Getting Ready To Review My Portfolio

How did the end of June get here so quickly? It’s all the way up to 75F (gasp! – and yeah, I know that isn’t hot), the neighborhood is filling with screaming grandkids (whatever happened to laughter?), and it would be an excellent time to be in the mountains (on the snow and past the mosquito zone). But, it is also the time to get the yard and house work done. Oh yeah, and one more thing, my semi-annual portfolio exercise, an exercise I’ve been practicing for over a decade. Practice makes perfect? Not really, but practice provides an opportunity to improve. For those who are interested in the process, maybe to do something similar themselves, here’s a glimpse of the work that I put into that series of posts that get published here and on several stock discussion boards. Pardon me as I leave the door open so I can see the great weather while I type.

Aachoo! Sniffle. Yeah. It’s that season, too.

For those who are new to my process, here’s the Intro I try to post with every review.
INTRO Here’s my semi-annual exercise to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too.
The idea was inspired by Peter Lynch. If I can’t describe the company behind the stock, then I’m not investing but blindly gambling. Keep it short, as if I am describing it to someone at a party, with a bit of license to make it useful to me, too. One of the benefits of the exercise is retrospective. Look back over several years (I buy and hold for the long term, frequently over a decade) and see how the story changes, but it will.

That sounds simple enough. At its simplest, I could record my descriptions and thoughts in under an hour. Audio’s harder to reference and share, and misses some opportunities to include simple analyses. Instead, I type. Each company and stock gets a few hundred words. That sounds like a lot when I remember my reaction in high school to the dreaded 500 word essay, but now I can write each on in about 15-30 minutes. The shorter times are for simple stories that haven’t changed much. The longer times are where the writer’s license comes in as I research facts. (Someday facts will be back in style, honest.)

The reviews tend to break into three or four paragraphs. The first is the essence of the exercise, a few sentences about the company. Another may describe their financial situation: income, expense, assets, liabilities, and their trends. Another may describe the stock, how it has been behaving and how it measures against those financials. If I get real uppity, I include a paragraph of commentary. Sometimes the numbers look good, the story looks good, but something makes me uncertain about the stock. Then, because I post these reviews for others to see, I include a disclosure paragraph that mentions how long I’ve held the stock and whether I am likely to sell, hold, or buy. A recent addition to the exercise has been to compare the market cap from the previous semi-annual portfolio review. It is humbling to see how often facts and data about the company differ from the performance of my stock in my portfolio. (See my post for A Study In Dilution – MVIS, its video, and Corporations Meet Owners MVIS 2017.)

Step 1) Find the previous review, copy it, and strip out the old information except for the market cap and the disclosure.
Step 2) Write the descriptions based on memory, and be prepared to be humbled in the editing. For this process review, I’ll assume nothing radical changed.
Step 3) Find the new market cap, maybe even a bit early, to see if the trend in the company’s growth agrees with my portfolio’s growth.
Step 4) If I’m ahead of myself, take a break (from this and get to work on something else, because there’s always something else.)
Step 5) Drumroll #1 – After close of business on the last day of June or December, finalize and publish the reviews.
Step 6) Check back as other investors read the reviews. Some people live for their stocks and analyze them to amazing detail. I usually learn something new from such devoted investors as they correct my words and numbers.
And just for my situation;
Step 5) Drumroll #2 – Before publishing the reviews, write a blog post that summarizes the process and my conclusions. That part is just another writing assignment. The tricky part is getting all of the links correct. I try to include links to each of the discussion boards, and within the reviews I try to include a link back to the blog and other pertinent posts. That’s a mad dash of uploading reviews, noting the links and editing to make sure everything connects. It’s a mad dash because some boards are so active that I get responses before I’ve finished posting the usual half-dozen reviews across up to four boards. And then, share the package out via Facebook, Twitter, LinkedIn, and Google+. (I count Reddit as one of the boards.)

Just to make the day more exciting, the semi-annual review happens on the end of the month – which is also the end of the business month (#HappyInvoiceDay!), quarter, and in December the end of the year. Even without the semi-annual review, that’s a busy day.

And here I am caught by surprise that #HappyInvoiceDay and the semi-annual review are due in a week. Whew. With that, I think I’ll have a bit of dinner, rest, then see if I can handle Step 1 this evening – unless of course, I decide that sunny, warm days in Western Washington are so rare that I should sit on the deck and enjoy this one for a while.

Stay tuned.

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A Study In Dilution MVIS

In the original, and innocently campy, Star Trek series, Scotty would confound everyone by using his time off to happily catch up on his technical journals. I had a couple of spare hours the other night and did something similar. I grabbed my box of Annual Reports from one of my investments, MicroVision (MVIS) and went through every annual report since 2000. Recently they, we, had the annual stockholders meeting. Before I attended I made a quick calculation that was humbling. Stock dilution had kept the company alive, but dramatically reduced the power of my earliest shares. It was time to do a more detailed analysis. Cue up Netflix and stream Star Trek: Enterprise, the prequel for a background soundtrack.

Startup corporations start with some money (probably not enough), shares of stock (a surprisingly arbitrary number), and a plan. If the money starts to run out before the plan succeeds, then the company finds more money somewhere. Sometimes they go into debt, which leaves them with expenses and another set of financiers to report to. To avoid that potential trap, others will issue more shares of the company. If they started with 10,000,000 shares, they can issue more shares. That sounds simple, but the number of shares to issue, the price of the shares, and finding a large enough buyer gets complicated. Issue another 10,000,000 and find that owning 50% of the company has become 25% of the company, and welcomed new owners and influences into the corporation. Done right, a bit of dilution can bridge a small gap in the plan. Taken to an extreme, and dilution can turn something flavorful into something bland.

My investing strategy has been Long Term Buy and Hold. MVIS has been testing this. My quick calculation was to determine the power of my earliest shares. Shares are frequently valued by their price, but they also represent a fractional ownership in the corporation. I’ve held MVIS since 2000. Those first few shares have been reduced to 1/46th their original fractional ownership, about 0.02% of their original influence on votes. My curiosity kicked in. What about the shares I bought along the way? How quick was the dilution? How frequent was it? Did that change when management changed? At the ASM, the CEO or the COB pointed out that more dilution was possible to either cover a shortfall or fund growth. It was time to better understand the history. Two data points, 2000 and 2017, weren’t enough.

