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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My Money And My Life – Intentions

I have great intentions! Ah, I’ll get to them eventually. When life comes by in a rush it is easy to keep old habits and hard to develop new ones. I intend to step through the Nine Step Program

New Road Map Foundation

New Road Map Foundation

developed and popularized by Joe Dominguez and Vicki Robin. Back in the late 90s, the program helped me gain confidence in the way I managed my finances. As I’ve said before, it is time to do it again. Progress since the first time I mentioned it on August 6th equals zero. If you find that managing your finances is easy to procrastinate around, know that even from someone who knows its value, getting started is the hardest part.

Distill most personal finance texts down to the basics and they become, “Spend less than you make. Invest the rest.” Eight words, yet bookshelves are filled with variations on that theme, including my book, Dream. Invest. Live.Dream. Invest. Live. The variety exists because there is variety within humans.

How you spend is determined by your values and your necessities. Some people would never buy a gun. Some people would never be without one. Some people live alone. Some people have dependents that extend beyond family and acquaintances. Some people learn to be so frugal that they can meet their needs for less than some are compelled to spend on appearances and dining out. Some people have to pay for bad luck through medical bills.

How much you make is determined by your skills, talents, opportunities, and luck. Even Warren Buffet acknowledges that he has become one of the richest people on the planet because of luck.
I’ve worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions.” – Warren Buffet

Invest the rest are three simple words, yet the range of investment possibilities extends far beyond More Than Stocks; and each possibility is worthy of volumes of books and years of study. Be lucky enough to live in America, and many opportunities are available – if you’re making more than you spend. Tens of millions can’t afford both food and housing, and may be in debt. They aren’t investing. Yet, get on the other side of that balance and compound interest proves Warren right.

I intend to step through the Program because it helps systematize each of those steps, and adds 6 more. Mentally I am preparing for them again, looking ahead to the various exercises, and knowing that none are onerous though a couple are tedious while being instructive. And yet, I have yet to begin.

Life is nothing but time. Life is real. Time, at least for now, is non-negotiable. Money is abstract. I can make more of it, predominantly through spending time. The trade of time for money is improving, but the balance is fragile enough that any relaxation in effort is met with a shortage of resources. The notion of taking time off to better enjoy time puts too much pressure on my future time. Spending money to make more money is a fact of American life, but when there is no extra money to spend the extra money can’t be made. The US Government defines poverty by a yearly income, but a truer dividing line is that point where there is no extra money and no extra time.

Our lives are never totally out of our control. I can decide to risk bankruptcy by only working the hours I want; but, that is a risk that entails much more trust in serendipity than is prudent in a society that bases food, shelter, clothing, and health on wealth. Even as I type this post I am making a choice. I post twice a week, which takes about 3-4 hours each week. An extra 3-4 hours would help me get a lot done with at least a few of the tasks on my long list, including the Nine Step Program. I’m willing to make that trade because I know that I’m already on the right track to regaining financial independence. The Program will merely help me better estimate how long it will take. This blog, however, is evidently useful to a widely scattered international audience because so few people are able to articulate what it is like to live through such financial turmoils.

If you are on a similar path, congratulations. Even if you’ve only made as much progress as me, that is to set the intention, congratulate yourself on being far ahead of the millions who avoid, ignore, or live in fear of managing their personal finances. Every step may seem onerous, tedious, or innocuous; but, whichever path you take, deciding to place yourself at the start is the necessary first step. And then step. And celebrate. And step. And repeat, and realize that you’re heading to a goal that you defined. Get there and celebrate again. And don’t be surprised if you find more steps after that, but that’s another story.

Considering what I just suggested you consider, I am going to close this post now, a bit short, so I can take the few extra minutes saved to take at least the tiniest of steps: getting a copy of the program and reading page one.

For those of you who want to help me along with that balancing of time and money, keep in mind that I am happy to consult (for a reasonable fee) about such things (few have seen the swings through America’s economic classes as I have), or help me with that passive income that comes from sales of work I’ve already conducted (buy my book(s)!). History suggests that we’ll both benefit.

