I Live in Iowa: Week 43

Another week living the dream. Of course the dream is a process of development and a mental state far more than it is an actual achievement. I forget that all too often.

I worked 43 billable hours this week. It's not much really, but it is consistent and the amount of work that I get done in an average hour is improving. This week was fun as well. I worked or am working on an articulation lock. Usually I don't mention what I am working on for fear of saying something proprietary, but articulation locks are so common among construction and forestry machines that the sheer amount of time that I have spent on it seems an enormous investment for something that is relatively small. What is interesting about the simulation is that I am using solid elements, nonlinear material properties, and contact interfaces. Those are things that I don't get to use terribly often and it is fun because they are more complex than the standard shell element model.

In the coaching world we continue to have victories and defeats. We had a high profile athlete cause some drama this past week, which I have a blog post 90% written with my take on the situation and reflections on my role as coach. That counts as a defeat because we failed to diffuse the situation before it became a problem. The victory this week happened when several of the athletes, perhaps most, set personal records at the meet on Saturday. We keep telling the kids that we have been through the track season cycle numerous times and had success, we know for the most part what we are doing, and it showed this weekend. Almost all the throwers threw season bests. We had a sprinter run one of the five fastest times in the country. One of the distance runners who greatly doubts her speed ran a new 800 meter best, off of two weeks of injury and rehab. That is just a sampling of the meet, but in short, we rode home from UW Platteville with a bus full of smiles.

My own running was terrible this week. I get stressed every so often trying to fit engineering, coaching, running, and anything resembling a social life into my life and I had a few days this week where I felt like I was failing at them all. You need to have the hard times because they make one appreciate the good times or the successes more. I ran only 61 miles and only one workout. Although it was a very short workout it was 4x200 with 3-5 minutes rest and I averaged 29.5 including one 200 meter repeat in 28.9 seconds. That's nearly as fast as I raced a 200 a few weeks ago! I refuse to accept running 30-31 for hard 200s and calling it good enough. I am faster than that.

In the social life I spent a few hours at a friend's house watching a poker game. That's about it. Because of the feeling of stress in the middle of the week I slept over nine hours a few times. I needed some recovery time.

I am going to include a weekly tracking of the DHT (Double Hull Tankers) stock that I bought so that we can see together how it does. As a reminder I bought it at $1.18 per share. It closed on Friday at $1.08. So I have already managed to "lose" money. However, it is not real money right now as it is instead stock in a company. I did buy more of it when it went down, but that was for a different account so I will not mention that particular stock again. I am not worried because I feel the company financials are still stronger than the price that I bought it for. Additionally with a $0.03 dividend every quarter this stock is returning about 10% a year in dividends at this price. That is ridiculous. I didn't know that any dividend returned 10% a year. Occasionally you hear about 4-5%, but never over 6%.

Life is good. Any complaints that I can think of involve my ignorance and laziness, so I guess I don't have any.

Buying and Selling a Stock: Part 4

DHT was a flop today. At least my attempts to buy it through a limit order failed. It was obvious 20 minutes after the open that it wasn't going to go back down to $1.07, but two 10% gains in a row?! How often does that happen? Had I bought it a week ago I could have sold today for a nice profit. I still want it, but the lower the price the better so I have a solution: I'm not going to tell you that I bought it until I do. But as soon as I buy it I'll put an article up. I'm not saying that people read this blog and drove the stock price up, but it could have happened. The volume on it was four times the normal daily volume. I like stocks that go up, but preferably when I own them, and slower than 20% in two trading days so that I don't go crazy.

In short I still want it, but if it keeps going up 10% before I have a chance to put in an order, this might just be a stock that I don't end up buying. Unless I buy it with a market order, but knowing myself I would buy at $1.30 and it would not see that price for another two years...

Buying and Selling Stock: Part 3

DHT is up today a few percent and I want it. I canceled my $1.07 limit order and put another in at $1.15.

Buying and Selling a Stock: Part 2

Article started February 5th, 2012, 7:40 PM. (Yep, I'm not watching the Superbowl.)

I'm still sticking with a P/E low, below 15x on the stock screener but hopefully below 5. Also and Price to book below 1, preferably below .7. In other words, I'm still researching and I'll spare you the details of the dozen companies I have passed over in the last few days. Most of them you have never heard of, which is most of the reason I passed on them. However, I passed on Citigroup and Credit Suisse because I also have more than 10% of my account in one financial company and I don't trust banks enough to dump everything into banking stocks despite the fact that I expect most bank stock to go up 20-40% this year.

I changed some of my search criteria until I found the following combination:

This particular group led me to DHT, or Double Hull Tankers.

DHT 6 Month Chart and Overview

I have had greater quick success with micro cap stocks than the larger stuff. So here is the pertinent information that I gleaned reading through the tabs. The price of the stock was around $15 per share a few years ago. The company owns and operates nine large double hull tankers for the oil industry, but has only five employees. Their book value is around $200M, which means if they threw in the towel tomorrow, they could sell everything at market value and settle their debts and the five employees would walk away with tens of millions each. Their most recent quarter they beat analyst expectations, thus the recent jump from $0.80 to $1.10. Their sales are almost as great as their market cap, which is great. A terrible analogy is imagine that you have a renter property with with a $100k mortgage, and pretend you put $0 down for this example. Now imagine if you brought in $70k in rent in one year. Sounds like a good deal?

