Really Good Solar

Posted on March 17, 2012 by Tom Trimbath

Really, it all should be so much simpler that it is. Small companies should be easier to understand, and they are, but even a small NASDAQ company involves big numbers, intricate deals, and confusing accounting. Real Goods Solar announced earnings this week, and even though they are making millions the market is not treating them richly. The trick for the individual investor is to figure out if the stock price is down because the company is doing poorly, or because no one appreciates them.

Like most companies, Real Goods Solar has an About page on their web site, and like most companies they skip over massive pieces of their history. They claim a heritage that goes back to 1978. I think I knew them back then as Real Goods Trading Company. They were a mail-order catalog business for people wanting to live off the grid, possibly before off-the-grid became a popular term. Back then, way back when I was in college it was probably considered back-to-nature – with a hefty dose of expensive technology. I fantasy-shopped their catalog while living in apartments and suburbia. They grew, went online, and decided to become a publicly traded company under the symbol RGTC as I recall. About the time I decided to buy them, the entire company was bought by Gaiam (GAIA), an alternative lifestyle and healthy living catalog company that also did videos. It was an interesting match that included Steve Case, the ex-AOL CEO. I’d owned AOL stock and sold it for about a 2,400% gain. I bought a bit of GAIA. A short while later, GAIA segregates and then spun off the more hardware aspects of alternative energy and off-the-grid products into a company called Real Goods Solar. In, out and back to the beginning? Not quite. Real Goods Solar had a catalog that mimicked Gaiam’s, but it also had a service business installing solar cells arrays on buildings in a few states that subsidized solar power. Gaiam de-emphasized their catalog. I sold GAIA. Now, I can’t find Real Goods’ catalog either. Maybe they are concentrating on the service sector. The name has barely changed but the business appears dramatically different. From self-empowerment to construction contractor is a big switch.

Maybe I got the story wrong, despite watching it for 34 years. Whatever they are doing, they are making money. Net revenues jumped over 40% from $77,000,000 to over $109,000,000. This sounds great, and looks like a vindication for solar power. The areas where solar power made sense 30 years ago were dots on the map. The technology was inefficient and expensive, so it was only cost effective for places very far from the grid. As the technology improved the dots grew to splotches. As power rates went up, the splotches expanded. As non-renewable energy becomes more expensive, and as technology improves and subsidies rise, large portions of the map become more ruled by solar. Real Goods’ wholesale approach evidently finds enough business from big projects to make $100,000,000. Hard to complain about that.

Small companies are supposed to have simpler stories, and they usually do. Diagramming a similarly long history for something like Microsoft is a tome, not a blog post. And yet complexities exist. Real Goods is expanding. They bought Alteris, another company, which is a sign of optimism, but also the very sort of thing that clouds financial reports. Gaiam also continues to own a major fraction of the company, so as it trades shares the financial statements cloud further.

At times like these I retreat to fundamental fundamentals. Merger and Acquisitions (M&A) throw data into wild swings, but only for a few quarters. Fundamentally, the company operates to make money. I buy stocks like RSOL for the positive impact of their work and because they make money. Why not do both at the same time? That’s one of the things I like about my investing strategy. It is possible to champion a cause and fund a lifestyle simultaneously. (See my book Dream. Invest. Live. for details.) Real Goods made about $100,000,000. Their market cap is about $24,000,000 (according to Yahoo) or $40,000,000 according to Google. (I suspect the difference is in the number of shares used for the calculation.) In either case, RSOL adds up to less than what Real Goods makes in a year. The good news is that they expect to make even more in 2012, $145,000,000. The bad news is that the analysts expected them to make $193,000,000.

In an irrational market, like the one we are coming out of, companies are downgraded for any bad news, even if the bad news is still good news. In a normal market, my rule of thumb for a regular company is a price to sales (revenues) of about 6. Construction operates on tighter margins, so I understand a lower multiple (how about 3.0?). According to Yahoo, RSOL is trading at a P/S = 0.30. A ten times higher valuation seems reasonable from that point of view. And the book value is similarly low: P/B = 0.50, so even getting the stock up to an dollar of the company equaling a dollar of the stock would be a doubling of the stock price. And then they are expecting to make $145,000,000 in 2012.

No wonder I shake my head at the market, my portfolio, and the media. There are some serious disconnects between price and value, perception and reality. But fear sells, and one solar power company became a political pawn. Maybe that hurt the rest of the industry.

In the long term there will probably more need for solar power, not less. The systems will become more efficient, not less. The subsidies may go away, but they may also increase if as oil and power plant construction remains expensive. De-centralized power may become as popular as de-centralized communications. Fewer people have landlines in their homes. Imagine a suburban house efficient enough that it doesn’t have to be tied into the local phone or power grid. Those dots on the map are making great progress. Even here in the historically grey Pacific Northwet (yep I spelled that right), there is a solar power p-patch. Of course, I want to be invested in the solar market. If I had spare cash I’d probably invest in Whidbey’s solar plant.

Investing can be complicated. Anything can be complicated, if you decide to make it complicated. Ask a writer. Choosing the right words for one sentence can be the most complex task of a complex week. So, as a writer I’ve learned how to stick to fundamentals. A good story with good enough words is better than a dull story with exquisite words. And as a blogger I’ve learned to trust to first drafts. In the end, consistent voice and the long story will prevail. As an investor, whenever a company’s story becomes too complicated, I retreat to fundamentals. Real Goods Solar is doing good work and making good money. They may not be exquisite, but in a rational market, and given enough time their story and their value will shine through. That would be, and will be, really good.

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Wash And Care

Posted on March 14, 2012 by Tom Trimbath

My new used dishwasher is sitting in my carport. My other dishwasher is installed in my kitchen. Neither works, but my dishes are clean. Things don’t always work out the way we expect, but somehow they work out. Maybe it is as simple as making sure we take care of what’s important.

My dishwasher died about three years ago. Four years ago it started making a lot of noise. Being the frugal guy I am, I tried to repair it, but didn’t succeed. So, I called in an expert. About $150 later it was working again – for a while. Then it groaned and stopped. About $100 later it was proclaimed dead, unless I wanted to spend over $150 more on a new motor. I decided to wash dishes by hand for a while.

I hoped to soon have enough set aside for a kitchen remodel anyway, and I could upgrade everything at once. I waited. I waited. DNDN climbed. I almost made the move but wanted a little bit more – and DNDN dropped by a bit, and then DNDN dropped by a lot. As my portfolio shrank with the misfortunes of DNDN, AMSC, and others, my remodel was scaled back to repair, which was scaled back to waiting for sales, which was scaled back to seeing what popped up on drewslist (see my previous post for a description) and craigslist. Drewslist almost provided. The drewslist emails come out late at night. I happened to be up at 3AM, and saw a free, yep, a free mini-dishwasher available to the first contact. I immediately sent an email and got a quick reply. I was the second in line. I didn’t get it.

It has to be a small dishwasher because my kitchen is old, and appliances were smaller then. That also meant that new dishwashers were more expensive than normal because they don’t make as many that fit. Living outside the mainstream has its costs.

