’ boot-camp that the key was to have the compensation committee chaired by someone older and richer than you, who would not be threatened by the idea of your getting rich too. Under no circumstances, he said (the very thought clearly evoking feelings of disgust), should the committee be chaired by “anyone from the public sector or a professor”.

Maybe that's the reason he finally retired from GE: there was no one left who was richer than he was.

Tuesday, June 23, 2009

Correlation revealed

So now that my secret is exposed that I try to mimic the entire structure of the capital markets it is best to look back at how the portfolio would have performed. Here we arrive at some very tricky parlance and one must be very careful when listening to investment advisers when they talk about performance. See some will talk about relative performance and some will talk about absolute performance and a non-mutually exclusive group will talk about one or the other spinning the performance in the most positive light. More on this in a moment.

In an earlier posting I proclaimed I had no benchmark, which is true. To offer a benchmark I would need someone mimicking my portfolio. So I have no S&P500 guiding light. However, I still like to use it not as a benchmark but as a fixed position to compare where I have been and where I am headed.

So I took the portfolio and how it performed in 2006, 2007, 2008 and the 1st half of 2009. I compared it to a buy and hold versus a rebalanced portfolio and then I looked at the S&P500. Again, I cannot state that the S&P500 is a benchmark, but I find it is as the most useful position line in which to compare. This is because, it is by far the easiest and probably wisest investment that a novice investor could undertake. One would need to surf to Vanguard's website and just choose the ETF or mutual fund that mimics the index. S/he will probably be in the top 1% of his investment cohort at the end of ten years. This is because s/he will pay minimal fees and not pay a manager for alpha generation, including failed alpha generation.

I have attached the spreadsheet here. All the information in it is from Yahoo Finance.

The first sheet has the funds and their respective performances. There is also a table for the S&P500. The second more interesting sheet is the Portfolio performance.

The first table is the ETF's performance again. BND and ESD both have their monthly dividend yield incorporated because it is a major part of their returns. The rest are just their price performance. One can see that they are all over the map. Some are well correlated, others less so. You can also find covariances and create a covariance of the portfolio. Then you could find sigma or the variance of the portfolio and produce a hypothetical ultimate portfolio. I have that somewhere based on these same numbers. However, as you may have guessed with such limited numbers this ultimate portfolio is of limited use. One of my main arguments against it is that the correlations change depending on how you frame them.

An example, gold is traditionally a hedge for your portfolio. In bad times, gold retains its value as a precious metal, as a unit of currency. So its value is as an insurance policy against your portfolio dropping. However, if you compare its performance to VWO, the most likely candidate for the highest beta in the portfolio, they were almost perfectly correlated (small sample size) until 2008. Then they became highly uncorrelated. So the perfect portfolio I find is largely a myth. One would need to keep generating a new one over and over as more information is incorporated into the secondary market exchanges. This ultimately only benefits your broker as you keep transitioning in and out of asset classes chasing the unicorn from Optimal Portfolio.

I choose the asset classes that fit best with my investment thesis.

The thesis in brief:
  • equities are better than bonds in the long run. So I want a significant portion in domestic and foreign markets to hedge against inflation. All central banks aim implicitly or explicitly for 2% inflation per year. This in turn will take away a lot of your fixed income stream in the long run. If you bought a 30 year bond offering coupons of 60 dollars a year the 60 dollar annual coupon is worth around 49 dollars in 10 years, 40 in 20 years and the last coupon is worth 33 dollars. You need to have income in real terms and equities are the best way to be exposed to real income. So I want about 35% of my portfolio there
  • bonds are necessary because they are more of a sure bet than equities. They offer stodgy returns but you can count on the principal repayment and coupons less the default risk. However, they offer only nominal payments that are eroded by central banks tacit inflation benchmark. So only 20% here.
  • 45% to real assets. In a fiat world where money can be manipulated by central banks and legislatures the only real income one can count on is real assets. From commodities to precious metals to real estate, I want stores of value. I never expect the governments to allow deflation, even in our current balance sheet recession. Even as people, governments and corporations unwind their debt, deflating asset prices, I believe in the Federal Reserve and their brethren to produce their low targeted inflation. Thus the large exposure to this asset class
  • Finally, as David Swensen of the Yale Endowment makes clear the difference between the top performing bond manager and the bottom performing bond manager is about 1%, 100 bps. About a 3% channel in equities. So there is no real gain in spending an inordinate amount of time searching for yield by picking the best manager. In fact today's best may be tomorrow's dog. Near everyone can recite the lore that the sun shines on a dog's ass some time. So I index.
  • If at some time the financial markets become evolved enough to allow ordinary investors the crack at venture capital and private equity managers, I would definitely be interested but the questions and concerns for these titans and their investment vehicles are best saved for when that day is closer at hand.
So after three years what do we have. A big mess. On a relative basis (your ears should be perking up) my two portfolios the buy and hold and the rebalanced both outperformed the S&P500 by a considerable amount. As in over 900 bps or 9% better per annum. As an absolute performance the portfolios both lost over 2% a year to finish lower than the initial outlay. That is, during this time period it would have been wiser to have been in Treasuries or Bank CD's. That is a depressing mess.