However, there is never a perfect paradise. One of the largest shareholders, an investment company, MMI, recently dumped over a million shares some 2% of the company or more. That is partly responsible for the price decline over the last two months. Why did they sell? Well, as they are an investment company I figure that they don't hold stocks less than $1.00. It's a mental thing. Stocks in that range feel cheap. Below $5 is another perfect example, most large investment companies dump at that level. Bank of America had that kind of moment a few months ago dropping into the $4.90s a few times one week. Now it's up to $7.84. The point being large shareholders selling is not a good sign, but it is not always a bad sign.

How do I personally connect to DHT? I like the idea of double wall tankers. Single wall tankers are the kind that seems to always be getting into oil spills. Plus, with the situation in Iran, oil trafficking might be of increased importance over the next few months or even years, in other words, the price will go up. Even if we do not get any oil from Iran, say Russia and China do get oil from Iran. If they no longer get oil from Iran through a pipeline or local tankers, they will need oil transported the long way, using tankers, preferably double hull tankers. Secondly, the economy is better than the media is portraying, the same way it was worse than they portrayed in 2007 and 2008 and 2009. So I expect more people to vacation in the US this year, thus using more oil. So I expect the price to go up significantly this summer. The more money each tanker cargo goes for at port the more the companies owning the tankers will be paid.

Buy Order for DHT

So I put in a limit order for 1000 shares. Yep, I'm betting over $1000 that this is a good bet even though I had never heard of the company an hour ago. That does mean a few things though, I will be skittish to sell the stock relatively early because I am not 100% familiar with it like I would be with Apple stock or John Deere. In other words, in my magic calculator I have a target price of $1.94 for this stock. Don't ask to share that on my blog, that's part of my secret. But I will show you in person if you want to look at my laptop. Basically it's an algorithm based on my priorities and selected financials of the company.

One last comment pertaining to microcap stocks I am unfamiliar with and my value formula. I sold GRVY stock this week for $1.82 a share after buying it at $1.42 per share about 22 days earlier. I had a target price on the stock of $1.88 but it went up so quick that I sold it a little early even though it is now trading at $1.96 or something ridiculous.

Gravity Company Win

The point is, Benjamin Graham and Warren Buffet are not geniuses by any stretch of the imagination, but they sure understood the idea of value investing.

Article completed 8:45 PM. (Still not watching the Superbowl.)

Buying and Selling a Stock: Part 1

Blog article started at about 8PM Central Standard Time February 1st, 2012.

Here we go. There were only four votes, yet around 300 unique visitors in the time the poll was open. However, like many things in life if you don't take the chance to vote, you don't get a say in what happens. So I'm going to go through the process of buying a stock and describing the process to everyone. Here we go with Part 1: Research

Step 1: Log into your brokerage account. For me that is ShareBuilder. I chose it because it links to my ING Direct account, which used to have great interest rates. I also have a Fidelity Account.

Step 2: At the current moment I am into "net asset" value stocks, preferably Micro and Small Capitalization (Cap). So I go to Research > Find Investments > Investment Screener. Then I select on the Basics tab > Small and Micro. On the Fundamentals tab >  P/E Ratio and Price to Book. We will pick a P/E Ratio of 0-15X and a Price to Book Ratio of 0-1X.

Since that gives us a huge list of 283 possible companies, and I am too lazy to go through them all we have to make the list smaller. Let us stick with only Small Cap stocks because I have a feeling some of my readers would be terrified to invest in a Micro Cap stock. Let us also add companies with a Debt to Total Cap ratio of less than 50% because a company with less debt is probably a good bet. We end up with:

That gives us a very manageable list of only nine companies.

The List of Possible Value Companies

Unfortunately, none of those jump off the page as best investments ever. However, I am interested in Ruby Tuesday because I recognize it and Interactive Brokers Group because it has nearly no debt and a very low P/B. Here is where it gets tedious. You have to read. Let's start with Ruby Tuesday.

Ruby Tuesday Stock Overview

Now, the first thing I do is read the Profile and check some News & Events. I won't show you every screen shot but I didn't know Ruby Tuesday owned Mozzarella's and Tia's. I vaguely remember a Tia's somewhere. They also use Tiffany lamps in their restaurants. I had no idea. Oh, it seems the CFO is going to retire in June. At first a CFO leaving raises a warning flag for me. The most recent quarter results announced January 5th say that they lost $0.03 per share, which beat analysts expectations of a $0.06 loss per share. Beating analysts expectations is good, but losing money without any specific one time events such as a large investment or spinoff is not a good sign. However, the economy was not great this fall so fewer people probably went out to eat, that probably explains it. It seems almost all restaurants were down for the year.

Finally I click on the Financials tab. This is where the real meat of the kill is. They have only $10M in cash, but including property have a whopping $1.19B in assets. However, they have some significant long term debt and accrued expenses for liabilities of $595M. That means they have a book value of $592M. Thus the Price to Book ratio of .82. Additionally, the 52 week high is $14.48 and the 52 week low is $6.35. At a share price of $7.74 this looks like a good deal. However, the price to earnings ratio is 14.7 while the statistical 300 year average is 12.1 for large companies I believe. Plus, they did lose money the last quarter. Their stock price has been dropping over the last year, which often indicates that either the company is going bankrupt eventually, or set to go back up again. It seems that prior to 2007 the stock traded at $20-30 consistently. Again, that can be a good sign that it will likely rise again.

However, due to the high P/E ratio, recent Q2 loss of $0.03 per share, and my skepticism about Ruby Tuesday as a restaurant of choice and the overall American dining out prospects for 2012 I am not going to invest, but I will keep Ruby Tuesday in mind if I hear anything. Also to see if It goes up to $10 a share or something next month.

That is all for tonight. I've been typing for over an hour. Just because I research a stock doesn't mean that I have to buy it. Furthermore, for someone who better understands the restaurant business this might be a great investment. I would suggest this investment more than 90% of the companies out there based on the numbers that we looked at tonight.

