A Silly Little Slide

We had a silly little slide outside the neighborhood a few days ago. I say silly because it is small relative to the slides I geek out on at @DavePetley‘s blog. He chronicles the massive slides that sometimes make the news, and also the ones that are equally massive but ignored because they happen far from “civilization”. The locals probably think differently about that civilization thing. Our slide wasn’t a surprise. For a long time I wondered when it would go. Now that it has, it has inspired quick reviews of the various emergency preparedness actions I’ve taken over the years, including simple frugality. A small thing can uncover big issues to those involved.

I live in a nice neighborhood with great views, a small marina, and only one road for access. That road, like several on the island is above an earthquake fault, passes through a tsunami zone, and is built on the rubble pile of sand and gravel left by the glaciers. Slides are common, but they usually happen off to the side where they are curiosities. Occasionally, big ones hit the news when they move houses or parts of neighborhoods. Luckily, this one isn’t threatening to move a house. It did, however move much of the land that holds the bluff that holds the road above the shore. I trust the local authorities to find a solution. I won’t be surprised if it means moving the road over a lane or two. I also won’t be surprised if it means some interesting disruptions while they work. We all hope that we aren’t treated to yet another surprise which is the slope sliding more and cutting off the road, or the power, or the phones, or the various cables that provide civilized services to the hundreds of homes in the various neighborhoods.

Well, thinking about those earthquakes and tsunamis mean I have an earthquake kit. In this situation, I’m comforted more by all the preparations in place for our power outages. A full pantry, various ways to cook food, and local water and septic services mean interruptions don’t interrupt as much as they might. If all goes well, I won’t have to worry about anything more than dealing with a one lane road for a while. If something goes amiss, well, that’s a broad range of possibilities.

I won’t make claims about cause and effect, but here’s the sequence as I saw it. The road runs from just above the high tide line, roughly follows the shore of Cultus Bay as it climbs over a hundred feet atop a forested bluff, then heads south with roads splintering off into a patch of suburbia poised beside Puget Sound. On my various walks, I noticed a skinny section of the shoulder near the top of the bluff. It was a spot to avoid when cars came by, but it wasn’t dangerous, just a risk not worth taking. Wait a bit then walk on. Looking out from the shoulder it was hard to tell how steep the bluff was because of the heavy undergrowth. There was also a tree not very far out that was very far down. Look straight out and seemingly see more than half way up the tree. We grow trees tall here, so that was possibly a very large drop to the ground. No evidence of slides or subsidences. No cracks in the asphalt. No particularly tilted trees, that I can recall. Maybe the signs were there but I missed them. I am not a professional geologist. I’m just someone fascinated by nature and the fluidity of the seemingly solid earth. A short while ago we got a treat. Finally, a road crew installed a long guardrail along the bluff. A very prudent idea, and surprising in retrospect that it took so long. The guardrail starts in the tsunami zone and finishes just a few dozen feet past the skinny section. Yeah! More civilization! The next time I drove by the work crews were gone, a shiny strip of steel wound along the bluff, and one of the lanes was blocked by traffic cones near the top end of the rail. I can’t recall if I noticed the extra sunshine. Last week I was fortunate enough to have a client within walking distance. Walking made it much easier to get around the traffic cones and look down a ravine that was naked of foliage. From the road side of the guardrail posts, possibly to the asphalt, the ground was gone. The trees and the shrubs were piled up most of the way to the shore. I didn’t want to be late, so I didn’t dally. On the way back there was much more time. A pair of neighbors were there when I walked back. The damage became more apparent. They pointed out that one of the guardrail posts was completely exposed. The only thing holding up the post was the guardrail. There was dirt on the post, so it apparently was installed in dirt, but the dirt left the scene. Now, the traffic cones are accompanied by two stop signs that use the honor system to make sure people look before driving in the one lane. Straw has been spread on the slide. And we wait and wonder.

 

The Seattle area has had one of the wettest winters on record. The weather year around here goes from October to September. We’ve already had a year’s worth of rain. If it didn’t rain until next October, the total would look normal (but the months of drought would look abnormal.) The landslide hazard throughout the region is elevated, particularly after rains. It rains here. This will be interesting.

It has already been interesting watching people’s reactions. Events like this challenge assumptions. What would you do if your car or truck was stuck on this side of the slide? There are some inventive routes through backyards and over the ridge, but I suspect the neighbors may protest and the saturated yards may not cooperate. If it is only the road that is out, but the utilities work, then what can be done about temporary parking lots and changes to bus schedules? I’m comfortable walking and bicycling, so frugality has its benefits, again. If the utilities are out, I’d have some interesting commutes because almost all of my work is online. No Internet equals a big dip in my revenues. One neighbor is considering getting their RV out of the neighborhood before there are any width or weight restrictions. Others are wondering what it would be like to commute and shop by boat, a return to island life of a hundred years ago. Check your tide tables.

It may be a silly little side, but it is a valuable one. The repair will be valuable, and pricey. But one of the benefits may be an increased awareness of the riches we unconsciously enjoy, the value of properly maintaining them, and the security inherent in at least some level of self-sufficiency. Understanding basic resources is one of the key characteristics of frugality. Resourcefulness is best exercised by choice, rather than necessity. Our silly little slide may be an interruption, but if it is going to happen, it is better to happen when there are few other distractions. If it happened because of an earthquake, work crews would be busy working in central locations, first. Maybe this way, the road and the utilities will be better prepared to survive another event; as will the residents.

Of course if a tsunami took out the road at the other end, well, that’s another issue.

Stay tuned for updates. I know my neighbors will be.

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Seven Bosses

What’s it like to work in the Gig Economy? There are infinite answers, but I’ll pass along something I’m experiencing. I have seven bosses, and that can be a good thing. And, it can also not be enough.

To corporate types who have experience with convoluted organizational charts, allow me to point out that this isn’t that. I’ve been in the mix of multiple contracts, conflicting lines of authority, and political battle and mine fields. This ain’t that.

To get a feel for life in the Gig Economy think about what it is like to celebrate getting a new gig: new opportunities, new people, new ideas, new skills. It also means, a new contract, a new way to invoice, new culture, new software, new business strategies, and new motivations. For several years, I’ve gotten by with about two or three, depending on the season. Now, as my two main long-term clients have dropped their budgets and third is suggesting something similar, four new clients have arrived. Only one is close to quarter time. The rest are good gigs but are limited to a few hours a week or a month. I don’t know if they all equal full-time employment because the pay scales are shifting so much, but I do know that they fill a seven day, 10-12 hour per day schedule.

The Gig Economy makes sense to businesses. They pay according to an invoice, but don’t have to pay for and manage benefits like health care. Scaling up or down doesn’t involve union negotiations. The workers take care of the facilities and equipment. While it helps big businesses increase profits by lowering expenses, it also means smaller firms have a better chance to get started because their cash flow is simpler. The Gig Economy is to the old model of corporate careers as online dating is to traditional marriage, a suggestion of a long term relationship but with no commitment and simplified breakups.

