Archive for October, 2009

So, I haven’t heard back yet from the Seattle Times or the Seattle Post-Intelligencer.  Emails there just go into a void black hole.  Next up – local television news.  I’m beginning to think that this isn’t going to happen.  Man, I need my own personal publicity agent.

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Balancing my portfolio

I’ve been wondering for a long time what to do in my portfolio for investing.  I have too many accounts.  I have three RRSPs from back in Canada, my 401(k) here and my Scottrade account.  I have a big chunk of change sitting in my Scottrade account but I have not been actively moving it.  I finally sat down over the past few weeks and decided to allocate portions of it according to the following guidelines:

  1. I need exposure to US markets
  2. I need exposure to International markets
  3. I need a little exposure to the bond market.  I’m 30 years old now; if I were 25 I wouldn’t bother but the experts tell me I need this, so I did it.
  4. Anything I buy needs to have low expense ratios.

I have reviewed countless numbers of lazy portfolios.  A lazy portfolio is when you buy something and forget about it.  Every once in a while (every six months, maybe) you rebalance your portfolio.  This forces you to sell high and buy low.  Whether or not I do that, we’ll see.  While prices are up 50% since the March lows, they are still off 40% from the Oct 2007 highs. 

I decided to throw in a bit of a wrinkle to my portfolio creation.  Some experts recommend diversifying across multiple types of index funds or ETFs, dividing into value or growth.  I said “Forget that.”  I want to keep things simple.  However, the little wrinkle that I tossed in is that if I have to choose between a fund that doesn’t pay dividends and one that does, I go with the one that does.  The second wrinkle is that there is a method to my domestic/international distribution.  Most of the portfolios I saw either split the US with the rest-of-the-world (ROW) 50/50.  I decided to break it up by GDP.  So, since the US is 1/4 of the world’s GDP, I decided to only invest 25% of my funds in the US markets.  Actually, that was my plan but I chickened out.  I’m slightly overweighted in the United States, but it is still the most stable market in the world.

And thus is born the Cool Spot Lazy Portfolio

  1. 35% in the Vanguard Total Market ETF, VTI.  This is currently paying a dividend of 2.02%, the expense ratio is 0.09%.
  2. 50% in the iShares MSCI EAFE Index Fund (Europe, Asia or Africa, Far East), EFA.  This is paying a dividend of 2.71%, the expense ratio is 0.34%.  The comparable fund from Vanguard is the World ex-US, which has an expense ratio of 0.25%, but it pays no dividend.  Therefore, the iShares one wins. 

    I considered the value vs growth distribution, but decided there probably wasn’t much point.  Value sometimes leads, and then growth sometimes leads.  I just bought the whole thing.  The expense ratios for the others were higher or the dividends were lower.

  3. 5% in the Vanguard Total Bond Market ETF.  This is paying a dividend of 4.19%, the expense ratio is 0.15%.

    These last two entries for me are difficult because there are so many more options.  How do you divide up the remaining 15%?  Well, since I am still relatively young, I don’t need much exposure to bonds.  But, this one has low expenses and a great dividend yield and therefore I bought it.

  4. 10% in the Vanguard REIT (Real Estate Investment Trust) ETF.  This is paying a dividend of 5.58% (!), the expense ratio is 0.14%.

    This one makes me nervous.  There is another fund out there, the iShares World ex-US Property Index Fund ETF, that has performed much better than my Vanguard fund, probably because my Vanguard fund includes the US.  The dividend is lower, though.  However, what makes me feel better is that Nov 27, 2007, the funds have about the same return.

    What also makes me nervous is investing in real estate.  All of the investment experts insist on investing in something other than domestic and international stocks.  About half of them recommend real estate, the rest pick fixed income (bonds, treasury securities, etc).

So there you have it, that’s my current retirement portfolio for the way I am managing it on my own.  I still have to figure out what I am going to do with all of my other retirement invesment accounts.  If I could, I would roll them all into passive portfolios the way I have it set up here.  Given that one of my RRSPs charges a sh*tload of management expenses, I think I am going to close that one down or collapse it into something else.

I’m also not putting all of my money into a passive portfolio.  I only put 85% in so I have a little bit of money to trade with. 