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Retreat Run Away To Valhalla

Retreat! Retreat! Run away! Run Away – at least for a day. I, gasp!, took another day off. In the balancing of life and money, bare necessities necessitate working seven days a week. I’m known for my endurance (marathons, cross-continent bicycle rides, etc.) but I am also human. Logic dictates working every day until my finances have recovered sufficiently to take regular days off. I’m not there yet, but the realities of being human mean eventually needing to step back, even to the point of running away. I ran away to my mountains for a day and a night. And learned a lot about my fears, anxieties, and joys. Thank you, Valhalla.

Like many people I know, I work every day. It isn’t through choice. Working every day is required to pay every bill, even for someone with fewer and smaller bills as my frugal self. This year is far better than the last two years. I have just enough work to pay all of my regular bills thanks to four main clients, several short-term projects, and my regular classes, books, and photos. Add them all up and they just make enough to pay for the essentials, except taxes. Got to find a way to pay the government too.

The irony is that I am a strong proponent of balancing work and lifeDream. Invest. Live.. The universe presents us with lessons, sometimes rather forcefully, that expose our assumptions. Balancing work and life in today’s society is something that we’re only beginning to accept within social circles. Many people are working hard to keep the right job and the right car and the right house while doing the right things, except that they weren’t the ones that defined what was right. Tackle that, identify your personal values, live to them, and challenge convention with a life much better lived.

The reality for many people in situations like mine exposes the limits of that assumption. Implicit within the idea of balancing work with life is the assumption that work is producing more money than necessary. With 1/6th of Americans in poverty, there is sufficient proof that many people’s jobs aren’t producing more than enough money. Working every day isn’t a choice made to afford luxuries. Working every day is a necessity measured in balancing necessities.

As much as some think they’ve heard my litany of bodily aches, I can assure you that no one has heard the complete list. I only dare myself to list it to myself every few months. One reason I don’t concentrate on my aches is that I know that most of them are stress-related. The pain in my neck will be relieved when I relieve the ache in my assets.

Three days ago the aches ganged up. Sleep went away. My ability to concentrate pulled back from hours to dozens of minutes. I needed a break. With a little warning, but not much, I told all of my current clients that I was taking a day off. Nice folks all, they were encouraging.

The weather was right. My deck and fence were finally fixed. I had a slight backlog in hours. I committed myself to going on an overnight hike.

Taking a day off to go hiking sounds frugal, but it is expensive. As us work-everyday people know, a day off is not like what regular employees experience. A day off is a day without pay. The hike would cost me a day or more that must be made up with more work some other time. A hike also costs gas (~$40), food (~$20), ferry tickets for us islanders (~$20), trail pass (~$10), and the inevitable gear replacement (~$15 for a lost lens cap + ~ $15 in replacing snacks that became rodent chow). Even if I wasn’t losing a day’s pay, the hike would cost more than a day’s wages. And yet I knew I must go.

The cost and my anxieties were on my mind from the start. The price of gas, the age of my truck and its shocks and tires, encouraged me to drive slowly and carefully; ignoring the rest of mainland frenetic traffic. The trailhead is up a logging road, that was in the worst shape I’ve ever seen it. I know it well because I used it frequently when I was writing Twelve Months at Lake Valhalla.valhalla cover As I pointed out in the book, when stresses and anxieties arise, familiarity soothes. I was heading back to a familiar place.

Everything was fine. No breakdowns. As I got out of the truck I prepared myself for the inevitable climb with the sweating and heavy breathing. Yes, I love Nature. But, I was worried. I spend so much time in front of the computer that I was sure I was out of shape. My heart hasn’t felt happy on the days with contentious negotiations. If I didn’t keep my concentration up, my body might fall down. The wilderness is a bad place for bad things to happen. I know; I’ve had to assist in a few search and rescues just because I was in the vicinity.

Skip ahead to the top of the climb and meet my surprise. I wasn’t even sweating. My breathing was better than usual. My chest felt relaxed. My hips and back weren’t complaining. My headache was gone. I felt light, happy, and content.