The buy and hold did perform slightly better than the rebalanced portfolio but they are really neck and neck. It will be better comparison when I review this portfolio again at the close of 2009.

So at the end all this babble about increasing your return. I only lost 800 of your 10,000 dollars whereas the S&P500 would have lost you over 3,000 dollars. So not a real lot to toot my horn on. However, this portfolio is a long run portfolio and I have more tricks up my sleeve.

Over the next few weeks I will show how you could have avoided all this loss and instead been up by close to 70% over this same time period with these same investments. However, I still believe that in the long haul, over the next set of 5 and 10 year periods this will be a huge money maker for your retirement and that you will be a top your cohort of newly minted investors following this simple and painless strategy.

Monday, June 22, 2009

Correlation and asset classes

Probably time to at least bring a little bit of finance and economics to this blog. Before I begin, I just want to state that we are truly blessed at this moment in time with the ability to create portfolios with a variety of mechanisms that just were not available in past years and generations. I am not talking about the mutual funds that were ruled by 100 to 150 dollar buy/sell transactions by your broker. Or the egregious fees paid for by the investor such as 12b, expenses, etc. But the new status quo with low-cost index funds and ETFs.

Let us just take a quick trip to Fidelity's website to find an example. I chose the Fidelity Focused Stock Fund after rapidly clicking around the website. I notice on the very front page of this fund's mini-website is the summary. It has R squared, Morningstar ranking, spiffy chart with a comparison tool, and minimum to invest. See what you need to understand about financial service companies is that at their heart they are marketing organizations. They want to segment the consumers into groups and sell them products that they try to make attractive. Thus this page of drivel. The first 4 pages can be skipped and of course the last page, the most important page is the fees. Currently the fees are 1.20% of assets. So if you invest a Dollar they take 1.2 cents, or if you invest a 100 dollars they take a buck-twenty.

Whew, glad that is over, I can live with a buck-twenty off each year, even the years when it goes down. Wait, it is not over, I have to read the what pro-ssspppeccctusss?!? Turns out to be not so bad, that is the fees not the prospectus. No loads, or holding periods. Just your 1.20 which they have reduced to 1.0% because the annual return over the past 10 years you would have lost 0.8% of your money that you placed in the fund. See marketing.

However, this kills my point. So now I have to just tell you about the fees without a nifty example. Maybe Fidelity is not so evil. The point is that research has shown that most of these mutual funds do not beat their index after fees are incorporated. In fact, the numbers are worse because the data sets used do not track funds that die, so actual experience in aggregate for all investors would be worse. However, with the power of the Internet investors, again in aggregate, are becoming wiser and following less of the marketing jargon and following their noses to the fees and expense.

Fees, i.e. things to avoid if at all possible:
  • Front-end load: rarely seen except in the annuity world. Means that you place 100 bucks with the broker and he charges 6%. Some of the money goes directly to the broker for making you purchase it and the rest goes to the company to set up your account to receive those cool prospecti
  • Back-end load: The opposite of the front-end load. Cool exception though is that the fee drops the longer you hold the investment. So it may be 6% to exit in the first year but it will decline to 0% if you hold on to the fund until after 6 years. This is also popular on annuities as well.
  • 12b-1 fee: named after the SEC ruling that allows them. This pays for the marketing of the fund and also defers some of the cost of the broker's commission.
  • Expense Ratio: This is the cost to run the fund. For example, paying the investment manager so he can drive a Bugatti and summer in the Berkshires. Also to pay the peons in the contact center to listen to you cry about how much money you are losing. Finally it pays the fund accountants to syphon off the fees from your account into Fidelity's.
The best advice I ever heard is from Zvi Bodie at Boston University "Pure no-load no-fee funds distributed directly by the mutual fund group are the cheapest alternative and these will often make the most financial sense for knowledgeable investors."

So the main point is that with the Intertubes we can find out all this information and there has been a move away from fees and loads. On the flip side of the coin there are very knowledgeable fund managers out there who can beat their index so it might be worth finding them. However, I believe it is just as difficult to find these managers as it is to pick stocks. So I index and create alpha in other ways. That being said I could not construct my portfolio in the manner that I have it without having ETFs at my disposal. So I will show my portfolio of low cost ETFs as one of the best ways to continue growing your wealth on an annual basis. I have no index I am trying to beat other than not losing money.

