Tiny House Winners

Buying the biggest house you can afford for your first house makes as much sense as learning how to run by starting with a 100 mile race. Yes, it might work, but there’s a good chance you’ll hurt yourself. What we’re witnessing now are a lot of people with strained financial hamstrings just now trying to get back into the race. It shouldn’t be a surprise that idea of starting with a tiny house is just as appealing as a runner deciding to restart their training with some nice walks.

There was good logic behind the concept of buying the most house you could afford, and buying the cheapest house in the neighborhood for the minimum downpayment. It maximized your money, leveraged the value of the mortgage, and amplified that by participating in the higher rise created by the increased prices of the rest of the houses in the area. That logic worked as long as some assumptions worked. Housing prices are most likely to go up. Your mortgage will become a smaller fraction of your monthly costs because of some combination of it being fixed, or the rate being lower than your raises, or the appreciation making everything else moot. That world almost existed for a long time. Today, we know prices aren’t safe from retreats, mortgage rates can do strange things, and raises are rumor for most.

My current situation is too common, though how I got here is unique enough for a screenplay. Someday I’ll write that, maybe. I started, though, by following that logic. I bought a nice, though cheap, house just inside the border of a golf course estate; and lived with finances so close to the edge that even with a frugal life and an engineer‘s salary, I had to close off the upstairs and hope the roof didn’t leak. I was lucky. Within four months the house appreciated by 30%. Any lack in discretionary income was secondary to making more in real estate than I did in months of overtime professional paychecks. Four years later, when I decided to sell because I was getting married, I had to drop the price enough that a lot of those gains were gone. Amortized over four years my returns were a few percent per year.

We’re three paragraphs into this explanation and maybe you’ve noticed what I didn’t mention. It was a house, not a home. You may have noticed that it was more house than I needed or wanted. At the end of those four years I was relieved to be rid of it. There weren’t any upgrades, except a new fence. The roof hadn’t leaked, but the hot water tank, which was oddly installed in the second floor crawlspace, had dramatically leaked sending a stream of hot water down the staircase. Raises meant I was finally returning to discretionary spending, but filling the empty rooms with furniture seemed pointless, so I didn’t. When the house hit the market again, my minimalist style meant the prospective buyers thought I’d already moved out before I’d packed up anything.

First they ignore you, then they laugh at you, then they fight you, then you win.” – Nicholas Klein (not Gandhi)

Within the last decade or so, people have begun taking advantage of the minimum building size rules to construct tiny houses. The idea within the regulations was that there should be some lower limit to building size under which the regulators wouldn’t have to worry about approving permits. If a parent wanted to build a play house for their kid, they shouldn’t have to fill out paperwork. If a spouse needed a studio, a study, a sanctuary, or a place to get away from their spouse, they shouldn’t have to explain it to anyone except their spouse. The authorities ignored such insignificant dwellings.

It is easy to ridicule the concept of living in a space that is smaller than a MacMansion’s master suite walk-in closet. If you shop ’til you drop, then you need a place to put all that stuff. A 120 square foot shed isn’t big enough for some people’s shoe collection. Foodies have pantries and wine cellars bigger than that. Wal-Mart and Costco exist for reasons; people like buying things and buying in bulk may save money, and bulk needs a place to live. How could a person live in such a small space? Don’t they wear clothes or shop?

The reality is that many people had more than enough incentives to find the smallest housing options available. Concern for the environment, a desire to lower their utility bills, a repugnance towards mortgages, a destroyed credit rating for too much debt or not enough income, a desire to walk away from the mainstream, a sense of style, control over every aspect of their lives, or because they had not other option – all reasons people have used to live in Tiny Houses. If you haven’t heard about them, it’s a trend that is already becoming hard to ignore. Go check out Tiny House Listings and see the variety of solutions people have found or are selling. A nominal Tiny is about 120-160 square feet. Houses as small as 96 square feet are notable, but common. Step up to 240 square feet and you’ve got a place some would consider palatial.

The fight has begun. Regardless of people’s need for shelter, the defenses are being raised by conventional housing authorities, frequently with the backing of conventional providers. There are arguments for regulation, or minimum size requirements to uphold neighboring prices, or automatic responses purely based on attacking something that’s different. The attacks are underway. The attacks lack alternative solutions to the compassionate need that inspired pioneers to act.

I suspect the Tiny House movement will win. The momentum exists, and is growing. I’m witnessing it as I write about them for a Seattle real estate site, Seattle.Curbed.com. There are tens of thousands of people reading the pieces even if there are only a few dozen buying, for now. I have friends who have Cabin by Angela, and are improving Tiny Houses. I stayed in one. I’ve visited others. Laugh as you may, but anyone who appreciates the workmanship inherent in yacht design can appreciate a similar level of expertise inherent in many tiny houses. When you’re only working in 120 square feet, you might as well make them all exquisite.

DSC_5094Today I had to repair a window. The light was brighter in my bedroom this morning, and that was not good. It meant the storm beat my storm window into shreds. I left work a bit early to come home and stretch some plastic over a window screen frame that hopefully will survive until I have more discretionary income again. It made me wonder. This house, my first house after having owned four to actually be worthy of the name home, is only 860 square feet. It and its 7,000+ square foot lot are more than I can take care – at least to the level I deem appropriate. Its market valuation and the mortgage balance was too close for comfort. Do I still have too large a house?
Imagine, as I did, starting my real estate experience by buying the smallest that house met my needs. Not the cheapest house, but the smallest one that met my needs including neighborhood and commute. Instead of trading around houses and mortgages based on an old bit of conventional wisdom, I could have bought a house for far less, carried less debt, took better care of it because there was less of it to care for and because I had more money to spend on it – and then, moved up to something larger if I wanted to. There’s a strong chance that by now I’d be out of debt, have more money in my portfolio, and wouldn’t feel subordinate to the needs of a major fragile investment – even if it is home.