DSC_4994I was in wilderness. I was in the wild, where even the trail crews can’t use powertools. I was in the wild where there are lions and tigers and bears, oh my. Or, at least there are bears (probably black), cougar (which have stalked me), and the most dangerous of all – rodents who pester and eat camp food. I was in the wild where there are rockslides, forest fires, falling trees, and hazards enough to limit human expansion until the last few thousand years. I was in wilderness and felt better than I’d felt in years, since the last time I went on a hike.
I carried my basics: shelter, clothing, food, medical supplies, and assorted gadgets; all of which fit in a pack I carried on my back. DSC_4972 The anxieties were gone. The aches and pains and anxieties that fatigued me to the point of escape were the result of trying to meet society’s basics of a house, its systems, taxes, utilities, transportation, and the list of bills most of us are familiar with. We’ve made an unbalanced trade some time ago. Originally, we left the wilderness and developed technologies to civilize our world and ease our lives, but which separated us from nature. Yet, we also developed expectations within that society, while reducing wilderness to pockets that must be legally preserved and only visited temporarily.

Fantasies of living in a cabin in the woods or on an isolated island remain fantasies because those lifestyles cost money for the land at least. Of course, maybe I’ll win the lottery.

Realties exist though, that I am reminded are healthy. I lived a life that had me backpacking three weekends out of every four, while maintaining a regular job, while maintaining a house. I know now that this retreat has run me back into something I want and need to do. I have a refreshed goal of finding that balance, financially, mentally, and emotionally. I’m glad I ran away.


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ASTY Refuses To Be Boring

Stocks only return 5%-10% per year. Investing is boring. Timing is everything. I’ll agree with that last one. I intended to not mention ASTY again until my semi-annual portfolio review at the end of the year. So much for those plans. ASTY took the pop that I talked about last time, which was on top of a pop I talked about previously, and popped the top off both of those. Evidently, the stock ASTY doesn’t know that the company it is based on, Asterias, hasn’t changed significantly in the last two weeks. At one point today ASTY was up 359% from its recent low. I almost sold. Timing got in the way. That’s probably okay.

Four days ago I wrote, “My position was up over 200%. I could sell half, take out my original investment, and let the profits be pure.” I wrote about deciding to hang in there for the long term as I usually do. Selling half would let me do that with half of my position; but that position was the smallest in my portfolio. I didn’t want to invest too much time or emotional energy into deciding whether to sell or not. But, I tasked myself as usual and asked what would be a high enough price to pull out my investments while leaving a large enough position. I settled on a roughly four-fold increase and set my expectations to act on that within a few years.

The universe laughs at our plans. Investors can design intricate stratagems, but reality trumps everything. The day I published my post, ASTY went up to 6. The trading day after that, it climbed to 7. This morning it started with a jump by gapping up, and climbed past 8 as I had breakfast. My silly thought experiment of a four-fold increase was no longer a far-off calculation. It was something to calculate now. Ah, but I am a rational human being and decided to ponder the exact number as I drove to work. If it exceeded that number when I got there, I’d put in a Stop Loss order for a quarter of my shares.

Ha! the universe said. When I got in the truck, ASTY was above 8. As I drove in, I realized that approximately $8.80 would meet my criteria. As I got to my office (a co-works space in downtown Langley), I fired up my laptop, saw a blip above 9, arranged the rest of my nomadic workspace, poured my cup of tea, and saw that the stock had dropped to $8.60. I trusted the number I’d estimated, and waited for a possible rebound. It came and went while I dealt with my first client. Through the rest of the day it dropped as if it was bouncing down stairs, then plunged to below 7 and dribbled around in the mid-sixes for the rest of the day.

Who says investing is dull?

It is a good thing that I understand my risk tolerance, know the folly of definite plans, and have confidence in my overall strategy of investingDream. Invest. Live. in the company more than the stock. The stock dribbled along above 6. I bought it below 3. A 10% return on a $3 purchase would take seven years to reach $6. The stock’s performance is exceeding my goal. I haven’t optimized my portfolio, but at least that stock is exceeding the market averages.

Investing in startups involves a lot of guesses masquerading as analyses. Startup biotechs can range from below $100,000,000 to almost a billion; yet no one knows the answer until the FDA approves the treatment and the company begins treating patients and getting paid. Hindsight is perfect, and it is too easy to beat yourself up over missed opportunities. If only I’d . . .

