A Quiet Graduation Day For GigOptix

Posted on February 10, 2015 by Tom Trimbath

Did you ever have a party, and had no one show up? I’ve almost had that happen. Did you ever have something to celebrate, and find yourself in a crowd of strangers? That’s happened more than once. GigOptix hit a critical day in the maturation of a corporation. They made more money than they spent. They made a profit. Based on the market’s reaction, no one cared – well, except for a few folks like me. The lack of thunderous applause doesn’t change the fact of the accomplishment. Maybe the celebration comes later.

There was a good chance that GIG, which is GigOptix’ stock symbol, was going to have a good day. Yesterday they announced profitability. Every company has two main phases, when they are young and spending far more than they are making, and when they are old and making far more than they are spending. There are infinite variations on that norm, but the day to celebrate is when a company graduates from the first phase and enters the second. In a simplistic view, the company and the stock go from being a speculation to an investment. Graduation day has some weird mathematics though.

Math geeks know what happens when we try to divide by zero. Things blow up; at least mathematically. FigureB When a company is losing money, even if they are growing revenues and decreasing expenses, the price to earnings are negative because the earnings are negative. When a company is making a profit, the price to earnings is positive; and can be used to evaluate the company and the stock. When a company crosses that point when revenues and expenses are exactly the same, the earnings aren’t negative or positive because they are zero. Divide by zero and the result is infinity. Infinity to and beyond is a great attitude, but a lousy mathematical situation.

Great debates transpire about what is the proper price to earnings ratio. Mature conservative companies may have a value of about one. Disruptive companies in an enthusiastic market can have ratios about twice their growth rate. A company that is growing about 10% a year is doing reasonably well and can have a ratio of about 20. (P/E = 20) Above that and the stock may be pricey. Below that and the stock may be a bargain. Pay attention to the words just used: debate, about, may. Bull markets shift the numbers higher while bear markets shift the numbers lower, and all that is altered by the general market versus the specific industry versus the specific competitors. Like I said, great debates transpire.

GIG has traded at about a P/E of one. GigOptix makes very high-end electro-optic switches. If that last phrase didn’t mean anything to you, don’t be surprised. GigOptix makes things that let us stream movies without hesitation, but they do it in a way that may be hard to understand. The demand is easy to appreciate. Very few companies can do what they do. I think their technology is disruptive. I think their industry is growing. I think they have a lot of potential. The market is pricing them as if they were a construction firm that isn’t growing. That may be because the analysts understand something I don’t. It may be because the analysts don’t understand the technology, aren’t allowed to look at such immature companies, or are too busy chasing around the mega-bucks from the mega-wealthy who are most interested in the mega-corporations.

GigOptix made $32.9M in 2014, a 14% increase over 2013. Take that 14% growth, multiply by 2 to get a P/E of 28, and realize that the E was nearly zero so the math falls apart.

That’s why I look at Price to Sales for small companies. If you want the details, go buy my book.Dream Invest Live cover In the meantime, I use a Price to Sales of about 6. Revenues ($32.9M) times 6 equals $197.4M That’s my estimate of GigOptix’s worth. Even after the good news, the market thinks GigOptix is worth $32.8M (based on market capitalization). Divide my estimate by the market cap and get about 6. If the market drove GIG from today’s $1.19 up to $7.16, I’d think it was finally recognizing GigOptix’s current conservative value.

But, it didn’t. GIG barely moved. About 118,000 shares traded, which sounds like a lot, but at $1.19 that’s only $140,420 traded. That’s not even a real estate deal.

And yet, that’s what I’m watching happen to many of my stocks, most of which were bought with the strategy of buying small companies and selling them after they are large.

MicroVision had good news too. A product that they are key to (PicoAir & PicoPro) inspired the following tweet; “The initial demand for #PicoAir far exceeded our forecast. We are working hard to get the devices to you ASAP. Thank you for your support!”

– @Celluon News like that should be news. MVIS was even quieter than GIG.

I sit back and watch good news go unnoticed, except by the loyal stockholders, and I wonder how much has changed. In rational markets, stocks move based on math and logic though with some psychology shifting the outcome. In irrational markets, emotions rule, the crowd rules, and math and logic are inconveniences. The markets are hitting record highs, but the markets represent the large companies and therefore the large portfolios. Every large company started small. Does this mean that these small companies will eventually reach such large valuations, or has something fundamentally shifted such that they won’t get that chance? Dendreon’s bankruptcy reached a critical point today too. They were small, disruptive, and technically successful; but failed financially (and arguably through purposeful intent.) Has the corporate, industrial, and financial immune response developed an actively negative reaction to anything new? Or, is it just a matter of time before the good news filters through?

When I bicycled across the bridge to Key West after riding across America, and when I stepped onto the bridge over Aberdeen’s train tracks after walking across Scotland I did so alone and relatively quietly. Both of those accomplishments deeply improved my life, regardless of the size of the celebration. The changes just took time to filter through. Maybe the same will happen here, as we pass through this investing phase.

I’ll quietly lift a glass to all three, GigOptix, MicroVision, and Dendreon for different reasons; and hope to have a more boisterous party some time soon.

PS To the fellow MVIS shareholder who was planning ahead, when in doubt, Glenlivet and the older the better. Some good things just take time.

Posted in Uncategorized | Tagged , , , , , , , , , , | 2 Comments

Dance When You Can

Posted on February 8, 2015 by Tom Trimbath

Swing, waltz, salsa, or just shaking it. Has it really been that long since I blogged about something light and easy? The local children’s theater held a dance-a-thon as a fundraiser. The last full day I took off was Christmas, and my next day off is hopefully some time before the end of February. (My Rule of 7 continues.) The holidays, and then the start of the new year are hectic times. We’re living in fascinating times. The effort and the issues are wearying. Life isn’t just working and surviving. Life is also about the dance.

Personal finance is personal, and lately my personal life has been driven by the need to make enough to pay the bills. The good news is that I’m almost making enough; but almost isn’t enough. The other good news is that various stocks in my portfolio supposedly can do well in 2015; but five weeks into the year they haven’t. My other blog, Pretending Not To Panic, is gaining in popularity; and the research for it continues to uncover reasons for great optimism and great pessimism. Sorting it all out has given me a headache that was exacerbated when I tried to decide which timely topic to write about tonight. It took a bit of homemade beef stew and a nice glass of boxed red wine to remind me that sometimes the most important thing to do is to forget to do the things that seem important.

When I dance, I smile. That’s simple enough. Not everyone likes dancing, but I do. Throw a multitude of issues at me and, except while in the depths of my personal financial downturn, dancing with a partner makes me smile. The rest of the day can be intense analyses or tedious research; but, eventually that has to be put aside. What is really important? Being responsible is really important; otherwise, there’d only be a lottery ticket’s chance of me paying my bills. Being responsible is more than just responding to money issues. Being responsible to community, to other individuals, to myself, is also important.

Responsibility isn’t just altruism. Society and civilization survive because we respond to each other. If everyone only worried about themself then everyone would have to be a farmer, rancher, doctor, policeman, mechanic, and self-schooled in a long list of craft skills.

