Ships On The Horizon

Posted on July 15, 2011 by Tom Trimbath

It’s Friday afternoon and the cruise ships are steaming north. More than 190 cruises start and stop in Seattle every year. My house has a nice enough view that I get to see them go by. Sometimes three of them head out at the same time the shipping lane looks like a ponderous and immaculate drag race. Maybe someday I’ll take a cruise to Canada and Alaska. For the price of some of those trips, I’d rather have a sailboat.

Sailing and frugality have a lot in common. Sailors can’t be extravagant. Boats don’t have as much storage as a house. After stowing emergency supplies, maintenance gear, safety equipment, tools, and navigation charts, there isn’t much room left for food and clothing. Every pound slows the boat and every item has to be lashed down or stepped around. Sailors are very definite and aware of needs versus wants, and the value of time. Sailing is an experience, not always a calm one, but always a memorable one. The stuff involved are the tools, not the goal. As for time, ocean coastal sailors are very aware that the time of the tides is not negotiable. The connection with this world, the sun, and the moon can’t be ignored.

Sailing and frugality are also famously embattled opposites. Catch phrases for boat ownership probably go back centuries. “The happiest days for a sailor are when they buy their boat and when they sell their boat.” “A boat is a hole in the water into which money is poured.” Sailing isn’t cheap. Owning a boat takes a lot of time and effort. Many of them have rigging turned into spider catchers, decks turned into moss carpets and sea gull depositories, and in my neighborhood, otters turn cockpits into diners that lack busboy services. And boats can sink.

I want a boat. I want a sailboat. My neighborhood has one of the few marinas on Whidbey Island, and from here, as my neighbor pointed out, it’s possible to sail any ocean by walking down the hill, climbing aboard, casting off and setting sail, assuming the tide’s in and the wind is blowing in the right direction. My ambitions are less global. Between here and Alaska is more than enough water and wilderness for me. Shorter trips on Puget Sound could connect me to the cities of Seattle, Tacoma, and Bellingham; and also to the smaller, quieter places like the San Juans, Port Townsend, the southern tip of Canada, and the South Sound. As long as there’s wind, which is a grand assumption, I could get to all of those places without burning fuel. I could avoid the pavement enabled anxiety attacks of Seattle’s traffic and still get to see Pike Place Market and attend “the theater” (spoken theatrically).

Sail boats are cheaper than usual. I suspect that new sailboats depreciate more than new cars, and in an economy like this used sailboats are being unloaded by people fed up with moorage fees, insurance, and maintenance charges on something they rarely use. The hulls of some are more kelp garden than hydrodynamic marvel. I’ve found a few that have asking prices about 1/4th the price of a new one.

Unfortunately, my economy isn’t very robust either. My stocks aren’t doing as well as I’d like. I think most of the stocks are undervalued, so selling a thousand shares to buy a boat now would get me a small boat while selling a thousand shares at my guesstimate of their true value would get me a boat that I might even be able to stand up in. Boats with more than 6 foot 2 inches of headroom are bigger and more expensive than my self-imposed allowance.

I could rationalize owning a boat. Besides cruising, it acts as guest quarters (especially because it is in the neighborhood), a self-contained emergency backup home (earthquakes happen), a camera platform (my Twelve Month Whidbey series of photos are all from water front locales), and buying now is buying low.

Emotionally, I want a boat; but, I recognize that my rationalizations are excuses, not reasons. As long as I own a house I don’t need a boat. I might follow the example of various friends and buy a boat to live aboard, but I’m not planning to sell my house in this market. Who knows? Maybe someone will knock on my door and offer me a million dollars for this house that I bought for $300,000 four years ago. It could happen. (Evidently extreme optimism continues too.)

Frugality is not about an impeccably rational life, constant denial, getting by on the least amount possible. For me frugality is respecting the resources within my world: time, money, and what the world provides, including community. So, I don’t just say No for the sake of saying No.

One of the reasons I might say Yes, is because sailing, like frugal living, is conscious living. Even deciding to sit still requires an action of setting an anchor or deciding to stay in harbor. I like to think that I live my life consciously. I don’t try to consider every moment, because the constantly examined life is spent in constant examination, not in being alive. Balancing examination with living is one way to respect the resources available to me: time alive versus applying intellect and wisdom towards a better life. Sailing requires attention, opens access to other ways of living, and can do so using the wind provided by nature (but make sure there’s a motor on board.)

One of the boats that fits my style is for sale on the island. It is a rugged cruiser, build for function, not for looks. The price is about the same that some folks on those cruise ships are spending for a nicer cabin as they take a few days to sail from Seattle to Seattle. Of course the reason they do that is to see the very sites that I want to cruise to too. The sailboat needs some work. So does my portfolio. The sailboat needs some money poured into that hole in the water. My portfolio needs patience. Patience is easier to come by than money, and with enough patience I might be able to afford a boat that doesn’t require as much work.

Someday my ship will come in, after the financial tide reaches into my little harbor and lifts my portfolio. Until then, I’ve got my kayak, my bicycle, my feet, and occasional forays to the mountains via my Jeep. I may not cruise the world this way, but the world I cruise through is simple and easy to enjoy. And I’ll watch the horizon for ships heading my way.

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Personal Debt Addictions

Posted on July 13, 2011 by Tom Trimbath

Debt. Yuck. Is that concise enough? Unfortunately, without it life can take more effort – until some skills are learned. Debt is a tool. Used well it can ease stresses. It can be the lubricant that lets life flow by allowing action easier and sooner. Used too much and it becomes as destructive as any addiction. During the last couple of years I agonized over a bit of an excess. I’m feeling better now, thank you. It hasn’t been easy, but I’m glad I am tackling my debts.

Life without debt would mean always saving for every purchase. That is an admirable goal. It would still be possible to spend too much, but the limit is physical and real. It would also mean possibly waiting decades to buy a house (how long would it take to save up $300,000?) or years to pay for some medical treatments. Living without debt worries is one of the attractions of wealth. The wealthy have a much broader range of stuff they can easily buy. Unfortunately, without a fortune, the unwealthy would have a harder time starting businesses or paying for schooling or many of the other avenues for getting ahead. Ah, but the frugal folk have a way around that. But lets put that aside for now.

