#literal cost of production especially talent would be my next bet

[brbgensokyo]

id love to know the production politics that goes into 12/26 ep mecha series vs 52.

[ibythetidepromotions]

An interview with: Wax Vessel

Could you introduce yourself to the readers?

Nik Velleca - Founder/Owner/waytolongofaresponder

What led to the inception of Wax Vessel?

It’s actually a story in a couple of parts: the name (which is not interesting), the year before it started (mildly Interesting) and then the actual launch! Maybe two years ago I really wanted to get in to the whole Instagram vinyl collection showcase scene. Made a second account called Wax Casket (because it sounded cool) and did a couple hundred posts. No big deal. But at that time, it kind of out the inkling of an idea in my head. Fast forward a year or so, and Simon from WFAHM and I were taking about how literally every influential album from 2000-2010 was never pressed on vinyl. We thought about teaming up to do Ion Dissonance in vinyl (which is still a huge goal). It never materialized, so the label pages (renamed to Wax Vessel) kind of got shelved. Speaking of the name Wax Vessel (rant incoming) I landed on that name because I’m so fed up with the start of digital. MySpace deleting song libraries. Hard drives crashing. CDs getting bit rot. The only try archival format is vinyl. You could pull a WV release of a shelf in 2219 and it would still play. It’s a ��time capsule” or “Vessel” for preserving history. Anyway. Fast forward to like 5 months ago - I had just stumbled upon PRR and they told me they were doing Destroyer Destroyer. I asked if I could just press the records to accompany that release, and viola! Here we are!

Wax Vessel is very unique, you what always comes to mind when I think of extremely rare and beautiful presses. What process goes into getting your visions to come together properly at the pressing plant?

So I’m glad you touched on this, because artisanal (barf) pressings are one of the tentpole features of WV. There’s so much that can be done with the format that it seems like an insult to just do single color records. I figured if I was going to bring all of these albums back from the dead after decades of never having a physical release, it might as well be in style! Otherwise someone will just repress it hah. But each release is its own project. My goal are always to have the color play with the album art, while also pushing the physical medium itself. Everything is very case-by-case, with the number of variants and the type of variant really just being subject to my mood haha.

Recently announced was the pressing for Dr. Acula’s S.L.O.B, congratulations on making it to WV007! From the posts I’ve seen on social media, you guys are really excited about this release. How would you describe Dr. Acula to someone who has never heard of them before?

Thanks! Dr. Acula was a huge one for me, they’re one of the forefathers of Deathcore in my opinion. They’re that early, wonky type of proto-Deathcore that uses a lot of samples before breakdowns and has a lot of inside jokes. It’s just fun, without taking itself too seriously.

They obviously got much bigger later, but SLOB was such a classic album, and a standout release from 187 records at the time (who really deserve all the credit for basically being the label pioneers of the genre along with Debello and BMA).

Wax Vessel focuses on pressing music from the MySpace era of metal. What about that era made it so memorable  and dear to your heart that you decided to resurrect it in the wax form?

Man, prepare to watch me get spun up on this, haha. I’m really terrible at organizing my thoughts in to a cohesive essay on the topic, so as a kind of “stream of conciseness” ramble please accept this: 2000-2010 was just peak music. It was a digital Wild West with a bunch of talented Midwesterner pioneering new sounds for niche audiences. It was a perfect storm of a bunch of cultural factors playing out all at once. Literally all of these trailblazing bands were pushing envelopes and rail blazing new genres for No monetary gain and no fame. Every single review form music media was “this is unlistenable garbage”. They absolutely did not get the recognition they deserved at the time. I mean the “scene revival/20-9-scene” is more popular than the actual scene at the time! So what happens when you mix this new way to make music (digital production) with a new way to reach fans (social media/MySpace)? You get a fucking no holds barred race to make the most niche, unlistenable music in existence. The decade was a fucking blip in music history and then was lost to the ages. The internet was too young to preserve it, and to young for anyone to really use to their advantage. Just a lost decade. So I think that’s worth preserving. Especially since YouTube rips are the only thing left.

The default vinyl color of black is never an option with your releases, always seeing high quality, creative options for your limited presses. What is the reasoning behind this stylistic choice?

Black is such a fucking cop out. It’s only to save money. It’s lazy and requires no finesse or imagination. If you’re going to press records, go all in. Like imagine building a house in 2019 with all the modern amenities and building materials we have at our disposal and just building a 6-sided box. So boring. And for everyone who says it sounds best - black (carbon) is an additive for strength. Natural PVC is additive free and sounds better. So when I need a cheaper variant to offset the cost of some of the more expensive ones, natural PVC is always my go-to.

Have there been any challenges so far with the process of mastering these old files on vinyl? Were any of the music files hard to come across?

You have no idea! I feel like a lot of people see WV and then want to start a vinyl label, haha. But there’s so much craziness behind the scenes! Let’s start at the top - WV will only do a release if the band is on board, and the rights are retained. Mechanical licensing retained. Full quality tracks hunted down and mastered for vinyl. New art made (no one has their old art files) and laid out for vinyl. Then after all that, I have to drop $4k at the plant to get it pressed. Then promos and art made, coordinating with ZBR on timelines, etc. But none of that can happen without the tracks. Most of the time the band will have the master bounces, and it’s not that difficult. But on a couple of occasions I’ve had to rip old demos from personal CDs. I’ve even had to pay for a hard drive to be recovered for a band member so we could get tracks! I really believe that vinyl isn’t just for the fashion, so having great sounding records is top priority. Can’t do that with a YouTube rip! If we can’t get the best quality tracks, I won’t do it!

Any possibility of there being Wax Vessel merch down the road?

I mean I’m not sure anyone would give a shit! But if like 10 people messaged me and said they wanted a shirt, you bet! We would whip up a cool “no represses” design or something, haha. Maybe 2020!

With a new year right around the corner, what are some goals for kicking off the new decade in 2020?

2020 souls have some cool “firsts” for sure! I’ve got our first multi-LP box set dropping. First project with a hand-painted cover. First modern release (under a different side name, don’t want to dilute the WV name haha). Really what if love to do in 2020 is press Psyopus to round out the techgrind section. That’s a big goal! I’d also love to have a both and sell LPs at like a festival, but they all sell out too quick!

Anything else you would like to tell the readers before we go? Just a couple of blurbs! People always forget that wax Vessel is a non-profit and we give 100% of the money to the bands. So remember that the next time you think I’m an asshole for not doing something you like! We got a lot of hate mail about not doing represses, haha. To that point, there will never be represses. It’s a sticking point. I don’t want to make records that end up in dollar bins and eBay lots. I’d rather leave money on the table. I want to great collector items that will be cherished. All of these bands have been defunct for a decade. No one is coming back to just to try and make a quick buck. These are all swan song little fun presses for the core group of fans. For the 200 weirdo left who still care about early 2000s techgrind and vinyl, haha. It’s niche, but no one wants to make any money. It’s just a fun thing for the scene. Remember this is all for fun! Additionally, I see a lot of miscommunications that I’d like to get on the record! Please remember: Wax Vessel is its own thing. Not an imprint or affiliated with anyone. I shoulder all cost, design, etc for everything! So it’s very much WV as the label. I hate shipping and fulfillment, so ZBR [Zegema Beach Records] is WV’s official store. The mega studs over there (Dave and Dave) definitely allow WV to exist. If I had to ship everything, it would be one release a year haha. And super not last, WV couldn’t exist without Ryan Peter. I have absolutely no scene Fred, and Ryan gets fucking results. He almost single-handedly spreads the word and gets bands on board. Literally invaluable. All the records in the world mean nothing if you can’t get any bands to agree to get pressed! He’s a MySpace madman!!

Wax Vessel Social Media:

Facebook

Instagram

Website [Coming Soon]

Big Cartel [Coming Soon]

Merch through Zegema Beach Records

[sunshineweb]

Beware the IP-Ohs

People indulging in the stock market are often people with a lot of emotions. They get excited by something new, especially if it holds the promise of making them a whole lot richer and provides bragging rights at their next social gathering.

Maybe that’s why amateur and professionals alike tend to lose their minds in bull markets, particularly when a hot initial public offering, or IPO, is offered to them by their broker.

On one hand, had you bought into the IPOs of Infosys (yes, remember?), HDFC Bank, Sun Pharma, or TCS, you would have had some volatile price fluctuations along the way, but there is no question that you have made enough money to substantially change the quality of your life. Clearly, a well chosen IPO can be a life changing experience if you simply make the right choice and stick with the stock for years.

On the other hand, there is a large majority of IPOs such as those of Reliance Power, Suzlon and DLF, which have destroyed investors’ capital. With such businesses, even the “long-term” cannot save you from permanent capital destruction.

The Truth about IPOs Benjamin Graham wrote in The Intelligent Investor…

In every case, investors have burned themselves on IPOs, have stayed away for at least two years, but have always returned for another scalding. For as long as stock markets have existed, investors have gone through this manic-depressive cycle.

In America’s first great IPO boom back in 1825, a man was said to have been squeezed to death in the stampede of speculators trying to buy shares in the new Bank of Southwark. The wealthiest buyers hired thugs to punch their way to the front of the line. Sure enough, by 1829, stocks had lost roughly 25% of their value.

Over my 19+ years of experience in the stock markets, I have rarely come across any IPO that has been launched keeping in mind the interest of investors.

A majority of them have been launched in the form of ‘legalized looting’ by company promoters and their investment bankers.

I have come to believe how Graham defined IPOs in The Intelligent Investor. He said that intelligent investors should conclude that IPO does not stand only for ‘initial public offering’. More accurately, it is a shorthand for…

It’s Probably Overpriced, or

Imaginary Profits Only, or even

Insiders’ Private Opportunity

Why Avoid IPOs? There is an old saying in corporate circles. One should raise money when it is available rather than when it is needed. This is the reason most companies come out with their IPOs during rising or bull markets when money is aplenty.

Unfortunately, most investors in these IPOs come out on the losing end of the equation.

Granted, some IPO deals are good for retail investors, but I’d argue the odds of that happening are stacked against you.

The stock market regulator SEBI’s rules that are designed to protect Indian IPO investors, generate reams of disclosures about the company and the offering process but unfortunately, many investors neither read nor understand these.

After all, how many people have the time or inclination to read 400-500 pages of IPO offer documents? And then they say – “Please read the offer document carefully before investing.”

IPOs are not level playing fields, I believe. This game is stacked heavily against the small investor who is lured into the hype and then often loses a large part of his savings betting on listing gains.

Here are a couple of reasons I believe you must avoid IPOs and rather search for great businesses among those already listed.

One, IPOs are expensive. People assume an IPO is an opportunity to “get in at lower prices”. In reality, by the time you buy shares of a company in its IPO, other parties have almost always invested earlier at lower prices – often, much lower prices.

Before you even knew about the company, there probably were three or four rounds of private investment, and the per-share price of ownership usually goes up with each round.

In fact, one of the big incentives for an IPO is so that previous investors – founders, venture capital firms, large individual investors – can “cash out” at least a portion of what they’ve invested.

That is why most IPOs are often expensively priced. They are not priced to offer you a piece of the business at cheap or reasonable prices, but to find “bigger fools” who can get in when the “privileged few” are getting out.

Don’t believe the investment bankers when they say that IPOs are “cheap and attractive”. Their incentive lies in first fixing the IPO price (whatever the promoter wants) and then working backward to justify the same.

Two, IPOs create vividness bias.

It’s important to understand that the investment bankers and underwriters of IPO are simply salesmen.

The whole IPO process is intentionally hyped up to get as much attention as possible. Since IPOs only happen once for each company, they are often presented as “once in a lifetime” opportunities for the promoters and other large shareholders to cash out.

Promoters and investment bankers thus create stories that are “vivid” – by using terms like “listing gains”, “bright future”, “long-term story” – and entice you to believe them as soon as you hear them.

You must avoid getting charmed by that vividness.

Try to go behind the beauty of that vividness, and scrutinize the IPO to see if it is really so bright and beautiful.

In other words, you need to get past the “bright and shiny” stuff that surrounds IPOs because it’s easy to fall into the trap given that so many others around you are falling for the same.

Don’t buy a stock only because it’s an IPO – do it because it’s a good ‘investment.’

Warren Buffett wrote in his 1993 letter –

[An] intelligent investor in common stocks will do better in the secondary market than he will do buying new issues…[IPO] market is ruled by controlling stockholders and corporations, who can usually select the timing of offerings or, if the market looks unfavourable, can avoid an offering altogether. Understandably, these sellers are not going to offer any bargains, either by way of public offering or in a negotiated transaction.