Two weeks ago I found an RV dishwasher for $75. It had been used twice. I drove 40 miles, bought it, and watched as the courteous previous owner dropped it on the way to my car. When I got it home I set it up in the carport to see if it would work or leak. It doesn’t leak, and it almost works; but it doesn’t drain. It is now a project. I try something. Run it. And then turn it upside down to drain it after it beeps and dies.

There are times when re-use, repair, and other eco-conscious efforts are not as effective as discarding and replacing. I’ve spent enough that I could have a new and efficient dishwasher and have more free time, use less water, and have cleaner dishes. In the meantime, I’ve taken care of things by washing dishes by hand. Hand washing works, but I suspect that a dishwasher is more sanitary than a dishrag.

Of course, some people look at my portfolio and tell me that I should’ve replaced DNDN, AMSC, MVIS, and the rest long ago. They see them as broken. But I remember my investing history (Keeping AAPLs). My style and strategy has been Long Term Buy and Hold, and such a strategy does not suggest jumping in and out because of short term situations. Okay, I’ll admit that this recent short term situation is taking longer to pass than I expected. Luckily, except for two, all of the companies behind my stocks are making more money than ever. This is the equivalent of the dishwasher repairing itself while I leave it alone. In the meantime, I’ve been selling stocks, but I’ve also switched to a more hands-on approach.

I can be very hands-on with my own company. My business keeps me busy, too busy sometimes, but I am glad that I have worked on it for years, even when I didn’t have to. It is something that I have control over. It may not work as well as a portfolio that grows faster than my expenses, but it helps, and may someday provide those funds. Now would be a good time for that.

A lot of things are acting dodgy. That also means there is a lot of coping going on. Major institutions stumbled. Corporations dramatically curtailed hiring. Convention and entrenched habits are being challenged. I am encouraged, however, because many aspects of life are progressing. The Occupy movement will probably sprout several new institutions, or at least invigorate existing advocacies. Corporations are hiring again, and yes, I’ll include a link to my resume. People are downsizing and aiming to live with less debt. We’re taking care of what matters whether it is activism, a return to productivity, or an awareness of the appeal of new lifestyles.

I don’t expect my old dishwasher to suddenly work, but I think there’s a good chance that I can get the new used one to work. My business is improving, or at least the activity level is increasing, hopefully with profits to soon follow. My portfolio is showing slow signs of recovery. Measuring the companies against where they were and against where they may go would probably be a better tactic than evaluating them against whisper numbers and speculations. That will be the sign of a return to rational markets. And societally, many people are heading towards sustainable lifestyles, which I find encouraging.

I’d like to wash myself clean of the stresses I’ve experienced, and I’d like to see society wash itself of it’s recent fears and paranoias. I’d like to see the world washed clean of environmental damage. Care of self, each other, and the planet can get us there.

And if my portfolio appreciates appropriately, it will fund a new kitchen and of course I’ll start with a new dishwasher. Anyone need a Haier HDT18PA that’s been used twice, dropped once, and has been tried many times? Maybe with a bit of care it can work.

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My Jobs Report

Posted on March 10, 2012 by Tom Trimbath

Jobs! Unemployed people are turning into employed people at the rate of about a quarter of a million per month. Nice. Okay, so the unemployment rate hasn’t changed, but people getting jobs is a good thing; especially, if you are one of the people. Me? I’m busy. I’m working my job, which is my business (books, photos, speaking, consulting, etc.) which may someday pay my bills, which probably makes me employed but currently leaves me unpaid. Is there a category for that? Maybe that’s the definition of a budding entrepreneur. I’d much rather be in the paid but unemployed group. I’ll check my lottery ticket later. Statistics are a measure of the world, but they are an abstraction. Anecdotes don’t tell the whole story, but without them we may forget that people are involved. And the job of civilization is the proper care of its people.

Government data is frustrating. I prefer to include lots of links to basic data. Unfortunately, government data is obfuscated by clouds of boilerplate, caveats, and disclaimers to ensure that nothing is interpreted incorrectly. It is buried so deep that I wonder how anyone except bureaucrats or frequent visitors ever find it. The data presented is so obtuse that we rely on secondary analyses flavored by ideologies and agendas. I try to produce each of these posts in under an hour or two (it’s not like I’m getting paid for this, eh?), and today got a late start, so please accept my paraphrased version of the official jobs report. As I understand it, over 220,000 jobs were added last month even though the unemployment number stayed at 8.3%. Rather than parse how the 8.3% remained the same, I’ll celebrate over 220,000 people finding jobs. That’s 220,000 relieved households and improved lives. That’s 220,000 stories.

Jobs are not synonymous with good or bad. They are not a panacea. Sometimes they can be toxic environments, and unhealthy in many ways; but, jobs are the most direct way people have to make the money they need to survive in this society. Surviving is good. Thriving is better. Some jobs are a struggle. Others are bizarre Dilbert worlds. Some are even healthy, productive, supportive, and – gasp – fun.

One friend lost a terrible job. Getting out of the madhouse was healthy. Not being able to pay the heat bill was tough. A part time job has paid some of the bills. Survival is not assured, but is a lot closer than before. Another friend found a job that was initially a torture, but that quickly became positive and paid enough to recover three years of being unemployed. At that rate he’ll be thriving soon. More recently, a friend with only the cash left in their wallet, got a unsolicited request to help a billionaire with their estate. That’s a good start that could have a great finish.

I’ve been actively applying for jobs for over six months. So far I’ve only had one interview and offer. It was for a part time job that paid about $10/hr, but it was contingent on me not applying for regular full time work elsewhere. I said no. A job might as well pay for more than just the mortgage, unless there’s another part time job covering the rest, or money comes in from my business, and improved portfolio, or a windfall. To everyone out there that’s passing along my resumes, thanks. To everyone who is in the same situation as me, I feel for you.

I’m fortunate enough to have some savings to draw from. Granted that I never expected to have to tap them, or to have them drop so dramatically; otherwise I wouldn’t have semi-retired back in 1998. Evidently the semi- part carried more weight than I thought. As recently as two years ago I expected to reach “enough” within a few more years. It would just take a bit of good luck, maybe some traction from my business, and a bit of frugality in my lifestyle. Oh well, maybe that will happen yet, but the climb back is much steeper now.

Now that the shock has worn off, I hear more stories about people who lost everything. My net worth dropped 90% from the peak. Building back from 10% is possible. It’s been done before, and I won’t understate the effort required. Even an abrupt climb takes time and carries uncertainties throughout the rise. Stocks can be volatile in both directions. Others have been less fortunate. Some lost 100%, or more (yes it’s possible). Old maxims stated that stocks are risky and bonds are safe. The people that lost 100% were in bonds. The only people that lost more than them were leveraged in the stock or real estate markets.