I enjoy my work, especially lately. For three separate assignments I’ve been able to interview architects. Architects are easy to interview. The nature of their business is to have a perspective, understand why they have it, know how to act on it, and know how to articulate it to others. Three articles overlapped with topics, people, images, and ideas. I was happy to exercise some economy of scale. Three other assignments involved whales and a bit of history. I was lucky enough to schedule two interviews on the same morning at the same place with different subjects, and all I had to do was shift my perspective from asking about whale parade (yes, Langley has a whale parade for people) to asking about what happens to the whales after they parade on by. One trip, two conversations, some hooks into the third assignment for later, and more economical use of my time, again.

Eight interviews in two days and I might just spend an evening listening to nothing in particular. The fascinating stories in my head have to quit swirling, settle down, and arrange themselves so I can pull them apart into separate articles over the next few days.

As stock investors know, diversification lowers risk. As some stocks rise, others may fall, and hopefully the balance is positive. As anyone who’s read this blog and tracked my portfolio’s recent performance knows, perfect storms of bad luck can happen. Perfect storms of good luck can happen as well.

As I mentioned in my previous post, I am happy to help as a consultant. Most of my longer-term jobs are in program or information management, or as a content producer. This last week or so has been a special joy because I’ve helped four consulting clients with personal projects and business plans. That’s in addition to my seven bosses mentioned above. More diversification. More conversations with passionate people. And more contracts, agendas, and deliverables to manage.

That’s why I said in my interview on Marketplace,
“What I’ve found is, this is actually an expensive way to work. I can pay for almost all my bills with all this work, but not quite. I can either pay for everything except income tax or pay for everything except health insurance.”

There may be an economy of scale within some of the articles, but such diversification has some of the very costs that corporations try to avoid. Simplification can save time and money, and lower stress. Participants in the Gig Economy can’t afford the luxury of simplified businesses because their revenues require diversification and self-management.

I write this partly to chronicle my financial path so others can see they aren’t alone, partly to document it for myself and the possible sequel to Dream. Invest. Live., and partly so others can be disabused of the perception that the Gig Economy is a relaxing and freeing way of working. I also mention it because I’ve found one perspective that has caused shortfalls for me and others. I’ve found that when I add another boss, some of the other bosses assume that’s a good opportunity to cut back. They think someone else will add what they subtract. Add an hour from one boss and possibly lose several hours from the others. I can see why many members of the Gig Economy are secretive about their situation. Revealing any insights into their situation can become a disadvantage in negotiations. The loss of commitment creates a loss of openness.

I have plenty of work to do this evening, but I decided to take the time to write this post. While I am glad to have seven bosses and multiple clients, I also have to demonstrate a commitment to myself. It is good to be in service to others, but it is necessary to also be in service to one’s self. That’s the one boss that must be respected and obeyed. Pity that boss doesn’t generate any revenue, but at least there are other benefits.

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Happy To Help Consulting

It turns out I’m a consultant. Soon after I wrote about a recent surge in requests for my writing skills, I start getting requests for something I enjoy even more, consulting. It is good to be in demand. Writing may be more visible; but consulting is deeper, more fulfilling, can be a lot of fun, and yet is a difficult practice to grow because I’m serious about discretion. Luckily, I received a quote and the promise of a longer testimonial that I can share. My clients have proved to me why good consultants, not just me, are worth their price.

“felt like you were some ancient sage genius reading my pulse”

What do you say to a compliment like that? Take your pick of your preference from “Thank you”, or “You’re welcome”, “Happy to help”, or the far more common bit of babbling as my brain, heart, and mouth collide.

Testimonials are great (ask anyone who cares about the people they work with), but they don’t tell enough of the story. I “should” have an elevator pitch for what I do, and I do, but it’s evolving. In general, I help people find ways to get their projects done or meet their personal goals. The reality is that I enjoy working with people who are in unconventional situations: inventors, entrepreneurs, artists, and people who live creatively. Standardized advice doesn’t apply. Flexibility is necessary. One description doesn’t fit all. That gives me breadth, but is terrible when it comes to marketing, business cards, and keeping people’s eyes from rolling after they ask me what I do.


I listen. Why not? People are impressive. Unconventional people are also thoughtful people. They’ve picked paths on purpose, have the best idea of why they’re following it, and are familiar with running into archaic attitudes and anachronistic procedures. They talk and tell me fascinating stories and struggles. I listen, and I try to find their blind spots, their strengths, and places where they have uncommon advantages. Of course that’s a fascinating endeavor. My problem is that I haven’t found a way to summarize those experiences into a sellable package. As one astrologer friend put it, astrologers need other astrologers because they’re too close to their own chart to read it right.

I’ll pass along another testimonial, but I’ll paraphrase it because of that discretion I mentioned earlier. My advice helped someone “get more done in a year than they’d gotten done in a decade”. If time is the most valuable resource, then I provided a lot of value for relatively little cost.

Whether it is personal finance, dealing with relationship issues, or managing a career, it is too easy to be too close to the issue. We all have ruts, well-exercised habits that got us to where we are, but that can keep us from getting to where we want to be. A fresh perspective can turn a difficult problem into a simpler, and sometimes fun, solution with a unexpected insight.

Recently, someone asked me for advice about money. I am not a certified financial planner or advisor and wouldn’t tell someone what to do with their money; but I can relay personal experiences and lessons. We started with something I enjoy doing, walking and talking. (Mark Lucero has formalized his version with Pathways Counseling. Smart, Mark.) They were trying to decide what to do with their investments. They had enough to build on, but not enough to generate much income. A mile went by as we talked about cds, annuities, bonds, stocks, index funds, etc. None of it generated any enthusiasm. Finance can be emotionless, but add some enthusiasm and it can shift from being a chore to something to look forward to. As we sat after the walk I asked about their business. How much did they normally make? What would make them more money, a 10% return on their portfolio, or a 10% increase in their business? Eyes lit up. I didn’t have to say much more. They realized that an extra thousand dollars directed to their business had the potential to generate far more income than leaving it as an investment. I’d provided two simple insights: 1) rather than invest in someone else’s business they could invest in their own, and 2) managing money is not an all-or-nothing choice. Almost all of the funds were going to a trusted, professional, certified financial planner; but using a bit for personal business was okay too. Look at it as either a small relief valve, or a resourceful use of resources; but what had looked like a dismal chore had become that source of enthusiasm I mentioned.

I’ve been fortunate to have several clients have similar experiences.

