Writer Weather

It’s snowing. Seattle is getting hit by two storms. First there is snow, even enough to warrant midwest levels of snowplowing. Next comes wind, according to the forecast, enough wind to topple trees and snap powerlines. The worst of the sea level snow is south of Whidbey. The worst of the sea level winds are north of Whidbey. My neighborhood will get a bit of both. I mention sea level because the mountains claim the extremes. I’ve been voluntarily snowbound for three days. My mini-vacation has proved to me that I enjoy being a writer and a photographer. Such revelations can sound trivial and yet can define a life, and are definitely treasured in retirement.

I enjoy snow. I was raised in a suburb of Pittsburgh. Our street led up to the main road on a ridge and ended at a dead-end near the bottom of a valley. We kids learned how to push cars and how to sit on trunk lids adding weight to give rear wheel cars better traction, counter to recommended practice, proper safety, or parental approval. The road was steep enough that the snow plows and salt trucks would skip our street, though our snowball barrages may have had something to do with their avoidance. I do recall one snowball finding an open cab window during one storm. Not so nice in retrospect. At least it wasn’t me. My aim wasn’t that good. I did know that I enjoyed being in the snow making snowmen, building forts, and sledding in the backyard.

In the first few years after I graduated from college and joined Boeing’s workforce I enjoyed watching winter, but didn’t get much of it in Seattle’s maritime climate, and mainly dealt with it as a commuter’s nuisance. After going back to Virginia Tech to get my masters I returned to Seattle and found time to discover hiking and its winter version in cross country skiing. I wasn’t wearing lycra and speeding along a groomed track. I took skis and used them as long, skinny snowshoes. I enjoyed getting to the pass early and exploring untouched new snow – and when I turned around I’d find that others followed my tracks because it was easier than making their own trail. My outdoor activities defined my leisure activities and identity, and I unexpectedly met new people.

Retiring questions identity. Retiring early can result in a very confused identity. Most people identify themselves by their work. Their job title is part of their introduction. For years I was an engineer. My other hobbies might get mentioned if the conversation went on long enough, but that basic paycheck identity was my primary ID. The job label continued to stick for the first few years of retirement, but after a while it faded. Retired is a fine label for people who are over sixty, but early retirees aren’t readily given that option. The most frequent response to describing myself as retired or even semi-retired was; “You’re not old enough.” I’d rebut that retirement is based on finance, not chronology, but engrained social norms aren’t easily dislodged by simple logic.

About fourteen years ago, about the time I retired, I started celebrating my birthday by taking a ski vacation. There’s a resort called Silver Star above Canada’s Okanagan valley. They had a great mix of cross country trails, effectively two half mile mountains, and everything was ski-in/ski-out. I enjoyed it (though less every year as they turned trails and slopes into condo villages), but it couldn’t define me. Maybe if I was luxuriously retired (part of the 1%) I could have become a ski bum, but I was frugally retired, which meant one very good trip per year. Regular readers know that my recent finances (Triple Whammy) put my retirement to a test. This year I skipped the trip and haven’t even paid for the snow park pass that’s required for the local trails because I am not willing to pay the gas and ferry fees.

I needed my winter vacation though, so I decided to take a few days at home and act as if I was in the resort, without the skiing. Then the weather forecast came in. We had a storm coming our way. My excuse for staying home was buttressed by weather.

Yesterday my neighborhood had a forecast of about four inches of snow as a prelude to the storm. We got that eventually. It was also the day for a King Tide, an abnormally high tide. Washington State sponsored a King Tide Initiative that encouraged people to photograph the high tide as a baseline for tracking sea rise from global warming. I got out the camera, hit the beach in the snow and lent a hand to conservation.

On the way back I realized that I still enjoyed winter, but despite taking a day off from my writing and photography work, my first inclination was to go out and take pictures in the snow, and then come home to write about it. I did that because it was what I wanted to do, not because it was expected of me. As a friend said last summer, people know me as an artist now. I hadn’t aimed for it, but that’s where I am, and evidently it fits.

I know several folks who are retiring. Some expect to do nothing. Others are frantically reaching for new labels to wear. When I retired I taught karate, and I hiked, and I skied, and I bicycled, and took care of the house, and I took care of the investments. Eventually I started writing books and respecting my photography. Every step along that path has given me the opportunity to wear different labels. I’m glad that I didn’t tattoo any of them on my forehead. Sensei/outdoorsman became writer/photographer. Maybe writer/photographer becomes speaker/consultant. I started by doing what I enjoyed and that life continues to lead me better than if I’d aimed for where I am today.

Today’s forecast is for the main part of the storm, but it looks like the worst will hit south of here. Tomorrow’s wind storm is tomorrow’s story. It is snowing heavily enough that I can’t see the mile or so across the bay. Later I’ll go for a walk, or a ski; but swirling snow can coat lenses. It isn’t a photographer’s day. It is a good day to stay indoors and work on this blog and my next book. It is writer’s weather, and I am a writer – for now.

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Sale Pricing

Sell the house, maybe. Sell the kayak, done. Money comes in from selling something, whether it is a thing or my time. The trick is finding the right price at the right time.

