Dendreon Bankruptcy

Build a better mousetrap and the world will beat  path to your door. Cure cancer and everyone will cheer you. Dendreon didn’t cure cancer, but it did develop a cancer treatment that was better than the competition. In 2013 they made over a quarter of a million dollars and treated hundreds of prostate cancer patients. The company is filing for bankruptcy. Shares of DNDN are at less than a tenth of my last sale; and my last sale was at less than a tenth of the stock’s peak. Investing is risky, but Dendreon and DNDN are a cautionary tale for a possibly shifted investing environment. Rewards continue to exist, but the risks may be higher.

It has been over two years since I blogged about Dendreon. The company and the stock fit many of my criteria. I bought DNDN when Dendreon was unknown by most of the investing community and laughed at by much of the rest. The company was developing a cancer treatment that relied on teaching the body how to defend itself. It was a pricey treatment, but it was cheaper and better than the conventional competition. If the technology succeeded, the potential would exist to treat many of the other major cancers. Finally, it was approved and the company switched roles from unproven to approved.

As an investment, DNDN was following a path I’ve experienced enough times before to encourage me to buy such small companies. In less than a year and a half it went from below $3 to over $50. The valuations seemed conservative because most estimates were based on one cancer treatment; but the potential was far greater. Regardless, I was about to sell about 10%-20% after it rose another 20%. Then, a less than stellar earnings report. Instead of going up 10%-20% it went down 40%. Reality was less than expectations; so, even making hundreds of millions of dollars was not enough and the stock continued to slide. I continued to sell out of necessity and sold my last shares at about $4. Friends who held shares saw the business grow and the shares sink. Some still have theirs and I can understand that pain.

Dendreon should’ve succeeded. DNDN should’ve succeeded. The reasons they didn’t are various. The most obvious reason is that the company got into too much debt to build out the appropriate capacity. After a few years without sufficient growth a balloon payment that would’ve been trivial for a multi-billion dollar corporation was too big to meet.

FDA delays, a flash crash, and surprisingly negative media pressure are events and circumstances that are each explicable, yet when combined suggest a decrease in trustworthiness in investing. None, that I’m aware of, have been credibly investigated and appropriately prosecuted.

The FDA delays made bureaucratic sense, but not business or humanitarian sense. The FDA treats novel treatments with great caution; but a three year delay to raise their assurances also meant denying tens of thousands of men the treatment. Death by bureaucracy is bad enough, but enough doubts were raised about conflicts of interest that suggest the delays were designed to the advantage of the existing competition. A three year delay would mean a three year continuance of profits.

The investing community frequently commented on trading activities that would normally draw the attention of the SEC; but, the flash crash surprised everyone, including one of the anchors at CNBC. DNDN went from over $24 to under $8 in less than two minutes. No news. Shareholders with Stop Loss orders were tripped out of their shares. The stock was halted, then rebounded. I was told that the three day settlement period involving each trade is there to provide a buffer in case the trades were suspect. The trades were left unchanged. The NASDAQ Market Maker wasn’t publicly criticized or investigated. The SEC and the system effectively did nothing.

In the media, suggestions, insinuations, and speculations were raised that bolstered the existing treatments rather than cheering a major advance against cancer. The data were rarely mentioned. The patients were ignored. One suggestion was that the media collectively decided to chastise Dendreon for trying something new. Another suggestion was that the industry’s immune response was powerful. An upstart that would be profitable at less than a billion dollars in revenue was a serious challenge to a multi-billion dollar industry. A few percent of a multi-billion dollar income stream is enough to fund major media campaigns, direct or not.

(The best discussion I’ve found is over on Investor Village.)

Or, Dendreon’s bankruptcy is due to one CEO overextending the company. That’s the easier story that fits nicely into a 15 second sound bite or a three inch newspaper column.

I don’t expect to learn if the conspiracy theorists are right. I doubt that they all are, but so many forces were in play that I also wouldn’t be surprised to find that at least one was correct.

The cautionary tale regarding investing is partly the classic risk / reward tradeoff. The other cautionary tale that has changed my perception of the stock market is the lack of a response from the FDA and the SEC. Whether through budget cuts, internal policies, or external forces, my government didn’t seem interested in even investigating abnormalities so many of us witnessed in public. Maybe that’s why they didn’t investigate and why I have less confidence in the system – the abnormalities are becoming normal.