I thought it would be eye-squinting enough to go through the Annual Reports. In those 17 years, I’ve collected 23 reports and announcements where the company published a share count. Squint, scribble, type, sort, and coerce Excel into producing some simple results and charts. The most recent number I found in a report was for April 13, 2017, 68,122,274 shares. That means that owning one MVIS share effectively means owning 1/68,122,274th of the corporation. Want to own 1%? Buy 681,223 shares. Simplistic, and for many investors immaterial, but once upon a time I strived to own 0.01% of my investments. That way, if the corporation became worth a billion dollars, my investment would be worth a hundred thousand dollars. Billion dollar corporations are considered as small (corporations get BIG), which means that if the company was truly successful and reached ten billion my investment would make me a millionaire. I prefer my personal finance to be simple.

The blue line on the chart represents the data from the Annual Reports. In that first decade, the number of shares increased about ten-fold. Then, there’s a dramatic drop (that should be vertical but I didn’t want to take the time to force it in Excel.) That was the dreaded reverse split, an event the company undertook to keep the share price artificially high and hopefully avoid delisting from the stock exchange. The other two lines provide two perspectives based on that split. The red one takes today’s shares and tracks them back as if the split started with the start of the company. The green line assumes the split never happened. If you bought after the split, you may not care about the early years. If you’ve held MVIS for over a decade, the early line may have more meaning for you.

A share is a share. The ones I bought in 2000 are as valuable as the ones I bought within the last year. But, buying ~11,000 shares in 2000 effectively bought 0.1% of the corporation. If a shareholder didn’t buy any more shares, those 11,000 shares represent about 0.002% of the corporation. A share is a share, but a share is also a vote. The voting power of a position is diluted with every dilution. While long term shareholders are appreciated, their influence is reduced with every dilution unless they buy more shares.

I haven’t been able to keep up. I’ve rarely sold, and have been buying more as the corporation, the technology, and the market progress. With ideal hindsight, the best investment would’ve been to invest in something else and now buy MVIS shares. Ideal hindsight is a fantasy. One of the reasons for Long Term Buy and Hold is because dynamic companies can be dull for years and then become overnight successes. Guessing that timing is guessing. I may write another post based on my view of MicroVision after every ASM. Every year had reasons to buy more. Maybe this is the year. Maybe this time is different. It seems so, but that dilution curve doesn’t show signs of stopping. Plot it on a logarithmic scale and it is closer to a straight line, as if it is engrained in the corporation.

This is intended as less of a commentary about MicroVision and MVIS, and more as a learning experience for long term investors of small corporations. I also know that the MVIS investing community is so starved for information and data that they may be the most engaged readers.

Investing treated me well for over thirty years. Then my Triple Whammy hit. Six years out of four decades doesn’t sound so bad, unless you’re living in the lean years. I could write thousands of words more about my strategy, and did. (Dream. Invest. Live.) Want more? The book’s available in print and as an ebook.

Dilution is one of the realities of investing in individual stocks. I’ve written before about how dilution, share price, and market capitalization interact, but rarely have I had such a chance to analyze (even simply) the effect of dilution on what it means to own a piece of a corporation. Being able to invest in stocks is one of the ways for people’s money to make money for them. It is one of the ways to build wealth or fund a lifestyle that doesn’t rely on working forever. It is also one of the ways that individuals can do more than complain about corporations. Buy a share and vote; but don’t be surprised if that vote doesn’t count quite as much as it ages.

Scotty retreated to his room to read technical journals. I just spent a Friday evening typing this post. I think it’s time to polish, publish, and share it – and then watch the next episode or two of Star Trek: Enterprise. “I’ve got faith…

This post is now available as a video with additional content.

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Corporations Meet Owners MVIS 2017

One advantage about American capitalism, you can experience its machinations in person rather than relying on other people’s opinions. Public corporations are public. They hold regular meetings, somewhat like the company’s version of the State of the Union address. Some will let anyone in. Some prefer to talk to shareholders. Want to get in? Buy a share of stock. With companies like MicroVision, that may only cost you a couple of bucks (plus commissions and fees.) It is the one time of the year when the directors and officers meet the owners (you if you own a share). The official parts may be the prime reason for attending. I find the unofficial parts more valuable and fun.

If you own stock and can attend a meeting, showing up once will introduce you to the people running the company. Show up twice and you’ll get an idea of whether the company is sitting still or moving. Show up three times and if it is dull then that may be a key insight. Show up enough times and become part of a community that also shows up. The officers are more likely to shake your hand. The other shareholders are more likely to share their insights, and do that over a meal, too.

I’ll use MVIS as a model because I attended their meeting today, and because it is the last of my stocks that is still in Washington State. All of my other in-state companies have been bought out, sold off, or moved away. So much for buying local. I also use MVIS because their story is dramatic, even though their stock is dull – for now.

If you need a primer on MVIS, browse my collection of MVIS posts. In general, MicroVision is based on a simple technology; a mirror on a chip. Oscillate the mirror the right way and either bounce light off it to make a display, bounce light off it to hit a sensor, or do both. It may be a simple and innocuous little thing, but count the cameras, displays, and sensors you see every day and realize the potential size of the market. A tiny sliver of an enormous market can make a very profitable company. A bigger slice can make a company that makes headlines.

So, why isn’t MVIS already a headline stock and MicroVision a headline company? Despite stories of overnight successes, starting up a company isn’t easy. Developing disruptive technologies isn’t easy. Convincing enormous companies like Sony to work with companies that aren’t profitable yet is probably more than doubly difficult. It is also difficult for the investors.

MicroVision seems to be living at the whim of its customers. While that’s true for every company, MicroVision’s customers operate in the highly competitive field of consumer electronics. Apple is famously secretive about its product plans. (And, no, I don’t know if there’s a connection.) They aren’t alone. The result is such an array of non-disclosure agreements (NDAs) that the company’s officers and managers can’t or won’t say much. They must announce significant news, but they also must protect their competitive position. Investors are left parsing press releases. Show up at a stockholders meeting and get to parse body language, too.