Responsibility is, however, also about self. If a person doesn’t take care of themself, they can’t take care of others. The harder I work, the longer I go without a break, the less effective I become. Health, relationships, and attitude degrade when the only thing in life is survival. Take it too far and words become more difficult, simple math requires a calculator, schedules are missed. Fortunately, the solutions aren’t expensive.

A couple evenings ago I went for my walk. The Powerball lottery was up to over $300,000,000 and I had a ticket. (Now it is over $400,000,000; so, I guess I didn’t win the jackpot.) As I walked I thought about how I would indulge myself. It was a fun exercise, especially when I realized that it would cost far less than $1,000,000 for my indulgences: a campfire by the beach, I already do that in my neighborhood; a long hike or ski trip, which might cost a few hundred for some new gear; a long schedule of massages, which cost less than many people spend on dinner. I enjoy my own cooking, so maybe a nicer kitchen and better ingredients. I enjoy talking with my friends, especially when the topics are substantial; so, maybe some extra wine or whiskey as lubricants. (Hey, this is Washington. We can add cannabis to the conversation.) The greatest indulgence is the one I evidently least afford right now and that is time. Having the bills paid, the debt eliminated, the repairs completed would ease my mind and my time so I could sit and enjoy whatever.

Oh yes, and there’d be dancing. There’d be dancing because, as I said above, when I dance I smile. Finding that one simple thing that creates that reaction is precious, and highly individual and personal. Amongst the great concerns about the planet and its people, we lose something if people don’t also find what makes them happy. I’m lucky. Most of what makes me happy are things that aren’t things. Experiences are marvelous. A few things may help them happen. (I really appreciate good dance shoes.) Experiences are actions. They take time. Life is nothing but time. Experiences are living.

My needs and wants may disappoint the advertisers, but they can go sell things to people who find joy in things. Go back and check my review of the Super Bowl ads. Very few of them made a direct connection between a thing and joy. They make allusions to enticing notions, but almost everything uses sex to sell, and almost none of the things had anything to do with sex. At least the Fifty Shades of Grey and Victoria’s Secret ads weren’t as much of a stretch.

There’s a storm coming in tonight. The rain isn’t here, yet. I’m going to close now, so I can spend a bit of time doing something I enjoy. The issues and concerns probably won’t change much (though earthquakes do happen, so you never know). I suspect the bigger change will be in myself. And, who knows? Maybe it will start raining and I’ll start dancing. As long as it makes me smile.

Posted in Uncategorized | Tagged , , , , , , , , | 1 Comment

Real Wealth Inequality Worries

Posted on February 4, 2015 by Tom Trimbath

A cascade of thoughts can become an avalanche of insights from one piece of information. I’ve been tracking wealth inequality for years. Data drives most of the thoughts, but after consuming dozens of articles and videos it only takes one extra story to crystalize my concern. The snowball that started the avalanche was a local NPR story. The insight convinced me wealth inequality is different this time, despite what some say it isn’t just a bunch of poor people complaining, and the situation is getting extreme enough that something is going to change whether by choice or chance.

The global story that caught my attention was the fact that about 80 people have as much wealth as the poorest 3,500,000,000.

The local story that caught my attention was that less than 5% of the people moving to Seattle are considered middle class.

We become numb to data. If we weren’t, Federal spending and personal priorities would shift from destruction and junk food to construction and healthy habits. Eighty people have this. Five percent fit here. Just numbers. Trends can be ignored, too; but maybe I notice them more than most.

Eighty people own half the world’s wealth. Four years ago it was 388, and we were shocked. Before that it took so many to not warrant being counted. Unfortunately, at this rate, in four years half the wealth will be owned by 17 people. I doubt that it would ever get down to 1 person owning more than half the rest of the species; but ask yourself how few would it have to be before you thought the situation should change.

Only 5% of the people moving to Seattle and King County are middle class. That’s odd enough, but if middle class is a narrow definition, then a small percentage makes sense. Middle class was defined as making $35,000 to $125,000 per year. That’s a broad range. The good news is that the area is attracting a lot of high income jobs. The bad news is that the majority of new residents make less than $35,000.

As wealth inequality increases, and as income inequality increases America loses its status as a classless society. When there was an even distribution of income and wealth, there was mobility, hope, and a reason to work harder. A chasm, a moat, is widening that can’t be crossed with attitudes and stereotypes that were valid ten years ago.

The main reason I am worried about the economy is that, as wealth accumulates, spending stagnates, businesses stagnate, jobs stagnate, incomes stagnate, the country and the world stagnate.

Give a billion dollars to a multi-billionaire. If they spend it, the only way to spend all of it in a year is to buy very expensive things from other very rich people. To spend a billion dollars in a year a person has to spend $2,739,726 every day. Buying a sports team isn’t enough. Buying companies works, and if done right, creates more wealth – which exacerbates the inequality. The greater likelihood is that the billion won’t get spent, and the life of the multi-billionaire wouldn’t change.

Give a billion dollars to a thousand people and they each get a million. It’s possible to spend a million. Many would. Many would also say thank you and reinvest it because so few folks have retirement accounts. Much of the money would get spent, and many people could relax a lot more. There might even be a vacation in there.

Give a billion dollars to a million people and they each get a thousand dollars. A million lives would create a million variations. For some, a thousand would be nice, but soon blends into an existing portfolio. For some, a thousand would let them take a short vacation, or fix the house or car, or pay down a bit of debt. For some, it would be the greatest windfall of their lives and would arrive just in time for some to avoid bankruptcy, foreclosure, default, homelessness, or hunger. A lot of the billion would be spent.

Give a billion dollars to a billion people and most Americans wouldn’t notice, but large parts of the world’s population would immediately put the money to work. Very little would languish.

Wealth is accumulating. Productivity is up, but wages are flat. Profits are up, but wages are flat. Jobs are up, but many are for lower wages, or temporary, or part-time, or without benefits.

The trend is continuing. Wealth continues to accumulate. Luckily, at least the American part of the story happens within a representative democracy. With enough votes, anything can happen; and while the lower classes are growing, the power remains elsewhere. A few of the ultra-rich are advocating for change, but they are in a minority within their ranks.

Ironically, a possible source for change may come from the recently ultra-rich. The ultra-rich shrank from 388 to 80, which means there are 300 people who are now excluded from that club. Just a bit poorer than them are the multi-millionaires who may be realizing that they won’t get to be billionaires. They don’t need the money, but humans have other motivations. People with tens of millions or more are also more likely to be able to exercise the money is speech is power process that is operating in America’s government and media. While the greatest collection of votes may be in the lower class, the greatest collection of political power may be in the bottom 99% of the 1%.

Historically, there have been very few peaceful resolutions of wealth inequities. I look forward to hearing examples. Asking around, the most common example I hear is the French Revolution, the source of the fictional “Let them eat cake” and the source of the very real guillotine. Wealth redistribution is not a case of someone writing billions of checks or some hacker redistributing cash. Much of the wealth is in real estate, stocks, bonds, and commodities. Even if the wealth of Microsoft was redistributed by giving one share of MSFT to everyone one the planet (with about a billion shares left over), everyone would get about $42. The stockholders meeting would be awesome and could stand in for the United Nations. It is unlikely to happen. The wealth has taken decades to accumulate. It might take just as long to distribute.

