Trimbathcreative's Blog (Tom Trimbath)

Concentration Dissipation

Posted on January 29, 2014 by Tom Trimbath

Hello, President Obama, you stole my thunder. I was planning on blogging about financial inequalities and you go and make it headline news. Er, thanks. I guess I’ll blog anyway. A new datum inspired me. Wealth continues to concentrate. It isn’t the only thing tending towards an extreme; and extremes are not sustainable.

A few months ago I blogged about the fact that 300 people are as wealthy as the poorest 3,000,000,000. The more recent data suggests the concentration of wealth is much higher. The richest 85 have as much wealth as the poorest 3,500,000,000. Different analyses or not, the trend continues. Math folks know though, that extrapolation is inevitably in error. A closed system can’t concentrate more than 100% of a resource.

An argument has been made that poverty is inevitable. The Bible even quotes Jesus as saying, “The poor you will always have with you . . . ” Given a large enough population there will probably always be someone who has had bad luck. But things are getting a bit out of proportion.

Wealth and income inequity in America have become so common that we collectively know it is out of balance, and are terrible at guessing how extreme the imbalance has become. The concentration of wealth is such that even the bottom half of the 1% are dramatically poorer than the wealthiest Americans.

Folks in the United Kingdom, arguably more socialist than the US, has wealth concentration. But then, royalty has been part of their culture. Of course, even the Queen’s reserve is down to less than the price of some waterfront houses in my vicinity.

Globally, no one is surprised that globally the wealth isn’t evenly distributed. The disparity is enough to steer some vacationers from the poorest destinations, even though they are inexpensive. Of course, globally, it is easy to see the issue as “someone else’s problem”.

Words, like inequity and disparity, may not be as effective as numbers. Math makes it too abstract. But numbers may help illustrate a different world. (Pardon the language, but he makes a good point.)

I’ve replicated the exercise from that last link here, and continued it down below because making people wade through 1,000,000,000 is too disruptive. Of course, maybe that’s what we need.

$100,000 = a small house for some; a very nice car for others; six years of living expenses for someone at the poverty line (and about 15% of Americans are below the poverty line)

$100,000 $100,000 $100,000 $100,000 $100,000 = a nice house, unless you’re in downtown New York, San Francisco, or really most any large city; or about enough for frugal people to retire, if they’re lucky

one million
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 = a nice home almost anywhere; and a good retirement package, though some recommend triple this amount

ten million
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 = the border of the 1%
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000

If you really want to scroll through one hundred million and one billion, check the bottom of the blog. Reality no longer applies in that realm. (My house is in there somewhere.)

Wealth is not just being concentrated in bank accounts.

The Super Bowl is coming up. Witness arenas that cost hundreds of millions, that receive tax benefits, that rarely pay for themselves, that are justified by the luxury boxes, that host sporting events between millionaires, and that draw advertisers but not tax collectors. Are we really that enthusiastic about sports? Great! Let’s take even a tenth of the cost of each stadium and devote it to playgrounds, ball fields, and equipment before we ever negotiate another stadium.

The opera and the ballet have much lower budgets than sports, and definitely lower salaries yet even their edifices are grand concentrations when compared to the need for neighborhood places for kids and beginning artists. How about shoring up the local theaters, paying their staff, and creating places for creativity?

Education has changed as more attention is paid to the most prestigious colleges. Parents who did very well going to state colleges demand to send their children to Harvard and Stanford. Supply and demand drives up prices, regardless of the rationalizations produced by administrators. The irony is that most college degrees have a rough time paying back the investment; especially, considering the current student loan environment.

Even the stock market is seeing concentrations. As wealth concentrates it tends to move around in bigger chunks. If you have a hundred million to invest, it is far easier to buy a small slice of MSFT than to have to buy 100% of three MVISs. I think this is one reason the markets are reaching records, while the profits are going to a few, and while startups are struggling for funds and small companies are seeing small valuations.

Concentrations carried to an extreme eventually dissipate. A recent TED Talk suggests that may be about to happen. As a rule, the denser the concentration, the more rapid and pervasive the dissipation.

Two quotes passed along by friends sit oddly beside each other.
A quote passed along by Steve Smolinsky via twitter (@smolinsky); ‘Thought from a billionaire on income inequality: “When I hear the market went up I know the guillotines are coming closer.” ‘
A comment made by someone who has been working too hard without enough support; “If the system is going to collapse I wish it would do it soon. Trying to fix it is taking too much out of too many.” (paraphrased)

I’m glad the President of the United States is talking about alleviating inequalities and inequities. That fact that his statement stands out is a statement. Government should always be working, not just talking, about alleviating inequalities and inequities. If we’re just starting to have the conversation, then we’ll probably hit some limit before we enact a reasonable solution. I expect little from government because money and power have become synonymous, and if money is concentrated then power is concentrated. The poor have always been with us. So have the rich. But, even in the ages of true kings and queens, empresses and emperors, we’ve probably never witnessed a time when the 85 richest people on the planet were worth more than billions of their fellow humans.

The dissipation will probably happen, but I don’t want to concentrate on it – though I know I won’t be able to ignore it.

one hundred million
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000

$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000

one billion (+$64,500)
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000

$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 +$64,500
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000

Posted in Uncategorized | Tagged Art, billionaire, Charity, consulting, education, frugal, frugality, income, investing, Millionaire, Obama, occupy, opera, personal finance, political, sports, stocks, wealth | Leave a comment

Unwrapping My Chromebook

Posted on January 24, 2014 by Tom Trimbath

Ah, that’s a relief. My Chromebook has arrived and we’ve gotten to know each other. I’ve been eager for a new laptop since I became anxious about my old one. My MacBook has been worked hard for years as the main conduit for my business. A backup was prudent, but conventional machines cost too much. Ah, but Chromebooks are a different animal with a different price – affordable. An interesting experience to have on the 30th anniversary of the original Macintosh. Did they give up too much? Relative to what? I was willing to take a risk to find out how far we’ve come and whether we’ve backslid.

I am a self-proclaimed extreme independent moderate politically, and technologically. My preference has been for Macs even before the first one went for sale. I wish I still had my Mac 512k; alas, I let someone try to fix it. Bad idea. A $3,000 machine (and those were 1984 dollars) that became worthless, ah but the memories linger and it did help me get my Masters. But I’ve also owned Windows machines; and used PDPs, CDCs, mainframes, and supercomputers. Oh yeah, and slide rules too. They are all tools. Prepare yourself for a techie’s and trucker’s sacrilegious comment: I think the difference between a Mac and a PC is the same as the difference between a Ford and a Chevy. They both get the job done, and the rest is preference and details.

My MacBook has been a necessity. My business would barely exist otherwise; so, having a backup is a good idea. Unfortunately, the market did a job on my portfolio; and my business has been cash-constrained. Thanks to my clients I am busy every day, which means my computer is busy every day. That partly explains the cracked case, the lost fasteners, and the sluggish performance. It also explains my worry that my business and my income could be halted with one misplaced bit.

One day while sharing an office, my Mac’s screen went white. It looked less severe than the Windows’ blue screen of death, but a friend glanced over, tsked, and said, “Well, that certainly isn’t a good sign.” Luckily, it rebooted. And I started to shop.