Friends are encountering hardship because they also bought DNDN. My hardship started with the drop in DNDN in August 2011. Such hardships are dismissed by many because either their investments succeeded or they don’t invest. Investors do have to be prepared to weather such upsets, setbacks, and failures in silence. But, with wages stagnant, and hard work insufficient to get ahead, investors are at least trying to avail themselves of avenues. Those roads were rough before, but they seem a bit darker and dangerous now.

Dendreon will probably be a profitable company after it recovers from bankruptcy. Its main disadvantage has been its debt. Without that, the company has good prospects. Whether the shareholders will have to lose then buy back in, I don’t know. But, I would be curious to learn how much the new managers make in the meantime, and how they’ll be compensated throughout the proceedings. There are many perspectives on how a company can be viewed as profitable.

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What A Difference A Quarter Teaspoon Makes

Listen to the news and it sounds like a dramatic week. Look around my house and the two most obvious events were a wind storm and I mowed the lawn. There was the chance for dramatic good news from MicroVision, but not this time, again. The economy is improving, and as one client closes their project, others entice with attractive positions that merely lack compensation. A situation that must be improved. There’s little to be done this late on a Friday night. I can, however, continue my experiments brewing the new version of a cup of green tea. A quarter teaspoon of that herbal tea that is legal in a few more states may make more of a difference than all the drama.

Okay, so there were elections. The news made sure we know about that. The debates are moot. As one pundit put it, nothing’s changed except the party that is filibustering. Government has done a fine job of preferring ideological scrimmaging over pragmatic governing. Much of the real progress is happening thanks to non-politicians getting issues on the ballots. The news hounds chase through the halls of power, but the real work is being overlooked and unappreciated.

MicroVision announced news this week. Their quarterly earnings were released, and the lack of news was no surprise. As usual, stockholders were left parsing paragraphs and phrases from the news and the conference call to derive qualitative assessments of the company’s progress. The quantitative assessments were possible, but the numbers available were so weak and not representative of the potential that it is generally accepted the subsequent valuation would be bleak. Bleak, however, does describe the stock price. I continue to be divided about MVIS. I think they have great potential and could also never succeed. In general, the news sounds like things will be much better within the next 6-9 months; a situation that has been true for years. (Peter Jungmann has some good arguments for optimism.)

The best news I’ve heard this week all came from individuals. Businesses are busy. Friends are paying their bills, and one even bought a boat. I’m not the only one working seven days a week with most of the evenings included. I know some who include working nights, too; something I couldn’t sustain. Jobs are shuffling. Opportunities are developing. But, I continue to make enough for my regular bills, hope nothing breaks, and wonder where I’m going to get the money to pay my taxes. Ah, but a little bit of good news could go a long way. And, some of the potential news is big – if they can get the money. Fortunately, there are a few such possibilities and it would only take one or two to make me breath easier. Sooner is better than later.

Waiting on good news is a habit. The world impresses me. It is beautiful, rich, and defined by potential. Look at the seeds spinning from maple trees. Each seed is the potential to create another tree. One tree could produce one forest if given the opportunity.

This week, Whidbey had a wind storm. Fall has been warm, which means the leaves stayed on the trees. Thanks to the kind of weather forecasting that was a fantasy fifty years ago, we knew it was coming and could watch it on radar. The last bit of clear sky was around for the sunrise. A backdrop of the storm front was the canvas for a double rainbow that took up more sky than my wide-angle lens could see. The high winds and high tide hit together, throwing water and logs over the sea wall and undermining the beach. Power outages were scattered around the island as the leaves caught the wind and pulled their trees down across the lines. Luckily, no one was hurt; and I didn’t even lose power. (Losing power is one of the few ways I’ll take a day off, and even then, I’ve got emergency power. Gotta pay those bills! Gotta eat!) The next day, the storm was past. The Sound was so still it looked like a kayaker could coast for miles without paddling. It doesn’t work that way.
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I remind myself that the storm I’m weathering, and many (but not all) of the storms we’re weathering, are dramatic and pass. In the midst of it, there are appropriate concerns, responsible actions, and developing stories. Afterwards though, Most things head back towards normal. A few things will have shifted. There will be some damage to repair; but, except for the big events like climate change, we manage to adapt and steer ourselves true. Eventually.

