Friday, January 30, 2009

My weekend picks (sport)

There are two big matchups this weekend.
The Superbowl and the Australian Open men's final.

For the Aussie final, I like Federer. This will be Nadal's first hardcourt grand slam final, he just finished playing a 5 hour marathon, and he has one less day of rest compared to Federer. Also, noone knows how much of Federer's downturn last year's was due to mono. Strangely enough, Federer has something to prove going into this final as he spoke out before the tournament regarding the ridiculousness of having Andy Murray as the pre-tournament favorite at Irish bookmakers. It was pretty ridiculous, though I understand the concept of hometown money in betting. A lot of people say that there's the big four, Federer, Nadal, Djokovic, and Murray, and then a big gap between them and the next ranked players. I disagree with this. While the four of them are indeed much better than the rest, I believe that Federer and Nadal have that same kind of separation between them and Djokovic and Murray. While Djokovic and Murray can beat either of them on their day, neither of them have the combined consistency and skill set of the two at the top.

One last random tennis thing. While reading an article on, the writer referred to Djokovic as the Djoker, which I think is a pretty fun nickname.

As for the Superbowl, my pick is Arizona. This is a true matchup between a warm weather team and a cold weather team, both in terms of geography and playing style. One thing that I thought has not gotten enough mention was the fact that Arizona ended up with all warm weather games during the playoffs, hosting two and playing the other in Carolina. One of the strangest things is that while many of the most memorable playoff games are in cold, blustery conditions, there is a rule in the NFL that all Superbowls are played in warm weather locations (mean Jan temp. >50 degrees or in dome). While often the road to the Superbowl goes through cold weather locations and teams are built for that, it's not clear that it's an advantage in the actual big game. I say go with the warm weather team in Tampa.

Thursday, January 29, 2009

Near term partisan pressure on the market? (stock)

Maybe I'm thinking too much into this, or maybe I'm just overgeneralizing too much. Yesterday the stimulus bill went through in the House vote without a single GOP vote. I'm going to make a big assumption here and say that the majority of big market participants are republicans. Wouldn't these people feel much less confident about the immediate future of the market if their representatives can be waved aside on a bill this big?

Wednesday, January 28, 2009

What have I been eating? (food)

It's not that I haven't gone out to nice places to eat, it's just a combination of laziness and the fact that none of them either impressed me or disappointed me enough to make me really want to write about them.

In the last month, I've gone to

Le Bernardin (ate at the bar, but they still forced a jacket on me)

Kanoyama (had the superomakase, which turned out more expensive than I thought, had the fried fugu which was great)

Megu Midtown for Restaurant Week (the croquette from the regular menu was amazing, the RW menu was good value, but the service was extremely rushed as food came quickly and no water refills)

I'm hoping to change all that by having a review-worthy experience at Jean Georges next week. This would actually be the first time I've been to any restaurant in the JG empire.

In the meantime, I've started one phase of my diet plan, which is the fiber phase. I basically eat 3 meals a day, one of which has to be a cereal blend of Total and Fiber One with honey clusters (I choose this rather than the other Fiber Ones because it has the most soluble fiber). I also make sure that I have to have some serving of green vegetables (spinach, broccoli, chinese broccoli, etc.) every day, and fish at least three times a week. It's a transitional diet where I'm trying to get some healthy foods in without completely overhauling my eating plans. That's why I'll still be able to go to Jean Georges as long as I have my cereal early in the day and vegetables during the meal.

Monday, January 26, 2009

Too much TP (random)

So today I received my delivery and noticed that I got 3 boxes instead of the usual 2. To my surprise, the third box contained two 24-roll packs of toilet paper that I hadn't ordered. When I found the invoice in the box I called customer service and they told me that it was a glitch in their system. So I get to keep the extra toilet paper which is fine by me.

What's really funny is that I looked at the invoice more carefully, and it read:
Qty Ordered: 75
Qty Shipped: 2

Imagine if I had actually received 75 packages of 24-roll toilet paper packs!!!

Friday, January 16, 2009

NBA league pass for TV (tv)

I really love my purchase of the NBA league pass for TV. Although Time Warner charged me full price even though I purchased it a quarter of the season in, it's been well worth it. I get to sweat every game that I'm involved in, and there are a lot of fun teams to watch this year such as Indiana and Golden State (Knicks are fun to watch too but that's on MSG). Another great thing is that if I just want to have something on the TV late at night (eleven or later), the west coast late game might still be on.

