1. Baseball: The Silent Spring

    Ah, it’s that time of year again when the most of us are locked in the frozen tundra of winter, dark and gloomy skies, all hope for joy long gone. This year on February 14, thoughts turn to Valentines Day with flowers, candy and a night out for a nice dinner.

    But not me: February 14th is the day pitchers and catchers report for Spring Training. The official start of spring may be a month or more away but I could care less. Hope has arrived, to hell with the ice and snow.

    Say what you will about baseball, it is slow, often boring, tradition bound or all of the above. There is just so much excitement about the start of spring training that all of these shortcomings are overlooked. There will be plenty of time for complaining around mid August when your favorite team is hopelessly locked in last place 22 games back of the second wild card spot.

    Of all sports, baseball is unique. Players are paid what the open market determines they are worth. Yes there is this thing called a luxury tax that punishes any team owner who spends more than $187 million on player salaries. But even this threshold that still works out to an average of $7.19 million per player. So what if 5% goes for agent fees and another 25% for taxes, that still leaves a bundle for the players to take home. Hooray for free enterprise.

    Keep in mind $7.9 million is just the taxable income. What about the other benefits like first class travel on private jets, the best hotels, rock star status and all those plump after game buffets? Just as part time baseball star and full time gourmand Pablo Sandoval for details.

    There is a lot of complaining about baseball salaries being so inflated they don’t relate to the value received. There is even a baseball statistic to measure this; it is called Wins Above Replacement or WAR. I don’t have a clue how exactly it is calculated. I think it is something like the NFL Quarterback rating system that I don’t understand either.

    Critics are all so short sighted never taking into account raw talent and the years of work and dedication it takes to make the major leagues. In addition to hitting, fielding and throwing, a top-level player also must learn how to spit incessantly, chew bags of sunflower seeds and adjust his protective cup only when in frame of a television camera. When a player is being interviewed and refers to his dedication to working hard everyday, this is what he is referring to: spitting, chewing and adjusting.

    Baseball’s business model is changing dramatically thanks to Theo Epstein and the Chicago Cubs. Over the past few years, Theo amassed a pool of highly talented and cheap (a little over $510,000 per year) players winning a World Series in the process.

    The Cubs success has not been ignored. Every team is now chasing young talent. It is no surprise that the high priced free agent market took a dive this last off-season. The people to feel sorry for are the players between 30-35 who are becoming free agent eligible for the first time seeking the big Robinson Cano 10 year $247 million contract. Sorry, it isn’t happening any longer. Even Bryce Harper may be in for a surprise come 2018.

    This holds huge implications for talented young high school and college players. The doors to major league baseball are about to open wider than ever before. Imagine any team fully staffed with players making the league minimum. Their payroll could be under $30 million. So kids, time is short, start working on your spitting, crewing and adjusting today. The future is yours if you are willing to work hard.

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    In a digital world such as ours, currency is almost becoming obsolete. With so many smartphones and debit- and credit-card readers being used for point-of-sale transactions these days, the paper and metal currency and coins that we have used for more than two centuries have now become quaint.

    In a digital world, money has moved from cotton paper to a series of zeroes and ones. It would make sense that in this new world, a new currency for online and digital transactions would be formed for these specific purposes. But there are a lot of questions about this new currency, called Bitcoin – namely, what is it really, and how prevalent can it be in an economic universe in the tens of trillions of dollars when there is less than $20 billion worth currently in circulation? (Two billion is 0.2 percent of 1 trillion. Just so you get a picture of the small universe we’re talking about here.)

    What is Bitcoin, Anyway?

    How to define Bitcoin is pretty dependent on who you ask. According to the “official” Bitcoin website, Bitcoin is actually a “consensus,” decentralized, peer-to-peer payment system that uses digital money. Bitcoins are used in this system for transactions much like cash would be used in brick-and-mortar stores. There is one government agency that considers Bitcoin a commodity (we’ll look at that in a minute), and there are others in the financial world that see it as a currency. Commodities and currencies have different regulations for their use, so the distinction is important.

    The Bitcoin Market

    As Bitcoin soars to a new high in value (nearing $1,200 per coin), the market for bitcoins is pretty expansive for it being a small universe. At last count, there were more than 100,000 merchants that accept Bitcoin as a valid form of payment for online and web-based transactions. The currency and the payment system have been growing slowly since its inception in 2008 and it currently has a universe worth about $18 billion. At the current valuation, that means there are about 15 million bitcoins currently in “circulation” – a sort of misnomer, as bitcoins are not circulated in the public monetary system but just within the Bitcoin system.

    Bitcoins in some ways are a lot like foreign currencies compared to the U.S. dollar. The U.S. dollar is generally stable in value inside its national borders, and it compares to other currencies in exchange according to the market supply and demand of the various currencies in each country. With that, bitcoins will fluctuate in value, which means if you were to buy something with a bitcoin, it doesn’t have a stable rate of exchange like a $100 bill does. It is almost like selling the bitcoin for cash according to the value of the bitcoin at the time of the transaction.