My worry is that I see no significant effort to curtail the trend; the trend accumulates wealth outside the mainstream economy; any movement of that wealth tends to be from portfolio to organization, not from person to people; and that a peaceful resolution has no historical precedence.

The timing is not academic. At this rate, with potentially only 17 people owning half the wealth in four years, the imbalance within lives and the economy should become more pronounced. I have a difficult time believing that political pressures or revelatory compassionate responses of the ultra-rich will move faster or prove stronger than the possible populist desire for dramatic change.

Pardon me as I sit back and continue pretending not to panic.

Posted in Uncategorized | Tagged , , , , , , , , , , , , | Leave a comment

The Real Super Bowl Competition 2015

Posted on February 1, 2015 by Tom Trimbath

“A toast to the Seahawks. I heard that they … ” lost. Just a one word edit from last year’s Super Bowl post. Ah, the power of words. I worked through the game, or at least most of it. So it goes. Some day I’ll sit in on a Super Bowl party, but evidently that’s at least a year away. I quit watching in 1982 when I realized I got incredibly emotional about the Steelers in a sport where, on average, every team loses half the time and wins half the time. The ads, however, intrigue me. Just like the parties, they’re insights into what people care about, or at least what people are told to care about. So, join me as I pour myself an after work cocktail, and sit and sip and watch this year’s ads. What issues, trends, and styles are winning and losing this year?

Consider this. If there were no ads, would there be a Super Bowl? I like to think that yes, there would be a Super Bowl and professional football, but there would be far less money involved. Let’s see where the money’s being spent.

(Thanks to YouTube for providing a channel for the ads that doesn’t require watching or recording the entire game plus the pre-halftime-post game shows.)

  • Dig: Armageddon sells. Oops. Apocalypses are popular? Oh well, maybe that’s why I am not alone in Pretending Not To Panic.
  • T-Mobile: Frugality fights wasted and expensive phone contracts, with a vulture. No wasting money sells, and the bad guys are vultures.
  • American Family Insurance: Things will get brighter, because dreams are all some people have. Is it already this dismal after only three ads?
  • Microsoft: Empower through technology. Courage in the face of reality, which suggests reality requires courage. Oh dear.
  • Mercedes-Benz: Excellent production values. And the value isn’t in the quality of the car but in racing faster than the competition. And the tortoise gets the hare?

    Come on people, let’s get a positive message that doesn’t start from a downer.

  • Fifty Shades of Grey: Well, I certainly didn’t see that one coming. And now for some escapism.
  • M&T Bank: Persistence and hard work can make you a football star. And how many people make the cut who also had persistence and hard work?
  • Furious 7: And now for more escapism, but this time with exploding cars.
  • Geico: Short, simple, and sorry I missed the gecko.
  • Pepsi: Evidently the best way to sell colored sugar water is to not mention the colored sugar water – but show the logo.

    At least we’ve gone from downers to irrelevant.

  • Toyota: Great message, nice production, good to hear Ali. Don’t know what it has to do with a Camry, but, ok.
  • Jurassic World: Don’t mess with Mother Nature. Wasn’t that the message from the first movie? Neat spherical cars though. Camry’s?
  • Kia: Yes! 30mph and fireworks and breaking convention. Very refreshing.
  • Loctite: Go ahead, make me laugh. Thanks, I needed that. And they actually showed the product doing something useful. Nerd on!
  • Doritos: Snack food gets the girl, and her kid. Silly man; but, maybe he wants a ready made family (if she’s available.)

    We’ve gone from irrelevant to at least one that was useful.

  • Minions: They weren’t really trying to profile sports fans, were they? Keep your clothes on, people; unless you’re in Fifty Shades of Grey. (See above.)
  • Toyota: The pendulum swings as “men’s messages” return. And have something to do with Camrys.
  • Nomore: Did they knowingly place these two ads together? Tasteful, powerful, necessary.
  • Nissan: Dad’s the message again.
  • Northrup Grumman: Selling bombers and spy planes … to Congress via the voters?

    Probably the most masculine set of five (arbitrary selection) which points out that advertisers may have caught on that women watch the show since so many ads aren’t macho.

  • Odyssey: Who is chasing her? The drones? In which case, fear the machines. The government? In which case, fear the authorities. In any case, fear and persevere.
  • Dodge: Actually listening to the wisdom of experience? Marvelous! Curious how many of them have their licenses. If they don’t Dodge should give them a car and a race track and let them have fun.
  • McDonald’s: Brilliantly simple message and gimmick; paying with love. I’m interested to hear what the Sharing Economy will say. Now, about the food…
  • Pitch Perfect 2: Sequels are in. So are musicals. Musicals?! Fun. Wasn’t the last time they were popular was during the Great Depression?
  • Bud Light: Pac-Man for real. Fun game. Amazingly expensive. Now, about the beer…

    Such an interesting mix that I’d like to year what the centenarians have to say about tech dangers, the power of live, musicals, and good food an good beer.

  • T-Mobile: Reality. Being able to call from your crawlspace is handy. What stories she has from down under…
  • Skittles: Arm wrestling for a lemon Skittle. Whatever.
  • Sprint: Cost is more important than coverage. Fun video. Looks like someone intruded in the creative process for the last third without adding anything.
  • Ted 2: And now for something totally frivolous.
  • Terminator Genisys: Wow. A movie that’s a sequel. How uncommon. (Sarcasm, in case you couldn’t tell.)

    They won’t leave a mark. (But now that I’ve written that I’ll think about them more, so maybe it is effective.)

  • Wix: May be one of the few that actually addresses what the product does. Making a good web site and making a successful business are two different things.
  • Blacklist: A TV show where things blow up.
  • Snickers: Now, that’s a version of the Brady Bunch that would be fun to watch; making sugar crashes are more interesting than car crashes.
  • Fiat: The fun a little blue pill can do in Italy. Did Pfizer pay for half the ad?
  • Lexus: Be seen. Be heard. Make some noise. Well, I’ll grant you the car can do that. But what does an SUV have to do with a parking garage and very urban people?

    At least some of them are entertaining. But, how many more are there? The game didn’t last this long, did it?

  • Victoria’s Secret: Who was this ad for? Not that I’m complaining. At least they showed their product.
  • The Voice: That must be a reality show that probably doesn’t look a thing like the ad, and definitely doesn’t give me a reason to watch.
  • Redfin: Hey. Be careful. You also showed something about what your company does. That’s not usual.
  • Tomorrowland: Disney does an ad right. That’s one of the few that actually made me interested in what they had to sell.
  • Doritos: When pigs fly – do they get parachutes?

    I’m getting weary, but a few bright moments are taking me through.