Many people decide to go to school, start a business, buy a house, and take occasional vacations. Some of that involves work and necessities. Some of that involves play and passion. All of that can make life better. Most folks take on a bit of debt rather than waiting through years of saving. Done prudently, temporary debt is powerful. At the corporate and governmental level, temporary debt eases a lot of bookkeeping. Otherwise, with so many different people depositing money and writing checks, eventually there’d be a slip when a lot of checks bounced merely through a fault of timing.

Most of the current concern is about too much debt. House defaults, maxed out credit cards, and eternal student loans coupled with unemployment and stagnant wages mean lots of expenses happening at a time of lower income. Except in the case of things like medical expenses, we did it to ourselves. It is easy to point fingers at the financial institutions for overselling, but buying houses that were too big, or buying more stuff than we could afford, or spending too much on vacations and dining out are personal decisions and personal responsibilities. Even student loans can be discretionary. Parents who succeeded on state university educations seem compelled to pay for Ivy League diplomas even though they learned in simpler establishments and some of the most marketable skills are taught in community colleges.

Sometime before August 2nd, 2011 the US government has to figure out how to handle its debt. Except for a few years during the Clinton administration, I can’t recall even a hint of a budget surplus. I don’t know anyone who handles money less responsibly than the organization that the money represents. Sadly, the argument over the deadline is reducing to a contention over the debt ceiling. That’s like being able to arbitrarily raise your own credit card limit. It’s an attractive option, but interest has to be paid on that increasing debt, and many people have witnessed that pain. Luckily the government’s interest rates are much more reasonable than most people’s credit card rates. The numbers are unsettlingly large though. The average US debt per person is about $45,000. The average household credit card debt, for those who have credit card debt, is $15,000.

Fortunately, there are wonderful role models amongst us: the Frugal Folk. While I aim for frugality, I bow to those who truly embody its practices. (Simple Living Forum and The New Road Map Foundation) They spend less than they make, pay for their needs first, have money set aside for emergencies; and if there is excess, invest; and if there’s excess excess, maybe pay for some comforts, probably help others, but not spend for the sake of spending. The trick is an awareness of personal needs versus personal wants versus public pressures, and the appreciation of what’s here and now. Use those tools for years and some frugal folk find themselves well off and dealing with that excess excess. Ignoring external pressures to buy and spend uselessly saves impressive resources. Maintaining appearances is costly.

The media and advertisers make it sound like such folks are uncommon and probably odd, but there are enough frugal folk out there to make a major party. Despite the difficulty of buying without debt or credit, about 30% of the population doesn’t have a credit card. Considering that about an additional 15% of the population is under 12, there is a bare majority that account for our personal credit card debts. Thirty percent of the population probably understands personal finance better than the US Government. It’s a good thing this is a country built from We The People. The pity is that the frugal folk aren’t the ones running the country. The ones running the country are typically wealthy, and have an odd relationship with money because of campaign financing. I think it would be fascinating if one of the requirements for public office was to live within the median household income while in office.

Personally, I am making good progress on paying down my debt. Up until about two years ago I almost always paid off the balance each month, but then as the market collapsed I decided to delay some stock sales and let a few of the expenses sit on my card. The costs of publishing the book (Dream. Invest. Live.) while producing a photo essay (Twelve Months at Cultus Bay) weren’t extraordinary, but they came as the market fell. Then came a major car repair, some medical bills, and an obstinate desire to maintain the habit of one vacation per year. The credit card company raised my debt limit, but my emotional limit was more important. I wanted to get rid of that debt, regardless of the charges. I’d rather live within my means. The delayed market recovery delayed my paydown, and the accrued finance charges became more than an emotional issue.

A simple choice here, an unexpected expense there, a habit that should’ve been put aside for a while (though that vacation in Scotland was revelatory), and I began to understand how easy it is to fall into a debt spiral.

For the last year or so, I’ve paid down my debt by about two dollars for every new dollar spent. My credit card debt is much reduced, and a glance at the numbers suggests that costs from delaying the paydown are smaller than the returns I’ve received from my stocks, but that’s not a game. I played it and paid an emotional price. I don’t recommend it to others.

Speaking of other, last week a friend though was able to celebrate paying off a major credit card debt. The onerous interest rate of over 24% is now being charged against a balance of zero. The financial institution wasn’t happy about it and tried to talk them out of it. My friend may have kicked the habit, but the bank is still addicted to debt.

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Accidental Excellence

Posted on July 9, 2011 by Tom Trimbath

Pursue Excellence. Strive to be Great. Oh wait. Those must be typed with exclamation points and more caps. Pursue Excellence! Strive To Be Great! Or. Follow your intuition. Let it happen. Michelangelo spent years painting the Sistine Chapel. A writer can spend a decade crafting a novel. And then there are signature songs written within minutes and iconic photos taken with auspicious timing. The amount of effort and depth of intent behind any work is no guarantee of success, and something done casually may have phenomenal and unexpected impact. Outcomes are uncertain, but even small efforts can generate world-changing results. That’s true in art, finance, and charity.

It is summer here in the northern hemisphere, and the temperature on Whidbey is finally getting into the 60s. Oo. Actually, that’s pleasant and excellent conditions for dancing, especially in open air. Yesterday, on the way to a barn dance, I talked to a multi-talented art market organizer, a photographer/printer, and a photographer/chef/gardener. Some bloggers probably plan their posts, write outlines, and sketch themes. I listen to those around me and hear common threads. Those three artists are capable of elaborate, detailed work, and each has also seen some of their simplest efforts reach further than they expected. The trick we’ve all learned is to let it happen.

I am not a belabored artist. My approach is more pragmatic because for me, the message is more important than the art. Receiving an Editor’s Choice award for my second book, Twelve Months at Barclay Lake, was an honor, but my first book, Just Keep Pedaling, remains my best seller. It’s been for sale for over nine years and sells better than any of my books, including the one that this blog is based on, Dream. Invest. Live. People come up to me and thank me for the story, or some inspiration that they got from reading about my bicycle ride across America. In my opinion, my writing has improved with each book, but I write to convey a message, not to improve my writing. If I had practiced my skills for years before writing my first book, it might not be finished yet, and no message would have been conveyed.