Another maxim held that, in America, everyone can find a job if they just work hard enough. This is the land of opportunity. Yes and no. In general, yes. Yet, we have had times when jobs weren’t there for the asking. These last few years have that in common with the Great Depression. Sometimes the jobs just don’t exist. Fortunately, there’s always the route of the entrepreneur, the chance to create personal employment. I’ve been doing that too. It takes talent, skill, and effort – and luck. The right word to the right person at the right time can establish a business with one contact. Maybe that will happen with my books through word of mouth, with my art through a corporate art buyer, or with my consulting where a client tells a friend the right anecdote. I’m even having fun with fellow entrepreneurs who would rather collaborate instead of commiserate.

Companies are in a buyer’s market. They are adding jobs, but they can also be very picky, at least for now. One company pointed out that they screened their candidates by how extreme they were in the application process. How far were they willing to go to prove that they wanted the job? That’s an odd way to begin a mutual relationship. I decided not to apply there. Well, maybe I’ll take a crack at it. It doesn’t hurt to try, but I’ll just be myself. Besides, maybe that’s extreme enough, or maybe I’ll catch them on a day when they’ve had a bit too much extremism and find they’d rather have rational adults apply.

It’s a Saturday, time for this blog, and then a few other chores. I’ll work on my next book (my internal and external journey as I walked across Scotland), wrap and store a photo exhibit that just closed this week, and maybe call a consultant who was willing to consult with me about my consulting business. That will be more than enough work. Then it will be time to play. That’s my main job, living my life, and that is the most gainful employment possible.

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Delayed Decisions

Posted on March 7, 2012 by Tom Trimbath

Investing – it’s not all about the money. I’ll admit that money is the main reason I invest, but I also invest to champion causes that I can’t support any other way. If I find a company doing good work, and I can buy stock in them when others have ignored them, I can show support for their work, and then eventually sell some stock to support my personal passions. The upside is a set of positives that multiply their benefits. The downside is, well, the opposite. Sometimes reversing that negative has unrecoverable costs. Our civilization does that and yet we progress. How do we do that?

I’ve told many episodes of the Dendreon story. Here’s a synopsis for those who are new to it.  The company developed a technique for retraining the body’s immune system to  fight certain cancers. They targeted one cancer (prostate cancer) performed years of clinical trials (DNDN up), were told to go back and get more data (DNDN down), finally got a technical review (DNDN up), passed it (DNDN up), then were told to go back and get more data anyway (DNDN down), finally got approval (DNDN way up), and then ran into bureaucratic and reimbursement road blocks (DNDN drastically down to pre-approval prices). This is the story of a cancer treatment without the side effects of chemo or radiation. About a quarter of the men get flu-like symptoms as their immune systems kick in. Total up the bills and the treatment is cheaper too. Track the patients for a while and they live longer than under any other treatment. More effective, cheaper, with few side effects – the treatment, Provenge, could be considered one of the major successes in the decades long War Against Cancer.

The current story of Dendreon and DNDN have more to do with reimbursement procedures than anything else. The total treatment costs less than traditional treatments, but Provenge’s problem is its simplicity. The treatment primarily consists of three shots instead of the myriad of visits and prescriptions associated with chemo and radiation. Provenge costs less, but it costs about $93,000. As I understand it, chemo and radiation tend to cost over $150,000. Divide by three and each visit costs $31,000. The physician has to hope that it will be reimbursed, just like with any insurance claim, but $31,000 is a lot of risk for a small business like a doctor’s office.

That may eventually resolved. I’d like it to be resolved yesterday because I’ve had to sell more than half of my shares to pay my bills. By my guesstimate, DNDN should have been worth more than enough for me to have more than enough back in 2007. Five years have taken a toll on me, and I lament it, but the larger loss is within the patient population – or to use a less euphemistic phrase – men who have died waiting for treatment. And despite it being a prostate cancer treatment, women may have died from the delay as well.

In general, we want things to be perfect and simple. Does this work or doesn’t it? The world is messier than that. Humans are more complicated than that. Have you looked around? Most of our bodies look different. Differences exist, which is one reason for clinical trials. Similarities do too, which is why general statements can be made. Exercise, eat right, drink plenty of fluids, and get plenty of rest are generally good ideas; but anything good can be taken to an extreme. Drink plenty of fluids, but don’t drink an ocean. Dendreon was sent back to get more data to get closer to a perfect picture. They’d demonstrated effectivity, but barely missed a statistical point. Two years of delay proved them right.

Two years of delay also meant two years of delayed treatments. Prostate cancer kills about 30,000 men per year. Provenge is not a panacea, but even if it works for only 20% (and I’m pretty sure the number is higher) that delay meant 6,000 men could have been helped each year. That delay hurt my stocks, but my hurt is small in comparison.

This isn’t just a story about men. Dendreon’s technology may also work on breast, colorectal, ovarian, lung, cervical, and renal cancers (at least according to my notes from the 2009 stockholders meeting). The delay in Provenge that hurt DNDN meant a delay in possibly developing treatments for six other cancers. Multiply the effect of the delay across six other cancers and the cost becomes larger than many wars.

What probably sounded like a good, academic, procedural, and methodical approach to ensuring the company met a critical benchmark was evidently more important than lives, thousands of lives.

Does this sound like a rant? Didn’t I say investing could involve passion?

We delay a lot of things for what sound like excellent reasons to someone. We delay building bridges or giving raises because of budget issues. We delay environmental protections because of doubts and uncertainties. We delay explorations because, well, possibly because we are more comfortable not being challenged by what we don’t know. I’m glad someone had the courage to look for near Earth asteroids. There are more of them than we expected. We might need a defense against impacts that could wipe out our civilization, but we’re delaying that work – for now.

Delays are necessary. Fools rush in and all of that. But delays for security, and then more security, may come at the cost of the very things we’re trying to secure.

Conspiracies about Dendreon’s story are passionately pursued. The billion dollar industries behind the entrenched chemo and radiation treatments have sufficient incentive and resources, though I’ll let other decide if they actually actively delayed Provenge’s progress. There is a certainty to the fact that delays have cost lives.

Personally, as far as health is concerned, I’d rather hear that the food industry initiated its own set of trials, and that doctors could prescribe the proper foods instead of the proper pill. The food industry has billions, could influence everyone because we all eat, and could produce a treatment that was as simple and cheap as eating more garlic. The trials may take some time, but we already understand some of the side effects. Really, garlic breath isn’t that bad. I kind of like it. Throw in some tomatoes, maybe some turmeric, a few scallions – maybe I should go food shopping, But first there are a few other things I have to do.

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Keeping AAPLs

Posted on March 3, 2012 by Tom Trimbath

News alert: Apple is worth more than Poland. Nope. Apple’s market cap is over $500B. Poland’s GDP is about $480B. It sounds like a story, but it is comparing a sum to a rate, a savings account to a paycheck,  a house price to a mortgage. Despite that, Apple’s achievement is impressive. My portfolio could have been equally impressive, but I was young and emotion ruled an early decision. Fortunately, I learned. Hopefully, I’ll benefit from my experience. It’s happened before. It can happen again.