I cheer the people who are building tiny houses. When I day dream about winning the lottery, I dream of buying or building a house that is just the right size for me to take care of and enjoy, and that leaves more than enough time for enjoying the rest of life. A tiny house, that’s off the grid, on a large lot, with a gorgeous view; and, while the list continues, the details are secondary to the appreciation I have for the people who, regardless of regulations and convention, are building their homes to the right size for their needs and wants. They are the winners.

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Rationally Irrational Finance

Humans are rational people. Ha! If you think that you obviously haven’t met any. Actually, people are rational, but in a very personal way. There’s a Robert Heinlein quote I’ll paraphrase because I can’t track it down. “People always do what they think is best, it’s just that best frequently is judged by criteria they aren’t conscious of.” They’ll say they wished they could’ve done something else that everyone knows is the right thing, but dig deep and ultimately they’ll use a criterion that may only make sense to them. If we all acted perfectly rationally there’d be no reason to invent Vulcans. We don’t, which is why our art and culture is so diverse, and why economics and finance don’t seem to make sense. Understand that people are rationally irrational and a lot of the world makes sense.

Someone doing something that appears to be bizarre will make sense at some level, even if it is because they are trying to please someone who isn’t there who never had that criterion. Many people base life choices on hopes of pleasing someone they are no longer in relationship with. Family is as good a source as any. We want them to like us because they didn’t back then, we guess at what they’d like, we’re probably wrong because we guessed wrong before, and we end up doing something that makes no sense in our lives and that looks bizarre to everyone else.
“I’m saving all of my money, because that’s what they’d expect me to do.”
“I’m making sure I have a nice wardrobe, because that’s what’s expected of me.”
“I’m going to prove that I can be independent and successful, because they said I couldn’t.”

Diving into deep introspection to challenge such actions can cost a lot in counseling fees. Going off on a year-long sabbatical may produce the same effect, and maybe cost about the same. One of my counselors pointed out that, like most people today, all I really needed was someone to share deep feelings and thoughts with ; and, he pointed out how rare that has become in our highly-individuated lives. The year-long sabbatical is the material of fantasies, memoirs, and movies; but one friend called in from Spain to reveal that it is no easier finding yourself when you’re thousands of miles from home, so you might as well take the time, save the money, and sit in your backyard. There’s enough to explore within, and no plane tickets are required. Though I will admit that my walk across ScotlandWalking Thinking Drinking Across Scotland was effective, for me.

There are three aspects of our irrational selves that influence personal finance: ourselves, the market, and the world.

An industry of financial professionals exist precisely because many people realize they are too irrational to manage their money, or at least they feel that way. Professionals, like Mike Brady, are known for being the calming, rational influence that keeps investors from over-reacting. Fear and greed sell well in the media, and financial professionals should primarily be swayed by data, not emotion. Individuals can also manage their money. The majority do; but part of financial success is based on how successfully they understand their motivations and risk tolerance. Understanding does not guarantee success, as the retraction of my early retirement proves, but understanding does improve the odds. (And yes, I’m an optimist; and yes, I know the risks and rewards for investing as an individual rather than with a professional. Want data to assess my decision? Check out figure L in my book, Dream. Invest. Live.Dream Invest Live cover)

The financial markets are run by a crowd that is by definition, professionals. And yet, the market reacts irrationally. If they all operated solely on data and used the same algorithms, there’d be nothing to differentiate them, and none would offer a competitive advantage. As each tries to get ahead of the rest, anticipation and extrapolation enter. Taken far enough, instead of reacting to official reports they react to estimates based on research, which means someone starts reacting to hints of how the research will come out, which leads to someone reacting to the possibility that someone will do research. It is only one example, but investments are sometimes judged by how many researchers are researching the stock. Another obvious example is the ripple that happens with the firing of one missile from one Middle East country towards another; though lately that is happening so frequently that everyone just takes it as the norm. Ah, but let news leak of a virus in a hospital and similar effects reverberate through the market.

We know the world needs help; but we just can’t agree on what help for which issues, who is responsible, and who’s going to pay for it. Rationally, the majority want the species to continue and thrive, but from that basis can spring commercial space ventures, Isil (Isis, Is – IsNot?), Occupy, and the localvore movement. Each has rational reasons for acting, but there will always be someone else who thinks they are irrational. There’s probably even a rational explanation for the US Congress, but my brain balks at describing what I suspect is happening there. Maybe after another glass of wine.

Anyone trying to understand the direction of our civilization, and how to find a place or a fulcrum within it is justified if they complain of headaches, frustration, and a touch of cynicism. That may actually be proof of having achieved an understanding of the fundamentals of the situation.

We, as a species, tend to muddle through. We, as individuals, have to decide how to arrange our days and lives to fit. There’s a fantasy world where you make plans when you are twenty based on a world you’ve witnessed for several years, and have those plans work unchanged for the next half century or so. The change in the world is accelerating. Plans based on the lifespans of mortgages run into scenarios in which there will be societal, political, and environmental upheavals large enough to require a new perspective. Write plans in pencil, or into a file that can be edited. Remember though that the fact that is less likely to change is our basic nature as rationally irrational beings. Write that in ink. Lock it into a read-only file. Chisel it in stone. It is in you, and me, and us; and the ability to be simultaneously rational and irrational may be the reason we will adapt and survive.

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A Scottish Anniversary 2014

Tom Trimbath (trimbathcreative):

Four years ago our world was in turmoil, and we looked forward to getting past that. Well, hmm. Ah, but somethings that no one else can control are safe within us.

Originally posted on A Walk Across Scotland:

Four years ago tonight I was back home and wondering what was going to happen next in my life. I’d just walked across Scotland, back from what was supposed to be a vacation and stepping into a realization that my life had changed and that a book would result. Walking, Thinking, Drinking Across ScotlandWalking Thinking Drinking Across Scotland has an embryo. There was enough there to tell me something would be coming, but there was a lot of gestation before anything would be born. The origination of ideas and inspirations are sudden. Manifesting them takes energy and trust. I continue to trust, and wonder.