Apple (AAPL) products would have been a great continuance, but they cost too much. More important, Apple seems to have changed their software philosophy a few years ago. Without getting into the details, I had to move my blog from iWeb (here are the 200 orphaned posts) to wordpress after an Apple mandated upgrade, started managing my photos outside iPhoto after a few files were corrupted, and moved one of my major clients to Google Drive in hopes of finding compatible file access and storage. My recent experience with iOS 7 on my iPad shook much of the confidence that remained.

Windows (MSFT) continues to change. None of the new versions of the operating system impressed me, except with cautions. I enjoy consulting about program plans and strategies, but much of my clients’ time is charged to making new software handle simple, old tasks. Every time I launch into a Windows consult I begin with lots of caveats and conditions, and am prepared to discount my work if we can’t figure out how to make the (expletives deleted) thing work. It is a pity because the machines tend to be cheaper than Apple products, though the cost of Office et al keeps the overall price high.

Google (GOOG) caught on. More work is transferring to the Internet. Why add complexity to simple tasks? To me, a Chromebook is not much more than a screen, a keyboard, and a fancy version of a modem. But I remember that old Mac512. This is far superior at one-tenth the price. I knew they didn’t try to do everything, and maybe it could do enough.

Technology aside, I am somewhat nomadic. My computer must move with me, and I work from a variety of environments. My house is possibly in foreclosure, so working from there has some weird disruptions; which is why I have an office in a co-work space. The commute to the co-work space and to various clients means my computer gets bumped, jostled, and regularly shoved into a deteriorating briefcase. A lot of those problems are eased by driving everywhere, but using 4,000 pounds of vehicle to move about 200 pounds of me and equipment is an inefficient solution. The planet and my health would appreciate a bit more use of bicycle and bus. Trusting my sole computer to the vagaries of commuting is a scary thought. Clients’ locations are variable and I have to be ready to accommodate various levels of technology. The consequence: simple but not too simple, robust but not too expensive.

Welcome to Chromebook. That was simple enough. But which one? Simplicity evaporates.

Chromebooks are cheap, except when they are not. The cheap ones do everything – almost; and each drops its price by dropping some other feature or two or three. Fortunately, I know what I need: a good keyboard, for my prolific writing; a good camera and microphone, for video conferencing; and an Ethernet port, because many health minded people avoid wi-fi and its possible influence on sleep, heart irregularities, and a list I’ll let you investigate.

Three weeks of searching (and a much-appreciated Christmas gift certificate) and I’d finally found a Chromebook that did it all. Why so long? Shopping online for a Chromebook is easy if the main determinants are price, color, and size. Technical details like Ethernet ports are harder. I only succeeded because I finally called someone in an OfficeMax store that would walk over to his display and look at one.

Thank you OfficeMax. Thank you person whose name I can’t remember. He even suggested I buy it online and then bring it into the store if there was a problem. One nice thing about island people is that they understand that returns can work a bit differently when a ferry is involved.

Log on. Click, “add to cart”. Read, “Not available.” Wait. Click again. Wait a few days. Click again. Repeat for a week, or two. Finally, I called the OfficeMax phone support line, got a real person, and asked her about one of the other Chromebooks that looked identical. Did it have the Ethernet port? Please wait on hold while she checks with the technical staff. Yes it does. Yeah! Is it in stock? Yes. Excellent. Double check the item ID. Hang up. Log in. Order up. Order confirmed. Relief.

Email arrives. Product backlogged. Patience. Delayed gratification leads to good things, right? The order is shipped – after only a three day delay.

I purposely worked from home the day it was supposed to arrive. Ah, a FedEx Ground truck (with a Harley Davidson license plate holder) backs into my driveway and the driver smiles and hands me an enormous box.

Get inside where it’s warm, open the box, and notice that it doesn’t have an Ethernet port. Not a happy camper.

After a few moments of internal venting, I called the number for “if you have any questions about your order”. The quick story: The pleasant support person confirmed that the particular Chromebook I ordered doesn’t have an Ethernet port, and that I hadn’t simply overlooked it. After being placed on hold for a while and simultaneously doing some research, I asked them to ship me an Ethernet-to-USB adapter for free. When I made the order I’d asked for a product with a specific feature, they accepted my payment, and delivered something that didn’t have that feature. The adapter would effectively meet the requirement, though at a reduced performance that I was willing to accept. They said no, but offered a $10 credit. I said no, because driving to the nearest OfficeMax would cost me about $16 if I wanted to return it in person. We left the call with a quietly emphasized message that OfficeMax’s trustworthiness dropped a notch in my estimation. For all I could tell, returning it would only result in the next one missing something else. I will adapt.

For those that want the specifics of the unboxing, look below.
For the rest, here’s my summary and conclusion.

After a few days of use, the Chromebook is an impressive machine. It doesn’t do everything I want, but it does enough that I can easily envision it as the next evolutionary step in computers. Comparing to a full-featured laptop will be a losing battle. If you started with a Chromebook, it would seem to do everything. As an investor, I compare it to a Windows tablet and an Apple iPad. The Windows tablet seems to have shuffled off only about 20% of the complexity of full Windows. An Apple iPad maintains its character by using software to constrain the capability of the hardware. A Google Chromebook suggests it won’t do as much, while also suggesting it may do enough. Of the three main companies involved, Microsoft (MSFT), Apple (AAPL), Google (GOOG), I think Google displays the greatest understanding of where computers and users are going. Stock evaluations are all for market capitalizations of hundreds of billions, and therefore outside my comfort zone; but, as an example of managerial strategy, GOOG looks best to me. As a user, a Chromebook is impressive for the price, and may eventually take over all of the capabilities of a laptop, but in a different way.

Now, if I can only figure out how to save this document to the archive on my Mac. Details, details. (Post finished on my old MacBook because it is late and I don’t feel like porting around the pictures. But, eventually . . . )
____________________________________________________________

Unwrapping My Chromebook – the details

January 21, 2014

Eagerly awaiting my Chromebook. It means my cracked Mac won’t have to commute. Besides, helping a client get ready for a trip included configuring their Windows tablet and phone. They say “It’s easy>” Sure. They made it so easy that before I got there the keyboard was set to Arabic and there was no obvious way to Undo.
Work from home so I can be here when it is delivered.
12:55 FedEx Ground
Harley Davidson
Big box in a bigger box
No Ethernet!
Hey OfficeMax, how about a freebie adapter? No.
Hey Thomas, how about $10 off? No.
The gas to get me there and back is about $16 and hours of my time.
Radio Shack is on the way and that’s good enough for me.
Nap to cleanse the palete.
Supposedly Chromebooks are easy to set up and run, but after the first two disappointments (including an ordering experience) I’m putting it aside to get some work done. Gotta bill hours to pay for the machine.
But first commiserate with an other geezer geek.
Okay, let’s plug it in and see what happens.
16:50
Elegant looking machine, even for $300. Ugly power cord, not travel friendly.
Turned on without me doing anything. Must have been because I had it open to remove the protective keyboard cover.
language keyboard network (Where’s that password?)
Usage stats? No.
Sign into GMail.
16:58
Which photo for the background? One of mine? Not yet, but I can use my G+ profile shot. Or not. Must investigate later. If I’m selling photos it should display one of mine.
Take the Tour? Not yet. I skip ahead to the browser – which already knows my Chrome bookmarks.
17:00
Transfer this file to a USB drive to continue the note taking on the new machine.
17:15
Interesting. I could drop the file in via a USB drive and upload it to Google Drive, but I couldn’t edit it until I converted it from .txt to .doc, which necessitated going back to the Mac.
But hey, I’m editing from the Chromebook now.
Hmm, trivial little difference. The MacBook keyboard letters are all in CAPS. Take a look at your keyboard. The Chromebook’s keyboard is all lower case.
Turn off the Tour. I get their message; every thing should go through the Chrome Store because they probably want to emulate Apple’s success.
Looks encouraging. Only other optimization I want to do now is to change the background photo.
Heading over to Google+ for the photos I have there, and find that G+ isn’t even in Chromebook’s toolbar. Do they think so little of G+ too?
Maddeningly small photo icons. Oh how spoiled I’ve become.
There’s more work to do, and I’ll have to do it offsite, which means working offline, but it should be able to handle that. Not. (Comment added afterwards, obviously.)