So, what’s a guy to do? Keep doing. Tonight, I’m doing the next step in my culinary cannabis experiment. This time, twice as much as last time: a quarter of a teaspoon. Not much of a thing; but, this time there is aroma, flavor, and still no effect large enough to notice. Of course, maybe that’s the best news – I’m making progress and I get to continue experimenting. That’s good news, and like so much progress, it won’t show up on the news.

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Hmm, maybe I am feeling a bit more relaxed. A quarter of a teaspoon may a nice step.

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An Anniversary To Celebrate

It came on like lightning and has rumbled on like thunder echoing from the hills. Some forecast a storm, and at best, people found umbrellas when they actually needed an ark. In 2008, I started blogging. Barack Obama had just been elected President, and the world breathed a sigh of relief. We knew there were troubles, but it was time to put the fears of 9/11 behind us and return to something like normal, but better. Then, the storm hit that was the beginning of the Great Recession. My simple little blog that was intended as an adjunct to my recently published book on personal finance, Dream. Invest. Live.Dream Invest Live cover, has become more as my life has since weathered financial rises and falls. Within those years I’ve been within days of having “enough”, lost almost everything, and have been busier than I’ve ever been as I try to survive, recover, and hopefully find a sustainable life. I toast myself with a glass of red wine from a box.

It feels as if it has always been this way, whichever way that is. Six years ago, though, all of the US Presidents had been white men, NASA was still using the Space Shuttle, Twitter was only 2, climate change was more data than debate (though some had been aware for decades), and gas prices were half of what they are now.

Six years from now, what may be different? A female President? Space is either abandoned or more readily accessed? Facebook and Twitter will be replaced by _ ? The coast line exodus, which has already begun, will move millions. Solar, and maybe some other innovation, will have replaced fossil fuels for a surprisingly large percentage of our energy use. Graphene and 3-D printing will be redefining so much of our world that I won’t speculate further.

We haven’t recovered from 9/11. Just check TSA, the ubiquitous cameras, and the requirement for having the right papers. I can’t be the only person who cringes when watching a WWII movie where the Nazis are checking everyone’s papers as an example of an authoritarian regime. We haven’t recovered from the Great Recession. I know I haven’t. The stock markets are hitting records, but almost all of the gains are going to less than 1% of the population. Unemployment is down, but wages are too, and many unemployed are no longer counted. Meanwhile, global ice is melting faster than it can be replenished, and the methane stored in permafrost is accelerating the greenhouse effect faster than carbon could on its own. And fracking, just amazing how bizarre our institutions are if that’s allowed to be as prevalent as it is.

Extrapolating from 2008 to 2014 would’ve failed massively. Extrapolating from 2014 to 2020, would fail even worse because the changes are accelerating and intertwining. All the more reason for me to continue to blog because writing books is too slow to keep up with the world. (Writer’s confession: I have three book ideas that could be started as soon as I find the time. Okay, so that may not happen soon.)

Intentions and reality do not coincide, regardless of philosophical assertions I hear frequently. My intention for this blog was as an adjunct to the book, Dream. Invest. Live., so the intended topics were personal finance, frugality, and balancing life and money. One of the advantages of blogging is the quantitative feedback about what people want to read. Here are the five most popular posts.

  • A Bow To Drewslist – An acknowledgement of a man who does one simple thing very well and defines a community.
  • Micro Vision – A story about a company and a stock, which is about personal finance, but is popular because people want hot stock tips.
  • One Confused ObamaCare Applicant – Not even an attempt at anything literary, just a chronology of what it was like to try to sign up before the deadline; but, I described the difference between some of the plans; and was open about the frustrations.
  • Weed Changes Whidbey – Marijuana is legalized! And nothing really happened, be readers like the story.
  • Whew Good News – A story about a company and a stock, and one episode in the most disheartening saga of a successful cancer treatment undermined by financial forces that were unchallenged by federal officials.
  • (Note: Some of the earliest posts were even more popular, but thanks to arcane and archaic systems at Earthlink and Apple, that data is practically indecipherable.

If regular readers wonder why lately I’ve been broader in my choice of topics it is because I realize that what people want is either: 1) hot stock tips, which I won’t give, though I will tell the stories about my investments; and 2) insights and perspectives on the shifting economy from someone who has been through a wide range of America’s socioeconomic classes. #2 covers a lot of ground, and I continue to explore it. Investing in stocks is changing, but the changes in the rest of the economy are ready to redefine currencies, occupations, and community.

