Cautious Positive Suspense

Posted on March 2, 2014 by Tom Trimbath

“That’s excellent news! High five!”, a neighboring friend and worker in a co-working space. Me, “Oh yeah. High five.” He used exclamation points. I used periods. He’d just overheard the second of two positive calls, both of which were worth celebrating, neither of which was confirmed or committed. He saw the possibility as a certainty. I watched myself cautiously consider the positive probabilities. After too many months of delayed gratification, I might finally have news to share, but not yet. But there is a potential for a very nice party, or two, or three.

Suspense? Yes. I’ll leave you in suspense. It is too embarrassing to raise the flag only to have to take it back down again. But blog about it I must. Part of the process of recovery is financial. Part of the process of recovery is emotional. The financial part will resolve itself via bank statements. The emotional part doesn’t wait that long. I’m chronicling both parts of the process.

Pardon the ambiguity, but that’s been a powerful characteristic of my financial journey. Lots of great possibilities, but for a long time there has been very little actualities. Except for lottery winners, the return to the positive takes time and involves too many unknowns.

I dearly want to tell you, and yet I won’t – yet.

What I will tell you is what happened. My view of the world changed. All of the worries and possible calamities remain, but I found myself diving into myself. I became a bit more self-centered and also began considering how I will reach out.

The self-centered part
I’m frugal. Yes, I had some cheap champagne. And the next day I took advantage of sunshine to wash the windows, mop the floor, and dust the bookshelves. I went shopping. And I bought food I haven’t bought in a while: parmesan, garlic, wine, and some pantry stockers like tomato sauce. I might even get around to ordering up some replacement parts for the truck, and taking it in for its oil change a bit earlier than usual.

The reaching out part
The home phone rang. I rarely pick it up because the mortgage servicer’s phone calls can upset me for hours or days. One “caller unknown” call had already gone by, so hours later I picked up the next. It wasn’t the mortgage company. It was a call center calling for donations for people having trouble with their heating bills. In the time it took for me to listen and say no, I already began reviewing how many charities I’d necessarily neglected for the last few years. As the money returns, it will be nice to help out yet again. (And I already know where and how the money will be disbursed. No reason to call.)

Both the pieces of potential good news could be delivered at any time, though business hours are most likely. But I am eager enough that I’ve been working from home, watching for the FedEx and US mail trucks because the one bit of news should be delivered on paper. (And my thanks to the responsive FedEx folks on twitter and to my local mail carrier for fielding my queries.) The other bit of good news should be in my portfolio; so, of course I am checking for press releases on a regular basis. Private emails have suggested great news, but it won’t matter until the rest of the world, or at least the investment community, knows.

In addition to the emails, every one of my stocks has been profiled in the financial news within the last two weeks. This hasn’t happened in years. Maybe the big money is finally steering away from the mega-corps and is looking for the next big things. Maybe I’ll have more than two bits of good news to celebrate.

I also hear that I am on the short list for jobs that I haven’t even applied for. Thank you. Let’s talk.

But for now, my story is pronouns and allusions. I can dream and plan, but I also have to persevere and persist. Keep working the way I’ve been working. Continue to live the new embodiment of my frugal life. But find those emotions, those exclamation points, that I’ve become so unfamiliar with. Reintroduce myself to that part of myself. And cautiously, get ready for a party.

Remnants of a previous party. Maybe I'll eventually get a dishwasher.

Remnants of a previous party. Maybe I’ll eventually get a dishwasher.

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Costs Up Benefits Down

Posted on February 26, 2014 by Tom Trimbath

I’m insured. Obamacare says so! Oops. No, I’m not. Oh wait, maybe I am again. Hours on the phone and I’ve noticed two consequences: their music is better, and I’m spending more money than I expected. Another thing has been apparent the entire time. For someone in my economic condition, insurance is an expense, not a benefit. But such disparities with the headlines are kept quiet, even by the people paying the bills. There are stories behind the optimism and the headlines.

You must get that feeling occasionally. Intuition tells you to do something. Intuition told me to call my new health insurer. It was a good thing that I did when I did. A day later and they wouldn’t have been my insurer, and there was nothing they could do about it.

It was February 24th and I hadn’t seen a bill for a premium (what a misplaced word) payment, and nothing had been automatically withdrawn from my bank account. Rather than let it slide and hope for the best, I called my insurer. About 20 minutes later I got through to find out that they have nothing to do with my payments or bills. Everything comes through Washington (the state) Health Planner. Click me over and wait for another 80 minutes. The last time I did that was more than a month ago. The music has improved a lot and they no longer interrupt it with useless advice and instructions. It was easy to forget I was on hold. Doing this without a wireless phone would be anchoring myself to a radius around a wall outlet. Because I had a hands-free, wireless home phone I was able to wander around and get the mail, load the laundry, and basically take care of a few chores while waiting.

Every time I’ve talked to Washington State’s customer service reps I’ve been pleased and impressed. The fact that I have to do so repeatedly is not a good sign, but hopefully we’re improving my situation with every call. This time, somehow, without any obvious action by anyone, I’d been dropped from the billing cycle, which also meant my coverage was going to be dropped – the next day. I knew the situation wasn’t normal when the rep had to put me on hold at least three times while he checked with various experts. A day later, no luck. It looked like we’d catch it just in time; but, he had so many options to legally relay that I was starting to worry about my phone’s battery. Finally, right after he came back again, a new option showed up on his screen. I asked the expedient question. If I take that option and pay with a debit card immediately, does that clear everything up? Yes. Are any of the options even remotely as simple? No. Then, let’s do that.