Has it really been four years? It seems much shorter. The world has gone through significant crisis since then, and we aren’t obviously back to a familiar normal. Hopefully, that’s progress. In the time that since my walk across Scotland, the people have debated and voted and almost become a…

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What Comes Next

Planning a life can seem like a silly venture. My passion is people and ideas. My degrees are in Aerospace and Ocean Engineering. Many know me because I’ve written six books and produced five more. My photography receives more compliments than I ever expected. I find it very gratifying to help people plan and implement their projects, or life choices. When I was 15 there was no way to know that I’d be doing all of this 40 years later. If I live another 40 years, I should expect to laugh at any plan I make today. And yet, I continue to work on what comes next.

A cubicle job has a series of seductions. There’s a regularity of the space, the paychecks, the benefits, the work, the people, the commute, the topics, and even the lunch choices. The rest of a life can hang on such a structure. Work hours define which hours are left for sleeping and living. To some, such a routine is dull and drudgery. To others, such routine frees up the mind by marking off the pieces where thought is required from where emotions can be expressed. Regardless, any suggestion of regularity in this era is an illusion based on a world that never existed.

Life after The Great Recession returned to normal for many people. If it hadn’t, the protests in the streets would be louder or the exodus from the mainstream would be greater. In quiet conversations, off to the side, and rarely amongst more than two or three, people are asking me about what I think comes next. I shrug my shoulders a lot, listen a lot, pass along my optimisms and pessimisms – and then ponder at the incongruity I hear when they close the conversation describing actions based in the 70’s: IRAs, pension plans, retirement relocations, hobbies that will be resumed, etc. Even amongst people that see today’s norm as a fragile and temporary shell, there’s talk of how long they have until they’ve paid off the mortgage. If you think the economy is going to implode and the country is going to become insolvent within the next ten years, why assume that the mortgage will even exist in eleven years?

The reason to assume nothing will change is because, even after great changes, many things stay the same. Prior to the American Revolution and after the American Revolution crops had to be tended, bills had to be paid, and taxes had to be collected.

The reason to realize that things will change is because they always do.

I got a degree in Aerospace and Ocean Engineering at just the right time for the United States to accelerate into space and radically change the course of human civilization. The Space Shuttle had just been launched. We knew it wasn’t the best design, but it was a marvelous improvement over the Apollo Program, and that made it to the Moon. Surely America wouldn’t give up its lead. Commercialized space, and the vast wealth of resources available off-planet should have been enticements enough to take the next steps. If we did it right, the planet’s resources would have a far better chance of staying in the ground. Self-sustaining orbital habitats would be an impetus to develop processes that would allow life on Earth to happen in the ultimate recycling loops.

That didn’t happen. I suspect you’ve noticed. We abandoned space and dreams, for a while.

I enjoyed that job, and was saddened to realize that my effort came at the wrong time. We, as a civilization, thought we needed to pull back and devote more effort to the Cold War and disco. (But I did get to work on a fascinating project that challenged many of my assumptions and taught me a lot about the power of ideas.)

Ah, I knew you so well.

Today, I updated my Events page. I have a series of talks and classes coming up (and room for more, call me). The topics are Modern Self-Publishing, Social Media, and Personal Finance after the Great Recession. None of those seem to have much to do with a Masters’ degree in Aerospace and Ocean Engineering. If I expected them to, I’d be having a difficult time every day of my life. Fortunately, I know how all of it ties into my passion, and that knowledge is valuable.

My passion is for people and ideas. As far as we can prove, people don’t exist without ideas, and the only ideas I can effectively pursue exist within people. I’m a fan of the human race, which is why I want us to explore and colonize space; which has the happy consequence of leaving the Earth in better shape. Why tear down a life-covered mountain for a bunch of rocks when there are bunches of life-less rocks flying by our planet? That idea inspired me to get my two degrees.

Other people’s ideas inspire them. Knowing that I can help them inspires me. Self-publishing, social media, project planning, consulting, writing, and even photography are all ways for me to connect people with ideas to people with other ideas. If I had only seen my professional career as my only possibility, I would’ve been lost when I retired early (a temporary condition, evidently.) If I’d thought that the change would require a total redefinition of my self, I would’ve balked at the task. With a bit of introspection, and a great deal of retrospection, I was able to find the underlying passion that was also unrelenting.

Understand the fundamentals of why you do what you do. Then, when change inevitably happens, you’ll be readier to say good bye to the shell and illusions and find the strength in the structure beneath.

What’s coming next? I don’t know, but in the meantime I have these classes and talks, some intriguing projects, and some fascinating people with marvelous ideas to keep me busy.

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Getting Real With Tiny Stocks

Let’s get real. Put the emotions aside. Let the data talk for a while. I think emotions belong in personal finance, because otherwise persons won’t care about finance. I also know that math belongs in finance because finance is driven by arithmetic and math. Our emotions, however, don’t like to be usurped. Here’s an exercise I conduct that introduces each to the other when I analyze stocks.

Microsoft, Apple, and most of the S&P 500  companies grab headlines anytime they choose. They gain that power by what the companies do, but also by the consequences for their stocks: MSFT, AAPL, INX. Their stocks rise, the market rises. The number that typifies their power in the investing community is their market capitalization. Market cap can be as simple as the price of the stock multiplied by the number of shares of the stock. That’s arithmetic, not even fancy mathematics.

Investors draw lines in the investment environment declaring stocks to be small, medium, and large based on their market caps. Depending on who you are talking to, those borders change. Depending on how picky they are, they may even add micro and mega.

Let’s put market cap in perspective. According to Google, over 6,500 corporations have market caps of over one billion dollars; that’s $1,000,000,000. Currently there are about 7.125 billion people. Currently there are about 2,217 corporations with market caps over $7.125 billion. That many rich companies mean most investors, especially the professionals, only look at large companies. That also means many of them look down on small companies. I’m glad they do.