Finally, next year I am going to sell that crummy real estate investment that I own next.  With the money that I am saving every month, I will put a chunk of into the market and the rest I will spend.  I did a cost/benefit analysis and the projections say that over the long term, that “investment” will pay off but the market will pay off better over the long term.

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So, the local newspaper rejected my idea to do a story about predicting the local election.  They said that the paper was full for the upcoming edition, and they weren’t interested in this type of story.

Fine, instead of the local paper, I’m going to try the Seattle Times.  Maybe they’ll appreciate good magic.

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Ever since I moved to the left coast, I have quietly bemoaned the fact a little bit that I never get a chance to dress up in a suit-and-tie.  It’s very rare because the west coast is very laid back.  I don’t go out in circles that require me to dress up.  In truth, I miss it because it makes me feel classy.  I have a few new shirts and I like to get my money’s worth out of it.

But I finally figured out where I could use it.

While it is true that when I perform magic, I dress up as it goes with my persona, I figured out another place – ballroom dancing.  It is also true that I blogged about testing out this a couple of weeks ago, and this past weekend I pulled it off.  I put on my red shirt, classy tie and waistcoat (vest) and went out to a place in Seattle.  The dancers there are a little bit older than my other studio I go to but the people dress up a bit more as well.  I figured I would dress up and see what would happen.

It was a success.  I got five unearned compliments on my attire.  By “unearned”, I mean that I said nothing to draw attention to myself but the lady I was dancing with said something like “I like your tie/outfit/way you have dressed.”  That’s right, five times.  Spontaneous compliments.  And in fact, I was getting so used to it that I gave a pre-emptive thank-you that made no sense.  I was about to dance with a lady and she glanced me over.  She then said “Excellent choice of music” as the song was beginning to play.  Unfortunately, I anticipated what she was going to say and I thought she was going to say “Excellent choice of tie/vest combination” or something to that effect.  So, I said “thank-you.”  I just blurted it out, my brain forced it out of my mouth even as I realized that she didn’t say what I thought she said.  I then added “I agree,” in response to what she said.  So here’s the situation:

Her: Excellent choice of music.

Me: Thank-you. <pause> I agree.

Yeah, like that makes sense.  But really, can you blame me?  I was on a roll that night.  The lone drawback is that there were no young ladies who complimented me, but there weren’t that many there yesterday.  But, I shall comfort myself in the belief that they were thinking it.

And that brings me back to my original point.  I now have a place where I can dress up and go out – ballroom dancing down at this place.  It fits in well, and it makes me look sharp.  Why didn’t I do this earlier?

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That was weird

One of the things I have been doing a lot of this year is use the concept of touch.  Specifically, when I perform magic, or have a conversation with people – usually girls – I will often touch them on the shoulder when talking to them.  It’s something that I have experimented with over the past year.  In part, it has to do with body language but a couple of friends have independently suggested it, too.  I started off doing it when performing magic, then began working it into casual conversation when I head down to the dance studio.  At this point, no one has ever pulled away except for one person when I was doing a stage show.

Well, today, I was at a spam conference down in Tacoma.  I was talking to a couple of guys, one from Microsoft and another from the University of Cambridge in England.  Note that I was talking to a couple of guys.  Anyhow, at one point, I broke into the conversation and asked the guy from the university a question about something or other.  As I did, I moved in and put my arm on his shoulder, the way I often do when performing magic or engage in casual conversation with the women I dance with.  I did this move automatically, I wasn’t even thinking about it.  I caught myself about a half second after I made contact.  Not wanting to appear flustered, I left it there for about three seconds and then naturally removed it.

That’s something I haven’t done before.  It seems to be becoming a lot more automatic to do this type of thing with people I don’t know all that well.

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Space Invaders

I was reading this past week about a person’s personal zones.  I think we all already know about this, but it’s still kind of neat.  In western societies including New Zealand, England, North America and Canada it is generally the same. It can be broken down into four distinct zone distances.

  1. Intimate Zone (between 15 and 45 centimeters or 6 to 18 inches)

    Of all the zone distances, this is by far the most important as it is this zone that a person guards as if it were his own property. Only those who are emotionally close to that person are permitted to enter it. This includes lovers, parents, spouse, children, close friends and relatives.  There is a sub-zone that extends up to 15 centimeters (6 inches) from the body that can be entered only during physical contact. This is the close intimate zone.