So here it goes. I have found or at least whittled down in an Aristotelian catalog 7 asset classes. They are Domestic Stocks, Domestic bonds, Foreign Stocks, Foreign Bonds, Commodities, Precious Metals, Cash, Domestic Real Estate, and finally Foreign Real Estate. For those of you counting at home there are 9 items on my list. Well, there are two forms of real estate but really only one class and precious metals and commodities are also real assets. Both members of the two sets behave slightly differently so I utilize them.

Some caveats.
There are ETFs for each of these classes and I chose the ones with the lowest fees. Also, I am not including other wealth here like a house you may own, or an apartment you may rent to tenants. You would have to look closely at all that makes up your net wealth to decide how much exposure you wish to have to each of these asset classes.

If you have made it this far I wish to add one more caveat. You should not be investing until you have 6 months of savings in a money market fund. Meaning, you should have enough liquid assets to last you 6 months in the case of a sickness, a job loss or a divorce. Until that is done I would suggest checking out and finding the highest earning savings account that is FDIC insured. When I first began I found Amtrust Direct and they offered over 5% interest on money that I could have in 48 hours if I needed it. There are others like FNBO out of Omaha and ING is a domestic bank but it has a Dutch heritage. However, because of unprecedented action by the Federal Reserve I would expect that most savings accounts will be about or under 2%. Don't worry about the relatively low rates your wealth will be expanding while a lot of people's money will be contracting. It is the real rate of interest not the nominal ones that matter. Right now the real rate is negative so even your low rate on your account is very helpful.

Domestic Stocks - IVE
Domestic Bonds - BND
Foreign Stocks - VWO
Foreign Bonds - ESD
Commodities - DBC
Precious Metals - GLD
Domestic Real Estate - IYR
Foreign Real Estate - RWX
Cash - BSV

Now the next part is finding out what weights you wish to attach to each of these categories. Obviously over the past few years being overweight cash, commodities, gold would have been wise. However, this is a long haul portfolio so allocating 100% to Gold right now not really the optimal long term solution.

Remember what I said about financial services firms, the same can be said of financial television. They just want you out there buying and selling giving them a purpose to be shouting over each other every morning. So one day it is buy China stocks, the next day it is sell those and buy Australian mining concerns, then oil, then reverse convertible bonds. Investing is boring and should be done once a year. Unfortunately, rebalancing is not sexy, that is until Serial Correlation came about.

See what I am about to say sounds dumb, but the portfolio I want is like Bernie Madoff's. He returned 9-10% a year every year no matter what happened. He had serial correlation. That is what helped expose him. I want the same, only instead of stealing from investors I just want my returns to be consistent and predictable within a range. To do that I must rebalance.

Quick example. I have a portfolio of two securities A & B and 10 bucks. I asses my risk and find that I want to have 4 dollars of A and 6 dollars of B. Well after one year A is up 100% and B is up 16.7%. So Now in my portfolio instead of the original 10 bucks broken into the 40/60 split, I now have 8 of A and 7 of B. So you must fight your intuition to leave well enough alone and at the end of the year you must rebalance. This is alpha, this is the free lunch. So you sell 2 of A and buy B so you are back to 6 & 9 or 40/60. This helps you lock in your gains.

It is an order of magnitude more difficult when you have 7 or 9 stocks to follow but it is infinitely easy to follow the logic. What happens the following year when A is down by 50%, you are at 3 but your B gained 20%. So you are better off by rebalancing than just letting it ride. At the end of year 2 you have 3 and 10.8 which is close to 14 or a loss of 8.0%. If you have just let your portfolio ride you would be at 4 and 8.4 a loss of 17.3%. Now these are small numbers, a simple example, but remember the top of the page. Never lose money, if you must do so, do so in small amounts. This is also why we want more than two assets in the portfolio.

You may lose money in any particular year on an individual stock/asset class but by diversifying in multiple asset classes and rebalancing one can minimize the losses, which have a disproportionate affect on how you will fare as an investor.

So for my portfolio here are the allocations:

Domestic Stocks - IVE - 20%
Domestic bonds - BND - 10%
Foreign Stocks - VWO - 15%
Foreign Bonds - ESD - 10%
Commodities - DBC - 10%
Precious Metals - GLD - 10%
Domestic Real Estate - IYR - 15%
Foreign Real Estate - RWX - 10%
Cash - BSV - 0% ***

Good luck!

*** Cash should be held in times of market turmoil. My economic model had me reduce my ETF holdings to cash in late 2007. I was always involved in one or more of these ETFs over the past 18 months but cash became an increasingly significant amount of my portfolio as all the asset classes became correlated and were in hindsight overpriced.

Disclaimer: I am currently long GLD

US Open and Nascar not as uncorrelated as initially believed

I have had some free time during the summer to break out my rusty golf game and hopefully return myself to a bogey golfer. I have not had enough time to drop below that level yet, but then again this recession is not over.

