Wednesday, December 15, 2004

Why I bought Canon (again)

I very nearly caught up on all the investment decisions I've made thus far, and I managed to not mention limit orders. All of my stock purchase and sales have been executed as limit orders, which means that I pick a price and my broker tries to get it for me. In contrast market orders are executed at whatever price the broker can find on the open market. Since I have a pretty good idea what I want to pay (or receive) for a stock, and since I live on the West Coast and don't get up early for the opening bell, limit orders work well for me. A further twist to limit orders is the Good-Until-Canceled order which let's me leave the order open for 30 day, until I cancel it, or the order is executed at my price. That way I can set a price, forget about my account for a month, and not miss opportunities.

The danger, of course, is missing out on a great stock because it never quite falls low enough or selling too late if the price never quite reaches my "reserve". In fact, I had money to spend almost all year, tried to buy Select Comfort, Pixar and Canon at various times, but couldn't because my limit orders never got executed. Finally, I ran against the deadline of making at least one trade a year, yet again. Canon seems way undervalued according to the intrinsic value calculations I've done. I guess it trades at something like a 30 to 50% discount. Considering Canon's impressive growth and ~1% dividend, I jumped at the chance to buy at $50.

Actually I started at $49, but when that price wasn't reached after a week or so, I tried $50. On November 30, Canon's day low was $50.01 so my order was not executed. I was tempted to try a market order the next day, but I resisted. Since Canon trades primarily on the Tokyo Stock Exchange, it's relatively easy to guess the next day's price in New York -- just convert the closing price in Tokyo from yen to dollars. On December 1, I found out that my broker had executed my order at $49.66, which was that day's low. Since the market price was less than my limit price, my patience paid off in a small way.

Monday, December 13, 2004

Glad I didn't short PeopleSoft!

I suggested back in September that shorting PeopleSoft would be a pretty good risk. I was horribly wrong. Anyone who tried it would have lost about $7.15 a share. That would be an annualized loss of about 7% (depending on commissions). In short, it was a terrible investment idea.

According to Larry Ellison some of PeopleSoft's ongoing revenue was better than Oracle had estimated. I sure hope so, because it's difficult to see how this deal makes sense otherwise. I've had 18 months to ponder this and it seems to me that the only way this deal works in Oracle's favor is if they can retain PeopleSoft's revenue and cut the fat. Using Quicken's intrinsic value calculator:

Revenue (TTM)            = $2.67 (billion)
Assumed operating margin = 20%
Assumed operating income = $0.534(billion)
Assumed growth rate      = 5%
Discount rate            = 11%
Intrinsic value          = ~$25
It appears Oracle is overpaying about $1.50 a share.

I've had to make a ton of assumptions, which presumably Oracle management didn't have to do. For instance, maybe there are more costs that can be cut or perhaps there are deals in PeopleSoft's pipeline that we don't know about. But the possibility exists that Oracle was over-eager to get the deal done. It's troubling that the final price is just 50¢ more than the previous high bid, because it seems like a face-saving device for the PeopleSoft board, rather than a robustly calculated number. Also, Ellison pointed out that he didn't really see anything that surprised him in the PeopleSoft numbers, just that he didn't have to be so conservative in his estimates. We have a strong tendency to see the things we want to see.

Thursday, December 09, 2004

Surname Distribution in the U.S.

It is now possible to see the influence of Ericsons spread from 1920 to 1990. It's also easy to figure out why so many people think there's a "k" in my name.

Monday, December 06, 2004

Why I buy the Excelsior Value & Restructuring fund

Starting next year, I won't be forced into buying Raytheon stock every two weeks. And since I'm way over-exposed to Raytheon and I don't think it's a particularly good buy, I won't. That means I need to find other things to invest. Also, I still want to diversify away from the S&P 500. My screen didn't show enough funds, so I started playing around with relaxed criteria. As it turns out, when I eliminated the manager tenure requirement I found this fund:

 					Non-Load Adjusted Returns
Investment Name                         1 Yr	3 Yr	5 Yr	10 Yr	LOF
---------------                         ------  ------  ------  ------  ------
Excelsior Value & Restructuring		19.56%	11.48%	8.83%	15.89%	17.22%

Fidelity doesn't know that David J. Williams, the fund's manager, has been either manager or co-manager since the fund started in 1992. I decided that this is good enough to meet my requirements even if Fidelity doesn't agree.

When looking at companies, there is normally too much information. I don't think I could ever bring myself to buy McDonald's no matter how great an investment it might be, because I don't like their product. The opposite is true of Oracle -- I'll probably hang on too long because I like their database. It's irrational and puts me at a disadvantage.

Mutual funds have nearly the opposite problem. The only thing it produces are investment returns and all you know about how a fund gets them is reading some generic phrases in the prospectus. Just about everything can (and often is) manipulated by the fund management. For instance, the top holdings are sometimes changed at the last minute to give the appearance that the manager picked hot stocks (like Taser this year). (There's even a term for this: "window dressing".)

One of the things I like about the Value & Restructuring fund is the handful of presentations and essays found on it's website. Value investing is interesting to me since I buy individual stocks. The "restructuring" aspect of the fund should also be fun to watch. For instance, the fund bought Black & Decker during a restructuring in 2002. The tool maker needed to reduce costs by shifting production to places like Mexico and the Czech Republic. It also needed to control inventories -- especially of seasonal products. In Peter Lynch's parlance, it's been a two-bagger since then.

The fund commentary also talks about disappointments, such as AOL Time Warner. I don't know if the fund will do better than it's benchmarks over the next few years, but I appreciate the honesty. It feels less like throwing darts and more like investing.

Friday, December 03, 2004

"That ship has sailed"

A while ago I used the phrase "that ship has sailed" in anger, but I wasn't sure why. I mean, I hadn't thought to use it before and I wasn't even sure I had used it correctly. It was like slipping into a foreign language in the middle of a conversation.

Since then, I've noticed lots of other people who use the phrase -- sitcom actors, columnists, bloggers, and so on. I can't decide whether I started noticing because of my (embarrassingly inept) use of the phrase or if I'm part of broad attempt at popularizing it. One way to gather information about this might be to use Google's newsgroup archive. The phrase was first used in 1990 (at least in groups archived by Google). Roughly 3/4 of the references are after 2000. In the last year it's been used about 200 out of 829 times. Of course the volume of posts have increased as well.

One way to work around the problem would be to find a "control phrase" which has not changed frequency over the same period. Maybe, "sounds good to me" or "I don't think so". Even better, use a group of phrases. Then compare the change in frequency to the control. Best would be if Google published volume statistics by year.

Thursday, December 02, 2004

Why I buy the T. Rowe Price Small Cap Stock fund

Most of my retirement savings are tied up in my 401(k) plan, which from the beginning I've invested in a S&P 500 Index fund and Raytheon stock. I don't (currently) have much choice is the Raytheon investment, but my plan offers many options besides the index fund. I didn't spend much time looking at other options, mostly because I didn't know how to evaluate them. Who cares if a fund beat the market last year -- I want to know if it will beat the market for the next 30 years.

Last spring, the Motley Fool hired Shannon Zimmerman from Morningstar to cover Mutual funds. I've read the Fool as far back as when my family used AOL in the early 90s, and this was the first time I'd considered the idea that actively-managed mutual funds could consistently out-perform the market as a whole. Based on his first few months of articles, I came up with a screen to find the best candidates my 401(k) plan offered.

