Tuesday, December 2, 2008

Crude Settles Down $100/bbl from July High (The Saga of Kurt Warner - Part II)

Today crude oil price finally eclipsed a level that I had been marking time for it to move through. On it's close today, it is now down over $100 since settling at $147.25 in July. The ferocious, unmerciful bear! Crude's fair value was doubted on the way up past $85/bbl- folks said "no way it should be this high." It was further discounted in its fall from the stratosphere to current price levels.

It made want to think of other examples of things or people that had unexpected success - or way overshot what onlookers deemed to be their potential - and then suddenly reverted back to the mean. Take a look at Kurt Warner's Bio:

Kurt Warner's baseline:
  • Attended College at the University of Northern Iowa
  • Graduated in 1994
  • Undrafted
  • Worked at an Iowa area HyVee grocery store for a year (until)
  • 1995 - when he got the call to quarterback the Iowa Barnstormers
Kurt Warner's Unexpected Success:
  • QB'd the Barnstormers for 2 years
  • Plays Backup on an atrocious St. Louis Rams team for 2 years
  • In 1999, Trent Green (the starting Rams QB) blows out his knee in the preseason, and Warner takes over
  • Has one of the most prolific seasons in the history of the NFL, including 4,353 passing yards, 41 passing touchdowns, NFL MVP, Super Bowl Champion and Super Bowl MVP
Kurt Warner's Mean Reversion:
  • In 2002, Warner broke the pinkie of his throwing hand
  • Through 2006, a series of injuries significantly limited his playing time
  • Over this stretch, Warner became a turnover machine - if he didn't fumble, he was likely to throw an interception
  • Warner had 4 more interceptions than TD's in that 4-year stretch
Warner has really turned it around in 2008 - maybe crude will too (again). And you might think that this is a weak example when related to the recent crude oil volatility. Can you think of any better worst-to-first metaphors? Post them, and let me know.

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