My long orange kayak departed but only after I received some cash. Of course I think I should get more, but waiting for the optimum price would require a non-optimum time. Two guys are going to use it in a relay race in late spring. Buy it in January, race it in May, sounds like about the right timing for them. Cash in my wallet means not having to pull money out of the ATM anytime soon and greatly eases paying the health insurance.

Pricing and timing are linked. I’m considering selling my house. Depending on what else happens with stocks, jobs, sales, gigs, and windfalls, the price varies a lot. The online real estate site zillow, lets me list a “Make Me Move” price. If I was confident that I had sufficient funds to sustain my lifestyle for decades I wouldn’t sell my house. If my finances were significantly improved, but I didn’t have “enough” I’d seriously consider a Make Me Move price of about $375,000. If my finances don’t improve quickly I’ll probably put the house up for sale closer to zillow’s estimate of about $100,000 less than the Make Me Move price. The less I have the more encouraged I am to sell, both to get some of the equity out of the house, and also to get rid of the mortgage payment. Others are in worse shape and have to walk away from their homes without getting to pick the timing.

The pricing and timing within the stock market is always an unknown. DNDN was priced at $14 last Friday may eventually be priced at $100. The stock may already be worth $100, but the timing of that pricing is an unknown. I think my kayak was worth 30%-40% more than what I sold it for, but they were here, so were some bills, and the timing was right enough. Earlier this week I sold some DNDN to pay the mortgage. The price was far below what I want, but the timing drove me to sell at the lower price. Being able to wait out for the right time is a powerful tool.

I just got off the phone with my dad. We reminisced about vacationing on the Outer Banks of North Carolina about forty years ago. He remembers a house for sale on the north edge of town that was going for $42,000. Beyond that were sand dunes and grasses. A lot in that area could probably go for about ten times that now. It seemed expensive at the time. Maybe it was. Inflation and hurricanes may have offset a ten-fold increase in the price.

I look at my home and my stocks and ponder my net worth and its ability to fund my lifestyle. For now that lifestyle includes living in this house; but at today’s prices the portfolio can only support this lifestyle for, well, not decades, more than a several months, and definitely less time than I am comfortable with.

Fortunately things change. Prices rise. Sales happen. I even heard a hint of a short, but well-paying, consulting project aimed my way. (Thanks for keeping me in mind.)

There is a limit to how many things I can sell. I sold the kayak. My signed first-edition copy of 2001 is for sale on eBay. A few other things are lined up getting ready for craigslist or drewslist. (Don’t bother searching on drewslist. The links have nothing to do with this excellent local service. Thanks Drew.) That’s the problem with selling most things. There is usually a limit. That’s one of the reasons I like selling books and art online. More of my unsigned books and photos are always available because they are part of the digital world. My signed books and prints are limited editions. If you have one of my signed prints, you have a unique piece of art. Others can get the same print on the same media at the same size, but I won’t sign the print. That’s one way to have a limited edition and unlimited editions.

There is also a limit to how much of my time I can sell, but at least time does not require packaging, shipping, and handling. Each moment delivers itself. Consultants know that their time is valuable, and also enables a business model with very low Cost of Goods Sold and therefore a potentially high profit margin. Consultants aren’t the only ones who have figured this out. Paycheck employees make the same trade, but the price is different because each side commits to a different timing. A consultant may work for a few hours and a well-defined endpoint. An employee works for an indefinite time and probably on a seemingly never-ending task.

Pricing time is difficult. Consultants are very aware of the price negotiation. Employees may see it via union contracts or are reminded of it when paychecks and raises come along. Time is priceless, yet because it is so valuable, we place a price upon it, and then use that money for more tangible needs.

As another friend pointed out, prices are always in doubt, but values are much more stable. I know many talented people who are not compensated for the value they provide. Our society’s benefits are easily overlooked. Nothing, no one, is perfect, and while much is cheapened in the news, eventually with the right timing, the value will be recognized. On the long list of unappreciated luxuries, waiting for the right time and price to be able to sell is near the top. When value and price meet is a great time for a sale.

Okay, I think MVIS can easily be worth $26. It’s trading at $0.40. I think I’ll wait for a better price for that sale.

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Feed The Bills

Long term buy and hold investing (LTBH) would be much easier if I could buy the stocks, sit somewhere for free in suspended animation for a few decades, and then live off the proceeds. Even a 1% return from bonds would eventually pile up enough money if they were given enough time and beat inflation. But bills must be paid and the money has to come from somewhere, and if it isn’t from a big pile of assets, the money has to come from income. Come in income. Come on stocks. The mortgage company has made the call. I must feed their bill.

Five years ago I bought this house, the first house I’ve owned where I feel at home. It’s a small house (840 sq. ft.) with a big view. It would be a million dollar view (in my opinion) except for an extra house or two between me and the water, but I get a good approximation of that whenever I stand on the roof. An early incarnation of this blog (which has been orphaned by iWeb issues) contains a post about the house and why I love it (Living Small). Ironically, the post also includes the week of DNDN’s first major rise. DNDN was up 185% that week. It is a nice reminder that stocks can move more than 15% a year.