Diving in and writing a book helped me become a better writer. It is one of the reasons I enjoy teaching others about self-publishing (seminar/workshop July 16th). After enough rejections letters (anywhere from zero to ouch), self-publishing can keep a writer from being stopped by an industrial roadblock. Blogging is relatively easy for me because of the continual practice of writing while aware that mistakes will be made and conventions will be unconsciously ignored. These posts take me about an hour or two to write, including phone call interruptions, and hyperlinking. These are basically first drafts. If I took more time, they’d be shorter. Each time I publish one I think of a rewrite an hour later. But I’ve learned to let them go and use the lesson in the next post. There is no guarantee of striking a chord and outcomes are uncertain. Some of my favorite or overworked posts are rarely read. Some of my old forgotten posts find audiences months later, and I have to remind myself what I wrote. Fretting over posts that no one will care about takes time away from other aspects of life.

For me, one of the distinctions between a scientist and an engineer is that a scientist seeks the truth while an engineer seeks a solution. A truth is an absolute. A solution is a pragmatism. Both are necessary, but at different times. The more common and more inclusive phrase that captures the thought is that “sometimes better is the enemy of good enough.” “Paralysis by analysis” also comes to mind.

Personal finance is important, but only for those of us who live in modern civilization. If you’re reading this blog and are not part of modern civilization, tell me how you manage to do that. Such an important topic encourages people to dive into headache-inducing spreadsheets, eye-straining stacks of reading, and hours of contemplation. Warren Buffett and his portfolio may be the modern day equivalent of Michelangelo and the Sistine Chapel, but sometimes personal finance can be as simple as making sure the deck gets painted with spare paint.

The most common approach to personal finance seems to be whistling with lots of procrastination. Ignorance is bliss, maybe, for a while, if you’re lucky. Another approach is to study, study, think, think, plan, plan. With financing though, time is money, especially if interest rates are involved. Delaying credit card debt reduction means interest charges are increasing total expenses. Delaying saving or investing means compound interest has less time to work. One of the most powerful financial tools is starting early.

To me, that didn’t mean become an early expert. I stepped into investing slowly with about $300. A few hundred dollars taught me about stocks versus bonds, what news to consider or ignore, the connection or lack between the market and a stock; and I learned about my interest level, emotional reaction, risk tolerance, and began building my confidence. Three hundred real dollars taught me some things that could be learned from books, but also deeper things that could only be revealed by commitment.

One artist had a windfall, a very nice commission that produced some extra cash. They were smart enough to decide to buy a cd (a certificate of deposit, not a compact disk). I wish I hadn’t suggested they check the interest rates and such. That extra bit of research is appropriate, but not as important as their positive decision to do something besides spend. Ignore what I said yesterday. Do what you feel is right. Doing is the best way to learn. It carries risk, but wasting time increases risk too.

Good enough now is more powerful than excellent later when it comes to work that needs to be done, as long as it truly is good enough. Good versus good enough is the difference between letting someone slip back into the water versus pulling them into the lifeboat. Good is thinking about saving money. Good enough is saving money.

For my art, good enough is an easy hurdle. I’ve learned the lesson that sometimes the art is there for someone else. A photo that wasn’t one of my favorites may be the image that produces serenity for one person. Another may conjure memories. I don’t restrict my exhibits to only my favorites. If intuition says include a photo, I do so. One person touched me deeply by telling me that my photos made her realize that she’d forgotten how to look at and enjoy nature. Wow. I didn’t see that coming.

So, I regularly remind myself to not worry as much. My deck needed painting, money was tight, and some contractor friends dropped off some paint that was headed to the recycle/dump station. It was obvious why some of the colors hadn’t been used. Mismix will happen. After a nice coat of grey I started to have fun. The results may look accidental, but I thank Jackson Pollock for inspiring the ensuing excellence (from my point of view).

Hmm, I wonder if anyone would want me to paint their deck like this?

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Drunken Frat Parties

Posted on July 6, 2011 by Tom Trimbath

Discussion boards are powerful and unregulated, which means I use them, but only with lots of filters. Some are populated with people expressing considered opinions as if it was a collegiate debate society. Many are empty except for a solitary investor asking questions into the void, hoping someone else will respond and initiate a conversation. Some, to use the term from my book, are like the stereotypical drunken frat party, boisterous and obnoxious, with lots of passion and chaos. I use them all, but I keep in mind that the debaters may sound more impressive than they are; and that even at a drunken frat party there might be someone sober and rational worth listening to. Here are the boards I use, why I use them, and how I use them.

The long description of why I use stock discussion boards is in my book, Dream. Invest. Live., but the short version is that I use the boards because I recognize great areas of personal ignorance. If you stroll around my various web profiles you’ll come across a Will Rogers quote; “We are all equally ignorant, just in different areas.” No human consciously knows everything. So, to fill in the blanks, I read and sometimes participate in the various boards.

In the interest of conciseness in a previous post I wrote that the Dendreon boards tend to have medical professionals and statisticians, but that is a generalization. The longer version fills out more of the picture of how and why I use the boards. The DNDN board on Investor Village includes urologists, oncologists, patients, nurses, hospice, clinicians, academics, and other health care folks. Sometimes the various motivations conflict, or produce dis-similar support. Dendreon’s prostate cancer treatment, Provenge, breaks through traditional professional boundaries (as I understand them) because a cancer that would normally be treated by an oncologist now has a treatment that can be administered by a urologist. Bureaucracies and business models can be upset, and understanding the swaying power struggles explains some of the variation in news items and public perception. On the finance side, the board seems to have long term investors, short sellers, options traders, deal makers (M&A), analysts and researchers. The business types see the implications of company financing and partnerships, while the stock investors and traders see the flow of money, ownership and the influence of reporting deadlines, options expiration dates, and shifting institutional loyalties. No news item captures all of those points of views and motivations.