  2. Personal Zone (between 46 centimeters and 1.22 meters or 18 to 48 inches)

    This is the distance that we stand from others at cocktail parties, office parties, social functions and friendly gatherings.

  3. Social Zone (between 1.22 and 3.6 meters or 4 to 12 feet)

    We stand at this distance from strangers, the plumber or carpenter doing repairs around our home, the postman, the local shopkeeper, the new employee at work and people whom we do not know very well.

  4. Public Zone (over 3.6 meters or 12 feet)

    Whenever we address a large group of people, this is the comfortable distance at which we choose to stand.

Depending on where you grew up, your zone might be slightly larger or smaller.  For example, I grew up in a rural area so my zones tend to fall closer to the tail end of those ranges, rather than the smaller range.  But I thought it would be interesting to tell an anecdote about how this affects people who dance a lot.  For example, while dancing, the minimum space requirement for almost every single dance is the personal zone, and in many cases it is the intimate zone.  There’s no way I can do a closed dance position like the Waltz or Foxtrot and hold my follow more than 18 inches apart, it just isn’t physically possible.  But there are other dances with open positions like East Coast Swing where that does work (and some moves are easier).

Secondly, even in the intimate zone there are ranges.  There are a small handful of moves when I eclipse even that lower 6 inch range for even less than that – zero to three inches.  These are brief encounters in dances like Samba or Salsa and they last perhaps a second or two.  But they are there.  They thing to realize, however, is that they are only temporary phenomenon.  After the dance is over, unless I have a close relationship with the other person, we more or less go back to observing the unwritten rules of zones.  I’ve been paying special attention to this in the past week.

Fast forward to yesterday and I went to a friend’s place for a game night.  She, and her husband, are people I know from dancing and other games (she’s a dancer, he is not).  But everyone else who was there I similarly know from dancing.  There were six of us (later expanding to nine) and we divided up into three teams of two.  One couple was married, one was engaged, and the other was myself and another girl who I know from the studio.  We know each other relatively well, I suppose.  Certainly not intimately, but we’ve danced enough together and I have shown her enough magic effects to put us on pretty good terms.

Now, consider the personal zone I was talking about before.  We like to protect our personal zones.  Think about when you are in a movie theater and the person next to you kind of crowds you and puts his arms on the armrest.  How do you feel if it’s a stranger who is doing it?  You feel uncomfortable.  But what if it is a good friend of yours?  It’s not so bad.  Consider a crowded bus and people wedging up against you.  It’s not comfortable, is it?  So, even sitting next to each other, unless you know each other and feel relaxed in each other’s presence, even the innocuous act of sitting side-by-side means something.

Which brings me back to games night.  At one point, both myself and my teammate were sitting on the floor and I was leaning with my back up against a recliner.  This made sense because the table was too far to reach from the recliner so sitting on the floor was a more natural way to interface with the game board.  My teammate was sitting near me, but not directly next to me until later in the game.  As time passed, she decided it would be more comfortable to sit against the recliner as well.  And when she did, she sat next to me with her arms/shoulders right up against mine, “invading” my personal zone (I didn’t pull away).  Now, there was space to create a gap between us, even if a very small one, but when that happened I was thinking to myself “Hey, it’s my personal zone that is being entered!  She clearly feels comfortable with me.”

Now you might think that all dancers are this way (ie, all dancers that are not me – perhaps just women, and it is true that women will tolerate more space invasion than men).  They just feel more natural getting closer to someone and it’s no big deal.  Possible.  But unlikely.  Because later on, more people joined us.  The first to join was another girl who joined the losing team on the couch.  I’ve danced with her quite often as well.  She was sitting next to the host couple.  But what I found interesting is that while she wasn’t externally uncomfortable, she was laughing and smiling throughout the night, she protected her intimate zone by unconsciously creating as wide a gap as possible.  When you’re sitting on a couch, you have to be closer than you might normally be.  However, she has her legs crossed (which in itself means nothing) but she leaned away from the husband, who was in the middle, and leaned against the arm rest.  You might think that is a natural position, but she never squared up.  She protected her space unconsciously.  She also had her arms crossed, and combined with the legs crossed this indicates defensiveness.  The reason she was defensive is because she doesn’t know the husband very well.  I am reasonably certain that had I been there, it would have been different.  I say this because we have done the 0-3 inch intimate zone range while dancing in the past.