I’ve been fortunate to have several consultants provide the same for me. One relieved an immense amount of stress with the simple sincere phrase, “I’m sorry to see you in such emotional pain”; rather than replay old advice or encouragements. He acknowledged where I was, and then we moved on. Another pointed out something I’d said repeatedly. I thought of it as a casual aside. They pointed out that it was obviously on my mind. I took a leave from Boeing and returned a while later with a Masters in Aerospace and Ocean Engineering that got me a series of dream jobs in research and development. The advice I’m hearing from several of my consulting friends is that I’m not charging enough. Maybe I should listen to them.

There is a joy to consulting from both sides. It doesn’t have to be suit and tie and dull office stuff. Finding ways around hurdles, uncovering latent resources, sometimes simply finding someone who will listen and try to understand can turn a situation from dull to bright.

This blog is about personal finance, the effective use of our precious resources of time and money. Spending a little to save, or even create, much more is frugal. The cost may be upfront, and the benefits may seem intangible, but when they are tangible one of the greatest results is a smile or two.

I’m happy to help.

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Writing Real Estate

It turns out that I am a writer. I am also a consultant, project manager, strategic planner, organizer, engineer, photographer, and dancer; but I am also a writer. Writing is the skill that is most visible, followed by photographer and dancer. The rest may be where my greater strengths live, but they are exercised for discretion for others, and subsequently relatively hidden. Among the various writing assignments I enjoy lately has been writing about houses, homes, and how we live. As I tell my clients, I’m happy to help.

Take a look at real estate. Lots of people do, even if they aren’t thinking about buying. The number of people looking at $20M mansions is far greater than the number of people who can afford them. The number of people looking at tiny houses is also far larger than the number who would actually live in one. One of my clients, Curbed.com, lets me write about some of the biggest and smallest houses. Writing about a house’s high points, possibly noting things that don’t matter in a transaction like whether a celebrity owned it, while leaving the key data to the real estate agent’s listing. I also get to write marketing remarks for real estate listings, which must professionally fit specific formats, respect the buyers, the sellers, and the agents while describing the house to a broad audience. Those two ventures helped lead to yet a third, which is 360Modern.com, where I am writing articles about Modern homes and modern home trends. There’s even a fourth that is being developed, thanks to Tygart Media, that is more targeted content customized for narrower niches. Stay tuned for more about that.

One topic, multiple perspectives. I’d like to produce four examples based on a Modern tiny house that’s targeted at a particular niche like golfers, but that would be a full day’s work. An interesting exercise, though. Hmm. But my mind digresses.

I am not a real estate professional. I do not have an agent’s license. About the only license I have is artistic license, but even there I tend to stick to non-fiction instead of fiction. People are smart. Readers are smart. I respect their intelligence. I do, however, have some credentials based on experience. I’ve been middle class, a millionaire, and then not. I’ve bought, owned, and sold several homes; and know what it’s like to be a tenant and a landlord. Thanks to Boeing’s scattered facilities and various career moves, I’ve lived in about ten different neighborhoods in and around Seattle. I’ve also walked or biked through every county from Oregon to Canada. I’m a techie, so I enjoy modern homes. I love the mountains, so I appreciate off-the-grid cabins that were built before the grid. I even considered living on a boat, and may actually do that some day.

I also don’t mind breaking rules of writing, like starting several sentences with the same word and that word being “I”. Sometimes relaying the message is more important than following the rules.

I started writing about real estate in this blog. Tiny houses are appealing solutions to many modern problems. My Triple Whammy meant almost losing my house, which I was able to keep thanks to working with the non-profit group, Parkview Services.

Getting paid to write about real estate happened by chance. Sean Keeley was the Editor for Curbed’s Seattle page. We happened to be working in a coworks. One day he was feeling overwhelmed and told me how tough it was to find writers who knew something about houses. I’ll skip the details, but I soon began lightening his load.

Welcome to the Gig Economy, where within real estate alone I have several clients. (And then there’s the consulting, planning, teaching, and speaking tasks, as well. I have a long list of bosses.)

Will Tygart, of Tygart Media, understands marketing far better than I do. He understands the value of content in social media. Will contacted me after reading some of my articles and spotting an opportunity. Writing marketing remarks for real estate agents is nothing new; it has been valued for a long time by agents who understand the value of their time. But, especially in today’s social media environment, there are more opportunities to provide the right content to the right people in a way that works for them. Will and I are working at providing that service, those services, or something similar.

As anyone on Twitter knows, media shape the message. These several hundred words will fit best as a blog post. As an email they go out as an excerpt with a link. On Facebook and most social media they are delivered as a few sentences, usually a hashtag, and a link. On Twitter, all of that must somehow fit in 140 characters (which is changing.)

Within real estate, there are similar distinctions, as the professionals and news outlets know. I’m happy to be able to write to each audience, and to be thanked by being paid. A nice combination. I’m happy to help.

One thing leads to another. Today’s world is no longer a linear progression from college to life-long career to retirement. The Gig Economy relies on the value of adaptability. Making adaptability and value visible is something others are better at, and I’m trying to learn from them. I don’t know where this new trend in my life is heading, but so far it has led from engineer to artist to consultant to writer to …? Stay tuned. I am.

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50 80 And Not A Rule

Have you heard of the 80/20 rule? It’s more of a guideline, though in these extreme times it has morphed into the 99/1 rule because the influence of “the 1%” now rules the rest. Personally, my refrain has been considering my 50/80 reality (that I hope is temporary), that has also inspired an opportunity.

Budgets run up and down depending on funding and strategies. One of the consequences of working within the Gig Economy (or the 1099 Economy) is dealing with shifting budgets from larger organizations. That was true in the corporate world, and is supposedly buffered by diversity within the contractor’s world, but perfect storms happen – and as sailors tell me, what others consider storms can be opportunities. Two clients have experienced budget cuts, one of 50% from a peak, and the other of 80% from a peak. A third is suggesting a 100% cut, but that news hasn’t blown in, yet. So much for diversification.

Woe. Oy vey. What the …! Or, whew. Yeah. “Whew”, may not be the expected response; but the combination provides a needed opportunity.

As regular readers know (and may have already heard too often) I’ve been working seven days a week for several years. Some years I’ve taken a day off every other month. Now I take a day off every month. It is a difficult pace to sustain. Even at that level of effort, it has been difficult to pay all of my bills. (If you want the short version, check out my post about being on Marketplace’s My Economy broadcast.)

Through some convoluted circumstances that require far more details than I want to relay, my pace since Thanksgiving has been higher than normal and explicitly temporary. Good news will follow, but let me pass along the bad news. Because I knew the situation was temporary, I had to maintain my regular workload, too. The good news is that I built a buffer that looked like I might be able to pay my taxes in cash for the first time in years. Whoops! There goes the rug.

If I was an automaton, or maybe 28 instead of 58, I’d logically dive in and fill the open time with job searches, resume improvements, and active networking. I suspect I will get to that. Reality though, is that getting a job does no good if I am not around to do the work. I need a break and I don’t want to take one because I broke. Instead, I’m going to do something radical. At least for a few days this month I’m only going to work until dinner, and – gasp – may even take two days off. Like I said, radical.