  • GoDaddy: I may not like their product or service, but I like their ad. Keep in mind that I worked through the Super Bowl.
  • Budweiser: A beer ad about beer? Is this a trend? Congratulations. I’ll stick my beers that are so dark you can’t see through them.
  • Budweiser: A beer ad that barely mentions beer? Well, thanks for the entertainment.
  • Game of War: I like games, and I greatly suspect the game doesn’t look a thing like whoever that woman was.
  • Avocados: A fruit, or is it a vegetable, – hey, real food gets an ad! That’s a first, and sad that it’s so alone.

    Those five, er four, could make a set: an entrepreneur working late eating nachos with guacamole and a beer then taking a break to play a game. It could happen.

  • T-Mobile: I know Kim Kardasian is famous, but I don’t even know how to spell her name.
  • Coca-Cola: Another message that we need more love in the world. I wonder how many IT people shrieked at the thought of colored sugar water pouring into their servers and routers.
  • Dove: Care makes a man stronger, and I’m pretty sure the cleanliness of a person’s skin has little to do with what’s in their heart and mind.
  • TurboTax: What does the Tea Party think?
  • Carl’s Jr.: Interesting product, but really, a model biting into a burger that’s probably a week’s worth of calories?

    Best five for displaying a disconnection with reality, regardless of their products and services.

  • Weight Watchers: Courageous to stand out amidst the fast food ads.
  • Always: Changing the definition of “Like a girl”. Another message ad.
  • BMW: An ad for people perpetually behind the curve?
  • Newcastle Brown Beer: Not about the beer, but unabashedly bashing branding.
  • Jeep: Play responsibly, and look beyond borders.

    Messages, messages, and challenge convention – evidently.
    I’m getting tired.

  • GrubHub: Ordering food without having to deal with people. And that’s good?
  • Microsoft: Courage in the face of reality. And use software to manage it.
  • M&T Bank: Somehow landscaping for cemeteries is tied to banks.
  • Clash of Clans: Live the game, in your local coffeeshop, because where else can you succeed?
  • Carnival Cruises: JFK sells the sea, and makes me think a sailboat is a better idea.

Disconnect. And I’m about ready to. There must be an end to this commercialization.

Hallelujah! I made it back around to the beginning.

Here’s what I’m left with.
Microsoft says it best, Courage In The Face Of Reality. There’s a pervading sense that where we are is something that demands perseverance. Life needs fixing. That’s not just a Microsoft message, and it may be inherent in every sales pitch; otherwise, why buy anything? The most positive message was from the centenarians. Live in the moment. Appreciate what you have.

The majority of the rest of the ads sell the idea that we should ignore reality through escapism and fantasy.

Rarely does an ad sell the goods or services the company sells. It must be tough selling cars because they so rarely describe something they do that the others don’t. Many products only distinguish themselves by their branding, not because they are obviously better than their competitors. The loudest defense of a brand is that everyone else buys it so you should too.

I just watched 60 ads. That’s possibly as many as I’ll see for the rest of the year since I disconnected my television. Maybe the YouTube ads will make up the difference, but it will take months. Stepping away from the hourly onslaught makes most ads look sad and silly. As television is replaced by streaming media, and as awareness grows of our reality, many brands that rely on old media and old habits will be replaced as well. The celebrity couple in the electric BMW will probably be even further behind because change is accelerating. Microsoft seems to understand that, as do the companies with various progressive messages; but I feel as if I just devoted more than an hour to witnessing the birth of dozens of anachronisms. l wonder what the ads will be like next year.

Posted in Uncategorized | Tagged , , , , | Leave a comment

Another Early Boeing Pension

Posted on January 28, 2015 by Tom Trimbath

I officially signed up to be a Boeing pensioner, I think. Pensions may be something that has to be explained to young children in a generation or two. Maybe not. As of this week, years before I expected to begin receiving monthly payments, I clicked boxes and answered questions so that, about a decade before my plan, I will be receiving my Boeing pension. Optimizations based on conventional wisdom would suggest otherwise, but reality is more important. Working seven days a week at several jobs has not been sufficient for this ex-aerospace engineer to pay the bills. Important things are rarely done for only one reason, and that’s true here, too. The prominence of those other reasons wasn’t evident until after I hit confirm.

From 1980 to 1998 I was an engineer at The Boeing Company, a place where the The had to be capitalized. People within the company may appreciate the distinction between the titles: senior engineer, lead engineer, aerodynamic stability and control, flight systems, technical coordinator, customer engineer, etc. To people outside the aerospace industry, I was one of the people who help figure out how planes, rockets, and satellites fly or orbit; and how to deal with the incidents when things don’t go as planned. It was fascinating work, and I can fill hours of talks with properly sanitized anecdotes. The unsanitized anecdotes are saved for those who understand the jargon and realities of vehicles flying far faster and higher than evolution naturally allowed. In 1998 I quit, or retired, or left the company voluntarily during an auspicious opportunity. Retiring at 38 inspired others to inspire me to write my book about personal finance, Dream. Invest. Live.Dream Invest Live cover

I thought I was retired, labeled myself semi-retired, and was about to drop the semi- when my Triple Whammy negated the semi- and the -retired and threw me back to work. That transition has been chronicled in this blog, a long writing self-imposed writing assignment that has seen a transition from maybe having enough, to watching it fade away, to fighting to bring it back.

The fight’s been long, painful, unhealthy, and difficult – and is unresolved. My consulting and writing business has grown to within 17.5% of what I need to pay all of my bills including taxes, as long as I don’t spend much on repair or maintenance. Close is good, but I doubt the IRS will consider that sufficient if they’re the one bill left unpaid. There are an amazing array of potential projects, many of which have suggested hiring me for full-time employment – after they get their funding. There is an amazing potential within my portfolio, (check my semi-annual exercise), but the reality is that the companies’ news hasn’t been delivered. My savings are almost gone. My IRA is about 3% of what it was at its peak. My attempts at getting jobs are met with interest but not commitment. My house didn’t sell. The only source of that remaining 17.5% is from my pension that was designed to be accessed in a bit less than a decade from now. My bills can’t wait.

Personal finance is supposedly layers of math and logic, but emotions intrude because we are human. Many people tell me that they have enough money, but it’s locked up in an IRA or a house or some other investment. I understand the feeling. That feeling, however, is artificially induced by the penalty clauses or costs of accessing assets and incomes that are in our control. IRAs are meant to be used in your 60s (your specific age limit may vary), but they can be drawn upon by paying penalties. Houses and other assets can be sold, but you need to replace one housing solution with another. There is a middle ground between assuming assets and incomes aren’t available, and having free and easy access to everything. I’ve already spent much of my IRA while building my business, but it meant selling stock and then paying a penalty to pay my bills. The option was to be homeless and hungry, but with an IRA. I’ve tried selling my house, but the numbers suggest that staying where I am is cheaper than rent, while also holding onto an investment. I’ve delayed signing up for my retirement because of the penalties for accessing it early, but when left with only one reasonable choice choosing becomes easy.

