What happens when my SOI Retires?

So you are worried that the second FAVR retires for the 4th time that your SOI price is going to trade at $0.50. Well don’t worry sports fans because this market is driven by you and there will always be a strong bond between a fan and his favorite athlete since childhood. You base your own life events relative to your bond with your sports idol. I remember when I got grounded for spray painting the cat because that was when FAVR moved to Green Bay. I remember the first time I touched a girls boob, it was when FAVR won the super bowl. I remember when I was studying for that tax mid-term, it was when FAVR shaved his head for his wife who was fighting cancer. Obviously, a retired player cannot have a solid performance to help influence short term trades but the love for an all time favorite never dies but grows over time. Also, a retired player could quickly take on a career that could be easily viewed and valued by the public: Coaching Jobs (Ex: Avery Johnson – Former head coach of the Dallas Mavericks), a sports analyst role (Ex: Steve Young) or try and pursue a career outside of sports that could impact their SOI price (Brian Bosworth).
However, if you are like me then you are dieing to apply quantitative analysis to your Oneseason sportfolio I recommend looking at your retired legend as a bench mark to the current players in their position. For example, this is a down year in the NFL for quarterbacks with ROMO and BRDY hurt and PMAN coming back from injury maybe you would want to load up on Dan Marino or John Elway. They could be your gold play in a position downturn (NFL:QBs). So if you want to rationalize your AIRJ play compare the current players stats to those of our favorite legends and see who is the better buy.

You Found the Golden Goose - Now Go Tell a Friend

Well, unless you have been short the S&P Index since January 1, 2008 (down 40.3%) or my favorite shoe company, CROCS, (down 95%) chances are you haven't done that well trading in the stock market this year. Despite Jim Cramer's incessant attempts to call the bottom, you have likely seen your portfolio dwindle to 60% of the value you started with right after receiving that shiny new X-Box for Christmas '07. Well, I feel your pain, and although I will not be giving you advice on stocks today, I do want to provide some perspective on how you may (very important MAY) be able to make some money on OneSeason. Aside from making money through SOI day trading, I believe there is money to be made simply due to the rising tide of penetration. Let me explain - bear with me on this math and try not to yawn. As of this afternoon, OneSeason had a Market Value (Total Shares Outstanding x Price Per Share) of approximately 8,529,000. I try to back into the number of users by saying that all you jokers, on average, originally put $900 into your account and have $810 actively invested (a 10% cash reserve). This gets you to 10,530 active investors (8,529,000 Market Value / $810 invested capital). So, think about market value growth as a function of A) Number of Users and B) Average Invested Capital. Therefore, by making some assumptions on both of these two variables, we can back into a longer term market value. [Now chug a RedBull so you don't fall asleep - almost done]. Lets assume that over the next 4 months (around the first of March), the number of users using OneSeason can grow 15% a month (an average of 66 new users per day). Seems reasonable right? Now lets say that because everyone starts to make a little money and dream about those new pair of Ferregamo loafers they can buy off BlueFly.com, everyone begins to invest a little more. Assume that each month we all add about 5% to our total account value (approximately $44 bucks per month for the next 4 months). If that takes place, the total market value will have grown to $18,132,040 by the end the fourth month. This means that an average portfolio invested throughout those 4 months would have made 112.6% - more than 2X your money. To quote that old guy on Entourage (that old goofy agent Ari hates) "Is that something you might be interested in"? Two words: Daddy Like.

So - this is what I am talking about when I say "penetration" (please get your head out of the gutter...I mean seriously). As both user penetration and invested capital increase, all things held equal your Sportfolio will be the beneficiary. So you ask yourself - Self: what could I possible do to increase both of these very important metrics. Well - for starters it requires that you stop hitting the Refresh button on your OneSeason account for 2 seconds (Painful. I know). Next go find every man, woman, child, step cousin, brother, used car salesman, aunt, uncle, that one guy you picked on in the third grade (also the same guy who stuffed you in a locker in 4th grade because he hit puberty one year before you did), every unborn child, firefighter, and good lookin' dame you can find, and get them to sign up for OneSeason (you get my point). The increase in average invested capital will take care of itself. Now go spread the word. Your sportfolio will like it.
Written by UncleRico