As an individual investor in a competitive marketplace inhabited by very powerful and ruthless competitors, I’m glad to find a niche that they avoid and dismiss. Thank you for laughing at small companies. Thank you for ignoring that the largest companies started out as the smallest companies. Even a multi-billion dollar corporation probably has a historian who can track it all back to one or two people who came up with an idea.

That rise from almost nothing to unimaginable wealth is an element of our society. It exists without judgment until we act upon it. I’ll leave that debate aside for this post.

Individual investors with high risk tolerances can’t readily invest in the “almost nothing” unless they start the business themselves or know the people involved. There are rules about angel investing and venture capital that encourage people to be “accredited investors“, which generally means someone with over a million dollars in liquid assets. The idea is that such a distinction is proof that you’re a prudent investor. Pardon me as I pause and reflect on how that definition totally ignores the role of luck in our lives.

For the individual investors with high risk tolerances but poorer finances, one option is to invest in small companies before they are popular, profitable, or proven. Warning bells ring whenever such investments are considered, and the label of “speculation” is appropriately applied. Some elements of the financial system aim to protect such investors from themselves. Many individual investors take that as a challenge.

A good characteristic of any investor is the willingness to analyze the investments they are considering. Small companies have less data, which is another reason for large investors to concentrate on large companies. While many investors have many opinions about their investments, I am most impressed with those who conduct an analysis, and even more impressed with those that publicly share them as part of an open discussion.

When dealing with small companies that have little data, it is necessary to extrapolate. Extrapolation, as most people familiar with math know, is easily misleading. Whenever extrapolation and estimates drive an analysis, I find myself checking the results against outside limits and benchmarks.

After MicroVision’s Annual Shareholder meeting I did a quick analysis of the share price possibilities based on comments made by the Chairman of the Board. I liked the answers, but I knew they had to be given some perspective. Based on the components that go into digital cameras, it is possible that MicroVision could see similar growth. Given that growth in the company, I calculated the growth in the stock.
2015            $33
2017           $178
2020         $667
2023      $3,333
It should be obvious that if I can hold the stock until 2023 that I’d be a multi-millionaire just from my MVIS shares. Have no fear, I’d diversify and have a bit of fun long before then. But how big is a company with a price of $3,333? Would it be bigger than the biggest company that exists now?

Currently, according to Google there are 30,059 companies to invest in. I suspect that includes mutual funds and such, but I work with the data I can get. 20,532 are worth more than a million; but there are a lot of houses worth that much. Even at one hundred million, there are 12,309 investment opportunities to pick from. At ten billion we’re down to 1,666; a number small enough that many people would recognize many of the companies. Only 96 are larger than one hundred billion; not all of which are recognizable, but most are. That top rarefied niche is the home of the drivers of the market indices, the holders of immense wealth, and also probably partly owned by most pension plans. None have made it to a trillion, yet.
Market cap    # of companies
1.00E+06        20,532    32% percentile
1.00E+07         17,272    43%
1.00E+08        12,309    59%
1.00E+09          6,578    78%
1.00E+10           1,666    94%
1.00E+11                96    100%

max cap 100814 market cap

So, where does my estimate place MVIS? Assuming about 45,000,000 shares for MVIS
2015               $33         $1,485,000,000
2017              $178        $8,010,000,000
2020            $667      $30,015,000,000
2023          $3333    $149,985,000,000

max cap 100814 MVIS

MVIS market cap and share price

That last number is definitely high, but at least it isn’t higher than what’s proven possible in 2014. It suggests that MVIS would be a major player in the S&P 500, even as the index climbs. That’s where conventional wisdom wags a finger and says it won’t be so. Maybe so. I don’t need it to get that high. I need sooner rather than 2023. But, that company with the largest market cap, the one that most people laughed at for decades was started by two guys who had an novel and simple idea. Thank you Steve and Steve, Jobs and Wozniak.

If big price numbers create an emotional positive or negative response, remember, they’re just numbers. BRK, with a market cap lower than AAPL’s, closed today at over $200,000 per share, directly because there are less than two million shares available. MVIS has less than fifty million shares.

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Reasons For Optimism October 2014

Overall, I’m optimistic. Got problems? Same here. I need to find additional work. My house, car, and self are requesting repairs. Yet, I’m optimistic. One friend calls it the Trimbath Sanguinity. I also like the term apocaloptimist. There’s a crisis amongst us, and I think what comes next might be alright. Here are some trends that I listed from just one day of casual web browsing.

Electric transportation
Mass produced electric cars have been tried before, and famously squelched. A good idea resurges, and does so with broad appeal and without trying to mimic old solutions. Electric cars are becoming common enough that there’s no reason to comment on them as they drive by. I’ve ridden in a few, and a few hybrids, and after the first few minutes the novelty is replaced with a normal drive. The range may be an issue, but that is only going to improve, not degrade.

Electric bicycles sound like they should just be toys considering the weight involved in batteries for electric cars. They do weigh more than a normal bicycle, but the extra weight doesn’t slow them down much. On my bicycle commute route is a one or two hundred foot hill. An electric bicycle climbed past me without hesitation. Its range may be limited, but just clearing that hill from my commute would save me ten minutes. People in flatter terrain are seeing the advantage.

LEDs aren’t just light bulbs. It is easy to forget that they are Light Emitting Diodes, little bits of electronics. Their efficiency is impressive. Their lifespan is impressive. The rapidity of the price drop is becoming impressive. My local grocery sells subsidized ones for $4. Any extra cost is worth the extra life, and mine don’t have the annoying buzz of the CFLs I tried.

Someone did remember that LEDs are electronics and decided to try using them for more than just light. US electricity cycles on and off 60 times a second. That’s fast enough that our eyes can’t detect the 50% of the time they are off, but that is slow compared to computer speeds. But, LEDs can be cycled at high enough speeds that they can send data. Instead of using radio waves to create wi-fi (and creating some health concerns), LED lights can be designed to act as a local internet called li-fi. The bad news is that the light is stopped by obvious things like walls. The good news is that the signal is much more secure. Hackers can’t get the signals from inside closed rooms. Hospital rooms don’t have interference from other hospital rooms. And, those wi-fi health concerns are avoided. Someone will find something wrong with li-fi too, but maybe all they need is to leave the room rather than live in the wilderness or in a faraday cage.