January 22, 2014
I’d prefer to thoroughly explore this nice bit of hardware, but I have work to do and will dive in via my client that does almost everything in the cloud. We’ve been using Google Drive / Docs / whatever they’ll call it next, for over a year.
Hmm, bookmarks in place, but must log into everything again. Where are those userIDs and passwords? Ah, yes, over on my Mac.
Not much adjustment to make for the new keyboard.
HCLE works – well except for the sites that don’t load under Chrome, and a Chromebook won’t support Firefox, so I have to find a workaround. Anyone got one?
On my Mac I used different browsers for different clients. It was a convenient way to separate browsing traffic, usernames, passwords, and email systems. Fitting them all into Chrome is possible, but I might have to sign up for Hootsuite or some such aggregator to manage the accounts.
Wish I could switch the ctrl and alt keys. Switching between my machines will be like switching between cars. The same motion that hits the lights in one vehicle turns on the windshield wipers if I’m in the other one.
Our introduction isn’t over yet, but I suspect you’ve read enough.

Will my Chromebook do everything I need a computer for? A short introduction suggests no; but, for $300 it will do so much that, as we celebrate the 30th anniversary of the Macintosh, I can be amazed at what is available.

Posted in Uncategorized | Tagged AAPL, Apple, bicycle, Chromebook, consulting, cowork, goog, Google+, HCLE, investing, Mac512, Macintosh, Microsoft, officemax, photos, slide rule | 1 Comment

Rube Goldberg Manages Healthcare

Posted on January 22, 2014 by Tom Trimbath

Rube Goldberg would be proud. My journey through the officially mandated revision to my health care plan led me on a far adventure with grand vistas and worrisome territories. I was sure that I’d be shunted aside on detours, but by the end I ended up almost where I started, but not quite. Ah, so the system is designed like much of life, Much Ado About Nothing – almost.

I listen to the media less every year because each year they seem to move further from personal practicality to mimic the ideological generalities fed them by pundits and publicists. My descriptions of the minutiae of things like applying for healthcare are my contribution to reality checks. The reality behind the headlines is rarely as simple as the public debate suggests.

Last week I chronicled my hope and then dismay with ACA, the Affordable Care Act. I have the good fortune to be in a state that had a working site. The site suggested (no promises) that I’d either qualify for the state’s version of Medicaid or get a $300 rebate towards health insurance. Both sounded good because my existing provider was about to raise my rate more than 30%. By the end of the process, my new rate was 60% higher with no hint of a rebate. It felt like a bait-and-switch.

There is good news to report. After weeks of trying to get through on the phone line, and attempts via email, I finally resorted to complaining publicly. Thank you Twitter. After a few tweets that I directed at the wrong source (evidently @WAhealth is not for WAshington but for Western Australia – try @WAPlanFinder instead) I finally got a response, as well as chorus of others who were similarly disaffected. I was instructed to go back online and check out the support links on the main site. Yes, I’d done that before. That’s where I got the phone number and the email address. (By the way, apologizing for the inconvenience trivializes the fact that my health insurance was going to be my second largest monthly bill; and I wasn’t paying the largest, which was my mortgage. That’s not just an inconvenience.) I was to look for Navigators and Brokers.

Dutifully, I log in, click the link, answer the question, and find that there’s no one listed for my zip code. I know this is wrong because friends have told me about someone up by the grocery store, but not someone online, along a bus line, or necessarily open when I’m not working. (Granted my common 12 hour work days would be tough to work around.) Frustration!

Undutifully, I pick up the phone to vent at their apologetic message – and a person answers. Shocked. Shocked I was to actually talk to someone. There was a strong chance that I dialed the wrong number. Gasp. I actually got through. Teresa kindly takes my information and graciously puts me on hold. After the first few minutes I was glad that two of my Christmas presents to myself were a new headset and battery for the phone. This might take a while. I couldn’t start dinner and didn’t want to be caught in the bathroom, so I wandered around the house doing small chores. After a hungry hour I realized that I might be on hold and that they may have all gone home for the night. The battery and my patience wouldn’t last until morning.

And then the muzak and recorded apologies stopped. At 86 minutes into the call – a voice. Robert introduced himself; and in a friendly, professional, and non-judgmental manner tried to understand my situation. Ah, it’s simple.

During the previous weeks, I’d chronicled my trials via Facebook and such. Equal numbers of people were on either side of my situation: “It’s easy, what’s wrong with Tom” versus “It’s messed up, and there are lots of us in similar situations.” I had a mix of humility and companionship.

Robert asked me one question. I answered truthfully. He pointed out that it was possible to be too correct with some of the answers. The intent of the question could be different than the specific wording, or at least that’s how I interpreted his explanation. If I’d been more cavalier in my responses I probably would’ve been finished in that first session. For 24 minutes I accepted every bit of help he offered. By the time we were done my insurance was re-established with a $230 rebate (instead of the $300 rebate I expected).

Do the math, 110 minutes spent once saved me $230 every month, almost.

Hello Rube Goldberg. my premium started at a bit over $300, I thought it was going to go down to less than $200, was forced to make a payment that was almost $600, and ended up back to only $10 over my original premium. Hours of effort, through multiple avenues, and hours not spent working for clients, and I end up back almost where I started + $10. A lot of flurry for almost no difference. (Though the coverage can’t be the same. Can it?)

Last week I described how my health care costs affected my mortgage and foreclosure prospects, and how that all necessitated my business, which I have yet to pay 2013 taxes on (due 1/31 and waiting for funds from December). Each has a process. Each is complicated. Each is necessary. Therefore, each must be addressed. And I keep in mind that, after all of the work, it is probable that I’ll have health care, regain control of my house, continue my business, pay my taxes – and may be back where I started + $10. Rube Goldberg would be proud.

Posted in Uncategorized | Tagged ACA, business, consulting, Facebook, foreclosure, health care, healthcare, housing, mortgage, ObamaCare, Rube Goldberg, Shakespeare, taxes, Twitter, Whidbey | Leave a comment

Easy Bits

Posted on January 18, 2014 by Tom Trimbath

Don’t do it all at once – if you have the choice. In investing, you have that choice. People get spooked by thoughts of having to make a major life-long obligation, or by worries of losing everything. Have you heard the term “liquid assets”? They’re called liquid because they should be able to move easily. Easy is good, especially if you’re trying something new. If you’ve got a nice mix of smart, wise, and lucky easy can turn into ease; which is true in investing and much of the rest of life – but there are no guarantees.

