Daily Speculations The Web Site of Victor Niederhoffer and Laurel Kenner


Write to us at: (address is not clickable)

Tim Melvin

What Autumn Brings, by Tim Melvin

So, the first full weekend of the new season is behind us. A glorious weekend of sports including college football, the NFL and Yankees-Red Sox. Coupled with some good books mentioned earlier, a full bottle of Famous Grouse, the reappearance of the on/again current incantation of the one great true love of my life, great weather, great bands at the plastic cup emporium and dock bar for nighttime pleasure, and it makes for an incredible weekend for the lazy sports fan and man about. Can’t call in town so we ll go with waterfront.

Much had been written by many, including myself on the many corollaries between baseball, life and markets and doubtless when spring returns with its air of hope and renewal I shall write another such. But for now it is September and word such as G%^^&%ed, talent less, weak armed no brained, steroid-ridden, clueless and hopeless have replaced beloved as the adjectives for the Baltimore Orioles. Now in 4th place in the division, a comfortable 16.5 games out of the lead the birds have an outside shot at finishing above 500. I put the odds as approximately those of the second coming happening at high noon on the pitches mound at Yankee stadium in the 9th inning of tonight s Yankee-marlins game. Rendered even more unlikely as it is an away game. The only ray of hope left in the season is that the Yanks or Crossman's Indians can get a run going, get into the playoffs and beat those myth loving curse breaking self professed idiots from Beantown. I hate those guys. Sosa's Collapse, Palmerio's fall from grace, steroids, payrolls and the worst commissioner in the history of the game have left a somewhat sour taste in the mouth for America's pastime. Doubtless, the affair shall be renewed after the long winter, if not in time for the word series, then after a long winter s absence. But for now, along with hank JR and his rowdy friends, I'm ready for some football.

Not a bad start to the year so far. Navy, although dropping two, has played well in losses to Maryland and Stanford, two big time college programs. Maryland gift-wrapped a game for the Clemson Tigers after dominating the entire game. Already this year in the college game we have seen spectacular upsets with tiny Tulsa beating mighty Oklahoma, Florida State breaking the Miami curse, Texas taking out Ohio State. Most importantly of all Notre Dame and the Fighting Black Baptists seem to be back on the trail to glory knocking off Pitt and the then #3 ranked Michigan Wolverines. College ball with all the pomp, the rivalries, the bands, the colors, the glory of one states mutated freaks attempting to overpower another s genetic misfits is one of the greatest inventions of American sports history. Attend a Navy game with me someday and experience college athletics at its finest, or a Notre Dame Game in south bend, a Harvard Yale match up and it is easy to get caught up I the game.

Ah..But the NFL, the modern day reincarnation of the Roman coliseum games, a high-speed mix of strategy and violence, mixed with loud rock and roll and scantily clad women gyrating for our viewing pleasure. It gets no better than this. and the opening weekend did not disappoint. Brady proving the above average athletic ability, intelligence and above all team work gets the job done, manning proving the extreme intelligence and ability s the stuff of legends, the potential rebirth of the cowboys from Dallas, the first fade of Brett Favre's bright star, Saban proving that oh yeah…He can coach in this league, the annual implosion of the New York Jets, the fierce Monday night game between the Atlantic Falcons and the Philadelphia soap opera a great starting weekend for the game. The emperor has decreed. Let the game begin, gladiators to the field, nubile females to dance in the wings and all of Rome shall be amazed!!!!!!!!!!

Football, I think, has even more correlation to markets and life than baseball. It is the dull boring stuff, endless practice, off tackle runs and power sweeps that soften the defense for the down the field aerial spectacular. In life and markets, it is studying, learning, reading the filings, setting up the stats tables that make possible above average success Those who live and die on the long ball. air lamonica and the raiders of the 60 s, air corrayl and Dan Fouts chargers in the 80s,the legendary Dan Marino will win some spectacular games but never win the title and will suffer spectacular reversals of fortune along the way. Those teams with good passing, strong running and well thought out game plans will become dynasties..The packers, steelers, cowboys, 49ers and today's Patriots.

Innovation pays off but the edge will dissipate. The Redskins of Joe Gibbs, the 49ers and Bill Walsh's west coast offense, Buddy Ryan's 4/6 defense and the bears of 1986,the dolphins of 73-74 and that incredible running attack driven by Don Shula's game plans. Your edge however will dissipate. The whole league now runs the west coast and everyone knows how to defend it. The 4/6 took the league a year to eliminate the advantage. The key players, a Csonka and Kiick of the dolphins, Riggins and the hogs of the skins will get older and no one else can adequately replace them n the scheme. One must always look for a new edge. See convert arb, stat arb, risk arb, distressed, tax hedging, pairs trading et al. Once your edge is public knowledge and the first book or article appears, your edge is already dissipating.

Risk and reward is perfectly defined on the football field. Going for it on 4th and inches can lead to continued possession and a scoring opportunity or loss of the ball altogether. Where you are on the field and time on the clock factor huge in the decision. Doubling down a losing trade, using long options instead of the underlying, taking the huge risk to keep in the game depend a lot on where you are in the market and your own life cycle.

One must play good, or at least adequate defense to win championships. Your ability to put up 30 points a game is meaningless if your defense allows 45. An investor or trader who gains 100% this year but lose 50 next is even for the period.

It s all here. The superstar funds who seem to do it all right and win a lot..The Colts, the Patriots, the Eagles, the Falcons..They have different approaches but for now seem to dominate the game (Appaloosa, Citadel, SAC), the middle of the pack who just muddle along ..  the Bengals, the Browns, the Cardinals, the Redskins(mutual fund mangers), the disgraced who return for big money..Ricky Williams (the fat man), the super mo-mo with great offense who flash glory but lack of defense causes the ugliest of crashes.Kansas City Chiefs (Driehaus et al..The mo-mo boys). Those whose incredible defense keeps them always in the hunt..Baltimore Ravens (Marty Whitman, Bob Rodriguez). A legendary coach who has one bad year, is discredited and returns to glory..Marty Schottenheimer whose Redskins debacle was followed by a division leading year with what was supposed to be a bad football team, the Chargers. (Draw your own conclusions).

Football has a time limit, the game cannot last forever. There are rules. If you break them, you will be penalized. To take the large risks you must first set up the basics. If you panic when behind, you will lose. There is pain involved in the game. If you duck out of bounds to avoid the hit, you will be replaced by some willing to take the risk for the reward of the extra 2 yards and a first down. There are boundaries that cannot be exceeded without a (at least temporary) loss of forward progress. If you cannot defend what is yours you cannot win. If you can't take a sack from a steroid crazed 270 lb linebacker, shake it off and get behind the center for the next play; your career will be very short. Innovation gives edges. Edges fade. As soon as you score, you must be prepared to defend. Excessive celebration before the final whistle blows is an infraction.

And one final note:

It is always better with half dressed beautiful women cheering you on.