Drink the Kool-Aid, but Keep It Liquid Baby

Whether you are a 19 day veteran or a 2 day user of this new machine we have collectively created called OneSeason, I think we can all agree that this monster is addictive as hell. From keeping yourself logged into your account 24 hours a day (on multiple computers mind you), to hitting the refresh bottom on your browser like a madman in hopes to get a jumpstart on the newest IPO, this is the most intense thing you have done since freshman year pledgeship. The first time you see the ROMO SOI you just bought at 5.75 split 4 times and then gap up to 40 bucks intraday faster than Mike Vick getting chased by the ATL Po Po (all the while you are rest easy because your man Tone the Rome is due to split again tomorrow morning once his share price breaks 20) it is pretty exhilarating...I know. You begin to ask yourself: Self - can I actually make real money at this, or will this euphoric high leave me just as quickly as it came. We will chat more as I continue this dialogue, but for now lets just lay out a few points on how I view the world: 1. Is the OneSeason model sustainable over time? (Answer: Unclear, however I do think adoption and penetration rates alone will be the tide that raises all ships) 2. Are there ways to make money in the short run (Answer: Absolutely) 3. Are there ways to make money in the long term? (Answer: I think so, but the incremental $ opportunity will diminish (forget normalized / analyzable returns on invested capital (ROIC) because they are irrelevant at this point), and the ability to capture massive upside will subside 4. Is this a rational marketplace (Answer: Hell no - but it could be a LESS IRRATIONAL someday) 5. Will player performance eventually drive price? (Answer: It will be one of many factors, but I think so). 6. As the S&P gaps lower by the nano second (literally headed straight to 825), will this be your only refuge to make money? (Answer: YES).

Why do I pose all these seemingly idiotic questions? Well, because OneSeason is the Wild Wild West and you think you are Wild Bill Hickock - a modern day Maverick. You are logged on, guns 'a blaz'in searching for arbitrage opportunities left and right - puking AIRJ at the open and buying him back on the lows...I know how you think. Well, its all gravy baby. Keep doing what you are doin, but just recognize that this market is NOT liquid. In fact, lack of liquidity (volume of shares exchanging hands from buyers to sellers) has led to massive moves intraday and those swings can have meaningful impacts or your own P&L (Sportfolio). To that end, I suggest always maintain a cash balance (un-invested capital) of 15% - 30% (depending on your risk appetite). This is helpful for many reasons: 1. It gives you some dry powder to put in bids for IPO's as they come into the market 2. Decreases portfolio volatility 3. Gives you the ability to capitalize on glaring dislocations that may present themselves throughout the day. In addition, monitoring your cash reserves % (cash / total invested capital) it will also help you know when to take profits on some of your high returning positions. Good luck out there, and make some money.
Written by Uncle Rico

What happens to my SOI in the Offseason?

The biggest SOI holding in your Oneseason Sportfolio had a good postseason but just came up short of the title. He had strong gains all season and now you are worried that his value is going to start heading south in the offseason. Before you resort to panic mode and sell off everything listen to this. The same SOI that performed well in the regular season might still be a strong performer in the offseason. Sports are all about speculation and how good you are going to be next year (Just look at the Cubs). Fans are well aware of a player’s value in or out of the season. It is never too early to invest in the future because the preseason is just around the corner.

In addition to loading up on next year’s picks in the offseason, the off the field actions of a player can also impact your perspective of them which can influence their SOI price. The offseason presents a lot of time for players to help or hurt their reputation and SOI price. Keep tabs on holdings because Olympic gold medals, endorsement deals, movie roles, bar fights, and trips to Cancun with pop stars can all impact your sportfolio.

Written by RickWildThingVaughn

How to Value SOIs?

With the Oneseason market just a week old, how can I know if a player is trading at a fair price? When is an SOI overvalued or undervalued? What can I do to tell the difference between a cheap SOI and an expensive SOI?