I’ve been called a Renaissance man often enough that I no longer have to check the spelling of Renaissance (though I do have to type it slowly to make sure I get it right.) I have a few decades behind me now, and without great intent I’ve developed a varied and eclectic mix of skills, talents, and endorsements. Unfortunately, today’s job and business market concentrate on experts and expertise more than experience. At least I have a lot of stories to tell.

Almost all of my experience comes from trying something, making mistakes, then trying again, making different mistakes, and repeating until I’ve gained enough proficiency to have fun. My first classes in dancing and in karate involved a lot of stumbling. Now, not so much.

As the stock market hits records, people become more interested in investing. That’s actually the opposite timing from conventional wisdom, but the markets and wisdom have little to do with each other – in general. And yet, I encourage people to invest if, if, they go slowly and check in with themselves frequently, and are willing to back out if it doesn’t fit their style or goals.

My start was small enough. I bought a few shares of what was US Steel, held them for a few months, then cashed them in on my first SLR camera. A few years later, after college, I got back in for the price of a pair of hiking boots. A few years later, my purchases were the same as a B&B weekend. A few years later, they became the size of small vacations, then the same as a used car, then a new car, then a (very) small house.

Some of my purchases kicked off major episodes of buyer’s remorse. The feeling usually stemmed from some factoid I’d overlooked, or simply from the realization that I had acted rashly rather than rationally. Most stocks spend most days lazily wandering about some average, and a sale a few days later may only mean the loss of a commission. Before discount brokers, commission losses were so large that attitudes about investing developed that persist today. Reluctance remains, yet the situations have changed. People spend more on shipping from online shopping than from what most brokers charge for a trade.

I just spent the last couple of hours catching up with my portfolio. I actually made some trades this week. As I said at the end of last Saturday’s post, I sold some RSOL. It had done so well that it became half of my portfolio. In the last year it has gone from $0.82 to $4.42 (actually peaking out at $7.17). The rebalancing is happening in small steps. I bought a bit of MVIS. Thought about it for a day, and bought a bit more. A day or so later, I bought some GIG. Half of the funds from the RSOL sale are still sitting there in the account. I’ll get to them, but there’s no rush.

MVIS and GIG also are very good examples of taking small steps. In both cases they had previous incarnations (reverse splits) that took multi-thousand share positions down to a few hundred shares. As I bought these new shares, I reviewed the history of my positions. I accumulated thousands of shares by making many small purchases. Usually I held, but sometimes I’d back out a portion, then step back in later.

MVIS and GIG are also very good examples of how easy investing does not mean easy money. In one case, MVIS, my purchases this week doubled my position for less than a twentieth of the cost of the rest of the position. The stock has dropped that much over the years. I could’ve done the same with GIG.

If you’ve been investing for a while you’re probably questioning my purchase. Good. I questioned it too. Past performance is not predictor of future results. That caveat works up and down. The true test is what I think the companies and their stocks are worth, and whether their current value is much below that. I think both MVIS and GIG should have a much higher stock price based on Present Value of Future Revenues Discounted for Risk (go read my book for details.) It’s been true every time I bought the stocks.

Pessimists weigh in with, “And you were wrong all those times.” Optimists weigh in with, “So, if you have enough patience it will all work out right.” I weigh in with, “I’ve reviewed decades of my own performance and patience usually pays often enough.” (And there sits the counter argument in the paragraph above. “Past performance is not predictor of future results.”)

Taking small steps makes it easier to step back. Lots of steps got me across Scotland. Just keep pedaling got me across America. Lots of stumbling taught me how to stumble less when sparring or dancing. Lots of little steps got me the title of millionaire, for a while. Whether it does again or not, one way to get through anything is to take lots of steps in the direction you want to go. Bit by bit is so much easier than all at once. Make it easy.

Posted in Uncategorized | Tagged dancing, Dream. Invest. Live., GIG, GigOptix, investing, Just Keep Pedaling, Karate, Microvision, MVIS, personal finance, RSOL, Scotland, stocks, wealth | Leave a comment

ACA And HAMP And Me

Posted on January 15, 2014 by Tom Trimbath

ACA and HAMP, government programs for health care and housing. Before you think I’m about to either praise or vilify them know that I am an extreme moderate independent. I am (extremely) certain that solutions are in the middle (moderate) and I am unimpressed with the two main parties (independent). The grander the plan, the greater the chance of unintended consequences. In the midst of seven day workweeks, I am devoting time each day to thoughts of how to answer my required responses to the Affordable Care Act, the Home Affordable Modification Program, and somehow get around to figuring out my business taxes. For a person that wants to be healthy, housed, and responsible, there’s a lot of work that takes away from work which leaves less for life – at least in the short term.

I welcomed the Affordable Care Act. Was sad to hear about the early implementation. Was glad to hear that Washington State’s site was running well. Was gladder to learn that I’d save about $300 from the update planned by my provider. Then have been dismayed to find that, despite qualifying for the state’s version of Medicaid or for a tax credit, I’d be paying the full rate. Not only would I be paying the full rate, but that it would be extracted automatically from my account. I’m sure that all that is required is for a switch to be switched. An option checked or unchecked. Three weeks of phone calls, emails, and tweets and I’ve been led back to where I started. This could be good, but in the meantime it is painful.

HAMP helps homeowners avoid foreclosure. I’m told that HAMP, other aspects of the Make Home Affordable Program, and various Washington State programs are why I am still in my house despite not having paid my mortgage since fall 2012. I suspect that if it wasn’t for those programs, and the counselors at a state grant funded organization called Parkview Services, I wouldn’t be so close to regaining control of my debt, my mortgage, my house, and my home. The cost in time has been preparing paperwork, cajoling faxes scanners and printers to properly replicate every letter and note delivered by the mortgage servicer. The cost in money has been certified postage, overnight deliveries, and a cost I decided to bear of a co-work slot that got me away from the distracting traffic of debt collectors. Fortunately, thanks to some appreciative clients, I might be able to pay a modified mortgage enabled by the government programs – as long as I can keep my monthly income up and my monthly expenses down.

HAMP, meet ACA. You two should talk. Without the monthly tax credit my healthcare costs will be my largest non-discretionary expense, and therefore the largest cost influence on my ability to meet a modified mortgage.

And, it is January. Tax time for Washington State businesses. 2013 was a record year for my consulting business. It had to be, and it was. Instead of worrying more about book and art sales taxes, I am now wondering how much I’ll have to pay for my consulting services. HAMP and ACA, meet DOR, the Department of Revenue.

At this point I think I’ve provided ammunition for both political sides. “Here’s proof that there’s too much government intrusion!” “Here’s proof that government programs work!” My point is that there is more than one point.

Here’s my side. I’m tired. I’m thankful for the benefits. I’m very aware of the costs in time and money. I can’t ignore that the time required to rectify my health care issue, plus the time to answer the mortgage modification process, plus the time to calculate my taxes leave me with less time for work, and shrinks the life segment of my days down to a hour or two. Even writing this blog feels like an act of playing hooky, and I’m posting this near 9pm. The dishes will get done later.

One of my clients is the New Road Map Foundation, an organization with a lot of overlap with my dedication to valuing life over money while acting responsibly. The title of my book is Dream Invest Live because Dreaming and Living are the beginning and the end. Investing is merely a bridge between the two. Both efforts have drawn me to the studies that show how much time is really required to maintain a reasonably sustainable lifestyle. The answer: three hours. Aboriginal cultures tend to work about three hours a day to attain everything they need. Even in medieval times, the peasants worked long and hard – except for holidays. Almost every other day was a Holy day. Praise be.