Trying to learn all of those disciplines would take me decades. Instead I read the discussions, and use basic manners and character judgments to weed out the majority of the nonsense to get at useful knowledge and insight. My gauge of a board is whether it can provide that. Few can reach IV’s DNDN board’s expertise.

There are also practical considerations: cost, ease of use, traffic data, etc. Some are free. Some are free, but with upgrades. Some cost up front. Paying to cruise empty boards is a waste of money, but if I learn one thing that affects a trade, the difference can be worth thousands of dollars. Paying $50 a year (a fictitious price) can suddenly seem more than worth it. Ease of use is simple. If the boards are hard to use, I’m less likely to use them. I want posting to be easy, and I want to readily see replies and tangential posts. Traffic data isn’t just ego-stroking. The number of readers, responses, recommendations tells me if I might be tapping into a crowd’s wisdom or have simply shouted into a vacuum. Some of my posts have received no comments or replies but I know that hundreds have read them, and seeing that there are recommendations tells me that something I said was worthwhile; and that nothing was so outlandish that I needed immense and immediate correction.

Without further dissection of my methodology and philosophy, here are the boards I use.

Investor Village (investorvillage.com)
Without a doubt this is my favorite site. It is easy to use. Provides useful data. It can be used for free, but premium service speeds things along (and I think that’s why I don’t have to wade through ads.) The operators police the site and kick off offenders. People can only have one username, though I think some have figured out how to get around that. Combined, the various features result in more reasoned debate. The site has it’s flamers and Off-Topic screamers, but the site allows me to filter out them and their posts.  Every stock has a board, even if that board is empty. It is the newest site that I use, so many boards are empty, for now.

The Motley Fool (boards.fool.com)
The Fool may be the best known, and has much greater lineage and heritage than IV. As a result, personalities are apparent and their track records can be perused. When in doubt, I’ll check a user’s number of posts, number of recommendations, and their CAPS score (a judge, though noticeably poor judge, of their portfolio performance). Some of the more general boards there are small academies that are very good for training new investors. Unfortunately, the site seems to have a tendency to use its articles to sell it’s various newsletters. It may not be a conflict of interest, but it doesn’t feel right either. The Fool also has a policy of not hosting boards for very small companies, which precludes many of the small-cap and micro-cap companies that I am interested in. It is a parent-child relationship where they are taking care of me by guarding me from temptation. It is a bit condescending to me.

Silicon Investor (siliconinvestor.com)
SI has been around since before the internet bubble popped, I think. Some of my semi-annual reviews can be tracked back many years there (true for The Fool too). It is a fee site, but I bought a lifetime membership way back when. Of the sites I check, SI has the fewest useful boards (for me) and the least traffic (for my stocks) but the people there tend to be very knowledgeable and rarely enter flame wars.

Yahoo (finance.yahoo.com – look for messages)
I doubt that Yahoo intended it but, their name doesn’t convey an image of reasoned debate. The site is free and every stock has a board (I think), but there seems to be very little policing of multiple usernames, inflammatory comments (in my opinion), and misleading statements (in my opinion), and because so many users resort to abusive phrases, I don’t post on Yahoo. I do lurk there though, with very heavy filters, and little expectation. Intelligent and reasoned people post there, but of the sites I check, this one takes the most effort to hear the useful moderate voices. I turn to Yahoo though when the other sites have nothing new. Despite the quantity of useless shouting, the immense quantity of traffic means that news may show up on Yahoo before it shows up anywhere, including the news outlets.

Discussion boards aren’t the ultimate resource. The definitive data resides on the company’s web site and at the SEC. Analysts and researchers may do a good job of compiling data, and may provide insight from a well-defined point of view. The boards are good for finding pointers to the data sources, because while crowds may or may not have wisdom, a crowd of individual investors tend to have similar motivations and constraints and that crowd is most likely to have found the data most pertinent to my questions, even the questions I didn’t think to ask.

If nothing else, that recognition of a crowd of similar souls is therapeutic. There are days when a stock is moving and none of us knows why, and it’s comforting to know it is a shared ignorance. The boards are also the place to find shared solace. The Dendreon boards are regularly touched by personal cancer fights, losses and victories both. And there are shared celebrations. Much of the time, investing news worth cheering is something only other shareholders can appreciate. It may be virtual, but the party gets real on days like that, and it’s always good to know where the party is.

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In Dependent Relationships

Posted on July 2, 2011 by Tom Trimbath

Bang. Bang. Bang. No, the sound has nothing to do with fireworks or the local gun club. The banging is coming from the other artists setting up their exhibits. It’s Saturday morning before the Fourth of July. We’re setting up the Bailey Saturday Art Market, something that started a few months ago with three people melding three ideas into one, and then letting it go and grow. Today there are nine of us. Each is independent, yet each is helping the others move panels, hook up lights, and hang art. Somewhere between reclusive hermits and totalitarian empires exists a realm where most things get done, a place that balances dependence and independence. It is true in art, investing, and the world.

Of course independence is on my mind today. It’s July 2nd. Back in 1776 one of my ancestors (Francis Hopkinson) signed the Declaration of Independence. For me, my lineage emphasizes that event, the ensuing struggle, and the resultant nation. Thirteen independent states (and commonwealths to be more correct) decided that, somewhat counter to their various concepts of liberty and freedom, they were also dependent upon each other. They decided to unite for their common benefit despite their differences. It hasn’t been perfect, but it has been working better than the critics and pundits of the late 1700’s predicted. Of course, the colonists had a common external enemy. Today’s politics seems to focus on fighting each other instead of focussing on our common pursuits. Maybe those historical pundits will be proven correct.

It is easy to become discouraged while launching a new venture, whether it is a cause, a business, a party, or a project. Rough spots inevitably arise. They are excuses to stop, but a simple concept like Just Keep Pedaling, can eventually overcome or steer around potholes.