The story about Apple and Poland is similar to the stories that compare Bill Gates’ wealth to various countries. Forbes has a reasonable article about it, so I won’t repeat it in depth here; but, I will add another analogy. Comparing wealth to income is like comparing the capacity of your gas tank to your miles-per-gallon. My Jeep has a 20 gallon tank and gets about 20 mpg, but they aren’t equivalent. They do suggest that I can drive 400 miles though.

I applaud Apple’s success. I’ve always been a fan, thought not a fanatic. I’ve even recently lamented my reaction to my new MacBook in the post “A Mac is Not a Toy“. The joy has gone away, but the value remains.

My Apple history goes back decades. I bought one of the first Macs: a Mac 512K. Yep. 512K of memory, a 400K internal floppy, and a revolutionary way of using a personal computer. I loved it. I bought the stock. With my Mac I was able to write my graduate project and eventually receive my Masters in Aerospace and Ocean Engineering.

Despite the story line in Forrest Gump, AAPL was so volatile that the early years weren’t as stellar as other stocks like MSFT. I bought anyway. I was sure that a company which such an obviously superior design would ultimately rule the industry. But they didn’t grab much market share, the CEO was blamed, and Steve Jobs was kicked out of his own company. I was livid and sold my stock in protest. The stock promptly rose. I’d held my righteous ground though, and was happy enough with the returns I had in a few other places that I didn’t buy back in. Besides, from about 1987 to 1997, the stock barely moved and the company looked like it might not survive. I got out for ideological reasons, missed out on some gains, but was somewhat vindicated for about a decade. Then it started to climb, partly because of the internet bubble, but also because Steve Jobs was back. I watched for entertainment value, but was doing well enough in other stocks. It was a good time for AOL and such. A friend sold his AAPL when it hit $25. I remember thinking of him as a counter-indicator and that I should buy. I didn’t. AAPL closed at $545 on Friday. Its worth compared to countries is moot. Its worth compared to other stocks is astonishing.

If, if, if. A common investor lament. If I’d only held. That’s true for any investor that lives through such revolutionary times. It is also a common lament for Seattle residents. Everyone knows someone who bought MSFT, AMZN, IMNX, or SBUX early. I was lucky enough to have had MSFT and SBUX. Some did phenomenally well. Others never took the chance. I was also lucky enough to have FFIV. I bought it at various times, one time as low as about $3. It closed at $127. That’s why I am a fan of Long Term Buy and Hold (LTBH), an investment strategy that relies on proper positioning and patience. Ten years is a long time, but a forty-fold return (FFIV) can be worth it. Twenty five years is longer, but a 250-fold return (AAPL) is hard to ignore. (Really, AAPL was < $20 twenty five years ago.)

The only way that strategy works though is to be able to buy and hold. For most of those years I was able to do that because I had either a good income or a large enough portfolio that grew faster than I spent. I’m not in that situation now, but hope to return. Writing my book, Dream. Invest. Live., gave me confidence in my approach because it forced me to analyze years of my performance. Past performance is no guarantee of future performance, but as humans, that’s what we go on. The average time I hold a stock is more than three years. Lately that average has grown. There have been gains and losses, but over the years and decades, the gains outweighed the losses (page 233).

I feel less incentive to trade and recognize that one of my strengths is my patience – but I have to trade to pay my bills. I think that’s one of the reasons I’ve reacted more emotionally to my recent string of bad news. I’ve seen how powerful waiting can be, but I am being forced to act.  I’m selling stocks far below my guesstimates of their value. Most of those stellar stocks went through similar doldrums. Like I said before, AAPL spent a decade going nowhere despite progress within the company. Unfortunately, waiting is not enough. The company has to succeed and survive. That’s hard to remember during depressed markets, and especially in stocks that lag a recovering market.

That’s why I am confident in Dendreon (DNDN), GigOptix (GGOX.OB), and Real Goods Solar (RSOL) for the long term. They are all making money in expanding industries, and their revenues are increasing. AMSC is in turmoil after their disputes with the Chinese.  Maybe they’ll get back to work. I don’t know. Microvision (MVIS) and Geron (GERN) are some of my oldest holdings. They continue to creep towards making money, making profits, and revolutionizing the world; but cash flow and competition may be creeping faster. Undoubtedly, these are not the pre-eminent stocks out of the entire market. They are merely the ones that I thought were good enough, and I continue to think so despite doubts. No company or stock is perfect and I haven’t seen compelling alternatives. I’ll continue to hold as long as possible, sell when I must, and continue finding other sources of income. Give them enough time and ten-fold increases are possible. I’ve seen it happen. I wish I could wait.

I envy youth. They may have the time to wait. Warren Buffett suggests that houses and stocks are fairly cheap right now. I agree. Looking beyond fear and pessimism, I’d like to buy instead of sell, and have the time to wait.

For my own sake, I’d really appreciate sooner, instead of later, significant price appreciation within my portfolio, a windfall, an income that lets me build wealth while maintaining a prosperous life. I’m guessing that’s something my Polish mother (may she rest in peace) would be proud of – but she’d probably still want me to get a haircut, shave off the beard, and wear long pants more often. Who knows, maybe that could happen too?

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Dammed Plans

Posted on February 29, 2012 by Tom Trimbath

Dam. Dam. Dam. That’s about as close as I get to swearing. DNDN went back down another 20%. MVIS did too – on the same day. I thought it was more likely that DNDN would pop 20%. I had plans. I’ve had to dam up my optimism for that plan, that plan, and that plan. Dammed, reserved, optimism is better than letting events deplete the hopes for positive possibilities. But in the meantime I am delaying some repairs, paying off my credit card debt more slowly, and watching a vacation turn into a camping trip turn into a staycation. I’m not giving up, but I am developing a dam full of plans. If we have a collective consciousness, is it doing the same?

It’s been a long time since I had good financial news show up and stick. I’m glad to see that the general market is doing well again, though I think it has a long way to go to get back to normal. Unfortunately, my idea of normal is based on the 80s and 90s, not the post 9/11 norm. We continue to recover from the Dismal Decade. I’m beginning to see hints of the Decisive Decade, but many expectations are based on steering extrapolations of pessimism rather than pursuing optimism. With a social mindset of picking between various versions of bad it is possible that we will create a self-fulfilling prophecy. That would be sad globally and it may mean that my personal investing strategy may be undermined. I’m an optimist. I think I am out of style, at least within the financial realm.

Imagine being wealthy. I’ve been there. I liked it. I learned that I am not much different with over a million than I am with a half or a quarter of that. I was frugal before then, during those times, and continue to live that way. I think that finances fall into phases based on a few categories: improvements, maintenance, repairs, and sustenance.

When there was “more than enough” it was easy to embark upon improvements. Everything else was taken care of and optimism was given a responsibly free run. One project at a time please. That spreads out the spending and allows time to take on the task and enjoy it. Do it well, or at least well enough, and then leisurely do the next.

When there was “enough” there was a balancing act. Bills and such were paid as they came in, and improvements were stretched out or showed up as upgrades during repairs. There is no true “enough” number that is good for all time because there is no way to predict the future. “Enough” is calculated based on assumptions of income and expenses. Windfalls happen. So do unpleasant surprises. It was a comfortably uncertain time.

