Daily Speculations

The Web Site of Victor Niederhoffer & Laurel Kenner

Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter;  a forum for us to use our meager abilities to make the world of specinvestments a better place.

 

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9/17/04
Jim Courier, by Victor Niederhoffer

Jim Courier trained very hard for many years, and played a few Davis Cup matches after I believe winning the French Open some 10 years ago. In a hagiography of him, it was pointed out that he was a great money manager, always took a long term view, and had bought Intel with his winnings at an adjusted 5 or 10, when it cratered in 1996, and seen it double to its 1997 level of 20 so that now he didn't have to grind out money from tennis any more and could provide for his family's stately home and retirement. Let us hope he sold the stock on its way up, like at 80 in mid 2000 when its earnings were 1.53 a share versus its 1.25 this year when it's price is at that same level of 20. You see its profit margins are being squeezed to 20% after tax, versus the hoped for 21% and sales increases this year are only of order of 15% versus the previous consensus estimate of 16%. The microprocessor industry itself is only growing at 17 or 18% this year versus the hoped for 20%. In short Intel's earnings are a few cents less than previously estimated as are its sales as are the industry growth rate for its main product. One wonders whether for such a series of shortfalls the price should have dropped some 40% from its Jan 2004 levels, 75% from 2002 and back to the Courier levels. I wonder if as the rest of my career sags, someone will say that I liked to take a longer term view, to abstract from the nitty gritty, and as my rackets career declined I took a huge position in Intel and was able to provide for my family's retirement and the upkeep of my stately home with the proceeds or am I as my partner indicates totally unsuited for long term stock investments since I watch every tick back and forth.
P.S. Regrettably the question is relevant as vic owns a number of Intel shares but his views above should be taken as those of an ignoramus.

9/17/04
James Tar Responds:

Jim Courier is a real nice guy. He is humble, and though he lacks intellect, he makes up for it in effort, he tries harder than anyone to understand and learn. Just like the tennis he once played. He won the French Open in 1991 in an upset over the much favored, much more talented (intellect) Andre Agassi. He repeated in 1992, and also won the 1992 and 1993 Australian Open crowns. Courier worked harder than anyone. If Talent/Work was a stock ratio like a P/E or Book Value, he was the best value perhaps in the history of the game. (Andre Agassi and McEnroe would challenge for the highest valuation). Courier had the weirdest, unorthodox, yet some of the most powerful groundstrokes in the history of tennis. His serve was powerful too, it was the genesis of the Andy Roddick serving method. His timing and ability to take the ball early off the bounce was second only to Andre. He punished the ball. His tennis strokes looked more like the compact baseball swing of Barry Bonds. He had huge, Popeye-like forearms, and the racquet head speed he developed was unearthly. Throwing this all aside, Courier's rapid ascent to #1 was directly correlated to his work ethic. He worked and wanted it more than anyone else. He was more intense than anyone else. And this was his demise. He burned out, he had nothing left in the tank after two years at the top. I ponder if a tennis player, or any other athlete, OR A MONEY MANAGER, OR A STOCK LISTING, has a higher risk of burnout and collapse should the ascent to the top happen so drastically. You get there so quickly you don't know how to keep it, you have no foundation, no support. Are moves such as these flukes? Is it random? Is it skill? Courier's rise happened during the transition of the Lendl Era to the Sampras-Agassi Era, he took advantage of the shaky transition. But when the tennis market settled, he couldn't hold it, he was done. He was outmatched, outskilled, outplayed.