LEDs are also showing up in monitors, not like in the flat panel displays on our laptops, but as pico projectors. Whether or not MicroVision succeeds with its MEMS mirror oscillating red, green, and blue laser diodes, computers, televisions, monitors, and an immense array of fragile flat glass electronics that require immense quantities of resources, transportation, and disposal costs will be replaced with projectors the size of postage stamps that necessarily take far fewer resources and leave far less waste.

3-D printing
Being able to print documents at home was a dramatic change for every household. The ability to print color and photographs continued the trend. Those impacts are small compared to the advent of 3-D printing. It might seem like a toy that can print toys; but the implications are far greater. Even if the price of the part doesn’t change, being able to buy something and print it rather than ship it dramatically reduces the cost of time, shipping, packaging, warehousing, and the waste of discarding unsold inventory. Just like print-on-demand means authors no longer have to store books and ship them to buyers, individuals will be able to design parts, sell the designs, and enjoy the royalties. Passive income is a nice thing. Decreasing waste in resources and time is even better.

Tiny Houses
If you haven’t seen them, you probably will. Tiny houses

For Sale

For Sale

are a growing answer to a population that either can’t make enough for normal mortgages, or don’t want normal mortgages, or have realized that they’d rather own a house than have a house that’s so big that it owns them. Everyone’s answer is different, but a bit of self-examination of basic needs means a house below 1,000 square feet usually suffices. I live in 860 square feet, and could just as easily live in 600 square feet. Others push a bit more, happily declutter, and get down to 120 square feet, some even less. Rather than being spartan, tiny houses tend to have high-end everything because the total cost of the house is so low because it is so small. Total impact on the environment is lower, especially when it comes to heating. Total impact on the owner is less in terms of upfront costs, recurring costs, while allowing more free time because there’s less house to take care of. If you have to move, put it on some wheels or load it on a truck and relocate.

Solar power
Solar cell efficiency is increasing. The cost is reducing. The subsidies help, but oil, gas, nuclear, every other energy source is subsidized, and sometimes more that solar. Residential solar is becoming popular enough that it is impacting conventional power generation. A destructive economic cycle is developing around conventional power because of solar and wind. As more people use alternative energy, fewer people are using conventional. Fewer people maintaining the old system means the cost per capita for conventional power goes up. That provides and incentive to use solar and wind, which feeds the cycles. Many environmentalists have pushed for energy policy changes, but basic economics and the acts of individuals may have a stronger effect.

Walk Away movement
I am witnessing what I am calling the Walk Away Movement. Some of the advances I’ve mentioned above, as well as others, are enabling people to become more self-sufficient. Transportation, energy efficiency, power generation, sustainable housing, and self-manufacturing, are joining an increasing population of people growing their own food, making their own clothes, repairing rather than replacing things, building communities, and learning skills that extend beyond sitting on the couch with a remote. The power structures are providing disincentives to participate in politics, and public advocacy; so why try to change a Senator’s mind when it is easier to stay home and be a role model.

Social media
Go ahead and groan, but we groan about social media via social media because it is far more effective at connecting with personal networks that anything that came before; except when villages were small enough that everyone could fit in the pub. Good ideas travel faster and farther because we shout it out and people listen. Phone calls, snail mail, and public meetings can’t reach as large of an engaged audience as an idea that goes viral.

Legalized marijuana
Whether you inhale or not, legalized marijuana is one example of how ideas are spreading. Despite our concerns about control, social media is far less controlled than anything coming through the official channels or conventional news media. it is now much easier to check data, listen to debate, and make up our own minds. We won’t all agree, but we’re at least working at an amazing array of issues far more effectively than the US Congress.

Much of what I’ve just described is the consequence of the Age of Silicon. Even a bit of both sides of the political dysfunction and the WalkAway Movement are enabled by the information that flows through silicon chips. Graphene is almost magical in how much better it is. Graphene isn’t just a replacement for silicon’s conductivity. Graphene is also a building material so strong that an elephant standing on a pencil point isn’t enough force to break through a sheet of graphene the thickness of clingwrap. The difference between the strength of chemical bonds and molecular bonds creates astonishing characteristics. Graphene is nothing more than sheets of carbon. The holes between the atoms are smaller than water. That means a material that is strong and waterproof that also conducts electricity and heat. How about a roof and walls that are only one atom thick? The resources required to hold them up would be minimal, and fewer resources are used.

Consciousness, The Universe
The most powerful positives may be the progress we’re making in understanding consciousness and our place in the Universe. The insights are simultaneously humbling and inspiring. We reaching beyond compassion based on “Because I told you to.” and fundamentally learning about our similarities and interconnections. We may finally reach the point where people treat other people as if they were people, no labels applied.

Ironically, most of these ideas don’t affect my daily life. My financial situation is improved, which some take to mean resolved, but which I know is insufficient and fragile. While one of my major clients is closing their project, and I continue to look for an improvement, I’ve also had fun, actual fun, working for a new client. An article I wrote for Curbed Seattle, went to #1 regionally, then #3 nationally, and then was picked up by a news outlet. It had more views than there are seats in the Tacoma Dome. Now, that’s encouragement! Especially, because I did something similar the month before.

I may be hitting my niche, explaining things as diverse as real estate, aerospace, and financeDream. Invest. Live. in conversational and entertaining terms. Exercise that, and couple it with my joy in simplifying complex program plans, and my financial situation may get back to repair-the-house money, or more. We may be hitting our niche, in areas that we’ve all become aware of, but in ways that are creating a new mainstream that is hopefully pointed in a much better direction for everyone. Okay, I feel optimistic again. (I’ll look at the bills later.)