My health insurance has gone from a bit over $300 to almost $600, but then had a tax rebate applied that got it back to only $10 over my old bill. But not the first payment, which was the full amount, because I answered a question too precisely. The second payment, which was done over the phone, went well, but it was setting up for auto-pay, which I don’t like. The third payment was supposed to be via a paper bill mailed to me, but it never showed. I had to pay the full amount yet again, though April’s payment should be okay. Okay? So far, two months out of three have been at a price that would possibly threaten my ability to pay a modified mortgage.

So, what’s the worry? Why post about it? The applause about millions becoming insured misses the point that many of those millions can’t take advantage of the insurance. Yes; they are covered. But, only if they can afford to pay their portion of the doctor’s bills, the clinic’s bills, the prescription bills. Many of them weren’t covered because they didn’t have the money. Now, many of them are probably covered because they’ve been ordered to. I’m covered, and I’m glad; but I also know that I can’t afford to use the benefits from my second largest monthly expense. For me, health insurance is an expense which has a benefit with a value of zero. The cost/benefit analysis puts a zero in the denominator, which makes math and mathematicians blow up. I pay the bill and watch the money go away.

Our economy is improving. GDP is up, but much of it is consumption not production. Unemployment is down, but people have traded high-paying benefit-delivering full-time jobs for low-pay benefit-less part-time jobs. Housing is improving, but it appears that many of the houses have been bought by corporations to turn into rentals with business models that are as unsustainable as the previous mortgages. We are improving, yet there’s a bit of an illusion happening.

Undoubtedly some people are getting good jobs and returning to a mainstream lifestyle. The numbers we are dealing with are so large that probability ensures success for some; but probability ensure the opposite too. I see the headlines about successful programs and wonder if the numbers are being made to look better regardless of the need.

Quiet stories continue. A friend who is very aware of the complexity of my situation gingerly asked about how I was doing, and was courageous enough to listen to the long reply. My situation simplified within these posts, is more complicated in reality, yet is simpler and more secure than many around me. I am on the edge, as my fatigued mind and body acknowledge.

I’ve been working hard to keep my house. More than a year after stopping making mortgage payments, I may finally be making enough to meet a mortgage modification – maybe. I won’t know until March 6th at the next mediator’s meeting. My house is for sale because that is one way to meet my obligation. Maybe I’ll meet that obligation with higher wages. Maybe I’ll win the lottery.

Last week I realized that, very quietly, a neighbor who I assumed was successful and stable evidently moved out and had their house go into foreclosure. Everything looked fine. Their house looks much nicer than mine, has a nicer view, and is much bigger (not a plus for me, but for some). Some financial support failed, and I have no idea what happened or where they’ve gone.

I’ve always been skeptical of the news and the media, but it wasn’t until I backed into this financial realm that I realized how far the statistics are from measuring reality, and many lives quietly step aside rather than challenge that narrative. Sad to say, for many, the benefits are in the headlines, but the costs are all they see.

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Questioning When To Sell

Posted on February 23, 2014 by Tom Trimbath

Celebrate the lucky friend who bought his first stock within the last couple of months, and then watched it double in a day, and who knows that it can be worth a lot more. Is it already time to sell his MVIS, or buy more, or what? What’s happening here? Welcome to investing. Answers are always easy, in retrospect. Decisions are always made in ignorance – almost.

If you’re reading this anytime after market open on February 24, 2014 you already know what happened to MVIS. As I type it is Sunday night after a busy work weekend. My business has been so swamped that my Saturday morning posts were moved to Saturday night and kept sliding until Sunday. Maybe I should raise my rates. (Yes, Peter and others, I’m considering it.) During a break this afternoon I talked to a friend, a novice investor. His question: “What should I do? Sell? Or should I buy more?” The words of my reply were probably no more useful than the shrug that preceded them. I wasn’t dodging the question. I was just being honest. No one knows, but a lot of people will be happy to accept your money in return for strong declarative statements that deliver the voice of authority. We humans like thinking there’s an answer, even when we know there isn’t one.

I am not a novice investor. I may be an amateur, but I have almost 40 years of experience investing in stocks. A lot of examples have rolled past my eyes.

Let’s start with conventional wisdom. If you make more than 10% after taxes and commissions you can sell and proclaim yourself above average. On average, the stock markets return something in that range, sometimes higher, sometimes lower. If you made 10% in a day, and did that once per year, you’d double your money every seven years and not spend much time investing. The trick is picking the right day and stock, and then thinking you can do that every year forever.

A typical conservative approach. Sell when you’ve made 20% (or whatever percentage works for you). Buy back after a pull-back. Reasonable. Do it right and ratchet your investments up. Do that with MVIS last week and miss out on the next 80%, but profit is profit and congratulate yourself on the 20%. The trick is doing it consistently, and decided how long to wait for that rise. Days are easy. Decades may be too long.

A less conservative approach. Wait for the stock to drop 20% and then sell. That may mean selling right after buying if your stock is caught in a downdraft. But is also may mean selling after a stock has risen hundreds of percent. I sold AOL after it dropped 50%, but first it rose from about $1 to about $80. I sold at about $40. (It is Sunday night and I don’t want to look up the exact numbers. See my book for details.) Dream. Invest. Live. The trick is finally making that decision to sell. The difference between selling AOL after a 50% drop versus a 20% drop was two or three years living expenses.

Greed. Hang on forever and fall into that motto of; “Bulls make money. Bears make money. Pigs get slaughtered.” Which sounds like a great line until you find out what happens to most male cattle in this world.

Investing isn’t just about making more, then more, then more. (Cautionary tales in good movies: Dick Tracy with Madonna singing “More”, and Key Largo with Humphrey Bogart’s character revealing Edward G. Robinson’s character obsession with More.)

Personal finance is personal. What do you need? What do you want? Why are you investing?