Article finished 9:23 PM CST Wednesday February 1st, 2012.

Learning Through Failure in Investing

I have failed hundreds of times. Some notable examples since I started blogging: Janzen Gear (Part 1), most of my initial M.S. thesis research, running (constantly a mix of failure and success), unemployment, and my personal relationships. I am here tonight to add another to the list of failures: investing.

The stock market is a lot of fun, but as with many endeavors there is a learning curve and a difference between understanding what you are doing and understanding what you are doing. In Spanish "saber" is to know (informally) and "conocer" is to know (intimately). I wish English was as descriptive. So we begin with the story...

I read Joel Greenblatt's "Little Book that Beats the Market" about formula investing, and while I still think that the system works, I thought I could do better than his mutual funds with less than an hour of research. I scanned the stocks on the list and came up with several I was interested in investing. The one that formed my learning curve is Jiangbo Pharmaceuticals (JGBO). All of the financials that I saw looked good, the idea of a pharmaceutical company in China, where everything is exploding, sounded great. The numbers did not seem too good to be true, but they seemed the best compared to the other companies on the list. I was hooked. I bought 105 shares at $4.58. Including the commission that was $490.85.

Mistake #1: I bought stock in a company that I did not understand. I know nothing about pharmaceuticals, especially pharmaceuticals in China. A few days ago I mentioned that I traded USO (Oklahoma oil futures contracts) this summer. Oil I understand. By looking at charts and graphs and listening to the news I knew that when USO was around $30 (52 week low of $29.10), a 52 week low and at the end of summer when oil is the least expensive and after 3% of the US reserve was announced to be released, chances are very strong it would go up (it's at $38.92 tonight). Oil futures contracts in Oklahoma I understand; pharmaceuticals in China are a total mystery to me.

A few weeks later the CFO resigned effective immediately. When it comes to a company's financials you want the CFO to be a stand up, honest, long term person. The kind of person who notifies the board of directors months in advance of leaving the company. When a CFO leaves abruptly chances are that person realized that there is a financial problem at the company.

Mistake #2: When the CFO leaves abruptly, sell everything immediately! Even if you take a loss on it, at least you will probably still have some left. CFOs are not the kind of people you want dropping off the face of the Earth. I've never seen this "rule" written anywhere else, but after this experience I will not soon forget it. I would have only lost about $100 had I sold then.

A few weeks later Jiangbo Pharmaceuticals was investigated by the SEC and trading shares on Nasdaq was stopped. Several weeks after that the results were that there were major problems at the company and the stock was delisted from Nasdaq. Now the shares are traded over the counter on the "pink sheets". I waited until 2012 to sell my stock so that I could use the loss as a tax deduction. I sold the stock last week for $0.15 per share. After commissions that means I lost $485.05.

Lessons to take away:

1. Invest in what you understand.
2. If the CFO leaves abruptly, sell everything!
3. When investing in foreign companies that trade domestically, make sure you know what you are doing. As of now I am invested in nine stocks and ETFs. Only one is foreign and it is not in China.
4. Market capitalization of 2/3 net assets + insider buying + 52 week or 104 week low = worth looking into as a buying opportunity (it's probably a bet-the-house situation if you understand the company). That has nothing to do with everything above but it's genius. 

Lest people think I am throwing my money away, January 10th and 11th (yesterday and today) I "made" over $500 in unrealized gains. Particularly today I had a huge day. It was the first time I "made" more on the stock market than I did at work. I had four stocks that went up over 3.5% and one of them went up over 10%. By the way the markets were up about .9% Tuesday and about flat today. Which brings up the typical rich person problem, "should I quit my job to play the stock market full time?" No of course I won't, this year. 

I Live in Iowa: Week 30

Thirty weeks! I'm practically a native!

Worked 34 hours due my grandmas funeral, which I talked about several times over the last week if you did not hear already. Work is work. In the words of a mentor at Kohler, "Some days it [engineering] is the most interesting thing in the world, other days it is work." To be honest I was productive and finished two projects this week, but I had other things on my mind as well which made it difficult to stare at a computer screen for eight hours a day.

My running went okay. I have my best pace variation tempo ever Monday but no other quality running the rest of the week. 77 miles total including the seven mile tempo in 38:42 or something.

Coaching we had our regional meet this Saturday. Several of the kids set personal records, but not as many as I hoped. Frankly, I was disappointed, not with the kids, but that we didn't set them up to PR at the last meet of the year. On the other hand ten out of eleven runners set personal records this year which is a good percentage for any team. Also, I would like to mention that we had the cross country runner with the most playing time at regionals this year. That is to say last place in the men's race. While some may be shocked that he ran so slow, it was nearly a 30 second PR for him and he improved with every single race this year, plus he is a 10.9 100 meter guy so 8k is not his strong suit.

What else? I suggested buying Deere stock a few weeks ago at 61-62 and it is up to 75 now. I did not buy any because I had no money, but Bill Gates bought $571 million around that time. I am not going to suggest selling it now (I would retire with it) but if you needed a quick 20% profit there you go.

http://www.isaiahjanzen.com/2011/10/great-recession-is-not-going-to-relapse.html

Success Expedites Improvement

On my runs I often see the same people. One of those people I happened to see Friday night and we were headed the same direction going the same pace so we ran together for about five miles. He was talking about his kids in high school how one had success early and achieved greater success later while the other had difficulty early and achieved less success later, but a more valuable success because it was such hard work.