To any Boeing ex-employees who are 55 or older, congratulate the company on making the process relatively simple. (Though I had to call their help line three times, and had to ignore two warning messages to complete the process.) The emotional hurdle was tougher. (Which is why I was glad to know someone else who got theirs early.)

Photo on 2015-01-28 at 18.41
Emotionally, receiving a pension carries imagery of old age, dependency, and a limited time offer. I balked for months because of that ingrained judgment. Money, wealth, income all carry emotional import that we as a society have infused in our culture. Money, wealth, and income are based on a notion of currency that is abstract that we created. I’ve spent four years trying to find sufficient income to sustain a very frugal lifestyle. The influence of emotional and societal judgments shrinks considerably when the list of choices essentially comes down to one. (There are those lottery tickets and risky stocks, but that’s nothing to base a plan on.)

As I filled out the forms and analyzed the options (I chose Accelerated Single, which sounds more like a lifestyle choice than a pension plan) I realized that accessing my pension now was comforting for more reasons than just paying my monthly expenses.

Every day I blog about “news for people who are eager and anxious about the future”.

PNTP

PNTP

(Pretending Not To Panic – my other main blog) Instabilities in our financial system convince me the financial world is due for a massive change. The assumptions behind my 40 year mortgage may be valid for year one, but are highly doubtful for year thirty nine. Waiting almost a decade for full maturity of my corporate pension may be waiting long enough for a fundamental shift to invalidate a supposedly secure commitment. Getting the money now is far more valuable than risking years of uncertainty for a small eventual increase. Besides, income now helps pay off double-digit credit card debt while waiting for my pension benefits to mature risks losses from inflation for the small price of a small effective annuity investment return.

I’m not advising anyone, except myself, to do anything. Personal finance is personal. I do suggest, however, that you check your assumptions about all of your assets and potential incomes. Are they really “locked up”, or were you just taught to think so? If you have more than enough, none of this may be an issue; but, considering that 1 in seven Americans are in poverty, at least some of them may have options that are more prominent than they imagine. Emotionally, I feel as if I capitulated to circumstances. Logically, however, I think I may have made one of my best decisions. Stay tuned. The first check supposedly arrives on April 1st, Fool’s Day and just in time for Tax Day. The story continues.

Posted in Uncategorized | Tagged , , , , , , , , , , , , , , , | 2 Comments

Once More Unto DNDN Q

Posted on January 23, 2015 by Tom Trimbath

I bought a stock. Boring, some will say. DNDN has never been dull. Years ago I held more than enough shares – if it reached my price estimates. Since then, the company, Dendreon, has lived a story of trials, triumph, turmoil, and possibly that financial tragedy called bankruptcy. One story hasn’t changed since they received FDA approval for their cancer treatment; the technology works. Financial fundamentals tell one story. Technical fundamentals tell another. The risk versus reward comparison is almost at lottery levels; but, great analyses aside, I was able to buy a lot of stock for less than some people will spend on dinner tonight. Personal finance is personal, which means it is always a story, or it isn’t about a person’s finances.

My history with DNDN is long enough for a book, but for the most recent episode read the most recent post. Follow the links or click on the tag, for the details. The quick story is that, as usual, I followed my investing strategy by buying into a local corporation with a disruptive product or service before it met the market, held the stock as it rose – and then watched it implode counter to logic. As it dropped I had to sell to pay bills, first in the $40s, then closer to $4. Almost had my house go into foreclosure. And, am now working my way back out of my financial insecurity. I have reached the point where some untouched cash could be touched. I bought a bit.

Dendreon developed a technology that helps the body’s immune system recognize there is work to be done against cancer. The first treatment approved by the FDA was for prostate cancer. The last time I checked, the treatment worked, and was demonstrating improving efficacy as more data came in. The company should be massively profitable considering a success in the War Against Cancer. Instead, through mismanagement, bad luck, malevolent forces, or over-enthusiasm, the company took on too much debt while the revenues didn’t meet expectations. The stock went from about $5 before approval, to over $50 after approval, to $0.152 as it sits on the cusp of bankruptcy. And then, they had a quarter where they had positive cash flow. That got my interest.

Buying and selling stocks benefits from prudence. Rarely does a trade have to happen within minutes. Even stocks that are rising or falling, usually do so slowly enough that there are days when they languish. I’ve been considering this trade for days based on the recent news about the cash flow. I wrote about it, listened to comments and advice, and welcomed the focus that such a consideration brings to my normally passive trading. The amount of effort for these few shares is nearly the same as when I was investing months of living expenses. The same logical questions must be asked. The analyses of the company’s value don’t change. The main difference is the impact it has on my cash. There’s a longer pause whenever I spend any money after my Triple Whammy that was partly triggered by DNDN’s initial collapse.

I bought shares of DNDN; actually, DNDNQ because of its diminished status.

Check your emotions. Taboos and conventional wisdom are ingrained and can trigger effects out of proportion to the causes. I spent less on DNDNQ than people will spend on dinner, or a smartphone, or a pair of shoes, or even groceries. My holiday grocery bill was larger than my new position in DNDNQ and it didn’t induce days of analyses and consultations. It took me longer to realize that than it did to analyze the company’s potential.

My style of investing, Long Term Buy and Hold (LTBH), is not for everyone. The stock markets since 2009 are evidently not for everyone, because the total number of investors is down. People don’t trust the market. The markets are setting records, but have left many of individual investors behind.

Historically, investing in the financial markets has been essential to a retirement plan; yet, fewer people are buying stocks and bonds. Unfortunately, many people I know don’t trust the other markets, either, like real estate and jobs. Housing may be coming back, but attitudes about a house as an investment have changed. Mortgages are treated with more caution. Biggest isn’t always best. Jobs may be coming back, but many are finding that hard work means stagnation instead of elevation.

With fewer appealing options, I wonder if lottery ticket sales are up.

DNDN(Q) and other such stocks are attractive to many people who are on a financial edge. If working hard means standing still, and if buying lottery tickets is more likely to provide daydreams than security, then maybe there’s something in the middle. That’s where I am seeing people investing. If your reaction is somewhat of a revulsion, good. Their actions, however, aren’t driven by greed but by necessity. If a few hours of work, or their monetary equivalent, won’t make a difference; and if buying the equivalent in lottery tickets is most likely to produce worthless paper; then buying a very risky stock can seem attractive. The fact that such stocks are attractive is a commentary on our current financial situation more than a reason for personal judgments.

It feels good again to be invested in something that is making lives better. I invest in disruptive companies because there are many ways life can be made better, and if I have that attitude I should see if I can profit from my optimism. Check back next month to learn if I should’ve spent the money on groceries, or if I’ll be able to feed myself for a long time based on the value of the stock.

Posted in Uncategorized | Tagged , , , , , , , , | 2 Comments

MVIS And DNDN Again Maybe

Posted on January 21, 2015 by Tom Trimbath

Conservative investors, look away. Don’t read any further. I am considering a trade between two stocks that are so far off the conventional investing radar that the only comfort I have is a familiarity with both of them. MVIS and DNDN are derided for many reasons, with their low stock prices as proof enough for most. And yet, I should pay some respect to my analyses and logic, regardless of cautionary advice. Personal finance is personal, human, and always messy, regardless of the overly rational way we paint it. I might, might, sell some MVIS to buy some DNDN. I can already hear the groans.