Some of my notes are posted on various stock discussion boards (Motley Fool, Silicon Investor, Investor Village, reddit). I highly recommend listening to perspectives from other attendees, and from Investor Relations.

This year’s meeting in particular revealed something to me that is more personal and an example of why there’s a value to showing up.

I’m a long-term investor. That’s not stylish, anymore. I invest in companies by buying shares of their stock. I prefer to buy shares in small companies, hold them while the company grows, then sell the shares when they are more valuable and the company is more popular. (Details? I wrote a book about that, Dream. Invest. Live.) I bought my first MVIS shares in 2000. Yes, just before the bubble burst. I also bought more several times at much lower prices. Now that the company is looking more promising than ever (though I’ve said that before) I find myself less optimistic about how it will benefit me. Personal finance is personal, and while a company and stock may succeed, it isn’t necessarily true that the shareholders will succeed.

Dilution. The reason MicroVision is still in business after over twenty years of development is dilution. One way for a company to raise funds is by creating and selling more shares of the company. MicroVision has survived because the people in charge have managed the finances in a variety of ways, including dilution, significant dilution, dilution that has dramatically reduced my potential gain from the stock. As I said in my notes;

“My bad news is that dilution has severely reduced my potential gain from the company. When I first bought MVIS shares, there were only ~ 12M shares outstanding. Now there are ~70M. Between those two was an 8-to-1 reverse split. Divide that first number by 8 and get down to an equivalent of 1.5M. My fractional ownership of the company has reduced with each dilution. Since those first shares in 2000, I’ve invested at least three years of living expenses into MVIS. Currently, they are worth about three months of living expenses. I don’t expect those first shares to ever reclaim their value, and am glad I drove down the cost basis with several purchases since then. If MVIS rises twelve-fold, I’ll recover my investment. I believe that potential exists, but I haven’t updated my analysis.”

I realized that academically before the meeting, but quantitatively after a quick analysis. Most of the dilutions were relatively small. Cumulatively, they result in a 46-fold decrease in power of those first shares. My fractional ownership of the company decreases with each dilution. The estimate for the share price decreases with each dilution. Each step may be small and necessary, but the cumulative effect is enormous. Some will buy more shares and maintain their fractional ownership. Others, like those who get grants and options, are also more likely to keep up. Long term buy and hold of a set number of shares has a diminishing value with each dilution.

I sat there feeling as if “we’d” were close to reaching a goal, but that I’d be left behind. People buying now have a much lower cost basis. The people from the company making the presentations will doubly benefit from their stocks and from the salaries. They have a right to be proud. In the last five years, they’ve raised the market cap of the company five-fold. The stock, however, has barely budged.

There were two videos in the presentation, each of which were in a world I can’t visit. One had a nuclear (but diverse) family living in a smart McMansion where the oven responds to Mom’s arrival (does Dad cook?). The other was a family going out to dinner, something I rarely do because of time, money, and the fact that I like my cooking better. It took a few nudges to get me to accept an invitation to join some of other shareholders for a post-meeting lunch. (Which was a very good thing.)

Attending the meeting made me realize that while the board is “working for you (shareholders)”, they can’t work equally for all of us. Corporations may attempt to increase shareholder value, but that’s typically driven by increasing the value of all of the shares, not by maximizing the benefit to all shareholders. People and institutions with many shares benefit more than people with only one share. There’s a monotonically increasing sliding scale from one extreme to the other.

Despite that personally subdued expectation, owning stock and meeting other stockholders is valuable and fun.

It is fun to watch something grow and develop. Even without being employed by the company, being a part owner engages me far more than just watching it happen from a distance. Being a shareholder in a successful company is far more profitable than being a fan of a successful sports team. People fascinate me. People willing to directly own a stock, to independently invest in a company, impress me with their intellect, analyses, research, and insights. They also tend to have great stories whether that’s about successes and failures, careers, where they live, or what they want to do with their lives. Meeting people after the meeting, sitting around the lunch table, I always feel a little more humble. There are impressive people out there.

It is easy to stereotype anyone. We humans are good at that. For me, going to a stockholders meeting is a smart thing to do for my investment, a cheap way to broaden my research, and a reminder that even “legal entities” like corporations are populated by people who are fun, flawed, and fascinating. Thanks to everyone for doing what you do.

Sorry, Brian. No hats, just a report and a pen this year. Oh wait. That’s my report. Only a pen.

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Frugal Gardening 2017

The seasons work like that. Forget about the calendar because some things will happen on a regular basis without effort or timing. I decided to write about a few frugal hacks I’ve employed in my nascent garden. One in particular is an upgrade from last year. The time of that post? Almost exactly one year ago. Friends Grow My Garden was a nod to my expert friends who’ve helped me through, and who probably have pity on my poor plants. I apologize to them both, but my garden gets better every year. So do the hacks.

Unlimited veggies. That was part of the recent prescription from my naturopath. She had good timing. This year my garden has twelve crops, a variety of: lettuce, spinach, tomatoes, peppers, beans, peas, potatoes, squash, apples, figs, raspberries, and the long suffering mushrooms. Okay, so they aren’t all veggies. I wasn’t about to unearth the potatoes that self-sow. The apple trees, fig tree, and berry bushes are perennials. The mushrooms, well, they’re just a mystery. At least I’m already harvesting salad greens. Very cool, especially with the price of romaine lettuce, lately.

Defending against slugs isn’t easy. It rains a lot, here. They’re happy critters, or at least they’re well fed. Last year I realized that slugs might have trouble climbing steel wire. It’s narrower than their wide, slimy bellies. Sure enough, propping the pots on little wire cages meant no slugs all season. This year, a friend downsized by giving me a bunch of the saucers that go under the pots. They were just right for a new variant on the old cage. Much more stable. Still no slugs.

