The only credit I can give the boys at Freakenomoics is their love of the good professor, John Kenneth Galbraith. Galbraith gave himself a little undue credit around coining the phrase "Conventional Wisdom" (Levitt and Dubner apparently feel they don't need to research the origins of anything if they can simply prove it for their purposes), but he probably did perfect it's usage. In describing the masses tendency to reduce their thinking to simplistic ideas and then flock to that en masse, Galbraith said "we cling to it as if to a raft, set adrift..." It's an elegant analogy for the stupidity of group-think where individuals rush to a single idea and find comfort in joining the plurality that shares a common thought, rather than evaluate the rightness or wrongness of the idea.
Football as an educator of the American Masses is just such a spectacle. Shall we look at the headlines this week? The Chargers are riding high, the Colts are destined for their 22nd straight regular season win (a useless landmark since it spans two seasons, neither of which has included a Super Bowl appearance... yet), the Cowboys will lose because it is December (even though the Giants are mostly gutless this year and the Eagles just gave a long-term extension to the always-burn-my-popcorn-clock-management-disaster-but-the-media-loves-me-Andy-Reid) , the Pats are in shambles because a snowstorm made two of their stars late to an 8 a.m. meeting, the Broncos have again been dismissed as a passing fancy, no one respects the Bengals because they a.) play in Cincinnati and b.) are the Bengals and c.) have a star linebacker name "Dhani", and the Steelers goose is cooked because they have lost to the Browns, Chiefs and Raiders in the last four weeks and have no idea when Troy Polamalu will return.
Of course, the last statement is true, but it doesn't have to do with Troy's injuries. It has to do with Troy's Head & Shoulders Commercials. Your eyes said it, Troy? Did anyone see Tomlin or Ward's eyes last night? Part of this had to do with playing in a negative 20 windchill. Part of this had to do with losing to the Browns for the first time in 13 games. Most of it had to do with Head and Shoulders. You cannot be a Dick LeBeau Smashmouth Team and have your human Bazooka/Cheetah/Mystic doing advertisements for shampoo. It ha nothing to do with Madden 2010. Larry Fitzgerald is still the biggest play-making freak in football. It has everything to do with pitching shampoo.
Football is a game where David Tyree can make a velcro-headed catch Super Bowl winning catch (that was the ballgame, Plaxico's catch was a formality) and disappear from the game as a special teams player only on the 6-6 Ravens two-years later. It is possibly the perfect spectacle for the defeat of hubris. It is a Karmic Fantasy Land. In other words: betting on conventional wisdom... are you serious? When Plaxico caught the game-winning catch in the '07 Super Bowl, Asante Samuel was looking into the backfield. He was cheating, looking to make a pick. Rather than cover, and preserve the lead, arrogance to try and go after the pick. Plaxico "lit up" the Patriots secondary and was a popular fantasy pick the next year. Before he shot himself in the leg at a nightclub. Plax is now out of football and Asante is getting burned by Miles Austin in Philly and having his Orville Redenbacher flambed by the aforementioned Reid. Then there are the karmic reversals that just don't make any sense: Rodney Harrison who was draped all over David Tyree and now, somehow has a high-profile gig next to Tony Dungy on Sunday Night Football? Am I the only one who remembers that Harrison had been busted the season before for Human Growth Hormone? Kids, that's the stuff that killed Lyle Alzado. He gave up "The Catch" and now he's sitting next to one of the sports truly great men, Tony Dungy as his equal? Peter King is always quoting Harrison as "a gamer" among the crew and a great guy, who even made it to the video-viewing room in NYC by noon on Sunday, even though his wife just had their fourth kid a day or two earlier. Right on, Rodney. Tiger Woods, there's hope for you yet. Stories that are not neat and tidy usually don't get mass attention. Neat and tidy like "former Patriot equals Major Lucrative NBC Deal and that's the end of the story"... do.