Every day I see the irony in my life, a life that is largely out of balance. The optimist in me sees the imbalance as temporary and the effort as foundational for the future. The pessimist in me sees a foolish effort to please the authorities.

Yesterday was my birthday. I was asked, “What do you see your next birthday looking like?” The answer that flashed to mind was “I’m just going to try to make it through tomorrow.”

Today I started back at the State’s web site, trying to resolve my health care bill before the money is automatically extracted. I dutifully scanned, emailed, and printed copies of the latest letter and envelope from the mortgage servicer. And yes, I have to make a copy of the envelope as well as the letter, scan them, email the scan, then print the scans, put them in an envelope and mail them to the counselor – all in a good cause. By the way, the letter was actually the first bill I’ve seen from the mortgage company in months. The amount due by the end of the month is – ah, well, large. And then, of course, there is the tax issue, but hey, I’ll get to that any day now.

Would I trade this level of health care (and resultant lifespan) and this quality of a home (with its utilities, comforts, and shelter) and these governments for an aboriginal lifespan, exposure, and tribe? Evidently, not. But now that I think of it, I don’t recall anyone making me that offer. Hmm.

For now though, it is me and HAMP and ACA – and hope that next year at this time it will all be better. Hey, I can dream, eh?

Posted in Uncategorized | Tagged ACA, Art, books, consulting, Dream. Invest. Live., entrepreneur, Fannie Mae, foreclosure, frugal, frugality, HAMP, health care, housing, MHA, mortgage, New Road Map, ObamaCare, personal finance, photos, taxes, unemployment, wealth, writing | Leave a comment

No News Is No News

Posted on January 11, 2014 by Tom Trimbath

No News is Good News. Really? That phrase seems like it is only true about half the time. The other half is No News is Bad News. The third half is No News is No News. (Go ahead, check that math.) Public perception of a company, an organization, or a public figure is driven by skillful use of communication, ideally. But, saying nothing doesn’t mean nothing was said. People will fill in the blanks even if it means reading between the lines when there aren’t any lines. And sometimes, nothing is nothing.

We watch for news. Granted, fewer of us are watching ABC, CBS, and NBC for it, but we continue to seek news from Facebook & Twitter, The Daily Show and the Colbert Report.

The last few days were a technologist’s news fest. The Consumer Electronics Show was held in Las Vegas. Over 150,000 people showed up for a trade show of everything electronic from enormous televisions to computers on a chip, from critical care medical devices to meat marinaters. It is an obvious event for any electronic startup to show off and gain exposure. Every year I and other MVIS sharedholders wonder, “Will this be the year for news from MicroVision?”. This year we had hope.

MicroVision released a press release on December 13th proclaiming that they were going to “show new and exciting product concept devices” at CES. While that sounds like news, it was met with ambivalence by most of the shareholders. There was an expectation of a product announcement by the end of 2013. That wasn’t it. The PR announcement mentioned CES, which was good; but concepts aren’t products. Yet, the hopeful hoped.

First Gen ShowWX (about the size of an iPhone - so maybe the next gen fits inside a watch, or . . . ?)

First Gen Projector (about the size of an iPhone – so maybe the next gen fits inside a watch, or . . . ?)

Then, silence. Maybe they were operating under secrecy constraints. Maybe they would be included in some larger corporation’s announcement. Maybe we’d hear from the company and the attendees about MicroVision’s exhibits and exciting product concepts. Even without a press release, there’d be Facebook, or Twitter, or maybe even YouTube videos. It’s happened before.

The show opened and the company’s mouth stayed shut. No buzz. Not even any innocuous, everyday tweeting. Was that bad or good?

That’s what has confronted MVIS shareholders, but a lack of news does not result in a lack of discussion. Speculation begins, well, speculation continues because it never really stops with such a story stock. Pessimists take it as proof that the company has nothing worth showing, and they can point to the more public competitors who manage perception by stepping into the spotlight. Optimists take it as proof that things are so good that the news has to be kept secret, and that spotlights will swing over to MicroVision without being, after the news is released.

Two days into the show, a thread on a discussion board held a clue of a rumor that everyone that attended the MicroVision exhibit had to sign a Non-Disclosure Agreement. The rumor producer didn’t disclose why.

As I read it, no news is no news. Yes, the pessimists could be right. They have been so far. Yes, the optimists could be right. Long-delayed overnight successes do happen. In the meantime, I know no more than I knew before; except that, whatever is going to happen is happening at least one day later than I wanted it to. That’s been happening for years.

Managing a message is important. That’s why we are taught manners. It’s why I’d love to be able to spend more than an hour or two writing these posts. (IIHMTIWHMIS – If I Had More Time I Would Have Made It Shorter) Properly managing a message takes effort. Extemporaneous politicians are a rich harvest for comics. They say too much without thinking. Use your mouth to take a breath before using it to speak. Enthusiastic physicists witnessing a phenomenal energetic reaction that could provide clean power make a blunder by giving it the wrong name. Cold fusion becomes a joke instead of a hope. A bit more humility in the name, like, quickly now, how about, Room Temperature Energetic Reaction, may have concentrated the debate on energy instead of challenging the Hot Fusion crowd. Saying too little is the wrong way to go too. That’s the fatal flaw in so many industrial disasters. If it’s bad; say so soon. Respect your audience.

MicroVision may be executing exactly the perfect message. We can’t know right now. Whether they have anything to say or not, they missed an opportunity to simply communicate the fact that they wouldn’t communicate. How about, “Yes, we’ll show new and exciting product concept devices, but we won’t be talking about them because of: pick one or more of, competition, NDAs, carefully managing expectations, other.”

Investing should have a basis in logic, and logic works best with facts and data. A company that does not provide facts and data provides less reason for logical decision making. Within the investing world, there will be other companies that provide that supply. Maybe that’s why demand for MVIS is low.

This is one reason why I consider MVIS a speculation. I considered it an investment, then a startup-that’s-about-to-become-an-investment; but now I consider it a speculation.

Well, I speculate about a lot of things because there are a lot of things we don’t know. Will the Digital Singularity happen? Are there aliens amongst us? Is the biggest threat to my house the mortgage company, an earthquake, or my maintenance skills?

I may even speculate a bit more about MVIS by buying some more MVIS. There was no news, but that wasn’t good or bad, it just wasn’t. I sold some RSOL because they had some good news, which means I may rebalance my portfolio. When there’s no news, whether it is about investing or politics or people, I’ve learned to remind myself, that no news is no news and that, except for time, nothing has changed to change my mind.

(A last minute phrase from karate comes to mind,
“Do not block the punch that wasn’t thrown.“)

Posted in Uncategorized | Tagged CES, cold fusion, Comedy Central, Facebook, Fukushima, IIHMTIWHMIS, investing, Microvision, MVIS, NDA, personal finance, stocks, Twitter | Leave a comment

When Free Costs Too Much

Posted on January 8, 2014 by Tom Trimbath

It happens surprisingly often. Eager, compassionate people appreciate and understand a fellow human’s hardship and heartache, then offer something valuable for free. Confusion scrunches their face as their offer is turned down from someone who couldn’t afford to buy the gift for their self. Why would you turn down something that is free, especially when there are no strings attached, no obligations implied? I know more than enough people from both sides of the offer. When you’re poor enough, even free things cost too much; but, you’re also likely to know what’s really valuable.

