US PPP, UK Property and Sports Knowledge

Check out that photo... Makes me want to ride! In three months time Epic Camp is heading to Italy. Johno and Ian are perfecting the logistics for how we will get up the Stelvio Pass (pictured). If you would like to join us (June 8th to 15th) then drop me a line with your triathlon CV.

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Visiting Europe & UK Property
I am currently mid-way through a European business trip and tapping on my computer in Edinburgh, Scotland. The UK is certainly expensive for the dollar-based visitor -- Yesterday I went through $100 and that only included a visit to a health club and some breakfast. Out of all the countries that I visit in the world, the US appears to be offering the best value right now. I have been considering how to take advantage of that point but haven't come up with much (other than telling my European business contacts to diversify away from Euro-based assets).

A few years ago no one in my peer group wanted to hold Euro assets. Now, many talk as if the dollar is heading for a permanent slide. My simple purchasing-power-parity (PPP) analysis from my global journeys is telling me something different.

Here in Scotland, I am the director of a firm that specializes in prime residential development. I work in the Scottish part of the company's portfolio -- they also have projects in London, Boston, New York and Dubai. Generally, the company follows a buy-build-hold strategy but we do sell a portion of the portfolio each year. The sales enable us to 'prove' our valuations to bankers/shareholders and manage the overall composition of the portfolio.

For those of you interested in residential property prices here is what we are seeing -- the prime Scottish sector grew 5% last year and has been flat in the early part of 2008. This is against a backdrop of 10-20% falls in the UK's new build and 'investment' sector.

Up-and-coming market segments and secondary locations are under extreme pressure -- investors, and firms, that bought heavily into the new build sector are going to have a very tough time.

Given our financing strength, we had been hoping to make distressed purchases. We aren't seeing many of these and good deals remain competitively priced. One favorable change is that development margins have expanded back to 2004 levels. Of course, that might be the result of our sales assumptions being more rosy that our competition. UK home buyer sentiment is as bad as I've seen it in the last 15 years but prime prices are stable (paradox #1). It will be interesting to watch how the market moves over the next 12 months.

The credit markets are tight but we have been approached by lenders that are keen to build their loan books in prime residential (paradox #2). While the credit markets are poor (in general), we are being offered loans at attractive prices. Similar to the property markets, there is a lot of variation within the credit markets.

Within our key financial relationships, liquidity is more of an issue than credit -- banks want to do more deals than they can fund with their balance sheet. They are limited by the short-term funding capacity of their balance sheets, not the quality of their deal flow. (Paradox #3) We remain the other way around -- high quality prime property deals are in shorter supply than capital.

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Who Controls Knowledge?
Scientific research costs money, takes time and is very difficult to control. Have you ever wondered wondered who funds the research that we take for granted? Have you ever considered if the population studied is an accurate representation of your current position?

I ask these questions because (in ultraendurance) the best athletes appear to do impossible feats -- coping with excessive hydration, dealing with material dehydration, superior fat oxidization, superior carbohydrate metabolism... it can seem that everywhere I look in ultradistance triathlon, there are outliers that don't fit the data.

By definition, the highest athletic performers are outliers but I wonder if industry-funded research on collegiate men (or sedentary adults) is the most accurate representation of my peer group. I'm also aware that, in a market with limited funding, the established players have a vested interest in maintaining the status quo, and their position.

Specifically, I've been thinking about how I perform...

***my capacity to process food (huge)
***my performance when dehydrated (just fine, mostly)
***my ability to remove fluids from my gut (massive)
***my capacity to oxidize fat for fuel and/or my ultraeconomy (unable to explain via the literature)
***my power/pace profile when fit (far below average reduction from VO2 down to AeT)

How much of the above is genetic, how much was trained, how much is due to the 'norms' being inaccurate? We may never know for sure and worrying about our profile is likely a waste of time. Focus on enjoying the training and see what happens.

There is a lot of silent evidence that is lost when people that aren't suited to ultradistance athletics retire from the sport. Each year, a BIG segment of long distance triathletes disappear. In most fields, people that underperform relative to effort (low inherent ability) fade into the background. Evidence from people that outperform relative to effort (high inherent ability) is what we cling to. The mind wants to believe that there might be an easy way... if only we had the magic protocol... [motivation, inherent ability, opportunity, time, luck].

One benefit that we have within our Boulder team is a wide range of physiological baselines. Alan is the most science-savvy team member and he faces the greatest physiological hurdles for going long. If you read his blog then you'll see that (physically) he performs best at 10-30 minute efforts -- one of the toughest zones for me to perform in. Triathlon is the only sport where a sprint takes 60-90 minutes!

Alan and I were talking about motivation for athletics -- performance vs enjoyment. Understanding our motivation is important because it relates to the satisfaction that we receive from our sport.

For example, I am an enjoyment-oriented athlete (that happens to have high inherent ability for ultra-distance triathlon). The least satisfying periods of my athletic 'career' have been when I focused on performance benchmarks. Working within a team, or with a coach, that is highly performance driven totally drains me. Interestingly it took me NINE years to figure this out!

That said, performance-oriented coaches have helped me breakthrough with my racing. Sometimes this was enjoyable, sometimes not!

Knowing what drives you, and your clients, is an important consideration in ALL advisory fields (finance, business, academics, athletics). To be effective teachers, we need to understand the values of our clients, and ourselves.

Coaches can't create motivation but we can certainly kill it.

Back next week,
gordo