Saturday, December 20, 2003

Road trip!

The movers are coming on Monday and so this weekend Bob and I are packing most of our stuff and preparing for the upheaval that is sure to ensue when the guys from fly-by-night-movers show up. All I can say is thank goodness for insurance!

Once our stuff is on its way, the plan is to spend Christmas eve at Dad's house in Connecticut, then drive to Aunt Barbara and Uncle LJ's house for Christmas day. We leave the morning of the 26th headed for Arizona. Bobby and I are making the drive from Peru, VT to Mesa, AZ over the course of several days. We're gonna be making time so we can attend Rick & Kelly Dwyer's annual New Year's Eve party. We decided to take the southern route so we can drive through states we've not explored much to date and to avoid the inconvenience of weather-related delays. The drive should be something unlike anything I've ever experienced but Bob is prepared from the Dwyers' many long haul driving vacations. He's actually excited about spending days on end in the Civic together. I'm a bit apprehensive but he's already prepared with his CD collection, 5 books on CD and a head full of things to gab at me about. Oh yes, and thanks to our friends the Gendrons and the Gottfrieds, we also have a local classic to read on the way-- Jack Kerouac's "novel that defined a generation" -- On the Road This should be a road trip to remember!

Monday, December 08, 2003

Shovelling Technique

We just got our first big snow storm of the season, and it was a good one. On Sunday morning, as things were starting to die down a bit, I headed out for my first shovelling session of the season. Each time I begin work on removing the snow from our modest driveway, I start off with a very methodical approach to the task. After an hour, I'm displaying some of the worst maneuvers known to the trade: The twist and throw with your back, the rapid fire approach (which lasts about 3 shovels full), and of course the long-distance displacement approach (where you get to catch your breath as you move snow from one place to another very far away). After about 3 hours, I know it's time to go in because I've stared at a pile of snow for more than a minute without doing much of anything.

After our first snow storm in this apartment, I headed out in the morning to try my hand at shovelling. My upstairs neighbor, Pete, was hard at work- and had an extra shovel. I didn't want to disappoint him, so I apologized in advance for my poor technique. Pete made me feel right at home- he told me something I'll never forget: "Snow shovelling requires 2 things: A strong back, and a weak mind."

As we prepare to move to Arizona, I'm very much looking forward to simple things like taking out the trash without bundling up, without slipping on ice while digging the trash cans from out of a snow drift, and not having to find a place to put the trash cans along a sidewalk covered in snow. I'll have to check back in August to see how things compare. I'm off to the trash barrels. Wish me luck.


Tuesday, December 02, 2003

Aren't you supposed to be working now?

Well, yes but I'm taking a lunch break. More importantly, Christmas is right around the corner and shopping is underway. For those poor souls who have asked for ideas on what to give Bob and I this year, I suppose I could revert to Bob's tired joke, "Is cash a good gift?" The answer: "That depends, how much cash?" If you don't think that's funny anymore I've added a link to my Amazon wish list so we can make this a more market-based exchange. I encourage you to do the same or else you will end up with a) another of the same gift you received last year or b) something I got off eBay. If we're real lucky Bob might also post his wish list since he's probably the more difficult of us (*wink, wink*). Anyway, hope your holiday season is off to a stellar start !

P.S. If anyone out there has an affinity for packing, I'm taking time donations from those who will do a good job packing our junk.

Sunday, November 30, 2003

Book Review!

I just finished a great book: "Buffett: The Making of an American Capitalist" by Roger Lowenstein. I had been wanting to read a book about Warren Buffett for some time, and this book has to be the most interesting biography I've ever read. (well, OK, it was more interesting than "A Beautiful Mind" so of the 2 biographies I've read, the one about Buffett was more interesting).

For those who haven't heard of Buffett, he's currently the 2nd richest man in America (the richest being Bill Gates One of the cool things about Buffett is that (unlike every other person you see in the top 10) he made his money by investing the stock market. The majority of the "richest people" lists are people who have made billions on a single great idea (Microsoft, Dell, Oracle, Wal-Mart). He never added any additional capital to his portfolio- he only reinvested the profits his investments made. On average, his portfolio has returned 23% annually, as compared to a historic average of around 10% for the S&P 500.

Most Buffett book reviews grab the reader's attention by saying that $10,000 invested with Buffett in 1956 would be worth more than $200 million today. While that's true (and astonishing) consider that $10,000 invested in a simple S&P 500 tracker (at 10%) for the same period would be worth $970,000 today. While $200 million vs. $970,000 is indeed impressive (when in my mind 23% isn't THAT much better a return than 10%), we're once again reminded of the power of compound interest. Note to self: "Invest early in life, and divert as much of your income as you can stomach into investments."

