The Day of Reckoning, indeed!
Figured you'd enjoy this anecdote...my "hobby" is scouting minor league baseball players, I publish a website (http://minorleagueball.about.com)
Anyhow, after the close Friday I flew down to Florida to watch some fall instructional league games this weekend. The games are very informal and the players--once they're through for the day--often go up into the stands to watch the rest of the scrimmage. As luck would have it, two guys who sat next to me around the 7th inning of a game today were both were taken in the top 10 picks in all of the draft in the past three years, in fact, one was the top player drafted overall. Translation: these were 18- and 19-year-old kids sitting on multi-million dollar signing bonuses. We start B.S.-ing and the subject turns to the market...99% of the time, these kids blindly turn the $$$ over to a "money manager" (ahem) who was recommended to them by their high-dollar agent...i.e., we're not talking about turning $$$ over to Warren Buffett here, more like Shyster Incorporated (the agents get a kickback from the money managers for recommending them--they're not chosen for their investment acumen).
So naturally I couldn't resist...asked them how their bonuses were faring in the market this year...sure enough, instead of investing their bonuses in solid blue chips, seems that their clown managers were chasing chit like CSCO, DELL, AMZN and YHOO. They both admitted they were down a bit, BUT BOTH said their money mgrs recently called and obtained authorization to go on margin, so they could (you know what's coming...) BUY THE DIPS! Because, as these 18-19 year olds told me, the market ALWAYS comes back. I damn near fell out of my chair. Talk about the blind leading the blind.
Once they told me that, I told them I sincerely hoped they made it to the majors and that I hoped they didn't have that bonus money earmarked for anything soon. They laughed at me as if I was delusional and then we started talking about chasing skirts again. Obviously the baseball diamond isn't immune to clownish behavior...sorry thing is, these kids have no idea what their clown MMs are doing...like I said, I mentioned stuff about "investment prudence" and they looked at me like I'd lost my mind.
Ho, ho ho...I may not be able to hit a curveball or throw 95 mph heat like these two, but I can recognize a meltdown in the making. The caveat, of course, is that these guys will see more "tail" in the next 3-5 years than I'll see in a lifetime... |
