Season's Greetings: No cards this year

December 21, 2005|By JAY HANCOCK

If you haven't gotten a Christmas card from me, don't think I hate you or have decided to kick you out of my will.

I am doing you, me and the spirits of economic efficiency a favor by unilaterally disarming in the hazardous and costly escalation of Hallmark exchanges. This is according to the smartest minds of "game theory" economics, which is all about helping us live happily together despite our worst instincts.

If you thought saving the planet from World War III was the most important accomplishment of Nobel laureate Thomas C. Schelling, think again.

Schelling, emeritus professor at the University of Maryland and co-recipient of the economics Nobel in Stockholm this month, laid the groundwork for ending the mutually assured "Season's Greetings" that darkens so many doors this time of year.

In his 1978 book, Micromotives and Macrobehavior, Schelling described the spiral of fears and assumptions that leads to wasteful holiday-card procurement.

"People feel obliged to send cards to people from whom they expect to receive them, often knowing that they will receive them only because the senders expect to receive cards in return," he wrote. "People sometimes send cards only because, cards having been sent for several years, cessation might signal something. People send cards early to avoid the suspicion that they were sent only after one had already been received."

Oh, the excess.

"Sensible people who might readily agree to stop bothering each other with Christmas cards find it embarrassing, or not quite worth the trouble, to reach such agreement," Schelling added.

British economist Tim Harford noted Schelling's observations in the Financial Times a few weeks ago, and he, too, lamented the "grim ritual" of reciprocal felicitation pursued by some families. "Both would prefer to stop," he says, "but neither is going to be the first to do so. `Exchange' is not the right word here. `Vendetta' is more accurate."

Schelling is best known for describing competitive tradeoffs in defense and offense that underlay the Cold War. Nuclear holocaust was avoided because Moscow and Washington publicly promised to blow each other to smithereens in the event of a first strike by the other, and both believed it.

Schelling's prescription for Christmas and Hanukkah cards, however, is different. All address lists and holiday-card obligations, wrote the Nobel laureate, should be liquidated in a sort of "bankruptcy" proceeding in the form of a bonfire.

So, to everybody: I love you and value your friendship and wish you the best holiday ever. Therefore I am not sending you a card.

Stock in sportswear maker Under Armour got its first Wall Street analyst yesterday and reached a new high as a result.

Under Armour rose $1.58 to close at $28.07 after CS First Boston's Omar Saad called the Baltimore company "the most exciting growth company in the apparel sector" and said "you don't have to believe Under Armour will be the next Nike (or even Reebok) to own the shares at current levels."

Saad acknowledges that, at 40 times next year's estimated profits, Under Armour's price "reflects high expectations." But, he says, "Our projection that Under Armour can become a $1.1 billion brand in 2010" - with potential earnings of roughly $2 per share - "is still below Nike and Reebok at similar stages in their lifecycles, but ahead of expectations implied by the current stock price."

Saad, who says that he doesn't hold a position in Under Armour and that CS First Boston isn't its investment bank, rates the company "outperform," the firm's top rating. The report fairly pulses with excitement, suggesting that more Wall Street interest in Under Armour will follow.

But be careful out there. It's a great company and a great story, but at 42 times (after yesterday's spurt) next year's projected earnings, Under Armour is not a cheap stock. Of course, new bullish reports could make it even less cheap.

You will be glad to know that, through November, gas prices had fallen more sharply in the Baltimore-Washington corridor than in the rest of the country. A gallon of unleaded last month was 19 percent cheaper here than in October and 9.7 percent cheaper than in August - before Hurricane Katrina, according to the Labor Department.

For the nation as a whole, November unleaded fell only 15.9 percent from October and 6.5 percent from August. Guess the secret oil cabal plotting to gouge Maryland even more than the rest of the country, according to various politicians, changed its mind.

jay.hancock@baltsun.com

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