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Twiddling Thumbs

What broke loose in the world? Everything seems to be in flux; but, maybe it’s always been that way and we’re just aware of it now thanks to the Internet. Nah. This time is different, as every time is. Almost all of the change is out of my control. I could try to track every detail, understand every nuance, and anticipate every possibility. And I’m old enough to know better. Sometimes the best approach is to keep doing what I’ve been doing – as long as it seems like a good idea. And sometimes, it just makes sense for the mental equivalent of twiddling my thumbs to keep my mind occupied while the world resolves itself.

I know, I’ll run a civilization! Gamers know what I am talking about. There’s a game called CivilizationScreen shot 2014-10-01 at 7.29.07 PM, aka Civ, also known as an addiction. A successful run at the game can take ten or twenty hours to play. This is not a shoot-em-up, unless you consider the seemingly inevitable global conflicts. Civ is a strategy game where the player starts with a wandering band of settlers who haven’t even developed writing. The player has to build up their country’s size, technology, culture, military, and relationships. The first country to launch a spaceship to Alpha Centauri wins. Finally a game that doesn’t require shooting and subjugation for success; except that is an option too. And success is possible by being the best diplomat, or most advanced culturally, or merely being the biggest in 2050. It takes strategic planning, big and small picture perspectives, and a lot of brain cells. I can dive into a game of Civ and have nothing left over for worries, anxiety attacks, or useless anticipations.

The planet is changing rapidly, and isn’t waiting for us to resolve a debate over the cause. People are implementing solutions are quickly as they can, and trying to make more of the population aware of the situation. Governments are realigning themselves in Scotland, the Ukraine, Syria, and probably a couple dozen other places. The US elections are only weeks away, and while there will be votes, it is hard to tell if there will be change; unfortunately, the lack of change is initiating change in the form of consequences. The economy is improving, at least in sectors; and maybe that’s enough, as I’ve seen many businesses gain traction and earn their owners a living. My business is losing a major client as they conclude their project; yet I hear hints of enticing possibilities that could replace or even improve that revenue stream. Aside from all of that, I’m hearing good news from many of the stocks in my portfolio; particularly, Peter Jungmann’s positivity regarding MVIS. Passive income again? That would be a welcome return.

It is tempting at such times to try to do something for each of the issues, and I do. But, it is also possible to do too much, even though it will have no other effect than to spend time. I live a life with little waste. I use my bicycle more than most. I compost. I won’t list the rest because no one needs to read anyone’s list of what they think they’re doing right. A good rule is that, when in doubt, people are making and acting on their best guess. That’s all any of us do every day.

But sometimes, I must remind myself, there is nothing to be done beyond what I’m already doing. I try to live “right”, at least according to my values and abilities. The forces in play in the world have incredible momentum, and are usually only affected by opposing levels of incredible momentum – though I do enjoy that fact that chaos theory suggests that a small random cause can have an immense effect. The forces in play in my personal finances have far less momentum, and yet are probably equally resilient and sensitive on any given day or night.

So tonight, while I wonder what’s happening with the ice caps, the protests in Hong Kong, the election fodder the politicians will provide for Stewart and Colbert, whether the economy’s recovery is temporarily superficial or permanently superficial, whether my newer clients will ramp up as they’ve suggested, or whether MicroVision and MVIS will finally be proven successes within weeks or days, I guess I’ll have dinner, let the world settle itself without my active interference, and play a game where I try to take over the world – peacefully.

twiddling thumbs

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Sustainable Versus Survivable

Watch the watchwords and catchphrases used by movements and causes. They shift, as language does, and also as people’s reactions are recognized. Sustainable was the word for several years. It was replaced by thriving. The real topic is how many people will be surviving. On a personal level, that’s the basis that we all work from, and how aware you are of the fact is a measure of where you’ve been in this life. At the level of survival, needs versus wants are not academic concepts. Necessities become starkly apparent, and valuable lessons that are hard to ignore or forget. Knowing your true needs makes sustainability, and then thriving more realistic. Self knowledge is one of the most precious lessons learned from the hardships encountered when survivability is challenged.

Several years ago I had a conversation with a noted new economy pundit who will remain nameless. The topic of poverty came up, and my paraphrasing of their response is that “while the poor may be in poverty, their culture sustains them.” I had one of those jaw dropping moments when trying to respond to a concept so disconnected from reality. The assumption was that even though the poor don’t have enough to eat, or a place to sleep, or healthy conditions, a song will carry them through. Nope. The human body needs sufficient calories, vitamins, and minerals to survive. Every climate requires some protection from the elements. No place on Earth is safe from disease because a person without enough food, or under too much stress will not survive long.

A simple fact is that, the generally accepted scientific observation is that humans are mortal. A wonderful source of science fiction, fantasy, and conspiracy theories suggest immortality is an option; and they may be right, but let’s assume that most of us are going to die. The fact should not be a shock, even if stating it is shocking. I’m over 55. As the saying goes, old age is not for sissies. That’s become obvious. Mortality also means that survivability for an individual is a limited time option, at least until the immortals or the digital singularity decide to change things.

My life for the last few years has been a journey through economic turmoil. One bit of evidence: I’m only going to conferences if someone else pays my way. I’ve been pleased, and several folks have applauded me, for being able to survive losing 98% of my net worth, avoiding foreclosure, and building up a business because for some reason I wasn’t able to get a job after trying for years. I accept the applause because I’m still here. Many folks assume that the result is obvious. As with anyone who’s been through a similar situation, we know different. We know the people who didn’t survive. The harsh reality is that lives are shortened either through stress or from more active means. This gets into a dark place, but the suicide rate dramatically increased after the economic downturn that became the Great Recession.

It is time to step up past survivability to sustainability. Sustainability was too dire for some early media campaigns, but it is a step up from bare survivability because it extends the concept of surviving out to a more typical lifespan. There is an ease to sustainability because the systems in place are reliable and replicable. Do this that way with these kinds of systems and life will get its chance to run a natural course. The stress and anxiety of survival are eliminated, leaving a great relief and an opportunity to enjoy the song that is culture.

