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Archive for September, 2008

Funny.

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Gut level instincts

I’ve had some weird going ons the past couple of weeks with regards to my investing.  Normally, I like to do tons of comparisons and then pick the best option.  For stocks, I look at growth rates, relative strength, earnings per share, sometimes return on investment, and so forth.

For my real estate investing, I did pretty much the same thing.  I ran the numbers, checked market rents, calculated out of pocket costs, and made offers based upon seeing what was the best deal.  I did all of that… and I’m still going to lose quite a bit of money at the end of the month, each and every month I hold onto it (sigh).

But that changed a bit when I started looking around to fix it up.  Case in point – when I wanted to get the condo painted, I interviewed a couple of people.  The first guy gave me a quote that was slightly less than the second guy.  However, I got a better vibe from the second guy.  It just "felt" better.  I can’t really describe this phenomenon, it was more of a gut level instinct that the second guy would be a better choice.

Similarly, I’m currently interviewing property managers.  I talked to one yesterday (Sunday) and another today (Monday).  While I’m sure both would do a good job, I definitely got a better "feel" for the first guy.  Again, it’s a gut level instinct.

I don’t normally like relying on my guts and intuition.  After all, how can I be sure my emotions are not influencing my decisions?  But on the other hand, my cold calculations and logic haven’t treated me well this year either, so I suppose changing things up a bit couldn’t… much.

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So I know that I’ve griped a bit about my stock trading this year and how much it has sucked.  Of course, the rest of the market has sucked as well so misery loves company.  But at least I didn’t do what my co-workers did.  These are true stories.

  1. We all know that banks are failing left, right and center.  Before they all went belly up, one of my co-workers decided to speculate that the Fed was going to bailout a bunch of banks and pseudo-private companies.  So, he bought shares in Lehman, Freddie Mac, Fannie Mae and AIG (I think).  The next day, Lehman went bankrupt and Fannie and Freddie were taken over by the Federal gov’t and their shares went into the toilet. 

    Ouch.  That’s gotta hurt.

  2. But not as much as this next story.  One of my other co-workers is thinking about day-trading.  I really advise against this unless you are a professional because you have to be at your desk glued to the screen.  You also have to have a a rigid stock trading system.  My other co-worker has neither.

    He bought shares in Washington Mutual.  He IM’ed me the other day and asked me for my opinion on WaMu.  I said that it was a penny stock and was very highly speculative.  He said he had bought shares the other day and the stock was making money for him, quite a significant amount.  He then asked what he should do.

    I said that he should sell a portion of his profits.  When stocks are that cheap, it’s tempting to be greedy.  After all, a shuffle of $1 up or even more can reap huge profits!  But, they are also very unstable.  I said if he wouldn’t sell it all, at least sell a portion.

    He declined to listen.  He said "Nah, I’m going to be greedy.  You make sense but I think that there is more upside."  Well, last week, the bottom fell out on WaMu and they declared bankruptcy.  I think he’s SOL with regards to his shares.

So, while I admit that all of my decisions in the past year haven’t been great, at least I haven’t made the horrible mistakes my friends have made.  It’s like someone smart once said – penny stocks are very inexpensive securities that are worth significantly less than they cost.

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Market returns to date

Here’s a look at stock market returns from around the world:

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The rest of the world is getting killed… yet somehow, the USA looks to be performing among the best!  And the US is going through a financial crisis!

Weird.

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Today, an incredible coincidence occurred.

September 18, 2008 was our Microsoft company meeting.  It’s an all-day event where we rent out Safeco Field (where the Seattle Mariners work) and all of the executives get up and motivate the employees.  They also have some product demos and stuff.

It finished about 3:45 pm, and they said to stick around for the after party.  They were giving out free beer.  I don’t drink but I decided I would like to wander around to see if there was anyone else there I recognized.  Maybe they were also giving out other free stuff.

Well, I was making my way through the crowd on my way to get some popcorn when I was tapped on the shoulder.  I turned around.  "Excuse me," said the person who stopped me, "but did you used to work in England?"  I recognized the guy immediately.  I used to work with this guy at Lucent Technologies when I was living in England back in 2001.  I was like "Steve?  Is that you?  Are you now working at Microsoft?"  It turns out he was and had been for 3 and a half years.  Heh, I’ve been here for four years if you count my one year of pre-acquisition time at Frontbridge.

We chatted for a bit before parting ways.  But can you imagine?  I hadn’t talked to this guy in about 7 years (I was laid off in September 2001 and left England in July 2002).  And now, we run into each other on the east coast of the United States at a company meeting where 20,000 employees were.  How’s that for a coincidence?

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This past Sunday, myself and a friend went down to a local electronic store, called Fry’s.  A bizarre thing happened in the parking lot.

