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Monday, April 09, 2007

trip report redux

Finding myself, as I always do this time of year, sitting in the Lexington, Ky airport after a weekend of drinking gambling and carousing with fellow after dark specs, I find my thoughts turning to the weekend just past. This is a different kind of trip report this year as it was a much calmer trip.we were a week earlier thn usual due to some members family and school commitments so it wasn’t the makers mark Mile and Toyota Bluegrass stakes. It was also freakishly cold with a wind that had artic iciness to it. Coupled with the fact that it is easter weekend and Lexington was not as crowded and rambunctious as past keeneland trips.There were no Purple PT Cruisers, skinhead bars or even female arm wrestling championships this time. Just great friends, good food and good times. There were long conversations on the various markets, trading ideas, systems and strategies, as well as the latest chapters of the new hit series, Life in Deltaville starring the voodoo prof and Elena. Seems Deltaville is kind of hee-haw meets tha bay as told by a slightly mentally disturbed version of garrison keiler. We hear tales of streetlight shooting, coon killing and exploding handymen. Buying the wrong type or color of car..that’s is to say anything but a white pickup cause for being accussed of “turning”, a deltavillians way of saying hey ther boy that’s one gay ass looking toyoter you got there.It was decided during the first part of the first night as the stories spilled out all overt the table reeking of stale Budweiser and crab pots that a trip to deltaville to check out the Tide Inn and various drinking and boating establishments of the town must be forthcoming. The two CAICs(Chief Alcoholics in Charge) namely Crossman and myself rendered this unchallengeable ruling sometime between the restaurant and th bar and so a trip there to change small town mid atlantic life forever will be planned for later this summer.

Little tim and his gorgeous and pleasant fiancĂ© sarah joined us for the first time. As they had an 8 hour plane trip for one day of frozen horse racing and it was more sedate that I think they expected, no drunken uk grad students or melvinian misadventures of any sort, I hope they will nevertheless join us again in future years as they were an excellent addition to our band of travelers, drunkards and miscreants. The voodoo prof, he of the legendary eatery discoveries and dining delights, showed the first ever sign of weakness in his ability to select unusual and outstanding eateries chose a carrabass, an Italian CHAIN located around a huge mall for our first evening gathering.To make matters worse, they had some sort of weird cable tv system and fred couldn’t even watch the masters and hiss and curse at tiger while discussing subprime mortgages, mortgage collapses and shorting overpriced vitamin multi level companies. Still, the food was god and the regular crowd quickly assembled, in from new york, chicago, Cinncinatti, Maryland and yes the lovely metropolis of Deltaville, Virginia. The talk ranged from markets, to sports and back again, boring the hell out of the women in the group to our usual total unawareness that they were sleeping with their eyes open.A decent evening and Crossman and I even got new underwear out of the deal. Leaving the voodoo profs unusual dining choice we made one of the weekends greatest discoveries, LIQUOR BARN. Picture a Sams Club Or BJ’s size warehouse. Now, Fill it with booze. Liquor, wine , beer of every possible variety. We were so awestruck we took pictures of each oter in front of the football field size isles of high quality scotch and bourbon.. We all bought stuff naturally, Scotch, Butternut brown ale, irish Whiskey, Woodsford 1792 special issue Kentucky Derby Bourbon signed by the brew master whoever he is. I don’t really like bourbon but is a cool looking bottle.. We love the liquor barn.Back then to the hotel bar, in years past the scene of much ribald and hilarious adventure involving me , whiskey , coeds and women of the racing world. Dead. Totally and completely dead. Oblivious to the lack of activity a geetar strumming troubadour struck up the tune at a decibel level more appropriate for the Lexington arena than a small hotel bar. Offthen to the Hyatt through the rabiits warren and maze of hallways, skywalks and stairs that VP and elenahad discovered to talk and drink in relative peace and quiet. As a bonus they had masters coverage which goes a great way towords calming Crossman.

The day at the track was a good one, if you could ignore the numbing cold.The insode grandstand was packed while the outside seats and even the rail were virtually empty. It was in the low 30’s with a wind-chill in the teens. Winds whipped, occasional snowflakes spilled across the track and we bet on horses all day. The listmaster had the best day cashing 3 out of 4 tickets.They were all strong horses at good odds to show, a chicken bet to me but given I was stuck a hundred by the end of the day I bow to his prowess. I got caught in the switches this year. In the past I was able to bet exactas all day and hit three or four every outing. This year I had thw e winners as one of my two exacta picks in five races, Instead of boxing the exacta bet had I bet them both to win I would have had a huge day. It will be worth going over past trip to the track to see if this is a more lucrative approach than just betting all exotics all day. We will not however discuss the superfecta missed by one stinking length or my one large win bet at 17 to 1 that led wire to six inches short of the wire. A Maryland horse at that. I admit that I love horse racing and in spite of the bitter temperatures, Keeneland is still a beautiful track and we got to watch some of the best horses in the country today run. Next year, only win bets and cheap superfecta bets for if you go to keeneland with us, you should probable just box my win selections in an exacta bet and plan on retiring from your winnings.