The younger the investor, the more time they have, the more chances they can take, the more they can benefit from patience. I’ve heard advice for twenty-somethings that ranged from; “Be risky because it might work and if it doesn’t you can recover.” to “Be as conservative as possible because compound interest will do amazing things for anyone with enough time.” Both pieces of advice are correct. Youth have more options, they usually don’t know it.

Investors with less time or money are more likely to ignore the conservative approach. Financial disaster is too close to ignore. Money issues aren’t abstractions. Making money anyway possible is an every day concern. It is easy to put everything on one investment, which is really just a bet. Lottery tickets sell. The other 8,000 stocks are easy to ignore in such circumstances; yet, diversification is the cheapest risk reducer available.

Most folks live between those two extremes. They have time, but not as many years as they would like. They have an income, but maybe not as much as they’d be comfortable with.

There is no one answer. I think the best answer is within each person. Buying and selling stocks is about arithmetic. Is the stock overpriced or underpriced? Find a way you think is appropriate for estimating a stock or company’s value and run those numbers. Growth, value, momentum, income all have criteria to work from. Investing is about enabling a life you want to live. How much money do you need for what and when? If you are chasing a 10% or 20% return, you’re chasing math. Why are you investing? To retire early? To make enough money to redefine a lifestyle? To pay off a specific debt? Now thyself is the most powerful investing advice.

A lot of advice can sound abstract, theoretical, and philosophical. Get real. With stocks that have extreme debates over their possible valuations, like $0 < $MVIS < $1200, draw a chart. Take your number of shares and multiply them by 0, the current price and several prices on the way through the high value, and then a few more. Daydream, but do it for real. If the stock goes to zero, what do you do? If the stock rises, it will take a lot of time to rise. What will you do when it is up 100%, or has only reached 50% of its estimate, or has exceeded your highest estimate? Do you already have enough for personal “success” if the business and the stock succeed?

In personal finance, numbers aren’t as important as actions. I’ve ridden enough waves that I know that I’ll sell about 20% when I can pay off a major financial goal (credit card debt, or mortgage, or retirement, or ?). After that, I’ll let it ride but I’ll be watching for when I’ve made a profit, made 100%, 200%, 300%, 400%. If I haven’t sold by 400%, then I’ll sell 20%-25%. And, eventually I may sell off 80% and leave the last 20% to ride. (I’ve almost been there more times than I can readily count, and each time I was distracted by life, not finance.)

If nothing else, it is fun to imagine such trades. I’ve also seen the other side, when phenomenal misfortune means every investment dropped simultaneously and stayed down for years. But, within the last month, AMSC, GERN, and MVIS have all shown signs of recoveries large enough for me to ponder when and what to sell. It is refreshing to be able to ask such questions again, even when I know the answer is, Not yet.

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Almost News For MicroVision

Posted on February 20, 2014 by Tom Trimbath

Good morning! This wake up call is brought to you by a very happy fellow shareholder. I got a call before 7am. Good thing I was already up, sort of. The network of friendly MVIS shareholders, which for years has closely resembled a crisis support group, kicked off emails and phone calls as MVIS jumped 40%, crested up over 100%, and ended the day just about a 98% gain. There must be great news, right? That is the way the stock market is supposed to work. Well, there was news and there wasn’t. Welcome to the world of investing in tiny disruptive companies.

(Here’s my MVIS primer.)

MicroVision's first picoProjector, the size of an iPhone. The newest models are much smaller and brighter.

MicroVision’s first picoProjector, the size of an iPhone. The newest models are much smaller and brighter.

Other investors may not be surprised that I tend to wake up at about 6:30, just about when the market opens. Almost every day I wake up, check my stocks, see that nothing special is happening, and then roll over for another half hour or so. Handy things, these iPads. I can check in on the world in less time than it takes to put on a robe and sit down at a computer. Today I woke up, noticed about a 20% jump, didn’t see any news on Yahoo or on the company’s site, and shrugged it off to the volatility of small cap stocks. Minutes later the phone rings. The stock is up 40%, and fellow shareholder and blogger Peter Jungmann, has found the news. Sony is working with MicroVision. Finally, we have a name to go with one of the five possibly major OEMs that management has alluded to. Sony, definitely a good name. As good as the news was, I rolled back over because I wasn’t planning to do anything about it – except watch the stock throughout the day.

By the end of the day, the stock had settled to its 98% gain. I’ll celebrate that. Sony’s news was a public vindication of MicroVision’s technology. I also confused a few other stockholders. There really wasn’t any news. Yes, Sony is working with MicroVision, but nothing was announced that would change the valuation of the company. No specific product launch date, expected shipment volumes, or financial details were mentioned. Sony didn’t even mention MicroVision in the body of the press release. MicroVision was called out in a footnote. MicroVision hadn’t made an announcement. MicroVision hadn’t even retweeted Sony’s announcement. Slashgear, Engadget, and several investors had passed the word along; but MicroVision was acting as if nothing was happening. The company is either very coy or oblivious.

There was no news, but the stock doubled, and traded more shares than exist. Lots of investors weren’t trading, but evidently lots of other investors, speculators, and traders were shuffling shares fast enough to totally change the ownership of the company, though the actual shareholder list is probably almost exactly the same.

One of my investing mottos is, “What’s the company worth?” Regardless of the percentages and trading volumes, comparing the company’s worth to the market’s estimate via the market cap is my main criterion for major celebration, and action. (Details in my book.) Dream. Invest. Live.