The thing that really amuses me the most is watching the ads from other places in the US. I get to see fast food commercials for Carl's Jr, Hardees, and some places I'd never heard of before. One night, I actually saw a commercial for a bail bondsman (Clippers home game feed), which was the first time I've ever seen such an ad. You know who I think would be great for a bail bond commercial? Bernie Madoff.

Imagine him going, "Hi, I'm Bernie Madoff, and I use ABC bail bonds for my bail. Because if I actually put up bail, I wouldn't be able to mail that money to my relatives during my house arrest."

Another great set of commercials are the ones for local Indian casinos. The good thing is that in general the ones I've seen aren't as annoying as the Mohegan Sun ones. I did, however, find out about a casino in southern California called Morongo, named after the tribe. I mean, talk about subliminal advertising!

Friday, January 9, 2009

Interesting NBA trends/bets (sport, gambling)

Was bored and looking on (great NBA stats site) and came across two stats that might provide good betting opportunities.

First, in the quarter by quarter results, one thing stood out to me and that was that the overall winning (and losing) margins per quarter were significantly higher in the first and third quarters. I guess it makes sense because the starters play the most amount of time together during those quarters. Maybe this means that if you want to play a favorite (probably more useful for -7 or more favorites) you should just aim to play them in the first and third quarters. While I was looking this up, I came across a guy on ebay trying to sell a betting system. It's essentially a form of a martingale, but the thing that intrigued me was that the guy wanted to bet only the first quarter and then only the third quarter of games that he picked. This would make sense along the lines of the quarter by quarter stats, and also I can see how he suggests to stop betting that game once you've won the first quarter, as a big lead might make the play in the third quarter different.

In general, I think that betting on quarters might provide the best edge to non-professional bettors who follow trends. Consider a team that always plays its best in the first quarter (for this season, look at Toronto, who have a 70% win percentage in the first quarter). Some might just say this is an abnormality that will revert to the mean over time. But what if this has something to do with the underlying fundamentals, like their stamina, their coaching etc. The bookmakers don't/can't cater for these differences and most quarter lines are usually just 1/4th of the regular game lines, usually skewed toward the favorite. You could seriously profit from such a trend because the quarter line will always be relatively wrong. For example you could hedge by taking Toronto in the first quarter and betting against them for the game.

Another stat of interest, especially for those who like to use power rankings to determine their bets, is the W-L profiles on the site, which list scoring and winning percentages against teams classified as good/ave/poor. The most astounding number is the Lakers' net points against good teams, which is still unbelievably in double figures. Two other trends to note are that Denver tends to mop up against poor teams but is a regular loser against good teams and that San Antonio is 100% so far this season against bad teams.

Monday, January 5, 2009

OT in the NFL (sport)

A familiar question came up yet again while I was watching "Around the Horn" on ESPN. Should we change the current overtime structure in the NFL? There are many proponents of the college system, where both sides get a chance for a scoring possession. For those who want it to stay the same, they use the reason that "it's up to your defense to stop them". After some quick thought, here's my proposal:

In OT, first team to 6 points wins (or if the OT period is over then the team leading wins)

The pros:

If your defense gives up a touchdown, then your defense failed and you deserve the loss as opposed to giving up a cheap FG, regardless of who won the coin toss.

If you give up a FG and score a touchdown, you win, like in college.

The cons:

There may be more ties and extended OT games (maybe make the second OT sudden death in playoff games)

The strategy changes:

If you're already down a FG and you're backed up near your own endzone, you should almost always take the safety to win back field position.

The play to win or tie conundrum will still exist when there's not much time left.

I'm sure there are more pros and cons and I'd love to hear them if anyone wants to leave comments. But I think this would be the best compromise between the current structure and the college structure. However, this is likely to lead to many more ties and may lead to more frequent or more complicated playoff tiebreak situations.

Saturday, January 3, 2009

Why is it so hard to fire GMs? (sport)

My guess is that GMs are the closest thing to being an extension of the owner and that's why. They're often just executing the owner's wishes rather than coming up with actual signings and trades. This may be why ESPN's Bill Simmons (the sports guy) sits at home playing with the ESPN NBA trade machine for one night and comes up with 15 trades that all sound good but will never actually happen. In fact, most personnel decisions in the NBA and NFL come from a position called team president or vice president of operations instead of GM.