When determining whether a player (SOI) is overvalued or undervalued you must do two things:
1. Look at a player’s Total Value instead of their SOI price
2. Determine the Percent of Ownership you would be Buying

It is important to look at a player’s Total Value instead of their SOI price because the SOI price can be misleading. Not all players have the same number of SOIs outstanding and the number of SOIs outstanding can change because all SOIs are required to split when they reach $20 (In a split the number of SOIs outstanding is increased and the price/SOI is decreased. For example, in a 2 for 1 split you would have twice the number of shares worth half the price. This is done at the end of the trading day). A player could be trading at a higher price but if they have fewer shares outstanding then their Total Value could be lower.

Here is an example to show you what I mean:

We are going to look at two of the youngest stars in the NBA: Chris Paul and Lebron James. Chris Paul (PAUL), trading at $7.83, has a higher SOI price than Lebron James (KING), who is trading at $5.61. Does this mean that KING is undervalued compared to PAUL? Does the market think that Lebron is not as good of a basketball player as Chris Paul? The answer is NO because you have to look at a players total value when comparing SOIs. In this same example, PAUL has 1,268 shares outstanding with a total value of $9,560.71 and KING has 9,472 shares outstanding with a total value of $53,137.92. These two Gold Medal winners are separated by $43,577.21.

- PAUL: $7.83 (Price) x 1,268 (# of Shares) = $9,561 (Total Market Value)
- KING: $5.61 (Price) x 9,472 (# of Shares) = $53,133 (Total Market Value)

Although PAUL’s SOI price is higher then KING’s you can tell by Lebron’s Total Value that he has more value in the market. Lebron’s SOI has split 7 times and Paul’s has split zero times which can explain why KING has more shares outstanding. If you bought 100 shares of each player at their current prices you would pay more for PAUL but you would get a significantly greater percentage of ownership in him as shown below.

- PAUL: $7.83 (Price) x 100 (Shares) / $9,561 (Total Value) = 8.2% (Ownership)
- KING: $5.61 (Price) x 100 (Shares) / $53,133 (Total Value) = 1.1% (Ownership)

In this example you can see that although PAUL’s SOI is more expensive he is significantly undervalued when compared to Lebron James. If you believe that based that Chris Paul should not be trading at such a big discount compared to KING then this could be a great buying opportunity.

Look at the Total Value of a Player compared to others that you believe are similar and you might find some great opportunities that could make you money.

Written by RickWildThingVaughn

How to Make Money without IPOs?

“So you are telling me you bought 10 SOIs of LTEE at $5 and then you sold it at $15 ten minutes later? Where can I sign up?”

It’s true; there is no better way to make quick money than getting IPO shares of a solid player. However, how long can this go on? What are you going to do when you cannot sell all the IPOs you purchased? Once the market returns stop lighting up like a pinball machine, what is your sportfolio going to look like?

Here is a thought: Keep trying to get IPO shares, but in the other hours of the trading day, try to find those quality athletes at a fair value. Look for bona-fide superstars at a discount with low trading volume on a slow day (Ex: KOBE, AROD, BRDY). Also, try to buy a young player with unlimited upside (Ex: ODEN, DMAC), or try to take short-term positions on a player before you think he is going to have a big game by looking at a player’s historical performance against a certain team or style of play. Look at a player’s total value relative to comparable players. You don’t want to be there when the bubble bursts, so start investing as player performance begins to drive SOI prices.

Written by RickWildThingVaughn

Peyton Manning (PMAN) and Joseph Addai

While Peyton Manning (PMAN) gets back in to game shape after missing training camp due to an infected bursa sac in his knee, many people figured the Colts would rely on Joseph Addai and the Indy running game.
The Colts' bread and butter is the stretch play, which requires significant strain on PMAN's knee. For the first two games of the season, the Colts have been unable to run the stretch play.
Instead, PMAN is pitching the ball to Addai to run outside. Although this creates no strain on Manning's knee, it has created quite a strain on Addai's performance this season.
It certainly doesn't help that the Colts have some injuries to the offensive line. Center Jeff Saturday's absence along with left tackle Tony Ugoh hurting his groin early on against the Vikings have also hurt Addai, but nothing hurts him like PMAN's knee.Through two games, Addai has 27 carries for just 64 yards (2.4 yards per carry) and one touchdown. The Colts need more from him, but he needs more from PMAN.
Hurt knees slow down running backs, but in this case, it's not Addai's knee, but rather the knee of Manning.