DNDN and my house have been connected since then. For a while it looked like DNDN would allow me to pay off the mortgage very early. I wouldn’t be able to sit here for free, because utilities and taxes must be paid too; but living would become much cheaper without a monthly mortgage check. Oh well, it may yet happen. Now, a 185% rise in DNDN brings it to less than half of what I think the stock and the company are worth. Unfortunately I’ve sold more than half my shares in the meantime, and the remaining ones are in my IRA. Sales now include early withdrawal penalties.

I purposely bought the house with financing through a local bank. I’m a fan of local economies and wanted to keep the money as close to home as possible. Within a few months the bank sold the mortgage to another firm, and eventually to Bank of America, which has now passed it along to Green Tree. That last transfer didn’t go so well. My check’s journey to Green Tree through Bank of America has been slowed by some financial quagmire. Green Tree is not happy. They call me about it about once a week. Sorry folks, but I don’t know of any leverage I have over Bank of America, despite having been a loyal customer for years.

Chasing bills, shifting money, timing payments are not relaxing chores. Recent studies have shown that money does buy happiness – if you don’t have enough. Below about $75,000 per year, extra money relieves stress and increases happiness. Above that though, the correlation weakens. I’ve lived on both sides of that line and I agree. I enjoyed making much more than $75,000 per year, but if it involved much more extra work then the extra work came with extra stress and less free time. I’m sure everyone’s line is different. For some the line must be $100,000. I know others for whom the line is about $20,000.

The key I’ve seen is being able to pay the bills without concern or effort. My bills arrive because I’ve used some goods or services. I get a mortgage bill because I borrowed money to buy my home so I have a nice place to live. I’m able to upload this post from home because I signed up for and pay for phone and internet access. I pay taxes because I want someone else to manage most aspects of maintaining our society and civilization. When I had more than “enough” the only way a bill was late was if the envelope dropped behind the desk, or I was gone long enough for the bill to be past due when I returned. A personal luxury I afforded was to pay bills in advance. If a bill was typically $30, I’d pay $300 on occasion and then buy that little extra time, effort, and any worry about it for almost a year. Take the time to add a zero, and buy that time back every month.

I suspect I will return to those days. My friends assure me that I’m working hard enough at it. Regular readers know my mantra: books, photos, speaking, teaching, consulting, and applying for jobs – and buying a lottery ticket on a regular basis. I’ve even heard of some rather innovative and entertaining possibilities that I’ll post about if any of them happen.

Each notch up in DNDN eases my efforts. If AMSC gets out from under its China cloud it too may return to being a significant position within my portfolio. Microvision continues to innovate and may yet redefine our interactions with our electronic devices ala Minority Report. (I’ve seen the demonstration and it is very impressive.) If Microvision survives, then I believe MVIS will be worth a lot (Micro Vision). Those plus a few more, added to my business mantra divisions, and maybe some windfalls easily carry my net worth back above my mortgage balance and probably up to “enough”.

All of those elements come with the same question; “When?”. That’s what someone asked about my $100 estimate for DNDN in my previous post (Whew Good News). I ask the same thing about DNDN, and about AMSC, MVIS, GGOX, my books, my art, and the rest of my business. In a rational market I wouldn’t be dancing with bank balances, floats, mailing times, and due dates. Persistent work pays – as some unguaranteed eventuality that can occur sooner or later. Each trading day could be the day for my portfolio to radically increase. Each email and phone call could be the news or offer that generates more than enough income from my efforts. (Hey! A phone call! Rats. Just an automated poll.)

And each day can also bring bills or checks in the mail. The checks may arrive. The bills must be fed. Can I interest anyone in a kayak ($600 including gear), or maybe a signed first edition of 2001 a space odyssey ($1,655 which just happens to cover my mortgage payment)? Another phone call, and a friend chimed off with “More to be revealed.”

Stay tuned.

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Whew Good News

That feels better. DNDN, the stock that’s most recently been driving my portfolio, was up over 60% this week. That doesn’t put everything back to bright and cheery, but it is a sign that the downside of the irrational market may be receding. There are no guarantees of success, but there are also no guarantees of failure. What went up, then down, apparently has begun going back up. Those last two sentences can describe DNDN, the economy, my mood, and a multitude of over situations.

DNDN’s price history includes wild swings that are incredulous. I posted Incredulous Views to chronicle the ride back in October. Back then my financial situation was dire enough to prompt me to begin applying for jobs. DNDN dropped from there after Dendreon’s next earning’s report. My job search took on a greater urgency. The last two trading days of this week, that 60% jump, merely put me back into October’s situation, though with fewer shares in the portfolio, more debt on the credit card, and dozens more job applications circulating. Claiming that DNDN can rise much more than 60% from here can sound like hype or desperate hope. An unemotional response to mathematics, and a willingness to ignore conventional investing wisdom, allows for another 100%, 200%, or more rise. Yes. I am an optimist. (Someone described me as “that terminally happy guy”, which I appreciate except for the “terminally” part.)