I was driving in the lot on the right hand side between the rows of cards.  The parking lot was somewhat full and I was looking for a space.  I was coming up to an empty one so I slowed to a stop and put on my signal.  I was waiting for the car on the opposite side to pass by me.  He was further away from the space than I was.

It was very obvious that I wanted that space.  Besides, I had to make a left turn into the space and he wouldn’t be able to make the tight turn, he would have had to turn right.  I was on the opposite side of the space so I waited.  I, of course, had my traffic signal on.

That’s when it happened.  This guy creeps up and then pulls into the spot!  That’s right, I was signaling, waiting, and he pulled in!  Not only that, as he was doing it, he flashed this dumb smirk on his face, indicating that he was so proud of himself!  I was incredulous!  He clearly saw me waiting for it, yet he took it anyhow.

What a jerk.

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An odd prescription

Usually, whenever I get sick, I get this weird rash on my stomach centered around my belly-button.  It’s about 4 inches in diameter.  The rash is very warm, but that’s all it is.  It doesn’t hurt nor make me nauseous.  This happens every time so long as I can remember.

Well, this time was no different.  I got the rash so I decided to head down to the doctor and ask what it was.  So I got there and I told them I got sick so they started checking me out for that.  It turns out I had a fever of 102 (and I think it was worse last night because last night really sucked).  My throat was swollen and I looked like I was in rough shape.  I was also suffering from dehydration (apparently my body was 3% dehydrated) and to compensate for that, my heart was beating at 100 beats per minute.  That’s about 1/3 to 1/4 above the normal adult standing heart rate.

And here’s what the doctor told me to do: drink plenty of fluids.  But, he told me not to drink water or orange juice, in fact, those were the worst things I could drink.  I said I’d been drinking milk… but he shook his head.  He told me to drink fluids with electrolytes.  Translation?  I was told to drink Coke, Pepsi, Sprite, etc.  And not that diet stuff, I had to drink the real thing.  Water with sugar, and lots of it.

That’s a bit of a switch for me.  I don’t drink those types of drinks, but because I’m sick I’ll make an exception.  So I went to the office and swiped a bunch of can drinks and have proceeded to consume them.  To be sure, this prescription was a little stranger than I am used to.

As for my rash?  The doctor was stumped, he had no idea what was causing it.

Update: All of these sugary drinks are starting to make my stomach woozy.  Excessive sugar does that to me.

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Lipstick on a pig?

From the Weekly Standard:

Barack Obama says the John McCain-Sarah Palin policies don’t represent change, they’re “just calling the same thing something different.”

“You can put lipstick on a pig, it’s still a pig,” Obama said during a town-hall style event here Tuesday night.  “You can wrap an old fish in a piece of paper called ‘change,’ it’s still going to stink,” Obama said. “After eight years, we’ve had enough of the same old thing. It’s time to bring about real change to Washington and that’s the choice you’ve got in this election.”

The comment harked back to Palin’s joke during the Republican National Convention when she said lipstick is the only difference between a pit bull and a hockey mom.

Now, I don’t think Barack Obama was deliberately calling Sarah Palin a pig.  After all, that’d be political suicide.  Using the "lipstick on a pig" comment is a slang way of saying that dressing up the same old ideas that didn’t work before won’t work in the future; they are still bad ideas.  But consider the timing of this:

    • Palin, in her speech, says that the difference between a hockey mom and a pit bull (ie, a tough, aggressive politician) is lipstick.  It’s clearly a reference to herself in that she is a woman (because she wears lipstick) and she is tough.  Lipstick is a defining, feminine characteristic.
    • Obama talks about putting lipstick on a pig.  Given that Palin used the term only a week earlier to define herself (ie, with lipstick) it’s quite easy to draw a conclusion, even if its erroneous, that he is calling Palin a pig.  He’s using a term that she "owns the rights to."

Quite frankly, I think that Obama needs to be more careful.  Getting accused of sexism isn’t all that difficult in today’s political climate.

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Over the past 3 years and 3 months, I have not stayed home from work due to sickness.  Not even once.  I have battled through a couple of colds and stuff, but never had to stay home due to illness.

That streak ended today.

I woke up in the middle of the night because my throat hurt.  I woke up and say "Geez, that’s kind of painful."  I went back to sleep but woke up sporadically.  I ended up going into work, but at noon I decided to throw in the towel and call it a day.  My throat was sore and I had a mild headache (and a much worse one the evening before).  I figured that I wasn’t going to be very productive so I may as well leave.  I don’t want to infect anyone else.

Ironically, the last time I stayed home due to sickness was in June 2005.  The reason?  I had a sore throat.  I sense a pattern here.