It is too easy to fall into a rut. A pair of quotes from my first book, Just Keep Pedaling, echo since I wrote them.

At one point I likened the bike ride to being just another rut. It is easy to fall into a rut. Living life by a series of habits is how most of us get by if I believe the experts. The bike ride was nothing but another rut. Being in another rut was not a bad thing though. It made me look at my old rut with brand new eyes when I got back to it. I appreciate so much of so much more now. I also can see parts of my life that just don’t make sense and I have to do something about those…

I do know now that every once in a while I have to get myself out of whatever rut I am in just to get a better look at that rut.

I don’t have the luxury of getting into another rut just to see the one I’ve been in; but I have already seen how deep my current rut has become. Simply not setting the alarm has changed the way I wake up. I have to remind myself that urgency isn’t a constant. Taking a few minutes to enjoy the view isn’t getting away with something; but is a natural part of living. Finding an evening when nothing is scheduled after dinner isn’t supposed to be odd. It’s supposed to be normal, or least has been since labor laws were enacted.

I chuckle at times that surprise others. Sometimes I do it to diffuse tension, which can be very effective or the opposite depending on the audience. I also chuckle when I get a rare massage (something I strive for even if it is just a ten minute neck and head massage every two months to ease neck pain from staring at a screen). I chuckle when the massage therapist hits a knot, maybe because it confirms what I suspected, that hard work isn’t purely mental.

A 50 and an 80 may seem like they are ruling my life, but they aren’t. I’m aware of the cuts, would’ve been very happy to pass along the news of a 50% increase and an 80% increase in those budgets, but that’s not happening – this month. Other things are happening. Thanks to the work I’ve done with some clients, others are suggesting themselves. None have made large commitments and there’s definitely room for others to add themselves to the list; but in the meantime, I am glad for the opportunity to look up from my rut and remind myself of the view. As a rule, that’s a good idea.

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Comfort Food

Comfort food, a fine response to a week that held great drama, bad news, good news, and a need to remind myself of my Litany of Optimism. Don’t worry. I’m not going to dive into all the messy details. I’d rather write about popcorn.

Here’s a quick skim of the downside: delayed payments, an 80% budget cut, a 20% investment loss (unrealized), unspecified delays in three opportunities, and a understandable neck ache. Oh yeah, and a profane propane bill.

Here’s a quick skim of the upside: a visit with a naturopath that was far better than any recent conventional doctor visit, a series of writing assignments finished and published, and some sweet support from friends who know how to listen.

A storm is washing the region tonight. I can hear the rain on the roof. The landslide hazard is probably up again. It is hypothermic outside, and it is March. Regardless, bulbs are coming up. Deer and rabbits are getting busy. It is time to plant, as soon as the ground dries out enough. It is a good night for a movie, a drink, and a snack.

Ah, the snack. One of my favorite foods is buttered popcorn, made at home, maybe with some parmesan sprinkled on top. Ah, my waistline. I’ve been working so hard that I haven’t been working out. Maybe it is time for a different snack. Nuts are great, but expensive. Peanuts are cheaper, but I hadn’t taken the time to compare. Should I snack on popped grains or roasted fake nuts? I needed a task that had nothing to do with work, so I did some research. Thank you, internet. Finally, something simple and easy and completed. In only a few minutes it was obvious that popcorn would win. The calorie count for a third of a cup of peanuts is about 270 calories (pardon, but I forgot to record the source). A third of a cup of unpopped popcorn kernels is about 170 calories. Excellent. Add a tablespoon of butter, which adds about 100 calories and end up back at 270 calories. Mathematically, they’re equivalent. I can take my pick.

photo-on-2017-03-03-at-19-25

Take a look at taking that pick. A third of a cup of peanuts looks like a diet plan, not comfort food. A third of a cup of popcorn kernels becomes 10 cups. 10 cups! of popped corn. Give something the right opportunity and it can become far more than it was before. That looks like a celebration, not a restriction.

This is about more than peanuts and popcorn. Everyone needs comfort food; well, almost everyone. Monks exist. There’s a benefit to embracing simple comforts. I’ve been rich and I’ve been struggling and spent a lot of time between them. Regardless of my net worth there are times when a bit of edible comfort is appreciated. Throughout, I’ve found that foods I make taste better, are cheaper, create less waste, and are readily available. For someone, their comfort food is going to be caviar. Comfort foods that are cheap, easy, tasty, and relatively good are valuable and available. I’ve enjoyed popcorn all that time.

Comfort food doesn’t make the pain go away. It gives the hand and mouth something to do while watching a mindless movie (haven’t picked tonight’s, yet). But comfort food is a reminder that life can be enjoyed now. Most of my worries are about taxes and an upcoming employment gap. Popcorn is here and now, and very undemanding.

Next week can bring good news for some of my stocks (come on MVIS, NPTN, and AST), probably a new assignment or two, maybe even a payment for an invoice, better weather, a dancing to a live jazz band, and a bit of a breather. With several clients re-assessing their situation and with several assignments completed and submitted, I might just take a day off (I even hesitated as I typed that). With all of this talk of comfort food I’ll be happy to take some time for something else that’s simple and comforting, a nice long walk – after the storm has passed.

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Bye To My GIG Buys

As a closure to my purchase of the various incarnations of GIG, I decided to analyze the many purchases and subsequent sale of the shares that became part of a final sale. Analyzing successes is easy. Being willing to analyze the ups and the downs is more difficult, but more enlightening. Here’s a quick review of the consequences of Long Term Buy and Hold of the stock of GigPeak, which had been GigOptix, which had been Lumera, which had been part of MicroVision.

Want to watch someone’s eyes roll back in boredom? Tell them you have a spreadsheet with over 30 years of trading history chronicled, ready to be sliced and sorted and studied. Hey, it’s what I do. If you tuned out, I’m not surprised. If you’re trying to learn about investing, here is a real world example of patience, a good idea, and someone else’s success.

I’ll skip most of the details, but here’s the quick story. I bought shares in MicroVision, MVIS, in 1999 because they had a great idea for wearable displays and embedding projectors in cell phones. Sounds inevitable, only a few years out, right? MicroVision had a secondary division called Lumera that had electro-optic technologies that would work well in the increasingly automated and connected world. I was impressed. MicroVision spun them off to raise money. I bought shares so I was invested in both. Lumera had amazing technology that could work in several industries, but had a tendency to be product-out rather than customer-in. The strategy of building something they hoped would sell itself didn’t succeed. GigOptix, however, was buying such small companies because it was expanding its electro-optical switch business. Lumera had two advantages: 1) it was already public, which made GigOptix publicly traded, and 2) Lumera’s technologies could hit very high communication speeds with no moving parts. Everything else from Lumera was cast aside and Lumera’s technology eventually proved itself and began generating more revenues than MicroVision. Just as GigOptix, now GigPeak, was about to become significantly profitable, the company sold out to a larger firm. Instead of a six-fold valuation increase which I thought was due, I received a 20% bump. Nice, but not nice enough.