When Buffett issued Class-B shares of Berkshire, he made sure that it wasn’t a typical IPO. He wrote in his 1997 letter –

Our issuance of the B shares not only arrested the sale of the trusts, but provided a low-cost way for people to invest in Berkshire if they still wished to after hearing the warnings we issued. To blunt the enthusiasm that brokers normally have for pushing new issues—because that’s where the money is—we arranged for our offering to carry a commission of only 1½%, the lowest payoff that we have ever seen in common stock underwriting. Additionally, we made the amount of the offering open-ended, thereby repelling the typical IPO buyer who looks for a short-term price spurt arising from a combination of hype and scarcity.

The dot com crash of 2000 was preceded by hundreds of IPOs where the underlying business was literally nonexistent. In his 2001 letter, Buffett wrote –

The fact is that a bubble market has allowed the creation of bubble companies, entities designed more with an eye to making money off investors rather than for them. Too often, an IPO, not profits, was the primary goal of a company’s promoters. At bottom, the “business model” for these companies has been the old-fashioned chain letter, for which many fee-hungry investment bankers acted as eager postmen.

Benjamin Graham wrote in Chapter 6 of The Intelligent Investor –

Our one recommendation is that all investors should be wary of new issues—which means, simply, that these should be subjected to careful examination and unusually severe tests before they are purchased. There are two reasons for this double caveat. The first is that new issues[IPO] have special salesmanship behind them, which calls therefore for a special degree of sales resistance. The second is that most new issues are sold under “favorable market conditions”—which means favorable for the seller and consequently less favorable for the buyer.

Charlie Munger said this in Berkshire’s 2004 meeting –

It is entirely possible that you could use our mental models to find good IPOs to buy. There are countless IPOs every year, and I’m sure that there are a few cinches that you could jump on. But the average person is going to get creamed. So if you’re talented, good luck.

To which Buffett added –

An IPO is like a negotiated transaction – the seller chooses when to come public – and it’s unlikely to be a time that’s favorable to you. So, by scanning 100 IPOs, you’re way less likely to find anything interesting than scanning an average group of 100 stocks.

Buffett also said –

It’s almost a mathematical impossibility to imagine that, out of the thousands of things for sale on a given day, the most attractively priced is the one being sold by a knowledgeable seller (company insiders) to a less-knowledgeable buyer (investors).

The late Mr. Parag Parikh wrote in his book, Value Investing and Behaviour Finance –

It’s safe to conclude that IPOs, which seem like a good investment vehicle are, in reality, not so. In fact, an IPO is a product which is against investor interest, as it is mostly offered to investors when they are willing to pay a higher and outrageous valuation in boom times.

Prof. Sanjay Bakshi wrote this in a 2000 article –

Any kind of rational comparison of long-term returns in the IPO market and the secondary market would show that investors do far better in the latter than in the former…IPOs are one of the surest ways of losing money in the long run.

Four characteristics of the IPO market makes it a market where it is far more profitable to be a seller than to be a buyer. First, in the IPO market, there are many buyers and only a handful of sellers. Second, the sellers, being insiders, always know more about the company whose shares are to be sold, than the buyers. Third, the sellers hold an extremely valuable option of deciding the timing of the sale. Naturally, they would choose to sell only when they get high prices for the shares. Finally, the quantity of shares being offered is flexible and can be “managed” by the merchant bankers to attain the optimum price from the sellers’ viewpoint.

But, what is “optimum” from the sellers’ viewpoint is not the “optimum” from the buyers’ viewpoint. This is an important point to note: Companies want to raise capital at the lowest possible cost, which from their viewpoint means issuance of shares at high prices. That is why bull markets are always accompanied by a surge in the issuance of shares.

You get the message, right?

It’s important to remember that, while most are, not every IPO is bad. It’s just that the base rate of investing in an IPO is not in your favour, and thus you must assess every investment opportunity on its own merit.

Hype and excitement don’t necessarily equate to a good investment opportunity. If stocks continue to climb like they have over the past few months, and the IPO line lengthens, I’m afraid you’ll have plenty of opportunities to see that I’m right.

The post Beware the IP-Ohs appeared first on Safal Niveshak.

Beware the IP-Ohs published first on https://mbploans.tumblr.com/

[torontoarenas]

rapid-fire takes on every NHL free agent signing > $1.5M

$1.5M is an arbitrary cut-off, but I figure that anything less than that can be buried in the minors without too much difficulty. in other words, if you’re signing a guy for less than $1.5M, you clearly don’t expect big things from them. also, these signings all took place on July 1, another arbitrary cut-off. here are my takes, in alphabetical order by surname:

Noel Acciari (3 years, $1.667M AAV with Florida)

not sure why they felt the need to give a three-year term to a depth forward (and not a particularly good one at that), but the low cost means that won’t be a huge problem

Sebastian Aho (5 years, $8.454M AAV with Montreal)

the Habs did an incredible job signing one of the sport’s premier young talents to a bargain of a contract. it’s a shame, then, that the contract in question was in the form of an offer sheet, which means it will be a farcically easy decision for Carolina to match it and retain Aho’s services. nonetheless, I’d like to sincerely thank Montreal for signing the first offer sheet since February 2013 and, in doing so, making this off-season slightly more interesting.

Pierre-Édouard Bellemare (2 years, $1.8M AAV with Colorado)

my initial reaction when I heard about this signing was: “why?” but his numbers since leaving Philadelphia have actually been pretty decent, so I don’t mind it for the Avs.

Jordie Benn (2 years, $2M AAV with Vancouver)

doesn’t really move the needle, but he’s probably better than whoever the hell else the Canucks would’ve played in his stead, so whatever.

Sergei Bobrovsky (7 years, $10M AAV with Florida)

as a rule, DO NOT GIVE GOALIES THIS MUCH TERM OR SALARY, IT IS NOT WORTH IT. especially if that goalie turns 31 before the start of the first season of seven. this contract will likely be an albatross well before the halfway point, if not immediately. it truly cannot be overstated how inadvisable this contract is.

Alex Chiasson (2 years, $2.15M AAV with Edmonton)

this is another contract to which a shrug, followed by the words “hey, sure, why not,” would be a fair response.

Brett Connolly (4 years, $3.25M AAV with Florida)

he’s a decent player, but the four-year term is a bit iffy. I’m not entirely sure what the Panthers think they’re doing, although maybe I’m mistaken in assuming that Dale Tallon thinks.

Joonas Donskoi (4 years, $3.9M AAV with Colorado)

I really like this deal, but the fact that this was arguably the best-value UFA signing today says a lot about (1) the calibre of the players who tend make it to unrestricted free agency in first place; (2) GMs’ absurd overvaluing of depth players; and (3) the general lack of excitement in off-season transactions. regardless, this was a shrewd move.

Matt Duchene (7 years, $8 AAV with Nashville)

to be sure, the Predators overpaid for him, but not by as much as I thought they would, so ... congrats? he doesn’t really drive play & the main reason he scored more in 2018-19 than his career average (62 points per 82 games) was an unsustainably high shooting percentage. he’ll be a productive player for most of the contract, but it’s still a bit rich for my blood.

Valtteri Filppula (2 years, $3M AAV with Detroit)

unsurprisingly, an old guy who has been bad for several years now continued to be quite bad last season, except for the fact that he scored a few more goals than he usually does. for some reason, Detroit deemed that to be a good enough reason to give him a two-year contract. however, the Red Wings aren’t likely to be competitive in the next two seasons anyway, so it probably doesn’t matter.

Ron Hainsey (1 year, $3.5M with Ottawa)

well, the Senators needed to overpay somebody to get to the salary cap floor, so it literally might as well be Ron Hainsey. he’s terrible at this point, but so are the Ottawa Senators, making his contract irrelevant. they could’ve given him $10M for all the difference it would make.

Ryan Hartman (2 years, $1.9M AAV with Minnesota)

[see: Alex Chiasson]

Garnet Hathaway (4 years, $1.5M AAV with Washington)

four years? for whom now???

Keith Kinkaid (1 year, $1.75M with Montreal)

he’s not a good goalie, but if he were, he’d probably be making more money. I dunno what to tell ya.  ¯\_(ツ)_/¯

Anders Lee (7 years, $7M AAV with NY Islanders)

ahh, a classic case of “overpaying to retain a guy in order to save face after striking out on better free agents.” the Islanders are now closer to the cap than they were last year, they haven’t improved at all, and they weren’t even that good to begin with. folks, you just love to see it.

Robin Lehner (1 year, $5M with Chicago)

the contract itself is fair value, but what’s puzzling is the team that signed it. I talked about this earlier, but why is it Chicago’s goal to make the playoffs next year? it’s not gonna turn back the clock. the 2013 versions of their core players are never coming back, so they’re just delaying their rebuild for no good reason.

Timo Meier (4 years, $6M AAV with San Jose)

a very team-friendly deal. what’s not to like?

Petr Mrazek (2 years, $3.125M AAV with Carolina)

I have no idea if Mrazek is going to be any good next year, but it’s worth a shot.

Ryan Murray (2 years, $4.6M AAV with Columbus)

I hadn’t actually heard about this signing until I started writing this post, and I’m too tired to do any research. I was under the impression that Ryan Murray isn’t very good, but I’m not going to say any more than that in case I’m wrong.

Tyler Myers (5 years, $6M AAV with Vancouver)

a truly horrendous contract. to put it simply, Myers is replacement-level. I shouldn’t need to tell you not to give thirty million dollars to replacement-level hockey players, but here we are.

Patrik Nemeth (2 years, $6M AAV with Detroit)

Detroit just decided to give two bad hockey players the exact same contract. nothing much to see here. moving on...

Gustav Nyquist (4 years, $5.5M AAV with Columbus)

this is actually a reasonable deal. good on the Blue Jackets for keeping the term shorter than it could’ve been and not overreacting to the departures of Bobrovsky, Duchene, and Panarin. that might sound like damning with faint praise (and that’s definitely what this is!), but that’s better than having to damn them with, uh, damnation? haven’t really thought of a suitable metaphor here. again, I’m tired.

Artemi Panarin (7 years, $11.642M AAV with NY Rangers)

I’m not sure the Rangers’ future competitive window aligns with his own window as an elite winger, but it’s hard for a team to pass on the opportunity to add someone as good as Panarin & it’s hard for a person to pass on the opportunity to become the second-highest-paid player in the National Hockey League. tough to blame the Rangers for signing this deal, even if it won’t look great in the final few years.

Richard Panik (4 years, $2.75M AAV with Washington)

stop me if you’ve heard this before: the price is right for a solid middle-six forward, but the term is questionable.

Joe Pavelski (3 years, $7M AAV with Dallas)

he’s still really good even at (almost) 35 years old, so the first year likely won’t be an issue, but signing anyone that old for that length of time is a big risk. if I had to guess, the Stars will probably end up trading him or buying him out after year two, but that’s a problem for later.

Corey Perry (1 year, $1.5M with Dallas)

I think he’s probably washed, but this signing’s still a decent bet

Andrej Sekera (1 year, $1.5M with Dallas)

not seeing the upside is here, but luckily, the downside isn’t intolerable

Wayne Simmonds (1 year, $5M with New Jersey)

if almost any other team had signed him to that deal, I’d have said it was mistake, but New Jersey has so much cap space to work with that it literally doesn’t matter. mostly, though, I kinda resent having to sit through the same “is Wayne Simmonds still good?” debate on TSN that happened just a few months ago at the trade deadline. (the correct answer is “no, he isn’t,” by the way.)

Mike Smith (1 year, $2M with Edmonton)

why are you doing this to poor Connor McDavid? what did he do to deserve it?

Anton Stralman (3 years, $5.5M AAV with Florida)

this would’ve been a great deal to give Anton Stralman five years ago, but now? woof.

Cam Talbot (1 year, $2.75M with Calgary)

maybe he’ll be alright this year. I have my doubts, but for one year? sure.

Brandon Tanev (6 years, $3.5M AAV with Pittsburgh)

not necessarily the worst signing of the day (though it’s definitely up there!), but it is the most purely confounding. whereas, with Bobrovsky and Myers, I can at least understand the thought process that went on (Florida needed a goalie; Vancouver likes that Myers is 6′8″ and won the Calder Trophy a decade ago), I cannot fathom why Pittsburgh did this. six years?! for an only-OK fourth liner who’s never had a significant amount of hype? who the hell did they think they were bidding against?