BTW, yes, mother, since I know you’re going to email me and tell me this after you read this post, I do wash my hands frequently.  I even have that waterless soap stuff which I keep at work.

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I decided to trade differently this year.  I have a history of selling stocks too soon.  2/3 to 3/4 of all losing stocks I sell go on to recover and eventually make gains.  After realizing this I forced myself to hold on to stocks longer in an effort to combat this theory.

Similarly, my new strategy also involved trading on fundamentals rather than technicals.  I bought Dryships (DRYS) on a correction.  The stock is cheap, trading at less than 6x earnings and global demand for it is up.  The stock is a good company.  But I’ve lost 30% on it and now for it to come back, it has make a 50% gain.  That’s a lot.  I bought VimpelCom because it’s a Russian telecom and has a monopoly; the fundamentals are great.  But I am down 40% in it, and I need a 65% value increase to break even.

So where did I go wrong?  I can’t really say I made the wrong decision.  Certainly, in times past, I would have sold around a 15% loss.  But I’m trying to avoid overtrading my account and I want to avoid churn.  I think the markets simply are beating everyone down, me included.

I have to re-evaluate my strategy.  Do I return to my former method and implement strict technical sell signals?  Had I done that, I would have minimized my losses but it also has the problem of limiting my gains.  One day I’ll have to backtest better and figure out the optimal ratio of trading and when to sell and take a loss.

The main reason this bothers me so much is that one day I’d like to trade full time.  Taking a major pounding like this illustrates that I am not ready and have a long, long ways to go.

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Twisting the Aces

I recently filmed myself performing one of my other tricks, Twisting the Aces.  I first saw the trick performed in 1996 and learned how to do it in 2001.  I spent a few hours on the couch in front of a mirror learning how to do the sleight of hand.

I used to use this trick a lot when it was my opener.  Since then I have moved on to other openers but I like to pull this one out every once in a while.

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I was watching the Colbert Report the other day and they had one of Obama’s campaign advisors on the show.  She was saying that the economy does better under Democratic presidential administrations than under Republican presidents.  If you go back and do the math and compare stock market returns under the various administrations, she is correct.  The market does do better under Democratic presidents than under Republicans.

This is somewhat counterintuitive.  The Democratic philosophy/platform is to increase taxes on the wealthy and redistribute it to the lower classes.  This increases the buying power of those people near the bottom.  70% of the US economy is based upon consumer spending, so giving consumers more spending power is a good thing.  Right?

By contrast, the Republicans tend to favor cutting taxes and returning capital to the people who earned it.  Because the wealthier classes are disproportionately affected (ie, they put more in so they get more out), they get a bigger return.  Thus, Republicans return money to the investor class.  Investors then take their money and invest it in the economy – they start and build businesses.  These businesses grow and take off; they hire employees, buy office supplies and create goods.  In other words, they produce.  So this capital return to the investor class is a good thing.  Right?

Democrats counter that the wealthy do not invest their money, they hoard it.  Or it doesn’t trickle down to the lower classes and therefore the Republican strategy is invalid.  Republicans counter by saying that economic expansion is driven by production, not by consumption (ie, consumer spending).  They also further state that the wealthy earned their own money and it belongs to the people themselves, not the government nor should it be redistributed.

So who’s right?  It’s tough to say.  While the stock market does better under Democrats, inflation also runs higher.  This results in a reduction in buying power.  In addition, the Federal Reserve has much more power to influence the economy than most presidential administrations.  By injecting or removing money from the system, the Fed can single-handedly (almost) turn economies around.

The fact is that neither Republicans nor Democrats have shown much prowess at directing the economy.  Luckily, the United States is built on a capitalist philosophy and that, in itself, is probably the single driving factor of economic expansion.

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Throwing in the towel

That’s it.  I give up.

I have been taking a beating in the market for far too long.  My portfolio is down a massive 21% since May.  That’s enormous.  One stock is down 40%.  Another is down 33%.  I can’t take it anymore.

I sold 4 of my 5 positions, including all of my positions in energy. 

You know what the worst thing is?  Now that I have sold, I am absolutely certain that the market is going to rally from here.  That is the frustrating part.  But I can’t hold on any longer, I reached my breaking point and it will take forever to make back all of those losses.  Time to get out and wait for a nicer climate.

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I have a theory regarding Facebook.  The younger you are, the more likely you are to have friends on Facebook.  There are small exceptions to this, but I think that as a general rule it holds true.

I have noticed that people in their late teens and early 20’s have lots of Facebook friends.  If you don’t have your date of birth on there, I can often figure it out by looking at how many friends you have.  So, there’s no hiding.

Facebook is all about social networking, and it’s a new technology.  So, it makes sense that young people use it the most, just like they use instant messenger services the most.  Pretty soon, some other medium will be invented and the young people will flock to that as well.