If I wanted to only talk about the successes, I’d only mention the most recent purchase of GIG which netted a 50% gain in six months. But that’s only part of the story. Overall, I lost about 74%. If the stock had continued its recent climb I would’ve seen a nice profit. That was cut off by the buyout.

My investing strategy is Long Term Buy and Hold of Small Companies that I sell when they get Big. (LTBHSC? Nah, even that’s too long.) For details and data on the years up until about 2007, see my book, Dream. Invest. Live.Dream Invest Live cover Fans of irony may enjoy comparing the dates of the book’s publication and the start of the Great Recession. It wasn’t my fault!

Part of the advantage of long term investing is the greater exposure to buying opportunities. They’re the same for everyone, but when you own the stock the opportunities are clearer. Since Lumera’s spinoff from MicroVision I bought stock seven times: 2004, 2005, 2007, 2011, 2011, 2014, and 2016. I lost money on every purchase except the last two and basically broke even on the two before that. Effectively, all of my losses were from the first purchases which were large relative to my current net worth, but small relative to my net worth at the time.

gig-chart

By only looking at the total loss I could do a great job of beating myself up. That’s still the loss I must live with, but I’ve wondered if my strategy that worked for so many decades was failing. Not necessarily. A couple of bad trades from a time when it was easy to take risks overwhelm the story. The reality is that, while the performance wasn’t stellar, it was succeeding and was primarily truncated by an attractive package to a few shareholders. I’m still bummed about it, and the situation I’m in, but I will give myself a bit of credit.

Individual investing is personal finance. It gets personal. If it doesn’t, then why do it? The last ten years can skew any results in the small cap investing world. The mega-caps are doing very well, which is big money chasing big money about which I have other opinions, but I don’t see a need to step back on that soap box in this post.

The reason for this blog is to provide real world examples of what it can be like to make finances personal, to invest as an individual, and to do so long enough to benefit from the experience. Start early. Learn along the way. Adjust as necessary. And, I wish you good luck, or at least a successful investing history.

Over a decade of research heading to the recycle bin.

Over a decade of research heading to the recycle bin.

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Returning To Stock Screening

This blog is about the personal finance of one frugal folk, me. I write it so people can see one version of what it’s like to invest in stocks as an individual. Investing in particular stocks frightens some people, as if it is something only professionals should do. It is actually one of the ways to possibly make money from money. My style takes far less effort than active traders, but when it does take an effort I try to give it the time it deserves. Take a look through this blog and realize that very few of the posts have anything to do with buying and selling, because trading stocks takes up very little of my time. Thanks to GIG Goes Buy Buy, it was time to dive in and decide what to do with the proceeds of the unfortunate sale. No research is ever complete. At some point a decision must be made. I’ve developed my process over decades. If you are just starting to invest, your process will develop to match your style. Here’s a view of mine that closes with an irony.

If you want more details that are explained more clearly, read (and maybe even buy) my book. Dream. Invest. Live. I wrote it in response to folks who asked me to write about how I retired at 38. Unfortunately, it was published as the Great Recession (the Second Great Depression) started. Regardless of that, I was hit by a perfect storm of bad luck (as a few professionals have called it). I called it my Triple Whammy, which I continue to work at recovering from. Until that perfect storm, the strategy had worked for three decades. I’m continuing to buy and hold small companies for the long term (LTBH) so I can sell them when they are much bigger and much more valuable.

GIG had just hit one of my key success criteria – and then was bought by another company before the stock properly responded. Just as I was about to see my patience rewarded, I’m finding myself having to recover, again. Once more into the breach, dear friends.

The task is simple. I sold all of my GIG and now had to find new places for it. The money is there to make enough money so I don’t have to worry about making more money. It shouldn’t sit still for long.

The cheap response, at least in terms of time, would be to just buy more of what I already have. That doesn’t improve diversification, and whims are bad strategies. Despite that, I did take a small portion of the proceeds to buy more AST and MVIS to bolster their positions. Both are stocks that are in my portfolio. Both have the potential for near term dramatic news. Both of the purchases are in my IRA, so I could sell again and buy something else without penalty, as long as they didn’t lose too much. Hopefully they’d gain more than the few percent available in money market accounts.

Time to screen every stock available. Take a deep breath.

Stock screeners sound like a simple idea. Load up the database of stocks, sort on criteria, pick the winner. Unfortunately, every screener tries to work a different way. I ended up using three to do one task.

Yahoo!’s screener took a while to load. My first criterion is market cap. They offered “Small”. I wanted to enter a range with specific numbers.

Google’s screener has the finest details for specific limits. Here it’s interpretation of my critieria.

  • Initial list of stocks = 33,327
  • Market cap = $50M – $2B. (I could enter the limits, but couldn’t figure out how to make it update, which it did when I did something innocuous like click on something else.)
  • List of stocks = 9,782 (That’s a bit much. Retry with tighter limits.)
  • Market cap = $50M – $1B.
  • No change? Try adding the next criterion.
  • Total Debt/Equity (Assets) < 10%
  • List of stocks = 6516
  • Positive book value
  • List of stocks = 6302
  • Still too broad to be useful, which is quite like some Google searches

Search for other, familiar screeners. Looks like sites have either taken down my favorites or renamed them.

Well, I’ve used Schwab for decades. Let’s see what they have.

  • Success! It starts with a smaller list, but that’s okay. I only need a few.
  • Market Cap 50M-2B = 2760 stocks
  • Debt/Equity < .1 = 961 stocks
  • Price/Book > 0 = 947 stocks
  • Revenue growth (next year) > 0.1 = 482 stocks
  • That’s small enough that I can begin clicking through.
  • Remove sectors I don’t understand or don’t want to invest in. (The reasons would take a few thousand words. Maybe later.) Take out: Banks, energy, mining, fashion, holding companies.
  • List of stocks ~ 270
  • Schwab includes a nice, quick research glimpse with a mouseover of the name. Reduce, reduce, reduce, usually based on sudden stock drops.
  • Call Chat to find out how to download the results so I can sort in Excel – and learn that my work has to stay within Schwab.
  • Sigh.

It’s a good thing Monday was a holiday because it gave me one more day (part of an evening because I worked the rest of the day) to work on it.

Retreat to Yahoo!