Dendreon’s story is driven by their first FDA approved treatment. Provenge treats prostate cancer by retraining the body’s immune system to fight the cancer with the tools it already has. Provenge is not a panacea, but the trial data suggests that it works better than the existing treatments, has far more benign side effects (ala the flu instead of chemo and radiation pains), and costs less than traditional treatments (all things considered). Unfortunately, medical practices are conservative and can change slowly, there is an entrenched industry based on chemo and radiation, and while the total cost for Provenge is less, the individual treatments are applied in $33,000 events which puts a lot of financial risk on the doctor’s financial statement.

If Provenge revenues continue to rise it is reasonable to estimate that the treatment can be expanded to more patients earlier in their therapy, and it can be expanded to Europe and the rest of the world. Such expansions easily add up to a billion dollar revenue stream, and potentially much higher. Currently the company and the stock are valued based on slow growth and no expansion.

One trick wonders are risky investments. Provenge is not a solo or a trick. The technology behind Provenge may be applicable to treating lung cancer, breast cancer, ovarian cancer, bladder cancer, renal cancer, and colo-rectal cancer. Clinical trials for treating bladder cancer have begun. Those cancers constitute the majority of the cancer patient population. That pipeline expansion is valued at zero.

Use almost any positive rational number besides zero for any of those expansions and the valuation for Dendreon and DNDN result in much higher stock prices. A 60% jump from such a low level is a blip on such a scale.

I am not an expert on Dendreon, Provenge, oncology, or investing. My knowledge is built on persistent casual interest. I also suspect that there are other such stories. AMSC and MVIS come to mind, but I’ll write about them later.

Pessimism has prevailed long enough. One statistic I’ve yet to find is the non-financial GDP trends for the last decade or so. Much of the bad news has been based on banks, lenders, institutions, and central governments mismanaging money. Hiring has begun, and as one friend chimed in within the first few days of 2012, “wow, my calendar is filling up fast!” and then “working through the VERY LONG to-do list“. Variations on that theme are more common in conversations this week. My biggest headache came from being too much in demand. I’ll take it as a compliment that the most common complaint was that I wasn’t spending as much time as they (and there were many “they”s) wanted on their (almost exclusively unpaid) projects. It is far better than, “We’ve seen enough of you. Get out of here!”

Wars are winding down. Hiring that was put on hold during the holidays, has begun again. Stores are busy. I know one that had a stellar New Years Day. Friends are traveling more. Jon Stewart and Stephen Colbert are broadcasting new shows again. Okay, some of those are definitely related to the holidays, but I celebrate good news as much as possible.

DNDN has risen enough to make it easier to sell some stock in my IRA, pay the taxes and penalties, and still be able to make a mortgage payment and maybe another bill or two. As it rises, my anxieties abate and my delayed expenditures are addressed. As our economy recovers we may realize that the non-financial parts were reasonably healthy while we were being distracted by bank failures. We may relax enough to get back to getting the good work done. (And no, repurposing the armed forces from Iraq to Asia is not as impressive as if we repurposed the money to people and infrastructure at home.)

As an optimist I look beyond the initial relaxation and look forward to the days of balanced productivity and easy leisure. Provenge treating a broader geography and populations may mean DNDN ~ $100. Sound incredulous? If expansion creates $1B in US revenues, and $1.5B in European revenues, then the total revenues from Provenge alone are $2.5B. Six times revenues (a conservative ratio for a biotech) results in a $15B market capitalization valuation. There are about 150M shares which means a price of about $100 per share. And then there’s the pipeline of other treatments. A rational market will value them at something greater than zero, which drives estimates higher than $100.

That’s the sort of potential that may finally be revealed for Dendreon and cancer patients; for DNDN and investors. I think that’s the sort of potential we have as a country and a species. That’s the sort of potential I see for me and the people I know. That’s good news.

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Doing Everything Right

A friend passed away this week. He was one of those people who did everything right. Until we evolve into transhumans, mortality will continue. Human or transhuman, rich or poor, young or old, a life is defined by how it is lived, and how its time was spent.

Joe was a certifiable genius. Every concept I could imagine, he could carry into and through a conversation. It would be a conversation because he would speak and listen. He would use his ears and his mouth, plus his head and his heart. He was the sort of guy that I wish had run for political office: honest, friendly, intelligent, wise, and a hard worker. He was also fluent in Arabic. I suspect he also held a high security clearance because one day I got a call from the FBI, or someone like them, as they did a background check. They asked lots of questions that were from a script. I was busy so I offered a shortcut. I told them he was like Clark Kent: mild-mannered and industrious, and when called to action was capable of heroic efforts like Superman. I hiked with him a few times and found that he was in much better shape than me, but he wasn’t the sort to show off or angrily compete. His church, his company, his friends, his union thank him for what he did. Maybe I interrupted their interview process, but I enjoyed finally telling someone what I thought of the man. Thanks for listening as I tell the world through this blog. He died in a well-deserved retirement.

Recently, someone else passed away two miles from my house. An accident, a falling tree branch, claimed a nine-year old’s life. She didn’t do anything wrong either.

Sorry for the somber tone, but I’ve had some things happen in my life that weren’t averted, despite attempts to do everything right.

Doing everything right does not produce a guarantee that everything will work out right. A higher self may have a different point of view of what was right, but we mortals may never get to understand the higher ramifications. Lots of unemployed people have looked for jobs, but haven’t found them. This week marks my fifth month of job searching. I know well-qualified others who have been searching longer.