When I explain my running career thus far I mention that I had a breakthrough season in high school and then another one in college. Specifically after the one in college I wondered, if I did X amount of work to achieve A, then if I can do Y amount of work I can probably achieve B! I have not really clearly communicated the fact that I only stuck with running because I had a little success at an early stage. Specifically, my sophomore year of high school cross country. At the regional meet that year I ran 11:54 through two miles breaking my two mile PR by about 10 seconds and getting under 12 for the first time. I went on to run 18:54 for the 5k breaking 19 for the first time, I think, my memory is not prefect.

That was a huge race for me. It was a huge break through after running a couple of 20s at the beginning of the year and then mid 19s most of the season. Plus, our team placed third at that meet by I think one or two points and we went to state (I was 4th on the team and thus a scoring member). I got the flu or something the week of state and ran terribly, but the break through was accomplished.

That was the first season that things clicked. Until that season I was regularly beaten by the girls and lapped by most of the boys. In other words, a pretty typical start to a running career. I just happened to have a little bit of success fairly early, which not everybody has. I will not say that that season catapulted to me to serious training, I still thought that pre-season training meant easy running two weeks before the season started. However, I did enjoy running enough to run my first half marathon that winter and do some running in the off season and further improve over the next two and a half years of high school. If I had not had that success at that point, perhaps I would have quit the next year to do something else. We shall never know.

In America we often are chided for rewarding every young kid for participating and not for any actual accomplishment. I must admit I have soccer and baseball trophies and I have no idea if I won or lost. We just played the game. Growing up through the system of rewarded participation I am not sure wether it is good or bad. It worked out for me, I ended up doing the activities I enjoy the most and have a few skills that are applicable. Brain Sell is another example. The guy ran 15:30s 5ks his freshman and sophomore years of college at a D3 school. His marathon pace eight years later was 15:30s for all eight and a half 5ks. Had he not run those races early in college, he might have never transfered to a D1 school and never ran a 28 10k as a senior and never ran professionally. A little success at the right time goes a long way.

The Banks! The Governments! ...The Farmers?

In 2008 banking got a makeover, at least we are told that. In 2011 governments are getting a makeover. It started in Egypt and Madison, Wisconsin before turning to budget issues in Greece, Italy, and the United States. We have not seen the end of this. In fact, when it comes to government budget recovery, we are at the very beginning of this cycle. It will possibly involve a decade or more of limited growth.

The question just popped in my head while I was eating dinner, 'who will fail next?' while I have no idea I am afraid that food will become the next crisis. There is already an official famine in Ethopia and Somolia. As China, India, Pakistan, and Indonesia continue to expand they will want more food and more energy intensive foods, like meat. Add that to an El Niño cycle and add some insect in the mix and before you know it food costs twice as much (wholesale) and all of the sudden 3/4 of the world is unsure of their next meal.

Obviously, I hope that there are no major failures for the next 70 years of my life, but given two big ones in three years, something else will probably come up.

Not to sounds paranoid, although I do consider myself paranoid about unemployment, I spend time running and reading thinking about the future and crazy scenarios such as massive famines. That amount of preperation helps me run races and climb mountains because I have already thought through most of the scenarios and all I have to do it react according to one of my scenarios instead of panic.

So I'm not hoarding canned food and weapons and gold, but I do have a garden... I guess I was brainwashed as a young kid. They said 'Be Prepared' and I listened. For the most part it is all mental. The key is not to panic I suppose. Those that sit down on the mountain sometimes never get up. Those that get dropped in a race during a surge either work their way back up, or go backwards. What you do on the rebound after the fall really does matter. Will you try again with your new knowledge or end the pursuit? Some pursuits are too valuable to me to stop regardless of the number of failures.

I Live in Iowa: Week 16

Another week living, and I suppose that means another week closer to my death. I've never really thought of it that way. It was a busy week. One of the busiest I have had working yet.

I officially worked 51 hours. That's the most I have ever worked professionally. While it is a lot, it still is far easier than WPI was. I spent the first three days learning the fundamentals of product for John Deere Construction and Forestry Equipment. I basically got paid to drive around articulated dump trucks, bulldozers, motor graders, and four wheel loaders. While it is fun, it is tiring and those guys have hard jobs.

I came down with a sore throat the last half of the week due to running/biking more, lack of sleep because I was waking up at 5AM to go to Moline, IL, and dehydration. When I sit at my desk I drink water continuously, but at the training I was only getting like 80-90% of normal or perhaps I was sweating more in the heat.

I ran 61 miles and took two days off, although I biked about 38 miles over those two off days. I had a nice 1k hard 1k moderate workout. I struggle with the harder recovery running so it is something I intend to work on more in this cycle. I also had a nice 8.5 mile progression run on the track and that went well. I again struggle with steadily increasing the pace so I was hurting toward the end even though it was not terribly fast. Basically I worked on things this week that I am not good at, which means improvement will come.

Friday night I drove up to Mikwaukee to celebrate my sister's 21st birthday and I had a nice time.  We even went to a club and had VIP service. It felt like I was on Entourage or the Hills. Definitely not my normal Friday night.

It's late, I'm tired, I'm going to bed. Also, I'll say it on the blog so that I'm committed in public, I'm going to write an article about Work, Life and Retirement. I feel that the current stock market crash and debt crisis is making Generation Y even more doubtful of retirement and a better standard of living than our parents. Anyway, I'll elaborate later.

One last thing, I bought stock on Friday because it was at a good price. Well, it's at an even better price today but I don't have any cash. I live and I learn.

Fixing the National Debt

Half a year ago when I started writing my unemployment book I looked into the national debt so that I could include several pages about it in my book. With the current battle in Washington I have to say it is no surprise we are where we are. Of everything I have listened to, seen, and read the most educational was a podcast segment of NPR Money. If you listen to one podcast this year, make it this one. The speaker/professor/author they have on is great! He is seriously the most educated person I have ever heard from on national debts.

