Wednesday, November 10, 2010

A Lesson About Stepping Up in the Clutch

If you were to listen to the investment pundits on television, then they would tell you that there is going to be runaway inflation. They all say the same thing. The Federal Reserve is printing money like it is going out of style so, as a result, you can expect runaway inflation.Well, I have news for you. Ben Bernanke and the Federal Reserve Board is not going to let inflation get anywhere near a runaway train. I think they will succeed in keeping interest rates low for an extended period of time.

I read a great article from Scott Minerd, the Chief Investment Officer at Guggenheim Partners, LLC. the article was entitled, 'The Urban Legend of the Bond Bubble.' In his view, we are in for more of a period like the 1940's. This was a period when the 10 year U.S. Treasury Bond averaged a paltry yield of under 2.00% for the entire decade of the 1940's. He believes that we are in a similar situation today. I tend to agree.

Think about the fact that the Great Depression took a long and I mean long time to recover. They tried everything to get the economy moving. It took a World War to put people back to work. After all, the real problem of the Great Depression was a lack of jobs. Which reminds me of the situation today. It is a similar lack of jobs.

Ponder, if you will that in order to create jobs, you have to incentivize the private sector of the economy with access to capital to grow, low interest rates and low taxes. Lest we not forget we need someone willing to buy what we are selling, also. This was the same problem created by the Great Depression.

I will certainly agree that we are able to recover much more quickly from the Great Recession than they did after the Great Depression. Our country is much more technologically advanced and productive today. However, I think we will see the yield on the 10 year U.S. Treasury move closer to 2.00% than 3.00%.

One thing that I have learned over the years is that the smartest guys in the room are not the smartest guys in the room. They are just winging it. Sad, but true. They are just better at winging it than most people.

Let me tell you a baseball story involving yours truly that happened several years ago. I played in the Men's Senior Baseball League World Series in Phoenix, Arizona one year and our first game was against the defending World Series Champions. You have never seen the male ego in hyper drive unless you see this event. This World Series Champion team heralded from the great city of Chicago. They had the best players that Chicago had to offer on this team. They had several ex-Major League players and most all the others had played in the Minor Leagues or had stellar college baseball careers.

Our team was a team primarily from Central Arkansas. We had one guy who played AAA and that was about it. The rest of us were just a bunch of country boys who liked to play baseball. Yet, here we were in the first game of the World Series against the defending champions. These guys were shuttling players in and out between innings. They had about 25 players with them and I think we had about 14 on our team. Intimidation was in the air. You could feel it. They were dead set on repeating as World Series Champions. You could tell by the way they were acting. They were confident.

In the fifth inning, they were winning 3 to 1. Us poor old Arkansas guys managed to get the bases loaded, then it was my turn to bat. Chicago called time out and brought in ex-Major Leaguer Tom Gorman to pitch, a former Minnesota Twin. His catcher was Bart Zeller who played with the Chicago Cubs in his career. Then there was me, waiting on the on deck circle for my opportunity at the plate. There was no disputing what my teammates expected me to do for the team. They obviously wanted me to get a hit and knock in some runs. At the same time, Chicago's team had great confidence in shutting this inning down by bringing in the pitching ace Tom Gorman. This guy was blowing some serious gas. He was throwing low nineties easy. Somebody was going to win this battle and somebody was going to lose. The odds favored Chicago by a country mile.

I was watching him warm up and he appeared to have two pitches. A slider which he was not able to get over during warmups and a fastball that was buddy you better believe it, fast.

This is a point in your life where you say, "Am I going to step up or am I going to let this intimidate me?" The first pitch was a slider in the dirt. I could see by the look on Tom Gorman's face that he didn't have confidence in that pitch, so I figured he would come with the fastball and try to blow it past me. I guessed right. I hit an opposite field grand slam off of him and we went ahead 5 to 3. You would not believe how demoralized those Chicago guys were after that grand slam. They just could not believe that a guy like me, who only played baseball as a kid up to age 15, could hit a grand slam off their ace. Ever hear that baseball is 90% mental and 10% ability? It's true, although I can hang with the best of them in baseball ability.

We went on to win the game and some of the guys on my team were telling me for days afterwards that "that ball is still going!" Chicago never recovered the rest of the week. They failed to repeat as World Series Champions. Although we did not win the World Series, it was certainly a gratifying experience to beat the World Series Champions and to do it in such a dramatic way.

Which brings me back to my point. A lot of times when I watch some of my peers on television giving advice, I sit back and notice that these guys are just winging it. They are not the smartest guys in the room. Yet, a lot of people put a ton of credence into what they say. My advice would be to be careful about listening to these advisors.

I just smile to myself knowing that I can play with the big leaguers, come through in the clutch and I am probably a little smarter than they will ever know.

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