Conventional Wisdom in real estate always said that if you built it, they would buy it. Anyone who has watched the real estate market meltdown with any objectivity knows that there is a 3.9 month supply of houses under $250,000 and a 10.7 month supply over $250,000. When you get to a half million and above, inventory is no longer measured in days or months, but years. Sellers that claim "we just have to wait for the right buyer for this, the right house" are deluding themselves. It is a game of constant improvement and only the prepared sell. Like Football, real estate is a game of proactive match-ups. Bill Walsh revolutionized the game with The West Coast Offense. His quarterback, Joe Montana was amazingly precise, could make plays on the move with his mobility and he had fleet-footed, soft-handed running backs. So why not pass the ball first and run it second? Bill Walsh exploited his team's strengths, created a strategy around it, and forced the other team to react. The West Coast is not a vertical offense, it's a dink and dunk, yards after the catch offense. Yes, it brought Elway a championship even though he personally wasn't the perfect skill set for it. But Shanahan's arrival with the West Coast also came during John's 13th season when he was getting more feeble than nimble and the emergence of Terrel Davis which also forced defenses to account for multiple scenarios and thus, react rather than blitz John like mad. Marvin Lewis and Brian Billick had Ray Lewis, a human landmine to play around with and revolutionized defensive football. Even though the 3-4 is the sexy defensive scheme du jour, the dominance of the Ravens was realized from the 4-3. The reason was that the 4-3 created match-up problems for the offense by unleashing Ray from an advantageous point of attack. In the West Coast, the defense was forced to adjust to what the offense wished to do. The defense rarely could be on the proactive and instead was forced to be reactive. Likewise, the Ravens 4-3 with Ray Lewis in the MIKE still works, and the are still times like this one where Ray can already see that the game is over before he makes the play. If you watch that video, he's clapping his hands BEFORE the Chargers snap the ball. Give Ray Lewis a superior match-up and scheme and the proactive strategy is destined to win.
As Football Descends in lovely High-Def across America this weekend, people will start chatting about life, the economy, their jobs, and possibly more than one person or family will decide that next year, they need to be hosting the football party, and next year, it needs to be in a bigger family room to accommodate a bigger television. It's the classic, "my experience has just changed so my perspective on everything has also changed" moment that creates Real Estate Fever. Football Friday Advice Section: Words of Caution. Absolutely it is a good time to buy. Absolutely it is a better time to sell than it was one-year ago. But do not delude yourself. The best prepared team wins in football (why I personally love the McDaniels/Caldwell match up...if McDaniels lines up Dumervil on the same side of the field as Bailey - who Peyton historically does not throw on- he will restrict Peyton to looking only at one side of the field taking the always proactive-Manning and making him reactive). The best prepared team wins in real estate. Is your price, perfect? Is your condition, perfect? Are your toilets and mirrors and showers and kitchen sink really and truly, spotless? Is your carpet without blemish? If any of the above are not 10 out of 10, then the buying impact is 3:1 to 6:1 in penalizing contributory value reduction. Longhand for saying, it'll cost ya', big-time. Price elasticity in real estate is like emotion in football... you're either riding the wave high, or getting crushed at the bottom of it.
A year ago properties were populating my fancy-pants Scattergrams on neat little patterns riding the trend line. NOW... well, check this out: This is on a forthcoming listing. The REACTIVE thing to do is cling to the idea that everyone in their right mind will happily overpay for a Charlie Shea custom home in Mountain Shadows on a superb lot. This house is just that... Charlie's former residence on one of the four or five best lots in a great neighborhood. But look at the absurd price elasticity in this market: one home sold for 20% over the trendline and another sold 26% BELOW the trendline. The one that sold below the trendline, geographically and year-built, was MORE similar than any other listing. Conventional Wisdom says: there's a buyer for that home. But in the over-heated world of consumer perceptions, REALITY says: take the proactive route on the match-up. Because REACTING to consumer preferences will cost a seller $100,000.
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