No blog entry; Studying for the GMAT

I did not write a blog entry this week as I am studying for the GMAT test, which I will take on December 13th.

Am taking the GMAT test again for my PhD application. I took the GMAT back in 1992. I used those results to get into an MBA program (University of Illinois). However, can't use those 1992 results as they are over 5 years old. So have been studying the tricks to take the GMAT test. Am also having to refresh my memory on various math formulas that I have not used in 15 years.

The goal is to get a score of 600 or above. The highest that can be acheived is a score of 800. Most likely getting a 600 or above will mean that the GMAT test results will not be held as a negative in my application's review by the application committee.

Getting more users on GolfInvestors

First of all, let me say that getting more users trading on GolfInvestor stock markets than we currently have would be be nice. I will be the first to say that -- but probably not the last. However, we can not make users want to trade. Second, we want to make GolfInvestors more complete, and simpler before we get a lot more users trading on the markets. Third, we do not want everyone, just specific knowledgeable traders.

As a simulation, over the years users have continued to say they would like to see more investors trading on the GolfInvestor stock markets. It is true, the more investors trading on the stock markets, the more interesting trading on the markets will be for users.

I would like to see more active investors trading just like everyone else. It would help validate the concept and make the GolfInvestor markets more liquid. The more liquid the markets, the easier it is for users to trade shares of players and see movement in a player's stock price (volatility). More volatility makes trading on the GolfInvestor simulation stock markets more fun and interactive for users.

However, users do not just appear out of the wordwork overnight. It takes time to educate people about how to trade. For every 10 users that setup an account on GolfInvestors, 6 do not come back again. We need to make sure the users reigistered want to come back on a regular basis and be active traders.

Currently we have just over 1,600 registered users. Only about 100-200 of them continue to be active and still login on a regular basis. We get about 25-50 new users registered a month. We do have over 5 million page views by users since January 2004 (a two year period --- so an average of 2.5 million pages views a year) and have run 40 markets since 2000. Over 90 million shares have been traded in 1.65 million executed orders. The dollar value of those orders amounts to more than $10 billion. 1,216 player offerings have raised $591,711,326 on multiple simulation markets.

That said however, to be considered a liquid market we need to have at least 5,000 active traders. Having that many traders will ensure we have a good number of orders on each side of the equation -- buy/bid and sell/ask orders (see GolfInvestors' OrderBook).

As well, we try to keep the ratio of total net asset value (NAV) of all investors and market capitalization btween 1.5 and 1. Doing so helps the liquidity of the markets.

This NAV-to-market cap ratio is manged by the number of players and number of shares that are available on a market. As well, we have "market makers" that are in each market to ensure there is enough cash in the market. The amount of cash available to the market makers is adjusted up and down based upon if more or less cash is needed in the market to keep it liquid.

There will be times when GolfInvestor Admins drain the market of cash and make the market less liquid. This is to keep investors on their toes and trap them with shares sometimes. When trapped or squeezed, investors will have to make a choice of either selling at a lower price than they want to sell at so they can get cash, or even get stuck with shares as there will be no buy orders for them to match their sell orders with.

GolfInvestors is slowly ripening, just like one's golf game. It takes time to get better at the game of golf. The evolution of GolfInvestors is no different. Let GolfInvestors continue to mature and you will be surprised what will happen.

Moving towards being a real stock market

GolfInvestors plans on making a big move starting in 2006. We will turn on the "real" stock markets. These stock markets will allow players to raise money and investors to invest in these players for REAL. These two stock markets will be named:

• Developmental Market I
• Seniors Market I

The Development Market I, as its name alludes to, will be targeted to developing players who have yet to make a name for themselves and need help financing their desire to play golf professionally.

The Seniors Market I, as its name alludes to, will be targeted to players 50 years and older and would like to secure some financing to secure their salary to play golf professionally.

These markets are not for established players like Tiger Woods, Ernie Els, and Phil Mickelson.

These markets are set to run for 10 years staring on January 1, 2006. So they will conclude at midnight on December 31, 2015. So players will need to plan the timeing of their offering carefully to ensure they receive enough financing to participate in tournaments while still giving opportunity to investors to have a chance to make a good return on the money they are putting at risk on a golfer.

No blog entry; On a trip in the Colorado wilderness

I did not post a blog entry this week as I was on a trip in the Colorado wilderness with my dad and two brothers. We stayed 5 days at the Bar ZX Ranch near Paonia, Colorado. The ranch is at the base of the Ragged Mountain range.

See their web site for some nice pictures of the place: barzxranch.com.

It is a beautiful place, especially if you enjoy mountains, fishing, and hunting.

Cut Differential

In 1995, GolfInvestors introduced a figure called the "Cut Differential" -- aggregate and average. These figures are calculated for a player based upon their tournament results.

The Cut Differential - Aggregate provides the total number of strokes a player has made and missed cuts in the tournaments they have played in. The Cut Differential - Average provides the average number strokes a player has made and missed the cuts by.

When looking at a player's Cut Differential figures it is important to see if the figures are positive or negative and by how many strokes they are positive or negative.

If the figures are negative, that is a good thing. It means the player makes the cut more than they miss the cut in tournaments they play in. Why is that important? That is important because if a player makes the cut more than they miss the cut that means they earn money more times than not when they play a tournament.

If the figures are positive, like scores above par, that is not a good thing as that means the player misses the cut more than they make the cut. Thus they are more prone to not earn money from tournaments they play in.

If a player has a large negative number for their Cut Differential - Average that means the player has a much better chance of making the cut. For example, Tiger Woods' Cut Differential - Average was -3.9 in the 27 tournaments he played in 2005. He distances himself from the cut line, not leaving anything to chance.

The Cut Differential is just another tool to use when deciding to invest in a player. Use it as mush or as little as you like.