While I highly recommend you listen to the podcast I'll summarize it using words they are too afraid to use in the show: the US is in a mess of trouble and there are going to be unhappy people for years and probably decades because of it. What demographic suffers more is left to be seen, but rest assured, there will be suffering. He gives several example including Romania in the 1980s and I think France in the early 1800s. I especially like how he refers to an event 200 years ago as if it is relevant and the hosts laugh. We like to think we are the smartest people that have ever existed and as soon as you think you are smart you are admitting that you are dumb. I despise the words smart and dumb for reasons too lengthy for this article. Suffice to say we are no greater than our ancestors although we have probably complicated things so it will take more of us to figure out how to fix things, job security for some I guess.

So in the interest of solving a problem I came up with my solution to the national debt:

1. Raise the debt ceiling. I don't care what the number is but give us one or two years to pass the bills necessary to make a permanent fix.

2. Raise taxes. How? Create another tax bracket for million or two million dollar earners and give then a higher tax rate yet. For the rest us raise the percentages, except for 10% earners because seriously those people have no money anyway.

3. Cut spending. This is the hard part because it will involve extremely detailed organization to do correctly otherwise we will end up with tens of thousands more lay off and the same inefficiencies. Possible areas for improvement: education because we spend more on students and score worse on tests than most of the rest of the developed world, military because we are overseas so much that it becomes a burden on Americans, and especially social security. The goverment needs to raise the minimum and maximum age limits in a hurry. People can start collecting when they are only what 62? That is ridiculous! I get beat on the bicycle every Wednesday by a 55 year old theology professor. I have trouble believing that in the younger 60s people are no longer physically or mentally capable of contributing. On the contrary, many of the best professors and one boss of mine were in that range and they were extremely good because they have a story and example for every situation. We young people are missing out on that experienced insight because people retire early. However, after all that I say I'll probably retire with my millions in my 50s as a hypocrite.

4. Put Americans back to work. How? For starters, log all the dead pine trees in Colorado and throughout the west, including Canada. We have something like more than 50 million acres of dead beetle kill trees waiting to burn and cost us hundreds of millions of dollars. Or we could be proactive and cut them down because the wood is beautiful and we will save millions of acres of topsoil and tens of thousands of homes from destruction. Plus, logger jobs can employ the less educated, who are hurt more by the recession than most. How else to employ Americans? Agriculture is key. The US has much of the best farm land in the world. We will probably never have to worry about food the way than Somolia and Rwanda have. I also think we should raise the price of food but that's a more lengthy topic. A third way to put Americans to work is offer them jobs at minimum wage instead of outsourcing factories to Asia.

So those are my thoughts in a nutshell. I don't have many answers so please leave a comment below if you have a better idea.

I Live in Iowa: Week 14

Another good week.Another nice week living the dream or something like it. I feel strange when I say that, because I never dreamed that I would live in Iowa and work at a logging company. Yet, life is strange and I am incredibly fortunate.
Let’s get on with the week’s highlights, shall we?
I engineered my way through more than 43 hours again this week. That’s the second most hours I have worked yet, second only to last week. The design guys are coming through with semi-finished designs that we are putting through FEA so we have more work to do. I worked on 3.5 separate projects this week. (I started the second half of a project so it’s not entirely new, but for the most part it is new.) In fact things are getting busy enough, and there is enough work that I might even pop in the office on a Saturday a few times this fall. I don’t get paid an overtime rate, but my standard rate is somewhat better than minimum wage, and I don’t have to pay extra health and dental insurance on those extra hours.
As for athletics, I had a very nice week of running. I still haven’t updated my log completely but I ran 60-61 miles including an 18 mile long run, a set of short steep hills, a set of 8x400 (Aussie quarters), and a six mile tempo. That’s the kind of quality that I’m doing in the build up that I never really did before but I am sure that it will make a bigger difference in my race results. I am totally in shape to go sub 16 in the 5k. I feel I have been in that kind of shape twice before but instead ran other distance races. I am running a 5 mile this weekend so we shall see what kind of shape I am in. No Bix 7 this year.
I put in around 120 miles on the bicycle I think. I haven’t added it all together but that sounds about right. It was incredibly hot this week. The hottest temperatures and humidity I have had to deal with since I was a teenager. Five of the last six summers spent in the mountains has sure helped avoid the heat. Bicycling is nice because there is a constant breeze and I can drink from my two water bottles whenever I feel like it.
I have mentioned a little in the past that I have been doing some stock market investing, well I made my first sale of 2011 so I’ll give you the story. When I heard that the US was releasing oil from the reserve I knew that the price would drop temporarily only to go up a few weeks later. Is there really anything easier to predict than the price of oil? So I bought shares of USO (United States Oil, it’s based on the price of west Texas sweet crude as I understand it) at $37.45 on June 29th. If my limit orders had gone through on the 27th or 28th I would have made even more, but the price of oil went up linearly by the hour both days. Fast forward three weeks, it was time to pay for my new carbon fiber bicycle so I sold my shares with a limit order at $38.60 on July 19th. I have to say I’m quite happy that the price spiked around 1:30PM or my order for the day might not have been met. Although, had I held on at least two days longer I could have sold for $38.90.
What is the point of all this? Why did I put in an hour of work just to make 3.1% interest? Simple, 1% interest per week repeated over and over equals 50% interest per year. That is kind of the golden standard for investors. All of the big names have done 50% at some point in their careers. All I did was pay attention to the news. My savings account makes only 1% interest per year! I made 3.1% interest before commissions and after commissions I still made more than 1% interest, in three weeks!