Hmm, I realize that I am excluding myself from the phrase “young people.”

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Back when I was processing spam and false positives, I quite regularly came across very interesting things.  The one thing I miss the most of the daily grind of spam analysis was that I came across so many cool things that I normally would not have stumbled across.

Perhaps the best Internet video that ever crossed my desktop was created by a guy by the name of Matt Harding, of wherethehellismatt.com.  Matt is someone who has traveled around the world dancing in various locations and has created a video of his travels.  He did it in 2005, and then has made subsequent videos in 2006 and 2008.  Between my brother and I, we sometimes refer to him as "that guy from the video."

If you have never seen it, here is his latest video, and I think it is my favorite of the 3.

I really, really liked his videos.  I liked them so much that I made my own when I traveled to Australia in 2006.

Now yesterday, September 2, 2008, Harding was at a travel bookstore in Seattle.  I went down there because I thought it would be cool to see him.  He gave a presentation about his travels and answered questions.  Afterwards, he let a couple of people come up and take pictures of him as well as dance with him.  I was thoroughly excited by the prospect.

I had brought along my digital camera and asked someone else to take our video dancing.  We did the jig for about 10 seconds.  I then said "Could we get one more picture?  Just in case the video doesn’t turn out?"  I was worried that maybe the angle was weird or the lighting was off or something.  We snapped the picture, I took a look at it, thanked Harding for his time and left.  I was really quite happy, I had my picture and video taken with an Internet sensation.

I got home later that night and looked for the video and the picture.  But when I checked the memory card, the video was no where to be seen!  The guy shooting the video had screwed up and hadn’t pressed the button!  Argh!  I was crushed!  It felt like someone had punched me in the stomach when I saw that the video was no where on my camera.

But, at least I managed to snag the photo.  So it’s a partial victory and not a total defeat.  I suppose I only have myself to blame for not double-checking to verify that the video was actually taken.  You can bet I’ll know better for next time and the next person I ask to shoot the video, I will ask them if it worked.

P9020005

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One year later

Today, September 1, 2008, I have been in the United States for exactly one year.  I thought I would reflect back on all of the things I have accomplished in the past year, both at work and at home.  So here they are, in no particular order.

  1. New deals – I furnished my apartment for less than $1000.  My latest victory?  I got a TV stand that a friend of mine no longer wanted… meaning I got it for free!
  2. New magic – I picked up the book Strong Magic, by Darwin Ortiz.  In it, I learned some new techniques for how to make my magic more emotionally impacting.  A couple of months earlier, I learned a couple of new tricks.  Since then, I have picked up Any Card, by Alain Nu, and have recently added The Ambitious Card, by Daryl.  In other words, my magical skills have improved.
  3. New moves – I started to learn how to ballroom dance in the past year.  I have picked up the steps to about 12 different dances with varying levels of skill amongst them all.  I even created a video showing off my moves at all of the Microsoft buildings in Puget Sound.
  4. New friends – I’ve made some very good friends while I have been out here.  One of things that some of us do together is get together weekly to watch our favorite TV shows.  In fall 2007, we got together to watch Heroes.  In January to May, we got together to watch Lost.  Those activities were definitely among my favorite times.
  5. New investments – This is kind of a mixed bag.  I learned all about fixed income investing (bonds and foreign currency CDs, which is theoretically smart but hasn’t worked that way for me), and real estate.  My real estate investment is going to end up costing me a pile more money than I thought it would.  But at least I have picked up a new investment skill and am diversifying my portfolio.

These are a few of the things that I have done this year.  I notice that I didn’t even mention some of the things I accomplished at work in the past year.  Maybe I’ll talk about that in another post… or maybe not.

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Stupid weather

Well, it appears that once again, I’ve been had.

Here in Seattle, we don’t get too many hot days.  Even in summer, it may get warm but it doesn’t last that long.  To that end, I’ve resisted getting a fan.  After all, we only get 8 warm days per year, why should I bother to go to the expense and time of buying myself a fan to cool myself down?

Or so I thought.  The problem with that line of thinking is that it got really hot here in Seattle and I was melting in the heat.  Especially at night, I was sweltering.  I’m on the top floor of a 2-story condo and so the warm air kept rising.  I finally broke down and said "That’s it, I’m getting a fan!"  I strongly believed that I wouldn’t have to use it much after I bought and I resisted for quite a long time (and suffered through it) but that fan felt good.

For the 5 days that I used it.

Yep, I really didn’t use it that much.  I put it up and had it blow cool air on me and after that, the weather changed.  It’s still warm, or pleasant, but not so much that I need the fan.  So the weather managed to predict how long I could last, found my breaking point and then went just a little bit longer.  How it managed to do that is beyond me.

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