Semyon Varlamov (4 years, $5M AAV with NY Islanders)

look, any time you can throw a four-year deal at 31-year-old goalie who’s had a GSAA meaningfully above zero just once in the past four seasons, you’ve gotta do it

Colin Wilson (1 year, $2.6M with Colorado)

well, that checks out. seems fine to me.

Mats Zuccarello (5 years, $6M AAV with Minnesota)

reasonable salary, bad term. or at least, it would be bad if Minnesota weren’t going to be a completely irrelevant team over the lifetime of the deal. so, really, what’s the point?

[365footballorg-blog]

Armchair Analyst: Frontrunners, the Pack & all 23 MLS teams by tier

February 28, 20181:17PM EST

With a tip of the cap to the great Zach Lowe, here’s my own version of his “Annual Tiers of the NBA” column, MLS-style. What follows are not hard-and-fast Power Rankings, per se, but rather something a little more loose in terms of talent level, cohesion, chemistry and all the et ceteras that make teams tick (or make them awful).

These teams are mostly in the order I think they’ll finish, but what really matters is the tier designation.

TIER I: COME AT THE KING

Toronto FC

Last year I picked TFC first, talked about how Sebastian Giovinco and Jozy Altidore were the league’s best forward pair, and how Victor Vazquez would provide the third heat in attack to make them damn near unbeatable. I worried a bit about the defense if Drew Moor got hurt, but they survived – even thrived – when he missed a chunk of time early in the season. They managed when Altidore and Michael Bradley were on international duty, and they managed with Giovinco never really playing at more than 75 percent of what he’d been in 2015 and most of 2016.

Everything went right. Alex Bono established himself as a top MLS ‘keeper, and Chris Mavinga was arguably the league’s best center back for the second half of the season. They found depth at both fullback positions, and bring almost all of it back (including what appears to be an on-paper upgrade at right fullback/wingback).

They’re also going to be a touch more flexible with their formation this year. I think it’s safe to say they won the Canadian Championship and Supporters’ Shield playing a 3-5-2, but then clowned Seattle in MLS Cup playing a 4-4-2 diamond. Greg Vanney has proved to be one of the very best coaches in the league at making tactical adjustments based upon both his own personnel and on-field match-ups.

My only worry is if Justin Morrow – who’s 30, and is closing in on 20,000 minutes – gets hurt/goes missing. Last year they had Raheem Edwards, who put up 1g/8a in 1300 minutes across all competitions, which is an insane level of productivity for a left back/wingback (and he did it in big moments, too). But “oh man we no longer have a game-changing reserve left back” is such a first world problem, even in the TAM era, that it’s not worth getting hung up on.

TFC are the favorites by a mile.

WEEK 1 LINEUP

NOTE: This might get a little squirrelly given their midweek CCL duties. Also, don’t be shocked if they break out the 3-5-2 just to mess with Columbus.

TIER II: TOP CONTENDERS

Seattle Sounders

Was Nicolas Lodeiro the same player in 2017 that he’d been in 2016? Was Osvaldo Alonso? Was Jordan Morris?

The answer across the board was “no,” but Seattle were pretty clearly the best team in the Western Conference anyway. I know they didn’t prove it in the regular season, but come on – there wasn’t much doubt. And then they absolutely waltzed through the playoffs before getting clowned by the Reds.

The fact that they survived those individual drop-offs but still did what they did is indicative of the level of depth this team was able to cobble together. With Ozzie out, Gustav Svensson stepped up. With Morris hurt (and he’ll be hurt again, unfortunately), Will Bruin found the range. Clint Dempsey came back healthy and had a good-if-not-great season, Cristian Roldan continued his evolution into a very complete No. 8, and the fullbacks were constantly productive.

First and foremost, though, this team was about the center back pairing of Chad Marshall and Roman Torres, and I expect that to be the case again. Here’s the problem, though: By mid-season, those guys will be a combined 66 years old, and there still isn’t a high-upside replacement behind either of them. If one or the other goes missing, the Sounders struggle – which they’ve showed in CCL action already. Garth Lagerwey needs to address that in the next few weeks.

EDIT: He addressed that literally as I was writing this column. The Sounders officially signed South Korean international CB Kim Kee-Hee on Tuesday evening. He will, I’m guessing, eventually be a starter.

This team will play mostly a 4-2-3-1 again (though we might see some diamond), and will be mostly very good again. I don’t think they’re too old to challenge at the very top of the league, but it feels very much like the last dance for a group of guys that’s won every domestic title available to the over the previous three seasons.

WEEK 1 LINEUP

NOTE: As with TFC, this might go a little sideways given the midweek CCL game. Also, bear in mind that I’ve got Magnus Wolff Eikrem out of position here, but this remains my best guess.

New York City FC

At this point you know they’ll build from the back at all costs, you know they’ll play that 4-3-3 almost every time out, and you know that they’re going to press higher and harder than they did when Patrick Vieira first took over in 2016. NYCFC have transformed from an old and slow group to one of the youngest and most athletic teams in the league, but obviously one that prioritizes skill over everything else.

They’ve also gone out and prioritized depth this offseason, which makes sense given how their goalscoring dried up down the stretch as the likes of Jack Harrison and Rodney Wallace faded (I still think Vieira made a mistake by not getting more minutes for Jonathan Lewis). They’re two deep at every spot on the field, and if TFC slip in the regular season – which often happens to defending champs, especially ones determined to make lengthy CCL runs – NYCFC are my pick to pip them in the Shield race.

The one big concern? There is simply no replacing David Vila from what I’ve seen or can imagine. When Giovinco goes down the Reds either slot in Tosaint Ricketts to be a field-stretching striker or bottle up into a 5-4-1, and they’ve won their share of games both ways. When Villa goes down, the Cityzens… lose. They just lose.

Maybe Norwegian international Jo Inge Berget, signed this offseason, can change that. But A) he’s already hurt, and B) isn’t that much of a goalscorer. Villa has to fight off Father Time for one more season.

WEEK 1 LINEUP

NOTE: Expect Rodney Wallace and new Young DP Jesus Medina to swap sides quite a bit.

Atlanta United

In 2017 Atlanta United had the third-best expansion season in league history, behind only the 1998 Chicago Fire and 2009 Seattle Sounders (both of whom won trophies, which is an open-and-shut argument for their superiority). They did so with relentless pressure from front-to-back, dynamic wing play, a much-better-than-I-expected-it-to-be defense, and superhuman finishing from Josef Martinez.

Pretty much all of that is back and has arguably been upgraded. I’ll admit some doubt about Ezequiel Barco being better than Yamil Asad was (ED NOTE: Barco will be out 4-6 weeks after suffering in training Wednesday), but am buying plenty of Franco Escobar stock at right back. I also expect big steps forward from second-year youngsters Andrew Carleton, who was sublime in preseason and at the U-17 World Cup, and Miles Robinson, who could end up giving the backline the dose of athleticism it lacked at times in Year 1.

There is depth and creativity and chemistry and knowhow and, look, I’ve gotta say it: There’s a big old hole in central midfield where Carlos Carmona was. The Chilean vet is gone and in his stead is Darlington Nagbe, who is a much different player. Nagbe will at times make the attack prettier, and along with Barco will be an off-the-dribble weapon the team lacked last season. He brings stuff to the table.

I worry about what he takes off the table, though. Carmona was masterful at making it miserable to receive a pass in midfield, and his distribution was both clean and early. Nagbe is not that kind of defensive presence, and while his distribution is the cleanest in the league it is almost never early. He plays at a different pace, and it showed in preseason. Add in 34-year-old Jeff Larentowicz inching close toward the light, and I’m officially a little bit worried about central midfield for the Five Stripes. They’ll still be good if those guys struggle, but that could/will be the difference between “good” and “great.”

Also, don’t expect Martinez to finish at superhuman rates again. He’s still a good bet for the Golden Boot, but if he slows down to even that lofty level we’ll see Atlanta playing from even or behind more often, and that could give this year a whole different kind of feel.

WEEK 1 LINEUP

NOTE: I’m not sure that this backline is what I think it is. Tata Martino has been using Larentowicz in Parkhurst’s place, which is… weird.

TIER III: PLAYOFF RACE (AND MAYBE MORE)

I’ve spilled so much ink on this team over the last eight months, so I’ll just say it one more time: What happened last year – the mid-season collapse – was unprecedented in MLS history. Never has such a good team become such a bad team so fast.

Instead of blowing it all up they decided to move out a couple of players, move in a few others, and move up a few more beyond that. Reggie Cannon’s the starter at right back now, and Paxton Pomykal should get meaningful minutes at a couple of midfield spots. Jacori Hayes will as well, and rookie Homegrown Jordan Cano could end up getting some real run. FCD are re-embracing their #PlayYourKids ethos.

At the same time, they went out and spent this winter like they never have before, both on the backline (Reto Ziegler and Anton Nedyalkov) and in attack (DP forward/winger Santiago Mosquera). Add in a healthy-and-balling Mauro Diaz, and a hopefully locked-in Maxi Urruti, and there is, hopefully, enough to pull this talented group back up toward the top of the standings.

But let’s face it: Last year’s collapse wasn’t about talent. It was about chemistry. Something broke inside the Dallas clubhouse, and beyond anything else, fixing that has to be Oscar Pareja’s concern.

My guess is he manages it.

WEEK 1 LINEUP

NOTE: This is not their first XI, and there’s a chance I’m being too optimistic about Pomykal and Cano in particular. But I just can’t see Pareja going with the starters on short rest in Week 1. Let Diaz ease into the season, keep him healthy, and give the kids a big of run.

Portland Timbers

For the first time in five years the Timbers enter an MLS season with a new head coach, and given Gio Savarese’s credentials it’s probably justifiable for Portlanders to be hyped. The man hasn’t done it in the top flight yet, but he’s won and managed big egos and handled locker room strife and speaks three languages and has played in the CONMEBOL World Cup qualifying meat grinder and and and and…

Savarese’s got impeccable credentials. I think he was a great hire, and the fact that he’s inheriting a team that won the (regular season) Western Conference – then added a bunch of quality-on-paper pieces to that group – suggests Portland should compete at the top of the conference again even if Diego Valeri becomes something less than the MVP. Samuel Armenteros has been especially prolific in preseason, and there’s also young depth (which Savarese will actually be willing to develop and use, if his track record is any indication) pretty much everywhere.

That all makes me high on the Timbers. But not so high that I can overlook two things.

The preferred CB combo is old, slow and injury prone.

What’s the right formation for these guys?

Liam Ridgewell and Larrys Mabiala played well together last season, but how many “together” minutes will they manage in 2018? And while I’ll happily hit “buy” at every other position’s depth chart, I’m giving center back the old side eye until I see what Julio Cascante can really do. And by the by, there’s no longer “Prime Diego Chara” in front of this group to chew up the field protecting them (his age, foot injury and lack of playing time in the preseason worries me).

So they’ve looked vulnerable, for the most part, throughout February. The times they haven’t looked vulnerable have been when swapping out of the tried-and-true 4-2-3-1 that Portland have played for 95 percent of the time since 2013 and into either a 4-4-2 diamond or a 4-1-4-1.

I’m not sure results matter that much in the preseason, but the eye test matters. Especially when you have new players, a new coach and the same old high expectations.

WEEK 1 LINEUP

NOTE: Kiiiinda just making this up to be honest. Only thing I know for sure is there’ll be four at the back.

Columbus Crew SC

Speaking of preseason results maybe not mattering… Columbus are going to desperately hope they in fact do matter, because they looked like a juggernaut over the past six weeks. Federico Higuain was at his “float around the field and control the entire shape of the game” best, the wingers were livewire and occasionally productive, 19-year-old left back Milton Valenzuela is the best young DP in this league that you’ve never heard of, Wil Trapp + Artur = HELL YES, and Gyasi Zardes is out there slotting home tap-ins like it’s 2014.

It is entirely possible that I’m overreacting to their late-season form and playoff run, as well as what they did in preseason. The defense still has the look of a group entirely capable of catastrophe, there’s probably not as much depth at fullback anymore, Higuain’s entering his mid-30s, and Justin Meram is gone. Beyond that it’s just hard to talk yourself into Zardes being as consistently productive as Ola Kamara (also gone) was.

Except… maybe? Kamara’s success was a product of his instincts and skill, but also of the system. Columbus are a big chance-generating juggernaut and have been for four years under Gregg Berhalter, and Zardes has shown an ability in the past to convert those into goals. So much of Crew SC’s potential relies upon him rediscovering that, but I’m a big “system first” guy and thus I’m gonna choose to believe in this Columbus group.

They’re not favorites. They don’t have a good enough defense or enough proven attackers to be that. But they’ve shown repeatedly that they know how to win, and they’ll obviously be playing with some extra motivation in 2018.