Pots are expensive. Last year, I tried the trick I saw online where the bag of dirt is turned into a big, flat planter. It worked so well I bought two this year. I need a better support for them. One’s sagging a bit. The general idea is working. Now, I want to find a frugal cover that doesn’t get in the way of the plants, lets me harvest daily, but doesn’t let the deer nibble any. The arch of hardware mesh is working, but a good wind dislodges it. So would a deer’s nose, but I’m not telling them that.

If you notice, I use my front deck for those plantings. My house has a great, or at least pretty good, west view – which also means it gets hot. Turning that from a negative to a positive is one reason I used it for my container garden. I don’t want that heat in the house in the summer, so years ago I created a simple hanging awning that provides shade and keeps the windows cool even as the deck stays hot enough for the plants. It’s just a long sheet of canvas remnant with a cord stapled to the top, binder clips holding the cord in place and acting as loops to hang on the cup hooks hanging from the roof. Not exactly a gardening thing, but it was there so I included it.

Beans and peas like to grow tall. Whenever I grew them from garden beds they’d make a lot of progress, then something would munch them down about three inches off the ground. Slugs, bugs, or bunnies, I don’t know who is the drasted culprit. Using the idea of the artful use of wire mesh, I created a vertical tube from driveway rebar, built a platform a foot or so off the ground, and put the seeds in pots. I thought I was very clever and original, and then saw others doing the same thing. I still like the idea. It must work if it is as popular as it seems to be.

Container gardens need frequent watering. Yes, I could walk around with a hose. That means uncoiling and recoiling it. I’m lazy. As part of my emergency preparedness, I replaced one downspout with a chain that leads to a rain barrel. That’s full, now. So, I put a lid on it, put the bucket on the lid, put the chain in the bucket, and let the rain fill the bucket occasionally. If it hasn’t rained, I fill the bucket from another barrel or from a faucet.

It’s payback time, always. The very warmth and light that make my deck work well for veggies makes my living room’s front window a surprisingly good place for aloe vera. I repotted a friend’s aloe a few years ago. In return, I got to keep one old shoot and one new shoot. Shoot. Pardon a pause while I go over and count the number of shoots. I lost count after thirty. I’m keeping a few of them, but the rest are available for free. First some, first served – as long as folks are reasonable about it. Call or email for a good time, er, a time that’s good for both of us, er, proper scheduling.

Frugality is a lot like gardening, it isn’t necessary to become an expert instantly. Start small. Notice what works and doesn’t. Make little improvements. Have fun. Accept help. At its simplest, gardening is: dirt, seeds, water, sunlight, and patience. Weeding helps. At its simplest, frugality is: learning about wants versus needs, meeting those needs, thinking of simpler ways to meet those needs, and making room for a few wants. Budgets may help, but they aren’t required. Food is a basic need. Good food is a blend of want and need. Gardening is one way to meet a need while satisfying a want (as weather, bugs, and nutrients allow.)

I garden more as a want than a need. My harvests supplement my grocery shopping. A few pots can produce a lot, and pay for themselves; but I know folks who grow 80% of what they need, and get food they really want. Fresh asparagus, corn, berries, and tomatoes meet a need in a way that gourmets desperately want. Fine dining on a budget, with free home delivery. And, lots of playing in the dirt. Weeds happen. Haven’t found a way around them, yet.

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My Bike Gets New Brakes

Squeal! Squeak! Welcome to the noises made by my tired old bicycle as I tried to slow down while rounding a corner that was banked the wrong way. The intersection is in the neighborhood, so I didn’t want to disturb my neighbors. I also didn’t want to end up in their bushes or in the local emergency room. Okay. Frugality is fine, but safety can’t be ignored. For several reasons I was glad to be back on the bike again and I didn’t want my brakes to stop me from riding. Spend a little. Get a lot. That’s a nice cost/benefit trade.

Allow me to introduce my bicycle. It is a classic, hard-tail, 1992-ish Trek 8000 mountain bike. No springs. No shock absorbers. No disk brakes. It is old, purple, and slightly rusted. It is also the bicycle that I rode from an island north of Seattle to an island south of Miami, from Roche Harbor on San Juan Island to Key West in Florida. Want details? I wrote a book about the ride. It was my first book, before I considered myself a writer. It continues to sell, though that may also be because it describes America before and after 9/11. Or, maybe folks just like the title. Just Keep Pedaling.

Here I am, 25 years later, still riding the same bike. Why change? If it can get me to across North America it can get me (slowly) to the store.

Feel sorry for it. It hasn’t been properly cared for. The squeak came from the front brakes. The squeal came from the back brakes. From what I can recall, those are the same brake pads I used on the ride. Even if I treated the bike to a few new parts after the ride, I can’t recall doing much else to it for the last few years. Money has been tight. Even though bikes are cheaper than cars and trucks, other bills were more important.

Now, bicycling is more important.

The doctor gave me the bad news about diabetes. Shudder. One prescription, exercise. I can do that. About three years ago, I was lucky enough to be part of a 24/7 coworks. Money was even tighter. Gas was expensive. Riding ten miles each way took a lot longer, but that gave me two times each day when I wasn’t staring at a computer. I was a lot skinnier then.

Staring at computers happens more often and longer, now. That’s a good thing, at least for finances. Then, I was working hard at finding work. Now, at least I’m more likely to be working on something billable. Unfortunately, almost all of my paid work involves a keyboard and a monitor. My work world has been largely reduced to a space within arm’s reach. By the end of each day my eyes are getting a bit buggy. A recent set of massages (something like $20 for 15 minutes) is painfully comical as she finds strings of knots. (Thank you, Faith Bushby.) Eye strain and bad ergonomics are causing the wrong ripples down my back. Get out on the bike and there’s a great incentive to look farther and look around.

Now that I’m giving myself one day off each week, I have to remind myself what I did when I had time off. It may sound weird, but I’ve been working so hard for so long that I’ve forgotten how I spent my time. Sitting around the house also means sitting beside my work space. Going for a drive in the truck isn’t exactly relaxing, not at that gas mileage and with its set of probably more expensive noises. When I’m on the bike, I don’t mistake someone’s home oil heat exhaust for a problem under the hood. The turning radius is much tighter, too.

So, out I went to ride. And each ride got noisier and hairier.