According to the market and the price it put on MVIS, MicroVision is finally worth more than $50,000,000; which puts it back above a key measure for being listed on the open market. Good. MVIS had other listing problems before, which is why it had a 1-for-8 reverse split awhile ago. The company struggled to keep the stock above $5 a share, failed, conducted the reverse split, and watched the market cap slide below the $50,000,000 limit and the shares approach $1 per share. In pre-split terms, today’s price rise was only about $0.165 per share. Taking the stock back to the same market cap that equates to the pre-split $5 would put it post-split at $40. Today, the stock rose $1.32. If MVIS continues this trend for 28 more trading days, MVIS would finally be back to $40, aka the pre-split $5. That’s hard to imagine, but that’s the math.

Maintain these conflicting notions:
There really wasn’t news. The relative price appreciation was actually small.
Versus
This is really good news.

This is really good news because, despite any quantitative news, the stock moved enough to hit the NASDAQ Most Actives list. If such small news can produce such large action, then when the real news hits there may be much larger action. And this is just the news from one OEM. My interpretation of management’s inferences is that at least three other major OEMs could also announce similar and better news.

As I’ve posted in the past,
“One investor estimates MVIS’ worth as $1,200 – $1,500, and considers it to be conservative. My estimate is more modest, but $600 – $1,000 . . .“
Such valuations don’t happen overnight. The largest single gain I’ve experienced was 240% in a day. The largest I’ve seen in the market is more like 640% in a day. It will take a lot of days to rise from $1 to $1,000. A lot can happen in those days.

But, what’s the company worth? Present value based on present revenues doesn’t justify today’s price. Present value based on future revenues can justify phenomenal prices, especially with the appropriately long list of optimistic assumptions. It could happen. Many things could happen. Something undoubtedly will. Until then, we shareholders are in for a long anticipated ride; especially, if MicroVision even announces news.

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Balanced Optimism

Posted on February 19, 2014 by Tom Trimbath

They liked my house! They didn’t buy it, but they liked it. 8199 Cultus Drive, Clinton WA 98236 At least they liked it more than one of the other houses in the neighborhood. Friends frequently comment on my upbeat attitude in the midst of financial mayhem. Maybe I should hit the lecture circuit telling folks how to stay optimistic regardless of the situation. I’d be happy to; but, I suspect I’d deliver a bit too much truth at the same time. We want our stories simple and clear. Ambiguity doesn’t sell well, even if it is the nature of reality. Maybe I’ve passed F. Scott Fitzgerald’s test, “the test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.” I don’t know if it is a sign of intelligence, but it is a characteristic I see in the hard workers who are barely getting by. They simultaneously see the positive and negative potentials and persevere.

Hard work has become incredibly common. I can’t think of anyone who has more free time, who is socializing more than they did before, except for those that are millionaires or have impressive incomes. Shop owners, lumberjacks, consultants, and construction workers are working as many hours as possible, but few expect their work will ever enable retirement. That part of the American Dream has faded for many. On average, one in six Americans you see are in poverty. Half of America is living paycheck-to-paycheck. The applauded health care initiative has insured millions, but for many it is an added expense which has benefits they can’t afford to use. Paycheck-to-paycheck doesn’t leave room for co-pays, deductibles, prescriptions, tests, or procedures.

The Old American Dream lives on; but, it’s incarnation in Cadillac’s Super Bowl ad came across as incredibly insensitive. “Americans work harder than Europeans because we want the best things in life.” That’s true for a shrinking few. The rest are working to somehow maintain the necessities of life. Cadillacs aren’t on the shopping list.

Can you hear the Wagnerian music swelling as indignation rises? Pardon me as I produce a well-used pin that pops that ballooning emotion.

If I concentrated on the injustice and inequity I’d live a much shorter life. I like myself more than that. I don’t ignore the issues, as regular readers know, but I actively search for balancing forces.

My Litany of Optimism continues. Some folks call it Counting Your Blessings, which is a fine way to focus on the present. I do that too. But I also must set goals for re-attaining a healthy dose of ease in my life. Working seven days a week is not healthy, yet as with many others, that’s what is necessary – for now.

Every other Tuesday night is dance practice. Swing, waltz, latin, maybe a bit of country – some volunteer produces a playlist. Someone else hosts the event at one of the community-owned local dance halls.  We all contribute a few dollars and for two hours we practice or play. I look forward to it, and wish it happened more often – but I don’t have the time to volunteer so I won’t complain. (Besides, I did my stint a few years ago.)

I got there early so I took a detour and dropped in on some friends who have a fine art print shop nearby. They’ve been nice enough to host an annual show and include my art. (Thanks.)  Let me check. Yep. Their hours are 10am to 5pm – except for the fact that they are likely to show up early, stay late, and work weekends. When I got there, it was more than an hour past closing and they had hours of work to do. Sounds successful; except that, like so many small businesses, they’re scrambling as they wait for checks to come in for work that’s already delivered. Paying people, like themselves, waits. They love their work, but like so many people I know they’ve also had to give up too much of their lives, in my opinion. (They do impressive work, which I’ve much appreciated.)

They exemplify that balance between loving their work and needing to work less. Others find balance by creating art, because it is fulfilling and the cheapest entertainment. Dancing provides a big dose of my balance. When I dance I smile. No analysis required. More dancing highly recommended. At least for a couple of hours, I get to move to the music instead of thinking through every thing I do.

But dancing isn’t the solution for every day, though it does sound appealing. (Imagine the shape I’d be in then.) For most days I find the balance by reminding myself of the possible positives.

Hard work alone is no longer the answer, but it can lead to raises and better offers. Investments exist within a more skewed environment due to unregulated markets, but a contrarian always has reason to hope. My mortgage issues could be solved by a significant modification or a rising market or a full-price buyer. Sales of my books and photos could resurge. My clients could become more frequent and pay for upgraded services. I hear I’m on a lot of short lists for nice jobs, so maybe I’ll get an unsolicited call for a job that is better than I imagine and pays me to do something I’d be willing to do for free because it is so fun.