When there was “almost enough” optimism encouraged dreaming – dreaming because it was cheaper than doing. Bills were paid, but expenses were watched and income was sought. Maintenance is a good idea, because it is usually cheaper than repairs. If things go just right there will be “enough” money, so in the meantime, store those plans somewhere handy and don’t do anything fancy.

Lately, the drops in DNDN, MVIS, AMSC, are sometimes understandable and sometimes not. The news for those three comprised my Triple Whammy last August and the tale that many of you have read or heard about since then. In times like these, expenses are cut back dramatically. Improvements are undertaken if the supplies are free. Maintenance is set aside with hopes that there won’t be a need for repair. Repairs that arise are approached with resourcefulness and ingenuity, or with painfully large bills. I feel sorry for my friend who had one critical appliance die three times in the last three years. Some things can’t be fixed with duct tape.

And yet I am an optimist. Granted that is frustrating, but I see a few ways in which I can return to “enough”. The less I have the harder that is; but, the longer I’ve worked the more likely I’ll return. I’ve got networking and that 10,000 hour rule working for me. Now a bit of good luck can have an enormously positive effect.

I think that’s true of our society as well. We have variations on what’s enough. As my favorite weather professional puts it; “If world population was a steady 2 billion people, then we would not be talking about global warming.” I suspect similar data points exist for food production, water usage, global economies, resource use, waste disposal/recycling, etc.  We don’t have a sustainable balance, and are having a rough time imagining how we can get there. Many plans are put on hold. Explorations in space, our oceans, and our wildernesses are curtailed. Maintaining infrastructure has been delayed enough that some repairs are too costly and are ignored. I can think of a bridge or two that won’t be replaced. There are doubts that some governments aren’t sustainable. That may sound abstract, but it is real and some of their citizens will be in the same situation as a result.

I am not broke. I have money. I have enough to pay all of my bills (though not pay off my mortgage unless I sell the house). If I was only interested in the present I could even take an around-the-world cruise, but I am not interested in living the dream for only a day. I want to live long and prosper. To do that I must tend what I have and use what I’ve got, including my time, talents and skills, and keep the door open for luck and windfalls. So, I’ll delay a few things a while longer, giving optimism and hope more time to lend me a helping hand.

I hope that we, as a society and a civilization, do the same. Some organizations are more interested in living for this quarter or this term without thinking about the next generation, or our species’ future. My hope is that the rest of us decide to steer towards enough, working smartly and collaboratively. Maybe with a bit of luck our efforts will bring us back to where we can open the dams and let the optimistic plans flow again.

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Waiting For The Boil

Posted on February 25, 2012 by Tom Trimbath

Except for the lottery, much of life’s success and progress takes time. For planning purposes, we live in a linear temporal universe. Maybe cause doesn’t have to precede effect. Maybe there’s a way to know how this will all turn out. My intuition tells me that I’ll exceed my expectations and I should just relax and enjoy. That’s an assurance that is hard to believe when it is tough paying the bills. So, I wait, maybe for only a couple of days, maybe longer. It is Saturday. On Monday, Dendreon (DNDN) and Microvision (MVIS) report earnings. Maybe on Tuesday my financial situation will be much improved.

Investor Village‘s message boards are my favorite sources for community commentary about DNDN and MVIS. Some other sites have too much traffic. Spam and flame wars rule. Other sites are so sedate that weeks go by without a cough echoing the empty posts. The DNDN group is talking about earnings, analyzing projections, and performing sensitivity analyses – with a side of speculation of expansions and acquisitions. The MVIS group is talking about the opposite. Specifics about Microvision are hard to find, because their financial data are somewhat moot. Their recent earnings are so far from the levels projected for some future product release that most investors ignore the details and spend more effort considering product and supply scheduling, intellectual property value and infractions, and the probabilities of buyouts or bankruptcy.

I look forward to writing about the results, but there’s nothing else to do but wait. But watched pots do eventually boil – as long as there’s enough heat and the pot doesn’t leak.

Long Term Buy and Hold (LTBH) is an investment strategy that requires patience. There’s another version that requires ignorance or apathy called Long Term Buy and Forget. That sounds silly but so many have taken that to an extreme that estimates of the value of forgotten shares are in the billions. LTBH takes advantage of the fact that good or bad news can happen at any time and that generally, good companies are eventually valued appropriately.

“Generally” because it doesn’t always happen, or happen in time.

“Eventually” because when it does happen, there was no guarantee that it would happen before, with, or after the good news.

Three years ago DNDN was trading at less than $4 while Dendreon awaited the FDA decision about Provenge, the first prostate cancer vaccine. Provenge could revolutionize fighting cancer because it was more effective, cheaper, and had fewer side effects than the traditional cancer treatments. It is a vaccine, so it cleverly retrains the body’s immune system to do the work. It is also a technology that could work against many other cancers. The present value of all of those future revenues (discounted for risk of course) produced very high valuations for DNDN. Everyone guessed but no one knew if the FDA would approve Provenge. Everyone guessed and no one knew what would happen to DNDN. Two years earlier a scandalous FDA reversal popped and then dropped the stock. The possible felonious actions are still debated, and maybe someday prosecuted if you listen to the Deep Capture people. The FDA did eventually say yes. By mid-summer DNDN was over $24. A year later it doubled past $48. I looked forward to having “enough” and maybe more. And then, one earning report last August dropped the stock 80%. So much for having “enough” – at least for a while. Yet, the treatment looks like it works better than expected, and the main growth issues are logistical rather than medical. Maybe Monday’s news will rebuild confidence within the investment community. As I sit here, I don’t know.

Until their stock split last week, MVIS was trading at less than $1. Now, after a 1-for-8 reverse split, MVIS is trading at about $4. As I wrote and cross-posted to The Motley Fool, Investor Village, and Silicon Investor (sometimes I like to shout a little louder and see who’s out there listening);
“Microvision’s value is unchanged, with a modification each day as we creep closer to that hoped-for significant event that is countered by daily cash flow and encroaching competition. I think Microvision should be valued much higher based on present value of future revenues discounted for risk, but apparently the market is using a much higher risk discount; otherwise, the price wouldn’t have dropped so low to prompt a delisting notice.”
The stock price changed by a factor of 8, for a while. The company value remains the same, or at least its valuation. The valuation is the guess of the company’s value, which is supposedly reflected in the stock price, generally, eventually. I’ve been watching Microvision since I bought shares in 1999. The demand, the heat, seems to be potentially great. A radical technology that revolutionizes electronic displays can have global consequences and immense profits. But the pot couldn’t get near the fire for a while because the technology hadn’t been invented. Now the pot may be ready and may be getting closer to the fire, but the entire process is taking so long that too much money has leaked out in the process. At last year’s stockholders meeting the CEO announced that eyewear was the foundation of the company’s first strategy, but it has slipped because finding appropriate transparent content is difficult and it needs a better user interface. Last week Google’s eyewear hit the news. It isn’t using Microvision technology. But Monday, maybe Monday, pure speculation from me is that the report will bring news that someone else will use Microvision technology to compete. Maybe we’ll finally hear about a major product being released into the public and from under the secrecy wraps of an NDA. Maybe we’ll get quantifiable news and my stock will allow a more quantifiable response to my bills. Or, maybe it will be more of the usual generalities and projected eventualities.