  • One way I research stocks is to keep a list of interesting companies from news items. I maintain one portfolio on Yahoo! that I call Curious.
  • Check Curious against the criteria and come up with:
    CRAY, RRGB, BLDP, BREW, GAIA, ULBI, BSQR, NNVC
  • Check another portfolio, an out of date version of the 100 top stocks based in the Seattle area. (The benefit being I can research them by attending their meetings.)
    HOME, CRAY, LSCC, SCHN, RENT, CACB, PCBK, NLS, BLT, NILE, BBSI, NSTG, POPE, DMRC, ESIO, CSTR, RNWK, NWPX, TSBK, CTIC, MCHX, MVIS, PXLW, KTEC, KTCC, BSQR,
  • Realize that I can hand copy the “short” list from Schwab.
    XXII, AHC, ACTA, HIVE, AVAV, AGYS, AIRG, AOSL, AMSWA, APPF, APTI, AFI, AUDC, AXTI, BW, BLDP, BZUN, BRFH, BNED, BSET, BWEN, PRSS, CRCM, ECOM, CAAS, DL, CHUY, CTRN, CLFD, CLRO, CTRL, CRAI, CRAY, CROX, CFI, CYBE, CYRN, DAKT, DZSI, DWCH, DFRG, DNN, DGII, DMRC, DVD, ESTE, EDGW, ESIO, EMAN, EMKR, NDRO, WATT, EFOI, ERII, PLUS, ESCA, ETH, EVBG, EPM, EXA, EXAR, EXFO, XONE, EXPR, FARM, FARO, FINL, FRAN, FRPT, GAIA, GNK, GEOS, GPX, GHM, HABT, HSII, HIBB, HDSN, IDSY, ICD, IIIN, INST, IVAC, SNAK, ITI, ITRN, JIVE, JOUT, JMEI, LRN, KTEC, KIRK, KRNT, LAKE, LFGR, LEJU, LITB, LPTH, LLNW, LQDT, LYTS, LL, MGIC, CALL, HZO, MRTN, MED, MEET, MIND, MITK, MIXT, MOBL, MODN, MPAA, MOV, MRVC, MTSC, NSCC, NCIT, NPTN, UEPS, NTWK, NMBL, NWPX, NVMI, NVEE, NVEC, OOMA, OESX, ROYT, PCTI, PDVW, PRFT, PETS, FENG, PLAB, PCOM, POWL, PRGX, QIWI, QTNA, QUIK, QNST, RNWK, REIS, RVLT, REX, REI, RRTS, RTEC, RUTH, SANW, SPNS, SALT, SEAC, SCWX, SCVL, SHOR, SIAF, SODA, SORL, SPAR, STRL, SPCB, SUP, STS, SYX, TNGO, TEDU, TNAV, TESO, TLYS, TACT, TGA, TRMR, TUES, TWIN, UNXL, USAT, UTSI, VRNS, VRA, VIRC, VJET, VUZI, WMAR, WEYS, WYY, WLDN, WKHS, WPT, XCRA, XOXO, YUME, ZPIN, ZUMZ
  • Create a new Yahoo portfolio called Shopping that has all three lists.
    Argh! Yahoo! limits copy and paste to 200 stocks.
  • Edit duplicates and obvious non-candidates.
    RRGB, BREW, ULBI, NNVC, HOME, LSCC, SCHN, RENT, CACB, PCBK, NLS, BLT, BBSI, NSTG, POPE, DMRC, ESIO, CSTR, NWPX, TSBK, CTIC, MCHX, MVIS, PXLW, KTEC, KTCC, BSQR, XXII, AHC, ACTA, HIVE, AVAV, AGYS, AIRG, AOSL, AMSWA, APPF, APTI, AFI, AUDC, AXTI, BW, BLDP, BZUN, BRFH, BNED, BSET, BWEN, PRSS, CRCM, ECOM, CAAS, DL, CHUY, CTRN, CLFD, CLRO, CTRL, CRAI, CRAY, CROX, CFI, CYBE, CYRN, DAKT, DZSI, DWCH, DFRG, DNN, DGII, DMRC, DVD, ESTE, EDGW, ESIO, EMAN, EMKR, NDRO, WATT, EFOI, ERII, PLUS, ESCA, ETH, EVBG, EPM, EXA, EXAR, EXFO, XONE, EXPR, FARM, FARO, FINL, FRAN, FRPT, GAIA, GNK, GEOS, GPX, GHM, HABT, HSII, HIBB, HDSN, IDSY, ICD, IIIN, INST, IVAC, SNAK, ITI, ITRN, JIVE, JOUT, JMEI, LRN, KTEC, KIRK, KRNT, LAKE, LFGR, LEJU, LITB, LPTH, LLNW, LQDT, LYTS, LL, MGIC, CALL, HZO, MRTN, MED, MEET, MIND, MITK, MIXT, MOBL, MODN, MPAA, MOV, MRVC, MTSC, NSCC, NCIT, NPTN, UEPS, NTWK, NMBL, NWPX, NVMI, NVEE, NVEC, OOMA, OESX, ROYT, PCTI, PDVW, PRFT, PETS, FENG, PLAB, PCOM, POWL, PRGX, QIWI, QTNA, QUIK, QNST, RNWK, REIS, RVLT, REX, REI, RRTS, RTEC, RUTH, SANW, SPNS, SALT, SEAC, SCWX, SCVL, SHOR, SIAF, SODA, SORL, SPAR, STRL, SPCB, SUP, STS, SYX, TNGO, TEDU, TNAV, TESO, TLYS, TACT, TGA, TRMR, TUES, TWIN, UNXL, USAT, UTSI, VRNS, VRA, VIRC, VJET, VUZI, WMAR, WEYS, WYY, WLDN, WKHS, WPT, XCRA, YUME, ZPIN, ZUMZ
  • Delete non-candidates, again. (finance, mining, education, furniture, fossil fuels, apparel, cars)
  • Wow, that took some time.
  • Check the Detailed view (handy) to remove sudden stock drops.
    Remove BLT, CRAY, EFOI, EXFO, FRAN, HABT, KRNT, LEJU, LQDT, NDRO, NLS, RENT, SIAF, SORL, TRMR, ULBI, ZPIN
  • Review company profiles at a glance:
    ACTA, AGYS, AHC, AIRG, AMSWA, AOSL, APPF, APTI, AUDC, AVAV, AXTI, BLDP, BREW, BRFH, BSQR, BWEN, BZUN, CALL, CFI, CHUY, CLFD, CLRO, CRAI, CRCM, CTIC, CTRL, CTRN, CYBE, CYRN, DAKT, DFRG, DGII, DMRC, DWCH, DZSI, ECOM, EDGW, EMAN, EMKR, ERII, ESCA, ESIO, ESTE, EVBG, EXA, EXPR, FARM, FARO, FENG, FINL, FRPT, GAIA, GEOS, GHM, GPX, HDSN, HIBB, HIVE, HOME, HSII, HZO, IDSY, IIIN, INST, ITI, ITRN, IVAC, JIVE, JOUT, KIRK, KTCC, KTEC, LAKE, LFGR, LLNW, LPTH, LSCC, LYTS, MCHX, MED, MEET, MGIC, MIND, MITK, MIXT, NOBL, MODN, MOV, MPAA, MRTN, MRVC, MTSC, MVIS, NCIT, NMBL, NNVC, NPTN, HSTG, NTWK, NVEC, NVEE, NVMI, NWPX, OESX, OOMA, PCOM, PCTI, PDVW, PETS, PLAB, PLUS, POPE, POWL, PRFT, PRGX, PRSS, PXLW, QIWI, QTNA, QUIK, RRGB, SCHN, SCVL, SCWX, SEAC, SHOR, SNAK, SODA, SPAR, SPCB, STRL, STS, SUP, SYX, TACT, TEDU, TESO, TGA, TYLS, TNAV, TNGO, TSBK, TUES, TWIN, UEPS, UNXL, USAT, UTSI, VIRC, VJET, VRA, VRNS, VUZI, WATT ,WYES, WKHS, WLDN, WPT, WYY, XCRA, XONE, XXII, YUME
  • Feeling a time crunch, so I decided to leverage past research, at least for now. I can come back later when I have time. It was interesting to see how many I recognized.
    • Eliminate ACTA. I owned it when it was ICGE, a decade ago, but it has declining revenues.
    • Consider BLDP. A nice alternative fuel source investment with a promising profit margin.
    • Consider BREW. I owned it when it was HOOK, as in Red Hook Brewery. They have mildly increasing revenues, but I don’t buy it anymore. I’ve always wanted to attend the annual meeting, though.
    • Eliminate BSQR. I lived up the hill from their office and watched them grow, but declining revenues.
    • Eliminate CTIC. A Seattle biotech that I’ve considered frequently but its stock just fell off a cliff.
    • Eliminate DMRC. Declining revenues.
    • Eliminate ESIO. Flattish revenues
    • Eliminate GAIA. Sold them a few years ago because I doubted their strategy which has produced flattish revenues. Maybe I was right.
    • Consider KTCC. But, flattish profit margins
    • Consider LSCC. Recovering is good.
    • Oh no, not again! MVIS. Repeat, Oh no, not again!
    • Eliminate NNVC. Nice or not it’s a too early biotech for my goals.
    • Consider NPTN. Surprise! It’s GIG’s competitor and it too is newly profitable.
    • Consider RRGB. I owned them near the IPO, but steered away during the Recession. Slight and stable revenue increase.
  • That brings the list down to:
    AST, BLDP, BREW, KTCC, LSCC, MVIS, NPTN, RRGB
  • I prefer disruptive business models.
    BLDP, KTCC, LSCC, NPTN
  • A quick check of the final four (including a quick tour of their discussion boards) finds NPTN the key candidate. Back where I started with GIG, just shifted one company over.