I know I am not alone. The American Dream may have faded to the point that its appearance in ads seems like farce; but, I am encouraged that of all the hardworking people I know, dreams based on their desires and values are replacing old stereotypes. Cadillacs in three car garages are being replaced with plans for small houses with big gardens and eventually more time for each other and for each self. The present is being balanced by the future because that’s where the optimism lives.

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Welcoming Motivation

Posted on February 16, 2014 by Tom Trimbath

Engage motivation! Some days there’s an urgency which makes motivation easier. Today’s post is pushed along by 40 mph winds across the Sound and the resultant flickering lights. Must post before the power goes out. Most days though, motivation is harder to find. Today, I’m leveraging everything I can from news sources and tidbits. They are encouraging, though like a lot of encouragements, they are intangible – for now. I wait for the then.

I do enjoy my little house on the end of this big island. The weather comes up the sound and I get to watch storm clouds, white caps, and rainbows.  Nature’s dynamism is far better than some 2-D show that buffers by on YouTube. To see the big ships dwarfed by the geography which is dwarfed by the meteorology is humbling and incredibly valuable. At least for a while, daily troubles seem small.

And then I have to pay the bills and daily troubles blot out the view. My business is doing better than ever, and yet it must continue to grow if I am going to finally catch up on back debts, deferred repairs, and postponed plans. Tonight I have to unwrap two more packages from the mortgage company, scan, copy, and mail them to my counselor, and wonder how the mortgage modification meeting will go in early March. The grandeur of nature steps aside when I wonder about what comes next.

Many have commented on my positive attitude. I like to think it is based on something more substantial than words. For the most part, my litany of optimism is based on my backup plans that I described years ago. I continue to work to those plans and they may yet succeed. Fortunately, there have been some news items that buttressed my beliefs.

Within the world of investments, my portfolio continues to entice without appreciation, and yet people are saying good things about the stocks I own. Maybe the emphasis is finally returning to innovators. AMSC has been called “well-positioned“. GERN’s technology is impressive enough to make some think in terms of accelerated approvals. GIG’s offering was over-subscribed. MVIS’s meeting left one shareholder to be “more optimistic than ever”. RSOL received upgrades as analysts realize solar is a growth industry. If these stocks climb and cover my cost basis, I’ll be able to comfortably get out of credit card debt and make regular mortgage payments. If they climb to my estimate of “present value of future revenue” then I’ll be able to pay off the mortgage.

8199 Cultus Drive, Clinton WA 98236Despite wanting to keep my house, the easiest way to take care of my mortgage is to sell my house. That is still a prudent choice if my business doesn’t grow considerably or if my portfolio doesn’t re-appreciate. So, the good news; someone looked at my house today. The house has been for sale for over a year, and of all the times I’ve had to put a house on the market, this has been the quietest. But Seattle’s market is booming, and it’s just across the ferry ride. Maybe that enthusiasm, and realization of island values, means someone will buy my house. I don’t want to lose it, but I really don’t want to be in debt anymore.

If doing the same thing hasn’t produced the desired results, then maybe it is time to try something different. In my work for New Road Map Foundation I frequently come across news for alternative currencies. If our current currency is based on faith in the dollar, and if that faith fails because of institutional excesses or assaults like Target witnessed, then the alternative currencies look more appealing. It is one reason I’ve been watching Bitcoins, and kicking myself for not buying them early. They’ve gone from being under a dollar to over $600.

Bitcoins are not the only alternative currency. I realized that I had some Linden dollars. Linden dollars are the currency used in Second Life, the alternative reality game that I explored a few years ago. Sure enough, Linden dollars can be traded for Bitcoins. My optimism comes for a surprise. I’d effectively abandoned my Second Life life because my computer couldn’t keep up with the software upgrades. I remember having saved a few extra real dollars in Linden dollars back when I was active, and I’d never taken them out. It was a kick to see that my account had accrued to over L$115,000. The exchange rate for US dollars knocks that down to about $1500, or a couple of Bitcoins and some change.

SL snapshot 021514_001

Waterfront for sale

I haven’t decided what to do with my Linden dollars. I can’t bank on the house showing or the enthusiasms for my stocks. But I can remind myself that there are enough reasons for me to be encouraged. As most investors know, diversification is one of the easiest ways to manage risk. My future is diversified across my business, my stocks, and my acceptance of change. Like the client’s check I finally received for work I did over a year ago, good things find their own timing and all I have to do is keep that door open for them.

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Total Perspective Shift

Posted on February 12, 2014 by Tom Trimbath

The philosophical underpinning for today comes from the Hithchhiker’s Guide to the Galaxy. Welcome to the “Total Perspective Vortex“.
” . . . the TPV is now used as a torture and (in effect) killing device on the planet Frogstar. The prospective victim of the TPV is placed within a small chamber wherein is displayed a model of the entire universe – together with a microscopic dot bearing the legend “you are here”.”
Putting things into perspective can be painful, or at least bizarre. Various news items from the last few weeks have me reaching for a drink, but I’ll write this post first. I want to keep things in their proper perspective.

30 people could do that? Why don’t they?
Less than a year ago I posted about the fact that about 300 people had as much wealth as 3,000,000,000. Then the numbers were revised. 85 people have as much wealth as 3,500,000,000. Now someone broke it down further to point out that 30 Americans have as much wealth as over 150,000,000 other Americans. 300 fills a small theater. 85 fit into a couple of buses. 30 don’t even fill a restaurant. Imagine, 30 people suddenly deciding to make a grand statement that would immortalize themselves by alleviating suffering of half a country.