The companies behind the stocks have stories that are more tragic mysteries than intriguing adventures. MicroVision has never made a reliant profit, or a reliable product; which may be why MVIS is trading at about $2. Dendreon has a viable product, but was either too ambitious, poorly managed, or improperly targeted by competitors to the point that the company had to file for bankruptcy; which is why DNDN trades at about $0.15 .

The market’s votes are decidedly discouraging.

The news for each, however, is somewhat encouraging.

Personal finance is messy, and many people would point to my current situation as proof. Depending on how you want to calculate it, my household net worth has fallen either 98% or 99%, partly from the actions of the inaction of holding MVIS and DNDN.

I no longer own any DNDN. Parts of that tale are spelled out in a variety of posts ending with Dendreon Bankruptcy. I continue to own the majority of my shares of MVIS, with the latest episode of the saga spelled out in Mysterious MicroVision. Each summary is so complex that I respect my limited time this evening by pointing you to the summary and string of posts in each.

Both companies have disruptive technologies. From what I can tell, Dendreon has the most successful prostate cancer treatment that is FDA approved, with a technology that can extend to enough other cancers to account for the majority of cancer patients – all with relatively benign side effects. MicroVision has a mirror on a chip that can dramatically change a large percentage of the electronic displays sold, and has finally cleared the technical and logistical hurdles that have constrained it for decades. Their solution uses less power, fewer resources, takes up less volume, and produces a higher quality image than any other projector that fits in your pocket – at least as well as I understand the situation.

Rationally, the markets for each are sufficient to rationalize stock prices in the hundreds of dollars for DNDN, and potentially the thousands of dollars for MVIS. Considering their histories, there is evidence to suggest I’ve been wrong. Their markets, however, haven’t diminished. Their technologies have advanced. Dendreon has accumulated far too much debt. MicroVision has yet to provide quantitative assurance that they will profit from the market. Each, however, is poised to succeed at plans that looked far more reasonable in 2008.

The risk of buying a thousand shares in either case is less than what I’ve spent on a single vacation back in better financial times. The potential reward of owning a thousand shares in DNDN is over $100,000 for a purchase price of $150 (assuming DNDN goes to $100 and the shares are bought at $0.15.) The potential reward of owning a thousand shares of MVIS is the incredible sum of $1,000,000 for the purchase price of $2,000 (assuming MVIS goes to $1,000 and the shares are bought at $2.00.)

Have the various IFs dissuaded you yet? Have the various potentials overwhelmed any cautions? The IFs dissuade me, and yet the potentials intrigue me.

I know both companies and stocks as well as is reasonable. In each case, years of research have not been negated by their recent histories. Their products progress. Their markets progress. Their prices languish – except for some recent movements. Within the last two weeks, DNDN popped because the company reported a cash-flow positive quarter; MVIS popped because it may be included in a Microsoft device (highly speculative news). MVIS may pop regardless of Microsoft because in the next few weeks Celluon is launching a series of MicroVision enabled products that could mean people abandoning their PCs and laptops for the convenience of performing the same functions on their smartphones – a computer usage shift with similarities to the introduction of the iPhone.

If you try to buy either of these stocks, your prudent brokerage should display several red flags. I know mine does. And yet, I am considering a simple trade: sell 100 shares of MVIS to buy 1,000 shares of DNDN.

I already have enough MVIS if it pops up to a few hundred; a thousand would be a welcome and unnecessary excess. One hundred shares of DNDN popping to $100 wouldn’t send me back to retirement, but such an event would greatly ease my financial situation.

The range of possibilities is infinite. Will DNDN pop before MVIS? Will MVIS pop before DNDN? Will they both reinforce the market’s expectation and collapse, or will both or either succeed? I’ve sold thousands of shares of DNDN as the market and the price plummeted several years ago. I’ve held almost all of my MVIS shares because they’ve rarely been worth more than my DNDN shares. That situation has flipped. Dendreon is possibly turning towards profitability, or at least avoiding bankruptcy or privatization; but I have no shares of DNDN.

Personal finance and owning individual stocks must be simplified and sanitized as it reaches publication in books. I know. I had to do such editing for my book, Dream. Invest. Live. Dream Invest Live coverThis blog exists partly to chronicle the messy reality of analyses, history, emotions, necessities, and human nature that don’t fit into the generalization that is a book. I may not follow the writing dictum of the strong declarative statement, but I do hope I provide a picture of the conflicts and considerations behind a decision. Consider this post the before picture. Tune back in for the after – though after what, I am unsure. And that’s reality.

Posted in Uncategorized | Tagged , , , , , , , , , | 2 Comments

Representative Larsen And My Personal Finances

Posted on January 17, 2015 by Tom Trimbath

If you ever give a talk in a coffeehouse, be prepared to pause while the espresso machine shrieks and the barista calls out the drink orders. Rick Larsen, my representative in the House of Representatives in the US Congress, came to a local coffeeshop to give a one hour talk.IMG_0404 In a rare event, I attended. Even though I think the US government is somewhat anachronistic, the talk was so convenient that the cost of attending was minimized to the point that there would be some worthwhile benefit. (It happened next to coworks that I use as an office.) Regardless of politics, I am interested in the current economic situation of individuals and wanted to hear if anything was about to change. Maybe, if we’re patient, and we work at it – for those that have the resources.

I’m impressed with anyone who has held office, even if I don’t agree with them. For me, if someone can vote and doesn’t vote, their complaints are heavily discounted, especially if they take more time talking than it would take to mark and mail a ballot. If you vote, congratulations. That’s the essence of a democracy or an elected republic. If a person takes that next step and runs, they deserve a higher level of respect because they tried. If someone gets elected, they’re doing more than almost everyone. Granted, to get elected runs into a money issue and has led to the rich leading because they can afford to; and yet, they get credit for surviving what appears to be an excruciating process. At the same time, gaining my respect is not the same as gaining my trust or removing any criticisms.

Walk into a packed room. Try to summarize the nation’s issues in 15 minutes. Then talk with a bunch of strangers for almost an hour without knowing the topics, the agendas, and the histories publicly where everything you say can be dissected and possibly taken out of context. Not an easy job.

The topics he introduced were: Citizens United, Transportation (because he is on the committee), and – there must be something else from those first 15 minutes, but I can’t recall it.

The topics the crowd introduced were:
(My quick commentary is in the parentheses. For those familiar with my stockholder meeting notes, this doesn’t get the same treatment. Sorry.)