My blogging continues. What was one blog in 2008 has now branched into eight (some of which I ghost write) with a new one being launched next week. Details to be revealed. Evidently, I am good enough at describing complicated matters simply, and simply observing remarkable things that haven’t been remarked upon enough. I’m even writing about culinary cannabis experiments – legally! That wasn’t a prediction in 2008.

Yesterday was an election in the US. Lamentations and celebrations commenced. Extrapolating the current climate, politically or environmentally, produces unrealistic predictions for 2020. I will continue to be a short term realist, long term idealist, and an extreme independent moderate who knows most workable answers are in the middle. I am also aware that such a position is unfashionable and unpopular.

And, I thank you for reading. The larger our community, the stronger we are, even if we don’t know who “we” are.

Stay tuned. I’m hoping for better weather. Maybe that echo of thunder is fading.

Photo on 2014-11-05 at 20.13

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What I Can Do With An Eighth Of A Teaspoon

Thank you all for putting up with the joke about making a cup of tea from two bits of a marijuana bud. Total effect: I smiled because I got past everyone else’s anxieties and anticipations. This personal finance and amateur philosopher blog is not going to turn into a strictly cannabis culinary experiment. But, frugality can become such a habit that it is hard to see it in operation well enough to discuss it. I certainly don’t have any habits built up around cannabis, and there are certainly cautions and curiosities about it; so, I realized this is an opportunity to explore both. If I didn’t tell you that, you might have had a tough time figuring out how I do things. Welcome to the real step one of the culinary explorations of an engineer, geek, artist, entrepreneur, and innovator.

I like tea. There’s a frugal sentence. Few words, few syllables, few letters. When my pantry is full, it will usually contain about three dozen varieties of black, white, green, oolong, pu-erh, herbs, spices, and combinations. Less than half are in tea bags. I keep bags around for convenience and for guests who are unfamiliar with loose leaf tea. Loose leaf tea, however, is my favorite. There’s no doubt about what’s going into the pot and cup. The leaves haven’t been processed as much, they keep longer, I can control the portions, and mix them for the fun of it. It is a good thing that I have several friends who operate tea shops. The three with tea in my cupboard right now are Dandelion Botanical (Ballard and online), Green Willow Living (on hiatus, but maybe not for much longer), and a place in Langley that’s so new that I can’t remember their name.

Dandelion Botanical, Green Willow Living, and - rats, I can't remember their name.

Dandelion Botanical, Green Willow Living, and – rats, I can’t remember their name.

Tea is frugal. It is cheaper than coffee. The better the tea, the more likely the leaves can be used two or three times. Tea is made from dead leaves and boiling water. The only thing simpler would either be dead leaves, or boiling water. I did the boiling water trick last week. Dead leaves are a salad, or a garnish, or chewing tobacco. Salads are good, but I don’t want to drink one. Garnishes are – well – useless, except for ambiance, which has its place. Chewing tobacco, shudder. I’ve worked with people who drank Coke, then refilled the can with tobacco spit. Shudder again. Yeah, tea is much better.

Tonight’s tea will be green, and unaltered. True green tea has been oxidized. I’m using my marijuana as is. Tea is typically measured in teaspoons. Duh. But, I portion mine out depending on mood, need for or to avoid caffeine, whether food is involved, how much I’ll make, how long I’ll let it steep, and whether it ends up in a thermos. No. I am not going to bore you with all of those details. Tea is simple the way the game of Go is simple.

I suspect that a teaspoon of marijuana leaves in a cup or two of boiling water might be a bit overpowering. I break the rules of tea preparation by using about that much for a liter of tea – and then I’m amazed at how much tea a barista will shove into a bag for a cup. They know coffee. I’m met few who know anything about tea.

Enough tea leaves for a liter

Enough tea leaves for a liter of black tea for me

Marijuana, however, supposedly doesn’t infuse well into water. Most recipes suggest adding fat to draw out the influential chemicals. Add a bit of butter or milk, and the effects are heightened, so I hear. So, if I was making a cup of black tea, I’d use less than a teaspoon. I’d also only leave the leaves in the water for five minutes. For marijuana, I decided to use an eighth of a teaspoon (to sneak up on the effect), but leave it in the water for an hour. An hour’s steep is long enough for the water to cool down; but such long steeps are common with teas made of bark (cinnamon), roots (licorice), and berries. The geek in me would enjoy making a matrix of test batches, but let’s stay practical here. This is not my career. This is one way I hope to enjoy the compensations for my labors.