But here’s the other part of that perspective. Some of them are doing something. Of the richest 30, several have pledged to give away at least half of their wealth. Some of them are giving it away in ways that many approve of: Bill & Melinda Gates, Warren Buffett, Mark Zuckerberg, Sergey Brin, Larry Page, George Soros. Others are obviously working with power in ways some consider corruptive: Charles & David Koch, Michael Bloomberg, Carl Icahn. And then there’s the Walton family who collectively could exert more power than most historic royal dynasties, but I’m not sure what they’re doing with it all. The money isn’t static, it isn’t exactly going to flow evenly to the greatest number either, and it isn’t even flowing in the same direction.

Total cost of poverty
The amount required to eliminate poverty in the US is one-quarter of the US Defense Department’s budget. Fight the War on Poverty at one-fourth the intensity that we fight Wars and we’d finally have a victory to celebrate. Mission Accomplished. The “World’s 100 richest earned enough in 2012 to end global poverty 4 times over“. 25% isn’t a very high tax rate.

But maybe that’s only a short term fix. But maybe even a short term fix will have so many side effects that we’ll be happen to do it again if necessary.

Games are expensive
For the price of the Olympics we could’ve launched 20 missions to Mars. NASA has to argue for budget, yet our games cost so much that we could’ve build two teams of soccer playing robots (we could get the two extra players as part of a volume discount), flown them to Mars, had them play and televise three weeks of games, and then had them get onto an analysis more extensive than NASA’s engineers could imagine. Or we could’ve explored more than one planet. Or maybe explored our own oceans. Or maybe send up a US robot to the Moon to jumpstart China’s Jade Rabbit. The Super Bowl cost $70,000,000 was run as a non-profit, and only lasted a day. Even just getting the NFL to pay taxes would be enough to pay for fields and equipment for kids who don’t have many options.

But we’ve got to have the Big Game, right? Otherwise, what else will bring people together. Really, getting 750,000 people together for a football parade is far easier than getting 75,000 people together for just as long to help fix people’s houses or plant gardens for low-income people, or distribute donated meals for a day.

Personal Finance
I see such numbers in the news. The resources flowing around this planet are phenomenal. Get them steered somewhere useful and each year we’d knock off another major task. And then I quit philosophizing, pay my bills, and ponder whether I’ll be able to afford a modified mortgage. The amount it takes to live a frugal life is blessedly small. Own a piece of land. Live in a tiny house. Be resourceful in many of the aspects of life. If it wasn’t for mortgages and insurance, I could live for a year on less than some families spent on Super Bowl tickets, or short visits to the Olympics. The discordance between the public displays of public wealth versus the basic needs of people who have far less than me has actually made it difficult for me to watch the games. There’s an insensitivity on display that is only acceptable because of its naivete and innocence.

But in perspective, I know that such personal stories are so common that they aren’t news. I know that we’ve become so accustomed to seemingly ever-present homelessness and poverty, and to regular and traditional extravaganzas that suggesting something different is seen as self-centered and disingenuous.

This is the world in which we live, where non-profits have to hope for small slices from very big pies, where funds for luxuries are easier to find than funds for necessities, and where we have such a great opportunity to see what’s happening, change our perspective, and celebrate a far better world. Then that little flag that says, “You are here.” will also mark the site of the party. And then I can have that drink without hesitation.

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Money Sitting Still

Posted on February 8, 2014 by Tom Trimbath

Can you believe it? I actually have money that’s not in the market. It must be invested, right? Nah. There’s a time to move and a time to sit; and with money it is possible to do both. Personal finance and investing do not have to be exercises in extremes. Choosing to do nothing is an option; but it is also important to remember that choosing to do nothing is a choice, and choices have consequences.

My seven-day-a-week work schedule is not due to some workaholic binge. My portfolio has yet to recover (though it has more basis behind its optimisms now); so, I continue to work every day that I can, even when I have the flu. One convenient benefit of working from home is that going to the “office” doesn’t create opportunities to spread my germs (actually a virus). Work until I have to nap and repeat. Such is the life of the self-employed. Every sick day is unpaid. In the home office, no one else can hear you sneeze. Seven days a week is partly based on my Rule of 7, but these last few months have also been a time to catch up on bills, and to save up for taxes and the possibility of a mortgage modification.

Serious maximizers would find the highest returns for that money in the meantime. Given enough effort, and sufficient luck, and it would be possible to make as much as an extra percent over these months. Bigger is better, right? Nah.

I take it as an interesting sign that several people have approached me with a similar question in the last few weeks; “What should I do with this money that I have sitting around?” The question remains the same even though the situations are widely divergent. 1) I like to hear intelligent people asking intelligent questions. 2) If the same topic is arising amongst such disparate situations, then something systemic may be happening. and 3) I’m honored to be asked, and then I drop into the caveat that I am not a certified financial expert – but, oy, do I have stories to tell and I’m willing to help others work through theirs.

One quick answer. The only person I’d be worried about would be someone who had everything in cash and nothing invested. It happens, and even then, movement for the sake of movement isn’t good. Inheritances and windfalls happen, and taking time to consider options is a good investment.
Another quick answer. Having everything invested is like trying to swim, fly, and run at the same time. It looks impressive, but it may not be a very successful strategy. (I’d love to see the video.)

Most people live between those extremes. The bulk of their money is already locked into retirement accounts or long term assets. It is easy to forget the numerical importance of such large, quiet investments. The questions usually come from someone who’s had cash come their way from a house sale, a retirement buyout, or long-awaited insurance claim check. That cash may be small relative to the investments, but it can look enormous beside the checking account used to pay the monthly bills.

Conventional wisdom changes slowly, and most of what is repeated in 2014 is based on 1980. Interest rates were high. Inflation was high. Cash lost value every day. It still does, but at about one-tenth the speed; so, it’s okay to dial back to the urgency by a factor of ten.