US Oil (USO) on July, 19th 2011

The Tour of France ended this week and with it three weeks of me watching videos and looking at stats of the various bicyclists. It was a really exciting tour to watch. The sprinters were fighting all the time, the breakaways succeeded a number of times. Unfortunately, there were many crashes this year and I was excited to see Bradley Wiggins race, but he crashed out. I am happy that Cadel won because he is 34 and this is really a career capping thing for him. Andy Schlek will be back with his brother and I have a feeling that they stand a good chance of improving on their 2nd and 3rd place finish.

Also, the Shuttle landed for the last time. It makes me rather sad because the Shuttle did, for 30 years what no other vehicle has done, or probably will do for several decades. More importantly, the United States has no clear plan of what we are going to do next in space. That is really sad. I spent four years and tens of thousands of dollars learning about this stuff, and now where are we headed? I feel that it is all a little vague. I like clear cut goals, such as: Moon: done; Space Station: done; graduate: done; run a marathon: done; survive Broad Peak: done; get an engineering job: done.

I hope you had a good week as well.

My New Trek Madone 6 Series

2011 Trek Madone 6 Series (50 cm)

There it is! Look at how light it is, it's like 17 pounds. Maybe less. The statistics:

• Frame: Madone 6 Series OCLV2 50cm H1 fit
• Fork: I'm not sure but there is a Bontrager and XXX on it
• Components: Sram Rival with a 39-53 crank and 23-11 cassette
• Wheels: Bontrager Race (I think) they were $300 less than the wheels Trek recomended
• Pedals: Look (I think)
• Saddle: Affinity RL
• That little white thing between the handle bars and the fork stem: 120mm (I'm pretty sure)
• Handlebars: aluminum
• Computer: the cheapest DuoTrap compatible
• Bottle Cages: Bontrager carbon (c'mon I had to get carbon cages too)

It flies! I mean Friday I did 46 miles at an average pace of 18.5 miles and hour and it was not flat. Tuesday night, after running a workout on the track I did a little over 25 miles in an hour and a half that is a 16.9 mph average that was very aerobic. I am noticing that I am going up hills in bigger gear ratios than ever before. I'm going up hills in 3rd and 4th gear. That might not sound impressive, but thats a solid 15-18 mph. Of course, when the hill get steep enough, I still have to get off the pedals in first gear. 

Why did I spend all that money on a bicycle, when I already had two? I have wanted a fast carbon bicycle for a long time. Why? Because going a little faster and getting uphill a little easier is thrilling to me and when I am on the bike, I usually spend a lot of time on the bike and those extra five pounds is a huge amount of weight to take off the bike. Especially considering the rotational moment of inertia and air resistance of my new wheels versus my old wheels. Plus, after being unemployed for so long I am have strong fear of being unemployed again and having a physical thing that I could either spend hours on or sell is valuable to me. In other words, if I have money I'll just pay down my debt, but if I have something physical I have some collateral that I will not sell, but I could if I had to.

Top speed so far is 46.5 mph and I was in top gear pedaling at the bottom of a steep hill. I'd like to take it over 50, but it might be hard to find that kind of hill around here.

Wait One Day

Warren Buffett apparently calculated that the money to spend on a haircut when he was young would be equal to $300,000 when he was older. His solution was fewer haircuts. Similarly, waiting to pay a bill so that you can earn interest in the meantime earns you money. By waiting even one day you can end up saving serious money. For example, at my bank I earn $0.01 per day on every $350.0 in my saving account. If we say that I spend $7 at the coffee shop on a latte and a muffin, if I do that twice a week, but I delay each purchase one day then I would earn $0.02 over the course of the year.

Where this gets better is the compound interest and frugality at the same time. What if I go a week without going to the coffee shop? I would save like $13. If I went four times the next week, I would spend all of the money I budgeted, but that $13 ($.50 cost of coffee at home) would earn a weeks worth of interest.

This all seems like small potatoes but if you are spending several hundred dollars per week on food, clothing, entertainment, and other things and getting any better than 1% interest (like 8-9% from international corporate bonds) then suddenly waiting a day or a week to go out sounds like a good idea. Of course, if you can go one day or one week without something, maybe you can go two weeks? If you can do that, then maybe a month. If you did not need that thing for a month, maybe you don't need it at all.

A Month Without Internet or Cable

Well, I did it, I went the month of May without a cable or even an Internet subscription. The results:

• Redbox: 10 rentals for a total of $10.17
• Coffee Shops: 2 visits (I may have missed a third) for a total of $10.52
• Best Buy: One season of Entourage and the Wall Street double pack for a total of $57.76
• iPhone usage of 1.6 GB of data, the most I have ever used by far

The result from this experiment is that I really do not miss access to the Internet that much. I miss it of course, but I still can not justify $55 a month for cable Internet.

My iPhone Data usage May 2010 to May 2011
(the month listed refers to last day in billing cycle, usually the 1st or 2nd day of the month)

The implications are that I do not plan to have cable for a long time, while I miss having quick access to the Internet, I have it on my phone, at work, at the public library, at the laundry mat, and at a number of coffee shops. The interesting thing is that I probably used my computer less since moving to Dubuque than I have in the whole time I have owned it. I suppose that is not surprising considering that I spend 8-9 hours a day in front of a computer at work. Sitting in front of the computer at home does not always seem like relaxing.

So the trend will continue. With the money that I save, I'll probably buy a down suit. No kidding.

I bought it...