Stock Investments

At some point I should diversify to bonds for a percentage of my portfolio, but I'm young, interest rates are still going up, and stocks should continue to outperform bonds over the long-haul. I may need to re-evaluate this criteria in time.

Expense Ratio <= 1.00%

I wish I could get a fund that charged less than 0.5%, but actively managed funds don't usually come that cheap. Expenses for investors are like friction to bicyclists -- a drag. You can bet that Lance Armstrong has the smoothest ride possible because a poorly lubricated part could shave seconds off his time. We could trade bikes and he would still beat me, but he'd probably be dead last if he used my bike in the Tour de France. So the lower fee, the better, when it comes to mutual funds.

Equity Turnover Ratio <= 50%

Besides being another form of drag (trading expenses are reflected in the NAV, not the expense ratio), excessive trading is a sign of a manager who is chasing performance rather than evaluating companies from the bottom up. I'm looking for a manager who knows how to pick stocks that will beat the market over the long-term, not managers who get lucky trading over the short-term. 50% churn translates to an average holding period of 2 years.

Manager Tenure >= 10 years

I'm going to compare 10 year annualized returns, so it makes sense that I compare funds that have been under the same management for that period. The actual experience of a particular manager might be a lot more than his tenure on a particular fund, so if I were interested in a particular manager I wouldn't care too much if he were with a fund for only a short time. But so far I don't know any managers who fit that description.

Here is the result of that screen (as of today):

 					Non-Load Adjusted Returns
Investment Name                         1 Yr	3 Yr	5 Yr	10 Yr	LOF
---------------                         ------  ------  ------  ------  ------
Fidelity Equity-Income Fund		11.98%	6.52%	2.69%	10.72%	13.03%
T. Rowe Price Small Cap Stock SHS	15.17%	11.76%	11.80%	13.13%	13.57%
Vanguard PRIMECAP Fund Admiral Class	14.53%	--	--	--	7.39%

S&P 500 INDEX FUND			13.77% 	4.16% 	-1.15% 	11.12% 	13.07%
Vanguard PRIMECAP Fund 			17.86%	7.07%	3.38%	15.48%	--

Historical returns

I had to add the S&P 500 Index fund, since the screen didn't know the expense ratio (something less than 0.1%), turnover (about 2%) or management tenure (effectively forever). I also added the Vanguard PRIMECAP fund information from Morningstar, since the "Admiral Class" doesn't have a very long history. (I think the difference is in fee structure or something.) The Life Of Fund (LOF) number is fairly meaningless since a fund started in 1982 will look better than one started in 1999.

The T. Rowe Price fund seemed the best investment last spring because it beat the market in good times and bad, and I didn't have any exposure to small companies. In general, carefully picked small companies should do better than larger companies because there is more room to grow. People didn't become millionaires by investing in Microsoft in 1999, but in 1989 when it was relatively small and unknown.

Friday, November 19, 2004

Why I sold Oracle

On May 28, 2003 I sold Oracle at $13.35 a share. It was, oddly enough, the day my son, Joshua, was born. If you're imagining me on the phone with my broker while my wife struggled to give birth to my firstborn, stop that! For one thing, it isn't nice to imagine such a private moment, and for another I initiated the trade days before. Mainly I sold because I had to. That is, my brokerage charges a fee if I don't make at least one trade in 12 months. Also, Oracle was somewhat expensive in my opinion, though not so much that sold all of my shares.

Shortly after I sold, Oracle began it's hostile takeover bid for PeopleSoft. This was not a huge surprise for people who had listened to Larry Ellison, since he'd been suggesting that the enterprise software business had matured. Lots of analysts criticized the offer, since Oracle's price and revenue dropped off a bit. But as a long-term shareholder, I was pleased. PeopleSoft's operations could be minimized so that most of it's revenue ends up as profit for Oracle if the deal goes through.

As time goes on, I think Oracle (and other business software makers) will become more like cyclical stocks than growth stocks. As the economy picks up, companies will buy more licenses and when there is a recession, companies will cut spending on infrastructure. If that happens, I plan to look around for other places to invest.

Tuesday, November 16, 2004

Earnings yield

Another striking chart in Irrational Exuberance shows a history of P/E ratios for the S&P 500 with "bubble" years (1901, 1929, 1966 and 2000) marked at P/E peaks. Perhaps the most striking part of the graph is the most recent bubble which boasted a ratio near 45 compared to 25 in 1901, 32 in 1929, and 24 in 1966. Looking at the right side of the graph, it's easy to imagine a depression on the same scale as the 1930s! Once again, I think there are some misleading elements to the chart.

Previously I suggested that 15 might be a fair P/E ratio for the S&P 500, but that's obviously a simplification. For one thing, if when earnings are expected to grow in the future, it would be sensible to pay more for them now. That's why people bought companies like Amazon and Yahoo before they started turning a profit. Obviously some people overpaid for those growing earnings, but it's difficult to say exactly what P/E ratio is fair. (Yahoo entered the index in December of 1999, so it contributed to the record bubble valuation.)

A difficulty with P/E ratios is that the don't mean much without context. One way to fix that is to convert them into earnings yields (earnings/price * 100%). It should be obvious that an earnings yield can be compared to bond yields, and therefore during periods of low interest rates earning yields should be low (and P/E ratios high). The logical bonds to compare to would be corporate bonds such as Moody's Baa. (Seasoned bonds are bonds sold on the open market.) If you look at the right-hand side the chart which shows that relationship, it looks highly correlated.

But what happened before 1960 or so? One obvious difference is that companies made a transition from paying dividends to retaining earnings. The left-hand side of the chart comparing dividend yields to bond yields correlates better than earnings yields. There are still unexplained divergences in the 1950s and I really should measure the correlation rather than eye-balling it, but I think the results are better than bare P/E ratios.

None of this, of course, changes the conclusion that the S&P 500 is currently richly priced. Earnings must grow dramatically to compensate for the risk of owning stock rather than holding bonds. Remember, bondholders get income now and priority in the event of bankruptcy proceedings.


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Tuesday, November 02, 2004


I recently finished Irrational Exuberance by Robert J. Shiller which suggested in 2000 that the U.S. stock market was overvalued. And of course, it was. Dr. Shiller suggests that people overvalue the market (defined by high price to 10 year average earnings ratios), when they think the old rules no longer apply. For instance, in 1929 people thought new technology, easy credit and popular interest in investing meant that high P/E ratios were sustainable.

It doesn't take much in the way of mental gymnastics to imagine each of these things being said in 1999. The Internet, Globalization, and Mutual Funds seemed poised to sustain higher earnings growth than anyone could have imagined 5 or 10 years earlier. (The book discusses lots of factors that contributed to bubble valuations, but these are the ones I remember having an impact on me -- right at the start of my investment experience.)

One of the most striking parts of the book, is a graph showing the rise of stock prices and earnings (as represented by the S&P 500 index) over the last 130 years or so. I've reproduced the figure below. It shows earnings increasing at a moderate rate and prices jumping all over the place. Especially interesting are the booms in the 1920s and 1960s followed by busts in the 1930s and 1970s. From 1982 to 2000 the divergence begins to look especially ludicrous. It sure looks like prices are headed south, despite the recent drop.