I may follow my passion when producing a Twelve Month series, but the details can be daunting. Visiting the site is the easy part, except for timing sunrises, sunsets, tides, and rain. Contrails, boat wakes, trash and power lines can smudge great photo opportunities. Reviewing over a thousand images to find the four dozen that artfully describe a place takes hours of squinting at details, diving into flaws, and finding reasons to put aside over 95% of the photos can be demoralizing. I am in month twelve of photographing Penn Cove, one of Whidbey’s quieter marine havens. At this phase, simple logistics mean I spend more time with the 95% than with the final 5% and it is easy to be overwhelmed with what didn’t work. But I remember that my passion is people and ideas. Eventually I get to focus on the final 5% that become the essays, and that they are the instruments, not the products, of my passion. The final criterion is whether the photos independently and collectively convey a message or inspire a response, and of course the attendant sales that fund the work and compensate me for my effort.

The Bailey Saturday Art Market has growing pains. Originally, it was easy. Three people that had low expectations, but who recognized a common cause, goal, and opportunity, started something that cleared that hurdle and continues to evolve and mature. Fitting nine people and their art into the same space requires much more coordination and negotiation. This week we actually had to pick a name. Evidently we crossed some legitimacy boundary even though we are still independent individuals. Now we have enough artists that photographers are selling beside photographers. Encaustics artists can sit together and compare techniques. Some businesses don’t like similar businesses moving in beside them. Others buy into it, like the garment district story from You Got Mail; but of course, the bookstore equivalent in that movie didn’t see the same synergy.

Independence is instilled in artists because there’s usually some necessary step when the artist immerses themself in the art without interruption or outside influence. Books usually aren’t written in crowds. Actors get to know their characters. Ultimately, one person presses the camera shutter release.

Dependence on others is necessary and requisite for armies, bucket brigades, and emergency relief. Sometimes everyone has to come together and follow the same rules to get something done.

Individuals can invest independently, but there’s a lot of free help out there, especially amongst the community of independent investors. My previous post provided links to the boards that I visit the most. I take the work that I do independently, my semi-annual portfolio review of my stocks, and post them so others can agree, argue, or embellish. Sometimes the conversation never gets started, especially if no one else cares about that stock. Of course, I learn from that silence too. It could mean that I am so wrong that people don’t even see a reason to visit the board. It also could mean that I am in the right place at the right time, an early discoverer able to take advantage of an unfound treasure. I rarely had readers of my FFIV reviews while the stock went from $5 to about $90 (split adjusted). Other stories are more complex. I understand Dendreon (DNDN) better because of the medical professionals and statisticians on the Investor Village DNDN board. Microvision (MVIS) has technical, supplier, and finance issues that benefit from the education I gained on a flame-free private board. It is a small community, but a common goal and freedom of expression is very powerful.

Personal finance benefits from sharing stories, insights and resources. Find a nexus like the New Road Map Foundation and the Simple Living Forums, and it can be easier to find that initial impetus that works for you, or to find that trick or rule of thumb that simplifies your life or a money management task. Yes, it is personal, and yes, personal is also part of the effective definition of independent, but even while avoiding dependence, reaching beyond independence can be powerful.

The artists are settled in. The last things to get set up are the chairs we occupy for most of the day. The lattes are at hand (herbal tea for me). Customers, tourists, and patrons are wandering through. We’re sitting quiet, seemingly independent, identified by our art. And it happened because, for a while, at least to some extent, we decided to depend upon each other.

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Semi Annual Exercise Mid 2011

Posted on June 30, 2011 by Tom Trimbath

Welcome to my exercise routine. I finished posting my review of my stocks, as I do every six months. The methodical part of me decided that the end of June and the end of December were the most appropriate times. I post them to start conversations and discussions which might help me and others. The realist in me knows that there won’t be as much discussion because the end of June is near the 4th of July and the end of the year means I post when everyone is partying. Ah, but some habits are maintained despite such realities because really, the main benefit is to me from me. I see for myself what I think about my stocks, and I can look back over many years and see if that opinion has changed.

For details into why and how I do this, look back one post.

In general though, this time I realize that some of the companies seem to be doing the right thing (DNDN, GGOX, RSOL), some have hit stumbles (AMSC, MVIS), some are slowly making progress (GERN), and one is falling from favor despite being in a good position (GAIA). The markets may be up, but all of my stocks are down except for DNDN, and I think it is very undervalued. AMSC probably overcorrected. MVIS, well is MVIS, always just about to become stellar. My portfolio value has dropped, especially because I’ve had to sell some DNDN to pay bills. Groan.

For the details, here are the links. I’ll probably blog about why I use those boards and not others in a later post.

Motley Fool
AMSC
DNDN
GAIA
GERN
MVIS
RSOL
Economy and Markets

Investor Village
AMSC
DNDN
GAIA
GERN
GGOX
MVIS
RSOL

Silicon Investor
AMSC
DNDN
GAIA
GERN
GGOX
MVIS

Keep in mind:
My semi-annual exercise is to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too.
And this works better if I don’t do it alone. Join in. Add to what I’ve said. Add yours too. The more points of view, the more likely we individual investors can understand the companies, the stocks, and our options.

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My Semi Annual Process

Posted on June 29, 2011 by Tom Trimbath

It’s the end of June and time for me to dive into my portfolio. Some may find this dull, but this is the work that comes closest to answering the frequently asked question, “So Tom, how do you do it?”. I assume they are asking about investing. (For other topics please be a bit more specific.) Every six months I check myself by looking at what I own and why. This post is about how I do that.

Most of my blog posts are about life, the universe, and everything, or at least the everything that I think ties into personal finance for frugal folk. As one reader put it, my blog is eclectic. Sounds about right. My blog reflects my investing style: lots of thinking about trends, but very little, though very regular, subjective queries and objective analyses. Investing shouldn’t take a lot of time. My book is called Dream. Invest. Live. because Invest is merely the subject that can allow Dream to become Live. Invest shouldn’t take the most time or effort, but responsible investing does require some work.

Late on June 30th or early on July 1st I’ll post my mid-year reviews of the stocks that I own. I’ll probably post all of the links here, rather than the text because I’ve learned a lot by posting my opinions on The Motley Fool, Investor Village, and Silicon Investor. By posting on public sites, discussions can begin that draw in any investor. I’ve done it for years. You can check my earlier posts by searching on tetrimbath and tktrimbath depending on the site.

