Posts tagged ‘Tiger Woods’

Shanking Your Way to Success: Tiger Woods & Roger McNamee

Spring has sprung and that means golf is back in full swing with the Masters golf tournament kicking off next week in Augusta, Georgia. Next week also marks the return of Tiger Woods in his first competition since news of Tiger’s sex scandal and car crash originally broke. As an avid golf fan (and occasional frustrated player), I must admit I do find a devilish sense of guilty pleasure every time I see a pro golfer shank a ball into the thick of the woods or plop one in the middle of the drink. I mean, how many hundreds of balls have I donated to golf courses across this great nation? Let’s face it, no matter how small, people derive some satisfaction from seeing others commit similar mistakes…misery loves company. Even the world’s elite, including Tiger Woods, slip up periodically.

For quite possibly the worst, nightmarish, meltdown classic of all-time, you may recall Frenchman John van de Velde’s 18th hole collapse at the 1999 British Open in Carnoustie, Scotland.   

Investment Pros Shank Too

Investment legend Peter Lynch (see Investment Caffeine profile on Lynch), who trounced the market with a +29% annual return average from 1977-1990, correctly identified the extreme competitiveness of the stock-picking world when he stated, “If you’re terrific in this business you’re right six times out of ten.” Even with his indelible record, Lynch had many disastrous stocks, including American International Airways, which went from $11 per share down to $0.07 per share. Famous early 20th Century trader Jesse Livermore puts investment blundering into context by adding, “If a man didn’t make mistakes he’d own the world in a month.”

Mistakes, plain and simply, are a price of playing the investment game. Or as the father of growth investing Phil Fisher noted (see Investment Caffeine profile on Fisher), “Making mistakes is an inherent cost of investing just like bad loans are for the finest lending institutions.”

McNamee’s Marvelous Misfortune

Since the investment greats operate under the spotlight, many of their poor decisions cannot be swept under the rug. Take Roger McNamee, successful technology investor and co-founder of Elevation Partners (venture capital) and Silver Lake Partners (private equity). His personal purchase of 2.3 million shares ($37 million) in smartphone and handheld computer manufacturer Palm Inc. (PALM) has declined by more than a whopping -75% since his personal purchase just six months ago at $16.25 share price (see also The Reformed Broker). McNamee is doing his best to recoup some of his mojo with his hippy-esque band Moonalice – keep an eye out for tour dates and locations.

Lessons Learned

More important than making repeated mistakes is what you do with those mistakes. “Insanity is doing the same thing over and over again, and expecting different results,” observed Albert Einstein. Learning from your mistakes is the most important lesson in hopes of mitigating the same mistakes in the future. Phil Fisher adds, “I have always believed that the chief difference between a fool and a wise man is that the wise man learns from his mistakes, while the fool never does.” As part of my investment process, I always review my errors. By explicitly shaming myself and documenting my bad trades, I expect to further reduce the number of poor investment decisions I make in the future.

With the Masters just around the corner, I must admit I eagerly wait to see how Tiger Woods will perform under extreme pressure at one of the grandest golf events of the year. I will definitely be rooting for Tiger, although you may see a smirk on my face if he shanks one into the trees.

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper. 

www.Sidoxia.com

*DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds, but at the time of publishing had no direct positions in PALM or any security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.

March 30, 2010 at 10:34 pm 1 comment

Top 10 Predictions for 2010

#10.  Federal Reserve Chairman Ben Bernanke decides pundits were wrong on the housing bubble, so he sets Fed Funds target rate at negative -3.0%. Small businesses start receiving loans.

#9.  As part of healthcare reform, Medicare is extended to teens for collagen lip augmentation.

#8.  Goldman Sachs, Morgan Stanley, and Citigroup form tri-merger to guarantee they are too big to fail. 

#7.  Tiger Woods poses in Playgirl to pay for pricey revised terms in his prenup. (see previous post)

#6.  Gold spikes to $3,000 per ounce as government subsidizes dental chains in “cash for crowns” gold melting campaign. Consumers get extra cash, but Jujube candy sales plummet. (see previous post)

#5.  Bernie Madoff escapes from prison. A cigarette Ponzi Scheme created by Madoff generates enough money to bribe guards.

#4.  Apple introduces iPot – a combination iPhone and toilet.

#3.  Kazakhstan pays Brazil, Russia, India and China a 5% GDP royalty to be added to the emerging B-R-I-C-K countries. A win-win for all parties, including spelling teachers around the world.

#2.  Timothy Geithner retires from Treasury after making millions for being cast as Eddie Haskell in new remake of Leave It to Beaver movie. (see previous post)

#1.  Oprah decides to halt her retirement plans. Instead, she signs me to a multi-million dollar deal to co-host a stock & gossip show with her.

HAPPY 2010!!

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper. 

DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds (including BKF) and AAPL, but did not have any direct positions in any stock mentioned in this article at time of publication (including GS, MS, C, and GLD). No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.

December 30, 2009 at 12:01 am Leave a comment

Decade in Review

We laughed, we cried, we kissed another ten years goodbye. It is virtually impossible to cram ten years into one article, nonetheless I will attempt to chronicle some of the central and silly events that bubble up in my memory bank.