Urgency is still understandable. Every day there’s yet another stock that went up 30%. Of course, it would be great to have caught that. But wait, and there’s another one on the next trading day. Market timing, business news, global disasters, and the whim of the market mean trying to outguess the specific stocks on specific days is trying to outguess a chaotic system. Your chances are about the same as luck.

Money sitting still is powerful and useful. If you have anxieties about what to do next in your life, judicious application of some of that money can be more valuable as financial grease that eases a worrying friction. A few percent of that money directed at finding some quiet time to contemplate options can enable far more valuable life choices than its effect on your portfolio. Investing in yourself by taking classes or buying better tools takes that one step further.

One friend had a large enough windfall that she was visibly stressed with the self-imposed responsibility to properly steward the money. I asked her how long she was going to give herself to make a decision. She figured a few days or weeks. I pointed out that, because she was very frugal, less than one-tenth of that money was sufficient for her to take a year off. She laughed, and then realized I was serious. Yes, laugh. Life gives us that opportunity.

And then consider. If she tried to rush the decision she was as likely to choose poorly as she was to choose well. The choice would be made out of obligation, not interest. If, however, she gave herself time to relax and consider her life goals, then she’d have more time to get creative with her solutions. After the creativity starts to flow, it probably wouldn’t take twelve months, maybe not even twelve weeks, or days. As it turned out, she had the revelation as we sat there. Just the idea of being able to have fun with the idea meant we came up with at least three non-conventional solutions that all brought open smiles instead of furrowed frowns. She never had to spend that tenth, yet, just considering the possibility was valuable.

Personal investing is personal. Many try to approach it as if it was only investing, which it is if you take the person out of it; but then it becomes money chasing money, and I think we’ve seen enough evidence that is unappealing. Approach personal investing as if it was personal, without the investing; which then becomes about living, which is what every life is about. The trick, of course, is to bring both together again.

If your money is sitting still, but you’re actively trying to decide how best to live; good. If you’re making your life sit still while you figure out what your money should be doing, then maybe your money will out there having a life of its own while you’re still sitting there worrying.

Figure out where you want to be and go, and then figure out where to put that extra bit of your money to help you get there. Live.

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Frugal Disaster Preparedness

Posted on February 5, 2014 by Tom Trimbath

Even before last weekend’s post my intuition suggested I should cancel most of my plans for the week. I made a trip to the store, bought lots of soup ingredients and oranges, and lined up low expectations. Maybe it was the dance, maybe it was taking the bus, but sometime in there I caught the flu. And then the temperatures dropped while my temperature rose. Let my frugal preparations begin! Including the ones that are counter-intuitive.

Having the flu is a great excuse for a writer. Any error can be blamed on the viruses that invaded my body. I wonder what the little buggers have to say.

Servings from the big batch of potato mushroom soup have taken care of either lunch or dinner. Meatballs I made and froze weeks ago have taken care of either dinner or lunch. Great variety, eh? And all of those eggs have been a great excuse to use lots of turmeric (and butter and cheese). The oranges have been welcome, as well as the zest from the skins, which has been added to my loose-leaf tea. For drugs, I have so many health-minded friends that I’ve mixed aspirin, Chinese herbs, and homeopathy pills. The best course of action has probably been inaction, or at least a lot less than usual; and plenty of fluids.

Counter-intuitively two hints made me crank the thermostat. Yes, keeping the heat low keeps the energy bills down; but, too low is bad for the pipes, and too low is bad for my recovery. My energy usage is up, a lot. There’s a heater in the utility room, heater tape on the south wall’s pipes, and the house is being kept at about 69 degrees. Yes, the bill is up; but the cost of a long recovery or replacing broken pipes is much higher. Cheaper is not always cheaper.

We’re encountering a lot of disasters: climatological, geological, economic, political, and social. Preppers are preparing for the worst, and each seems to find some specific fear as inspiration. The revelation comes when they reveal what they intend to save and defend. Many times it is based on some semblance of an eventual return to suburbia. Maybe so. Predicting the future, very difficult, eh?

If you try to prepare for every disaster, striking any time and any where, your house becomes a fortress and your car becomes a tank.

I’m more impressed with my frugal and resourceful friends. Whether they are wealthy or not, they are satisfied living a simple life. They probably already have warmer blankets, so a cold snap isn’t as calamitous. The pantry is probably full, most likely with shelf-stable foods; and keep in mind that some of the pre-refrigeration shelf-stable foods were beer, whiskey, wine, smoked salmon, hams, jerky, cheese, fruitcake, and anything that will still work well enough in a root cellar. Bicycling in bad weather isn’t as much of an issue. And books and friends are still the best entertainment available.

I live in a community that could be cut off by a tsunami or an earthquake, on an island that is within sight of three volcanoes, and on occasion we get winds from Pacific storms, cold air from Alaska, and atmospheric rivers of moisture from Hawaii. Imagine if they all hit at once. The counter-intuitive response comes from the prospect of economic, political, or social collapse. There are many active efforts to establish a self-sustaining community now, rather than when it is too late. And, if we go to all of that work, and we never need to employ it, we end up with a network of friends and less anxiety about what could go wrong.

Maybe this is all easier in Cascadia, a territory defined by culture and climate that spans from somewhere in Alaska to somewhere in northern California. Backpackers can survive for days with what they can carry on their back. Imagine how much easier that is in a house, or even in an outbuilding like a shed. Sailors and especially kayakers don’t carry their gear the same way, but the gear they have is stout and definitely waterproof. Bicyclists and walkers are hard to stop, and may not even need roads. Then there’s the localvore foodies who know where all of the local food is produced, probably know the farmers, and may not have to go farther than their yard.

