Sam F. - Media Producer

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Is it Really Better to be Lucky than Good?
Posted by Sam F. - Media Producer on Jun 22nd, 2010 10:24am

The answer, of course, is a resounding “YES!”  However, I would happily take being either lucky or good over being too lucky or too good any day.  Over the weekend, I couldn’t stop myself from getting caught up in the 110th installment of golf’s U.S. Open Championship.

By Friday afternoon, it was clear that Dustin Johnson was in a zone all by himself.  He had already won twice this season at Pebble Beach, and he was wise enough to have a local caddie on his bag.  Most importantly, D.J. was the picture of cool as he strolled up the saltwater-drizzled fairways of the storied links course.  Although he was certainly playing extremely well, one couldn’t help but notice that Johnson was getting some very lucky bounces, both literally and figuratively.  One such instance that comes to mind is a Saturday tee shot on a par-3 that brought a look of disgust to the 6’4” athlete’s face, as he knew it was a mishit.  As the ball landed in the thick rough just at the edge of a daunting bunker, it decided to bounce left, instead of careening right into the sand.  To Dustin’s surprise and delight, the ball rolled to within a few feet of the hole.  A number of similar occurrences made it clear that someone was smiling down as the long-hitter climbed his way to a 3-shot lead by Saturday evening.

If there is one thing every golf fan knows about the U.S. Open, it is the importance of limiting damage, which is far more important than making birdies.  Andy North, a 2-time Open champion said it best early on Sunday morning when he acknowledged that Johnson hadn’t yet met any adversity during his authoritative march to the top of the leaderboard, and the true key to his potential victory was going to be his ability to deal with the bad breaks that were sure to come in the final round.

Within 30 minutes of his tee time, Dustin’s lead was no more.  With two “others” (a score of double-bogie or worse) within the first few holes, the once placid Johnson slipped back into a pack that included a Tiger, a Lefty, and an even taller 2-time champ.  After suffering one of the worst final rounds ever by a 54-hole leader in the Open, Johnson knew his luck had run out.  Even worse, he didn’t even have his “good” to fall back on.  As it turned out, he had been too good and too lucky for three days, which is a terrible curse for someone whose performance relies so heavily on confidence and precision.  Once the Midas touch wore off, Johnson was completely lost.  He simply could not limit the damage, and thus got his name into the wrong chapter of the record book.  The eventual winner, Graeme McDowell, on the other hand, managed to remain good and lucky all weekend, as he kept his game steady (good) and took advantage of Johnson’s monumental collapse (lucky).

I promise there’s a point to all of this…

Interestingly enough, as I turned off the TV upon the conclusion of McDowell’s victory speech, I walked by a magazine on my coffee table.  The featured story on the cover was about a recent interview with the infamous Bernie Madoff.  Immediately, I realized that the lesson we learn from Bernie is the same one we can learn from Dustin Johnson.  As cliché as it sounds, slow and steady really does win the race, and, if something appears too good to be true, it probably is.  Although I am not involved in the trading, this is an idea that we discuss constantly at our trading desk, and I don’t think its importance can be stressed enough in the financial universe.  Generally, there is a bullish sentiment filling our office, and it seems to me that it is vital to crawl out of the recent economic depression, as opposed to searching for lightning in a bottle and trying to burst out of the pit in one quick minute.

Let’s just be good.  Let’s be a little lucky, too.

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Are We Lost?
Posted by Sam F. - Media Producer on May 21st, 2010 4:27pm

This Sunday evening, millions of dedicated fans (some religiously so) will be tuned in to the series finale of Lost, a cultural phenomenon that first gripped audiences in 2004.  This noteworthy television series is most famous for one thing – questions.  Without fail, for five seasons, every single episode confused viewers further and only piled more mystery and intrigue upon the existing, and already abundant, pile of bewilderment.  Theories about the mythology behind the show, and prognostications about its ending became popular topics of conversations and blogs everywhere.  With over ten million viewers per episode for its entire lifespan, the number of theories grew to an absurd number.  Finally, in the show’s sixth season, J.J. Abrams and the producers of Lost

started to give fans some real answers.  We now know more about “the island” than we ever thought we would, and the potential for an outstanding finale has increased manifold.  But it is still only potential.  This weekend, we will find out whether or not it was worth investing approximately 4,850 minutes of our lives in this labyrinth of parallel universes and fantastical time travel.

For the last month or so, as an outside observer, I couldn’t help but notice the similarities between Lost and the market.  Each day seems more unpredictable than the last, no matter how clearly the indicators seem to be pointing in one particular direction.  There have been ups and downs, and some much bigger downs, along the way, and each trading period brings with it more questions than answers.

The amount of market experience and financial intellect around our desk rivals that of any firm, yet even we can’t figure out what exactly is going on.  Each day, the traders learn something new, but that knowledge is overshadowed by the confusion that is being generated by the fickle nature of the market.  So, the question now is whether it’s all going to be worth it.  Will this crazy period of fluctuation and uncertainty teach us enough about our economy to help us identify the one moment that will make us all millionaires?  Or, will we someday find out that it would have been wiser to sit this one out and wait for the next big hit?

If the people to my left and right don’t have these answers, then, I assure you, no one does.  However, one thing is certain; we are all hoping that the next few weeks will mimic the final season of Lost and present us with far more answers than questions.