Sustainability wasn’t enough, at least within ambitious America, and I am not surprised. As a species we can do amazing and good things. To do that we must do more than survive or sustain; we must thrive. By thriving and by remaining aware of our needs from our experiences surviving, we can realize our collective dreams whether that is improving everyone’s lives, expanding into the universe, deeper into our selves, or all of that.

Our civilization can thrive, but first it must become sustainable, and we must find a way for all people to survive. If thriving is only for a few, it is less likely to survive.

Like a lot of people I know, I am in survival mode. By working seven days a week, usually from about 8am to about 8pm, I can make enough to pay my bills; though I have yet to figure out how I am also going to pay the self-employment tax. Like I said above, I join the applause that I’ve reached this level, as have so many others. Survivable, however, is not necessarily sustainable. I’m only taking a day off every two months. My body has symptoms of carrying too much stress, a weakened immune system, and days when my diplomatic reserves are at a minimum. I strive for sustainability. I believe I can reach it because an extra client or two, or a windfall can dramatically improve my situation. I’m enough of an optimist that I know that eventually I’ll find the right combination of what I can supply to an existing unmet demand and that I’ll be compensated enough to thrive. I look forward to that day; and it could happen any day.

We find it convenient to classify people into lower class, middle class, and upper class. We are a class-based society, but at least we don’t require folks to stay in the class they were born to. One definition of lower, middle, and upper that comes to mind is housing:

  • lower = must rent,
  • middle = able to buy,
  • upper = able to buy more than one.

Roughly speaking, lower, middle, and upper could also be: surviving, sustaining, thriving. Sadly, there’s a fourth distinction that we treat as statistics and don’t talk about much and that is the not surviving. I’m glad I’m not there, but I can see it from here.

As we try to develop a society and civilization that will thrive, it may be best to look to the people who’ve learned how to make things sustainable, and even more to the people who are intimately aware of what it takes to survive. They’re the people who learned best about what matters most. Our modern irony is that the people with the most precious life knowledge have the least monetary wealth. Maybe it is time that what they can supply meets the demand to thrive in a way that helps them do much more than survive.

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An Irrational MVIS Market

Cause and effect are logical cousins. We expect them to be quite familiar with each other. The stock market doesn’t work that way – at least in the short term. MicroVision had a rare event, a press release that included data and dollar signs. They made money because they made something. This is good news! The stock popped; and as of today is right back where it was before the announcement. As an investor I have a simple model and expectation of how much a stock may be worth. The market and I disagree; and the market is what sets the price and the worth, regardless of my logic – at least in the short term. The news, however, suggests that the long term may not be too far away.

Ta Da!
MicroVision Receives Nearly $1.9 Million in Component Orders for Fortune Global 100 Customer
Development on display module complete; MicroVision expects to begin component shipments in Q4 2014

There are investors, or at least traders, who see a press release and buy or sell before they’ve read the news. In this case, I think they got as far as $ and bought. MVIS popped up 10% in the first hour. Then the stock started sliding back. Maybe they finally got past $1 and noticed that the next character was a decimal point. MicroVision made $1.9 Million, nearly; so, really probably a bit more than $1.85 Million. That’s a lot more money than I have, but there are houses in MicroVision’s neighborhood that cost more. It was good news, but it wasn’t great news. It wasn’t the sort of news that meant the company was profitable. And the stock settled back down, the energy spent. Evidently, the investing community is expecting bigger news and isn’t willing to hold the shares in the meantime.

My favorite valuation model is Present Value of Future Revenues, Discounted for Risk. Assume that someday they’ll make money, regress to today using some interest rate like 10%, and then take that number and reduce it by some percentage based on how likely they are to make that money. Peter Jungmann posted his estimate of the future share price based on future revenues. I appreciate his model, have my own values for some of the ratios, and am impressed that he has the courage to publicly post his answer. So many talk but don’t post. I’ve posted mine before as well, but it is late and my link is harder to find (here’s a piece of that story); so, let’s just use his. “Microvision @ $1,786 /share?

Share prices over a thousand look incredible, but he is not the only one to come up with such high numbers. I came up with something similar. Others have quietly emailed me theirs. Assume it takes seven years for MicroVision to become that successful. Regress the revenues back at 10% and find the price has dropped by about half; $854. Today the price is $1.93. The discount for the risk = 99.95%. (1.93/854~.0005) If I found that kind of discount on anything and could afford it and expected to be able to sell it, I’d buy it. Which I have in the case of MVIS.

My logic, however, is not popular enough to be reflected in the market.

Okay, I like such a high estimate for the stock; but I’m not surprised the market isn’t matching it. I am surprised that the market is effectively discounting it 99.95%. Even just based on luck the odds should be better than that. A 90% discount would be $85.40; which I think is reasonable. One of the reasons investors balk at that idea is that they are considering the share price without considering the number of shares. MVIS went through a reverse split a few years ago 8:1. Based on that share count, today’s 90% discounted price would be $8.54. Market psychology trumps market mathematics.

When I saw the news I saw the decimal point. $1.9 Million is nice, but it doesn’t affect my model. The parts of the headline that would affect my model, or at least how someone else may use it, are “component orders” and “shipments in Q4 2014“. As usual, there were few other data in the rest of the release, which is also why the stock may have come down, and also why the discussion boards are parsing the news a week after its release. Component orders, though, are an important step for a company that has been relying on development contracts. Hardware is being manufactured and shipped. Shipments in Q4 2014, mean things are happening now, not in some far off projected date. For me, the probability of success has just increased and the discount for risk has decreased. That’s enough reason for the stock to move.

Evidently, the stock does not agree.

I, like many of the MVIS investors who’ve owned the stock for years or decades, am anxious and eager for the company’s progress. So often they’ve made announcements, we’ve been exhilarated by the promise, and disappointed by the delivery. Now, we seem to be entering a phase where the events are more substantial, the far off anticipated events aren’t as far off, and we can base our discussions more on data than conjecture – though we have a long way to go there.