An eighth of a teaspoon - more than enough for a first step

An eighth of a teaspoon – more than enough marijuana for a first step for me

Pardon me as I sip a bit to check for flavor.

Not bad. A few folks told me the flavor would have to be masked, but maybe they put too much in. This is fine as is. The effect probably won’t be immediate, or even noticeable for so few leaves. A bit of honey is always welcome, so maybe I’ll add that if I reheat the tea.

Debates continue to rage, and elections are about to be held. More states are asking voters to decide about legalizing marijuana. It is easy to get trapped in escalating debates that spiral away from any sense of perspective. Frequently, it is quicker, cheaper, and easier to try instead of talk. Minimalists can get their start by decluttering one shelf a month. Investors can get their start by buying a few shares of one stock. Some things aren’t gradual or reversible. Rockets require commitment and a tolerance for risk. Many things can be taken one step at a time, stopped, restarted, redirected, and kept in control.

Oh, and about reusing tea leaves, I’ll give that a try too. After they’ve done their tea duty, I’ll put them in melted butter that gets drizzled across this evening’s popcorn. Who said frugality isn’t fun?

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Four Trade Deals Ravaging the World

If economics are more important than politics, then trade deals are more important than treaties. Americans may (but probably don’t) know the Democratic and Republican (and Libertarian for even fewer) platforms. Americans that know WTO, TTP, NAFTA, and TPP are far fewer; yet, those acronyms cover more than a few catch phrases.

Before the Zombie Apocalypse – Yes! Magazine

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What Can You Do With One Gram

What can you do with one gram of weed? You can start a lot of novel conversations. Getting my picture on the front page of the local paper (The bi-weekly South Whidbey Record) helped. Marijuana is legal in Washington State. Finally, I can try to cook up some stress-relieving foods and drinks. First, though, I have to sort through crowds of expectations and anxieties. A great debate over a cup of tea – as the American tea party gets redefined yet again.

Life is not work, work, work, even though that’s what I’ve been doing almost every day. The New Economy means I’m working seven days a week, with one day off every other month. I’m an optimist. It’s temporary. I’m looking forward to Thanksgiving.

Life is also change. I watch trends out of habit, and have benefited from that in the past. It was good to catch onto the Starbucks early rush, and I don’t drink coffee. I drink tea; which, ironically I learned to appreciate at the first Starbucks store back when they sold loose leaf and spices, too. Besides anticipating some relaxing relief from a non-alcoholic and non-caloric beverage, I’ve been watching the marijuana industry in case there are investment potentials. Nothing rational yet. Stay tuned.

My simple expectations sit nicely in the middle of the two extremes of commentary directed my way. “Oh my god, this new stuff is so potent you’ll hurt yourself!” “Awesome! Welcome to the club. Party on!” Ah, I just wanted a cup of tea, or maybe something extra for my popcorn.

Amidst the swirl of advice I stepped back and did some research online (where else do we do it?) for recipes and techniques. The people uploading to YouTube must be rich, growers, or willing to sacrifice a lot to buy their ingredients. “Take a half ounce and …” A half ounce?! A gram cost me $30. Yikes! I can’t follow those instructions. That’s why I decided to experiment.
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When people heard I was going to experiment I heard horror stories. It is almost as if they expect me to take the entire bud and smoke it as quickly as possible. That makes as much sense as chugging a bottle of booze.

And then, of course, there are those that choose not to partake; which I totally understand. If you don’t want to do it, don’t do it. Some people like tofu. Well, okay, go enjoy that.

The discussions are all appreciated. Party on. Be careful. Only do it if you want. Be responsible.

The echoes of the conversations collided in my head. How to start the explorations? How much should I use? Should I sequester myself for the day? Should I …?

Wait a minute. All I want is a cup of tea and to get past this first step. Tea is easy. Boil water. Either drop leaves in water or pour water onto leaves. A sweet spot probably exists somewhere between no leaves and no effect, and an entire bud and probably too much. Besides, the reason to start with water is because it isn’t a very effective way to extract the effect.
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Do those images spook you? Don’t worry. The bud was still in its bag when I decided I wanted a regular cup of herbal tea. The leaves are lemon balm from my front yard. Writing is hard work. I needed something to drink.