Thursday I went to the bike shop to get my pedals and rear wheel. I was asking the nice manager some questions and over an hour later I had 20% down towards a new Trek Madone. Baaaghh! It will be two or three weeks before it gets here, but rest assured that I will write more and take pictures and list stats and talk about stuff.

To Buy a New Bicycle

It may seem appalling or crazy that a month after buying a second bicycle I am talking about getting another one while I am still massively in debt and already have two that work (for the most part). I shall of course explain my thinking.

My road bicycle is a 1980s Miyata Professional with Shimano Dura-Ace crank and Campagnolo other components. I started riding it in high school after my dad traded a car for it when I was eight. In it's day it was the top of the line bike. My limited research years ago indicated that this particular model was ridden in the Olympics and Tour de France. It's hot stuff, but it's 22 pounds of unaerodynamic and flexible steel. People say it is not about the bike but I have been dropped going down hills and on moderate sprints by carbon bikes and I have to say, when seven locals drop me like I'm standing still and I'm a 2:34 marathoner, I feel I am at least in a little better shape than my bicycling performance shows.

I have been shopping for a top of the line road bicycle since at least the summer of 2007. I have put thousands of miles on my bike and I have no plans to ever get rid of it, but I want something that will allow me to go faster and in a race of some sort be competitive. Basically for the price of a used car I can get a brand new top of the line bicycle that has a frame that comes with a lifetime warranty. Let's see Ford do that.

So this isn't a whim, entirely. After four flats and a broken spoke in six days over maybe 120 miles I am a little frustrated. Secondly, no one drops me in an endurance sport that easily. I may be very aerobically strong, but I am not strong enough to keep up while on my 30 year old bike. Third, the whimsical part is that my uncle gave me a pair of aero bars last weekend, and I think they are the greatest thing. I plan on doing an Ironman or several when I get done with my more serious running and to be competitive you need a triathlon bike.

So as I browse the local offerings I see that about $2,500 gets a nice tri bike with most of the good features like carbon frame, internal cables, aero specific handle bars. However, on the road biking side you have to go up to about $3,200 to get the internal cables. I know it is just one ridiculous feature compared to the overall like frame material and choice of wheels, but I think it shoes the comparison between bicycles well. The problem is I already have a road bike, it just weights 22 pounds and is too flexible.

Then there is my general attitude of go big or switch hobbies which has a voice in my head telling me to shell out another $1,000 to get the next step up carbon frame, which I felt in the store and it is lighter. Because the truth is whatever I buy will thrill me on every ride, this summer. But what if next summer I get a little more serious and do more races and those 14 ounces of weights and extra flexibility slow me down noticeably compared to my competition. Then what do I do? Get another new bike?

Then there is the miser in my head which says thing like, 'if you save the $4,000 you could retire six months earlier or spend a month at the Trango Towers basecamp.' I have all sorts of loans and other financial goals that buying an expensive bike seems crazy. On the other hand, every year I am getting older. Now it means I am coming into my prime, but in 10-15 years I won't be getting faster. If there is ever a time to be using the best athletic equipment in my life it is now.

How is this going to play out? I don't know. I do know my current road bike is very nice and I enjoy it. My new cyclocross bike is great and I run errands on it probably four times per weeks or so, especially on the weekends. Finally, I am going for a test drive. Wednesday night the local bike shop is letting me take out a carbon mid grade (women's) bicycle for the weekly group ride. So we shall see how that goes.

I have not gotten around to writing about instant gratification versus delayed ultimate gratification yet, but any bike purchase at this point would fall into the instant category, which is often not the best category.

My 7 Year Old PowerBook G4 Computer

April marks seven years that I have owned my nice little laptop. In April 2004 I bought it as a graduation/college gift to myself. It was a good investment. For about $1,600 I have managed to get 84 months of use out of it, minus a few months I was away from electricity in the mountains. That comes to less than $20 a month. Considering that this little machine helped get me two engineering degrees including a master's degree, I think it did alright.

Seven Years Strong! (...and vainly checking my website stats)

The world has accelerated in that time so that programs are larger and my 768 megabytes of RAM is no longer able to speed through applications. The 1.33 gigahertz single core processor is quite slow and a 1x DVD burner leaves something to be desired. The little 12.1 inch screen reminds my back every so often that leaning over a tiny screen is not ideal.

Seven years and hardly any scratches!

I have gone through two hard drives as I toted my computer around campus in sleep mode. A mistake that I will never make again, fortunately we have flash memory available with no moving parts so we can bounce and twist without damaging new computers. I've taken this thing with me everywhere. In the fall of 2007 the battery kind of gave up and I have been limited to about 10 minutes since then, which is usually enough to find an outlet.

A year ago I was planning on getting rid of it, selling it to a friend. However, as I near it's end, I am having some trouble thinking about letting it totally go. I still have the box. I mean such a large portion of my life has been spent behind this thing. It is strange to think of not being able to open it and find a file of mine from four years ago that suddenly seems important. There is also the matter of computer software that I have that might not be transferable, thanks to engineering school.

Now that I am gainfully employed I am saving a little bit of money from each paycheck so that in four to six months I will be able to afford a new computer. I have already decided on the Macbook Air. Although, the processor is too slow now to last another seven years I am hoping that in the next few months they will come out with a refresh, which is likely considering that Intel recently released a new 17 watt sandy-bridge processor.

Seven years! When I say it like that I am astonished that I have been out of high school that long. High school was so influential on my personality. As I think about the future I think, where will I be when I am close to turning 32? Will I live that long? I must say, the last seven years have been amazing! If the next seven increase in excitement, as I feel they will, I can only dream of how well they will go.