It’s easy to imagine that part of the resentment against the self-serving portion of the 1% is that they are seen as having done something wrong yet benefiting from it; either something exploitive or even illegal that works well for them but no one else. The Occupy Movement is fueled with such emotion.

It is impossible, except through chance or divine manifestation, to do everything right. Humans are perfectly imperfect. Trying to maintain and measure against perfection can be painful and impossibly elusive.

Ray Kurweil’s Digital Singularity could happen, and it could give us the opportunity to become immortal transhumans, but his extrapolations require that everything go right. Last May I wrote about the upside and downside possibilities in Safe Tech Relations. Ray makes his case in his book, The Singularity Is Near. Bill Joy rebuts some of the concepts in a Wired magazine article from 2000. The answer is probably somewhere in the middle.

My personal finances aren’t healthy, measured against my personal criteria. Yet, reviewing my actions I think I’ve done as right as I could, considering what I knew at the time. Most of my estimates, analyses, and guesses were good enough, except that they aren’t reflected in the company stock prices. This is what the downside of risk looks like. Joe exercised regularly, lived reasonably, contributed greatly, cared deeply, and yet an end comes.

Balancing life and money in these tough economic times can make it too easy to focus on the money. It is hard to live in this society without money, so when money is hard to come by, it can be harder to live. Except that I know that is wrong. I do have money worries, and they do enter my thoughts throughout the day, but I recently have become better at putting them aside and appreciating what is alive and apparent in this moment. Most money problems are future issues. Regrets are reflections on the past. As I drive around on errands to manage various art exhibits, I pay attention to the road, but also the world I am driving through. Every tree is a marvel, and yes, that can sound trite, but the revelation is deep and valuable.

I write this in reflection on the recent passages, and also as I reflect on the stress I accumulated yesterday. My art is my business, and my business is a source of hope for financial support, so it is easy to elevate its issues. Yesterday I found myself in a cross-fire: competing interests placed me and my art in the center of a conflict. My attempts to find a yes-yes amidst two camps of no’s resulted in a headache and a cancelled evening with friends. The issue resolved around one piece of art, that if it sold, would pay at most a bill or two. The total profit would be less than what some people spend on dinner. The emotional cost didn’t justify the potential economic value. Trying to do everything right, trying to please everyone, hurt.

I think today I’ll try something different. Instead of trying to do everything right, I think I’ll try to do enough of the right things – and make a few apologies about the rest.

PS Quick note in that regard, I’d intended to blog a bit about passionate writers and the folks who help them, including Sandra Rodman and her Right Brain Aerobics. Stay tuned. Maybe I’ll get to that, if I get everything just right.

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Semi Annual Exercise EOY 2011

Before I began typing this introduction to my semi-annual exercise, I poured myself a cup of Passion, a tea mixed and blended by my friends at Dandelion Botanical. I still have a passion for individual investing, but this has been the toughest year for me, and tough times benefit from external support – even if it is just a cup of tea. An important aspect of exercise though is to be consistent and pursue it even in tough times, as long as it doesn’t hurt too much. This edition definitely has a twinge or two associated with it, but like most exercise pains, the twinges are probably temporary and may be indicators of internal growth.

My process hasn’t changed. I described it in an earlier post (My Semi Annual Process). In general it is based on a Peter Lynch idea. I’ll quote from my own post.
“Basically, for every stock in an investor’s portfolio, the investor should be able to easily and simply describe the company and why they own the stock. For me that translates into a couple of hundred words. I describe, for myself as much as anyone, what I think the company does, their prospects and hurdles, and what I intend to do about it.”

Obviously the exercise is more fun when the stocks are climbing. This year my portfolio was hit hard by two main events that I wrote about in Triple Whammy and Irrational Markets. Since then I’ve been applying for jobs, which prompts friends to chime in with phrases like, “But I thought you were some sort of financial expert.” Nope. I have no training though I have decades of experience. Some of those same friends were the ones that asked me to write about my perspective. I can only claim to be an authority on my own life. A book resulted, Dream. Invest. Live., which inspired this blog. Hopefully I emphasized that investing is risky which is why I don’t think it is for everyone. Stock investing is riskier than most. Investing in irrational markets adds risk to that. Today’s level of irrationality is rare. Of course, positive irrationality is possible too.

Another friend took a different approach. Rather than dismiss my experience based on my lack of positive portfolio performance she reviewed my portfolio. She came back with a similar conclusion. In general, the companies that I am invested in are fine, imperfect, but fine. The stocks are deflated, but the value behind them persists. As I wrote the synopses I expected to be dismayed, but that thread came through. Too many of my stocks are trading at one-fifth or one-tenth their highs, but the companies behind them have continued to introduce products and grow. A few years ago these stocks were worth more and none of them were profitable. Now, some of them have had a few quarters of profitability or about to reach that stage.

By definition, irrational markets don’t respond to rational analyses, so until they do, or until they become irrationally positive, I will make as much money as possible from other ventures: books, photos, speaking, consulting, and maybe finding a paycheck job. I will also continue to exercise.