Eventually, eventually, if, if MicroVision succeeds, then I think it is likely that this market that has marked MVIS down by an irrational 99.95% may counter their history by marking it up with an irrational premium. And, no, I don’t expect a multiplied premium of 2000 (99.95% = 0.9995 = 5/10,000 inverted would be 10,000/5 = 2,000); but hey, there’s evidence enough that the markets are irrational. They didn’t listen to my logic before. They probably wouldn’t listen then, either.

Okay, MVIS, sooner is better than later. I’ve got bills to pay.

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My Money And My Life – Breakout

We whacked weeds, pulled old fencing out of bushes, posted some signs, and generally played around in our grubbies in the name of charitable land preservation. It is how I decided to spend a morning, and I didn’t even get paid. I’m one of the site stewards for a land trust property. It is something I do that makes my life a bit better by making my neighborhood a bit better, so I guess I was or will be paid. Sometimes it is the little events that don’t take much time, but that affect your life, that make it worth a temporary shuffling of a schedule. I did that in blackberry bushes on Friday. I also followed my own advice from the previous post and spent some time in the neighborhood of my personal finances. A bit of life spent as time taught me something about wealth and money.

Allow me to disabuse any grandiose notion of my role as site steward. The other steward does a lot more work and lives almost an hour away. I think they gave me the role because I can walk there in twenty minutes, and have to drive past the property to get out of my neighborhood. He’s useful and constructive, planting trees, getting a bridge built, organizing fence parties. I’m more convenient, will work on the constructive side, but I’m more likely to lead the charge against invasive plants. Destroy! Exterminate! (Maybe we should hire a Dalek.)

Hammons Preserve is a small farm that was passed on to the Whidbey Camano Land Trust so people can sit and find a bit of peace. It is also one of the few places to see Cultus Bay, an fertile and active tidal bay with a view of the Olympics and that has shores that shift by at least a kilometer between high and low tide. By putting the property in trust the land was saved from probably becoming a housing development or a MacMansion estate. Farms are fertile. That also means invasive plants are happy to move in and take over. Our work parties alternate between destruction (tearing out the invasives) and construction (planting native species) and then more defense against the invasives until the natives are healthy enough to take over.

Trust me, the Olympics are right there, behind the clouds.

Trust me, the Olympics are right there, behind the clouds.

At the start, there were truckloads of old farm garbage. After that was carted away we covered the fresh dirt with mulch and weed barriers and started planting cedars, willows, grasses, and more types than I can recall. I spend more time with the weeds, remember? Those invasives are blackberry, english ivy, holly, canadian thistle, and scotch broom. We’re there about once a month. They work every day, but so do the natives. We are making progress.

Hammons Feb 2008

February 2008 – dirt and weeds

Hammons Jun 2011

June 2011 – our grasses arise

Hammons Sept 2014

September 2014 – shrubs begins to rule

Motivations differ, but at the last work party a thought came to mind. Aside from the long term goal of preserving the land, volunteers find personal short term reasons to help. The things we do for charity are the things farmers would do out of necessity. A Friday morning in grubbies is worth a celebration, but a farmer spends decades viewing much of it as just more work. If the farmer worked the land for decades, then the farmer found a sustainable lifestyle. Volunteers measure time and effort differently. A sense of gratification comes from knowing your work has helped at least in some way.

It is also gratifying to get dirty, do something good, and know you can get clean. It is gratifying to know that you’ve got the clothes for the job. It is gratifying to build up an appetite and know you’ll be able to eat enough to replenish yourself. It is gratifying to build up a thirst, know that water is available, and possibly have an excuse for an indulgence like a beer. The tools, though, are what impressed me. It is gratifying to have the tools for the job; and in our consumer culture, most of us have more tools than we need, and rarely use the ones we have. I know this because I had fun tackling a task by driving back home and grabbing an assortment of gadgets that meant a job got done rather than postponed. And I got to use my tools!

I felt rich – and anyone who’s been stalwart enough to read my financial story knows that I have far less money than even a few years ago.

That’s when the flash of insight hit. There are people who are working hard every day who, at the end of the day, can’t get clean, damaged their clothes, won’t have enough to eat or drink, and have to let vital tasks go undone because they don’t have the resources or equipment.

There’s a poverty line defined by the government based on income. I found a new line, while doing work for free even though I had to make up the money and time somehow.

In my previous post I exhorted folks to celebrate taking any small step in advancing their personal finances. Doing something is better than just talking about it. So, before I went to bed (actually couch), I opened up the Nine Step Program Guide and tasked myself with reading at least a page. Well, the first few pages are titles and copyrights; so I skipped to page 4 and ran into a list of questions. Mostly they were about money, and reminded me of how I’ve had enough and now do not. I was about to answer them as quickly as possible rather than dwell on my misfortune but I came across this one;
If you were to die in the next few years, would you be comfortable with your legacy or contribution to your family, your community, the world?
Yes. The answer came so quickly that I hit rewind in my brain and asked myself the question again. Yes. Despite my current situation, I am comfortable with what I’ve done and how I’ve acted – for the most part. I am human, so inevitably, mistakes were made. I beg your pardon. Accept my apologies. But the balance remains. And, no, I don’t feel like replaying my entire life within a blog; but I do appreciate the question and the answer and the level of confidence I have with it. (Want to know more of the story? I have over a million words published in books, articles, and posts. Check my bio. Read on.) Whether anyone agrees with me or not, the question is in the Guide because it is a question we should each ask ourselves. What’s your answer?

My new appreciation of poverty and wealth, and my new appreciation of my self arrived unexpectedly. The revelations continue to percolate and permeate through me. One thing is obvious – I’ve received some of the most valuable insights by spending just a little bit of time, for free. They broke me out of a mindset and gave me revelations. Thanks.

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