I’m glad I live where I live, amongst the people I know. They are the most supportive community I’ve met. Some claim that there are more non-profits per capita on the South end of Whidbey than anywhere else in the US. That may be. Island County has about 50 non-profits (501(c)(3)s) per 10,000 people, which exceeds all of the states except for Montana, Wyoming, North Dakota, and South Dakota. The champ is D.C., the other Washington, but that’s not much of a surprise considering the center of power.

Champions of non-profits per capita (501(c)(3)s)

My experiences in mainstream suburbia were of anonymity, statistical averages, and bureaucracy. Help was available, though I didn’t need it at the time, but the anecdotes were of institutional assistance. The help was appreciated, but it came saddled with lots of forms and requisite verifications to compensate for necessarily impersonal and clinical fairness – in general. Stereotypes are always inaccurate, but the core story remains.

South Whidbey is not economically or culturally homogenous. Billionaires hang out with artists. Commuters fill the ferries with each rush hour, only getting to mingle if they miraculously have free time. The same mix exists in other places, but small towns make the distinctions more apparent. If everyone doesn’t know your story, you’re either so good at keeping secrets that you should be a spy, or you’re a recluse ensconced at the end of a long gravel road winding between the trees. The consequence of comfortable wealth is the unleashing of advocacy as people seem to be more likely to spend money on an issue they are passionate about, and less likely to buy luxuries to impress. The consequence of the commuters is partly seen in their paychecks and payroll charity deductions matched by off-island corporations. The consequence of everyone else trying to get by on the island is a population that is either lucky enough to have found a full-time job (that probably pays less than off-island), or a population of entrepreneurship by necessity. It is common for a self-employed islander to have at least three businesses. Hi, I have redefined myself as a Consultant, Writer, Speaker, Teacher, Photographer, Engineer, Entrepreneur, etc. – emphasis on the etc. (Most of my clients are non-profits and artists, which is usually just another version of non-profit.)

Put it all together and you end up with a crowd of passionate people who are very aware of the needs of others around them, and the ability to do something about it. A suite of non-profits arise that address local and global issues, and is funded by benefactors and paychecks. There are impressive organizations for supporting health care needs, housing needs, nutritional needs, pet needs, lots of needs. There’s more. Specialists and experts of many disciplines reach out and help with negotiable rates or even free services. (But the south end of the island doesn’t have a homeless shelter, despite people living in the woods; nor a hospital within twenty miles, despite an older-than-average population.)

And yet, a lot of the people who need the help don’t get the help, which can be massively confusing to those offering it.

I offer one example from my life which has been repeated several times. A friend knows about my stress, and is proficient in a therapy or treatment that may help me and my body to cope and heal. They offer a free treatment. This is a generous offer. Any of the retired wealth or regular commuters would pay a full rate that is probably half a month’s food budget for the therapist. The benefit can be enormous because properly managing stress can avoid massive medical bills. Why not say yes?

Look at any help from the other side. For a person in a financially tight situation, every minute and hour is precious. Entrepreneurs know that building a business can consume every waking hour. Profitability and enough savings to take a day off can be years away. Even when business is coming in, if it is via billable hours, every hour not working is an hour not making money. And we’ve already established that the person who needs the free help is the person who can’t afford any slack in their finances. The work drive becomes unrelenting.

If a treatment takes an hour, that may not sound like a significant deficit. Maybe it isn’t. But it takes more than an hour. Work has to be shut down and set aside. The commute probably isn’t instantaneous. The quicker way is to drive, but that costs precious gas. The cheapest way is to take the bus, if one is along the route, but that can eat up a lot more time. Set aside some time to change clothes if necessary. Get there in enough time to fill out the paperwork. Let’s assume there isn’t a wait. Then, after the treatment rewind, repeat, and get back to work.

An hour’s free treatment that may be worth a person’s health, may also take half a day of time and half a day of earnings. The free $120 treatment may cost almost as much in other expenses, which must be earned back at a much lower rate that takes even more time. Add another half day for that. Producing and delivering work on-time is incredibly valuable to building a reputation and increasing income. Deviating from commitments and obligations may mean not paying the mortgage. Health versus housing is a common trade.

People in financial difficulty usually receive an intense education and awareness of time and money. They must if they are going to recover from their situation. The dollars per hour are very apparent and the modifiers, like taxes, can’t be ignored. Eating out isn’t an option, and even a deli-lunch may be twice as expensive as eating at home or the office. A gallon of gas equals how many minutes of work?

But, there’s another cost that is just as evident and has nothing to do with money. A gift from a caring soul is precious, not because of the value of the gift, but because of the compassion of the soul. How do you say no to someone who is demonstrating one of the most admirable human values? Do you say yes even though you know it may cost too much of your own time?

It is a dilemma, and one that I feel vulnerable describing because I care about the people who care about me. How do I balance our mutual and individual respect and values?

I’ve been on both sides now: offers made and rarely accepted. I’ve come to realize that, whether the offer was accepted or not, at least one gift was exchanged that has immeasurable value. Two people cared about each other, which is free and priceless.

Posted in Uncategorized | Tagged Art, books, Charity, compassion, consulting, entrepreneur, Financial Integrity, frugal, frugality, health care, housing, jobs, Langley, mortgage, New Road Map, photos, social media, speaking, teaching, wealth, Whidbey | 2 Comments

One Level Lower – Revenue and Market Cap

Posted on January 4, 2014 by Tom Trimbath

It’s so cheap it can’t go down much further. Not, not, one of the best reasons to buy a stock. Regardless of the price, unless it is trading at absolute zero, any stock can drop the same amount, 100%. Finding the true value of anything usually means looking beyond the labels and facades most people casually witness. In stocks, two things I see beyond the price are the Revenues and the Market Cap. Together they’re better judges of whether a stock is cheap. Together they are a source of optimism for my portfolio.

If you haven’t already, wander through the stock synopses I posted as part of my semi-annual exercise. Notice in each that I start with data before words (after the disclaimer, of course.)
AMSC (Market Cap was $0.160B is $0.106B)
GERN (Market Cap was $0.196B is $0.611B)
GIG (Market Cap was $0.028B is $0.033B)
MVIS (Market Cap was $0.064B is $0.042B)
RSOL (Market Cap was $0.068B is $0.110B)
Yes, I follow the stock prices for daily swings, even though I prefer to trade on the span of years. But, when I want to check my individual investments I check the Market Caps. Market Cap is short for Market Capitalization, which is nothing fancier than the price of the stock times the number of shares. Simple enough, but the added influence of the number of shares brings a lot more information to a single number.

Stock prices rise and fall dramatically enough that entire media outlets can spend every minute of the day reporting on the moves of the thousands of publicly traded companies. It is entertaining, and mostly moot because most of the motion is noise. If there’s no news, there’s no real reason to change the price; except that the markets are designed to make sure the prices move so the money continues to flow. Handy, but a bit silly too.

If the number of shares of the company never changed, then the price would be a good long term measure of the company’s progress. But for almost every company, the number of shares changes every year. When managers and employees receive enough shares as compensation, more shares must be issued. Financing sometimes involves additional shares being created and sold. Stock splits are the most obvious change because they usually involve a doubling or a halving of the share count. The price halves or doubles appropriately, but only the stock changes. The company remains the same company. Ideally, the Market Cap is a constant before and after the split. That’s true of the compensation packages too, but the influence there is usually a few percent, and easy to miss.