But there are a couple of problems with this graph. The tipoff is the scales on the left and the right. The left (price) goes to $1500[1] and the right (earnings) goes to $600, but there is no indication how those scales were chosen. Obviously if both lines were on the same scale, earnings would look nearly flat (since earnings are anywhere from 5 to 45 times smaller than prices). But if we are going to look at different scales, why not pick a scale that matches the range of earnings, say $0 to $55? One problem, from the point of view of selling the book's premise, is that prices wouldn't look so dramatically high.

Another issue is that the scale is linear. Even adjusted for inflation, S&P 500 prices and earnings are several orders of magnitude greater now than they were in 1871. On a linear scale, a large move percentage-wise is more dramatic when prices are high and muted when prices are low. If you have a $1000 invested that looses 10%, you're down $100 whether the price per share is $10 or $100. But if you put both changes on the same linear scale, the drop from $100 to $90 is more dramatic than the drop from $10 to $9. One way to correct for this illusion is to use a logarithmic scale. I've used the same data to created a corrected version of the chart.

I'm not saying that Dr. Shiller is wrong or trying to mislead, but this chart is misleading. Earnings and prices don't fit on the same scale, but putting them on the same graph suggests a relationship between them. Implicit in the original graph is the suggestion that P/E ratios should be around 2.5 (since 1500/600 is 2.5). Using a linear graph and letting the graphing software determine the range suggests a P/E ratio of about 27. (Linear graphs are better for accurately determining absolute values.) That's skewed by very high ratios in the last few years.

And this is the frusterating aspect Irrational Exuberance -- it makes a strong case that the market was overpriced in 2000, but it doesn't spend much time discussing the fair value of the market. The historical average is about 16 which is again skewed by recent history. I've produced another chart assuming a fair P/E ratio of 15. Years in which the Earnings line ducks under the Price line (such as 2000) would be years when the market is overvalued. Maybe this ratio is fair and maybe it isn't.

A practical question for me, right now, is whether or not the S&P 500 index is overpriced at a P/E of 18. I think it might be.

[1]   I noticed after I made the graph that the original goes to $1600.


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Tuesday, October 26, 2004

A coin flip

Imagine that someone offered you a chance to win a million dollars if you can correctly guess the result of a coin flip. The expected payout would be $500,000 and you could probably sell the chance to some wealthy individual for almost that amount. Buying the chance for $450,000, for instance would be a $50,000 expected return. In other words for a small price (relatively speaking, of course), you could trade a situation with an extreme range of outcomes for a certain outcome.

This is an example of a win-win hedge: you get a large sum of money and the other party gets a discounted chance at a large payout. If the buyer can make this sort of transaction over and over, he'll make a good profit with moderate risk. This is how casinos and insurance companies work more or less.

Suppose you decided to keep the chance and sell a chance to win a million dollars on that same coin flip to someone else. You have an expected return of $500,000 on the first transaction and ($500,000) on the second (plus whatever you sold the chance for). But there are two possible way for these transactions to pay out. It all depends on whether or not you make the same guess as the person you sold a chance to. Here's a chart showing the difference:

You  | Same | Not 
Win  |   0  |  $1,000,000
Loss |   0  | ($1,000,000)

In other words, if the guesses are the same, it's no different than selling your chance. But if they are different, the variation of results is huge. You would risk nothing in the first case and everything on the second. Statistically speaking, you would say that the results if the guesses are the different have a correlation of 1 and -1 when they are the same. If the bets were on two coin flips, the correlation in either case would be 0.

Obviously this is an extreme simplification of what investors are faced with. I own Raytheon stock and work for Raytheon, but there's not a huge amount of correlation between my job security and my company's performance. In some ways the election will matter a lot more, since I depend more on the federal budget than on Raytheon itself.

Real life is more like betting on hundreds of coin flips and we don't always know how they are going to interact. Like an insurance company, you have to spread out the risk and buy it at a discount.

Monday, October 25, 2004

Why I bought Canon

Canon is a Japanese manufacturer of cameras, office machines, and machines for building micro-chip and LCD screens. Chances are good that you use one or more of your products every day. I have a Canon printer and scanner on my desk, I gave my wife a Canon Rebel a couple years ago and I have a pair of Canon binoculars. One of the very pleasant surprises I found by reading the financial statements is that HP sells re-branded laser printers made by Canon, which I have used in every office I've worked in.

Buying a Japanese company (through an ADR) is a bet on the yen verses the dollar. Even a good company that becomes more valuable in Tokyo could lose value when translated into dollars. A strong dollar is bad for people holding stock in foreign companies. But it is good for companies that export to the US. Canon records high profits when it makes digital cameras with cheap yen and sells them for strong dollars. Overall, I hope Canon will be a good hedge against a weakening dollar.

Japanese companies have a reputation of trying to maximize sales even if it means lower profits, but Canon is an exception. Since 1994, net profit margins have gone from 1.7% to 8.6% in large part because gross margins have increased from 38.8% to 50.3%. The company has gone from selling cheap knockoffs of German cameras to setting the standard for optical quality, which people are willing to pay a premium for.

I bought Canon at $45 in December when the dollar traded at about 105 yen.

Thursday, October 14, 2004

End of the season evaluation of The Trade

Well, the season is over and we can take a look at The Trade so far. Here are the Win Shares:

Player         Team   POS    Bat  Pitch Field  ExpWS    WSP   WSAA Total
S Finley       LAD    OF     7.1    0.0   2.0      7   .676      2     9
Y Brazoban     LAD    P      0.0    4.5   0.0      2  1.184      3     4
B Penny        LAD    P     -0.1    0.8   0.0      1   .630      0     1
H Choi         LAD    1B     0.1    0.0   0.3      2   .089     -2     0
B Mayne        LAD    C     -1.4    0.0   1.4      3  -.007     -3     0

P Lo Duca      FLO    C      4.7    0.0   1.9      6   .567      1     6
J Encarnacion  FLO    OF     4.2    0.0   1.3      5   .530      0     5
G Mota         FLO    P      0.6    2.3   0.0      3   .546      0     3
D Roberts      BOS    OF     1.3    0.0   1.0      3   .446      0     2
T Martin       ATL    P      0.0    1.2   0.0      1   .459      0     1
K Hill         ARI    C      0.7    0.0   0.0      1   .350      0     1

I put Brazoban in the plus column for the Dodgers since Mota was blocking him out of playing time. I think it's pretty clear that Penny's injury and Choi's benching make this deal look pretty bad for the Dodgers. Encarnacion played better than I expected, but so did Finley. Florida certainly seemed to get a good deal.

I'm not 100% sure how free-agency works, but I think Finley's future is a win-win for the Dodgers. They get the first shot at signing him, and if someone else (Arizona for instance) signs him, they get a draft pick or two in compensation. The ages (and thus potential) and contract situation of the other players involved favor the Dodgers.

Tuesday, October 05, 2004

Yeast of the Pharisees

Last week I made some sourdough bread, but I didn't let it rise nearly enough. It tasted ok, but the loaves looked like albino hockey pucks[1]. Today I made the same recipe, but let the dough rise (and brushed on a little olive oil) and the results were amazing. There isn't much to the recipe: flour, water, salt, sugar, baking soda and, oh yeah, sourdough starter. I'm pretty sure the yeast from the starter is the primary source of flavor in this bread.