WEEK 1 LINEUP

NOTE: The wings will swap a ton.

Sporting KC

Speaking of “system first,” let’s go back to the banks of the Missouri River. If Columbus are the pre-eminent example of an attacking system in MLS, then SKC are the pre-eminent example of a defensive system in MLS. No matter who they trot out there, no matter how many years in a row, they lead the league in fewest expected goals allowed, fewest chances generated from Zone 14, most turnovers forced in their own attacking third and most misery inflicted upon their opponents.

Sporting play hard and fast and will continue to do so for as long as Peter Vermes draws breath.

The problem is twofold. First is that playing hard and fast every single game out has taken the mickey out of this group come August in each of the last four seasons. Vermes has to either A) become more comfortable rotating the squad to keep his most important pieces fresh, or B) figure out a different way to play from time-to-time (not gonna bet on that happening).

Second is that nobody scores, man. In 2017 they underperformed their expected goals for the fourth straight season, and for the second straight year they did so massively. And instead of bringing in a high-profile center forward, Vermes & Co. decided to roll the dice on Diego Rubio again.

Rubio’s a nice player and the underlying numbers like him, but that’s the point: The underlying numbers have loved SKC the last four years, but they keep coming up short. Add in a high-risk swap of playmakers from Benny Feilhaber to the underwhelming-in-preseason Yohan Croizet, and you’ve got potential for major problems.

The defense should still be good enough, but even that is a risk – will Ike Opara play another full, healthy season? Will age and miles catch up to Matt Besler and Graham Zusi? Cristian Lobato at left back? Really? Gonna do that with a team who had five one-goal wins and 13 draws while getting a blinder of a season from Tim Melia last year?

If not for The System™, I’d have this team two tiers lower than I do. But I’ve got to trust it because it’s worked so well for so long.

WEEK 1 LINEUP

NOTE: Pretty pretty sure that’s gonna be it.

Orlando City SC

Every year there’s at least one team that crawls up from below the playoff line into something approaching “contender” status. Sometimes you see it coming, as with Toronto in 2016. Other times it’s pretty well concocted out of the blue, as with Houston last year.

If it happens for Orlando City, it’ll be more toward the “TFC, 2016” side of the ledger. The Purple Lions have spent up and down the roster, using TAM and GAM, DP slots and the SuperDraft, Homegrowns and NASL and USL and a commitment to kicking over every rock and digging up any/every piece of talent possible, and then (hopefully) making them fit. Even if it doesn’t work out for them I love what they did this offseason because they committed in equal measure to getting guys in their prime, and getting youngsters on the come-up.

So they are now both more experienced and younger than ever before. The kids will have to fight to get on the field, and the veterans will have to fight to keep their spots. It’s pretty much exactly how I would build a team if somebody offered me a GM job.

Could all the bad things happen and Orlando City miss the playoffs? Yes, of course. There’s no guarantee there will be any chemistry with this many new arrivals, there’s no guarantee the kids will be good (though I’m betting heavy on all four of Chris Mueller, Josue Colman, Cam Lindley and Pierre da Silva), injuries have traditionally ravaged this club, I’m slightly worried about their finishing, and they need another CB.

But this was a magnificent job by the Orlando City front office. Jason Kreis, the ball’s now in your court.

WEEK 1 LINEUP

NOTE: The Lions haven’t been publishing their lineups this preseason, so some of these are guesses. Bear in mind that Sacha Kljestan’s suspended, Dom Dwyer’s hurt and Uri Rosell just stepped off a plane. Once those guys are back they’re the presumptive starters – though given this team’s depth, they’ll have to earn it.

TIER IV: DARK HORSES

New York Red Bulls

I’m maybe being a little bit naive here in that I’m not super concerned about the RBNY defense. Yes, Aurelien Collin is closer to the end than the beginning, but 1) I don’t think he’ll be asked to play every single minute, and 2) I believe in Jesse Marsch’s ability to coach young players up. We’ve seen him do it with young midfielders a bunch, and with young defenders to the on-field and financial benefit of the whole franchise. Can Tommy Redding be the next Aaron Long or even Matt Miazga? Could Fidel Escobar or Michael Amir Murillo or Hassan Ndam? At least one of them will push through, and RBNY will be fine on the backline, fine in goal, and fine (or better, depending upon how Tyler Adams develops) at d-mid.

The question, really, is in attack. RBNY shipped out Sacha Kljestan and for as long as Marsch has been the boss in Harrison his team has been helpless when Kljestan’s been off the field. I get it, though – they replaced Kljestan with Alejandro Romero “Kaku” Gamarra, a 22-year-old, high-priced import from the Argentine Primera. Kaku was legitimately one of the most productive chance creators in that league, and unlike Kljestan he is a goal threat himself. The Red Bulls got younger and, they’re guessing, better. They’ll also likely be more comfortable toggling between the 3-3-3-1 they used to such good effect last year, to the 4-2-3-1 they used in 2015 and 2016, to the 4-2-2-2 they’ve toyed with at times in the past.

If all of the above is the case, if they’re indeed both better and more flexible, they will be one of the best teams in the league. That is a massive “if,” however.

OPENING LINEUP

NOTE: Another bald-faced guess. But I figure they’ve started out the last couple of years in the 4-2-2-2, so why not make it three in a row?

Real Salt Lake

Is it still appropriate to call this team a dark horse? RSL were pretty obviously one of the two best teams in the Western Conference over the last four months, with only a historically bad start to the season keeping them out of the playoffs. They then followed that up with a productive offseason, adding pieces at spots (right back, central midfield and especially center forward) that were occasionally problematic last season, and the trajectory of their kids over the past 18 months suggests that the best is yet to come.

Bear in mind: This can go wrong. We’ve already seen Danny Acosta lose out on the starting LB job to 34-year-old veteran Demar Phillips, which isn’t a great sign, and we saw what happened to the defense last year when Justen Glad wasn’t around. Can he play 2800 minutes or so? He probably needs to.

Phillips, by the way, would only be the third-oldest starter, behind Kyle Beckerman and Nick Rimando. They’re not going to stay young forever. And while a lot of smart folks like new striker Alfredo Ortuño, he’s never really put it together for a full season, has he?

So yeah, it can go wrong. I don’t think it will, though. The RSL team we saw in the second half of 2017 is the one I expect we’ll see in 2018, and if that’s the case they’ll make their way to the top of the West.

WEEK 1 LINEUP

NOTE: This one looks pretty well locked in at this point. Your move, Danny Acosta.

TIER V: PROVE IT AGAIN

Vancouver Whitecaps

I didn’t have the ‘Caps up near the playoffs ahead of last year. I’m not going to make that same mistake twice, but at the same time I’m not expecting them to spend most of the season in the top three of the West once again. There’s just too much turnover year-to-year, not enough top-end talent and probably not enough diversity in attack. Vancouver were pure bunker-and-counter in 2017 and while that took them to the Western Conference Semifinals, it also led to them putting in one of the most feeble attacking performances over two legs in league history.

Have they gotten better in the offseason? Well, Kei Kamara’s probably not an upgrade over Fredy Montero in terms of raw talent, but he’s a better fit at center forward as long as age doesn’t catch up to him. The other big addition was veteran Mexican international Efrain Juarez, who’s probably spent 85 percent of his career at a defender but will be slotted into central midfield instead (Carl Robinson loves switching up his central midfielders all the time, and I’ll admit I don’t get it).

My big worry? Tim Parker seems to want out and given how many moves Vancouver’s made for young-ish center backs this offseason, it looks like he’ll get it. Parker and Kendall Waston were one of the most solid CB combos in the league over the past two years.

My big hope? Alphonso Davies just starts roasting fools. The 17-year-old was magnificent at last year’s Gold Cup and magnificent in this year’s preseason. If he’s not a Day 1 starter I will riot.

WEEK 1 LINEUP

NOTE: There was talk about a 3-5-2 in preseason, but it looks like back to the 4-2-3-1 that might be more of a 4-4-1-1. Not sure Aly Ghazal will be available from the start.

San Jose Earthquakes

If not for their California neighbors the Quakes would easily win the “Largest Gap Between Your Ceiling and Your Floor” award, which is pretty much exactly what you’d expect of a team that A) made the playoffs, with B) the 19th-best goal differential (-21) in MLS last year. When they were good they were really pretty good – pinging the ball around, combining nicely through midfield, generating quality chances – and when they were bad they got pounded all to hell and lost 5-0. It was uncanny.

I don’t think this team will have such wild swings in 2018. New head coach Mikael Stahre has a reputation as a solid defensive coach, and he has actual defenders he can use this year (while pushing Florian Jungwirth up to his natural d-mid slot). How those defenders will do is something of a mystery as there will be three new starters on the backline, but it looks like it should work.

The attack should work as well even as Chris Wondolowski heads into his final chapter. Stahre has a couple of goalscoring wingers to call on, Danny Hoesen is an under-the-radar pick for a big year at center forward, and this will finally be Tommy Thompson’s break-out year, I swear it!

I really do think the Quakes will be solid or better. I’m just not super eager to bet my life on it.

WEEK 1 LINEUP

NOTE: I’ll be surprised if I don’t get this one spot on.

ED. NOTE (BAER): Doyle’s wrong, Shea Salinas is going to start at left back.

Houston Dynamo

If tell me you thought, in 2017, that a backline prominently featuring Leonardo and 400-year-old DaMarcus Beasley would produce a playoff-caliber defense, I’m calling you a liar. Houston snuck on pretty much everybody last year pretty much all over the field. Yes, their attackers got most of the glory – they were fun and fast and attackers always get the glory – and yes, that midfield was way better than you think when they had everybody healthy.

But look at how that defense performed, both by the numbers and the eye test. The Dynamo were very good at the back, never gave up cheap goals, and played deep into November because of it. “First do no harm” was the mantra they lived by and it worked.

Teams across the league have tape of that now, and that worries me at least a little bit. Remember how Colorado overperformed in 2016 then came crashing down to reality in 2017? I don’t it’s going to happen quite so dramatically for the Dynamo, but I’m not emotionally capable of ruling it out.

Houston are, relatively speaking, both old and shallow, and adding “scouted” on top of that has me skeptical of their ability to recapture 2017’s magic in 2018. If they manage it, it’ll be because they’ll have added a new wrinkle – maybe they press high, or Tomas Martinez proves to be an elite chance creator from possession, or maybe something totally from out of left field.

I just don’t know what to expect here.

WEEK 1 LINEUP

NOTE: Martinez is suspended for the opener.

Chicago Fire

Chicago finally climbed their way into the playoffs – and all the way up to third place in the Supporters’ Shield standings – after years of dormancy. It was a very nice and long-awaited bounce-back for a franchise that’s mostly had a miserable decade.

They’ve followed that up with a strangely quiet offseason. The biggest news was the egress of David Accam, who was traded to Philly for a sack of GAM and TAM. It makes sense, then, that the biggest acquisition of the offseason was a winger, Serb Aleksandar Katai. He’s not Accam’s direct replacement (Accam is an inverted left winger, while Katai is an inverted right winger), but he’ll theoretically serve the same purpose once the ball is kicked: lots of goals and a little bit of playmaking.

As it stands now, though, it looks like the Fire are betting large on a cadre of youngsters. Homegrown rookie Grant Lillard maybe has the inside track on the starting job at left center back, and draft pick Jon Bakero, the 2017 Hermann Award winner, is maybe probably perhaps gonna be the playmaker this team’s fans have wanted for nearly a decade? Both guys are excellent. I love Bakero and if you like pretty soccer, you should too. But it’s a weird gamble for a team whose most important players (Bastian Schweinsteiger, Nemanja Nikolic and Dax McCarty) are all over 30.

If Lillard and Bakero and Daniel Johnson are as good as I think they can be, Chicago will have improved. If they’re not – and bear in mind I’ve been wrong maybe twice before in my entire life, so it’s possible here – they’re in trouble.

OPENING LINEUP

NOTE: Maybe Christian Dean instead of Lillard since Lillard’s nursing a slight knock? Also, the Fire don’t play their first game until Week 2, so things can change a little bit.

TIER VI: OPEN QUESTIONS

D.C. United

The big question heading into 2017 for D.C. was “Was that real?” with “that” being the 3-month buzzsaw of an attack they generated at the tail end of the 2016 season. United scored more than two-and-a-half goals per game, pushed their way up to third place in the standings, and looked for all the world like a young(ish) team on the come up.