Within my own business sometimes I have to wait for the boil and sometimes I can turn up the heat or find a different pot. I’m expanding my Modern Self-Publishing class by teaching over in Seattle (feel free to pass along recommended venues). I’m having fun creating more exposure by uploading videos to YouTube. I continue to give talks and exhibit art. But as a writer I also know that some things can’t be rushed. I can write quicker, but books are sold by readers reading and then telling their friends to read. I can’t rush that process. Word-of-mouth, the most powerful advertising tool, runs at its own speed; and I let it because it is so powerful.

LTBH is powerful too. Maybe other strategies can make more money. I think the various strategies overlap so much that luck can explain many performance differences. But LTBH spends the least time, and time is valuable, and time is powerful, and time can’t be rushed. This morning I boiled some water and made some tea. That boiling is complete. I guess now I’ll take a break and enjoy its result, a cup of tea, while I wait for my other pots to boil.

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Work Is Cheap

Posted on February 22, 2012 by Tom Trimbath

Busy? Daily. Working hard? Definitely. Fixing up the house? Not really. Want a vacation? Oh yeah. Gonna get one? Well, yes, as soon as the hard work that is keeping me busy begins to pay off. When money is tight, home projects are put on hold and cheaper tasks are taken on. It turns out that work is one of the cheapest ways for me to spend my time.

As recently as last July I considered myself semi-retired. I didn’t have “enough” but it looked like I would get there soon. Check DNDN’s chart if you want to see when that comfort zone vanished. I’m not the only one financially traumatized by that event. (See my post Triple Whammy for details.) It is hard to imagine getting back to those levels again, but I’m an imaginative guy. Besides, Microvision can finally succeed (though if that’s true, why did MVIS reverse split now?). AMSC could reclaim their previous revenues. Real Goods Solar could get back up to book value, which would double RSOL. Throw in a proper premium for their revenue growth and RSOL climbs higher. Geron could release good clinical trial news. My only OTC stock, GGOX.OB, could get the recognition, and possible index upgrade, appropriate to their revenue growth. Oh, and it turns out that most of Dendreon’s problems were exaggerated. Provenge works better than expected and the reimbursement issues are being resolved. DNDN could recover its June price and original growth, with a bit of a slide in the chart – though that slide cost me a significant comfort margin in my retirement plan. Oh well, bad timings happen. Good timings can happen too, I just don’t know what they are right now.

I retired about 14 years ago, but have never fit the mold of sitting on the porch for days, or velcroing my butt to the couch in front of the television. First I taught karate. Then I did the bike ride, which led to writing, which led to photography, and along the way I started teaching classes and performing shows, which made some people aware of me enough to hire me as a consultant for their lives or businesses. There’s always more than enough charity work. I overdosed there until I limited myself to a simple model: one local charity, one global charity, with widely-spaced, uncommitted, additional volunteer work. I’ve always been busy. Some say I never gave up work.

If I trust solely to intuition and trust in my investments I don’t have to look for other sources of income. The money will be there. But there’s a prudent side of me that points out that applying for jobs doesn’t cost anything. Besides, there is interesting work that needs to be done, and some of it pays very well. This appears to be an excellent time to invest. I very familiar with at least six stocks that I think are undervalued (see previous paragraph), and am amazed at some of the house and land values available. There’s some property outside Waterville, WA that is within even my strained credit card’s reach: 12 acres for under $11,000. Used sailboats, even ones big enough to live-aboard, are even cheaper. Cruising the listings on craigslist.org and yachtworld.com is fun. This is a time when cash is king, and why some folks always have some saved.

For me, that cash is gone. I’m selling my stocks to pay my bills. That has been the case for years, and is actually the ideal, as long as those stocks are worth enough to pay the bills from the growth instead of the core. Oh well, I’ve been here before in my life and come back better each time.

Some people imagine that I should be taking vacations or working on home improvement projects. I like their ideas. Unfortunately, it is very frustrating to begin planning a project and be stymied by cash. Fix the fence = cash. Expand the garden = cash. Remodel the kitchen = cash. Even walking vacations = cash. That’s a daily, and even hourly, mental machination.

Unconsciously, I steered myself to activities that didn’t cost much. Volunteering happened. But in addition, welcome to the life of the accidental entrepreneur and artist. Writing costs the least. Photography doesn’t cost much either, after the camera is bought and as long as it’s digital. Teaching classes costs a bit of rent. Social media makes advertising and marketing affordable. I’ve even teamed up with some friends to create videos of Whidbey Island and Washington’s Cascades.

My persistent activities are a part of who I am. I enjoy sitting, but I also enjoy moving. Remember that my most recent vacation was my walk across Scotland, which I enjoyed more than any trip to a sunny, warm beach. All of this work that I’ve fallen into hasn’t paid one month’s mortgage – yet. For the most part the business is paying to expand the business. By following my intuition, by doing work back when I was semi-retired and work wasn’t necessary, I’ve developed an artistic and professional foundation that may be my job, that may produce my own paychecks. Work is cheap, but I am spending time, which is valuable, and producing artwork that others value too. I’m learning skills and developing insights that I pass along through teaching and consulting. As a result, I enjoy the work I do and I value the life I live.

I blog to write about investing and living. Investing can become a trap that separates a person from life. Conversely, living without considering how time or money are spent is a life that may not be sustainable. In this blog I present myself as an example, not an expert, of following intuition (call it a dream if you want). I am fortunate. My investments aren’t doing well, but they did well enough to allow me to retire at 38 and spend over a decade adding other talents. Those stocks may allow me to regain my semi-retired or retired status. The time I’ve spent since retiring is also an investment, that has paid off with a burgeoning business. Others may not be as fortunate to have a cash cushion. People without jobs may not have money, but they do have time. But as an encouragement to replace the frustration, I wonder what will be produced by that time that can be spent and invested? Each person has their own answer. But one thing I know is, done right, work is cheap- and very valuable.

(Play is cheap and valuable too, but that’s another post. This post was long enough.)

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Presidents Say

Posted on February 20, 2012 by Tom Trimbath

There was a lot I wanted to get done today, but it is President’s Day. I thanked the calendar for the break, and the opportunity for procrastination. I also grumbled a bit about being able to get some things done because of the official holiday. (Really, no dancing? Rats!) A couple of us joked about how all of the presidents are lumped into what was Washington’s and Lincoln’s combined birthday parties. Then I realized that some of them should be celebrated too. Why not have one day for all of them? Of course, I don’t think we should shut down the banks for that reason, but we can at least acknowledge that they were smart (most of them) men (no women so far) doing their best in circumstances that are best judged from their perspectives, not ours. I applaud their efforts, well, except for a few that make me go huh!? Andrew Johnson got elected?

