3 Things I Think I Think

Lots of random stuff I am catching up on…..

1)  In his monthly letter, Bill Gross says baseball is boring, but fails to actually make any credible reasons why other than there’s not enough action.  He says:

“First of all, baseball is the most boring game in the world next to cricket. I don’t know how to play cricket, which is the only reason I rank it second. CNN Sports did an actual survey of how much time during an average two hour and 39 minute game that baseball players are actually moving – you know, swinging a bat or running to first base. Five minutes and 13 seconds!”

First of all, if you don’t know how to play something then how can you even begin to understand whether it’s boring or not?  I personally don’t know much about cricket so I’ll let my foreign friends here defend a game that millions of people love, but I’d only say that you shouldn’t hate what you don’t even know.  That’s just silly.  But let’s get real here.  Baseball is a thinking man’s game.  If baseball is boring then chess is an abomination!   And if action equates to excitement then the marathon is the most exciting thing in sports!  Of course, chess isn’t boring and marathons aren’t exciting.  But the reason why real baseball lovers love baseball is because it’s a strategic man’s game.  It looks awfully boring at first glance, but there’s quite a bit of action going on at all times.  All that “scratching” is part of a secret conversation going on between two sides who are trying to win the game.  Maybe Bill Gross never played competitive baseball.  I did.  And I appreciate the game because of the strategy involved.  With a runner on second base and a left handed batter up and 0 outs you have to protect against the potential for a right side ground ball or a hit and run that will advance the runner to single base scoring position.  Do you pitch him inside knowing he might be able to pull the ball to where he can sacrifice himself to move the runner?  What if he hits the inside ball well?  What if he hits the fast ball well?  What do you do with a 1-2 count?  Do you throw around the batter?  What if the next batter is a poor batter?  Do you intentionally walk the runner?  Where do you position the defense to optimally counter the offense’s strategy?  WHAT IS THE OFFENSE’S STRATEGY? What if you have guessed their game plan wrong?   The strategy in a baseball game, in every pitch is hundreds of moves deep in the exact same way a chess game is.  You might not appreciate it, but odds are, if you don’t it’s because you don’t understand it….

2)  Scott Sumner asks an important question:

“What would Bernanke tell his mother?”

Basically, Scott (we’re on a first name basis now after our brief run-ins with one another) says the Fed has failed, but only because they haven’t done enough.  He says they should set an NGDP target.  I say, what will help them hit the target.  He says they just have to set the target and that’s enough.  I say what’s the transmission mechanism.  He says the Chuck Norris effect.  I say Bruce Lee beat Chuck Norris.  And round and round we go.  So, what should Ben Bernanke tell his mother?  Ben should thank his mother and father (the US Congress) for having run enormous budget deficits these last 5 years and giving the appearance that this chart was all due to QE.  Could Ben do more?  Probably.  But it will require a real transmission mechanism to be effective and no, saying is not enough, you must do….

3)  I came across this quote that got my wheels turning:

“Happiness is not something you postpone for the future; it is something you design for the present.”

Isn’t it interesting how so much of our monetary lives revolve around deferring happiness?  We plan to follow a green line into the future that leads us to a magic number where we buy an island and retire to a life of pina coladas or something like that.  But is that what it’s really all about?  Isn’t it more about finding the right balance so you can enjoy the life you have TODAY rather than some life you might have TOMORROW?   Isn’t there a better way to balance all of this so that we’re not simply always building a goal around a future that might never materialize or one that, if it does materialize, isn’t nearly as glamorous as we think?   Chew on that deep thought as you head into the weekend and let me know what you think….

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Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services. He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.

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  • SS

    The baseball part of this post was boring. :-)

  • LVG

    I don’t understand what Gross was saying. The game is boring so don’t play the exciting game (stocks) and instead play then boring game (low duration bonds and TIPS)? Is he losing it?

  • Richie Roo

    Surely he meant baseball is the most boring game in the world next to golf?

  • http://www.conventionalwisdumb.com Conventional Wisdumb

    “Destination is the Journey, Journey is the Destination.”

  • Bb

    Cricket is the beat game ever!

  • jaymaster

    The only way I can possibly see an NGDP target helping is if it somehow shames or encourages congress to spend more money.

    Or maybe it would just provide them political cover. As in, “Hey, don’t blame us for these deficits. The Fed told us we have to spend to hit that GDP target!”

  • Johnny Evers

    My three cents.
    1. Gross has some interesting things to say about bond markets, but he writes like a high school sophomore convinced that he has some sort of original take on life. He’s becoming a bit unglued as he realizes the long bull market in bonds is over.
    2. How does targeting NGDP grow the economy? I assume it’s the belief that increasing inflation will trigger spending (hot potato effect?) and borrowing.
    3. Life is right now. Ask the Buddha, read your Scriptures, talk to an old person or a child. You still have to plan for the future, but the moment is all you have.