Then Patrick Mullins got hurt, Patrick Nyarko got hurt, and Marcelo Sarvas and Lloyd Sam got old. D.C. got shutout 17 times in 34 games. In the final three months (13 games) of 2016, they scored 33 goals. In all of 2017, they scored 31.

Mullins is back, battling with Darren Mattocks for the starting No. 9 job, but the rest of those guys are gone as the United braintrust have looked for younger and hopefully more durable players. Head coach Ben Olsen has a surfeit of attacking midfielders and wingers to pick from, and most of them are proven internationally, proven in MLS, or both. Add in an 18-year-old potential stud of a d-mid in Chris Durkin, and there’s reason to think this team can become something close to what they were 18 months ago.

There is worry at the back, though. Last year’s defense was as bad as the attack, and their one saving grace – Bill Hamid – is gone. David Ousted is an above-average MLS ‘keeper, but he’s no Hamid. The guys in front of him (most notably Steve Birnbaum) need to be better than they were last year, and they have to become so while playing 14 of their first 16 on the road.

It feels like this team should be bad. But it felt that way in the middle of 2016 as well, and we know what happened then.

WEEK 1 LINEUP

NOTE: Lucho Acosta is suspended for the opener. When he’s back, expect Ben Olsen to toy around with a 4-1-4-1 if either Canouse or Moreno show they can handle the job of being a lone d-mid.

It feels like this team should be good. But it felt that way – at least a little bit – at the start of 2017, and we know what happened then. LA had the worst year in franchise history, people lost their jobs, the locker room atmosphere was reportedly poisonous and suddenly there was a crisis in Carson.

The offseason has been mostly wonderful, though. Sigi Schmid took care of most of the family business, jettisoning (most of the) bad contracts and bringing in what appear to be quality players at a number of important spots. Ola Kamara gets goals, right? Perry Kitchen protects the backline, ok? David Bingham can recapture the form that had him on the periphery of the USMNT, maybe? All of this makes sense, and even if these guys are poor, that’s still a major step up from what the Galaxy had at those three positions last season.

But woof, I will admit some worry as to this team’s ability to defend based upon what I saw this preseason. Jonathan dos Santos looked like he was running in mud when trying to track Tommy Thompson, and just look at how poor Michael Ciani’s reaction is here. Those two guys have struggled a ton in preseason, and new presumptive starting right back Rolf Feltscher hasn’t inspired confidence, either.

Schmid might have to do some early-season damage control before this team, which is talented as hell, gets pointed in the right direction. And as we saw last year, sometimes damage control isn’t enough.

WEEK 1 LINEUP

NOTE: Why yes, I too would attack the right side of that defense.

Montreal Impact

The Impact finally decided to get younger, which is something the fans have been waiting on for a while. They could end up with as many as seven starters aged 25 or younger, and two of them – box-to-box midfielder Saphir Taïder and attacking midfielder Jeisson Vargas – are supposed to be legitimate stars. There’s also a distinctly Canadian flair to this group, with Raheem Edwards, Samuel Piette, Michael Petrasso and Anthony Jackson-Hamel all expected to play big roles.

So that makes this a season unlike almost any other in Impact history. This team’s been addicted to, let’s call it “experience” since Day 1, and now they’ve turned that page. And that, of course, makes them hard to predict.

There are also the elephant in the room: Ignacio Piatti’s age. The league’s best winger for three years running just turned 33, and while that’s not the very end he’s clearly operating on a different timeline than the bulk of this roster. If this were any other league in almost any other sport, there’d be serious talk about flipping him to a top-tier contender in exchange for a collection of other assets (money, younger players, Homegrown rights, etc.).

Business-wise, MLS hasn’t really grown into that sort of league just yet. But new manager Remi Garde was happy enough to trade Laurent Ciman (and then land a few verbal jabs on him) this offseason, so it’s not out of the question that the same could happen with Piatti. What if, say, the Fire offer up all their Accam cash and a good young player sometime in the next month? Garde doesn’t slam the phone down, right?

It’s something to think about here.

WEEK 1 LINEUP

NOTE: I don’t think Vargas is going to start in Week 1, but what do I know, really?

ED. NOTE (BAER): Expect to see Raitala at center back and Daniel Lovitz at left back with Zakaria Diallo out.

New England Revolution

Based upon preseason, here’s one thing that appears to have definitely changed for the Revs: They will not be taking plays off. This very gifted group of technical players have had a habit, over the years, or tuning out for big chunks of matches. Sometimes that came in the beginning of games, and sometimes in the middle. Last year, however, it more and more took place at the end, and thus New England were probably the league’s most disappointing second half team in 2017.

I don’t think that will be the case this year. New head coach Brad Friedel has them getting “stuck in,” for lack of a better term, from minutes 1-through-90. It’s bordered on vicious at times, which is something the Revs really haven’t been for most of this decade.

Now, “hard tackling” is not an adequate substitute for “well coached” or “tactically astute” or even “prepared.” I don’t know if the Revs will be any of those things, and the Lee Nguyen saga virtually guarantees they will be a less dangerous team moving forward than they’ve been for the last five seasons unless – say it with me, now – this is the year that Juan Agudelofinally breaks through. There are a million-and-one questions, which is rare for a team that’s brought so many pieces back.

So I don’t know what to tell you here. New England’s a big old mystery.

WEEK 1 LINEUP

NOTE: Kind of throwing a dart for my pick at right wing. The rest of it I’m pretty sure of.

Colorado Rapids

I’ve spilled a lot of ink on this already, but I’ll say it one more time here: In this league, pretty much everyone has started to look to Latin America and to within, via academies, for their roster needs. We saw it all offseason as everyone from Orlando to Vancouver, from LA to Montreal and pretty much every stop in between raided leagues south of the border – and mostly south of the Panama Canal – with suitcases of TAM and GAM and DP slot.

They zigged. The Rapids zagged.

Everyone else is getting more Hispanic while Colorado have decided to get more northern European. They brought in Englishman Anthony Hudson as head coach, signed players out of the Championship and Scottish Premier League and Sweden and Germany, and are pretty obviously building a “stout at the back, kill ’em on the counter” group.

It’s not what I’d do, but at least it’s a plan. At least it’s a system and an ethos, with the idea that “Part A will function in this way because we want Parts B and C to function in these other ways.” I’m not sure that Colorado have really had that since 2013.

Who will be their best player? Ask again later. Who’s going to be their leading scorer? Honestly, you’ve got me there. Can they make the altitude work to their advantage? Let to tell you, I’m stumped. Will any of the young guys improve? No idea. Does Tim Howard have anything left in the tank? Um… I don’t want to answer that one.

I don’t expect much from the Rapids except no-frills, solid defense. As they showed in 2016, sometimes that’s enough. (But usually it’s not).

OPENER LINEUP

NOTE: Maybe the only predominantly 5-3-2 team in the league this year?

Philadelphia Union

The Philadelphia Union have been promising two things over the past several years: A true No. 10 and a youth movement. They’ve more or less failed to deliver on both promises, but – my goodness, my goodness – it looks like 2018 is the year that they’re going to deliver.

The Union signed Borek Dockal on Wednesday morning, the 29-year-old Czech international playmaker who seems destined to wear the No. 10 shirt. Dockal doesn’t have the world’s most impressive resume, but he’s been a very good player in the Czech league and in the Europa league for a long time, and he’s banged home meaningful goals against the likes of Turkey, the Netherlands and Iceland in international competition. Without having seen him play I’m going to lay money on him clearing the “Better than Roland Alberg” bar.

Him, and Accam and C.J. Sapong and a healthy Fabian Herbers/Fafa Picault platoon is not going to be the best attack in the league. But they will not have to work as hard just to create middling chances as they did the past few years. There is balance, experience, speed and creativity there.

My worry this year is on the other side of the field, at least in part because of the youth movement. Auston Trusty looks locked in as a starter at center back, and there just aren’t a ton of 19-year-old center backs who’ve ever played well in MLS. Matthew Real, another Homegrown, could end up playing lots of minutes at left back. He’s 18. If Haris Medunjanin continues to be as poor as he was in preseason, 20-year-old Derrick Jones could be the d-mid. Jack Elliott, all of 22-year-old and in his second year as a pro, is the grizzled vet in front of Andre Blake.

I’ll go ahead and admit that I love this. Let Philly be the Ajax of MLS as far as I’m concerned. I think the fans will live with a couple years of non-Ajax-like results as long as they see the ethos they were promised.

WEEK 1 LINEUP

NOTE: I think Homegrown 18-year-old Anthony Fontana will get the start in Week 1 before Dockal takes over for good. I’ve also got Keegan Rosenberry pipping Raymon Gaddis at right back.

Minnesota United FC

I’m struggling with how to be gentle here, so I’ve decided to just go ahead and rip the bandaid off instead of easing into it. So here goes: I think there’s a decent chance Minnesota United will be worse in Year 2 than they were in Year 1.

Above and beyond everything else, there were three things that really worked for the Loons last year:

Sam Cronin solidified that central midfield, making them tough to break down

The Brent Kallman+Francisco Calvo CB combo worked pretty well

Christian Ramirez banged in goals at a DP-level

Well, Cronin’s been sidelined for unknown reasons (he missed a chunk of last year due to concussions), it looks like Michael Boxall – who wasn’t great – is preferred to Kallman or rookie Wyatt Omsberg (who will likely sign before the opener), and there’s a sneaking suspicion around the Twin Cities that Ramirez will be benched in favor of Abu Danladi.

So I’m just not sure that the things that worked in 2017 will be improved upon in 2018, and so in a lot of ways that makes this feel like a second straight expansion year. Obviously the scattershot way the front office has gone about collecting talent hasn’t helped even a little, but I think it’s fair to worry some about Adrian Heath’s decisions on the sideline as well.

The good news? Everybody in this league needs wingers, and MNUFC have a million of ’em. So if they need to swing another springtime trade like the one that netted them Cronin last year, they have the pieces to do so.

WEEK 1 LINEUP

NOTE: Bear in mind that I may be waaaaay off on this.

In terms of top-end talent, I think it’s fair to put LAFC in the same neighborhood as where Atlanta United last season. Carlos Vela was a roughly Giovinco-level player in Europe, and Diego Rossi is one of the biggest young (19) stars in Uruguay’s always bright attacking pipeline. Add in Portuguese playmaker Andre Horta (if they get him, and I think they will) and Colombian d-mid Eduard Atuesta – at age 20 one of the better d-mids in his native league – and it feels Five Stripes-ish, right?

In terms of filling out the rest of the roster, I think it’s fair to put LAFC in the same neighborhood as MNUFC last season. It’s taken them forever to even get up to 20 roster slots, the midfield is a mess (from the outside looking in, mind you), and I’ll admit a whole lot of “you know, I just don’t think that’s quite gonna work” about the backline.

More to the point, though, is that they simply don’t have the depth they need if things go wrong. What if Walker Zimmerman or Laurent Ciman continue with last year’s form, or if Benny Feilhaber hits the wall? Vela just pulled up lame; what now?

Atlanta had answers to these questions. LAFC don’t, that I can see.

Beyond that, it seems pretty clear they intend to play out of everything, and to use Feilhaber as a regista, a deep-lying playmaker who orchestrates more than creates. I love the idea behind it, but also let’s all just admit that the degree of difficulty for this gambit is damn near off the charts.

Of course, the rewards would be as well. It’s LA, so you’ve gotta go big or go home. Either way it should be entertaining as hell.

WEEK 1 LINEUP

NOTE: Some injuries, some uncertainty. What the hell, man, let’s just roll the ball out and see what happens!

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MLSsoccer.com News

Armchair Analyst: Frontrunners, the Pack & all 23 MLS teams by tier was originally published on 365 Football

[robertkstone]

2019 Infiniti QX50 First Drive: Back On Target

A writing job at Motor Trend can be described like this: Every year, you drive every new car, truck, SUV, and minivan on the market, and you have to generate an opinion about each and every one.

At some point in the past I spent time behind the wheel of the old QX50; however, I have no memory of doing so and as such hold no opinion of Infiniti’s compact premium SUV. Well, other than it was never much to look at, though the malformed metal goes back to the pre–Johan de Nysschen days when the lumpy thing was called the EX35.

But things change. I just spent the day with the all-new 2019 QX50. Let’s just say I won’t be forgetting this one anytime soon.