I decided to read a few of their quotes, decided not to leave any of them out, and found myself launched into this long post of copied wikiquotes (wikiquote.org).

Somethings stood out.
1) They said a lot.
2) The farther back they go the better they said it.
and
3) there were many common themes:
– Thank God I’m out of office.
– God and government should be separated.
– Government is for the people, not the elite.
– Peace is preferable to war.
– Wealth carries responsibilities.

They said a lot more and I encourage Americans to read a few and dive into their official (non-wiki) histories. We got here because of them. Thanks guys. (Okay, now about electing a woman – Hey Oprah . . .)

GEORGE WASHINGTON
“My manner of living is plain. I do not mean to be put out of it. … Those, who expect more, will be disappointed, but no change will be effected by it.”
“Make the most of the Indian hemp seed, and sow it everywhere!”

JOHN ADAMS
“The only maxim of a free government ought to be to trust no man living with power to endanger the public liberty.”
“Let the human mind loose. It must be loose. It will be loose. Superstition and dogmatism cannot confine it.”

THOMAS JEFFERSON
“I hold it, that a little rebellion, now and then, is a good thing, and as necessary in the political world as storms in the physical. ”
“I had rather be shut up in a very modest cottage with my books, my family and a few old friends, dining on simple bacon, and letting the world roll on as it liked, than to occupy the most splendid post, which any human power can give.”
“The care of human life and happiness, and not their destruction, is the first and only legitimate object of good government.”
“Every difference of opinion is not a difference of principle.”
“If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be.”
“Ridicule is the only weapon which can be used against unintelligible propositions.”

JAMES MADISON
“The man who is possessed of wealth, who lolls on his sofa or rolls in his carriage, cannot judge the wants or feelings of the day-laborer. ”
“A standing military force, with an overgrown Executive will not long be safe companions to liberty.”
“Religion & Govt. will both exist in greater purity, the less they are mixed together.”
“If men were angels, no government would be necessary”

JAMES MONROE (unsourced)
“Our country may be likened to a new house. We lack many things, but we possess the most precious of all — liberty!”
“The best form of government is that which is most likely to prevent the greatest sum of evil.”

JOHN QUINCY ADAMS
“To furnish the means of acquiring knowledge is … the greatest benefit that can be conferred upon mankind.”
“Courage and perseverance have a magical talisman, before which difficulties disappear and obstacles vanish into air.”

ANDREW JACKSON
“It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes.”
“The wisdom of man never yet contrived a system of taxation that would operate with perfect equality.”
“Take time to deliberate; but when the time for action arrives, stop thinking and go in.”

MARTIN VAN BUREN
“I tread in the footsteps of illustrious men… in receiving from the people the sacred trust confided to my illustrious predecessor.”
“All the lessons of history and experience must be lost upon us if we are content to trust alone to the peculiar advantages we happen to possess.”

WILLIAM HENRY HARRISON
“The only legitimate right to govern is an express grant of power from the governed.”

JOHN TYLER
“Popularity, I have always thought, may aptly be compared to a coquette – the more you woo her, the more apt is she to elude your embrace.”

JAMES K. POLK
“Thank God, under our Constitution there was no connection between church and state.”
“One great object of the Constitution was to restrain majorities from oppressing minorities or encroaching upon their just rights.”

ZACHARY TAYLOR (Not a very talkative fellow – according to wikiquote.)

MILLARD FILLMORE
“An honorable defeat is better than a dishonorable victory.”
“Let us remember that revolutions do not always establish freedom. Our own free institutions were not the offspring of our Revolution. They existed before.”

FRANKLIN PIERCE (unsourced)
“Frequently the more trifling the subject, the more animated and protracted the discussion.”
“The storm of frenzy and faction must inevitably dash itself in vain against the unshaken rock of the Constitution.”

JAMES BUCHANAN
“What is right and what is practicable are two different things.”

ABRAHAM LINCOLN
“The probability that we may fall in the struggle ought not to deter us from the support of a cause we believe to be just; it shall not deter me.”
“Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser — in fees, expenses, and waste of time.”
“Those who deny freedom to others, deserve it not for themselves; and, under a just God, can not long retain it.”
“We all declare for liberty; but in using the same word we do not all mean the same thing.”
“I do not like that man. I must get to know him better.”
“…no man is good enough to govern another man without that other’s consent.”
“With public sentiment, nothing can fail; without it nothing can succeed.”
“— and that government of the people, by the people, for the people, shall not perish from the earth.”

ANDREW JOHNSON (I couldn’t find a quote I liked, and then noticed that he was impeached. Hey, the system worked!)

ULYSSES S. GRANT
“The war is over — the rebels are our countrymen again.”
“I rise only to say that I do not intend to say anything.”
“Leave the matter of religion to the family altar, the church, and the private school, supported entirely by private contributions. Keep the church and the State forever separate.”
“Although a soldier by profession, I have never felt any sort of fondness for war, and I have never advocated it, except as a means of peace.”
“It is preposterous to suppose that the people of one generation can lay down the best and only rules of government for all who are to come after them, and under unforeseen contingencies.”

RUTHERFORD B. HAYES
“Abolish plutocracy if you would abolish poverty. As millionaires increase, pauperism grows.”

JAMES GARFIELD
“The world’s history is a divine poem, of which the history of every nation is a canto, and every man a word.”
“Next in importance to freedom and justice is popular education, without which neither freedom nor justice can be permanently maintained.”

CHESTER ARTHUR
“Madam, I may be President of the United States, but my private life is nobody’s damn business. ”

GROVER CLEVELAND
“Public officers are the servants and agents of the people, to execute the laws which the people have made.”
“A truly American sentiment recognizes the dignity of labor and the fact that honor lies in honest toil.”

BENJAMIN HARRISON
“We Americans have no commission from God to police the world.”
“I pity the man who wants a coat so cheap that the man or woman who produces the cloth will starve in the process.”

WILLIAM MCKINLEY
“War should never be entered upon until every agency of peace has failed.”
“Let us ever remember that our interest is in concord, not in conflict; and that our real eminence rests in the victories of peace, not those of war. ”

THEODORE ROOSEVELT
“Probably the greatest harm done by vast wealth is the harm that we of moderate means do ourselves when we let the vices of envy and hatred enter deep into our own natures.”
“Far and away the best prize that life has to offer is the chance to work hard at work worth doing.”

WILLIAM HOWARD TAFT
“We are all imperfect. We can not expect perfect government.”
“The world is not going to be saved by legislation. ”

WOODROW WILSON
“We are not put into this world to sit still and know; we are put into it to act.”
“I always remember that America was established not to create wealth . . . but to realize a vision, to realize an ideal. ”
“If you think too much about being re-elected, it is very difficult to be worth re-electing. ”
“Friendship is the only cement that will ever hold the world together. ”
“If I am to speak ten minutes, I need a week for preparation; if fifteen minutes, three days; if half an hour, two days; if an hour, I am ready now.”