More than a year ago, our one bicycle shop closed. Friends talked about it as if we’d lost our last post office or grocery. I may have an epic ride in my past, but an entire peloton of friends use their bicycles as their primary transportation. (Occupy Your Bike!) They regularly put more miles on their bikes than they do in their cars, even the ones with electrics and hybrids. Someone stepped into the gap, managed a dramatic shift as suppliers (and their inventory) fell away and had to be coaxed back. I worried about the reincarnation succeeding. He made it. Bayview Cycles is now so busy that I feel sorry for the guy. He managed to fit my bike into his queue on a day when he would probably work past sunset. And, the sun sets very late this time of year this far north. (He was probably also inundated because we’ve had over 150 days of rain in the last eight months, and now are in a ten day dry spell that’s wrapped around the holiday.)

It is easy to take frugality too far. Habits take many forms, including continuing to avoid something. I was lucky enough to get a small boost in business, could work from a coffeeshop near the bike shop, and use the one to pay for the other. The money balanced out for that day. The longer term effects are much more valuable. Bicycling isn’t a panacea. Nothing is. But, for less than most folks will spend on dinner, I bought the opportunity to get healthier physically and mentally, get some chores done, and have some fun. That’s a nice deal, and one my neighbors may appreciate, too.

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Tell A Story

We aren’t Vulcans, I suspect. (If any true Vulcans are reading this blog, WOW!) Facts, data, and logic may rule bank accounts and portfolio totals; but people are inspired by stories. I’ve heard a few stories about plans for careers and retirements lately. It sounds like folks are seeing change coming and deciding to control as much of their future as possible. Rarely do those plans get described as numbers. They’re more likely to be told as stories, even the ones with lots of blank pages.

Maybe it’s a sign that people are assuming that any change in government won’t happen soon enough or reach them. They’re making their plans based on getting no help from their government. Since the election, local entrepreneurs are getting busy. I call them entrepreneurs because they don’t expect any help from any businesses, either.

A Virtual Reality arcade seems to be making progress. The business plan looks encouraging; but at a presentation to a local lending network, the greatest audience response was from the vision of a place for teenagers to play that is innovative, safe, and doesn’t revolve around eating and drinking. Ethan Worthington, entrepreneur described what it was like to be a teenager in a tourist town. South Whidbey is know for being a quiet place for a vacation. It can also be expensive, designed for people with lots of discretionary money, and restricted to people over 21. Younger people need a place to hang out, too; regardless of whether they’re residents or visitors.

Imagine a cookbook written by a bagpipe playing biscotti baker, Don Scobie. That business model may sound like it is targeted at a niche within a niche within a niche, generally not a large market. The numbers aren’t there. Take each piece though, and see that one book can be known for its novelty, and a nexus for tendrils that reach much further than a single book. Cookbooks are common, and can be profitable. Cookbooks with attitude get a chance to stand out. Cookbooks written by a cook in a kilt, well, that will appeal to someone for sure. Take the attitude necessary to proudly perform with an old Scottish squeezebox, and clear one of the greatest marketing hurdles – an entrepreneur who is comfortable entertaining a crowd. Writing, speaking, playing, teaching, and even things like songs and videos can gather to create a large enough business (and potentially messy bookkeeping), but the story will be the driver.

Skip ahead a few decades to people getting ready for retirement.

A couple in the neighborhood told me their plan for retirement. They’re almost there. Sell their first house, try to figure out how to make their second house their only house, and take the jump. They understand the math because their other house is swept up in Seattle’s ridiculously busy real estate market. As they put it, “Even hovels are going for $650,000.” Sell now, and retire now. The fascinating part wasn’t the math. It was their very active editing of what their new life will be like. They won’t be rich, but they know the money isn’t as important as discovering how and where they’ll live. They are several iterations of He said, She said from finding one answer; but they’re trading the stories first. Detailed money issues can come later,  just to make sure.

Another couple finally found a home at the beach. Well, not at the beach. That would require millions in their neighborhood. But, a ten minute trip from the house to the water isn’t bad and saves them hundreds of thousands of dollars. Listen to them and hear what they will do rather than how they will afford it.

About those blank pages…

Several people have found themselves deciding to be entrepreneurs without knowing their full story of what they want to be. They know that what they have isn’t enough, and that they need, not just want, something better. They’re the brave ones, letting go of their insufficient stability and having faith that they’ll swim, float, and be swept to a better life. They know how much they need, and that is a basic inspiration, but the optimism comes from hoping they can reach and exercise their potential.

The retirement stories have blank pages, too. People who worked for corporations for decades have a reasonable chance to relax. People who worked for small businesses, or who owned businesses that were subsistence operations can find themselves with too little to retire in their homes. Their house has become their retirement, and the only way that works is to sell it. I know too many friends who have one option: sell the house when they can and move somewhere cheaper. Cheaper no longer describes Seattle. Cheaper is becoming less likely in the counties around it. This area is becoming like many areas with large inequalities in wealth and income. The poor progressively move farther out, sometimes taking the core culture with them. For some of my friends, that story is one of concession and compromise – and giving up what they’ve built for most of their lives.

Personal finance is personal. Finance is about facts, data, and logic. All of the people I talked to know that. Some have detailed spreadsheets. Some have rough calculations. They all have stories. The stories are their motivations.

My story

My story is a collection of drafts, each based on a different scenario. I’m a writer and an engineer. Both disciplines work best when an open mind considers a wide variety of options. Any one of the threads in My Backup Plan and My Litany of Optimism can lead to a different story. I understand the arithmetic for most of them. When I sit on the deck and think about them, it is their stories that come to mind. Stay tuned to see which (or something completely) comes true. In any case, live long and prosper.

AKA an opportunity to read my palm

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Good To See You

I’m tired of hearing bad news. I also don’t want to fall into the overly optimistic trap of only acknowledging good news. That light in the tunnel could be good or bad. Reality is in that messy middle where the two mix.The mix hasn’t been very balanced, lately. Sometimes the best news is the paradox that some things don’t change while change remains a constant.