    Currency or Commodity?

    That is a very good question, because it’s not as obvious one way or the other. On the one hand, bitcoins are used to pay for goods and services online and in an exclusively digital environment. In that sense it is a currency. On the other hand, Bitcoin is a decentralized payment network that does not have a central bank or central processing, so it’s like using a commodity like gold bars in a sort of barter system, where one trades bitcoins for a good or service that another possesses.

    And because bitcoins do not have a face value on them like regular currency, it can be thought of as a commodity because the value of a bitcoin fluctuates wildly according to market forces within the Bitcoin network. While a bitcoin may be worth nearly $1,200 today and was worth about $1,100 in 2013, in between the value plummeted as low as $200.

    An Investor’s Take

    While an institutional investor like Goldman Sachs is on the record as investing in Bitcoin, it doesn’t mean that you, as an individual investor, should do it. The bitcoin market is very small in relation to the overall economic universe, and because it is small, the value of bitcoins will be perhaps the most volatile of any currency or commodity on the markets. And if you want to think of it as a commodity, that means you will want to invest and hold the bitcoins, which means you would be reluctant to engage in the Bitcoin system and network.

    And with only 15 million bitcoins in “existence,” holding a few of them can cause the value of the bitcoins to ebb and flow according to how many others hold it like you would, or how many will use and spend them freely in the network.

    Bitcoins are treated like a currency, but are looked upon as a commodity in need of regulation according to the Commodity Futures Trading Commission (CFTC), which wants to provide regulatory oversight of the Bitcoin network. Bitcoin is an interesting concept, but getting involved in such a small universe as an investor would involve an awful lot of risk – perhaps too much for all but the most daring individuals who may have some money to gamble, when the casino or the horse track aren’t interesting.

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  3. Financial Planning: Worked To Death

    Back around the turn of the 20th Century, people worked themselves right up to their death. There was no Social Security and these were boom times in America’s industrial age so the working population was heavily blue collar. People lived from hand to mouth. Back then, however, life expectancy was only about 47.

    Today there is Social Security. If you are a government employee you also get a generous pension that could amount to half your current salary. If you worked for a major corporation there is a 30% chance you also receive pension benefits. For the rest, other than Social Security, you are pretty much on your own.

    Some people are just workaholics. Some people just love their work. Others fit neither of these two categories; they work because it gives them purpose in life and a social connection. There are a lot of video gamers in this group.

    And then there is the rest of us in the real world that go to work everyday because there is a need for money to pay the monthly bills.

    Historically the vicious daily work cycle began sometime after graduation from school and continued until age 65. Big corporations called this later date the mandatory retirement age. For the next 7.2 years after retirement you played golf then you died; simple as that.

    Those 7.2 years were known as the “golden years” because, over time, people saved their gold and could afford to play golf everyday and still have enough left over to pay for a burial plot. Today, things are much different.

    First of all, there is the exploding cost of green fees. And we can’t overlook the outrageous out of pocket cost of dying. As we have noted in past articles, some 40% of people over 65 have savings of under $20,000. With so little to go around, you better plan on dying close to your friends, otherwise, nobody will be able to afford to come to your funeral. Your only other choice is to be the last of your friends to go.

    All of this is leading up to a point. All along I assumed that after age 50 that age discrimination was forcing people onto the unemployment lines. Not true I have discovered thanks to the brilliant research minds at the Pew Research Center.

    Their conclusion is that today, more older Americans (65+) are working than at anytime in the 21st century. The total in 2016 was 18.8% compared with just 12.8% in 2000. The biggest increase is in the group 75 and over. Life expectancy in the United States (I asked Seri) is 78.5 years. These days it leaves only half as much time to play golf before the final 18th hole is played.

    Where have the golden years gone? Not only are there fewer but, thanks to the input from CNN, just look as the job types where senior Americans can most be found.

    1,) Handyman                                 5.) Gift and Souvenir Shops

    2.) Sewing and needlework       6.) Libraries

    3.) Religious Organizations         7.) Flower Stores

    4.) Labor Unions                            8.) Farm supplies

    One look at these challenging fascinating and fun filled jobs helps you understand why old people always look so sad. It’s not that the see their lives coming to and end, they see tomorrow as another day selling batman tee shirts at the gift shop.

    Young people everywhere, unite, and don’t let this happen to you. If you are mathematically challenged, start dating a financial planner. If you are driven by materialism, find a 12-step program. Remember a daily Grande Latté over the course of 50 years amounts to almost $100,000 in today’s prices. Save today, green fees and Latté prices will only keep rising.

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    Photos via Cybord Nest, Neil Harbisson/Facebook, Cyborg Nest

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