Jesus told his disciples to "beware of the yeast of the Pharisees", which is a fairly cryptic statement to most of us today. The New Testament records many conflicts between Jesus and the Jewish religious establishment, especially the Pharisees. Only his conversation with Nicodemus and his trip to Jerusalem as a child show anything resembling a friendly relationship. It's clear that Jesus saw something wrong with the Jewish leadership.

I believe that the yeast symbolism describes the Pharisees's flaw. During the Passover, yeast was forbidden to the Jews because they needed to be ready to travel. Flat breads (like pita and tortillas) are easier to make and carry on the road. Yeast, like the sourdough starter I use, needs to be cared for and would be a burden to travelers. Also, because yeast varies with regions, it would preserve a part of the place the Jews had left -- Egypt. Jews remove every bit of yeast from their homes during the Passover as a reminder of the flight from Egypt. These days, that mostly involves buying Matza rather than leavened bread, but in the past it meant cultivating a new yeast culture after the feast had finished.

Yeast is a symbol of contentedness and luxury. Bread just tastes better with a bit of yeast. But the yeast puffs up and adds fluff, not substance. Yeast is a sign of settling down and spreading out. Jesus said beware, because the temptation is to accept these things.

This world isn't our home. We belong to a better and higher country, so we can't be comfortable here. The yeast of the Pharisees is finding ways around the Sabbath laws, justifying hate and anger, tolerating the abuse of women. And we are all guilty of it. We are surrounded by the poor and we create all sorts of excuses so that we can go out to dinner one more time a month rather than helping. We cheat our employers out of an hour or two at work since no one will notice.

Yeast isn't inherently bad, but is dangerous to accept. Cleaning it out of your life once in a while is an exellent idea because it's just too easy to get used to.

[1]   This phrase also describes DEC mice according to Google.

Joshua belongs in a zoo

When I was feeding Joshua his morning applesauce, he wanted to look out the window at the doves at our bird feeder. He loved watching them and wanted to open the window. I'm sure if I had taken him outside he would have chased them off.

Joy went to her Pampered Chef monthly sales meeting, so Joshua and I stayed home. We wrestled a bit, watched some football, read the newspaper, and generally had a good time together. I know that his wildness makes things hard on Joy sometimes, but it's been a lot of fun for me.

Thursday, September 23, 2004

The most dangerous intersection in Pasadena

I like near the corner of Craig and Orange Grove, and it seems like once a month or so there's an accident there. Yesterday a couple of guys in a pickup hit a tree. The worst accident since we've lived here was a motorcylclist who was killed when he was hit by a car. My truck has been hit twice just parked on the street, and our neighbor's jeep was also hit while parked.

Most of the problem is that Orange Grove makes a little s-curve so that it can run a little further north. Drivers turning left onto south Craig or left onto west Orange Grove can't see cars on that curve until it's too late. Also drivers speed on both streets. Craig doesn't look busy, but since it goes under the freeway and past Colorado, it carries a lot of traffic south of Orange Grove.

I sent a request to the city to put in a traffic signal, which would help matters. I have some hope, since they did replace the stop signs with signals near the freeway on Craig. We'll see what happens.


Yesterday, less than 8 hours after I submitted a suggestion to through the Pasadena city website, the manager of the traffic engineering department wrote an email telling me a study would be finished around the end of next month. Apparently, some of my neighbors had already petitioned the City about it. Talk about a fast response!

Tuesday, September 21, 2004

Short PeopleSoft?

It looks like PeopleSoft executives are creating a golden parachute for when Oracle finally buys the company. As an Oracle shareholder, this isn't good news, but it's rotten news for PeopleSoft investors. As this takeover attempt drags on, the odds are Oracle will lower its offer price to reflect increased costs, such as these, and PeopleSoft's decreasing earnings.

Which is all to say, I wonder if shorting PeopleSoft (currently at $19.34) would make any sense? Most of the risk seems to be limited, since the price is currently capped at $21. If Oracle lowered the total offer by $2.2 billion, that would put it in the $15 range. If Oracle failed to buy PeopleSoft, I would imagine the price would fall even further. Management hasn't exactly been acting in the best interest of the owners.

Friday, September 17, 2004

Sourdough and composting

I started composting when we moved to our rental house -- the previous tenants had left a compost bin and I read about composting at the San Diego Zoo. Joy was happy because it gave us a good excuse to buy fruit and vegitables that we knew had a decent chance of going bad before we ate them. Coffee grounds, tea leaves and egg shells are supposed to be pretty good compost material, so it fit well with what I consume too.

On vacation to Idaho this summer, I took some sourdough starter to make pancakes and biscuits. Last Saturday I finally got a decent batch of bisuits. I think the starter might have died off a bit on the way home, but now it looks pretty good. I think I'll consider making bread soon.

Both of these things harness (or at least theoretically harness) organisms that would normally be considered harmful. Bacteria, worms and insects work together to break down the compost material so that I can spread it around our garden flowers. Bacteria and yeast work together to break down water and flour so that I can add it to dough to make it rise and add a bit of flavor. It's very satisfying.

Wednesday, September 15, 2004

Why I bought Oracle

Oracle was the first stock I researched and bought as an investment. At work, we use the Oracle database and I've spent several years learning how to use it.

Relational databases are designed based on a mathematical model invented by E. F. Codd, who was a researcher for IBM at the time. IBM didn't pursue the idea of relational databases because the assumption was they'd be too slow. The state of the art at the time were various designs that tried to match the data to the hardware that would be storing and manipulating it. What Larry Ellison, the founder of Oracle, attempted was to use the logical model pioneered by Codd to create a relational database.

It's a truism of computer science that you can't optimize for everything: if you make a program faster, it tends to be harder to change, for instance. Relational databases optimize for logically ordered data, rather than speed. But they also turned out to be fast enough, at least for most purposes. Over the years, Oracle has turned its early leadership in relational databases into huge profits, because there are now many more uses for databases than anyone could have imagined.

One of those applications, of course, was the internet, which drove Oracle's sales, profits and price to astronomical levels. So when the bubble popped, speculators panicked, and sold their Oracle shares down to under $8 from a split-adjusted high of over $46. It's obvious looking back that Oracle's price was far out-pacing its value. At $8 (where I bought my shares), it seemed to me there was plenty of room to grow. I like using the discounted earnings tool that Quicken provides.

So far I've been right.

Tuesday, September 07, 2004

Labor Day

This weekend, Joy and I put in quite a few hours fixing things at home. We finished painting our bedroom ceiling, installed a new ceiling fan, pulled off three doors for painting[1], spray-painted a bookcase, installed a locking doorknob on the bathroom[2], attempted to install new cabinet hinges in the kitchen[3], replaced the kitchen light, and made a trip each to Home Depot and Lowe's. Still on the on-deck circle are bathroom lights, finishing the various painting projects and replacing the bathroom outlet.

Because of the ancient wiring, electrical work is always a bit tricky. The electrical box in the kitchen didn't work with the new fluorescent light fixture we bought, but fortunately it included a mounting bracket that did fit. After I had finished, the circuit breaker would trip right away. I assumed it was a problem with the connections I'd just done, so I rewired and rewired. Finally this morning I tested with the old fixture and discovered that it still tripped. So I pulled out the new bracket and everything worked. The new screws had made contact with the rat's-nest of wiring stuffed into the box. In the end, I pushed around so that the bracket didn't cause a short and everything worked. I'm going to have to check the smoke detectors more often and make sure my renters insurance is up to date.

The result is very pleasing. Better light helps in almost every way. Now I wish we had taken some "before" pictures.