The new QX50 is handsome and honestly good-looking. Detractors will no doubt say something about how Infiniti’s newest crossover resembles a Mazda CX-3. So what? The Ford Fusion has looked like an Aston Martin for years now. We’ve all survived. The QX50 shows off Infiniti’s talent and affinity for putting sharp creases into curved metal. Such handiwork is impressive from a stamping perspective with the added benefit of looking premium. Plus, the crescent kink in the D-pillar is the first time that particular design trait has worked on a production Infiniti. For proof, check out the hard side of a Q60. Tell me that C-pillar isn’t odd. With the QX50, it totally works. The interior is (for the most part) pretty spiffy, as well—especially on higher trimmed models with the blue suede accents. I do have one giant gripe, but let’s save that for later.

The QX50 will go down in the annals of car (geek) history for one very important reason: It’s the first production vehicle to come with Infiniti’s VC-Turbo 2.0-liter inline-four. The VC stands for variable compression, and the VC-Turbo can run at anywhere from 8:1 to 14:1. If the governing computer sees a need for 10.5:1, the engine’s compression can switch to that ratio.

The VC-Turbo also features variable displacement, though a) VD-Turbo would have been a horrible name, and b) the displacement grows only from 1,992 cubic centimeters to 1,997; it remains a 2.0-liter throughout. Long story short, the high 14:1 compression ratio is great for low-load, high-mpg cruising. The 8:1 ratio is best for creating big power with the help of a turbocharger. Based on the driver’s right foot, the engine literally repositions the bottom end of the connecting rod to vary the compression.

Peak output is 268 horsepower at 5,600 rpm and 280 lb-ft of torque from 1,600 to 4,800 rpm. The VC-Turbo replaces the old VQ 3.7-liter V-6, which was good for 325 hp at 7,000 rpm and 267 lb-ft of torque at 5,200 rpm. Obviously, the old engine made 17.5 percent more power than the VC-Turbo does. But look at where the VQ delivered its power. Let’s be honest: No QX50 owner ever intentionally revved his or her engine out to 7,000 rpm. Plus, not only is torque increased with the new engine, but the peak also shows up at very low revs.

As the ever-quotable Bob Lutz famously said, “Americans buy horsepower but drive torque.” In other words, yeah, the “big” number is lower, but do people buying SUVs like the QX50 actually care? I doubt it, and Infiniti is betting on them not, either. Besides, compared to the 2.0-liter turbo I-4s found in the competition—Audi Q5, Mercedes-Benz GLC, BMW X3, Lexus NX—the Infiniti makes more horsepower. Also important as gas prices edge upward again: Fuel economy is up by a whopping 35 percent compared to the old car—26–27 mpg combined instead of 20.

The VC-Turbo has some other cool features, too, such as a multipath cooling system, variable geometry oil pumps, and plasma-transferred wire arc cylinder liners (as found on the Nissan GT-R). The turbo bolts right to the cylinder head to reduce spool-up time and turbo lag.

In the early morning light of the rapidly approaching age of the electric car—Infiniti, for instance, just announced that every new car starting in 2021 will be “electrified”—we are seeing wonderful engineering Hail Marys. Take Mercedes-Benz’s new M256 inline-six, a 48-volt beltless, starterless, alternatorless tour de force, complete with an electric supercharger. A Swedish company called Freevalve is set to put a camless valve train into production. With the VC-Turbo, Infiniti joins the chorus of innovators proving the internal combustion engine ain’t dead yet.

The entire QX50 platform is new, too. The body-in-white is 23 percent stiffer than before. Lighter, too, but we’ll wait until we plop one on our scales to be sure exactly how much. The old QX50 was derived from the G sedan (now called the Q50) and as such was front-engine and rear-wheel drive. That’s a great combination for a sport sedan, but, as it turns out, a fairly crummy way to lay out a small SUV. The new QX50 is front-engine, front-wheel drive, but (of course) it can be had with AWD.

Why is this better? Basically, a front-engine, rear-drive vehicle has its transmission behind the engine, eating up precious cabin space. In a FWD-derived vehicle, the transmission can be next to the engine. In terms of roominess and cargo capacity, FWD platforms are the better way to build a people schlepper. Years ago a friend of mine had to sell her EX35 because her infant’s car seat wouldn’t fit. No such problems will happen with the new QX50. In fact, the spacious baby hauler now sports reclining rear seats.

Like the Q50 sedan and Q60 coupe, the QX50 comes with Infiniti’s much maligned—and let’s be real, rightly maligned—steer-by-wire technology. However, unlike the Q50 and Q60, the QX50’s virtual steering feels pretty good. The SUV steers just like a normal vehicle and as well as any of its competitors. Sports car good? No way, but then that’s not the segment the QX50 competes in. But hey! For the first time ever I’m saying something nice about Infiniti’s literally disconnected steering. What a world ���

Speaking of steering by wire, the QX50 can be had with Nissan and Infiniti’s ProPilot Assist, a system that under certain conditions can steer, brake, and accelerate the vehicle. Until passenger cars come packing actual artificial intelligence, it’s best to think of all systems resembling ProPilot Assist as fancy forms of cruise control. Basically, they can relieve a little bit of the suffering from being stuck in stop-and-go traffic. In addition, these not-quite-autonomous systems prevent you from killing others if you look at a text message or open a bottle of water. (Ahem, don’t text and drive.) Although no Infiniti employee would own up to it, this flavor of ProPilot Assist feels an awful lot like Mercedes’ last-generation DTR+ Steering Assist.

If you’re not a fan of engineering, you’re probably just now waking up from the discussion a few paragraphs up about the revolutionary VC-Turbo engine. All that matters is: Does it work? Yes, it does, quite well as a matter of fact. I was never in a situation where the QX50 felt underpowered. On crowded Los Angeles streets where we rarely managed to go the speed limit, the engine was calm and quiet, and honestly I wasn’t even thinking about the technological marvel sitting inches in front of my right foot. The light turned green, and taking one for science, I stomped my right foot down. Just like that, the VC-Turbo roared to life. I was suddenly piloting a quick SUV, just as advertised. You can’t detect when the compression ratio changes. In fact, attaching the conrods to the moveable secondary linkage smooths things out to the point where the engine doesn’t need balance shafts. I must reiterate that I truly am blown away by this engine.

There are two things I don’t like about the QX50. One is the transmission. The perfectly fine seven-speed automatic found in the Q50 and other Infiniti products only works with longitudinally mounted engines. The VC-Turbo, though, is transverse. Re-engineering a longitudinal transmission into a transverse-accommodating one is no doubt expensive. Infiniti does have a transmission lying around that mounts east to west and can handle a good deal of torque. Unfortunately it’s the CVT found in the QX60 and both the Nissan Maxima and Pathfinder.

As such, I just gotta ask: Why oh why would you bring to market one of the most technologically advanced engines ever sold and mate it to a hated transmission that’s never going to be good enough? Cost savings, I know. But it’s a bad pairing, and I don’t like it. I can’t even believe a CVT is a good pairing to the VC-Turbo engine. I’d imagine that a constant gear ratio would allow the engine to vary the compression most efficiently. Even if that’s not the case, and especially when you put the QX50 into Sport mode, the transmission does everything enthusiastic drivers hate about CVTs—namely hold the engine at high revs even if your foot is off the throttle. Plus, you know, they don’t shift. However, most customers will never consciously rev past four grand.

The other letdown is the dual-screen navigation and entertainment system. It’s flat-out disappointing. Infiniti claims that two screens are preferred by customers because that setup allows the map to be permanently displayed. I agree with them that always having a map is a great feature. But as the owner of an Audi Allroad, I know that there’s an excellent way to have a permanent map as opposed to Infiniti’s bad way. In fact, with the Audi I can have the map in front of me or on the main nav screen. Or both. People cross-shopping the two vehicles will notice.

Perhaps worst of all, the fonts on the two display screens are different! Don’t marketing departments always say that the ideal customers for vehicles like this are architects and graphic designers? It cheapens an otherwise lovely interior because you are always reminded that one screen was sourced 10 years before the other. That decade-old map software is not atrocious, but it’s worse than all the competition, save for Lexus. And like Lexus, Infiniti weirdly refuses to put current mapping technology into its vehicles. No one will explain why. Then there’s the lower touchscreen, which is controlled not by the rotary controller (that’s for the top screen) or even by touching it (because it is after all a touchscreen) but by a bunch of plastic buttons below the bottom screen. And on the sides. The whole mess makes no sense. It’s as if a haptic hand grenade went off and the designers said, “It’s good enough. Let’s get lunch.”

Keith St. Clair, Infiniti’s director of project strategy, said that the QX50 is “probably our most important launch ever or right up there with the Q45.” Big statement, sure, but small premium SUVs are both huge sellers and huge profit centers for carmakers. Get it right, and the money comes rolling in. Get it wrong, and, well, there’s really no getting it wrong. The stakes are just too damn high.

For the most part, Infiniti got the QX50 exactly right. The exterior is gorgeous and looks premium. It’s fuel-efficient yet powerful. It’s small on the outside but large on the inside. The QX50 is even priced competitively, starting at $37,545, with a fully loaded AWD model clocking in at $61,995. My quibbles aside, the most competitive segment in the luxury car world just got a whole lot more cutthroat. More like this, Infiniti. More like this.

IFTTT

[heliosfinance]

3 Reasons IPOs Are Almost Always Bad Investments

People indulging in the stock market are often people with a lot of emotions. They get excited by something new, especially if it holds the promise of making them a whole lot richer and provides bragging rights at their next social gathering.

Maybe that’s why amateur and professionals alike tend to lose their minds in bull markets, particularly when a hot initial public offering, or IPO, is offered to them by their broker.

On one hand, had you bought into the IPOs of Infosys (yes, remember?), HDFC Bank, Sun Pharma, or TCS, you would have had some volatile price fluctuations along the way, but there is no question that you have made enough money to substantially change the quality of your life. Clearly, a well chosen IPO can be a life changing experience if you simply make the right choice and stick with the stock for years.

On the other hand, there is a large majority of IPOs such as those of Reliance Power, Suzlon and DLF, which have destroyed investors’ capital. With such businesses, even the “long-term” cannot save you from permanent capital destruction.

The Truth about IPOs Benjamin Graham wrote in The Intelligent Investor…

In every case, investors have burned themselves on IPOs, have stayed away for at least two years, but have always returned for another scalding. For as long as stock markets have existed, investors have gone through this manic-depressive cycle.

In America’s first great IPO boom back in 1825, a man was said to have been squeezed to death in the stampede of speculators trying to buy shares in the new Bank of Southwark. The wealthiest buyers hired thugs to punch their way to the front of the line. Sure enough, by 1829, stocks had lost roughly 25% of their value.

Over my 14+ years of experience in the stock markets, I have rarely come across any IPO that has been launched keeping in mind the interest of investors.

A majority of them have been launched in the form of ‘legalized looting’ by company promoters and their investment bankers.

I have come to believe how Graham defined IPOs in The Intelligent Investor. He said that intelligent investors should conclude that IPO does not stand only for ‘initial public offering’. More accurately, it is a shorthand for…

It’s Probably Overpriced, or

Imaginary Profits Only, or even

Insiders’ Private Opportunity

3 Reasons to Avoid IPOs There is an old saying in corporate circles. One should raise money when it is available rather than when it is needed. This is the reason most companies come out with their IPOs during rising or bull markets when money is aplenty.

Unfortunately, most investors in these IPOs come out on the losing end of the equation.

Granted, some IPO deals are good for retail investors, but I’d argue the odds of that happening are stacked against you.

The stock market regulator SEBI’s rules that are designed to protect Indian IPO investors, generate reams of disclosures about the company and the offering process but unfortunately, many investors neither read nor understand these.

After all, how many people have the time or inclination to read 400-500 pages of IPO offer documents? And then they say – “Please read the offer document carefully before investing.”

IPOs are not level playing fields, I believe. This game is stacked heavily against the small investor who is lured into the hype and then often loses a large part of his savings betting on listing gains.

Here are 3 reasons I believe small investors must avoid IPOs and rather search for great businesses among those already listed –

1. IPOs are Expensive People assume an IPO is an opportunity to “get in at lower prices”. In reality, by the time you buy shares of a company in its IPO, other parties have almost always invested earlier at lower prices – often, much lower prices.

Before you even knew about the company, there probably were three or four rounds of private investment, and the per-share price of ownership usually goes up with each round.

In fact, one of the big incentives for an IPO is so that previous investors – founders, venture capital firms, large individual investors – can “cash out” at least a portion of what they’ve invested.

That is why most IPOs are often expensively priced. They are not priced to offer you a piece of the business at cheap or reasonable prices, but to find “bigger fools” who can get in when the “privileged few” are getting out.

Don’t believe the investment bankers when they say that IPOs are “cheap and attractive”. Their incentive lies in first fixing the IPO price (whatever the promoter wants) and then working backward to justify the same.