I’ve decided to get silly, even before my first sip. I know just the right dose to get things started. A leaf from a bit of a bud. A fraction of a portion of a gram. A daisy petal would weigh more. Love me. Love me not.

Of course that’s a ridiculous amount. That shouldn’t do anything. That’s the point. Except for the last few decades, marijuana use was the norm. Let’s get past the folderol and get to spending more time talking about the day than what’s in the cup.

Okay, maybe one little leaf really is too little to make that point. I’ll double it and see what happens.
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Intermission while the tea steeps.

Ah, the aroma. It smells just like – boiled water. The water has a bit of color, but I don’t have a working dishwasher so that may be more of a measure of my dishwashing skills. Oh, and the flavor. The flavor is that of – yep, boiled water in a cup that maybe should’ve been cleaned better last time.

Seriously, I am going to continue my culinary explorations, partly from curiosity about a recently forbidden substance, partly from curiosity about anything new that’s added to my pantry. And, if I find myself giggling, well, considering the way things have been going I could use a good laugh – and some popcorn.

I’ve learned something tonight. I need to use more leaves to even color the water. Maybe next time I’ll try four leaves. Radical.

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More Insufficient MicroVision News

MicroVision announces news! No, really. This time with numbers! Surely its stock (MVIS) will react. It certainly did last February. Surely October will be no different. Except it was. The life of small companies and small stocks are irrational, or at least chaotic. Individual investors must try to make sense of the news from their perspective. Easy or not, it is rarely conclusive.

Check back through my blog. In February 2014, a news item took MVIS from about $1.40 to about $2.80 in a day. MicroVision was working with Sony. Nice. A big name company validated MicroVision. Years of waiting were vindicated and the market rushed in. And then drifted back out.

Waffle words, revenue payments which were large, but not large enough, and great gaps in which no words were spoken meant expectations dwindled and faded over the months. MVIS stumbled back down about $1.80. The discussion boards fill the gap with speculation, but the market doesn’t want to speculate on the stock.

Today’s news was encouraging. The company is still not allowed to mention Sony by name, as bizarre as that is, but this time there was a definitive payment amount mentioned in the press release. No need for speculations. There was a need to meet greater expectations though, and the stock fell on the good news.

Every MVIS investor gets to interpret the news from their perspective. Each perspective is unique, which is why the discussions never end. Here’s my interpretation of the news.

The press release.
MicroVision, Inc. (MVIS), a leader in innovative ultra-miniature projection display technology, today announced it has entered into an agreement valued at $1.5 million with its Fortune Global 100 customer for display module support services.
MicroVision recently announced successful completion of development work under an April 2013 agreement. The company and its customer will now transition to focusing on commercialization activities that are expected to span several phases including production readiness, initial production and market launch for the display module.
“We are pleased to provide continued support to our Fortune Global 100 customer as we work together to bring the display module incorporating PicoP® display technology to market,” said Alexander Tokman, president and CEO of MicroVision.

Here’s how I parse the information.

  • “MicroVision, Inc. (MVIS), a leader” Being A leader isn’t as strong as being The leader. While it may be a bit of wordsmithing, even a small company like MicroVision is worth tens of millions of dollars. Every word that can change the public perception by 1% is affecting the company’s value by hundreds of thousands of dollars. Of course, maybe they don’t see themselves as being The leader.
  • “entered into an agreement” is good news, but Entered is not Completed; which means backlog increases, which is good; but the work and potentially the payments come later.
  • $1.5 million is good news. It isn’t however enough to make the company profitable. It is on the same order as my estimate for the total pay for key executives. Regardless, it is money, it has value, and that value should be reflected in an update to the company’s valuation. For a Price/Sales = 6, the market cap should increase by $9M. For a Price/Earnings = 20 (assuming services are all profit, which they are not), the market cap should increase by $30M. The current market cap is about $75M, so there is logic to suggest the stock could’ve risen by 12% – 40% from my perspective.
  • “Fortune Global 100 customer” = Sony, with a high degree of certainty; which is good news because it means a significant customer came back for more.
  • “Support Services” = Services are not products, so there’s no way to know how many units are involved. It is business, but the major necessary revenues for MicroVision will probably be from licensing fees, royalties, and sales. At least, that’s what I gathered from the stockholders meeting.
  • “recently announced successful completion of development work” = Old news, therefore, no change in valuations.
  • “now transition to focusing on commercialization activities” = I thought they were already doing that. From some interpretations, commercialization, i.e. product launch and sales, were likely to commence in time for the 2014 holiday shopping season that is less than four weeks away.
  • “production readiness” = Suggests they are not not already in production, not even for an early 2015 product launch.
  • “initial production” = Confirms above.
  • “market launch” = Not a surprise, but there was that expectation that this holiday season would see such an event. Considering the production comments, it sounds like MVIS success is the seemingly permanent 6-9 months away.