  1. That took longer than you might think thanks to the paint in the hinge pins.
  2. This was harder than it should have been because I had to drill more holes in the door so it would take modern locks.
  3. But failed because the screws were painted over. Whoever painted our kitchen should be tossed in jail.

Tuesday, August 31, 2004

You get what you pay for

Joy and I have talked a lot about how we decide what thing to buy when there is a choice. For instance, we bought mountain bikes before we were married and talked over all of the various options and choices. I think our philosophy is that you get what you pay for. We paid quite a bit more than the minimum for our bikes because we wanted bikes that would last a long time and have minimal problems. Joy hasn't used her bike much, but I've used mine to ride to work and so on. I'm very glad we paid extra to save a few pounds and get better components. I've had very few problems.

Now Lance Armstrong uses a bike (or rather several bikes) that is far more expensive with a carbon composite frame and the best components. Cost is really not a consideration for him, since the Tour de France is on the line and every ounce counts. But it would be ridiculous for me to buy his bike, since I'm mostly happy with something far less expensive.

I try to minimize the product of price and problems. For instance, I bought a cheap pair of binoculars at WalMart that got misaligned almost immediately. So I replaced them with Canon's 8 x 10 WP binoculars that are more expensive, but are much more durable. A more expensive pair wouldn't have enough fewer problems to offset the higher price. In fact, it's possible if I'd bought image stabilizing binoculars I would have had more problems, not fewer.

There isn't a magic way to find the optimum price point, but there are some rules of thumb:

  • Ask an expert for the one or two most important features and focus on those.
  • Don't pay for features you don't understand or care about.
  • Don't pay extra for a single, secondary feature.
  • Lighter, smaller and simpler tend to be undervalued traits.
  • When in doubt, go for the cheap models of a high-end brand.
  • Sometimes the off-brand will make really good models that get overlooked (and undervalued).

Joshua's latest picture

Isn't he cute?
Posted with Hello

Saturday, August 28, 2004


Materialists believe that only material things exist. Originally it seems that scientists proposed materialism as a sort of approximation. Since material things can normally be studied profitably without introducing non-material concepts, it turned out to be a very good approximation. For instance, Galileo was able to observe and study sunspots because he ignored the ancient assertion that heavenly bodies are perfect. In practice, material objects are measurable and non-material things are only accessible subjectively.

At some point, people wondered if there might not be anything except material objects. After all, the approximation was so good that many phenomena were yielding to scientific explanation. Perhaps, the reasoning goes, non-material things simply do not exist. Materialists often make exceptions for things like Justice (which is a goal or ideal and does not exist outside of the realm of thought), or scientific laws (which are observable, though not necessarily binding). But they don't allow for a spiritual world or anything more than a Deist god.

Arguments from popularity normally exhibit the bandwagon fallacy, but it is telling that most people have believed in some form of dualism. It's difficult to understand why dualism should be so deeply ingrained in our intellectual history unless people have some reason to believe it is true. The materialist explanation seems to be that people have a need to understand the world around them and when they don't understand something (for instance, why the sun rises every morning) they would rather invent an explanation (a sun god) rather than admit they do not understand. Now that we know how the sun (or rather the earth) moves, we no longer need a sun god.

I'm not really a philosopher, so I won't pretend to be able to refute materialism. But I do think I can show why we should be skeptical about accepting it at face value. Materialist reject non-material phenomena because they don't conform to the level of evidence that is needed for material phenomena. Souls don't exist, since they can't be measured, even indirectly. Material phenomena that can't be explained by a materialist are meerly considered challenges to be solved by newer theories, better evidence and more study. In this way, materialism can resist apperant contradictions.

But why should we think it true? I can construct a simular philosophy of spiritualism in which the material world does not exist. All experiences, no matter how vivid, are meerly the result of realistic dreams. Through meditation, it will be possible to transend the illusion of the material world and assume the true, spiritual form. Naturally, a materialist would object that this is counter-intuitive or is unfalsifiable. But the same arguments may be used against materialism.

Further, the materialist explination for why dualism entered human belief systems seems unconvincing. Why did Aristotle believe in the soul? What was he trying to explain?

Friday, August 27, 2004

Christianity of death

I ran across an interesting review of The Passion by a Jewish rabbi who finds fault with the movie's celebration of Christ's death. "The Christianity of life concentrates on what Jesus taught his disciples about to how to living virtuously, the Christianity of death distillates the Christian message into the single maxim that Jesus died for mankind’s sins." I haven't seen the movie, but my impression (and the reason I've avoided it so far) is that the suffering of Christ is portrayed without balancing it with His resurrection. If Jesus did not conquer death, He would have been a common criminal, not my King.

But I suppose I am an advocate of the "Christianity of death", because the Christian message really is that Jesus died for mankind's sins. Obviously Jesus had lots of things to teach us, and I wouldn't for a moment discourage anyone from learning them, but His work was not finished until He had given Himself over to death. A careful examination of what Jesus actually taught makes me wonder how anyone could expect to live up to His standards. Hope, for Christians, comes not from His life, but from His death.

I know why a modern Jewish rabbi would want to find common ground with Christianity, but the same differences that existed between Christians and Jews 2000 years ago are still separating us.

Wednesday, August 25, 2004


Among the things I thought about on my vacation (while driving through Nevada and such), is that fish are the only predators that I even occasionally eat. I had sort of assumed that the reason was because the meat of a carnivore tastes bad, but I think it might have more to do with the difficulty in sustaining large populations. Fish are an exception.

I had a pretty successful trip in terms of catching fish in large part due to having a high quality rod and reel. Joy gave them to me as a second anniversary present. (Thanks, dearest.) Longer casts and fewer tangles meant that my lure spent more time in the water attracting fish and less time in the air attracting dragonflys.

Thursday, August 05, 2004


I'm vaguely involved with a pretty cool project, Gmane. Actually Lars Magne Ingebrigtsen, who rewrote Gnus, did all of the work and deserves all of the credit.

One of my earliest experiences with the internet was when AOL added newsgroups and mailing lists to their content. At the time, I remember being confused because it seemed like two different things that served the same purpose. Both required you to "subscribe", both were for talking with lots of other people and both consisted of threaded messages. AOL also had message boards, which are spiritual ancestors to web boards.

And of course, they do serve the same purpose. But since each one works slightly differently, people develop preferences about which is better. For instance, web boards offer the discussion owner the most control over content and presentation and newsgroups the least. It's possible to line them up in a series of spectra:

Control:         web  mail news
Ease of setup:   web  mail news
Ease of use:     news mail web
Universality:    web  mail news
Commitment:      mail web  news
Spam prevalence: mail news web
Centrality:      web  news mail
Archive:         web  news mail

This isn't set in stone of course and there are some subjective elements to the lists, but you can see how people would have strong preferences for one or the other of these methods. I really like using newsgroups now that I have a good newsreader, which means that when I come across an interesting mailing list or web board, I have to decide if I want to endure the pain of reading discussions that way.

The cool thing about Gmane is that I don't have to decide. Or at least there's a chance that I can read a mailing list with my newsreader. And if I need or want to use a web browser or search archives or avoid spam, I've got that too.

Tuesday, August 03, 2004

Defensive Win Shares

Thinking about the impact of the Dodgers trading away Lo Duca, I noticed how much of his value is on defense, at least by the Win Shares method. As of Saturday, he had 3.4 fielding and 8.9 offensive Win Shares. I just don't think of him as being a brilliant catcher.