But when I look at the slew of head coach firings so far in the NBA and the NFL I don't understand why GMs get so much benefit of the doubt while coaches just get tossed and replaced so easily. First let's look at the NFL. How many 1st round wide receiver picks and fire Millen t-shirts did it take before Matt Millen finally got the ax? And yet, Marinelli, who from most reports was still respected by his players, is let go when he had to deal with making Daunte Culpepper his starting quarterback and losing Roy Williams (who had 17 receptions for Detroit in 5 games and 19 receptions for Dallas in 10 games) in the middle of the season. How about Romeo Crennel being let go while Cleveland decided to keep Derek Anderson (rumor was they could have gotten a 2nd and a 3rd round pick if they had traded him in the offseason), Braylon Ewards suffered from the dropsies, and they ended up starting Brady Quinn anyway.

Even worse I think is the situation in the NBA. Of the record 6 coaches that were fired before Christmas, I think the GM was just as much at fault for at least 4 of them. Eddie Jordan in Washington was mostly hurt by the injuries to Gilbert Arenas and Brendan Haywood, but he wasn't the one that signed Arenas to a ridiculous $113 million contract with knowledge of his knee problems. Then there was Maurice Cheeks, a popular former 76er who got fired when the whole Elton Brand thing didn't work out. Another big contract where the GM basically told the coach, "here's a big name, you better find a way to make it all work." The best coaches in the NBA all have their own systems and a recognition of which players fit or don't. Guys like Poppovich and Sloan have power on personnel decisions while D'Antoni just straight up told a guy earning $21 million that he wasn't going to have minutes for him. So it's sad when some coaches have to change how they work their systems on the whim of a GM.

Sometimes I feel the coach just can't be at fault because the team is just built so badly. Kevin McHale will finally get a taste of his own medicine in Minnesota when he has to coach a team that was basically put together to help Boston win a championship. They took a specific deal which allowed Boston not only to get Garnett but to get Ray Allen as well (by allowing Boston to keep their first round pick to get Allen). Let's not forget he also traded away the best scorer so far from this year's draft. Then there's Reggie Theus, who it seems really didn't see it coming. The Kevin Martin injury certainly hurt, but when the other starters are Beno Udrih, John Salmons, Mikki Moore, and Brad Miller, the question that comes to my mind is how did this team get built in the first place? I remember reading that Theus didn't fear for his job because he said the blowouts were happening because he was told to play an uptempo pace. This makes sense because if you're the worse team, you're more likely to get blown out in a game of 200 possessions than in a game of 160 possessions.

Then there's the guy who will probably still be untouchable for quite a while, Bryan Colangelo. That first big number 1 pick for Toronto, Bargnani, has been a bust as a number 1 overall pick. T J Ford didn't work out , and then this season he rolled the dice with Jermaine O'Neal and that hasn't worked out either. There were fans calling out for Sam Mitchell to be fired as early as last season, but he waited. He waited until the Jermaine O'Neal gamble didn't pan out and Bargnani's regression and Mitchell became the scapegoat.

Friday, January 2, 2009

Leveraged ETFs (stock)

I am one of those who believe that leveraged ETFs (especially those on the short side) and other leveraged derivative instruments played a major role in how quickly and how hard the market has come down. My contention is that these side bets have become the main pot, as mentioned in this post from November:

While looking online, I have come across this interesting comment which I think shows a great example of one of the things wrong with these instruments. It's by user 325353 on this page:
I have read the whole page but I will just copy and paste a big chunk of the comment here.

"...these are terrible vehicles... ...because of their design. Lets take a look at a real world example: SRS is the UltraShort Real Estate ETF, it "seeks daily investment results that correspond to twice (200%) the inverse (opposite) of the daily performance of the Dow Jones U.S. Real Estate Index." The ticker for this Dow Jones U.S. Real Estate Index is IYR. Lets see how they've done this year... IYR is down 43% year to date (so SRS should be up 86%?? WRONG), SRS is down 43.6% year to date! The reason is the design of the vehicle, SRS moves 2x in the inverse of IYRs daily percentage change. Easy example (extreme example but should open your eyes): lets say IYR rallies from last nights close of ~35 to 52 on today's trading, up 17 points or ~48.5%. SRS will be down 97%, having closed last night at ~57, that will put its close today at 1.71. Now lets say the next trading day IYR takes it on the chin and closes at 20, setting a new all time low (its 52 week low was 23.51, when SRS was up near 300), that makes IYR down 32 points or ~61.5%. Wheres that put SRS?? not 300! SRS will be up 123% from the 1.71 close to end trading at 2.10. Nice Trade. In 2 days time IYR has gone from 35 to 20, down ~43% and SRS has gone from 57 to 2.10, down over 96%. The problem with these twice levered ETFs is that is not just a twice levered bet on a short, they're are higher order risks brought into the equation. Its not only a bet on where the underlying instrument goes but also a bet on the path it takes to get there. These ETFs are not doing "exactly what they're intended to do" and there's no way the average investor out there is taking these risks into account before jumping in and getting smoked on technicals. These machines deserved to be raged on, not for their intent but rather for their design."