Thanks to my other main blog,, I daily get a dose of news items that are reasons to be “eager and anxious about the future.” The posts were originally daily, but lately the frequency has gone down because talk about politics has gone up. I try to find news that is based on data (something that is considered too dull to report, for some reason), and apolitical. It’s that apolitical part that’s shrunk the available articles to comment on. I may not post daily, but I do check the news daily (now only 6 days a week – Yay!). The research frequently ends with me shaking my head. Oh, what a weird world we live in.

There is good news. Renewable energy is becoming so successful that it is threatening entrenched fossil fuel industries, and kicking off their corporate immune responses. Adoption of electric cars, high-efficiency households, and a return to walking and bicycling means healthier living in many ways. The awareness of injustices around the world are initially bad news, but their exposure means wrongs are more likely to be righted. (See the Giraffe Heroes Project and Robert Teel’s blog for a series of topics.)

There is also bad news, and too much of it. Pick a topic: climate, food sustainability, pandemics, natural disasters, human disasters, finance, and of course, politics. They are juicy topics, things that are keeping many writers employed, or at least busy. But, as I said, I’m getting tired of bad news – and looking forward to good news, and reporting on it, too.

This blog is about personal finance. Thanks to the way the world and regulatory agencies work, it is best for me to write about personal finance by describing my finances. I continue to have my Litany of Optimism. It gets replayed every day, and usually more than once. So far, except for the almost accidental increase in my house’s value, most of the optimisms continue to be a litany, not news. I don’t want to bore people with echoes of unsubstantiated optimisms, so I don’t write about them much. Ironically, when I do write about good news, there’s a tendency for a backlash. Good news about a small improvement in revenues thanks to a new client has frequently been met with a larger reduction in revenues from existing clients, as if I don’t have time for both. Very frustrating, because I want to share good news.

I continue to be an apocaloptimist, someone who is optimistic that we’ll recover well from whatever apocalypse we’re headed towards. That will be a very messy mixed reality, but we are an adaptable species, even when it comes to having the species survive our own messes.

I hear something similar when talking to friends. Good news is cheered, but it is something that will benefit others and some other time. Solar energy, electric cars, warm and cozy houses, and improved human rights are things that will happen – in someone else’s life. Bad news, however, gets delivered on a personal basis. Furnaces and vehicles break down, and must be repaired, not replaced. Injustices must be endured. #Resist is great – on an abstract level. Resistance on a personal level is frequently painful and futile.

News has even changed how I greet people. Instead of “How are you doing?”, I remind myself to say, “Good to see you.” I’ve scared people by asking them about how they are doing. They want to respond, don’t want to lie, and can’t find a polite way out. Telling them that I am glad to see them starts the conversation with an honest compliment instead of a probing question.

One of the items on my Litany of Optimism is luck, good luck in particular. I can’t recall a success story or biography that doesn’t include a key moment of good luck, even if it was at birth. Luck can be enabled, but it can’t be planned. Luck has no guarantees, but it also has no limits. As one friend frequently points out, even a small piece of good luck can have amazing consequences, as long as it is the right good luck. Some people hope for millions by playing the lottery. I do. A few hundred thousand may not be enough to retire on, but it certainly alleviates a lot of ills, figurative and literal. A few tens of thousands, the amount some people spend on a new car, could change a life by getting someone out of homelessness, giving someone the right training for a career, keeping someone from spiraling into debt. A few thousand may do the same, but that begins to get closer to only helping those who are on the edge.

Evidently, I’ve had some sort of good luck. Amidst the repercussions of my Triple Whammy and a variety of other ills, I’ve managed to keep my house, fill my pantry, and have the time for at least one asset to appreciate (my house.) A series of repairs have helped maintain home and vehicle. Health issues may be temporary. The fact that I haven’t had worse luck has been good luck.

The planet’s, species’, and my news could use a major dose of good luck and good news for balance. I trust that it will happen, though I don’t know how, where, why, or when. Until then, I’ll continue to practice saying hello by saying that it’s good to see you. I look forward to greeting the good news the same way. Good news? It’s good to see you.

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Indulging In Volunteering

Celebrate! My first week of taking one day off each week. That’s why I spent so much time this weekend working without getting paid. That may not sound right, but it was a good idea. Give me some free time and I spend some of it working for free, volunteering. Yesterday there were a few hundred of us doing the same thing, and I helped a bit. They inspired me to do some solo volunteering today, and that felt good, too. There’s an infinity of ways to practice self-indulgence. Sometimes that includes helping others.

Small towns are known for barn-raisings. That’s a nice image, though barns are more likely to be made from metal and built by work crews, now. Locally, there’s an organization that does something similar, but in ways that make more sense in today’s world. Hearts and Hammers pulls together a few hundred volunteers to help a few dozen homeowners for free. It is a smart organization. If someone wants to volunteer, their answer is usually, yes. I don’t know the details of their selection process, logistics, and organization; but I do know that they found work for people whose greatest strength was enthusiasm, plenty of work for professional contractors, and even work for cooks. They served breakfast and dinner for those hundreds, and then someone organized entertainment, too. It is an all-day, sweaty party that leaves dozens of households better off for the price of a lot of sore muscles – and smiles.

I was lucky. They only asked me to take photos at five of the sites. The only time I had to sweat was when I hopped into my sun-warmed truck. I was also lucky because I got a mini-tour of the work they did. One crew helped someone resurrect a natural and native garden that was getting out of control now that a spouse had passed. Another site had a dozen trees felled for safety, rails, and probably some sunshine and firewood. Want to attack blackberries? One group easily filled a truck. I saw two kitchens getting rebuilt, plus a bathroom, a porch, and a wheelchair ramp.

It was fascinating watching the energy and activity. Professionals’ trucks were open displays of amazing tools and equipment. Parked beside them were econo-cars and luxury sedans. Carhartts, jeans, sweats, and whatever happened to be handy made for a fashion show that will never see the bright lights, but should.

It was also a display of humility and courage. It isn’t easy to ask for help. The most common cause was simple bad luck. One, two, then three upsets overlapping can drain most people’s rainy day funds. If a medical condition is involved, it may also mean that the work can’t get done by DIY. That’s when a community impresses.