Buffett is quite a character. He still lives in the same humble home in Omaha that he did 40 years ago. Some mistake him for a bumpkin (as they did when he was "missing the boat" during the dot com run-up, and previously during the "go-go" market days prior) only to be proven very wrong as Buffett's laser focus on value sees stocks back in line with their "intrinsic value". Evaluating stocks based on their intrinsic values is Buffett's "secret". Here's an excerpt from Buffett's "Owner's Manual" on how to measure intrinsic value:

"You can gain some insight into the differences between book value and intrinsic value by looking at one form of investment, a college education. Think of the education's cost as its "book value." If this cost is to be accurate, it should include the earnings that were foregone by the student because he chose college rather than a job.

For this exercise, we will ignore the important non-economic benefits of an education and focus strictly on its economic value. First, we must estimate the earnings that the graduate will receive over his lifetime and subtract from that figure an estimate of what he would have earned had he lacked his education. That gives us an excess earnings figure, which must then be discounted, at an appropriate interest rate, back to graduation day. The dollar result equals the intrinsic economic value of the education.

Some graduates will find that the book value of their education exceeds its intrinsic value, which means that whoever paid for the education didn't get his money's worth. In other cases, the intrinsic value of an education will far exceed its book value, a result that proves capital was wisely deployed. In all cases, what is clear is that book value is meaningless as an indicator of intrinsic value."

Bam: while reading this book it hit me. So many things became clear to me that were previously muddy. Investing- and by that I mean NOT ONLY investing ones money in the stock market or in interest bearing accounts in an effort to save for the future- should always be guided by rate of return. When you consider doing something in life for financial gain, always measure it in the sensible terms that Buffett lays out. What I took this to mean from the book:

1) What's the initial investment?
2) What's the margin?
3) How long will it take to pay back your initial investment?

Say for example that I want to own a Subway Sandwich Shop (I actually have thought about this). To start a Subway up costs roughly $100,000. Most Subways bring in about $25,000 a month, with their margin being about 20%-30% giving them a monthly profit of say $5,000. Using this metric, if I own 1 Subway, it'll take me about 2 years to pay back my initial investment, and each Subway will give me an annual income of $60,000. I encourage you to apply these same simple concepts to a business idea that you may have- how does it look?

This book does not have a textbook feel to it. It was a very entertaining, fast read. BUT, I learned more about common sense investment analysis that stuck in my mind than I learned in half a dozen MBA classes on investing.

The story focuses on Buffett's folksky, down-to-earth manner, and how he got to where he is today. Reading the book, I thought I was reading about an icon whose time had come and gone. Until I went to the Berkshire Hathaway web site. There, I see that he is still very active, running a company that is really nothing more than a holding place for his various investments. You'd be surprised at the stocks and companies he owns. The Pampered Chef. Coca-Cola. Gillette. American Express.

Buffett doesn't believe in stock splits because they DO NOT create wealth for anybody. They only cut the pizza pie into more slices- the pizza doesn't get any larger. Consequently, shares of Berkshire Hathaway that once traded for around $8 are now worth $80,000! Have no fear though. Class B shares of Berkshire are now available at the bargain price of $2800 (as of this writing). Have a look and buy some if you don't want to bother learning Buffett's method and would prefer to just ride his coat tails: Yahoo! Berkshire Hathaway Quote.


Check this book out at

Monday, November 17, 2003

Cool Commercial

I saw a commercial the other day that really caught my attention. Have a look at it:


It was particularly cool the first time I saw it because I didn't know what the ad was for. But half way through it, I stopped what I was doing and started really paying attention to it. The thing I like so much about it is that the young boy in the commercial is learning from people throughout history. Just the way we've all learned from teachers, family, and friends; but this kid is learning from the best at every subject. Very quickly.

The premise is that Open Source sharing allows "all to benefit". That's counter to many workplaces where people are out for their own self-gain, and some people even hoard knowledge. Whether Linux will deliver on this promise remains to be seen. It's still a very difficult personal operating system to use, but I see it gaining acceptance with my customers who use it. Linux is replacing Sun Solaris quickly in the scientific computing market, and it's not surprising when you consider that a $5,000 Dell box can outperform a $60,000 Sun box. No wonder Sun stock has dropped from over $60 3 years ago to less than $5 today.

Will IBM benefit from Linux's popularity? They're certainly claiming the OS as their own. That's a great move in my opinion- rather than trying to shove their proprietary systems to no avail.

At any rate, it's a cool commercial and you should give it a look.


Me and Deanna will post thing here randomly as they occur to us. Everyone once in a while, we come across something that we think others might be interested in, or we just want to blab about something we're thinking about. Check back often to see what we're up to.

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