2000

Capture of Elian Gonzalez

  • Technology-heavy NASDAQ index peaks at 5,132 before completing its -78% decline by late 2002.
  • Y2K (Year 2000) fears do not materialize and technology orders begin downward slide.
  • AOL buys Time Warner for $164 Billion in hopes of converging media and internet worlds.
  • Al Gore Democratic nominee for the Presidency wins popular vote but loses election to George Bush after effort for Florida recount fails.
  • Elian Gonzalez, six-year old boy returned to Cuba.
  • Reality TV show Survivor finishes first season with Richard Hatch winning prize.

2001

Enron Logo at Headquarters

  • Apple introduces iPod digital music player.
  • Enron files Chapter 11 bankruptcy.
  • Wikipedia online community encyclopedia launches.
  • 9/11 attacks occur pushing economy further down.
  • Alan Greenspan starts 1st of 11 rate cuts  in 2001.
  • China joins WTO (World Trade Organization).

2002

 

  • Severe Acute Respiratory Syndrome (SARS), an atypical form of pneumonia, rears its ugly head in the Guangdong Province of China. 
  • SEC files charges against WorldCom and Tyco international in connection with accounting irregularities
  • United Airlines files for bankruptcy.
  • American Idol television singing contest begins first season.
  • Guantanomo Bay detention camp is opened.

2003

  • Federal Funds rate reaches a 45 year low at 1.00% – fuel for future credit bubble.
  • $350 billion in tax cuts approved, spanning a ten year period.
  • Iraqi Gulf War II commences with “shock and awe” military campaign.
  • Space Shuttle Columbia disintegrates upon attempted reentry into the Earth’s atmosphere.
  • Broad stock market recovery (>90% of stocks in S&P500 climb), including a +50% rise in the NASDAQ index.
  • Martha Stewart indicted for using privileged investment information and then obstructing a federal investigation.
  • Arnold Schwarzenegger, movie star, becomes governor of California.

2004

  • Google (GOOG) goes public with IPO at $85 per share.
  • Mark Zuckerberg unveils Facebook and people begin “friending” each other.
  • Comcast makes failing unsolicited bid for Disney. K-Mart buys Sears with aid of Eddie Lampert
  • Ronald Reagan, 40th President, dies at 93.
  • Janet Jackson and Justin Timberlake experience “wardrobe malfunction” on Super Bowl halftime show.
  • Boston Red Sox win their first World series since 1918.

2005

  • P&G announces $57 billion acquisition of Gillette. Conoco Philips buys Burlington Resources for over $30 billion. Bank of America buys credit card company MBNA.
  • Ben Bernanke is nominated as new Federal Reserve Chairman.
  • Hurricane Katrina overwhelms New Orleans as 80% of city becomes covered with water.
  • North Korea announces its nuclear weapons arsenal.
  • YouTube starts sharing online videos before Google Inc. eventually buys company.
  • Lance Armstrong wins 7th consecutive Tour de France.

2006

  • Inverted yield curve turns out to be an accurate leading indicator for 2008 recession despite markets advance.
  • Internet activity accelerates: Google buys YouTube after News Corp buys MySpace. Twitter is introduced.
  • Playstation 3 (PS3) and Nintendo Wii unveiled.
  • Merger & acquisition activity reaches $3.79 trillion worldwide, surpassing previous 2000 peak (Thomson).
  • Options backdating takes center stage. United Health and technology companies were among those dragged into controversy.
  • Housing market peaks.

2007

 

  • Markets continue multi-year rally with three major indexes holding single-digit gains. Emerging markets build on previous year gains – Shanghai composite +97%.
  • Monoline insurers MBIA and rival Ambac become early canaries in the coal mine given the greater than $1 trillion in exposure on insuring securities.
  • Apple presents the iPhone – part phone, part music, part computer.
  • KKR (Kohlberg Kravis Roberts & Co.) and TPG complete $44.4 billion buyout of Texas power company TXU Corp.
  • Microsoft Vista operating system introduced after five years of development.
  • Housing decline accelerates as Countrywide Financial announces 12,000 job cuts (20% of its workforce), New Century Financial (#2 subprime lender at one point) files Chapter 11 bankruptcy, and two Bear Stearns mortgage based hedge funds go under.
  • Chuck Prince, Citigroup CEO, steps down.

2008

 

  • Bank of America agrees to buy Countrywide mortgage company for about $4 billion.
  • JPMorgan Chase agrees to buy Bear Stearns for $2 per share in a sale brokered by the Fed and the U.S. Treasury – eventually bid revised upwards to $10 per share (~$1.1 billion) to appease angry shareholders.
  • Lehman Brothers goes bankrupt.
  • Bank of America agrees to acquire Merrill Lynch for about $50 billion.
  • Government takes over AIG after providing insurance company $85 billion loan.
  • Goldman Sachs and Morgan Stanley become bank holding companies to improve access to capital.
  • Washington Mutual Inc. is seized by FDIC and sold to JPMorgan Chase in the biggest U.S. bank failure in history.
  • Wells Fargo & Co., agrees to purchase Wachovia for about $15.1 billion, trumping Citigroup’s bid.
  • $700 billion TARP (Troubled Asset Relief Program) eventually approved by Congress to stabilize financial system.
  • Eliot Spitzer resigns after prostitution scandal.
  • Michael Phelps wins eight gold medals at the 2008 Beijing Summer Olympics.