Here’s how the market parsed the information.

  • MVIS drops $0.03 = Not a surprise.

Nothing else about the market is definitive because the market is not one thing; the market is an unorganized herd of conflicting motivations, incentives, and resources. Collectively though, they were underwhelmed by the $1.5M news even though they’d cheered early 2014’s $1.7M news.

Making sense of investing is never a completed task, because the markets continue to change. In the last 15 years the markets, the members of the investing community, have reacting to the Internet Boom and Bust, 9/11, The Great Recession, and lots of lingering unease. The logistics have changed dramatically, with far more computer influence now than then. The world has changed.

Some basic investing tools have not changed. In this case, parsing a press release continues to be the careful dissection of the phrases; seeing each as a piece of logic to be taken at face value first and interpreted later.

MVIS was not buoyed by the news. The next press release could already be scheduled as I type. Whether the good news is that close to good news or not, at this point I step back and re-collect the pieces. The company is making progress. They are getting paid for the progress by a returning customer, that customer has the potential to make very large deals, and that customer is not alone because MicroVision has several others that are quieter. I hadn’t expected MVIS to go up 40% on a $1.5M deal; but I take the drop as a sign that market is irrational, ignorant, or quietly aware of something I’m not. Yet, so it goes. That’s MVIS’ insufficient news, for now.

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Weed Arrives on Whidbey For Me

Promises, promises, and then success! How long have you been waiting for good news, of any size? Friday, October 24, 2014 at 11am, marijuana was finally for sale on Whidbey – legally, that is. Grand implications reverberate around the globe. Great debates amongst the community. Simple changes in individual lives. Marijuana is legal? I think I’ll have a drink.

If you want some fascinating history written by heavily filtered interests, try tracking down how a plant native to America and grown by Americans for centuries joined harsh drugs like heroin in our modern Prohibition. My favorite anecdote is about how President Nixon wanted to classify marijuana so strictly because it gave law enforcement officials an easy reason to round up protesting radicals. If true, loose threads from the fight against anti-war protests in the Sixties and Seventies are only now being tied up. From such motivations policies, politics, and people are affected for generations.

Washington State legalized recreational marijuana almost two years ago. We celebrated that, mostly with cheers and alcohol. Marijuana was legal, but we couldn’t buy, sell, grow, or gift it. Rather limiting. It took a year and a half before pot shops finally opened. Washington is a regulatory state. Many forms must be filled out and filed. Finally, July 2014, the first pot shops opened. They were rare. Only one in the city of Seattle. A few in Bellingham, which provides another reason I like B’ham. And Whidbey, Whidbey Island Cannabis opened its doors, and I was there – to see an empty counter and employees who shrugged their shoulders at the lack of product. The shops were open! But the supply chain had many links that were kinked.

Whidbey has to do things differently, even when it isn’t trying. Our shop was held up by permits. Evidently, there were more to fill and file. Oops. Please pardon the delay, eh?

It has been entertaining, from the outside. I’d swing past if I was in the neighborhood, which is necessarily far removed from “urban” Whidbey. Whidbey Cannabis 082514Little suggestions of progress were movement in the sign-up clipboard left on the front steps, a yellow permit sign posted on a standing frame beside the building, lights on as something got done. I wondered if the restaurant next door thought I was stalking the place. Finally, the announcement. Opening, re-opening, was scheduled for October 24. Last time, the first people in line were the people showing up to see if there was a line. Buying was secondary, including for me.