Here’s the end of 2011 edition of my semi-annual stock portfolio exercise. It is a long list of links to Investor Village, The Motley Fool, and Silicon Investor because I think the discussion should happen in a broad forum. Feel free to comment here, but also feel free to post links out to other sites as well. One of the greatest resources individual investors have is other individual investors. Our shared voices can be more powerful than any official financial institution.

Investor Village
AMSC
DNDN
GERN
GGOX
MVIS
RSOL

The Motley Fool
AMSC
DNDN
GERN
MVIS
RSOL
Economy and Markets

Silicon Investor
AMSC
DNDN
GERN
GGOX
MVIS

And to all who’ve supported me, and particularly to those who’ve supported each other, Happy New Year! (Really. I am looking forward to 2012. Time to fly!)

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Stymied Donations

I’m stymied. That’s a word I rarely use. An amazing community response to a local Christmas Day tragedy led me to thinking about how much it would cost to ease many woes. Is there sufficient wealth to substantially fund the needs, though maybe not the wants, of every volunteer charitable organization? How much do they need? Is it impossible to find the resources? How hard is it to at least financially help a family through a loss, medical bills, a replacement car, and lost income?  I almost found an answer but am stymied because I lacked one number.

I thought an estimate would be easy. Total donations to charities from people are about $0.2T.  I consider the federal government to be a massive charity that we have all agreed to contribute to. It has many of the same characteristics of a charity: mostly well-meaning not always as efficient as it could be, and not always spending every dollar the way I want it spent. The US government received about $1.1T from personal income taxes. The total of $1.3T doesn’t include person-to-person help, but it is a good start at a total of what must be done. In general then, US citizens are able to fund charitable activities with about 10.5% of their income of roughly $12.4T.

Total Personal Income $12.4T (2010)
Total Personal Donations $0.2T (2010)
Total Personal Income Tax $1.1T (2009)
Estimated Total Personal Donations + Income Tax ~ $1.3T
as a percentage of total ~ 10.5%

Now imagine every charity receiving twice their normal donations. The trick is to find an extra $1.3T. I decided to look at the corporate side of things.

I was stymied because I couldn’t find a consistent set of numbers. I could find how much companies claimed as profit, but corporations have lost credibility in the way they report profits versus revenues versus income. The closest I could come was a number for the Fortune 500 companies as a group. They reported $3.2T in income; but there are thousands more public companies out there, and probably thousands more that are private. That subset led to a cobbled estimate of an extra $0.24T for charities plus taxes.

Total Corporate Revenue ?
Total Fortune 500 Income $3.2T (2010)
Total Corporate Donations $0.015T (2010)
Total Corporate Income Tax $0.22T (2009)
Estimated Total Corporate Donations + Income Tax ~ $0.24T
as a percentage of total ~ 7.5%

Then again, Gross Domestic Product is $14.6T, which is on the order of the numbers I found for personal + corporate income ($12.4T + $3.2T = $15.6T).

The former administrator to one of my favorite charities, NASA, listed eight things that put their budget in perspective.
Bernie Madoff’s Ponzi Scheme $50B
Tobacco products $88.8B
Alcohol $97B
Treating tobacco and alcohol related problems $313B
Illegal drugs $64B
Treating effects of drug use $114.2B
Gambling $585.5B

Some things you can’t plan. The total is $1.3T, the same as the number I estimated above for personal contributions to charities.

Getting rid of all alcohol, tobacco, and gambling is too simplistic of an answer, but it does put our expenses and at least the country’s needs in perspective for me. Within the amount we waste is more than enough to ease the suffering of millions.

Another bit of perspective comes from an estimate of the cost of our recent wars.
“The most recent major report on these costs come from Brown University in the form of the Costs of War project, which said the total for wars in Iraq, Afghanistan, and Pakistan is at least $3.2-4 trillion.”

I’m sure that if we really wanted to, we could find the money to make every year a happier new year.

By the way, as Board Secretary of the New Road Map Foundation (aka FinancialIntegrity.org and host of the Simple Living Forums) thanks to everyone who donated this year. You weren’t stymied at all.

PS My semi-annual stock review is due this Saturday. It is the most humbling and painful edition I’ve ever had to produce. (Here’s the previous one for comparison.) Stay tuned.

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Gifting Mirrors

Some gifts are as good to give as they are to get. Some don’t even have a price.

‘Tis the season, and this season is unique. I’ve never done so little shopping. I’m giving out presents, but more of them are handmade, personal art, or a helping hand. Without my personal economic turmoil I would have dropped into old habits, rushing to shop, wrap and ship so everything arrived on time. In earlier years it felt good and complete having a check mark by every name on my list, and having a few backup gifts around in case someone drops by or I forgot someone. This year feels better. Like most folks, I’ve spent less time in the malls and more time with catalogs.

Previous years of online shopping helped me memorize my credit card number, its expiration date, and the secret code on the back. Cash never left the wallet and there was no tangible transfer to reinforce the notion that money was being spent. With free shipping and gift wrapping, giving became much easier.