  • Alex

    Any sport where you have morning tea and a lunch break (cricket) isn’t a sport :P

  • http://dismalecon.blogspot.ca DismalEconomist

    1) I’d say like most things, one’s interest and excitement with a sport is proportional to their level of knowledge about the intricacies of the game. So Gross finds baseball & cricket boring because he doesn’t understand them. Some sports certainly have a better “hook” in terms of getting people interested, but boring is a subjective thing. Most people would find money and banking boring, but not us. Well there is Nascar… ;)

    2) I guess the NGDP idea is that if the Fed says they’re targeting that level of NGDP, they’ll keep rates low long enough for private sector activity to get there. So borrowers knowing can invest knowing that rates won’t rise on their borrowing until economic growth has gained more traction, therefore they are exposed to less risk of defaulting on their loan if rates were to increase before their revenues gained steam…

    Do households and the majority of businesses actually pay any attention to statements from Bernanke and the FOMC? As a former personal retail banker I can tell you that discussions about the direction of Fed policy never came up and were irrelevant to the decision making process of when to borrow funds. All the ultimately mattered was the amount of money flowing in and out of someone’s account.

    3) I think there’s something abhorrent about the whole “Lean In” work culture where if you just work a little harder, a little longer, shine just a little brighter than the next guy then success, fame and fortune can be yours. It’s a culture that forgets that happiness is derived from good health, friends, family and the time and income to pursue one’s interests. For some this can be had in the workplace, but for many it’s a matter of toiling away at what David Graeber calls “BS” jobs. I was once told by a friend’s father that savings and zero debt is a means to win freedom from the state of the job market and I think that was sagely advice. Savings shouldn’t be about trying to get rich, but trying to protect your financial freedom and flexibility through all stages of life.

  • Skateman

    Bond bull market is in a cyclical bear. But secular bull likely remains, or at the very least, rates will stay low pretty much forever. Why? Because if you look at what mainly drives the CBO’s projection for budget deficits 25 years from now, it is actually the assumption of a 4%+ average Treasury rate and the compounding effect of interest NOT Medicare/Medicaid and Social Security Spending. Moreover, healthcare spending has actually slowed far more quickly than the CBO is projecting. The implication is that the Fed will have to keep rates low forever in order to keep deficits from skyrocketing and inflation at bay.

  • andrew

    It must be nice to be Bill Gross. He probably makes more money than God while his firm is losing more money than God for its clients, and his monthly update is mostly unintelligible drivel about sports and life, where he comes up with great philosophical insights (in his own mind). Beyond bizarre, in my opinion.

  • Boomer

    1 and 2 count, runner on second, left handed hitter up. You bust a hard slider right at his ankles. He strikes out swinging and looks like a fool doing it.

    Have fun Cullen–

  • JK

    Want to turn baseball from a boring sport into an exciting sport? -> get into a fantasy baseball league with a bunch of friends. And create a buy-in with a pot for the winner. By the end of the season not only will you find baseball interesting, you’ll be familiar with hundreds of players. and really, being “in to” a sport is so much easier when you’re actually familiar with the players and their tendencies, idiosyncrasies, their strengths and weaknesses, etc.

    Maybe what I’m really saying is that gambling makes anything more interesting. Maybe that’s why “the market” is so interesting for participants? Would any of you be as interested in it if you had no money on the line? (assuming you’re not an academic)

  • Aaron

    I enjoy going to a baseball game because the action is so boring, it makes for a great time to have a conversation with friends. You can’t do that at a football game because it’s too loud. Watching baseball on tv puts me to sleep. Same with golf.

  • GLG34
  • http://orcamgroup.com Cullen Roche

    Haven’t listened to that. But I think Warren’s been a lot more bearish than I have this year….I am still not very bearish.

  • tw

    I think golf is incredibly exciting at times, in a similar way to baseball. Much depends on the situation i. e. playoffs or major championships make a big difference in any sport.

  • David

    If you have played competitive baseball then you know how hard it is to hit an 80mph+ fastball, let alone a slider or change-up that will be thrown in there to shake things up. For some reason once you kick it above the mid 70’s it just enters a different level. I can’t imagine trying to hit these guys throwing consistently in the 90’s.

    I also have to defend Chuck Norris honor. He has definitely become a caricature of himself with the all of the Chuck Norrisism’s, but the guy used to fight in all of these tournaments back in the 60’s and 70’s with now weight limits and win them. I’m just sayin…. Give the homeboy a little respect.