2. IPOs Create Vividness Bias It’s important to understand that the investment bankers and underwriters of IPO are simply salesmen.

The whole IPO process is intentionally hyped up to get as much attention as possible. Since IPOs only happen once for each company, they are often presented as “once in a lifetime” opportunities for the promoters and other large shareholders to cash out.

Promoters and investment bankers thus create stories that are “vivid” – by using terms like “listing gains”, “bright future”, “long-term story” – and entice you to believe them as soon as you hear them.

You must avoid getting charmed by that vividness.

Try to go behind the beauty of that vividness, and scrutinize the IPO to see if it is really so bright and beautiful.

In other words, you need to get past the “bright and shiny” stuff that surrounds IPOs because it’s easy to fall into the trap given that so many others around you are falling for the same.

Don’t buy a stock only because it’s an IPO – do it because it’s a good investment.

3. IPOs Underperform Most people who get onto the IPO bandwagon often look at the listing or short term gains they can make in the next few weeks and months. In bull markets, this often happens.

However, if you consider the long term performance of IPOs, most of them underperform their peers and the general market – simply because they started off with high valuations.

As you can see in the chart below, the BSE-IPO index has underperformed both the BSE-30 and BSE-200 indices ever since this index was launched in 2004.

Data Source: BSE’s Website So much for the hype!

Final Word Here are some thoughts on IPOs from a few of the investing legends…

Warren Buffett wrote in his 1993 letter…

[An] intelligent investor in common stocks will do better in the secondary market than he will do buying new issues…[IPO] market is ruled by controlling stockholders and corporations, who can usually select the timing of offerings or, if the market looks unfavourable, can avoid an offering altogether. Understandably, these sellers are not going to offer any bargains, either by way of public offering or in a negotiated transaction.

When Buffett issued Class-B shares of Berkshire, he made sure that it wasn’t a typical IPO. He wrote in his 1997 letter…

Our issuance of the B shares not only arrested the sale of the trusts, but provided a low-cost way for people to invest in Berkshire if they still wished to after hearing the warnings we issued. To blunt the enthusiasm that brokers normally have for pushing new issues—because that’s where the money is—we arranged for our offering to carry a commission of only 1½%, the lowest payoff that we have ever seen in common stock underwriting. Additionally, we made the amount of the offering open-ended, thereby repelling the typical IPO buyer who looks for a short-term price spurt arising from a combination of hype and scarcity.

The dot com crash of 2000 was preceded by hundreds of IPOs where the underlying business was literally nonexistent. In his 2001 letter, Buffett wrote…

The fact is that a bubble market has allowed the creation of bubble companies, entities designed more with an eye to making money off investors rather than for them. Too often, an IPO, not profits, was the primary goal of a company’s promoters. At bottom, the “business model” for these companies has been the old-fashioned chain letter, for which many fee-hungry investment bankers acted as eager postmen.

Benjamin Graham wrote in Chapter 6 of The Intelligent Investor…

Our one recommendation is that all investors should be wary of new issues—which means, simply, that these should be subjected to careful examination and unusually severe tests before they are purchased. There are two reasons for this double caveat. The first is that new issues[IPO] have special salesmanship behind them, which calls therefore for a special degree of sales resistance. The second is that most new issues are sold under “favorable market conditions”—which means favorable for the seller and consequently less favorable for the buyer.

Charlie Munger said this in Berkshire’s 2004 meeting…

It is entirely possible that you could use our mental models to find good IPOs to buy. There are countless IPOs every year, and I’m sure that there are a few cinches that you could jump on. But the average person is going to get creamed. So if you’re talented, good luck.

To which Buffett added…

An IPO is like a negotiated transaction – the seller chooses when to come public – and it’s unlikely to be a time that’s favorable to you. So, by scanning 100 IPOs, you’re way less likely to find anything interesting than scanning an average group of 100 stocks.

Buffett also said…

It’s almost a mathematical impossibility to imagine that, out of the thousands of things for sale on a given day, the most attractively priced is the one being sold by a knowledgeable seller (company insiders) to a less-knowledgeable buyer (investors).

The late Mr. Parag Parikh wrote in his book, Value Investing and Behaviour Finance…

It’s safe to conclude that IPOs, which seem like a good investment vehicle are, in reality, not so. In fact, an IPO is a product which is against investor interest, as it is mostly offered to investors when they are willing to pay a higher and outrageous valuation in boom times.

Prof. Sanjay Bakshi wrote this in a 2000 article …

Any kind of rational comparison of long-term returns in the IPO market and the secondary market would show that investors do far better in the latter than in the former…IPOs are one of the surest ways of losing money in the long run.

Four characteristics of the IPO market makes it a market where it is far more profitable to be a seller than to be a buyer. First, in the IPO market, there are many buyers and only a handful of sellers. Second, the sellers, being insiders, always know more about the company whose shares are to be sold, than the buyers. Third, the sellers hold an extremely valuable option of deciding the timing of the sale. Naturally, they would choose to sell only when they get high prices for the shares. Finally, the quantity of shares being offered is flexible and can be “managed” by the merchant bankers to attain the optimum price from the sellers’ viewpoint.

But, what is “optimum” from the sellers’ viewpoint is not the “optimum” from the buyers’ viewpoint. This is an important point to note: Companies want to raise capital at the lowest possible cost, which from their viewpoint means issuance of shares at high prices. That is why bull markets are always accompanied by a surge in the issuance of shares.

You get the message, right?

It’s important to remember that, while most are, not every IPO is bad. It’s just that the base rate of investing in an IPO is not in favour of the small investor, and thus you must assess every investment opportunity on its own merit.

Hype and excitement don’t necessarily equate to a good investment opportunity. If stocks continue to climb like they have over the past few months, and the IPO line lengthens, I’m afraid you’ll have plenty of opportunities to see that I’m right.

The post 3 Reasons IPOs Are Almost Always Bad Investments appeared first on Safal Niveshak.

3 Reasons IPOs Are Almost Always Bad Investments published first on http://ift.tt/2ljLF4B

[heliosfinance]

3 Reasons IPOs Are Almost Always Bad Investments

People indulging in the stock market are often people with a lot of emotions. They get excited by something new, especially if it holds the promise of making them a whole lot richer and provides bragging rights at their next social gathering.

Maybe that’s why amateur and professionals alike tend to lose their minds in bull markets, particularly when a hot initial public offering, or IPO, is offered to them by their broker.

On one hand, had you bought into the IPOs of Infosys (yes, remember?), HDFC Bank, Sun Pharma, or TCS, you would have had some volatile price fluctuations along the way, but there is no question that you have made enough money to substantially change the quality of your life. Clearly, a well chosen IPO can be a life changing experience if you simply make the right choice and stick with the stock for years.

On the other hand, there is a large majority of IPOs such as those of Reliance Power, Suzlon and DLF, which have destroyed investors’ capital. With such businesses, even the “long-term” cannot save you from permanent capital destruction.

The Truth about IPOs Benjamin Graham wrote in The Intelligent Investor…

In every case, investors have burned themselves on IPOs, have stayed away for at least two years, but have always returned for another scalding. For as long as stock markets have existed, investors have gone through this manic-depressive cycle.

In America’s first great IPO boom back in 1825, a man was said to have been squeezed to death in the stampede of speculators trying to buy shares in the new Bank of Southwark. The wealthiest buyers hired thugs to punch their way to the front of the line. Sure enough, by 1829, stocks had lost roughly 25% of their value.

Over my 14+ years of experience in the stock markets, I have rarely come across any IPO that has been launched keeping in mind the interest of investors.

A majority of them have been launched in the form of ‘legalized looting’ by company promoters and their investment bankers.

I have come to believe how Graham defined IPOs in The Intelligent Investor. He said that intelligent investors should conclude that IPO does not stand only for ‘initial public offering’. More accurately, it is a shorthand for…

It’s Probably Overpriced, or

Imaginary Profits Only, or even

Insiders’ Private Opportunity

3 Reasons to Avoid IPOs There is an old saying in corporate circles. One should raise money when it is available rather than when it is needed. This is the reason most companies come out with their IPOs during rising or bull markets when money is aplenty.

Unfortunately, most investors in these IPOs come out on the losing end of the equation.

Granted, some IPO deals are good for retail investors, but I’d argue the odds of that happening are stacked against you.

The stock market regulator SEBI’s rules that are designed to protect Indian IPO investors, generate reams of disclosures about the company and the offering process but unfortunately, many investors neither read nor understand these.

After all, how many people have the time or inclination to read 400-500 pages of IPO offer documents? And then they say – “Please read the offer document carefully before investing.”

IPOs are not level playing fields, I believe. This game is stacked heavily against the small investor who is lured into the hype and then often loses a large part of his savings betting on listing gains.

Here are 3 reasons I believe small investors must avoid IPOs and rather search for great businesses among those already listed –

1. IPOs are Expensive People assume an IPO is an opportunity to “get in at lower prices”. In reality, by the time you buy shares of a company in its IPO, other parties have almost always invested earlier at lower prices – often, much lower prices.

Before you even knew about the company, there probably were three or four rounds of private investment, and the per-share price of ownership usually goes up with each round.

In fact, one of the big incentives for an IPO is so that previous investors – founders, venture capital firms, large individual investors – can “cash out” at least a portion of what they’ve invested.

That is why most IPOs are often expensively priced. They are not priced to offer you a piece of the business at cheap or reasonable prices, but to find “bigger fools” who can get in when the “privileged few” are getting out.

Don’t believe the investment bankers when they say that IPOs are “cheap and attractive”. Their incentive lies in first fixing the IPO price (whatever the promoter wants) and then working backward to justify the same.

2. IPOs Create Vividness Bias It’s important to understand that the investment bankers and underwriters of IPO are simply salesmen.

The whole IPO process is intentionally hyped up to get as much attention as possible. Since IPOs only happen once for each company, they are often presented as “once in a lifetime” opportunities for the promoters and other large shareholders to cash out.

Promoters and investment bankers thus create stories that are “vivid” – by using terms like “listing gains”, “bright future”, “long-term story” – and entice you to believe them as soon as you hear them.

You must avoid getting charmed by that vividness.

Try to go behind the beauty of that vividness, and scrutinize the IPO to see if it is really so bright and beautiful.

In other words, you need to get past the “bright and shiny” stuff that surrounds IPOs because it’s easy to fall into the trap given that so many others around you are falling for the same.

Don’t buy a stock only because it’s an IPO – do it because it’s a good investment.

3. IPOs Underperform Most people who get onto the IPO bandwagon often look at the listing or short term gains they can make in the next few weeks and months. In bull markets, this often happens.

However, if you consider the long term performance of IPOs, most of them underperform their peers and the general market – simply because they started off with high valuations.

As you can see in the chart below, the BSE-IPO index has underperformed both the BSE-30 and BSE-200 indices ever since this index was launched in 2004.

Data Source: BSE’s Website So much for the hype!

Final Word Here are some thoughts on IPOs from a few of the investing legends…

Warren Buffett wrote in his 1993 letter…

[An] intelligent investor in common stocks will do better in the secondary market than he will do buying new issues…[IPO] market is ruled by controlling stockholders and corporations, who can usually select the timing of offerings or, if the market looks unfavourable, can avoid an offering altogether. Understandably, these sellers are not going to offer any bargains, either by way of public offering or in a negotiated transaction.

When Buffett issued Class-B shares of Berkshire, he made sure that it wasn’t a typical IPO. He wrote in his 1997 letter…

Our issuance of the B shares not only arrested the sale of the trusts, but provided a low-cost way for people to invest in Berkshire if they still wished to after hearing the warnings we issued. To blunt the enthusiasm that brokers normally have for pushing new issues—because that’s where the money is—we arranged for our offering to carry a commission of only 1½%, the lowest payoff that we have ever seen in common stock underwriting. Additionally, we made the amount of the offering open-ended, thereby repelling the typical IPO buyer who looks for a short-term price spurt arising from a combination of hype and scarcity.

The dot com crash of 2000 was preceded by hundreds of IPOs where the underlying business was literally nonexistent. In his 2001 letter, Buffett wrote…

The fact is that a bubble market has allowed the creation of bubble companies, entities designed more with an eye to making money off investors rather than for them. Too often, an IPO, not profits, was the primary goal of a company’s promoters. At bottom, the “business model” for these companies has been the old-fashioned chain letter, for which many fee-hungry investment bankers acted as eager postmen.