After considering the cash available, the stocks I’ve reviewed, and my existing portfolio I decided to buy a bit more AST, which is already in my portfolio and promising, but too small of a position; and NPTN at a level that is smaller than GIG, but something to keep in mind for further purchases. I’ll learn more about them as I own them.

All of that happened within my IRA. There were a few shares outside my IRA, but I’ll hold onto that cash until I figure out how much I have to pay in income taxes. There isn’t enough there, but if it makes the difference between paying in cash or paying on credit, then investing in cash will have a secondary benefit.

That process took a few hours. Typically, I do that once or twice a year. That hasn’t happened for the last few years because I’ve really do buy and hold for the long term. That means I’ve saved that much time and more over other more active strategies. Whether they would have done better, whether I missed better investments above, I have no doubt. There is always something better, and best can only be determined from the moot safety of the future. I hope that I’ve done well enough, which is all any decision in the real world can be measured against.

My congratulations to everyone who got this far, even if you skipped over the boring bits.

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My Economy On Marketplace

And people ask me why I use Twitter (@tetrimbath). And now for something completely different, which is remarkably the same. Those who listen to public radio may already be familiar with the business show called Marketplace. They’re part of my Twitter feed so I can hear their succinct summaries of the economy, markets, and the world in money world in general. I think it was one of their tweets that asked for stories about the Gig Economy. Did I have a story to share? Sure. I filled in their form, can’t remember what I wrote, and got an email shortly after. Would I mind being interviewed? Sign me up! The piece was broadcast at 3pm East Coast time today. For people who wonder how to get a message out, there’s a lucky example. For people who think the job market in 2017 is the same as in 1987, tune in for mine and other stories. This is a new world.

I’ll skip the suspense for folks who just want to listen to the piece. Here’s the link.  It’s less than 2.5 minutes.

Regular readers are welcome to enjoy the coincidence that my previous post was also about GIG, but that was the stock, not the modern workplace.

The Gig Economy is also called the 1099 Economy. Forty hour work weeks, paid vacations, and benefits sound so sweet. Many people continue to have such jobs, but they are fading. The economy has recovered nicely since the Great Recession, but 97% of the job growth has been in alternative jobs. W-2s aren’t growing much. Their part-time equivalent, the 1099, is where almost all of the growth is happening. If it feels fruitless to try to find full-time conventional employment that’s possibly because almost all of the new jobs are part-time, temporary gigs.

My Gig Economy is improving. Within the last few years I’ve gone from selling things around the house to pay bills and almost losing my house, to working seven days a week (see my Rule of 7), usually from 8 to 8 and having enough to pay almost all the bills except income tax or health insurance. Those aren’t bills that are improvements. It has only been within the last few months that I’ve made enough to pay for a few DIY repair projects, and they’ve felt like luxuries. I continue to internally recite my Litany of Optimism, and parts of it may finally succeed (except for GIG.)

I mention my situation for the same reason I wrote Dream. Invest. Live. and started this blog. Money is a taboo even as it is central to our lifestyles. When I wrote the book I knew there were few who would openly talk about their money management. Besides, a book has to be general so it is applicable years later. A blog provides current reports. To those who think I only talk about the downside of money, go back and read the early parts where it looked like I’d be a millionaire again, and soon. Then I was criticized for being too positive. Aiming for honesty generates interesting reactions from the same people at different times. As I recall, that line from Fiddler on the Roof is, “When you’re rich they think you really know.” It is amazing and sad to see how people measure intellect using wealth, even though they have little in common. Think about it. Do you know any poor people who are smart or wise? Do you know any rich people who could use a bit more education and maturity? If not, go look at the news again.

The Gig Economy can be sold as a wonderfully freeing alternative to the conventional workplace. And it is, when it is entered by choice. When necessity means there is no choice, then the Gig Economy can be a constant source of anxiety, stress, and uncertainty. Companies are using Gig employees because the companies save money on benefits and can be more responsive with adding and subtracting people. Have you noticed corporate profits rising but wages stagnating? That’s one reason why. I think it works against the long term viability of the company because they lose expertise and rarely gain loyalty, but at least their near-term finances look better. The burden of benefits sits on the employee’s – oops – contractor’s to do list. People lose the economy of scale when negotiating for health care, lose the ability to recuperate mentally physically without losing a day’s wages for every day in recovery, and contractors must always be preparing to swap jobs because the notice can be short and the gap between the next paycheck may be longer than on billing cycle.