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Movie Market – The Future of Futures
Posted by Sam F. - Media Producer on May 11th, 2010 8:52am

I am not a financial expert.  I am probably not even a financial novice.  However, I do know a bit about the movie industry, and having been surrounded by financial experts on a daily basis for a few months, I have managed to soak up some knowledge of the markets through osmosis.  Naturally, when the traders at our desk began discussing the possibility of a film futures market, my ears perked up.  Imagine being able to make serious money from the box office success of Avatar 2 or Pirates of the Caribbean 4, titles that everyone knows will draw record-shattering audiences.  What a great feeling it would be to sit in the theater, look out on the sea of people filling the room, and think contently “I’m rich, baby”!  It all sounds like an easy way to become a Hollywood hotshot.

Unfortunately, the film futures concept doesn’t seem to hold much promise for the few of us who already are Hollywood hotshots.  Consider the following scenario:

Fox is ready to release Avatar 2, and the world is waiting with bated breath to see exactly what it will look like when a male human and a female Na’vi have a kid.  Meanwhile, James Cameron steals Steven Spielberg’s parking space at the local Ralph’s on a Sunday afternoon.  Steve is pissed!  He thinks for a second and realizes there’s a way for him to make a fortune AND make James lose a fortune.  He starts selling short as many Avatar 2 futures contracts he can get his hands on through a “blind” trust.  As the premier of the much-anticipated film nears, Spielberg starts putting some publicity in motion.  He puts some money into an Avatar-bashing campaign, and maybe even puts out a press release to let the world know he’s been working on a new 3-D format that will blow Cameron’s out of the water.  AND he’s planning on using it for his next movie, entitled Jaws Eats Wimpy Blue People.  Suddenly, Avatar 2 doesn’t seem so exciting, and audiences decide to spend their 13 bucks on a ticket to Scary Movie 11, opening that same weekend.  The value of an Avatar 2 futures contract goes down a few dollars, Steven Spielberg’s swimming pool of money (a la Scrooge McDuck) becomes a few feet deeper, and James Cameron will never steal a parking spot again.

I know that seems a bit ridiculous, because Spielberg is such a huge player in the movie industry.  However, Cantor Fitzgerald, one of two firms hoping to open a film futures exchange, will allow people in the movie industry to trade on their exchange, as long as those people don’t have inside information on the distribution figures or marketing budgets of the specific film on which they are bidding.  For this reason, and others like it, the MPAA, which represents the major studios in Hollywood, is not supporting the proposed movie futures exchanges, despite the potential interest they could generate in the movie business.  In essence, the major studios have no interest in throwing a mysterious wrench into the system, because they don’t see a tangible benefit for their bottom line.  However, some of the smaller studios are a bit more supportive, because they think the futures markets might generate some new sources of film financing.  I’m not so sure I can agree with that sentiment, because the movie business is widely known as one of the most risky investments around, and people making money off the futures will not necessarily want to steer their earnings toward an even more uncertain crap shoot.

I am looking at the film futures market like a Las Vegas sports book.  If I buy a futures contract for the next Shrek movie, it just means I’m betting that the movie will take in more than its expected box office receipts.  I wouldn’t actually own any piece of the box office revenue, and I certainly wouldn’t get to stand on stage at the Academy Awards to accept any little gold men.  Unlike an oil futures contract, there’s no product that must be delivered at a certain date.  It’s really just another form of gambling.  Considering the shadow of doubt that has developed over gambling and officiating in numerous college and professional sports leagues in recent years, I am doubtful that the proposed film futures markets would be free of foul play, especially considering how much money is generated by the opening of a big movie.  There’s too much room for manipulation by Hollywood insiders.  It’s comparable to Steve Jobs, or a mysterious person named Jeves Tobs, being able to put out a string of terrible products right after he shorts AAPL, and then going long just before he releases the iTimeMachine.

I can’t deny it would be fun to bet on box office receipts.  I know that, in production companies throughout Hollywood, employees bet on opening weekend numbers amongst each other all the time.  However, I think it might prove to be a nasty can of worms, which the big studios will try to keep shut, no matter what it takes.

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Content by the Sach(s)
Posted by Sam F. - Media Producer on Apr 20th, 2010 2:49pm

Last Friday, something unusual happened at our firm. For the first time since I have been here, one major news story affected every single person at the desk. When news came out about the SEC filing charges against Goldman Sachs, each person at the desk rushed to his seat and remained there for the remainder of the day. Forget the fact that our traders have been trading GS actively. This news reached far beyond the P&L of hedge funds around the country. The fact that this type of news was connected to GS was enough to, at least, create the possibility that a whirlwind would follow. As someone who is focused on the media side of our firm, not the financial aspects, even I have picked up on the consensus feeling that GS has escaped the recent economic depression with a relatively clean report card. This news, however, affected the country’s faith in its major banking institutions.

There was one positive derivative that was born out of the GS news. The content on our live broadcast was boosted into hyper speed, as each trader and portfolio manager at the desk offered his own analysis and prediction about how the market would react to the GS charges in the coming days and weeks. There was plenty of disagreement among our team, which further fueled the dynamic conversation over the broadcast.

This phenomenon proved to everyone at our desk just how much potential the TFG Trading Matrix possesses. Even on a day when portfolios around our desk and around the country were crumbling quickly, the Matrix was at its best. It is now clear that the Matrix will thrive no matter the economic climate. When positive news comes across the wire, our members need to hear our traders discuss how long the uptrend will last or how high the market might climb. When the news is less optimistic, our members need to hear our traders discuss possible fallouts and whatever strategies might help an investor survive the downtrend. In any economic situation, the Matrix will lead its members in the proper direction. However, as a man called Morpheus once said, “I can only show you the door. You're the one that has to walk through it.”

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