Benjamin Graham wrote in Chapter 6 of The Intelligent Investor…

Our one recommendation is that all investors should be wary of new issues—which means, simply, that these should be subjected to careful examination and unusually severe tests before they are purchased. There are two reasons for this double caveat. The first is that new issues[IPO] have special salesmanship behind them, which calls therefore for a special degree of sales resistance. The second is that most new issues are sold under “favorable market conditions”—which means favorable for the seller and consequently less favorable for the buyer.

Charlie Munger said this in Berkshire’s 2004 meeting…

It is entirely possible that you could use our mental models to find good IPOs to buy. There are countless IPOs every year, and I’m sure that there are a few cinches that you could jump on. But the average person is going to get creamed. So if you’re talented, good luck.

To which Buffett added…

An IPO is like a negotiated transaction – the seller chooses when to come public – and it’s unlikely to be a time that’s favorable to you. So, by scanning 100 IPOs, you’re way less likely to find anything interesting than scanning an average group of 100 stocks.

Buffett also said…

It’s almost a mathematical impossibility to imagine that, out of the thousands of things for sale on a given day, the most attractively priced is the one being sold by a knowledgeable seller (company insiders) to a less-knowledgeable buyer (investors).

The late Mr. Parag Parikh wrote in his book, Value Investing and Behaviour Finance…

It’s safe to conclude that IPOs, which seem like a good investment vehicle are, in reality, not so. In fact, an IPO is a product which is against investor interest, as it is mostly offered to investors when they are willing to pay a higher and outrageous valuation in boom times.

Prof. Sanjay Bakshi wrote this in a 2000 article …

Any kind of rational comparison of long-term returns in the IPO market and the secondary market would show that investors do far better in the latter than in the former…IPOs are one of the surest ways of losing money in the long run.

Four characteristics of the IPO market makes it a market where it is far more profitable to be a seller than to be a buyer. First, in the IPO market, there are many buyers and only a handful of sellers. Second, the sellers, being insiders, always know more about the company whose shares are to be sold, than the buyers. Third, the sellers hold an extremely valuable option of deciding the timing of the sale. Naturally, they would choose to sell only when they get high prices for the shares. Finally, the quantity of shares being offered is flexible and can be “managed” by the merchant bankers to attain the optimum price from the sellers’ viewpoint.

But, what is “optimum” from the sellers’ viewpoint is not the “optimum” from the buyers’ viewpoint. This is an important point to note: Companies want to raise capital at the lowest possible cost, which from their viewpoint means issuance of shares at high prices. That is why bull markets are always accompanied by a surge in the issuance of shares.

You get the message, right?

It’s important to remember that, while most are, not every IPO is bad. It’s just that the base rate of investing in an IPO is not in favour of the small investor, and thus you must assess every investment opportunity on its own merit.

Hype and excitement don’t necessarily equate to a good investment opportunity. If stocks continue to climb like they have over the past few months, and the IPO line lengthens, I’m afraid you’ll have plenty of opportunities to see that I’m right.

The post 3 Reasons IPOs Are Almost Always Bad Investments appeared first on Safal Niveshak.

3 Reasons IPOs Are Almost Always Bad Investments published first on http://ift.tt/2ljLF4B

[heliosfinance]

3 Reasons IPOs Are Almost Always Bad Investments

People indulging in the stock market are often people with a lot of emotions. They get excited by something new, especially if it holds the promise of making them a whole lot richer and provides bragging rights at their next social gathering.

Maybe that’s why amateur and professionals alike tend to lose their minds in bull markets, particularly when a hot initial public offering, or IPO, is offered to them by their broker.

On one hand, had you bought into the IPOs of Infosys (yes, remember?), HDFC Bank, Sun Pharma, or TCS, you would have had some volatile price fluctuations along the way, but there is no question that you have made enough money to substantially change the quality of your life. Clearly, a well chosen IPO can be a life changing experience if you simply make the right choice and stick with the stock for years.

On the other hand, there is a large majority of IPOs such as those of Reliance Power, Suzlon and DLF, which have destroyed investors’ capital. With such businesses, even the “long-term” cannot save you from permanent capital destruction.

The Truth about IPOs Benjamin Graham, the father of value investing, writes in The Intelligent Investor…

In every case, investors have burned themselves on IPOs, have stayed away for at least two years, but have always returned for another scalding. For as long as stock markets have existed, investors have gone through this manic-depressive cycle.

In America’s first great IPO boom back in 1825, a man was said to have been squeezed to death in the stampede of speculators trying to buy shares in the new Bank of Southwark. The wealthiest buyers hired thugs to punch their way to the front of the line. Sure enough, by 1829, stocks had lost roughly 25% of their value.

Over my 11 years of experience in the stock markets, I have rarely come across any IPO that has been launched keeping in mind the interest of investors.

A majority of them have been launched in the form of ‘legalized looting’ by company promoters and their investment bankers.

I have come to believe how Graham defined IPOs in The Intelligent Investor. He said that intelligent investors should conclude that IPO does not stand only for ‘initial public offering’. More accurately, it is a shorthand for…

It’s Probably Overpriced, or

Imaginary Profits Only, or even

Insiders’ Private Opportunity

3 Reasons to Avoid IPOs There is an old saying in corporate circles. One should raise money when it is available rather than when it is needed. This is the reason most companies come out with their IPOs during rising or bull markets when money is aplenty.

Unfortunately, most investors in these IPOs come out on the losing end of the equation.

Granted, some IPO deals are good for retail investors, but I’d argue the odds of that happening are stacked against you.

The stock market regulator SEBI’s rules that are designed to protect Indian IPO investors, generate reams of disclosures about the company and the offering process but unfortunately, many investors neither read nor understand these.

After all, how many people have the time or inclination to read 400-500 pages of IPO offer documents? And then they say – “Please read the offer document carefully before investing.”

IPOs are not level playing fields, I believe. This game is stacked heavily against the small investor who is lured into the hype and then often loses a large part of his savings betting on listing gains.

Here are 3 reasons I believe small investors must avoid IPOs and rather search for great businesses among those already listed –

1. IPOs are Expensive People assume an IPO is an opportunity to “get in at lower prices”. In reality, by the time you buy shares of a company in its IPO, other parties have almost always invested earlier at lower prices – often, much lower prices.

Before you even knew about the company, there probably were three or four rounds of private investment, and the per-share price of ownership usually goes up with each round.

In fact, one of the big incentives for an IPO is so that previous investors – founders, venture capital firms, large individual investors – can “cash out” at least a portion of what they’ve invested.

That is why most IPOs are often expensively priced. They are not priced to offer you a piece of the business at cheap or reasonable prices, but to find “bigger fools” who can get in when the “privileged few” are getting out.

Don’t believe the investment bankers when they say that IPOs are “cheap and attractive”. Their incentive lies in first fixing the IPO price (whatever the promoter wants) and then working backward to justify the same.

2. IPOs Create Vividness Bias It’s important to understand that the investment bankers and underwriters of IPO are simply salesmen.

The whole IPO process is intentionally hyped up to get as much attention as possible. Since IPOs only happen once for each company, they are often presented as “once in a lifetime” opportunities for the promoters and other large shareholders to cash out.

Promoters and investment bankers thus create stories that are “vivid” – by using terms like “listing gains”, “bright future”, “long-term story” – and entice you to believe them as soon as you hear them.

You must avoid getting charmed by that vividness.

Try to go behind the beauty of that vividness, and scrutinize the IPO to see if it is really so bright and beautiful.

In other words, you need to get past the “bright and shiny” stuff that surrounds IPOs because it’s easy to fall into the trap given that so many others around you are falling for the same.

Don’t buy a stock only because it’s an IPO – do it because it’s a good investment.

3. IPOs Underperform Most people who get onto the IPO bandwagon often look at the listing or short term gains they can make in the next few weeks and months. In bull markets, this often happens.

However, if you consider the long term performance of IPOs, most of them underperform their peers and the general market – simply because they started off with high valuations.

As you can see in the chart below, the BSE-IPO index has underperformed both the BSE-30 and BSE-200 indices ever since this index was launched in 2004.

Data Source: BSE’s Website So much for the hype!

Final Word Here are some thoughts on IPOs from a few of the investing legends…

Warren Buffett wrote in his 1993 letter…

[An] intelligent investor in common stocks will do better in the secondary market than he will do buying new issues…[IPO] market is ruled by controlling stockholders and corporations, who can usually select the timing of offerings or, if the market looks unfavourable, can avoid an offering altogether. Understandably, these sellers are not going to offer any bargains, either by way of public offering or in a negotiated transaction.

When Buffett issued Class-B shares of Berkshire, he made sure that it wasn’t a typical IPO. He wrote in his 1997 letter…

Our issuance of the B shares not only arrested the sale of the trusts, but provided a low-cost way for people to invest in Berkshire if they still wished to after hearing the warnings we issued. To blunt the enthusiasm that brokers normally have for pushing new issues—because that’s where the money is—we arranged for our offering to carry a commission of only 1½%, the lowest payoff that we have ever seen in common stock underwriting. Additionally, we made the amount of the offering open-ended, thereby repelling the typical IPO buyer who looks for a short-term price spurt arising from a combination of hype and scarcity.

The dot com crash of 2000 was preceded by hundreds of IPOs where the underlying business was literally nonexistent. In his 2001 letter, Buffett wrote…

The fact is that a bubble market has allowed the creation of bubble companies, entities designed more with an eye to making money off investors rather than for them. Too often, an IPO, not profits, was the primary goal of a company’s promoters. At bottom, the “business model” for these companies has been the old-fashioned chain letter, for which many fee-hungry investment bankers acted as eager postmen.

Benjamin Graham wrote in Chapter 6 of The Intelligent Investor…

Our one recommendation is that all investors should be wary of new issues—which means, simply, that these should be subjected to careful examination and unusually severe tests before they are purchased. There are two reasons for this double caveat. The first is that new issues[IPO] have special salesmanship behind them, which calls therefore for a special degree of sales resistance. The second is that most new issues are sold under “favorable market conditions”—which means favorable for the seller and consequently less favorable for the buyer.

Charlie Munger said this in Berkshire’s 2004 meeting…

It is entirely possible that you could use our mental models to find good IPOs to buy. There are countless IPOs every year, and I’m sure that there are a few cinches that you could jump on. But the average person is going to get creamed. So if you’re talented, good luck.

To which Buffett added…

An IPO is like a negotiated transaction – the seller chooses when to come public – and it’s unlikely to be a time that’s favorable to you. So, by scanning 100 IPOs, you’re way less likely to find anything interesting than scanning an average group of 100 stocks.

Buffett also said…

It’s almost a mathematical impossibility to imagine that, out of the thousands of things for sale on a given day, the most attractively priced is the one being sold by a knowledgeable seller (company insiders) to a less-knowledgeable buyer (investors).

The late Mr. Parag Parikh wrote in his book, Value Investing and Behaviour Finance…

It’s safe to conclude that IPOs, which seem like a good investment vehicle are, in reality, not so. In fact, an IPO is a product which is against investor interest, as it is mostly offered to investors when they are willing to pay a higher and outrageous valuation in boom times.

Prof. Sanjay Bakshi wrote this in a 2000 article …

Any kind of rational comparison of long-term returns in the IPO market and the secondary market would show that investors do far better in the latter than in the former…IPOs are one of the surest ways of losing money in the long run.

Four characteristics of the IPO market makes it a market where it is far more profitable to be a seller than to be a buyer. First, in the IPO market, there are many buyers and only a handful of sellers. Second, the sellers, being insiders, always know more about the company whose shares are to be sold, than the buyers. Third, the sellers hold an extremely valuable option of deciding the timing of the sale. Naturally, they would choose to sell only when they get high prices for the shares. Finally, the quantity of shares being offered is flexible and can be “managed” by the merchant bankers to attain the optimum price from the sellers’ viewpoint.

But, what is “optimum” from the sellers’ viewpoint is not the “optimum” from the buyers’ viewpoint. This is an important point to note: Companies want to raise capital at the lowest possible cost, which from their viewpoint means issuance of shares at high prices. That is why bull markets are always accompanied by a surge in the issuance of shares.

You get the message, right?

It’s important to remember that, while most are, not every IPO is bad. It’s just that the base rate of investing in an IPO is not in favour of the small investor, and thus you must assess every investment opportunity on its own merit.

Hype and excitement don’t necessarily equate to a good investment opportunity. If stocks continue to climb like they have over the past few months, and the IPO line lengthens, I’m afraid you’ll have plenty of opportunities to see that I’m right.

The post 3 Reasons IPOs Are Almost Always Bad Investments appeared first on Safal Niveshak.

3 Reasons IPOs Are Almost Always Bad Investments published first on http://ift.tt/2ljLF4B