We are building a new economy and if we don’t pay attention to its inefficiencies and inadequacies the new economy won’t become sustainably efficient and hopefully more than adequate. That’s why I was willing and eager to pass along my story. Getting interviewed for it was just a very special treat. It is also an opportunity for me to expand upon < 2.5 minutes of me speaking (with some nice music interspersed.)

Some people march in parades. Some people create advocacy groups. Others get into politics. Many back away, and too many don’t even vote (and yet they complain.) I tell my story, and hope others find resonances with theirs.

With 15 minutes of interview edited to fit inside 2.5 minutes, much had to be set aside. Some of that I’ve covered above. One piece I want to pass along. Robert Garrova, the interviewer and reporter who I could learn a lot from about interviewing, asked why I didn’t go back to engineering. Didn’t I like it? Yes. I did, and do. I’ve knocked on that door for years. The only job interview I had for a full-time position was one where they knew they weren’t going to give me the job, but they didn’t believe anyone could truly live up to a resume like mine. They told me they were pleasantly surprised, but that of the 24 criteria for the job, I only met 22 of them. Getting a full-time job isn’t as easy as it was thirty or forty years ago. I got my first engineering job because I was above average and was the only applicant who had taken two normally disparate classes in college. They liked that combination and accepted the rest knowing I could be trained. Welcome to 2017.

It has already been fun and interesting to hear the feedback from friends. There’s no way to know if my story will change anything in the world or in my life, but it’s just like reading the news on Twitter. Doors can open in unexpected ways and lead to unexpected places. Now, it is time to close this post, add links, publish it, share it on social media – and then get back to work. It’s 8pm, but I have more work to do. Some of it is even billable.

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GIG Goes Buy Buy

And there goes another great idea. I’ve heard that every good thing must come to an end. GIG, the stock for the company called GigPeak which was GigOptix which I owned because it merged with Lumera which was spun off from MicroVision, GIG will soon be part of a much larger company. Integrated Device Technology and I agree, buying GIG was a good deal. They’re buying one of my most promising stocks just as the company delivered and just before the stock had a chance to be fully appreciated. This is the risk in buying small companies that are tightly held. Any deal only has to make sense for the people who hold the most shares, not to the most shareholders. The deal meant about a 22% rise in the stock which I estimated could’ve risen far more in the next few months. Instead, I followed my investing strategy and sold; and now must go buy something else.

Two of the main elements of my investing strategy are Long Term Buy and Hold, and Buy Small Companies and Sell Them When They’re Big. I’ve held various manifestations of GIG since 2004, and even 2000 if you count its time as a division within MicroVision. I like to buy small companies before they are profitable, and therefore potentially cheap, hold them through profitability, and then sell when their growth commands a premium. It has worked with companies like Pixar, Starbucks, America Online, and others. It has also failed when upper management is offered attractive buyouts that benefit them and few others like in Go2Net, Eagle Hardware, QFC, and now GigPeak. Details on some of the case studies are in my book Dream. Invest. Live.Dream. Invest. Live.

GigPeak was bought for the very reason I invested in it. They have a technological advantage in the highly technical industry of high-speed internet infrastructure. Their revenues were up 45% over last year. Grow a $200M company by $10M and swing to a much higher Price/Earnings ratio. Put that same $10M inside a $2B company and barely see the stock budge. The great potential of GigPeak will continue, but it will happen in a crowd of products that can go down as much as it goes up. That’s why I sold Pixar when it was bought by Disney, Eagle Hardware when it was bought by some bigger big box store, QFC when it was bought by Fred Meyer (as I recall), and GigPeak when it is being bought by Integrated Device Technology.

GigPeak’s future is now moot to me. I have to focus on my future by shifting my portfolio. The first step was selling all of my shares of GIG. The question for me becomes, where does the money go next?

Look back through this blog and find several times when I’ve had to make similar investing moves. The process is simple, but can take a lot of time. One of the other benefits of Long Term Buy and Hold is that research invested in understanding a stock and a company happens in a large initial effort with updates a few times a year. Check my semi-annual portfolio exercises for years of examples. It saves time in the meantime, but requires significant efforts at a time like this.

I’ll pass along the updates as I work through the process, but here’s the general outline as it comes back to mind.

  • Create a list of all the stocks with market caps below $2B. (They’re already too big for me. Besides, this is the region where individual investors are trying to out-compete major financial institutions. Dancing with the elephants is dangerous.)
  • Remove all stocks with market caps below $50M. (They may be cute, but they can be so small that they can be manipulated.)
  • If that’s too many stocks, remove all stocks with market caps above $1B.
  • Remove all stocks with Debt/Equity > 0.10 (I skipped this step with Iridium, which went bankrupt from too much debt – and then succeeded after shedding its shareholders.)
  • Remove stocks for companies that are either in industries I don’t understand or display values I don’t want to support. (This is a very subjective step, but a necessary one for me. For me, it makes personal finance personal.)

That will take the list of available stocks from several thousand down to several hundred. It is a long list, but most of the steps are mechanical.

My next step will be to review the list and watch for companies and stocks that I’ve been tracking from news items. I’ll also review my portfolio to rebalance it if I see an opportunity. In this case, I am likely to buy more AST (Asterias) because I am impressed with their clinical trial progress in helping paralyzed people regain some use of their bodies, and MVIS (MicroVision – and yes, I can hear the groans) because this year will be different (right? please?). I’m willing to devote some of the funds to those two stocks because their companies have histories of sudden positive stock movements on surprise news announcements. Neither has held onto those gains, but they both have a large, latent demand and a limited supply of shares (even with dilution.)

When I was acting retired, I’d devote a few days to the process. With working seven days a week, news may hit while I stretch the process out over weeks. I’ll move some of the money soon, hold some in reserve possibly through tax season, and eventually reinvest most of the rest because interest rates are too low.

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Before I leave GIG behind, I want to pass along the chart of the last few days. While the government is supposed to regulate the stock markets, they can’t be everywhere at once. I include this picture of the stock action that happened around the news release. The pattern is too familiar. Days or hours before official news is officially released, the stock moves. It has now become the norm that such moves are watched by other investors as if they were news, too. Possibly felonious actions are now part of the indicators in the stock market. That’s a sad statement. I can’t prove if the stock movement was illegal, but I can point out that it is common enough that few investors expect any action to be taken. It, too, is one of the risks of investing in any stock, particularly small ones that could experience big news. Be careful out there. As I said above, dancing with the elephants has its risks.

In the meantime, it is time for me to say bye bye to GIG and then decide what I am going to buy and buy.

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