I particularly notice Market Cap because I invest in small companies before they are profitable. Besides debt, the main way a lot of them stay in business is to pay the bills by selling shares. Bit by bit they sell more shares and slowly dilute the price of the stock. Track the Market Cap and the dilution can become more apparent even if the price stays the same.

Market Cap alone isn’t very useful other than for long term comparisons, though it can put things in perspective. GigOptix’s Market Cap is a bit more than $30,000,000. There are probably houses that go for that much. I know there are boats in the price range, and some custom airplanes probably spend that on furnishings, or engines, or paint jobs.

The other number I watch for any company that is actually selling something, not just ideas and prototypes, is Revenue. Earnings and profits are wonderful, but they are also subjected to more bookkeeping tricks. Revenue tends to the truer to the business of business. If Revenues are increasing faster than expenses, then profitability is inevitable (as long as extrapolation holds).

Put the two numbers together in a ratio, Market Cap over Revenue and you basically have the Price to Sales ratio. How much does it cost to buy a company that is bringing in a dollar in sales? If you look as profits as a way to pay back your investment, then the lower the Price to Sales ratio, the shorter the time to recover your investment. Of course, as shareholders we’re only buying a small slice of the company, and the sales only come all the way through if there are dividends, but the idea maintains its merit.

In general, companies that are expected to have high profit margins start off with high Price to Sales ratios. I typically use P/S ~ 6 for high-tech. Steady, boring companies have lower ratios. Construction may be P/S < 1.

So go back and look at those numbers above. GIG and MVIS have similar Market Caps, so they’d seem to be similar companies, and they are. They are both electronic component manufacturers with disruptive technologies. I think a P/S = 6 is actually too low for them because the Present Value of their Future Revenues Discounted for Risk is much higher than their current sales. Yet, the company with the smaller Market Cap, GigOptix, has a P/S = 1.15 while the “bigger” company, MicroVision, has a P/S = 6.23. That’s because GigOptix is making about six times as much money as MicroVision. The irony being that part of GigOptix’s success is because they bought some of MicroVision’s cast-off technology. Solely based on that comparison, GIG is a better investment than MVIS. (It also suggests that, at the time, GIG’s managers understood MVIS’s technology better than MVIS did.) The real story is always more complex, but simply looking at their stock prices wouldn’t reveal the potential that either GIG is priced too low or MVIS is priced too high. (The more complex story is that GigOptix may get higher profit margins but that MicroVision may tap an much larger market.)

And here’s where the storied stock that is MVIS settles out. The stock reacts to rumor and speculation, disappointment and delay. Within the last five years MVIS has ranged from a high of over $40 to a low below $2. Yet, because of market dilution and stock splits, the story is harder to track unless you look at market cap, which still shows variation, but much less than what the price sees.
MVIS market cap in $billions
12/27/13   .041
6/30/13   .064
12/31/12   .048
6/30/12    .027
12/31/11    .042
6/30/11    .128
12/31/10    .177
6/30/10    .263
12/31/09    .244
6/30/09    .190
12/31/08    .11
07/01/08    .16
12/31/07    .094
06/30/07    .20
12/31/06    .126
06/30/06    .049

MVIS is trading below $2. It can be hard to believe it will go much lower, but I keep in mind that using the pre-split numbers today’s price would be one-eighth of what the ticker shows. More like $0.20 than $2.00. And that the Market Cap is essentially the same as it was in June of 2006. But the number I really keep in mind is what MicroVision’s Market Cap can be considering the Revenue they may generate. If a company can generate $1,000,000,000 in revenue, then daily fluctuations on the scale of $30,000,000 would barely make the news. They wouldn’t make enough noise.

The price is the easiest thing to read about is the easiest thing to talk about, but looking one layer lower may produce a much more valuable story. And that is true of much more than just stocks.

Posted in Uncategorized | Tagged AMSC, Dream. Invest. Live., GERN, GIG, GigOptix, investing, LTBH, market cap, Microvision, MVIS, personal finance, revenue, RSOL, stocks | Leave a comment

Semi Annual Exercise EOY 2013

Posted on December 31, 2013 by Tom Trimbath

Back by popular demand, but mostly because I do this anyway, it’s my semi-annual review of my stocks. For over a decade I’ve ended every June and December with a simple exercise: in a few sentences, well, maybe a few paragraphs, explain the company behind the stock, why I have the stock, what I think the company can do, and how I think things are going. It is an exercise inspired by Peter Lynch (author of One Up On Wall Street). If you can’t explain why you’ve got it, maybe you shouldn’t own it. I suspect that is true of any possession – though that would make a tough requirement for any first-time home buyer. Welcome to my opinions, lightly supported with facts, that explain to me, why I own what I own and what I may do differently.

A quick description of my strategy, analyses, and attitude is back in my previous Exercise. The shorthand is LTBH, PV of FR x %risk, and Buy Small Sell Large. Otherwise known as Long Term Buy and Hold (typically for years), Present Value of Future Revenue Discounted for Risk, and Buy stock in Small companies and Sell them when they are large. Want a longer discussion? Book me as a speaker, hire me as a consultant, buy my book (Dream. Invest. Live.), or maybe just buy me a very good lunch. Despite considerable consideration, decades of experience, patience, and diversification and a short while as a millionaire, my current finances are poor enough that I’m surprised I didn’t qualify for Washington’s subsidized health care.

Amongst a whispered chorus of “I Told You So”, I simultaneously feel dismay and enthusiasm. I feel both emotions because I’ve been investing for almost 40 years. Stocks go up and down and seeking logic to describe their motions is usually an exercise in rationalization, not methodical explanation. If you read the synopses (which are available below via links to other discussion boards, where the conversations serve more than just my web traffic) you’ll probably see that pessimism and optimism mixed.

For my optimism, I needed no more confirmation that what I wrote back at the end of June.

I am heartened.

My portfolio possibilities can far exceed any financial influences of mortgage modifications.

Currently, my portfolio is enough to pay off my credit card debt, but would leave only a few thousand for emergence funds and my retirement account.
If all of the stocks reached P/S = 6 at current revenues and products, I’d have enough to catch up on the mortgage and even pay off the credit card debt. This is close to what I consider a conservative rational market valuation. It assumes no growth.
The same is true if two of the disruptive stocks, MVIS and GERN, reached market caps of $1B. Then, I’d also have enough for a few more years of living expenses.
If they all reached market caps of $1B, I’d have enough, that if necessary, I could pay off all of my debt and still have savings. This is reasonable if the market was valuing companies and stocks based on the present value of future revenues, which does not seem to be happening for such small companies – though that may be changing.
As I said, valuing disruptive companies is difficult. While my estimates for MVIS are in the incredibly modest range of $640 (only $80 pre-split for you knowledgeable in MVIS), others estimate as high as $1,500. At that price my portfolio is so much greater than enough that philanthropy can become a wonderful occupation.
If GERN matches MVIS’s success, well, it will be time to give away lots of money.

So goes the money story. Of the list, only one scenario leaves me with my current worries. I considered such a scenario to be unbelievably unlikely, yet here it sits.

I am also disheartened.

I wrote that only one scenario left me with my current (June 2013) worries, and that it was unlikely, yet that is where my portfolio remains. Luckily, my consulting and non-profit support business is doing much better.

And yet I am heartened.