Trading flows to ETFs (stock)

Over the last 4 months especially, a lot of the daily trading volume has flowed away from individual stocks and into ETFs. A lot of these ETFs are also leveraged instruments which makes for much more erratic intraday movements for the individual stock daytrader such as myself. A lot of these derivative instruments went from being the side bet to the main pot. I can only hope it gets better and money flows back into individual stocks, but below is a simple hypothesis as to why the money and trading has flowed in this direction.

Any bet is essentially the same. You want to be in a position with the most ways to win. As in poker, it doesn't necessarily matter the situation on the flop, as much as how many outs you have. I remember back in early 2007 I recommended people buy the oil services holders ETF (OIH) because there were two ways to win at the time. If oil went up OIH went up with the oil prices while if oil went down the Dow tended to go up and since all the components were NYSE stocks there wouldn't be much downward pressure. I'm not sure if OIH outperformed at that time, but I did feel that it was the safest bet as there were two ways to win, one to lose (if both oil and stocks fell).

On the downside as the markets plunged the last year, it appears a similar idea is in order. In the bear market as opposed to the bull market, it's about finding as few ways to lose as possible. Consider the old adage that a stock's move is 40% based on the stock itself, 30% based on the market, and 30% based on the industry. That's 3 things that can go wrong on any given day. So how do we minimize what can go wrong? Eliminate the stock and the industry. It first began with the increase in trading of financial industry ETFs such as SKF and XLF over the individual stocks. Now, the SPYs are doing an average daily volume (3 months) of over 400 million shares a day. Maybe continued high volume in these "whole market" instruments will be an indicator that the bear market has further to go.

Lack of opponent-specific systems (bridge)

I could be wrong on this, and I'd love to hear the opinion of some real world class competitors, but I'm just putting this out there. It seems to me that even in the late stages at the highest levels of bridge, pairs continue to play their original systems and never tweak conventions or systems based on the score or the opponents. One thing I think we can all agree on is that there is no single most objectively optimal bidding system. So why not play more than one system or list of conventions and choose the ones that are most optimal for the specific situation?

I understand the arguments against this way of thinking. One system (and all accompanying agreements) is hard enough to handle as it is and one can always tweak the aggression factor. But I'm sure that even at the highest levels there are systems or conventions that certain players are uncomfortable playing against or that compare favorably in certain situations versus opponents' systems in the same direction. It's one thing to have prepared defenses, but when you set the system, you're dictating the terms and on the offensive.

Here's a sports metaphor. In the NBA, you have the regular season. You play all the opposing teams in the league and play continuously enough that you play one style that is optimal for getting you the most overall wins. It doesn't matter who you beat or lose to. But when the playoffs start, there is only one team you have to beat. You need to specialize against your opponent's tendencies. Both teams are more likely to play their most potent rotation more frequently than in regular season games. So in the round robin or in a pairs event, I certainly understand playing a specific system/style. But in the later stages, why wouldn't the same apply as in the basketball metaphor and increase the need for specific matchup-oriented strategies?

Maybe some pairs do make significant adjustments that aren't visible to the casual observer like me, but I still feel that any such adjustments are constrained by the thought of "what can I change within the system" instead of just changing the system to fit the need.

Happy 2009!!

Happy new year everybody!

I am looking foward to 2009 as I hope that it can't get any worse than 2008 was for me (and most of the world). I will try very hard to really make this my year.

A quick note about the blog. Since I will be cutting down on all manners of gambling to start the year, there will be few if any picks posts to start. However, I will continue to post (probably more than before) sport and market related thoughts. I might also sneak in an occasional post about bridge. Assuming I follow through with my plans, I will also post about my diet/exercise progress (oh, body in college, are you still under there? somewhere?) This will however not interfere too much with the occasional special dining, so I do still expect restaurant reviews and meal descriptions. If I ever bother to get a camera or eat with someone who brings one, I might even include pics and become one of those food porn bloggers.

I wish the best for everyone in 2009 and the coming year of the ox!!!