I intended to take the night off. I’ve been working seven days a week with one day off every two months for the last year or so. I’m about due. But I wanted to write this post and pass along this example of real life investing: the possibilities, the realities, the utility of engaging somewhat emotionally to maintain interest, but not equating performance with personal judgment. Investing is a tool within a personal finance kit. So are minimizing expenses, maximizing income, and appreciating time. Investing is important. If you are invested at all, congratulations. You’ve enabled opportunity. If you’re doing the work yourself, congratulations again. You’re developing the skills that are useful for a lifetime and applying them to goals you, not some stranger, define. If you are regularly tending your investments, commend yourself for responsible behaviour and the chance to do better than average. If, however, your investments become a reason to judge yourself; step back and remember that they are only a tool and can never be more important than your self.

I picked a number, the market met it, but the time wasn’t right. That’s does not mean I should stare at the screen watching every pixel change waiting for the prime moment. It means I had a good idea, and almost had good timing. Next time it might work out. If this is the only opportunity to sell ASTY at $8.80 then I should get out of the stock now; but there’s no way to know that. And, of course, I am holding the stock because I suspect that a company that can regrow spinal cords will probably have a stock worth much higher than $8.80.

These last few days of ASTY also remind me of the possibility and reality of stocks in small companies. They don’t tend to creep up. They tend to sit nearly dormant, treated with dismissal and derision, until they produce something that is recognized as impressive and profitable. The kind of action ASTY just went through may be mimicked several times as the company matures. The same is true of others that I hold: AMSC, GERN, GIG, and MVIS.

The ability of simple things being recognized for their true worth is enticing and exciting, whether that is in stocks, world-changing discoveries and inventions, or in relationships. It is one reason I know that life refuses to be boring.

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ASTY Pops Its Pop

So much for conventional wisdom. Sometimes stuff just happens. A couple of posts ago I wrote about a biotech company that was spun off to concentrate on developing stem cell treatments. ASTY Spins Off and Up. I like their story, and the treatment’s potential, so I bought in for my usual long ride of ups and downs as a company matures. My most recent post was about Adaptable Patience, the idea that “Patience is a virtue. Work brings rewards. Do both and get more than either can provide.” I wrote about work, but the concept applies to investing too. This week ASTY did something completely different. Good.

For those who are new to the blog, welcome to my investment strategy. It isn’t anything new. Long Term Buy and Hold, LTBH, is common enough; but many would say to belongs in a far away time when what a company did was more important than how its stock moved. Find a company that is possibly selling for less than it is worth, buy some, hold on as market irrationality bumps it up and down, and then sell the stock after the company is successful and the stock is in such demand that it is overvalued. Pick your own variant, but I check value based on “Present Value of Future Revenues Discounted for Risk”. Want to know more? I describe it in my book, Dream. Invest. Live.Dream. Invest. Live.

A little company like Asterias, working on a highly technical treatment, that has to meet FDA approval for a critical condition can expect to take years, sometimes a decade to succeed. I bought after a pop, figured I’d add more later if funds became available. And just added it to my watch screens so I could monitor it the way I monitor all of my stocks, casually.

Well, this was fun. The stock popped a bit more from where I bought it, then dropped back and settled out as I expected. The good news was that it was still above my purchase price. Yay! Okay, time for the boring decade, eh? No. Two boring days, yes; then two days of climb and climb. Since I bought it, ASTY is up over 200%. Annualized that is a hilarious 7,000+% return, which is down from the ridiculous 11,000% return that was extrapolated from a few hours instead of a few days. But hey, I won’t get in its way.

Conventional wisdom is that stocks, on average, return about 7%-10% per year. Averaged out across the market and across the decades that is true. Averages aren’t individuals. If they were, then we’d all be about half woman and half man.

Day traders live off volatility like ASTY’s, though they may prefer a lot more noise and less straightline climbs. There are investors who, very prudently and wisely, make 10%, sell, and walk away to try again. Do that once a year with every stock in your portfolio and your portfolio will beat the average return. Day traders take that logic and try to do it on smaller percentages far more often. At that frequency, the trading becomes tied to the stock price and disassociated with the company. Whether the company is doing anything constructive is immaterial.

