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Thursday, August 19th, 2010
going to the races

In the spring of 2003, a couple of my MBA students pitched the idea of International Speedway (ISCA).  By the looks of the chart above, their timing was quite good.  There was momentum in the business and NASCAR culture was ascendant for some time to come.  The thesis of the purchase was one of growth, the pursuit of which always has an element of “going to the races.”  How fast can you go without hitting the wall?  Is the car built for speed or endurance?

I don’t know how long the position was held in the student-managed fund, since I left a year later.  But the stock started to indicate stress about the time that the housing market began to weaken.  What analysts backed away when they envisioned that the “house as ATM” idea included a trip to the track for many?

Now that NASCAR’s woes have made all the papers, some value players are saying it’s time to take a look.  It seems like a situation that’s ready-made for good analysis:  Relatively lightly followed, expectations all over the place, and a large base of potential customers who’d like to attend if they had some cash.  But growth hangovers often last awhile, and it’s too bad that the corporate governance situation (the France family controls the voting rights of the firm and also controls NASCAR) is of the messy variety.  (Chart:  Bloomberg terminal.)

playing the curve with etns

While I was out last week, iPath announced some new ETNs to play rates.  With yield watching all the rage, we can expect to see more of these sorts of things, whether we need them or not.  It will be interesting to see which ones will be trading in a couple of years.  Should you need a little brushing up on the yield curve and why it moves around, the company has released a primer of sorts to help you out.  For a test of your knowledge, go to the dynamic yield curve at StockCharts and press “animate.”  Then pause at random points to explain what was happening to cause the changes.  If the history available went back forty years instead of ten, a series of self-tests might prepare you for the real thing.

our test is harder

Speaking of tests, when I noted in a tweet yesterday that more people became eligible to receive a CFA charter this year (by passing the Level III exam, assuming that they meet the other criteria) than had charters when I got mine in 1986, I got responses that said that I probably was grandfathered, or that anyone could pass back then but that it’s much harder today.  I also taught CFA test classes for awhile, so I’m pretty familiar with the history and keep up with the body of knowledge required.  The test has always been hard and the challenge remains the same:  Being sufficiently grounded in the details of a wide variety of investment topics.  Most investment people are specialists and candidates usually struggle on the parts of the exam for which they don’t have expertise or interest.  The only things different today in the curriculum are those items that us geezers created in the meantime.  (OK, so we almost blew up the world with some of them.)

trade with your hands

If your interest in the markets runs more to scrumming in the pits than taking tests, check out the wonderful site called Trading Pit History.  Picture after picture of what all those hand signals mean.  Who knows, if the power ever goes out we all may go back to doing it (but you’ll have to have memorized the signals to sell everything).


“A salesman is got to dream, boy.  It comes with the territory.” — Arthur Miller, Death of a Salesman.