I enjoy photography. Most of my photos are of nature or abstracts, or both. I didn’t expect the photo coordinator to contact me, but I’ve always been impressed by Hearts and Hammers, so it was a good introduction. Besides, there are some long-delayed projects around my house that I can’t afford to fix. Friends have suggested I nominate some of my chores. Maybe next year, but no, because by next year I’ll be able to afford to get the work done – a rationalization I’ve used for several years.

I enjoyed taking photos of people at work. There’s no time for posturing and posing. People are less likely to complain about a hair being out of place, or having a smudge on their face. Taking pictures of people volunteering is also fun because there are lots of smiles.

It felt odd staying behind the camera. There were a few times when I lent a hand, but I wanted to be more active. So, on my first regularly scheduled day off, I indulged myself by getting sweaty, muddy, dirty, and scratched. It wasn’t an official work party, but as Site Steward for a Land Trust property (Hammon’s Preserve, Whidbey Camano Land Trust), I knew where there was lots of work waiting for me, and tasks that were literally growing in the meantime. I decided to tackle a tangle of thorns and barbs, a blackberry patch that was overgrowing a barbed wire fence.

Until about a decade ago, the property was a nine acre farm. Some livestock lived there, too; so their pastures are fertile. The herbivores are gone. The weeds are happy.

Thanks to dozens of work parties, we’ve made progress against Scotch broom, holly, English ivy, thistles – and blackberries always blackberries.

Whacking blackberries is gratifying. Sure, there are scratches; but cutting back dozens of feet of thorny branches from new and old barbed wire leaves an open corridor of accomplishments.

About halfway through, I had a welcome break. The neighbor came out to thank me. They’ve lived there for forty years, so he had stories to tell about the farm, the farmer, and the history of the farm buildings. Evidently, the one we consider a tool shed was originally a tiny schoolhouse. I wondered why it had a spot for a woodstove and a lot of empty space. We put a new roof on it without realizing it was historic.

Whether it was Hearts and Hammers, or Whidbey Camano Land Trust, or any other organization that hopes to help, it is hard to know how far the effort reaches. We put a roof on a tool shed, and saved a bit of history. A few dozen people have better homes now, which may free them up to accomplish something greater or at least live with less worry.

I admit that some of my volunteering is indulgent. I do it because it makes me feel good. I’m probably not the only one. But, when I think about the ways I could’ve spent these days, that sounds like a pretty good trade. I hope it helped. I know it helped me.

Now, after I post this, I have some laundry to do.

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My Real Goods Is Gone

Solar power is becoming so popular that it is helping send coal into a downward financial spiral. An industry that disruptive and successful sounds like a good investment. That’s what I thought. Today, I sold my shares, oops, share, of RGSE, aka Real Goods Solar, a firm and an advocacy that I’ve been following since they started in 1978. Just shy of 40 years later, the total value of the company has dropped to under $10,000,000. There are houses selling for more. Somehow in less than three years, in a phenomenal growth market and industry, they managed to fall rather than rise from a reasonable market cap of $134,000,000. Having the right idea at the right time doesn’t guarantee success. Another reason for diversification.

Through the early years it was privately held, then it went public and the stock has traded as RGTC, RSOL, and RGSE. For a while it was part of GAIA, but was spun off again, which encouraged me to buy again. At the start, the company sold the things that helped people move off-the-grid. The customers were willing to pay a premium to be able to disconnect from mainstream society and the fossil fuel economy. For a while, Real Goods branched into more suburban products: solar powered lawn lights, sustainable materials, niceties that helped people demonstrate their preference for more natural products without having to leave the world of asphalt and cul-de-sacs. I was one of them. As solar technology progressed, the map of where it was viable grew. The economics worked best for large installations, so they provided installation services for companies and municipalities. Within the last few years, the technology has become so common and affordable that the regions that can go off-the-grid are overlapping the main grid. The solar enthusiast in me has been celebrating the progress.

The investor in me watched RGSE attempt to grow, stumble, and falter; but I saw optimism in the growth of its competitors. Today, First Solar (FSLR) has a market cap of $3,630,000,000. Solar City (SCTY) has a market cap of $2,014,000,000. They prove the market potential exists. I saw RGSE as the economy priced investment that could grow to those levels. That didn’t happen.

I’ve made the same mistake before. When went public, they mostly sold books. I thought online sales had good potential (and way underestimated that one) and already had shares in a bookstore, Barnes & Noble. Rather than buy into the purely online company, I bought stock in B&N had the benefit of people being able to have it either way, delivered at home or at the store, online plus personal customer service, and a chance to hold the book in hand before buying it. That didn’t work.

First mover advantage is a term used to explain Amazon’s success. The same’s true for Starbucks and other trendsetters. But, Real Goods existed before the World Wide Web. Barnes & Noble had decades of history. Coffee shops existed before Starbucks decided to redefine the model. Simple strategies are rarely simple in reality.

Years of supposedly diligently following the company didn’t help me catch the two year slide from $3.10 to $1.20. Ah, but let’s adjust for a 20/1 reverse split and a 30/1 reverse split. The $1.20 is post-splits, so it stays the same. The $3.10 is effectively $1860. Because of the splits, my hundreds of shares were reduced to one share.

While the company was imploding (and I was possibly working too hard to devote the appropriate attention to it), the solar and wind industries are imploding the coal industry. As solar and wind technologies have become more efficient, more people and institutions have been using them. As more units are built and sold, the economies of scale reduce the cost to produce the units. The effective price per kilo-watt drops. At the same time, that’s power that isn’t being fueled by coal. The reverse economy of scale kicks in. Coal mines, transportation systems, and power plants have large fixed costs. Those costs have to be covered by fewer customers, so the effective price per kilo-watt rises. As coal’s price rises, solar and wind become more appealing amplifying the difference. Solar and wind technologies are continuing to mature. That cycle should raise their market share and lower coal’s. Throw in some large side effects like pollution, remediation, and infrastructure, and the days of coal mining dim. (See for a story about the UK getting by without coal for a day.)