I buy stock in small companies, ideally hold them until they become profitable, sell the stock, and then start the cycle over again. To some, my style is speculating because the companies rarely have financial data to analyze, which means estimates (guesses) must be made. To day traders, my style is investing at such a mind-numbingly dull level that they consider it worthless. Within the last few years, as financial institutions are driven by algorithms more than by any notion of service (as long it was profitable), the concept of considering the company is claimed to be anachronistic. When I hear two such divergent opinions about something I am doing, I figure I’m probably standing in just about the right spot.

Today, Friday, September 5, 2014, I thought about selling some of my ASTY. My position was up over 200%. I could sell half, take out my original investment, and let the profits be pure. If I had done so with DNDN or AMSC a few years ago, I might be debt-free now. Many of my friends wonder why I don’t. The reason reaches back into that idea of patience, and also back into my experience.

I’m commonly asked what was my biggest investing mistake. Was it not selling DNDN at $55? Was it riding IRIDF down until it went bankrupt? Was it any of the several times I’ve lost tens of thousands of dollars? Nope. (You knew I was going to say that, didn’t you?) My biggest mistakes all had the same thing in common; I didn’t trust my analyses, responded to fear or peer pressure, and sold too early. The most I ever lost on a bad stock was probably about $100,000. The most I ever lost by selling a stock in a good company was about ten times that. By selling early I’ve missed out on several million dollars.

Investing for the long term is not easy. Being distracted by hourly, daily, or quarterly moves is, however, very easy. The pace of life has sped up to the point that anyone checking data back across a decade is considered silly. I’ve been investing since before 1980. I’ve tracked my data through most of that history, which covers booms, busts, recessions, and the Recession. My recent results are dismal. Yet, the logic remains and the overall data are encouraging.

Asterias is so new that there is very little to learn about it. Investors, or speculators, are in the guessing phase trying to figure out whether the technology has a reasonable chance of succeeding, how much money the company can make, and what are appropriate valuations for now and that eventual then. I counseled myself on the long wait, and I continue to believe that is appropriate – for me. Evidently, about two days ago, some portion of the investment community decided that this was the time to move and buy at prices above what I paid. I don’t know if they are day traders (though they don’t seem to be acting that way), or shorts covering their positions (though the stock has been public for so little time that I doubt they could build big positions), or individual investors buying in because they are champions of stem cell treatments (which I’ve seen happen with ASTM and STEM), or maybe some professionals did some analyses during that two day lull and were willing to buy in at almost any price (maybe, but who knows.)

My opinion of Asterias hasn’t changed since that previous post. There’s been no news or data so there’s no reason to change my opinion. I’m not planning on selling. I’m glad I bought. And, as I repeat the phrase that is frequently a sign of a pleasant investing experience, “I wish I had bought more.” All the more reason to maintain that patience, and keep working.

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Adaptable Patience

Patience and the pace of life are heading in opposite directions. Patience is a virtue, but it doesn’t get much of an opportunity for practice. The only thing that’s constant is change, and that’s accelerating. Wisdom advises us to slow down. Modern pressures implore us to speed up. I’m working both ends, marveling as they drift apart, and wondering if my arms will be long enough to keep it all together. Only slowing down or only speeding up are extremes, and extremes miss advantages.

I’m a bit of an endurance guy. Look at my books and my projects. They involve multi-year efforts or endeavours that require persistence more than speed. The title of my first book, Just Keep PedalingJust Keep Pedaling, is as much about bicycling across America as it is about my personal philosophy. Lots of people walk, hike, bike, or ski faster than me – for the first few miles. I don’t speed up, usually, but I am evidently reasonably good at finding my pace and then maintaining it for a long time.