I have come to the conclusion we need a sober scribe to accompany us on the se outing. The trding ideas and life philosophies that are tossed around over the course of a weekend are both a meal for day and a lifetime. This weekend alone we had conversations about the reverse carry trade, selling options on value stocks..(one of my pet theories that has worked well in practice but I have no idea how to obtain the data needed to totally test the theory, It does seem to me that if you do the valuation work first and locate stocks that are undervalued and then sell mispriced puts on them that the worst thing that happens is you buy a stock you like at a lower price. Best case you collect premium every month,, or get put the stock art a lower price. He problem with value stocks is that they can tend to linger for long periods of time until there is a catalyst to unlock the underlying value.), the almost absolute guarantee that trades with real high t factors, things that happened “always “ or “all the time” are an absolute lock to fail in the future.We covered gamble ring, bet sizing, money management ( we all pretty much felt that absolute bet sizing didn’t add much. There were observations that most CTA’s and funds used volatility based risk management systems that lowered position size as vol rose, and decreased as it rose…probably the exact opposite of the correct way to handle it.Somebody needs to write this stuff down. I would suggest a recording device but there are parts of the conversation that really do need to stay right at the table.

Lexington is one of the most unique towns in the world. Two things matter here and only two. Horse racing and Kentucky basketball. When good old Billy Clyde Gillespie left the texas a&m aggies this week to take the UK job, the town erupted. Some 5000 attended the news conference announcing his hiring. The Saturday newspaper had a six page special section on the coach, the team and the prospect for the wild cats next year. The Sunday editorials were not about the economy, the gubernatorial elections oe even the war in Iraq. All Billy Clyde, all the time. The basic statement seems to be, Welcome Billy, we love you. YOU BETTER WIN. In Kentucky it is not enough to make the dance. You have to win it after dominating the SEC all year. Gillespie is a great coach and an even better recruiter. I suspect we will be seeing Blue clad Kentuckians at the final four before too very much longer. The other great love here is racing. All the bars have horse racing on all day long. Tracks form all over the country are shown and these people watch it all day. They know the horse running at the Aqueduct, at laurel and Mountaineer Raceway. They discuss horseracing the way other towns discuss their baseball teams. Hey know their horse here. During the two three week racing sessions each year keeneland is THE social scene in Lexington. If you don’t have to work at one of the bars pouring ungodly amounts of Woodford reserve and makers mark for race fans, you are at the track for the days racing. They don’t save for family vacations in Lexington. They save for wagering money at keen land. Lets see, irish bars, horse racing, beautiful women and college basketball. All this and the liquor barn Its almost like heaven.

So another spring trip winds down and I sit in the airprt waiting for the plane to be called. It has once again been a weekend of great friends, incredible conversations with some of the most intelligent people I have ever had the pleasure to know. Lessons have been learned, methodologies discovered for trading and fro living as they always are on these trips. To the world at large I know it appears we are just drinking and carousing, gambling and dancing our way though the weekend. Of course we are. But along the way we learn much form each others conversations and discover a lot of things together. Not the least of which is that good friends, good whiskey and fast horses make the kind of memories we will cherish forever.

As always the trip home provides some of the more amusing moment. Sitting in the Detroit airport waiting for my connection to BWI, I sit in the fox sports bar, a civilized place where one can have a smoke with your beer. Sitting at the bar talking very loudly are three guys, pie eyed as hell just back form overrseas waiting for domestic connections. They are all back from the far east .I am listening to them discuss the merits of which type of wife one should buy, Korean, Chinese or Phillipines. The one fellow has drug out his computer to show his new buddies his design for a personal aircraft. His “bird” is going to put the aviaition industry out of existence. It worded well in a flight simulator under all circumstances, can be built out of balsa wood in his garage , his external airbags, programmable gps flight controls so you don’t actuualy have to know how to fly it, just plug in the course and go. It has luxury seating, cup holders and a Bose stereo system. He is quite passionate about building it, in spite of the fact that he feels very strongly the government will kill him for damaging the aviation industry.The fact that it appears form what I have heard defies the laws of basic physics and advanced engineering he has fric and frac as welllas the bartender ready to invest money. The bartender does have a concern being from Michigan. that’s all the snowbirds and old people flying south for the winter will be as serious a hazard in the sky as they are on the road.Our intrepid inventor admitted he had no knowledge of how to build a plane except on a simulator computer point and click program but he was going to seek out people who would teach him what he needed to know. Because knowledge should be free and he would find someone to teach him aircraft engineering for free out of their love of humanity. I am telling you, you cannot make this stuff up.