So, even people who break the personal/intimate zone barrier will not break it in social situations with people who they are no familiar with.  I have to tell you it was quite a bit of fun to read body language throughout the night – as well as read my own advantageous situation.

BTW, my team jumped out to a huge lead in the game and we ended up losing.  We just got stuck at one point and couldn’t follow through.

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Today at noon, myself and some colleagues at work were having lunch.  Somehow, I don’t know how, the topic of conversation turned to world hunger.  My crazy friend, the one who says that under the Obama administration tons of things have changed and that the gov’t can do whatever it wants so long as the Constitution doesn’t prohibit it, made a claim.

Two guys at the table were saying that the reason that we had so much world hunger was because the earth was overpopulated.  And it was getting worse, and the problem of world hunger was because we, as humans, were careless with our breeding.  Two guys agreed and another sort of seemed to go along with it.  “Yep,” said my crazy friend, “the further we get away from a (maximum) world sustainable population of 4 billion, the worse things are going to get.”

I thought to myself “Where did you get that figure from?  Oh, right, you pulled it out of your ass!”  I didn’t say it out loud, but I was thinking it.  And I had to speak up.

“Alright, that’s it.”  They all looked at me.  “The reason we have world hunger is not because the world is overpopulated, it’s because corrupt government officials interfere with food distribution.” 

“Oh, come on!” they protested.  “There are droughts, locusts, blah-blah-blah…” I wasn’t really listening.  Because government in the developing world is responsible for so much world hunger, not natural disasters.  They use it to control the population and put the screws to opposition.  Warlords steal it and use it as leverage.  Government incompetency in those regions steal foreign aid, waste resources and end up causing their population to starve because of their own greed.  The kleptocracy is to blame, not the people.

Why do I think this?  Because predictions of massive starvation due to overpopulation have always proven false.  Robert Malthus predicted in the 19th century that mankind was doomed to population limits because eventually famine would control us.  At the time, the population of the world was about 1 billion.  Since then, the world population has grown six-fold.  There were predictions in the 50’s and 60’s that there would be huge famines in India.  That hasn’t panned out either.

Why hasn’t it happened?  Because of human innovation and technological revolution.  Norman Borlaug is one of the greatest human beings who has ever lived.  His techniques in increasing the food supply by applying technology doubled wheat yields in Pakistan in nearly five years (1965-1970).  Similar results were achieved in India.  He went and lived in Mexico to do the same thing.  In other words, in places where starvation could have been a problem, he went there, lived there, and revolutionized agriculture to increase farm production.  His work has saved many tens of millions of lives. 

From Wikipedia:

According to Borlaug, "Africa, the former Soviet republics, and the cerrado are the last frontiers. After they are in use, the world will have no additional sizable blocks of arable land left to put into production, unless you are willing to level whole forests, which you should not do. So, future food-production increases will have to come from higher yields. And though I have no doubt yields will keep going up, whether they can go up enough to feed the population monster is another matter. Unless progress with agricultural yields remains very strong, the next century will experience sheer human misery that, on a numerical scale, will exceed the worst of everything that has come before".

However, by the 1990s Borlaug had changed his position on population control, believing it was not necessary. In 2000 he stated: "I now say that the world has the technology — either available or well advanced in the research pipeline — to feed on a sustainable basis a population of 10 billion people. The more pertinent question today is whether farmers and ranchers will be permitted to use this new technology? While the affluent nations can certainly afford to adopt ultra low-risk positions, and pay more for food produced by the so-called ‘organic’ methods, the one billion chronically undernourished people of the low income, food-deficit nations cannot."

So you see, it’s advances in technology that drive food production and sustainability.  There are two obstacles to this:

  1. Governments that interfere in food production and distribution.
  2. Environmentalist *ssh*les who attempt (and succeed) to ban agricultural techniques in the name of saving the environment – at the expense of the lives of human beings.

I didn’t get into all of this at work, of course.  I kept that part to myself.  But when I hear that government is the solution to everything (because only government is benevolent?) and that humanity is to blame (but I don’t hear anyone volunteering to sacrifice themselves?) it does irk me.

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