I am also known for adapting to change. I’m not a gadget freak, but I try to keep aware of new technologies, scientific progress, and philosophical insights. Maybe that comes from helping engineer airplanes, rockets, and satellites that hadn’t flown before. (Though few of the designs rarely launched. Sigh.) I judge ideas on criteria of science, math, finance, and a bit of sociology. It is why I was an early adopter of digital photography, 3-D printing, web sites, social media, blogging, self-publishing; and look forward to applications of graphene, quantum entanglement, and machine consciousness – based on particular assumptions.

Within the last two years my finances have begun to recover. Clients have arrived just often enough that projects, social media campaigns, strategic business decisions, and artists asking for production assistance have helped me pay my bills, keep my house, and begin to pay down my debt.

Entrepreneurs are known for hustling, always active, using every minute of the day, hopefully reaching a time when they can take time, but having very little free time at the start. I’ve been in that mode for over three years, ever since my Triple Whammy. Seven day work weeks have a tendency to make the calendar spread into a long line of days rather than blocks of weeks and months.

One client’s major project is probably coming to a close this fall. Working yourself out of a job is a sign of success in many industries. Success or no, it means my bills will be in need of another major project soon. (Though, windfalls happen, eh?) My client was concerned because they are very aware of my financial situation. I surprised them and me by not being as worried.

Within the last few months I’ve witnessed a trend. Both within my business, and within my friends’ businesses, there is a resurgence of activity. Projects are being proposed, and the conversations are more pragmatic than philosophical. People want to get things done and they’re tired of waiting. For the last few years, a lot of plans were dammed up waiting for better weather. A confident stock market, a possibly improving real estate market (depending on your location, location, location), an improving employment market all mean people are more secure and willing to embark on new ventures. Money is beginning to flow, through here on the island it is only an energetic trickle.

I’ve also noticed that many of the contacts being made aren’t new. They are the contacts that were made over the last few years when people met and planned and postponed for lack of funds, but had developed relationships and learned each others’ strengths. I can readily think of four projects beginning to stir that have hinted I may be called to help that have all lain dormant for too long. I don’t know if they will find the funds and the will to commit to their projects and my assistance, but the odds improve with every person I’ve talked with, listened to, and kept in confidence.

Considering how many people I know that have been hustling for the last few years, it is encouraging to realize that the adaptability they’ve displayed has gotten them through tough times, and the patience they’ve had for projects may now begin to pay, interest accumulated. Even better is the possibility that the adaptability and patience we’ve displayed will pay in a better life and a better world.

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ASTY Spins Off And Up

I got something for nothing, at least according to my bookkeeping of my portfolio. One stock, GERN, spun off another stock, ASTY; which didn’t seem to cost anything and almost makes my portfolio look like it is more diversified. Yes. No. Well, no wonder it is hard keeping track of investments when management dives into mergers, acquisitions, or spinoffs. Regardless, the move inspired me to buy a few more shares to tidy up the numbers, which surreptitiously resulted in a 60% return within a few days. Keep up that pace  and it will return something like an 11,000%. Fantastic. Let’s get real. I’ve seen similar deals. Let’s see how this one plays out.

Geron is one of the few stocks I own because a friend suggested it. Back in 1999, I had just retired (evidently temporarily) and so had a friend (more successfully from what I gather). We got together for regular lunches until our post-corporate lifestyles diverged as they were released from their old constraints. I spent more time outdoors. He spent more time in politics, quite effectively managing the power behind the power. In one of our last lunches he described a company that was so leading edge that few investors would consider it, but based on technologies that he and I recognized as based on solid data and logic. If they succeeded, their technologies would cure or alleviate many of aging’s ills, and many that afflicted young people too. It was time for a bit more risk in my portfolio, so I bought a small position in GERN.

Geron’s business was based on technical terms that have too many syllables for the evening news: nuclear transfer, telomerase, and stem cells. That last one, stem cells, doesn’t have many syllables but it certainly generated a lot of words, many of which were spoken from ignorance and fear. The simpler way of describing their business was that those three technologies would be used for cloning replacement organs, convincing cancer cells to turn off in some while convincing other cells to continue living despite auto-immune responses, and that last one would let the body repair itself. Stem cells are so controversial because they can do so much and use terms that are used elsewhere with different connotations causing great confusion and igniting passionate defenses, even when they are unnecessary.