The Hardball Times has been updated since then but it looks like Lo Duca is especially strong on the defensive side. Montreal's Schneider is the only catcher in the National League who has contributed more on defense. In fact, the Win Shares system shows him to be the best defensive player with (or rather, formally with) the Dodgers. That's right, better than Beltre, Cora, Izturis or Bradley. Which doesn't seem right.

I don't really know the answer, but I wonder if this indicates that catchers get too much credit in the Win Shares system for team defense. Bill James created Win Shares in part to help evaluate the defensive contribution players make to their teams. He explains it all better than I can in sample pages from the book. Basically a teams wins are multiplied by 3 and divided between offense and defense based on the contribution of runs scored and runs allowed to the teams wins. Then defensive shares are divided between pitchers and position players, and finally between individual players.

I really like this top-down approach and I suspect that the system makes pretty good approximations. But it is hard to evaluate since there are so many little details. For instance, on a team with several ground-ball pitchers, you can expect more double plays. So the system discounts the value of double plays for shortstops and second basemen on those sorts of teams. It's logical and fair, but complicated. And all of that complication is hidden behind an innocent little number.

Evaluating a catcher's defensive contribution is especially complicated, since the common wisdom going back to the earliest days of baseball is that the catcher is the defensive leader of a team. As a consequence, catchers get more credit for team defense than other players. They even get some credit for team pitching, since they usually help the pitcher decide how to approach the batters they face.

Needless to say, the Dodgers have had exceptional defense over the last few seasons. So if catchers are given unfair credit for team defense, it wouldn't be surprising if Lo Duca is overrated defensively by the Win Shares method. On the other hand, if he's as good as the system suggests, we should see a dip in the Dodger's defense, Florida's defense improved and Lo Duca's August and September Fielding Win Shares approximate the first part of the season.

We'll see.

Cubicle Cooking

For the last half-year or so, I've been expanding my lunch horizons a bit. I'd like to think I've invented the art of cubicle cooking. (Don't bother doing a Google search. Somehow the one of the hits was a porn site and the another was about "cooking the books".) Since I'm making it up, I'm defining cubicle cooking as the art of preparing food in an office environment. At a minimum, you need a microwave and a source of water. Hot water and a refrigerator are helpful, but not needed.

I started cooking at work after Joy got me a Small Micro-Cooker so that I can heat up ramen noodles. She uses it to make macaroni and other types of pasta. The pour spouts and strainer lid are really handy, but just about any microwave-save container should work.

If you've got a box of macaroni and cheese, you can cook it in the microwave by following the directions. But it's a hassle to take butter to work. Instead, I substitute plain yogurt, which is easier to transport. (This idea originated with a friend who uses sour cream. Joy uses yogurt instead because it has a bit less fat.) I really like the sour taste, but I can understand if you don't.

This week I brought eggs to work. Obviously they improve ramen, but today I added an egg to my oatmeal. I'm pretty pleased with the result, except I should have used less oatmeal. Cook the oatmeal first with a bit extra water, add the egg, and poach the egg in the microwave.

Sunday, August 01, 2004

The rest of the trade

The Dodgers completed their trades minutes before the trade deadline. The sent Tom Martin to Atlanta for minor-league pitcher Matt Merricks and Dave Roberts to Boston for a minor-league outfielder, Henri Stanley. The big trade was aquiring Steve Finley and Brent Mayne from Arizona for minor-league players Koyie Hill, Reggie Abercrombie, and Bill Murphy. Murphy of course just came over from Florida. Here are the Win Shares or the Major League players moved yesterday:

Rank  Player         Team   POS    Bat  Pitch Field  Total  ExpWS    WSP  WSAA
459   B Mayne        ARI    C      0.0    0.0   0.5      0      3   .089    -2
512   S Finley       ARI    OF     6.9    0.0   1.8      9     11   .396    -2

 90   D Roberts      LAD    OF     7.4    0.0   1.4      9      7   .621     2
434   T Martin       LAD    P      0.0    1.1   0.0      1      2   .348    -1

So the Doders gave up 10 and got 9 Win Shares, plus whatever effect the minor league players will have in the future. Mayne has been a backup catcher, so presumabely he'll earn more than 0 Win Shares through the rest of the year. It seems to me that these deals hinge on the long-term prospects of the minor league players gained and lost, but is likely to be evaluated on the Dodgers playoff results. I wonder if they should have stopped before getting Finley, who is nearing the end of his career.

Saturday, July 31, 2004

Lo Duca trade

Yesterday, the Dodgers traded Paul Lo Duca, Guillermo Mota and Juan Encarnacion to Florida for Hee Seop Choi, Brad Penny and a minor-league pitcher, Bill Murphy. Using the Win Shares list from The Hardball Times for this season so far:

Rank  Player         Team   POS    Bat  Pitch Field  Total  ExpWS    WSP  WSAA
 37   G Mota         LAD    P     -0.5    8.5   0.0      8      4  1.082     4
108   P Lo Duca      LAD    C      8.9    0.0   3.4     12     10   .626     2
375   J Encarnacion  LAD    OF     6.3    0.0   1.4      8      9   .429    -1

 38   H Choi         FLO    1B    11.9    0.0   1.0     13      9   .751     4
 82   B Penny        FLO    P     -2.4   10.3   0.0      8      6   .694     2
  -   B Murphy       -      P       -      -     -       -      -   -        -

Obviously Murphy hasn't established any sort of value, but is worth more than nothing. So the Dodgers gave up 28 to get 21+ Win Shares. But look at the last column, Win Shares Above Average. I'm not convinced the statistic is accurate, but I think it tells the story of the trade. Encarnacion has hurt the Dodgers because he's been taking time away from the other outfielders:

 62   M Bradley      LAD    OF     9.0    0.0   2.8     12      9   .639     3
 90   D Roberts      LAD    OF     7.4    0.0   1.4      9      7   .621     2
 97   J Werth        LAD    OF     4.7    0.0   0.5      5      3   .937     2
263   J Grabowski    LAD    OF     3.4    0.0   0.3      4      3   .538     0
546   S Green        LAD    1B     6.4    0.0   1.2      8     11   .360    -3

Ok, maybe they should have found a way to trade Green as well.

Monday, July 26, 2004

Home improvement weekend

This weekend, Joy and I finally started painting our room. We'd bought the paint months ago, but the task of stripping away the pealing paint and prepping seemed pretty daunting. On Saturday, we finished stripping paint and applied one coat of primer. Our room smelled awful and since we had disassembled our Select Comfort bed, Joy and I slept on sleeping bags in the living room.

On Sunday we bought another can of primer and a new screen door. The old screen door had gotten warped and was falling off its hinges. For some reason, it had been installed in the molding, which is rotting away, rather than the door jam. We bought a vinyl door that matches the window frames our landlord had installed. Not only does it look good and require no maintenance, it was also easy to install. First you mount a bar with the hinges and then you mount the door to the bar. Easy.

Then Joy discovered why the previous door as attached to the molding. There isn't enough of a gap between the main door and the screen door for both to be closed at the same time -- the door knob is too long. There's no hurry to fix it, because I don't have a big enough drill bit to install the screen door's handle.

Tool of the week: paint roller with shield. (You'll have to roll down a bit if you follow the link.) I can't imagine painting a ceiling without it.