My primary semi-annual exercise is based on a suggestion from Peter Lynch. 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.

COMPANY BASICS
Describing what the company does is like taking an essay test. Without checking web sites or new releases, I describe the company’s business in a few sentences. They make this, or they do that, and they base their business on a distinctive strategy, market or technology. Not a lot of judgment is involved.

UPSIDES AND DOWNSIDES
Saying Ford makes cars is true and descriptive, but Toyota and resource limitations are important too. I describe competitors, market conditions, industry growth, the economy, and those various influences that alter a company’s plans.

FINANCES
Behind all of the subjective and the descriptive lies data; so, if a company is beyond the startup’s perpetual need for cash, I check on a few key statistics: Market Capitalization, Price/Book, Price/Sales, Price/Earnings (maybe), and I might check the income statement for Revenue and Income and the balance sheet for Assets and Liabilities. Market Cap tells me what segment of the financial community is most likely to notice the company. Price/Book is a quick view on how much money and assets one share of stock represents. (P/B < 1 suggests that you can buy a dollar’s worth of the company for less than a dollar. P/B < 0 means they may have negative net worth. Ouch.) Price/Sales tells me if there is a lot of hype around every dollar that comes in. (P/S < 6 is probably okay for high-tech and such, but P/S > 20 might be a sign that investors are expecting bigger S or have overbought the stock.) I only check Price/Earnings for mature companies, and even then I usually don’t because earnings are easily swung by things that have nothing to do with sales. The income statement and balance sheet are the best view of whether the company is frugal; are they spending less than they make, and are they investing the rest without hanging onto too much debt? Ironically, while I avoid Yahoo’s discussion boards because they are too bizarre sometimes, Yahoo does a very nice job of collecting the pertinent financial data.

MY OPINION
With all of that info laid in front me, I ask myself my opinion of the company and the stock. This is the mirror and reflection time. Usually, I get to this point and I’ve convinced myself that I am comfortable with my stock holding and position. But the purpose of the exercise is for those other times when, while looking at what I’ve written, I realize that either my investing strategy, the company, or the stock’s performance have changed enough that I should change my holding. Sometimes it means buying more. Sometimes it means selling. I keep in mind that this is all internal, so maybe I am simply in the midst of rationalization, but even that realization is worth more than simply buying stocks and forgetting about them.

DISCLOSURES
I add a disclaimer and a disclosure when I post to the boards because I know that I am an amateur and human. Mistakes happen. (I particularly like the typo where I said I won a stock instead of own a stock.) This has become an unintentional but useful humility exercise. It pops any ballon that may have formed and reminds me that even investors like Peter Lynch made mistakes. It is quite probable that something in my description and logic is wrong. That’s a reason for caution, but not a reason to stop.

Years ago this exercise seemed somewhat silly. I wasn’t blogging the results and I was partly doing it because I “should”. My reviews have been useful two ways. By posting them I’ve learned about misconceptions, and alternative points of view. Another is watching my personal investing history within a stock. What did I think when I bought it? What do I think about it now? When and why did that change? It is a long term version of talking to myself that is useful because I tend to buy stocks and hold them for years. If the story changed, should I?

Investing isn’t as important as living, but if investing is the bridge between a dream and living it, then investing some time can be very rewarding.

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Not Bad Is Not Good

Posted on June 25, 2011 by Tom Trimbath

“Hey, that’s not so bad.” It took me decades to realize that “not so bad” does not equal good. Anxious is not the same as eager. Feeling better is not the same as feeling well. Saving is not the same as a great sale. Common phrases subconsciously color our perceptions and our actions.

Once upon a time I worked at Boeing. Through luck or an open-mind, I got to work with people from Spain, Italy, Iran (the Shah’s regime), Iran (the Ayatollah’s regime), Iraq, Sweden (or was it Norway and I won’t ask because that’s a touchy subject), Russia, the Ukraine, India, China, Japan, Brazil, and oh yeah, England. In one group I was the only one born in America. Political debates weren’t Republican versus Democrat. We had capitalist, anarchist, socialist, communist, theocratic, republican and imperialist. Politics were intriguing. The potlucks were fun. English was the common language, but it was simplified with words consciously chosen.

Visiting engineers would steer through the gift shop for souvenirs. They didn’t need a guide. These were intelligent and educated experts, but sometimes a nuance of our chaotic language would steer them into unexpectedly non-sensical conversations. “On Sale Now” sounded like it should be the same as “For Sale”, or simply “Sale”. I could tell that the one set of items was “finally available to buy” and the other set was “can be bought for less than usual”. One time, for the first few lines of dialogue Boeing’s guest sounded confused as he tried to clarify the distinction with the clerk. His one quick grin convinced me that the guest was having fun making fun of English while playfully possibly providing the clerk with a new perspective. I rescued her from her confusion after it was obvious that progress would only be possible after her nervous breakdown.

Cliches and familiar phrases carry meanings that may not match the words. Usually the difference doesn’t matter, unless you believe in the power of words.

Imagine someone who started conversations with, “So, what’s wrong today?” For years I didn’t give it a thought. Then I heard it and thought it was normal. Then I thought it was because of my attitude. Later I realized that he started conversations with a straightforward thrust to any bad news that must be dealt with. Small talk, pleasantries, and euphemisms were wastes of time if there was something to be done. A very efficient way to fight fires.

Finally I called with a bunch of good news. Right after the response from my hello the conversation was reset to imminent crisis. I stepped the conversation through: no crisis; really, no crisis; things are good; no, I’m not kidding; so, here’s the good news. The reply, “Oh, well, that’s not bad.” It wasn’t until later that I realized that “not bad” was as close as he would get to saying the news was “good”. Most of the time was spent digging out of a conversational hole that never got back to the level of celebration that inspired the conversation.

How much time is wasted from such simple detours?

Even reputations are self-wounded. I like language and don’t go around correcting people’s dialogue except when I hear someone make a mistake and they apologize by saying, “Sorry, I lied.” Most of the time they didn’t lie, deceive, or intentionally mislead. They made a mistake. Instead of admitting to imperfect knowledge, admitting that they were wrong, they impugned their character by branding themselves a lier.