WARREN HARDING
“Our most dangerous tendency is to expect too much of government, and at the same time do for it too little. ”

CALVIN COOLIDGE
“If all men are created equal, that is final. If they are endowed with inalienable rights, that is final. If governments derive their just powers from the consent of the governed, that is final. ”
“Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent.”

HERBERT HOOVER
“Older men declare war. But it is youth that must fight and die.”

FRANKLIN D. ROOSEVELT
“Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.”
“No business which depends for existence on paying less than living wages to its workers has any right to continue in this country. ”
“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”
“I have seen war. . . .  I hate war.”

HARRY TRUMAN
“Some of my best friends never agree with me politically. ”
“On tight money: It reflects a reversion to the old idea that the tree can be fertilized at the top instead of at the bottom — the old trickle-down theory.”
“It’s a recession when your neighbor loses his job; it’s a depression when you lose yours. ”
“My favorite animal is the mule. He has more sense than a horse. He knows when to stop eating — and when to stop working.”

At which point I took a break. There are a lot of Presidents and they said a lot of interesting things, but ouch, I have to go lay down for a while.

“In this shrinking world, it is futile to seek safety behind geographical barriers. Real security will be found only in law and in justice.”

DWIGHT EISENHOWER
“I hate war as only a soldier who has lived it can, only as one who has seen its brutality, its stupidity.”
“Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history.”
“Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.”

JOHN F. KENNEDY
“For of those to whom much is given, much is required.”
“A man may die, nations may rise and fall, but an idea lives on. Ideas have endurance without death.”
“Conformity is the jailer of freedom and the enemy of growth.”

LYNDON JOHNSON
“I do not find it easy to send the flower of our youth, our finest young men, into battle.”
. . . and a bunch of quotes that include language that I won’t have on my blog. And I am glad he knew how to use Freedom of Speech.

RICHARD NIXON
Fascinating, but wow, nothing I feel like repeating.

GERALD FORD
“We have come tardily to the tremendous task of cleaning up our environment.”
“I have not sought this enormous responsibility, but I will not shirk it.”
“A government big enough to give you everything you want is a government big enough to take from you everything you have.”

JIMMY CARTER
“The most serious and universal problem is the growing chasm between the richest and poorest people on earth. ”
“War may sometimes be a necessary evil. But no matter how necessary, it is always an evil, never a good.”

RONALD REAGAN
“It is time for us to realize that we’re too great a nation to limit ourselves to small dreams.”
“The future doesn’t belong to the fainthearted, it belongs to the brave.”

GEORGE BUSH
“Think about every problem, every challenge, we face. The solution to each starts with education.”

BILL CLINTON
“The road to tyranny, we must never forget, begins with the destruction of the truth. ”
“Yesterday is yesterday. If we try to recapture it, we will only lose tomorrow. ”

GEORGE W. BUSH
“I love freedom of speech. ”
“The peaceful transfer of authority is rare in history, yet common in our country. With a simple oath, we affirm old traditions and make new beginnings.”
And yes, it was hard to not be distracted by the malapropisms.

BARACK OBAMA
“Let us reach for the world that ought to be — that spark of the divine that still stirs within each of our souls.”
And I’ll leave space for more. He’s not done yet.

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Response Ability

Posted on February 18, 2012 by Tom Trimbath

CEOs are paid well. Their pay represents their responsibilities. Most employees are paid for their work. Corporate executives are paid to make the right decisions. The buck stops there. Many bucks do. I wonder if the money flows up out of habit. Lots of work is getting done, but without a similar raise in workers’ salaries. Meanwhile, executive compensation has risen enormously, especially in the top 1%, but I think there have been fewer rather than more right decisions being made.

A friend took me out to lunch today. It was a rare treat. We’re both entrepreneurs, also known as small business owners. Recently his business has been doing better than mine so lunch was his treat. We also both worked in the corporate world decades ago. Many of our friends are still there. We also are invested in some of the same companies. We’ve witnessed a lot of administrative maneuvering that had little to do with managing the company.

Our businesses keep us busy. The work is emotionally gratifying, but the financial side of the compensation is not enough to keep our cars maintained. Our corporate paychecks were massive in comparison, but both of us burned out from an environment that drained us. I don’t know how busy a CEO’s job is, but CEOs and each of us only have 24 hours in a day. We doubt that they are working that much harder. The poorly managed nature of some of the businesses suggest that many aren’t even making the right decisions.

Responsibility is a frequently used term, but I think we’ve lost sight of its base meaning. Responsibility is the ability to respond. Many jobs are equipped with responsibilities. CEOs aren’t the only ones that must be able to respond. And being able to respond is merely the lowest requirement. Except in extremely locked down procedural bureaucracies, even workers are required to respond appropriately. It is one of the characteristics of emergency workers. Firefighters are very responsible people. If the ability to respond appropriately was compensated similarly, firefighters would have much bigger houses.

Responsibility is used to describe the person who takes the blame. If something fails, the responsible person takes the blame. But I think a truly responsible person is not simply a public scapegoat. And, even if that was the case, a public scapegoat probably shouldn’t be paid more than someone who is actually doing work.

I am most impressed with people who treat responsibility with integrity. They sincerely try to make the best decision, and they also step aside if it looks like someone else could make better decisions. A CEO is responsible for maintaining or improving shareholder value. Maintaining and improving shareholder value does not imply massively compensating a CEO and entrenching them in their job, especially if the company is not doing well. It may sound like a fantasy that someone would step aside because they saw that others might do a better job (it happens in Japan, but please skip taking it to the extreme of ritual suicide). We’ve even had a president that knew that getting the right things done was more important than his political career. President Polk‘s example is so uncommon that we ignore him and his ethics.

Many small business owners, artists, and advocates are aware that they be active, engaged, and emotionally rewarded for their hard work; while not making enough to live. The same is true for responsible people like police, firefighters, teachers, nurses, and alternate health care providers. Oddly enough, the majority of people work for companies that have more than 500 employees, large enough to encourage bureaucracy and to distance employees from the customers they are responsible for. But at least they are more likely to be paid well and receive benefits. Another self-employed friend pointed out that after 17 days of having to work while sick, because if he stops the business and the money stops, ” . . .  how horrible it is to not be working for a company with benefits…like sick days and regular pay. ” Take that step further up the corporate, or even the political, ladder, and arrive at jobs that seem to compensate good and bad decisions, with rare consequences. Such an inverse relationship is not healthy or sustainable. In some ways it is very feudal.

Feudalism wasn’t sustainable. Responsibility and hard work are eternal and essential. I’d like to write about significant trend that suggests our major institutions are heading towards paying for true responsibility, and that integrity is practiced. I can’t. CEOs leave, but only after massive losses that affect the majority of their employees and shareholders. Politicians can be voted out, but the duopoly perpetuates incumbencies. I do however, see a small trend amongst individuals. The 99% are asking for responsibility and integrity, and are willing to work. I am most impressed though with those that are taking responsibility for their own lives. Whether that is moving off the grid, growing their own, or actively living a more frugal life there are people who are responding to their personal values with integrity. They may not change everything immediately, but they may be our role models for demonstrating personal responsibility.

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