Saturday, July 24, 2004

Late night reading

Joy fell asleep just now while I was reading Raising Cain. I just finished the chapter on fathers and sons and now I'm reading about mothers and sons. Joy fell asleep because she's been chasing down our very active one-year old.

She's done a great job dealing with Joshua. As the book points out, mothers and sons start out with the closest of relationships and that often doesn't ever change. What does change is the way boys and men learn to express their love for their mothers. Joshua isn't always eager to be held and often pulls away to explore the game cabinet or play with a toy. Joy has been on the lookout for ways she can help him play safely and strikes a good balance between hovering over him and ignoring him.

My own mom struck a similar balance. I remember how hard it was for her to help me fill out applications for the military academies and schools on the other side of the country when I was in high school. But she let me go and helped get Dave and Doug into the Air Force Academy. I know that every time I got on the plane headed for Los Angeles, she cried, but I never heard her complain.

Boys and men have to know that the women in their lives have confidence in our abilities. I've made enough mistakes in life to know that I need people to help me clean things up. Freedom to risk failure is a wonderful gift because it communicates trust.

Getting things out

Looking back at the things I've written here, I'm stuck by how haphazard they are. I've gone back to correct wording here and there, but for the most part I've tried to write things quickly without worrying too much about how they come out. Partially I've done this because "The best is the enemy of the good."

Perhaps more to the point, ideas that never leave home don't earn their pay.

Friday, July 23, 2004

Why I buy the S&P 500

When it comes to finances, it is always good to have a benchmark. For instance, for emergency savings, there is no reason to settle for less than the interest rate on short-term Treasury bills unless you need the convenience of a checking account. The benchmark for longer-term investing is the S&P 500 index.

When I first looked at the mutual funds availible to me in my 401(k), only one fund seemed like it might surpass the S&P 500 benchmark -- Fidelity Magellan. But Peter Lynch was no longer its manager. With huge amounts of money invested, it began to resemble the S&P 500, but with more expenses. I decided to watch Magellan's progress and invest in the index fund. As it turns out, Magellan has "returned" -3.17% annually to the index's -2.04% over the last five years.

There are three elements in the success and failure of mutual funds to beat their benchmark: 1) investment skill, 2) expenses, and 3) investment domain. The first and second points are obvious and, in theory, counter-balance. An index fund requires little to no skill, but minimum expenses. A managed fund has more expenses, but rewards investors with more gains from investment skill. In practice, many managed funds fail to beat their benchmark even without accounting for expenses.

The third point, investment domain, is a description of what sort of securities a fund is allowed to invest in. Over a long period of time, stocks of small U.S. companies have returned more than government bonds, for instance. So all other factors being equal, a small cap fund will do better over many years than a government bond fund.

An S&P 500 index fund has low expenses, will match its benchmark and invests in the 500 largest public companies in the United States. It may not be exciting, but it has been the bulk of my retirement savings for the last five years.

A parable

There once was a town with one well and everyone was sick all the time. Each citizen of this town survived only because there was an abundance of barely edible roots in the area. No one enjoyed more than a few moments in the day and none slept much at night.

One day, a certain man from that town discovered a spring far from the town's only well. He drank from the spring and the next day he felt a little less sick. So he went to the spring again and felt better still. Soon he was healthy and going to spring every day.

This man began to search farther away for food, and he discovered various fruits and grains that tasted better and were more nutritious than the roots near the town. So he became stronger and more energetic.

In the meantime, the people of the town noticed the change in this one man and they began to say to themselves, "Who does he think he is drinking different water and eating different food? He even is acting differently from us."

When the man heard what his neighbors said about him, he became ashamed. "Come," he said, "let me show you the spring with healthy water and the fruit and grains that make me strong." And some of the people came and saw. But others scoffed, "This man is trying to kill us! We have plenty of food and water right here."

And the town was divided between those who drank from the spring and those who drank from the well, those who ate roots and those who ate fruits and grains, and those who were sick and those who were healthy and strong.

Thursday, July 22, 2004

First TES data!

When I got in this morning, I learned we have data from the TES instrument. As I mentioned to Joy, I feel great satisfaction getting this stream of ones and zeros from space.

Andy had set up a mail filter to send a text message to his phone every time we get data. It started going off at 4 in the morning as the guys on the East Coast started catching up on some non-instrument data. We didn't know exactly when the commands would be loaded on the instrument, so he had to keep checking.

The actual TES data came through about the same time as the morning Ground System conference call. He had the pleasure of being able to announce that the data was processed moments after someone predicted it would take 3 hours for the data to arrive. Total turnaround time from command execution to fully processed was less than 45 minutes.

Why I buy Raytheon stock

I thought it would be a good exercise to go over why I have certain securities in my portfolio. Peter Lynch says that if you can't tell a stock's story in a minute then you shouldn't own the stock.

I've been buying Raytheon stock every other week for the last five years, which means I've seen prices from about $75 to about $18. Thankfully I've bought shares mostly at the lower end. Also, I've been dollar-cost averaging into my Raytheon position, so I've bought more shares when the price was low.

Virtually the only reason I own the stock is because I work for Raytheon which matches my 401(k) contribution with company stock. I've sold shares as often as I am able, so this investment represents an opinion in the quality of the company's work environment more than in it's ability to make money for it's owners.

I worked as an intern for Raytheon for four summers and when I got out of UCLA, Raytheon Pasadena offered me a job working with JPL. I also was offered a job at the same starting salary with a dotcom startup in Santa Monica called US Interactive. Despite the possibility of a large IPO, I chose Raytheon. After an IPO at about $10 on August 9, 1999, USITQ reached a high of $92 on January 3, 2000. Fortunately I didn't even lookup the ticker at the time. Over the same time, Raytheon dropped from about $68 to about $25 on news of large "one-time charges" on earnings.

Raytheon had bought a number of divisions in the 1990s, including the part I work for which was originally a small "Beltway bandit" based in Maryland. First it was bought by Hughes, which was bought by GM, which sold bits to Raytheon. Both cars I've owned have been thanks to a GM employees discount I enjoy as a result of this convoluted acquisition path.

Raytheon also bought parts of Texas Instruments and an engineering operation, and sold off its Amana appliances division. Not surprisingly, the company had problems integrating all of these businesses. Only within the last year or so has Raytheon shed most of the baggage of acquisition and focused on its core business.

I haven't spent much time analyzing the numbers, but I don't think Raytheon is a good value at current prices. The company has consistently paid out a 20 cent quarterly dividend, which works out to 2.5% yield, but I don't see how earnings can grow. We might be in a long defense boom cycle because of September 11, but the market has already taken that into account.

Meanwhile, shares of US Interactive are not even worth the paper they are printed on, and the Santa Monica office has been closed down. Raytheon hasn't been a great stock, but it's my best investment so far.

Wednesday, July 21, 2004

Little things

I love being a father! Since Joy came home from The Pampered Chef National Conference in Chicago, I've been feeding Joshua applesauce in the morning instead of Joy breast-feeding him. He can hardly keep himself from leaping out of his seat while I mix in his vitamins and when I start feeding him, he opens his mouth like a baby bird. Once he's calmed down a bit (either because he isn't so hungry anymore or he knows I'll continue feeding him), he hums to himself or babbles, "Ma ma ma!" He likes to lean way over so that there is a shorter distance from the cup to his mouth, and he gently places a hand on my knee.