Some detours are intentional. Advertising campaigns access our imperfect correlation between language and meaning. “New and Improved”, but new isn’t always good and improved is a point of view. “Best in its class” is best by some criterion and I might not like the class it’s in.

Politicians wage war the same way. The media matches them. Unemployment is up, or down. That’s describing a positive of a negative, or a negative of a negative.  In either case, a negative is involved. The positive is employment. How many people are working? The ups and downs can be reported, but with a different emphasis. People are working? Great! Can we get more people working? Definitely. Let’s get to work on that.

On a pragmatic level, my personal finances became easier to understand and manage when I understood my reaction to words. A large part of that was recognizing my values, and noticing that my values, goals, and incentives weren’t the same as those of the advertisers, politicians, and media. I wasn’t cheap. I was frugal. They weren’t saving me money. The price may be lower, but it was still a price that I might not want to pay. Labor and time saving devices could cost too much if their price meant spending more time making the money for the purchase. Decreased taxes sounds good until I realized that it means services had been decreased too far and that debt had risen too high. I learned that my values, wants, and needs were easier to meet than I’d expected.

New lost its power. Improved was treated with skepticism. Old and used is probably proven and less expensive, especially if I already own it. Enough isn’t measured by some generic algorithm designed by financial institutions for the average of everyone. My enough is different and specific.

Some of those familiar phrases are taught as exercises in manners. Humility is healthy, but not if it becomes personally dismissive.

Accepting compliments, humbly, has a nice effect on conversations. Acknowledging their point of view places a positive on a positive without stretching a truth. Topics flow and the talk is much more fun. I’m getting better at it, and I even appreciate my art more. Though the complimentary comparisons to Money, van Gogh, and Ansel Adams still surprise me. Really? Cool. Thank you. Really?

I may not feel completely well, but I feel better. I am less anxious and more eager about my future. My attitude has improved, and I wonder if that’s why my health has improved. My confidence in my skills is rising.

Life is good.

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Unconsciously Committed

Posted on June 22, 2011 by Tom Trimbath

A word can crystalize a collection of thoughts. Over the last few weeks I’ve considered my financial situation and my options. Pick through my posts and you’ll find many of the threads. I was headed to some conclusion but suddenly arrived there when I saw the title to my friend Smolinsky’s blog post, Commitment. One word collapsed the variety of possibilities into a course of action that I had already unconsciously chosen. I’d committed myself to a path and hadn’t realized it. All of those other paths were off to my side. There was only one path under my feet and I was already traveling along it.

The Matrix series of movies has great quotes for me. They are good action and adventure movies, but I watch them for the words. What other movies do you know that have a special DVD commentary track for philosophy?
“We can never see past the choices we don’t understand.” – The Oracle to Neo, Matrix Reloaded

That one continues to do laps through my head. There’s something in that quote that I don’t understand, but it will settle out eventually. The movie alludes to future choices (in my interpretation). The part that resonates with me is that the choices we understand help us move along in the present; but, we don’t always wait for understanding before proceeding. That’s a species-wide understatement. Many times we’re on the move without consciously knowing where we are going. It may feel as if there was no choice made and that we are simply wandering along, but subconsciously a choice was made.

Steve’s post was about the successes of companies that embrace commitment. Commitment to a goal can accomplish more than excellent unfocussed talent generally aimed in almost the right direction.

I’ve learned commitment from another source, karate, and I’ll quote from one of the great fictional masters (while stealing from sci-fi yet again).
“Do… or do not. There is no try. ” Yoda to Luke, The Empire Strikes Back
I learned that lesson by watching those who outranked me. Their effectiveness came from being committed to a target, to having quick wisdom, clear choice, and unhesitant action. Superior power and speed are useless if there is no decision to use them. Power and speed delivered decisively and precisely are astonishing, if you even get to see them in action.

My recent conflicting thoughts swirled around, what-ifs. I hadn’t expected such a long economic slump. What if my portfolio doesn’t do well? What if my books and photos don’t sell well enough? Will I be able to sell my house? Do I need to sell my house? Can I get a job in engineering after being out for a dozen years? Should I move someplace to make any of those possibilities more likely to maintain my lifestyle? Should I go back to school? For what? Should I just abandon considerations of a career and get any old job? There are an infinity of possibilities within any life. My life includes possibilities from engineer to artist to entrepreneur to investor. Maybe I could write about engineering startups for some investment organization?

Then Steve’s post popped up in my email. Commitment. No dithering. Then I thought about what I was going to do that day. It was a busy day. There were lots of things that I’d chosen to do. That’s the internal “wait-a-minute” moment. I’d already made a choice. I was already committed to a path. My conscious mind was tired from too many considerations, but my subconscious had ignored it all, picked a path and set out along it, determined with a clear direction. I merely had to understand that choice.

I am a writer and photographer who has a passion for people and ideas, and while those activities can lead to financial independence (pursue your passion and the money will follow – maybe) I am also prudent enough to live frugally while investing in a manner that fits my lifestyle and personality. Nothing is certain and waiting for certainty is an eternal wait, an unnecessary delay that wastes time and bits of unrecoverable life.

Yes, I keep should keep in mind the other possibilities. I’d love to work on the next generation of space shuttle or on high-efficiency/high-safety dirigibles. Many of those other choices would also be gratifying lives. But I realized that, while I do look at the job ads and consider schooling, I’d already made a choice. I hadn’t applied for a job or for classes. I don’t have the house up for sale. Any investigation of those other possibilities was merely casual consideration, keeping my eyes and ears open as they should be. My fault was in worrying about them too much.

I live my life by funding it with my investments. I am also using my talents as a writer and photographer to pass along my message and passion. My speaking and teaching (Modern Self-Publishing July 16th) help me entertain and encourage others. My fifth book was called Dream. Invest. Live., because dreaming and living are the beginning and end, within investing merely providing the means. Meanwhile, I live frugally out of choice, while also recognizing that it is currently also out of prudent, probably temporary, necessity.