Those treatments sounded so useful that I suspected they’d also cost a lot; so, I bought more shares which might appreciate enough to afford the treatments. That was about 15 years ago. Geron’s clinical trials have been difficult. The treatments are controversial, and the FDA is known for being stricter, more cautious, and taking longer when dealing with new technologies – regardless of the patients. Geron’s stem cell trial was cautious, only involved a few people, and conducted as quietly as most trials. The results weren’t conclusive enough and the trial was put aside. The cloning was also put aside, probably because the company’s progress was taking too long and costing too much so they had to concentrate on fewer treatments and trials. The telomerase trial was halted as well, and only recently re-initiated.

Effectively, Geron’s diversified approach was winnowed down to one set of trials. They picked the telomerase trial, and used the stem cell intellectual property as a source of cash via a deal that spun off the treatment into a new company, Asterias, and a new trading symbol, ASTY. GERN shareholders now became shareholders of ASTY. (At least that happened for me. I hear some got cash.) A few weeks ago the shares showed up in my portfolio. I found that out a few days ago. Maybe a letter got lost in my recently bizarre mail traffic.

I noticed the shares because I noticed the news. Asterias was re-initiating the Geron trial, but was going to apply the treatment to patients who were more in need, in doses that were much higher, and with more people. This is not some insignificant condition they are working on. The treatment aims to help people with major spinal cord injuries, the sort of people who can benefit greatly if they can regrow major nerves. I know they say they’ll look for increased motor function in fingers and toes, but I’d be amazed if they and the patients weren’t also hoping for movement in arms and legs. Or, maybe I’m just an optimist.

Stock spinoffs usually involve some ratio of one stock based on the value of the other. I ended up with some small prime number of shares. It is silly, but that looked untidy and was too small a number to effect my finances; so I bought enough shares to make a round number, but not enough to pay for a treatment. My finances haven’t recovered enough for that.

Their announcement of the new trial popped the stock a bit just before I bought, but I am a fan of LTBH (Long Term Buy and Hold) and estimated a much higher eventual value. Word of the stock spread more slowly than usual, but met interested investors who drove the stock up again the next day. And again. Hence, my 60% return in a few days.

I’m not extrapolating out to 11,000% within a year. That would exceed my mortgage debt, but it would also exceed credibility. Trial data takes long to accumulate, is kept secret, and will probably require another phase or two prior to the company applying for FDA approval. Years can go by. And yet, the market is irrational and can have incredible reactions to incredible results.

MicroVision (MVIS) spun off Lumera (LMRA) which was merged and acquired or taken over by GigOptix which then became GGOX and now GIG, all based on a simple and ingenious technology for electro-optical switches. No FDA. No public controversy. No risk to patients. No great expectations. Much lower cost to implement. That was over 8 years ago. Only within the last year or so have LMRA’s technologies become products making profit. And yet, they are making more profit than all of MVIS.

Real Goods Solar (RGSE) has swept into and out of Gaiam (GAIA), changing character a bit along the way, working within an impressive industry, yet failing to reliably make money, and recently being heavily discounted by the market.

Barnes and Noble bookstores spun off, hoping to make money from the dotcom boom. Despite being in the same business as amazon, they never attained the same premium pricing for their stock.

Spinoffs are not always good. They aren’t always bad. Management supposedly does them in the best interests of the company, but that can never be truly judged because the comparison of not having done the spinoff is moot.

I wish Geron didn’t have to spin off the stem cell technology to raise money, but if that money means the telomerase trials succeed and patients, the company, and the shareholders benefit, then great. I’m glad that the spinoff also means the stem cell trials continue, rather than languishing awaiting the conclusion of the telomerase trials. Two patient populations, two companies, and some shareholders like me may benefit. One of the pains of investing in biotechs is learning about patients who need the treatment, and then watching as the treatment is put aside because there isn’t enough money to find out if it would make their lives more livable. At least in Geron’s and Asterias’ case, we’ll have a chance to find out. Hmm, an 11,000% return would cure some of my other ills.

PS Investor Village has been nice enough to initiate a discussion board for ASTY.