  • Income disparity (as something to fix, eventually)
  • Healthcare (I missed the reply. Sorry, but I am human.)
  • Social Security (where the question was phrased using the word genocide)
  • F-35 overruns (the military-industrial complex continues)
  • Syria et al (where he pointed out that extremists happen and don’t respond to logic)
  • TPP, Trans Pacific Partnership (where the audience was vigorous but he reiterated that comments were moot because nothing has been written yet)
  • Growlers (a local issue where the Naval Air Station’s practice flights are measurably painfully loud, and where he wants more data, and where I already decided to not live on that half of the island because the Prowlers were too loud)
  • Pipelines, both Keystone and in British Columbia (Jobs versus environment)
  • Coal trains (which is a jobs versus environment versus monopolistic railroads issue)
  • Seattle (which is not his district, but they care about him, he’ll care about them)
  • Ukrainian civilian bombing (where there was a cry for an outcry that’s missing)
  • Afghanistan and torture (where he applies skepticism in any hearing and some folks were more vigorous in their outrage)
  • 9/11 commission (Missed this one too.)

The quickest synopsis from my perspective: If profits are involved, action happens sooner. Personal finance issues are important and get addressed, but not as quickly. If money isn’t directly involved but data is, collecting more data seems to be the response. If the issue is more subjective than objective, then it is harder to deal with. That progression in topics probably wasn’t the intent, but it was my perception – which is necessarily subjective and therefore imprecise.

Regardless of the validity of my perception, it is what I have to work with. That is true for each of us. Regular readers have witnessed my issues with unemployment, housing, healthcare, securities irregularities, taxes, and a transition from frugality by choice to frugality by necessity. Pairing my list to what I heard today, little will change, and any change will happen far enough in the future that the current Congress’ actions are moot. I wouldn’t be surprised to hear that it will take about a decade to resolve most of these issues. I must find solutions within the next few weeks and months.

Being disengaged from my government is not a good sign. I suspect I am not alone. There are limited resources for the government and for me. That’s why neither of us can get everything done. Neither of us are as wealthy as we were. Personal finance can be a lonely task. When there’s a surplus, it’s easier to find help and options. When there’s a deficit, there’s a greater need for self-reliance and acceptance that there are many things that can’t be changed. I believe this is one reason the Sharing Economy is growing; informal community rather than organized government is more responsive. More sad news for a government.

Rick did a good job of fielding the questions, and yet the majority of people asking for change probably felt unsatisfied. If they thought something was getting done, they probably wouldn’t show up to cheer him on. They showed up to express what they thought wasn’t being heard. I know I left unsatisfied, but that also met my expectations; which is another sad commentary.

Personal finance is personal. Self-reliance has always been useful. Frugality remains powerful. Politics, at least until I have a significant surplus, will remain inconsequential. I’m just going to keep doing what I’ve been doing and hope something positive happens for this ex-aerospace engineer who has seen too many sides of America’s economic cultures.

Posted in Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , | 2 Comments

Social Media Is The New News Source

Posted on January 13, 2015 by Tom Trimbath

I waited for news and was glad for YouTube and Twitter. From January 6th through the 9th, the Consumer Electronics Show (CES) provided thousands of companies opportunities to show off their gadgets. I follow trends, but I am not a gadget guy – unless it is an awesome gadget. There was a chance that this year one of the companies I follow would reveal an awesome gadget. The company was quiet. Maybe their major customer would make a major announcement. As the days passed, very little news passed – officially. Unofficially, people were talking on YouTube and Twitter, an in blogs. Social media, the new news source, particularly for individual investors.

There was a good chance that MicroVision’s recent mystery would be resolved. In the first week of January a small Korean company, Celluon, released news of a projector that would fit in your pocket, and that MicroVision’s technology would be involved. Finally, news for MicroVision, and its stock MVIS. Then, the notice was pulled from the Internet. Maybe pressure from one of MicroVision’s large customers squelched the news so they wouldn’t be upstaged. Sony might have that much power.

CES began. Sony announced a variety of products in their keynote presentation; but without a mention of MicroVision. A mention may have been asking too much, but even the allusions to the technology were only directed towards prototypes and possible, not committed, products. No news.

Hello, Celluon. Now, they felt comfortable officially re-releasing the premature release. They posted the original text, posted videos, and started the stream of tweets. MicroVision echoed the basics. No videos. No tweet stream. They let Celluon do the work.

Searching for news is easy if you are satisfied with the official story. Thirty years ago, that was the only option, except for those who could devote their time and money to newsletters. Now, if there’s an official story, there are unofficial stories too. If an official story was expected and not delivered, there will be unofficial stories about that. Thirty years ago we in the US relied on ABC, CBS, NBC, and PBS – and newspapers and magazines. Editors were involved in every media. Now, anyone can produce news, they can produce it quickly, and we can receive it for free. The editor’s job of filtering the content, however, is ours. That is still much better than nothing.

If Sony had exalted MicroVision and sent MVIS to $200 I’d be satisfied with that news. Even $20 would be good. The lack of news may be what let the price of MVIS fall back below $2. The news from Celluon may be what helped it back above $2; but wasn’t enough to raise it higher. Such a small name has a small effect, until it proves itself. Celluon’s PicoPro pocket projector (not pocket protector) will be available by the end of January 2015. This is good news, but until the gadget folks get one and tear it apart to review it, there really isn’t any news.

Sony said little. MicroVision said little. Celluon said the most, but even that wasn’t much. I knew someone would be saying something, so I brought up my two favorite, unofficial, unfiltered, somewhat suspect, news sources: YouTube and Twitter.

People visit trade shows. Companies may have strict pronouncement procedures, but people post things for the fun of it, and maybe because it can be useful. In both Twitter and YouTube I’d search on the same names: MicroVision, Celluon, PicoPro (or in twitter-speak @MicroVision, $MVIS, @Celluon, and #PicoPro ). Visitors to the trade show posted tidbits and reviews. (Thank you, @PrimePremise.) Piecing them together, filtering out the obviously planted opinions, and watching in the backgrounds of the videos provided insights that may never reach an official outlet.

The good news. People seemed generally pleased when they played with the projector. That fact that it is always in focus is so seamless that it is easy to overlook, but they noticed – which tells me that focusing the other projectors is a problem for the competitors. The ease of use, the weight, the heat, the noise, the image were all so innocuous that they didn’t have to be mentioned. The PicoPro worked the way you want an everyday gadget to work, without a fuss.

The not so good news. Nowhere in the non-Celluon YouTube or Twitter feeds did I find a mention of MicroVision. Either the Non Disclosure Agreements are amazingly efficient, or there was nothing to say, not even about the prototypes described by Sony. This is like going to a family gathering and realizing there’s a cousin everyone is not discussing. Is the news so good that no one wants to jinx it, or is the news so bad no one wants to mention it? Even some non-committal tweets about how tired the company representatives were would at least humanize the event. Maybe they didn’t have much to do. I don’t know.

I use YouTube and Twitter for much of my news. The major news institutions are tending towards opinion and gossip and tending away from data and logic. YouTube and Twitter certainly do not enforce objective rigor, but they don’t stop it either. I can draw from the feed the pertinent and objective, flavor that with some subjective insights, and get a better feel for what is truly news. I do so for investing, but I also do so for world events, scientific breakthroughs, sociological trends. In the act of finding the central truth, I also get the ancillary environment.

MicroVision may not be doing much publicly to increase demand for their products or for their stock, but I can at least supply some of my demand for news by reading what others produce. Heavy filtering is required, but that’s the nature of our new news source.