So as the US Open approached I was excited. Having recently traversed links over the past two months in Nebraska, Iowa, Florida, Massachusetts and New Hampshire gave me a better vantage point to view the Open. As I watched this weekend the personal experience with the difficulties of target golf I could sympathize with the golfers. However, I only have a basic understanding of the distances at Bethpage, which set it apart from the amateur links I have been frequenting.

So what does this have to do with NASCAR. Clearly the audiences are if not completely mutual exclusive, show little overlap. However, this is not about the audience, instead it is the psychology of the audience which I think are closer than the prima facie evidence infer.

Here is the breakdown of NASCAR fans (both are approximated by

The golf's statistics approximated by attendance to the USGA's website.

So as expected the golf viewers have more income, are more diverse (from low levels) and are older. Also as expected more NASCAR fans are more female and less collegiate experience.

However, like I said on the face it would appear to be different audiences, but if we get into the core of what the sports are about, how they create dran, the diametrically opposite pull of tragedy and comedy, are the same. But first, let me offer the counterpoint before I continue with my hypothesis.

One can view the final round today as watching Phil Mickelson move closer to his first US Open victory. NBC & ESPN play up the moral courage it takes for him to be out there when his spouse faces a mortal challenge in cancer.

Something I take offense to as, I find that personal life obstacles are usually avoided by burying oneself into his career or job, which is what Phil is doing. That is, hiding away from his personal duties by playing, rather than chivalarously playing for his wife that the networks trumpet. For more examples see A-Rod's divorce statistics or Ross Johsnon's work ethic while his son was ill.

I intend that the audience is more inclined to watch Barnes mimic Van de Velde's 1999 British Open, or perhaps if it is more suitable to your taste Norman's collapse at Augusta in 1996. Look at the parrallels:
  • Norman 13 under entering the final round. Faldo -7 and 6 behind
  • Barnes 8 under entering the final round. Mickelson -2 and 6 behind.
So what are people watching? Mickelson's 2 under for the day as I write, or Barnes' +7 on the day. Most people will boldly proclaim without a moments thought that they wish to watch winners win, but I don't think the facts play out.

Now with NASCAR I am certain I do not understand the nuances of the racing event where you "turn left." However, I do watch Formula One where you accelerate, brake, turn right, left, make hairpin turns and 90 degree turns as well. If you wish to watch racing this is a great championship season to spectate. I do know having watched several NASCAR races that the highlights of the events for myself and the cohorts I watched with was when a large crash took out hopefully a few, but optimistically half the field.

So this has been a long-winded reason to explain that the underlying drama of both events is not the par excellence but the bringing back of these sporting gods to the realm of mortal men. If you spent the time on Saturday to watch US Open group after group hit the same shot over and over and all land within three feet of each other and 10 feet of the hole. Therefore, I picked up my book and started reading. However, when a player shanked his ball into the high turf, that is when I put my reading material down to watch the fallen angel return to my plane of existence.

The first post

Indian Ipod

I will employ logos to convince the audience of my point of view. By employing interesting facts to bring about a point of view, which is further galvanized through the means of discourse by the audience and its diverse interpretations of facts. Then and only then is understanding reached.

The key to this blog's success will be the facilitation of learning. Far too many times do I hear that experts should be the only ones queried about important political and financial events. I would call that view naive but it would understate how disingenuous it is. For the capitalist system to work and for the democratic system to work requires the work of all. All need to observe, bring about their point of view and expose all actions for good or for mal, either premeditated or unintentional, by the government, corporations, individuals or groups. Then only then can a society form, blossom or maintain.

To further explain, society should approximate a culture's grasp of truth. This approximation should only be viewed as that, a simulacrum. It can be biased, it can run afar from its true meaning or intent, but by and by it will be exposed as the approximation of truth by agents working in opposition to each other. This is exactly how the capital markets should, and for the most part do, work.

I understand how difficult it can be to achieve momentum from the beginning of inertia. So I hope that all will be patient with me as I learn more about blogging, exposing my thoughts and of course democracy & capitalism. Some of the main topics I will cover are:
  • economics
  • finance
  • general business (undergraduate and master's level: marketing, accounting, strategy, business development, etc.)
  • personal finance
  • real estate
  • portfolio design and strategy
  • sociology/psychology
  • philosophy
So I hope you enjoy. If you need more information or need to get a further fill of the capital markets I would point you to the blog roll. Through the work of others you can learn more than any person could possibly ever hope to retain. I chose the best of the best for the blog roll and these authors are high level strategy personnel at government agencies, investment banks, asset managers and consulting firms. I rely heavily upon them to shape and form my view. I question them often to ground my thought process and I learn everyday that I am in their online presence. So I urge you to take some time to review their portfolio of musings as well.