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Every Day Realities

As my dad put it, as of tomorrow, he’s going on 89. Today was his 88th birthday. I do like the way he looks ahead. And, I’m amazed at what he had to do to get here. Hard work has always been a reality for the majority of the population, unless you believe the anthropologist’s tales of pre-civilization subsistence living. (Really, only three hours a day?) For most people, hard work is a necessity, not a choice; because, when you’ve decreased expenses far enough the only way to go forward is to increase income. Time is money, so spend time making more money – even if it takes every day.

Take your monthly expenses, divide by 30, and get the amount of money you have to make every day. Remember, taxes are an expense too; even if they are only paid annually. $1,000 per month is about $33 per day, and is only half of the poverty level. $2,000 a month is about $66 per day, just about exactly the poverty level for a family of four, and works out to about $8 per hour – after taxes. It doesn’t take much of a mortgage to get to $3,000 per month which is roughly $100 per day – a rate that some folks make in an hour, including me when I get to charge full rate for consulting. Have anything go wrong with health, a house, or a car, and the annual, monthly, daily, and hourly expenses rise quickly.

The essence of personal finance is; “Spend less than you make. Invest the rest.” If you are able to do that, and are actually doing it, congratulate yourself. You are definitely headed in the right direction.

Considering that the median net worth in the US is less than $20,000 when housing prices are ignored (which is easy to do now because the market is so uncertain), there are a lot of people who haven’t had much to invest. As of 2012, one-sixth of Americans live in poverty and the majority of Americans will spend some time in poverty even if they aren’t there now.

It seems that it should be easy to stay above that poverty line, make more than enough every day, and eventually accumulate far more than one year’s expenses.

Of course, millions of people are making more than enough. Many are making just as much, and only need to change their spending habits to decrease expenses and increase investments – no job change required. Yet, there are millions that, despite low unemployment, can’t make enough or are close enough to the edge that they experience that perpetual anxiety of imminent loss.

The inescapable reality is math. Working every day is unsustainable. My Rule of 7 suggests I should work every day based on my net worth, but eventually I have to take a day off. Maybe next week. That should be my fifth day off this year, just about one every other month. Taking more time off makes a lot of sense. Productivity rises. Health improves. Stress is relieved. A sense of life returns. Yet, math remains. For anyone trying to make enough, working five days a week instead of seven means having to make 40% more on each of those five days. 7/5 = 140%. Have you asked for a 40% raise lately?

My situation is improving, as long as I work as hard as I have been. A few more consulting hours, sustained book and art sales, and a speaking event every month can relieve a lot of financial stress.

Others are working their way there, but as Bagpiper Don posted;
Feel like you’re working so hard you’ve become INSANE?
Give your “MY GHOD I’M FLIPPIN’ NUTZ!” battle-cry of a near-crazy person here.

He has one business (music), and is starting another one (biscotti – site under construction), and probably hasn’t had a day off in a long time. The easiest way to tell the days of the week is probably by the health inspector’s office hours. If they’re open, it must not be the weekend. Biscotti is coming soon. (Got a gluten-free version?)

Another friend has a business called Savvy Caddy Wallets (go to his site for details). Good products are not enough. Cash flow must be managed. Inventions must be pursued. Fellow inventors must be advised, especially if they recognize the value of his experience. Alan and his wallets can’t take a day off, unless the cash flow improves, venues open up, or the next invention comes to market ahead of schedule.

Both of these entrepreneurs could use some venture capital.

I’m amazed that my dad managed to maintain a similar pace for decades. My parents raised three sons, got us all through college with good degrees, and at least in my case sent me off into the world without a debt – except for the feeling of never being able to pay them back for the good things they did for me. Dad worked six days a week, and for years worked more than one job. Driving truck for a while, then managing a small oil depot, and even running a service station. I didn’t see much of him except on Sundays. Mom worked too, tending disabled kids and eventually establishing an ambulance service (volunteer, I believe.)

It wasn’t easy then. It isn’t easy now. But somehow we survive. And I suspect that part of the secret is every day meeting those every day realities; “Spend less than you make. Invest the rest.” And then, regardless of the math, take some time off and remember to live.

Happy Birthday, Dad – and thanks.

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