Resourcefulness is more important than following someone else’s list, though the Red Cross, FEMA, and the Mountaineers lists are good places to start. Though, if you have the time, maybe playing a bit via hiking or sailing or bicycling can be a much more illuminating experience about what you need.

Deciding what you need is the basis of frugality. Does this thing have value to you or not? Maybe you don’t need an avalanche beacon or a life vest (though I’ve had a couple of scares). It is, however, amazingly educational finding out what life is like without a can opener, or a knife, or a flashlight, or a map. It is also fun finding out that, even though I forgot the fork and spoon, I could whittle chopsticks. (Whistling Chopsticks isn’t nearly as useful, except as good self-deprecating entertainment.) When your things are chosen because they are or will probably be useful you may be surprised at how little room they take up because the clutter is gone. I’ve hiked twelve months out of the year in Washington’s Cascades, and everything fit on my pack. I’ve bicycled across America, and everything fit in my panniers. I walked across Scotland and, partly thanks to inns, fit everything into a day pack. The Tourist
The only concession to specific disasters is this, if possible, store a major kit outside your house. That way, if disaster means they’ve red-tagged your house, you still have something to work from. Carry that daypack in the car in case you have to abandon it, and keep blankets, food, and water inside in case you have to stay with in. (This one is easy for any ferry commuter who must drive. Long lines teach lessons quickly.) No matter where you are, realize that your safety is most important because you can’t help others if you need help.

If after all of that preparation you never need to use any of it, then you’re at least ready for getting out to enjoy the world, or staying home and enjoying the community you have helped make home.

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Your Moving Money Game

Posted on February 2, 2014 by Tom Trimbath
Congrats!

Congrats!

A toast to the Seahawks. I heard that they won. Maybe someday I’ll watch a replay. I worked through The Game because it was the best way to spend my time. Then, after my work was done, I watched the ads, every one except one. Sports or commerce or whatever, the Super Bowl is a fine example of companies using money to move money, which two clients have brought up on a personal level. When should the money flow, and when should it stay?

Super Bowl ads = one of the best ways to track American commerce. Each year’s themes are different. The production levels change. The advertisers change. The reactions change. My reactions change.

According to YouTube’s count, there were 56 ads. Most were either 30 seconds or sixty seconds, and cost about $133,000 per second. How much are your living expenses per year? In less than an hour, you can get a multi-million dollar review of what advertisers perceive to be American desires. Very cheap research.

As usual there were car and beer ads. The internet and tech stocks showed up, but not as much as before. There were lots of American flags, which is also myopic considering the percentage of the audience that isn’t in the USA; but I guess each country sees different ads. But, hey, we’ve got stuff to celebrate, and it might as well be during the Super Bowl.

My favorite three were:

  • Coke Cola – Going All The Way (which is unlisted, hmm) – though such an ad would never get me to drink Coke unless rum was involved.
  • Duracell – Trust Your Power – because it was about someone real and inspiring, though had very little to do with the product
  • Jeep – Restless – because I am, and I miss the places my Jeep took me, though my Chevy may provide if I ever have the time and money again (“Stillness is what kills us.”)

The Budweiser limo ad reminded me of the unsustainability of excess. Over the top, and disconcerting that it probably appeals to many.
The Budweiser puppy ad was close to a great story, but may I rewrite it, please? There was potential there for a human story in addition to the pet story.

But why do they do this? Advertisers buy ads because it is one of the few times they know that even people like me will watch an ad. They see a time and a place where using their money may make money, and they know there are no guarantees.

Put mega-corporations aside.

Sit down with some of my friends. Some of whom are wealthy. Some of whom are wondering how they are going to live for decades with less than $100,000 in savings.

Where should they move their money? Conventional wisdom has stumbled so hard so often that people question it, know that they should try something different, but don’t know what should take convention’s place.

There was a lack of financial ads this year. The only ad I refused to watch was from Bank of America. The only way they could get me to watch that ad would be to tell me ahead of time that it was a massive apology to the country they named themselves after; otherwise, I suspect the message would be too conventional.

Interest rates are down. Stock markets are high are using an adjective from an well-known phrase, “Buy Low, Sell High.” Great. If the markets are high, and if people sell, what should they buy? Real estate is low, or high, or very confused. Commodities aren’t much better. There are no obvious safe havens or confidently insured alternatives. Cash sits, ready to move.

The corporations are in a similar situation. Corporate profits are up. Balance sheets are healthy. Yet, the funds aren’t flowing to employees, don’t seem to be proportionally progressing innovation, though seem to be finding havens in management compensation packages.

The ads that inspired the most thought were two that should be diametrically opposed: Smartcar and Maserati. The Smartcar ad pointed out the ridiculousness of an SUV in a concrete canyon, and example of too much of something in the wrong place. A Maserati anywhere except a race track, the Autobahn, or Montana in summer makes no sense either; yet the opening lines to their ad were about a cause laying quiet in the shadows and then unleashing itself upon the world. The first 1:09 sounds more like Occupy and products like the Smartcar instead of a testosterone supplement.

The Smartcar sounded like an invitation to a new world. The last 20 seconds of the Maserati looked like a last hurrah before the paradigms shift.

To my friends looking to decide what to do with their money I suggest being smarter than the old-style corporations. Doing nothing is going nowhere. Maintaining the status quo misses the point that the quo is moving. The world is changing. What can you invest in that makes your world better? Sometimes that is investing in someone else’s fresh idea. Sometimes that is investing in yourself. Research and Develop yourself, or others making the changes you know should be made. Use the resources you have to enrich yourself, others, and the world. And, when you’re moving that money around with such intent, don’t be surprised if you don’t buy anything the advertisers had for sale. That’s their game. Play your own.

A Real Seahawk

A Real Seahawk

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