With a story like that, Real Goods should do well; but that’s been the story for years, and they haven’t done well. I’m a bit embarrassed to relay this story because it’s yet another blow to my portfolio; but, one of my personal challenges is to progress past the money taboos so common in our culture. My embarrassment proves I have some progress to make.

As much as this is a cautionary tale about investing in individual stocks, this is also an example of why IRAs are not panaceas. If the stock was outside my IRA, I could’ve claimed the losses on my taxes. That would’ve come in handy these last few years. Some day I may run the numbers and quantify the costs and benefits of using an IRA rather than a traditional account. An IRA makes sense when it never gets touched. But, emergencies happen, rainy day funds dry up, and in those cases using an IRA triggers penalties while also being denied some benefits.

Years of Annual Reports heading to be recycled, naturally

Silly as it may be, the reason I sold today was because it was convenient. I’ve finally found some space in my work schedule (a good and a bad thing for an entrepreneur.) In the midst of finally getting lots of tiny delayed tasks accomplished, I decided to clean up my portfolio by getting rid of the last lonely share of Real Goods. The total position was worth $1.20. The cost of the commission was higher. My net benefit is freeing up some storage space, simplifying my research tasks, and removing yet another reminder of this largely unprofitable investing era. Let’s hope this doesn’t happen to the other stocks in my portfolio: AMSC, AST, GERN, MVIS, NPTN.

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My Rule Of 7 – One Day Off

Good news sneaks up and tests me against one of my rules. For the last six years I’ve been working according to My Rule Of 7. When my net worth was over $700,000, I knew I didn’t have to work very hard. When my net worth was under $100,000, I knew it was time to work every day of the week. My Rule Of 7 is incredibly simplistic; so, maybe I should call it more of a guideline. I’ve finally realized that if I was going to respect the Rule, then I should, er, get to, start taking one day off each week. My net worth may have finally risen above $100,000. The weird part is watching myself push and pull the idea of not working every day. Oh, what ruts we build for ourselves.

As an entrepreneur it would be great to celebrate reaching this milestone from all of that work. As an investor it would be great to cheer a sudden rise in my portfolio. (The opposite of that happened thanks to AMSC, MVIS, and NPTN.) It wasn’t hard work or insightful investing that is going to give me a day off; it is simply staying in my house while the real estate market recovered. (Which I was able to do because of all that hard work, so it wasn’t for nothing.)

Figuring out net worth is easy if it is all in cash or in liquid assets like stocks. Check the statement. Subtract the debt. There’s the number. Reality is more complicated because what people own and owe changes every day. It is an imperfect exercise, but it is worth doing. Most folks have more assets than they realize.

I hesitated adding in my house’s value because I don’t plan to sell, it would take a long time to sell if I decided to do so, and the value is always a guessing game until someone actually buys it. But, like I just said, it is an imperfect exercise, but it is worth doing. Again, an overly simplistic check convinced me to go ahead. Assume I could clear $700,000 by selling my house. If I ignored that and kept working, I’d be inside a life that hurt my health, and left me with very little time for family, friends, and fun. If I sold and cleared $700,000, taking 5% to spend a year recuperating would be one of the healthiest and fun things I could do. In the meantime, I’d put $665,000 to work on getting back up to $700,000.

Ah, but what is the market value of my house?

I’m fortunate enough to have a variety of perspectives from which to estimate my house’s value. I wrote a (ill-timed) book about personal finance. (Dream. Invest. Live.) I’ve bought and sold several houses. I write about real estate for Curbed and 360Modern. Put it all together and I feel confident that the value of the house has at least returned to its pre-Recession price. Seattle’s ridiculously hot market is starting to warm the island. Some neighboring counties are rising at about 10%, with a few flukes that are much higher. If not now, then reasonably soon, my house could be worth about 10% to 20% more than it was when I bought it. (~$290,000 x 1.15 = ~ $335,000) Take that purchase price, assume 1.5% per year growth and get something similar, $338,000.

Two other estimates are available for free. Both Redfin and Zillow provide market estimates. Redfin’s estimate ~ $275,000; which is probably based on recent sales without projections. There have been so few houses like mine on the market that the estimate is probably hampered by a lack of data. Zillow also has to deal with the lack of data, but I suspect Zillow is applying an algorithm that includes the regional market growth. Zillow’s Zestimate is a very sweet ~$463,000. One thing I like about Zillow’s estimate is that it comes with a range. In my house’s case, from a low of $361,000 to a high of $560,000. Ah, for that high number, but I have my doubts about it. Just for fun I found the average of Redfin’s estimate and Zillow’s low estimate. Voila, ~$318,000.

There are people who do this sort of thing for a living, real estate professionals. One has heard me talking about this sort of thing long enough to at least help bracket my estimate. Yes, Redfin is probably too low. Yes, Zillow is probably too high. Yes, somewhere in the between $300,000 and $350,000 is a good enough estimate for what I’m trying to do. (Getting real about putting it on the market would require an in-depth analysis, and I’m not going to ask someone to do that for free and fun.)

So, without revealing my mortgage balance (hey, some privacy, eh) it is reasonable to assume that my net worth has finally risen about $100,000. Throw in my portfolio and a few other assets as a buffer on conservatism and – whew.

And yet I hesitate; and yet I know I shouldn’t. Life is meant to be lived. Wealth, or at least the money to fund a lifestyle, can come from unexpected directions. That doesn’t mean it should be discounted. Recognizing values in our lives grants them the respect they, and we, deserve. Too many people dismiss the money they have in an IRA, or the value of their collectibles, or even the value of their home. If they already have sufficient funds, then that’s fine. But too many work as if the products of their labors and their life have no value. If I think they should value what they have, then I should value what I have.

Next week I’ll start taking one day off each week. Fellow entrepreneurs can know how radical that act can be. For a day I won’t be making any money. It won’t be a paid vacation. But, it is something that I’ve worked towards and that has arrived, even if it happened in  a way I didn’t expect.

Now, the trick will be remembering what to do with a regular day off. It may sound silly, but I’ve forgotten what I did when I wasn’t working every day. Sounds like a task to add to my To-Do list. Hmm, something about that sounds like a rut I should get out of.

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