One piece of advice for everyone, there is a reason I am using a seven year old computer and most people are not. I bought high quality with the goal of this computer lasting at least five years. Generally speaking, when you go with quality, you only have to shop once. That might apply to other aspects of life as well... Anyway, I am big on quality. I like things that last because I am unfortunately hard on most of my stuff. Plus, much of the energy cost of a computer is in the initial construction so a computer that lasts longer is more energy efficient and less damaging to the environment.

CDO: Collateralized Debt Obligation

Well, isn't that a fun word? Collateralized! It means that the loan is backed with collateral, typically a house. CDOs are most of the reason that we are where we are economically. For an in depth understanding of CDOs start reading the CDO Wikipedia page and then read the references. For starters, let's call this the The Two Trillion Dollar Meltdown (and I'll offer another opportunity for you to buy an Amazon book).

$2 Trillion in Lost Money

The other figures that you see aside from CDOs are Asset-Backed Security (student loans, credit cards, car loans, etc), Commercial Mortgage-Backed Security (commercial mortgages for Target and Starbucks and the like), and Residential Mortgage-Backed Securities (your parents mortgage). All of these things are related, specifically the CDO was typically composed of MBS (either RMBS or CMBS). It was basically hundreds to tens of thousands of MBS bundled together. As long as the people were paying their mortgages, everything was fine. 

Then some people got greedy or "smart" and decided to split the CDOs based on the ability of the homeowners to pay, based on their credit score more or less. The advantage of this is that while the people are paying you are making more money on the sub-prime CDOs than the prime CDOs. Secondly, there is a little thing a called selling short, which means you borrow shares to sell then at a later date you buy those shares back and return them to the lender. In other words you make money when stock prices go down. With so many sub-prime CDOs available when the market started to go south just about anyone on Wall Street would probably have the insight to sell short on bad CDOs, even though other financial institutions. In other words, people got rich using CDOs and then by watching the market like a hawk, they  stayed rich while people across the county lost their homes and retirement savings. 

In short, when Warren Buffet says it's a bad investment, it probably is. 

The Life of a Contract Engineer: Week 7

Seven weeks! It is still surreal that I have the opportunity to go to work and get paid for doing something that I enjoy. I spent the majority of my week learning how to use HyperMesh, which is part of the HyperWorks finite element suite. This is the third finite element software that I have learned. First it took me a year (working part time) to understand Abaqus and DANTE, then it took me a month to understand ANSYS and in less than a week using HyperMesh I have made significant progress. I now feel more valuable as a finite element engineer than I ever did in graduate school. I just need CATIA and NASTRAN to round out my repertoire and I'll be more qualified than most of the tech support for all of those companies.

Secondly at work, I enjoy the people I work with. I think that is an important factor. I have never really been in a bad working situation, but I can imagine and I have heard stories. Even five minutes of socializing with my coworkers per day is a nice mental boost.

My running injury just took a ginormous (that is an actual word!) leap forward! I went to a massage therapist and had fingers and thumbs pressed into my knots to the point that I was in significant pain and the knots started to release. I continued to do my exercises and I even bought a foam roller so that I could work on rolling out my tight muscles. In total I ran about 77 miles including a 3.3 mile tempo at 5:54 pace and a 12 mile and 10 mile run at 6:55 and 6:50 pace respectively. Those are three very pleasing runs compared to the amount of pain that I was in for two weeks.

Foam Roller

In other news I started an account with mint.com at the recommendation of a friend who is traveling in Laos right now. It is pretty cool. It updates all of my account information every time that I log in so that I can see how my net worth or paying off my loans is going. I am worth negative tens of thousands of dollars. That's old news, but it's nice to see it change for the less negative. For me simply seeing the numbers helps me make the numbers a little less terrible to look at by applying money where it makes the most difference.

Additionally relating to money, I've done some reading about history and it is not that hard to make substantial profits in the stock market. From a mathematical point of view there are a number of quarterly published variables which indicate that certain stocks are worth more than the price that you have to pay for them. It's not physics, so you will not get the same reaction every time. However, it is statistics, and if you play the numbers in enough quantity for long enough, according to the history of the stock market, you will make money. I'll write more on that in the future.

I hit a deer with my van. It has a huge dent in it and I would take a picture except that it's dark out right now. I'll do a post about the six accidents I have had in the last nine years.

Finally, in news relating to the book I am writing, I passed 48,000 words and 100 pages this week. That's 100 pages of single spaced writing with only four pictures and four pages of contents and title stuff. I am very excited about how well that is going. Although, I don't have an agent, much less a publisher, and I have not done any speaking engagements yet. So I have a long way to go, but I feel I am on the right path. My goal is to have a rough draft finished in the next few weeks. I do not have too much more left to add. I am sure that things that I have written thus far could be a huge help to others in their early 20s tackling unemployment, underemployment and misemployment.

Oh and one more note along the investing lines, about a year ago I solicited investors for Janzen Gear. I had a few bites but did not reel in the kind of investor that I was looking for. I am thankful that I did not find an investor at that point in my life. I learned a lot about product costs and failure. The hangboards are a much better situation. I am able to fund the costs out of my own pocket, and thus will put all the profits back into my pocket, or rather into manufacturing more. This product has a much greater ability to generate profits from batch one (ten hangboards). The ice axe would require huge batches (hundreds and ideally thousands) and even lower profit margins (although not much lower) and required safety testing. I just did not understand all of those challenges a year ago, yet it makes a huge difference in business. Also, running this as my second job allows me to think small. I am not relying on Janzen Gear to pay my bills. It allows me to deal in smaller volumes with lower profits than the big boys. Which means a high value product for the price and the prestige of limited quantities.