2009

 

  • Barack Obama inaugurated in as 44th President of the United States. Healthcare reform bills pass in both the House and Senate.
  • GM and Chrysler declare bankruptcy.
  • Recession ends as stimulus kicks in and inventories rebuild. Government announces new PPIP and TALF programs.
  • Warren Buffett pays $26 billion to buy Burlington Northern Santa Fe. Other announcements include: Oracle /Sun Microsystems; Pfizer/Wyeth; Merck/Schering Plough; and Pulte Homes/Centex.
  • Commodities and emerging markets rebound. Gold tops $1,000 per ounce.
  • Signs of housing bottoming as low mortgage rates, tax credits, and declining inventories create a more constructive environment.
  • Madoff goes to prison after he was convicted for a $65 billion Ponzi Scheme.
  • Chesley B. “Sully” Sullenberger successfully carries out the treacherous crash-landing of US Airways Flight 1549 into the Hudson River.
  • Dubai debt debacle forces Abu Dhabi to lend support to calm global markets.
  • Tiger Woods admits transgressions after car crash pushes him into spotlight.

2010 ???

Time will tell what the new year will bring. Stay tuned for some iron clad 2010 predictions coming to an Investing Caffeine blog near you in the not too distant future!

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper. 

DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds and BAC, AAPL, and GOOG, but did not have any direct positions in the following stocks mentioned in this article at time of publication (including AOL/TWX, VIA/CBS, NWS, TYC, UAUA, MSO, CMCSA, DIS, SHLD, PG, COP, Nintendo, MBI, ABK, MSFT, C, JPM, AIG, MS, WFC, GM, Chrysler, BRKA, ORCL, JAVA, PFE, MRK, PHM, BNI, LCC, GLD, and NKE). No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.

December 29, 2009 at 1:00 am 1 comment

The Porsche-Yacht Indicator

Tiger Woods is not the only person who has realized yacht purchases do not guarantee happiness. In previous articles (Back to Future article #1, article #2, article #3), I showed how magazine covers could be used for identifying tops and bottoms in the market. Now I’m researching yacht and Porsche purchases as a complementary indicators for future performance deterioration with the thanks of Slate.com and Bloomberg.

1)      Bill Miller: After an incredible 15 consecutive years winning streak against the S&P 500 index, Bill Miller (Fund manager of the Legg Mason Value Trust) thought it was a bright idea to add a yacht to his portfolio in 2006. Needless to say, from that point on, his five-star Morningstar rated fund went on a horrific losing streak, landing him in the bottom decile of peers and forced him to relinquish four of his fund rating stars (See Bill Miller Revenge of the Dunce) .

2)      Paul Allen: The jinxing of yacht buying is not limited to fund managers. Paul Allen was the Co-Founder of Microsoft (MSFT) with Bill Gates, Chairman of cable company Charter Communications (CHTRQ), and owner of the Seattle Seahawks football team, and the Portland Trailblazers basketball team.  Ever since buying his 300-foot Tatoosh yacht in 2000 and his 400-foot+ Octopus yacht in 2003, Allen’s cable company, Charter Communications, deteriorated and his company went bankrupt before recently reemerging from Chapter 11.

3)      Dennis Kozlowski: Corruption didn’t slow down Dennis Kozlowski, CEO of Tyco International (TYC), from buying his 130 foot sailing yacht Endeavor. From around the time he purchased the yacht until he resigned based on the charges, Tyco stock collapsed approximately -70%.

4)      Robert Rodriguez: The $1.1 billion FPA Capital Fund has been captained by Bob Rodriguez since 1984 and his 15% average annual return qualifies him as the best manager among diversified U.S. equity funds, according to Morningstar Inc. As a value-based investor his wealthy indulgences are concentrated on driving Porsches. So comfortable is Rodriguez about the performance of the fund, he has decided to take 2010 off traveling. Perhaps he can be my first experimental subject in the testing of my “sabbatical indicator?”

5)      Tiger Woods: With the endless media coverage, Tiger’s 155-foot yacht Privacy unfortunately has not secured him any. The $20 million purchase was made in 2004, but with six wins in golf “Majors” over the last five years, the yacht indicator is less conclusive. In the field of faithfulness, there is a higher correlation.

Obviously, there are many instances in which performance has improved over time, even after luxury asset purchase like yachts. I haven’t placed the order for my 400-foot yacht just quite yet, but I have made notes to myself to avoid bankruptcy, jail, car crashes and one-star performances if I decide to go through with the purchase. I’ll keep you posted on my order…

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper. 

DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds, but at time of publishing had no direct positions in MSFT, LM, CHTRQ, NKE. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.

Read Full Yacht Article on Slate.com

Read Full Rodriguez Article on Bloomberg

December 17, 2009 at 2:00 am 2 comments


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