The companies are making progress, and so are some of the stocks. AMSC is up almost six-fold. GERN has tripled. RSOL has almost doubled. Unfortunately, I had to sell half of my GERN just before it surged again. As encouraging as that sounds, on balance with my other stocks, GIG and MVIS, my portfolio has not appreciated enough to return my finances to anything that suggests taking more time off. Seven days a week remains my work schedule.

AMSC proceeds with its products and its court case. Geron’s clinical trial data is encouraging, especially the part about returning bone marrow to a healthy state. GigOptix’s highest end products should be gaining traction in the market, and the stock is about one-fourth of my conservative estimate. MicroVision really could be very close to delivering on its potentially, really, really, anytime now, right? Real Goods Solar trudges along, my most conservative holding, and yet its competitor has multiples that are more than 30 times higher. There is room for dramatic improvements in each of those stocks.

As I’ve said before, the likelihood that they will all succeed is small; as is the likelihood that they will all fail. And yet, in the meantime, there they sit.

Investing is based on logic, data, and judgment. The results include luck even though we never like to acknowledge luck’s role. The only way my money can make money is for me to invest it, and to invest responsibly means regular care and attention even when things are a bit achy and don’t seem to want to move. Patience and exercise, because, well, they don’t cost much and can have impressive consequences when given enough time.

Here are the links to the discussion boards I use. Feel free to comment here or there, and to pass along links to others. The bigger the discussion, the better the chance of valuable insights (as long as the trolls and flamers are moderated appropriately.) Congratulations to those who are using the same exercise. I hope it is working for you too.

Investor Village
AMSC
GERN
GIG
MVIS
RSOL

The Motley Fool
AMSC
GERN
MVIS
RSOL
Economy and Markets

Silicon Investor
AMSC
GERN
GIG
MVIS

Posted in Uncategorized | Tagged AMSC, consultant, consulting, credit card, debt, Dream. Invest. Live., economy, entrepreneur, GERN, Geron, GIG, GigOptix, health care, investing, Investor Village, LTBH, markets, Microvision, Motley Fool, MVIS, non-profit, personal finance, Peter Lynch, Real Goods Solar, Retirement, RSOL, Silicon Investor, speaker, speaking, stocks, wealth | Leave a comment

Optimism And Pessimism Dance

Posted on December 28, 2013 by Tom Trimbath

Nearly the end of the year. So much to do. So much to review. Past and present bumping into each other as if they are dancing to two different songs. Past wisdom shows signs of relief. Hard work may begin paying off for many. Present wisdom is split between the optimists and pessimists. I write this, watching thoughts from both dance inside my head, nudging each other as I try to pick a topic. Their dissonance is the song many of my friends hear. Will it resolve into a harmony or dissolve into discordance? We won’t know until we’ve lived through it. I wish there was one clear message but one chorus is clear, people are hoping for a Happy New Year.

My life has improved considerably since last year. At the end of last December I was dealing with the emotional shock of not being able to pay the mortgage and very glad for a small sign of hope from client who would pay enough for food and fuel, if not housing and health care. This December I have more work than I can handle, maybe enough to pay a modified mortgage, and yet not so much more that I can relax (thanks especially to HCLE and NRM ). My contracted work is good, but far from a rate that will appease all, which isn’t surprising because non-profits aren’t known for high wages (except for the mega-non-profits, but that’s another story.) I’ve been working hard enough that they have names for the days I’ve taken off since June: The Fourth of July, Labor Day, Thanksgiving, and Christmas. I’m not even sure I’m taking off New Year’s Eve because it may be the only time I have to manage invoices and get ready for taxes. Take those two years of data points, negative cash flow and possibly balanced cash flow, and extrapolate and next December could even show a surplus.

Many of my friends are in similar situations. Their businesses are busier than ever, which means more revenue than ever, but their profit margins may be so low that they’ve traded a higher workload for not enough extra money. Ah, but a better profit margin in 2014 with some growth in revenues and – hallelujah! – maybe enough to pay for things that have been put off for years.

Or not.

I’d love to paint a perfectly positive picture for 2014, but many of my friends are old enough to notice that something is different. Yes, the economy seems to be recovering. But there are a lot of buts. The stock markets are up, but most of the money is going to people who don’t do anything with it except accumulate more. Unemployment is down, but at lower wages and with people holding more than one job. The real estate market is improving (want to buy my house?), but it may be artificial because many of the urban sales have been to corporations that are turning the houses back into rentals with unreasonable expectations.

Or, change is happening in the best way possible.

People are getting out of debt. The Occupy Movement has found a way to cancel debt for 5% of the value. The total value of all of US mortgages is declining. Regardless of the size of the average house, a growing portion of the population is quietly and dramatically challenging the assumptions of house size by advocating and living in houses the size of some master bedroom suites. The Affordable Care Act may be attempting to decrease health care costs, and folks are signing up; but I am more impressed with the number of people who are proactively deciding to eat healthily and exercise more. Those people who can’t get a regular 40 hour a week job are redefining careers and worklife, mostly out of necessity; but with paradigm shifting results.

My concern is that we may be working hard, fixing our systems’ flaws, and adapting to new lifestyles, but at a rate that is too slow and at a time that is too late.

Working seven days a week was a reliable path out of a bad situation. But income and wealth inequities may be so entrenched and extreme that working every day means nothing more than not having any days off.
Even if you make more than you spend, investing may have fundamentally changed with the deregulation of the late 90’s. Maybe it is no longer reasonable to expect an individual investor to be able to compete against institutions that carve through mountains to enable trades that are just a few nanoseconds quicker.
Those of us in America may have to save our country from decades of ideological mis-financing. The ideologues seem to have lost most of the recent battles, but whether they should’ve won or lost, taxpayers and citizens are left with the responsibility for returning the country to fiscal health.

I am pleased with my progress through the year, and as many have said, I am eager for a Happy 2014. I am also aware that many of those same people who are eager for a Happier New Year say so with a tone in their voice, or a posture and gesture in their body language that suggests that they have doubts. For many years people have said, next year will be better. Optimism sustains us – especially when pessimism has proven us wrong so far

My optimism remains. Yes, the financial system is due for a collapse, but I suspect we’ll build something better (and I wonder what that will do to my mortgage.) Yes, the global climate is changing. To suggest otherwise is to suggest printing the Farmer’s Almanac once and repeating it every year. And we will adapt; especially, because coastal cities are quickly switching from debating words to erecting defenses – and going greener. I even think health care costs will come down because such inefficiencies are unsustainable and because eventually people realize it is not just cheaper but more fun to be healthy.

As to whether my portfolio will recover, my good business will become much better, my health continues to improve, and my appreciation of life appreciate – well, yes, I expect all of that to happen, and more. But in the meantime, I think I’ll sit in front of a movie for a while. This mental and emotional dancing has tired me out.

For those of you investing in stocks, stay tuned for my semi-annual review of my stocks and the market. I’ve already started writing it up, and plan to post it on December 31st after the market closes. There’s a lot of hope in there, and if life lives up to that hope, there’ll be a lot of dancing and a big sigh of relief.

Posted in Uncategorized | Tagged consulting, dancing, global climate change, HCLE, health care, housing, income inequity, investing, jobs, mortgage, non-profit, occupy, optimism, personal finance, pessimism, portfolio, stocks, Tiny Houses, unemployment, wealth, wealth inequity | Leave a comment

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