I'm pretty certain that for Joshua, "Ma" means "food" and "Da" means "play". I suppose there isn't all that much else important for him right now.

He was so worn out from the heat when I got home last night, but he hadn't slept much. I pulled out his helmet so we could take a ride which seemed really exciting to him. He enjoys himself on our bike rides, but on the way home he got fussy. I think he fell asleep for a moment and woke up confused. Fortunately he calmed down when I got home and we snuggled on the hammock for a while.

Last night, he woke up a couple of times before Joy and I went to bed. He practically threw himself on the changing table and back in bed the first time. The second time I thought he desperately wanted to be held, but he just wanted the sippy cup I was holding for him. He broke down when I pulled it out of his hands to refill it after he'd sucked it dry. When he finished drinking, he raced all over our bed trying to stay awake. He was so entertaining that Joy and I were pretty reluctant to send him to his room.

Official Aura launch photo

Here's the official launch photo of Aura. TES came on yesterday and we should get the first bit of data tonight. Posted by Hello

Monday, July 19, 2004

New outlets

I spent part of the weekend installing outlet around the house, including one GFCI in the kitchen. Originally there was only an ordinary outlet in the kitchen, so the hole in the tile was too small for the bulky new receptacle. So I had to file away some of the tile and some of the plastic bits on the outlet with my Leatherman. Finally I used a one-by-four and a hammer to force it in place. I pity the person who has to replace it -- hopefully they'll tear down the house first.

The other outlet in the kitchen was at least has hard. There really ought to be a law against painting screws and the penalty should be harsh. When the screw head got completely mangled, I unscrewed it using the Leatherman's needle-nose pliers. Fun.

I really like screws that have Phillips and flat heads. If I were dictator of the world, I'd require them everywhere.

First and Second order

Lately I've been thinking about how useful it is to divide problems into first and second order. For instance, when driving, a first-order question is "Am I in immediate danger?" and a second-order question is "Was that my exit?" It only makes sense to look at the second question after you've answered the first. I'm sure we've all seen people who have mixed the order by, say, cutting off a semi in order to get off the freeway. No doubt if you were to ask these people later if they made the right decision, they'd agree that it probably wasn't worth the risk.

Politics is another place this comes up. For months leading up to an election, candidates will say just about anything to get elected. Any chink in their opponents armor is fair game. But once the election is decided, the loser always publicly concedes the election. All of the issues between the candidates were really second-order problems. The answer to the first-order question is that ultimately the people will decide who represents them. Even if you are cynical and believe the loser conceded in order to improve his chances next time, it shows that democracy was the over-riding principle of the election. Starting democracies in places without a strong democractic tradition seems to mostly be a problem of getting everyone to really agree on the first-order issues.

The best time to observe first-order issues is during times of crisis. For about a month after the September 11th attacks, most people in America were focused on first-order things (loved-ones, life, patriotism, evil, and so-on). I imagine it was a lot longer in New York. Then as people started to notice that everyone was agreeing that terrorists are evil and firemen are brave, conversations turned to second-order issues like how much money the vitcim's families should get and which administration was most responsible for the intellegence failures.

Friday, July 16, 2004

Mental shortcuts

An article on the Motley Fool presented a little puzzle.

How are the following two rows of the alphabet organized?

The article gives one answer and points out another interesting fact about the list. The author, Bill Mann, ended the article by pointing out there is something else interesting about the list. I was the first person to write back with an answer.

The trouble is, I had to read the article in order to see the first two facts. I was completely blinded by the first thing that jumped out at me. Here's what I wrote:

> Bill Mann points out that there is yet one other noteworthy
> thing about the third list. Can you spot it?

It's in QWERTY order. Whoever typed the list must have worked though the keyboard left-to-right and top-to-bottom. That makes it exceptionally easy to spot the missing 'M'. (Not that I noticed. I was too locked into the order to either solve the puzzle or spot the missing letter.)

I think I would have eventially spotted the way the rows were sorted, but it would have required more deep thinking than I had time for -- especially since I knew the answer was just a few paragraphs further on in the article. Yay laziness!

Radiator fan cluch

My truck has been running hot for a few months, but the weather has been fairly cool. Until this week that is. Driving home from Joy's parent's place on Wednesday I ran into some traffic and the neddle on the temperature gauge jumped up near the redline. I pulled over, added some water, and it just got worse. So I drove back to Orange.

When Jim came home, he took a look. He didn't see any obvious leaks in the radiator, so he had me start it up while he held onto the radiator fan. It didn't seem like a good idea, but the fan applied almost no resistance. He even spun it backwards a few times.

It turns out the fan has a thermal activated cluch, so that it spins faster as the engine warms up. On older cars the radiator fan is directly coupled to the engine, which is wasteful and loud. On the other hand, that's one less moving part.

As long as I kept moving, the air naturally flowed through the radiator. It helped to turn on the vent and the AC, since that pulled through more air too. But when I got stuck in traffic, the radiator was worthless without the fan.

We have liftoff on Aura.

Wednesday morning I was asleep while Aura began its (hopefully) six-year mission. Fortunately there is footage of the launch. Mostlikely I wouldn't have seen anything anyway. At least that's what I'm telling myself.

Now the real work begins.

Wednesday, July 14, 2004

Mass customization

It turns out that a bunch of companies are in the business of manufacturing customized baseball gloves. Rather than going into Wal-Mart or a sporting goods store and taking a glove that has 80% of the features you want, you can order a glove that is exactly right. The manufacturers are happy because it guarantees a sale without adding much to overhead. High-end watches would also be a sensible choice for customization.

Cell phones, on the other hand, don't make sense to customize at the factory, since they are difficult to design and compete on price. Nokia hit on a brilliant solution by selling a phone with replaceable face-plates. For a while everyone had the same phone because they wanted to put Hello Kitty or the American flag on it. You see the same phenomenon in cars: everyone has the same GMs and Hondas with big exhaust pipes and extra running lights.

I'm tempted to say the one sort of customization is sensible and the other isn't. After all, a custom glove could make you a better ballplayer but you won't have better reception if your phone has Homer Simpson on it. Function versus style. The trouble is, I don't really act like function matters and style doesn't.

Exhibit A: my web-page. I spent untold hours getting everything just so, but beyond simple readability customizations, it was all about style. (Maybe not good style, but style nonetheless.) Humans seem to have a need to be different, even if they are different the same way everyone else is.

Exhibit B: I just wasted a bunch more time getting this post to look ok. It really bugs me to have lines wrap in strange ways.

Aura scrubbed again

Today I was actually watching the launch on NASA TV, which was exciting. About three minutes before the beginning of the launch window, there was an emergency hold. Aura has only a three minute window, since it is intended to fly in formation with Terra and Aqua. There just wasn't enough time to deal with the problem, so the launch was scrubbed for at least 24 hours.

It sounds like there might be weather issues with a tropical storm in the Pacific. The way I understand things, any delay beyond the 18th would mean we lose the launch site for a while -- to sometime in August.

The good news is that Joy will back from Chicago tonight, so we might be able to go see it happen at Vandenberg.

Tuesday, July 13, 2004

Aura launch delayed again.

Aura was delayed just 30 minutes or so before it's launch window closed. They are going to try again tomorrow.

A little history.

Jon's Page O' Stuff is my more or less up to date webpage. Hopefully I'll get around to cleaning it up once in a while.