There are great uncertainties, but I am invested in reasonably good companies that have very good prospects that should result in much higher stock prices, and therefore more wealth for me that will further fund my passions. My writing, photography, speaking and teaching are doing well, improving and gaining larger audiences. One consequence could be improved personal income. (Pardon the parenthetical reprise but  – Pursue your passion and the money will follow – maybe.) My frugality and my volunteer work are the foundation on which I can grow philanthropic and charitable efforts, especially as my financial situation improves.

I am optimistic about people and the planet. Collectively we are in a slump, but we pull out of slumps. Many personal and global slumps have passed in our last fifty years. We, I, get through them by not giving up and by not standing still.

It is fun to realize that despite my conscious turmoil, my subconscious was optimistic enough about me to commit to a choice and a path. Now it is time for conscious commitment.

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Saturday Job Reprise

Posted on June 18, 2011 by Tom Trimbath

Saturday morning, up at 5AM, that was my dad’s version of sleeping in. When I was a kid my dad worked six days a week putting my brothers through college and getting ready to send me there too. Saturdays were his “light” day. Up at 5 and done by noon instead of up at 4AM and working twelve hours. Incredible. He gave me my first job by hiring me to clean the office of the oil depot where he’d risen to general manager. Here I sit forty years later in a mildly reminiscent setting, selling art beside a general store (unsubstantiated factoid: Bailey’s Corner is the 22nd oldest building in Washington State) which puts me and my art beside used books, fuchsia baskets, and a rack of motor oil. We return to our roots but never exactly.

My dad did the classic climb: truck driver to dispatcher to general manager to division manager. I think it was only in the last one that he was wearing a tie and when the company car was finally a car. Before that he wore work clothes and had the company truck, a big stake truck, a flat bed with detachable wooden sides. It wasn’t my mom’s idea of a company perk, but I loved it. It looked, acted, sounded, and smelled like the archetypical truck and was big enough that I had to climb up into it. Ah, the sounds and smells of diesel in the morning. Harleys wake me up and annoy me because the noise is unnecessary, but the cough and rumble of a commercial diesel is comforting because I associate it with honest, responsible work. That’s no stranger than citified farm kids catching that waft of a newly manured field. Their friends may balk, and neither may have a desire to plow, but that aroma can be an olfactory comfort zone.

Frugality was not a word used in my childhood home. Money wasn’t discussed, but money wasn’t wasted either. From today’s point of view we were resourceful, and tended to reduce or reuse before recycle was common. Coffee grounds went into plant pots. Bacon grease was saved for later. (It wasn’t until I started cooking for myself that I understood the wonders of bacon. It’s not just for sandwiches.) We had what we needed and didn’t worry about the rest. The cars were washed every week and waxed every month. The chore wasn’t simply to keep us kids busy. A washed car lasted longer, especially back when car paints and coatings weren’t as good and when Pittsburgh salted the streets to make the winters survivable.

We all worked and thought it was normal. How else could we afford the little extras? I thought we were rich because we’d taken a vacation hours away at a beach house in North Carolina. Later I learned that there were neighborhoods where the houses weren’t all the same. (Common floor plans were handy for us kids though. We always knew where the bathroom was when we were visiting friends.)

Frugality is now considered an alternative lifestyle, a cause, a reactionary response to social and environmental issues. I’m continually surprised that respecting time, money, resources and others is something different, something that must be learned. We had a certain amount of money and we didn’t act as if we had more. Our planet has a certain supply of resources and it’s probably enough to enjoyably and sustainably live; after we learn or re-learn how to do that. In either case, it’s a matter of choice, not a matter of debate – at least not after it’s become engrained.

I want, I want, I want. Of course I want. We all do. Even the Dalai Lama talks about desire.
“From the very core of our being, we simply desire contentment.”
Even when I desire an exuberant excess, it usually is based in the anticipation of the contemplative contentment that follows. More, more, more is a ever-accelerating trip that ends in an abrupt and disastrous stop.

I’m board Secretary of The New Road Map Foundation, an organization that advocates personal financial integrity and literacy. There’s a need for coaching and support of people interested in frugality and responsible personal finance. Most people associated with New Road Map have some aspect of their life that deviates from archetypically perfect frugality or financial independence. Temporary situations, jobs, unexpected expenses, changed relationships, all can upset carefully laid plans and superbly organized lives. Even a windfall can be a monetary encumbrance if the windfall is like a house that has taxes due.

The Foundation and others encourage me, but I am most encouraged by communities that self-educate and self-support. The Simple Living Forums and similar sites like The Motley Fool (if you can get past their advertisements) collect people learning to live a more considered and sustainable life.

Most of the lessons for a frugal life are the tested habits of those who lived through the Great Depression. Some became trapped in fear, but many learned simpler ways of meeting needs and better understanding the difference between need, want, and desire.

Our home was simple, but it felt fancy, too fancy for a ten-year old boy; but in retrospect, I recognize that my mom picked the few things that made a big difference, French Provincial furniture wasn’t and isn’t my style. She wanted mullioned windows, so she artfully drew them out in electrical tape in a manner I see in Martha Stewart, if Martha Stewart was a bit more suburban. My dad had control of the rec room, which he built and tweaked until it became his comfort zone, including the obligatory recliner where he’d fall asleep after he finally got home from work, especially if it was his second job. It wasn’t fancy, but it had everything he needed.

Without knowing it, my childhood was years of training in the value of resourcefulness and personal effort. I don’t think I have “enough”, because I won’t make that claim with the current uncertainties in the market; but, at another level, inside, I think I have probably enough. Probably is the important word. It isn’t a sure thing. Nothing is. But my investments are in good companies that I expect the market to recognize soon. My lifestyle is such that even a slight increase in wealth can mean large increases in comfort. And I’m aware of how much can be done with extra-wealth directed towards philanthropy (New Road Map could use your support!), innovation, and entrepreneurship. I’m also aware of the benefits of a bit of work.

So here I sit beside the motor oil and folk art, listening to trucks rumble up, glad that I didn’t have to wake up at 5AM, and wondering if some of my art will find new homes (sales = good). It’s Saturday, might as well get some work done – but I’m making sure that I sleep in tomorrow.

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