The amount spent in December becomes obvious in January, when the credit card bill arrives, unceremoniously wrapped in a white envelope which is opened anxiously instead of eagerly. Credit card debt can start as simply as that. I am not immune, though it happened differently for me. My Personal Debt Addiction began with an emergency brake job and a mental health vacation (which may result in a book). I was on track to get that credit card balance down to zero by the end of 2011 and then my Triple Whammy hit. Within a few days my liquid net worth dropped 75%.

Purchases that can go on credit did so and do so, though with an emotional cost. Mathematically it might make sense to borrow, but there are risks involved. (Want the math? Check out my post: Hope From Pops.) If I think my portfolio’s rate of return will exceed the credit card interest rate, then it mathematically makes sense to keep the money in the portfolio as long as possible, or find some other source of funds. (Anyone need a consultant, artist, or aerospace engineer?) My resistance to borrowing is strong. I don’t like relying on credit, even with math on my side. Fortunately, I live a frugal life. The balance grows less quickly in the meantime and is paid off more rapidly when the money arrives. My ski trip this year may be in a tent, and I may enjoy it just as much as last year’s trip to a resort. Stay tuned.

Much has been researched about people and debt, and yet very little has been researched about how people have successfully and sustainably eradicated personal debt. I hope and expect to rejoin their ranks. Ann Haebig, under the auspices of New Road Map Foundation, has started a research project to finally document and analyze what strategies have worked. Check out and participate in the survey. Our society talks so much about how to handle debt, but very little about how to get out and stay out of debt. Countries seem to understand it the least.

My credit cards haven’t been used much this season. Early reports are that the cookies and fruitcakes are good. Recipes have been requested. Other gifts won’t be mentioned because it isn’t Christmas Day yet. Very few items will have barcodes, single-use plastic packages, or security devices. Some will have my name on them. Others may come with corks.

I’m hearing about a lot of such gifts. People are dialing it back, thinking outside the red-ribboned box, and finding items that mean more. Artists are giving each other pieces of art. Cooks and bakers are feeding friends. Hugs are definitely as good to give as get and still involved wrapping, though it is arms instead of ribbon.

I don’t know if homemade and personal is a trend. It might only be true on my island. There are a lot of frugal and artistic folk here on Whidbey. I do know that in some circles, giving something handmade is discouraged. Some ads make fun of personally produced gifts. A solo giver can feel belittled in such a group. But when personal gifting is mirrored and heartfelt creations are given throughout a community, then feelings build that are more powerful than “heroes” in video games. Batteries aren’t required. Instruction manuals are easy to understand, usually saying simply use and enjoy. The only software incompatibilities may be dietary. And there’s a lot less mess littering the living room floor.

It’s the day before Christmas, so I don’t know what I’m getting, but I do know that the early packages marked perishable are appreciated. Fruits and cheeses, nuts and chocolate are warming and appreciated; especially with a nice red wine I have in mind. Hmm, I think I gave that as a gift. I wonder if they’ll mind sharing?

Merry Christmas folks.

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Year End Celebration

Last night I attended my first Hanukkah. Latkes were eaten. (Thank you spell check.) The candles were lit. A song was sung. I appreciated the invite to such a multi-cultural setting. Friends share simple pleasures and that is sweet and fun. Sweet and simple is more common and more powerful than conspicuous consumption.

But no Dad, I haven’t converted to Judaism. My life and Whidbey Island is a multi-cultural experience. Behind us was a Christmas tree. Over in the stack of books was the Tao Te Ching. Here at home, my tree is up. The Tibetan prayer flags are draped in the wind as usual. Representations of two of my animal spirit guides adorn my house. A quick reach to the bookshelf would grab Hindu, Confusionist, and other texts.

The Hanukkah story resonates for me. People with scarce resources survived longer than expected. It isn’t a story of opulence or a bacchanal. The Christmas story is set as a poor family hunting for lodging on a wintry night. Most spiritual stories that I remember deal with people living frugally, renouncing riches, and being more aware of the realities of their world.

Frugality is not a new thing. Respecting the resources that are available, and trying to maintain a sustainable life are eternal human pursuits. Many define my frugal life by what I lack. I’m aware of what I lack, but I am also aware of the riches available to me. I have running water, a flush toilet (that takes too many flushes but that’s another chore), a warm house, a car, a computer, family, friends, food, drink, and safety. Somewhere there are people drinking from puddles, trying to survive in war zones, without any way to find their family or communicate with the broader world. I want, and think I need, more; but I am also aware of what I have.

I feel a pinch of regret because this year I am not buying as many presents for family and friends. Sorry folks, but that’s the way it is. I am not the only one. Last night I received a gift of cookies. Excellent. Apples, pears, cheese, and such came in a few days ago. I look forward to delivering some baked goods, giving some of my books, passing along items that I know will be used more in someone else’s life. Artists are handing out unsold pieces that are the equal of everything they sold, and should be appreciated just as much. Thank you by the way.

I’ve lived the life where every present was bought, wrapped, bowed, tagged and placed under a tree. The obligatory part of the season was more readily met, but I recognize that most of the gifts weren’t memorable beyond a week. The gifts represented a ritual, especially after I moved away from home. The ritual was the consideration of each recipient. At least once a year I thought about what they might want in their life. I had to consider what their life was like. The thoughts took me back home even when I didn’t travel. This year I find myself thinking about everyone just about as much. I also find myself with more time, and will be able to devote time to considering family and friends while sitting at home, quietly sipping a contemplative beverage, instead of trying to remember lists, shipping schedules, addresses, and clothing sizes while standing in the midst of a mall crowd.