Considering that, I’ve created a short MicroVision playlist on YouTube. Watch and enjoy, or at least learn.

Posted in Uncategorized | Tagged , , , , , , , , , , | Leave a comment

My Spreadsheet For Tracking My Stocks

Posted on January 11, 2015 by Tom Trimbath

Not bragging. Just saying. I’ve been investing for over 30 years. I started investing in about 1977. Thank you US Steel. Your stock helped me buy my first camera.Wind Prayer (And, thanks to my parents for showing me how to buy and sell.) The records of those early trades may only exist in the IRS’ files. It would be six years before I had a computer for tracking my investments. Since then, a spreadsheet has grown that tracks almost three decades of trades. I didn’t realize until recently that it might be useful for others. A friend asked for a copy as a template to build theirs. While I am comfortable including the summaries in my book, Dream. Invest. Live., I am at least private enough to not pass along the raw data. If the spreadsheet is useful to them, it might be useful to you; so, for the data geeks out there, here’s how I track my stocks.

A bit of an introduction first. All I am passing along are the column headings, because they convey the majority of the practicality of the spreadsheet. Most of the columns are simple data entries like buy and sell dates. Most of the math is simple arithmetic like addition and subtraction, with a bit of multiplication and division. The opportunities for compound interest calculations I leave to those who actually know enough to ask the question, because most of them already know how to perform the calculation, or at least how to get the spreadsheet to do that work. I don’t find fine detailed analyses to be necessary because a trade was either obviously good, obviously bad, or close enough to market performance that luck could explain much of the difference.

Okay, a bit more of an introduction. As I’ve said before, I am not a financial professional. Your professional advisor or your broker should be able to provide you this same information. But. I found having such a spreadsheet to be handy because over the decades I’ve changed brokerages, or had them changed for me; and because the realities of life mean inevitable complexities that can’t be foreseen by automated and institutionalized external entities. Life happens.

Enough with the introductions. Here are the column headings as of January 11, 2015. The original file was simpler. The file will undoubtedly change, unless something bizarre happens. Bizarre happens. Stay tuned.

Column Headings

  • stock (Duh. Simple except that names change, even without mergers and acquisitions.)
  • date acquired (I use the trade date instead of the settlement date.)
  • date sold (I use the trade date instead of the settlement date.)
  • days held (To check for long term capital gains, and my curiosity.)
  • sales price (The total value of the sale, not the per share price, including cost of commissions.)
  • cost basis (The total price of the purchase, not the per share price, including cost of commissions.)
  • profit (For tax purposes, but also because I also want to see how I did in terms of real, spendable dollars.)
  • % return (This is the total % gain, regardless of how long I held the shares.)
  • simple ROI (I use the ridiculously simple version for Return On Investment based on the profit divided by years held because reality can be too complex. It usually is not as simple as buy a share sell a share)
  • shares bought (If life is simple, this is the number of shares bought. And yes, it can get more complex than that.)
  • shares sold (The shares sold may not equal the shares bought if I sell only a portion of them.)
  • total sale (Note, the sales columns come before the buy columns because I like to subtract from left to right so profits are positive. It is simple, but I aim for simplicity. The total sale may involve selling shares from different purchase dates – all of the same stock, of course.)
  • total buy (The total buy is the sum of the purchases when I bought the shares. If I am selling everything, I want to see the total purchase cost, regardless of trade date.)
    profit (For tax purposes, but also because I also want to see how I did in terms of real, spendable dollars. This column is for the total purchase and sale, not the individual positions as above. Frequently, they are the same.)
  • % return (This is the total % gain, regardless of how long I held the shares.)
  • splits (Splits happen, and many of the descriptions about simple calculations are because splits, mergers, acquisitions, and other weirdnesses can change the number of shares between purchase and sale.)
  • shares held (The list of shares in each position or purchase accounting for splits.)
    sum (The total number of shares held or sold, which is also useful for checking against the brokerage’s portfolio report.)
  • portfolio then (Shares can shift between portfolios as brokerages change, or as life events like rollovers or divorces shift shares.)
  • portfolio now (Shares can shift between portfolios as brokerages change, or as life events like rollovers or divorces shift shares.)
  • purchase price derived (The total of all the purchases divided by the total number of shares held, also known as the overall cost basis.)
  • average price (Once upon a time I had an idea for this column. What was it?)

Lessons Learned

  • Managing the data is necessary for tax reporting, if it is outside something like an IRA.
  • Brokerages are not infallible, and if a position was brought over from another portfolio, they won’t have complete records. As a responsible investor, I find it valuable to keep records that are as complete as is reasonable.
  • Current average of the averages of time between purchase and sale is 3.44 years. I’ve said I was LTBH. My current record was a sale after 6,500 days or 17.8 years. Sadly, that was a loss; but it taught me much about the realities of investing. (See the book for details.)Dream Invest Live cover
  • Despite my current portfolio’s performance (as of January 11, 2015) my overall performance is very encouraging. My strategy of investing in small, disruptive companies is risky enough to record dozens of losses, but the gains are substantially greater. Rationally, I recognize both possibilities: my patience will be rewarded, and past performance is no guarantee of future performance – in either direction.)
  • While I usually hold stocks for years, I’ve also sold if a stock moved faster than I thought it should, and I’ve also sold within months if I uncovered reasons to sell.
  • Patience is not always rewarded.
  • By buying long instead of selling short, I’ve never lost more than 100% and have gained far more than 100%. The record so far is in excess of 2,400%.
  • I started small, a few hundred dollars, and learned more from those trades than I did from any book or lecture.
  • Investing can be intimidating, but can be approached at any pace; and, given enough time, much can be learned.
  • Figuring out profits and losses sounds easy when the exact same number of shares are bought and sold without splits. I frequently buy more than once, and each time can be a different number of shares. I frequently sell more than once, each time involving a different number of shares. Profits and losses, therefore require averaging costs, profits, and hold times. In a portfolio that is nothing but purchases, each row can be a stock. In a portfolio with combined or fractional sales, it becomes necessary to add rows for subtotals and tracking selling parts of purchases. That’s complicated enough to warrant its own post; but, I’ll wait for feedback before devoting time to chronicling those details.
  • Past performance is not much solace if current holdings are performing atrociously. And yet . . optimism remains.

I don’t know if anyone else will find this useful. My friend found it so, and found it a bit intimidating because of the nuances induced by the realities of selling. Undoubtedly more sophisticated spreadsheets and analyses are available. I contend, however, that investing should only be a part of life, not an all-consuming devotion. I update my spreadsheet whenever I make a purchase or a sale. That means, on average, about five minutes per transaction. Considering my average hold time of 3.44 years, it means I don’t have to spend much time massaging the rows and columns.

My book is called Dream. Invest. Live. because investing is only a middle step between dreaming and living that dream. This spreadsheet is a stepping stone, something that helps me keep my balance, as I follow that path. I hope it helps you too.

Posted in Uncategorized | Tagged , , , , | Leave a comment