I got there early because I wanted to see if there was a line; but also because I had a question for the local building supply business. I’m a busy guy, and almost every trip has more than one purpose. As I came back past the door to Whidbey Island CannabisDSCN5462, I noticed it was open. They’d been doing something outside earlier, but I hadn’t bothered them. Maybe they were open early? Nope. Besides, they had one last inspection and inspector due any moment.

Evidently everything went alright because they opened on time. And, who was in line? Me and the local reporter. Then two more folks showed up. My name was on the list since July, but it didn’t look like a rush; so, the reporter and I chatted before going in. Just being mellow.

The main event, waiting in line and stepping up to the counter, not a big deal.DSC_5109 It was confusing though, because marijuana sales have lots of new rules and regulations. The employees must be trained, and so must the customers. No touching the product. Buds are available by the ounce. Edibles are behind the counter. Paraphernalia are in the display case. And descriptions that are advertising pitches. Just like with tea, there are many varieties of leaf, product, and application. It is good that they were helpful.

Rather than try to master the process I stayed to what I wanted. I like to cook. To me, marijuana is a plant. I eat plants. I suspect you do too. Why buy something in small quantities and then burn it? It sounds inefficient. Besides, I’m not interested in getting wasted. Not even back in college did that seem like a good idea. Some plants taste good just as they were harvested: apples, corn, berries. Others work well when something draws out the flavors. Three ways to pull out flavors are in water, fat, and alcohol.

Allow me to describe my upcoming culinary experiments. (Got recipes?)

  • Water: Tea is an easy choice. Evidently, cannabis and water are a weak reaction so I don’t expect much potency, which can be a good thing but inefficient use of a pricey product. It might be a nice way to start, though; because, today’s weed is evidently very strong, and tea leaves can be reused. The only losses are in the aroma.
  • Fat: Butter or oil should work. Eggs should too. I haven’t decided yet, but I do recall college days with omelets, cakes, and such. Supposedly a more efficient solvent than water, but diffused throughout the food. Simplest and most ironic recipe is buttered popcorn. Gotta start somewhere, and why not make marijuana part of the munchies?
  • Alcohol: A touchy combination, supposedly very efficient as well, but I’m going to check online recipes before I go there. Mixing strong culinary chemicals is something to embark upon with respect. Go ask the first human who bit into the wrong pepper or mushroom. Combine them right, and taste buds are happy. Mix them wrong and go write spiritual fiction.

Except for the tea, I’m going to do a bit of research before I cook. This stuff is as pricey as some saffrons and I’ll probably treat it similarly. DSC_5114 - Edited

Being on the front page of the local paper created a few electronic messages from concerned friends. Images of partying, and wild abandon may have scared them; even though I am known for not drinking and driving – to the obvious and vocal disapproval of some restauranteurs. Partaking at home is my preference. You see, I’m not interested in the parties. I’m interested in the zero calorie equivalent of the glass of white wine at the end of the day. Though, it will be interesting to see if the munchies counter that. If you’ve been reading this blog, you know how my life has been lately. A non-alcoholic non-caloric possibility for relaxation, ah to dream of it. And maybe now I have it. You see, evidently one thing it is good for is as a sleep aid. Imagine my relief.

My simple wants and needs are secondary to the public debate. Decades of indoctrination in ideological diatribes mean very few are basing their opinions on data. The medical and chemical risks of marijuana seem to be far more benign than that of alcohol, tobacco, and potato chips. The benefits are significant enough that some of the customers who showed up in July were only there for pain relief. To see them turned away was painful.

The larger debates will continue. Public opinion was swayed enough to allow the legalization in two states, and soon in others. The larger costs of enforcement and the creation of a lucrative black market are lessons we learned in our first Prohibition, and are learning again. We Americans learn slowly, but we learn.

The larger debates are larger than America. Legalization is undercutting black market demand, even at the early elevated prices. (I bought one 1 gram bud for $30. I think that much would’ve bought an entire baggie back in college.) Foreign policy is shifting. Legalizing marijuana means drug cartels are losing major markets and revenues, fewer Americans will be locked up, police forces can concentrate on more serious crimes, and governments can make more money.

I’m just looking for a way to unwind and get some rest. Legalizing a native plant changes the world, fine. In the meantime, until I know how to handle this new member of my pantry, I’ll continue sipping that other prohibited food product that I’ve tested and experimented with: a bit of distilled potato with a few spices and a few ice cubes.

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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?
DSCN5593
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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