I hope to make my mall pilgrimage. Every year I like to spend a few hours in the mall, watching everyone else. Partly it is people watching. Partly it is reminiscing. Partly it is investment research. (It is natural for me to notice patterns like what shopping bags are the most common, which stores are busiest, what people are talking about, and what people are eating. It was one of things that convinced me to buy Starbucks (SBUX) because all of the shopping bags streamed into that one store eventually.) Maybe I’ll drop by later this week if I can catch a bus. I have no desire to subject me and my car to shopping mall parking lots.

Today is the Solstice. The days of incrementally increasing darkness will be replaced with increasing light. It is an unequivocal astronomical cycle. Economic cycles exist too. The downs are followed by ups. Usually the cycle is measured in months. Lately it has been measured in years. Some think it will be measured in centuries, like a new set of Dark Ages. We won’t know who is right until the light returns. Stay tuned.

Last night’s celebration felt like the beginning of a long string. People are talking more positively about 2012. Happy New Year has a real emphasis on Happy and New, as we look to better days. Official events may be lagging, but personal events seem to be emerging. There are more party invites than usual. More small local venues opening for music through the end of the year. I even have more to celebrate about next year. My teaching and art event schedule is filling. My photo schedule already has four months of overlapping commitments, and I haven’t added some of the biggest events. (Though one of the biggest in mind is the premier of the fifth of five Whidbey Island photo series to be hosted by Raven Rocks Gallery.)

My guess is that there will be a job spike in January. Many firms prefer to wait until the new budget year before hiring new employees. Besides, that way they don’t hire new folk and immediately have to pay them for the holidays. If that hiring happens, then the year end celebrations may be extended and renamed New Year celebrations. More parties? A Happier New Year? Sounds good. Sign me up. Let’s celebrate!

(Reminder: Stay tuned for my semi-annual stock review, my description of why I own what I own as part of a personal conversation and exercise I make public to inspire discussion.)

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Friend Businesses

I was turned down for a job yesterday. Don’t worry. Finding the right job is like finding the right house. You only need one, even though it makes sense and can be fun checking out lots of them. (And feel free to pass along leads.) And as one well-employed friend pointed out, I probably shouldn’t take the first one offered. Besides, businesses are filled with people, people can become friends, and friends should be treated well.

A friend runs a business that is growing and could use some part-time help. A simple idea has hit a sweet market niche. I was honest enough to mention in the interview that I’d have to continue applying for other professional jobs at the same time, at least as long as my liquid assets are in their currently dehydrated state. Where’s that rising tide? Even if I took the job I’d continue searching to find enough to cover the mortgage and my other bills. If I ended up in a full-time job I’d have to quit my friend’s business leaving them right where they are today, or worse if the growth continued in the meantime. They’d have to train someone again and in less time. We’re part of a friendly community. I couldn’t be that mercenary. Besides, maybe one of my friends will get the job.

I have many friends working at businesses they never expected to own and run. Gordy makes camera straps. Frazer sells DIY off-the-grid hot tub kits. Janice teaches dance. Brian and Kachi sell herbs. Mona makes chocolates. Sarah sells outdoor gear. Mix and match at will, but only their friends would probably guess which ones worked high-tech, geoduck farming, airline operations, and teaching. Some of those businesses are earning them a living wage. Some are at least keeping their owners very busy. I started off as an engineer, and have picked up the labels of karate instructor, writer, author, photographer, public speaker, teacher, and now consultant. I doubt that any of us aimed at these targets.

Artists particularly fall into the camp of following unexpected passions. At least where I went to school, such pursuits were discouraged in favor of professional collegiate careers, or life-long skilled labor in the mills around Pittsburgh. Wait a few decades and some slim remembrance of a high school hobby can resurge as a long-suppressed passion.

Making a living as an artist is less certain than as an entrepreneur, though each is effectively a self-written lottery ticket. The odds may not be very good, but devote your time, effort, money and resources towards something you care about and it may become a best seller, a modern art marvel, or a greatly expanding business.

Most entrepreneurs and artists start small, and therefore start frugally. They understand how small things can have large effects, and they appreciate each sale and each bit of progress. In most cases, that shows through in what they provide, typically simple quality.

Malls are defined by excess. Most of what’s for sale is unnecessary and largely driven by massive advertising campaigns that convince millions to collectively spend billions on things that are likely to end up stuffed back into boxes in storage, or eventually in the landfill. I don’t shop in malls anymore, though I do admit to an occasional visit to see how the mainstream flows. It is an amazing Las Vegas style spectacle when viewed from even a temporary remove.

I intend to friend my friend’s businesses this year. Sorry Frazer, I don’t expect to buy anyone a hot tub, and with my funds remain limited I will limit my shopping, but as much as I can, I’ll buy from friends. It’s more fun, more convenient, has more of a story behind it, and I know that the money will probably remain in my community, strengthening it, which is an even larger gift.

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