News News And No News

Waiting for news from one source, get twice as much from somewhere else. The clock is ticking, or the calendar pages are flying, as MVIS shareholders wait for news about a disruptive technology in consumer electronics. The wait continues. In the meantime, news hits about wind power and regrowing damaged nerves. So goes life when investing via that strange mix of a diversified portfolio of innovative companies. AMSC and Asterias had good news today while MVIS shareholders continue to check every breeze for hints.

It is the last day in August, so I planned to write about MVIS and MicroVision. MVIS_Catalysts_083115MicroVision has a projector technology that can be as ubiquitous and adaptable as cameras small enough to fit in mobile phones, tablets, and laptops. There is long list of possible product launches this year, and the remainder of this year is getting shorter; especially if the launches, or even the announcements, will happen before the holiday season kicks in at the end of November. Less than three months to go before Thanksgiving, and no news since the spring.

MVIS is the easiest stock to talk about in my portfolio. The idea of a projector accompanying every camera is simplistic and inaccurate, but close enough to get the idea across easily. Even with my dwindled portfolio, I’ve maintained at least some diversity. Diversification is the cheapest insurance against risk. It usually works. Oh well, sometimes the odds work against expectations. I hope they swing back.

Today, two of my other stocks began exercising that swing. AMSC, which was called American Superconductor until they decided to rename the company after the stock, announced a $40M order for wind turbine control systems. Good news for a $76M company. The stock went up over 24% to settle at a close of up 16%. Asterias, which has a name that is indecipherable to almost everyone, announced that their treatment has worked well enough in clinical trials that they will up the dosage. AST was up about 30% to settle at being up 14%.

Nice big swings, on tiny holdings.

More background on my portfolio and what I’ve said about all of my stocks is available in other posts, particularly my Semi-Annual Portfolio Exercise. One thing I’ve tried to maintain as I recover from my Triple Whammy, is diversification. Within about a half dozen stocks I am invested in wind power, power infrastructure, stem cells, cancer treatments, high-end esoteric electro-optics, pico-projectors, miniaturized image capture, and solar energy. As diverse as that is, The Great Recession whacked each one in different ways. From a portfolio that was on the cusp of comfortable retirement, I now have a collection of mostly promising stocks that have a long way to get to get back to even, and not enough to pay more than a few months of bills. The good news is that 2015 seems to be the year for good news. The bad news is that the good news hasn’t been good enough, yet.

My investing strategy is basically ‘Present Value of Future Revenues Discounted for Risk’. (details in my book, Dream. Invest. Live.)Dream Invest Live cover Find a company before it has made money. Estimate its current value based on what it might make. Estimate the risk. If the current price is below the present value etc, then it is a candidate to buy. Do that for several stocks. Pick the ones that seem best. It is a speculative strategy, but it is one I choose because it attempts to take advantage of a weak spot in the massive financial institutions. Buy something they consider trivial and sell it to them when they consider it to be significant – assuming the price has gone up enough.

The market’s strategy is almost infinite in variety because the number of investors, stocks, and trades creates a chaotic system. Even the major financial institutions can find themselves working from emotion rather than logic. That discount for risk is easily swayed by someone saying, “Oh, that will never work.” or “That’s awesome. We’ve got to get some of that.” Since the end of 2008, “…never work….” has been the norm. The attitudes may be changing.

Much of the march to market records has been in the massive stocks: MSFT, AAPL, etc. They can’t rise forever, and at some point that money begins looking for new places to visit. Take 1% out of GOOG and investors have to find homes for $4.4B. A small shift out of mega-caps can drive enormous gains in micro-caps worth more like $0.040B . The shifts aren’t that straightforward, but the effect can filter through, powerfully.

AMSC’s news was significant because, before the Triple Whammy, it was making more like $400M from wind turbines. This new order for $40M is from a company in India, and India is expecting to add about 3 gigawatts of wind power every year for the next few years. And, AMSC’s business is not limited to India.

AST’s news was significant because it is potentially the first treatment that will allow patients paralyzed in accidents to regain at least some nerve control. The clinical trials are tough because they must involve accident victims who have undergone paralyzing trauma. It is difficult to find enough patients, and then find enough who are willing to undergo the treatment. The good news was that, not only does the treatment appear to be safe, but one patient recovered better than 95% of similar un-treated patients. The dosage will be increased, hopefully leading to a new series of treatment for what has been permanent afflictions.

MVIS’s news was, well, nothing. But in the capricious nature of consumer electronics, and within the highly volatile nature of startup companies (even ones that have been around for two decades), a little bit of good news can mean viability, profitability, and seemingly overnight success.

Investing was never boring. Then came the Internet Bubble. Then came 9/11. Then came The Great Recession. Now, there are high-frequency trades, flash crashes, and global reverberations. There’s always news, some days more than usual; so, I stay tuned, continue my due diligence, and remember that there is more to life than investing. If there wasn’t, there would be no reason to invest.

Posted in Uncategorized | Tagged , , , , , , , , , , , , , , , , , | Leave a comment

Social Media Manners Matter

Will someone please come up with a better name than ‘social media’? Yes, it is correct because the media that is Facebook, Twitter, LinkedIn and such are media driven by socializing, but too many people either don’t use the term and instead just mention the sites they use, or redefine the phrase to mean ‘modern advertising’. I haven’t found a better term yet, but I’m trying; especially, because I am giving talks and teaching classes about it.

On October 6th, I’ll teach a class in Social Media Marketing for Artists (page 64) – which has that dreaded work ‘marketing’ in the title, but the topic will be to artists who have a bit more of a business mindset. That will be at the Oak Harbor campus of Skagit Valley College. On October 20th, I’ll give a much shorter (and cheaper) version of the talk at the Mill Creek Library; and that title is even more business-like; Social Media Marketing for Entrepreneurs and Small BusinessesEntrepreneurs Toolbox That’s one end of the social media discussion, but it has to take place with the understanding that social media persists because of the social part, not because of the media part. Humans are social creatures, even the ones that don’t care about business.

Facebook et al is not just a trend. Trends and fads are temporary. Few other technologies have reached so many people so quickly. Facebook just had its first day when one billion people used it on the same day. One billion. Not one billion accounts. There are already over 2.2 billion accounts. One billion of them used the site on the same day. Skeptics can question the number that were fictitious, but every human system has imperfections and few of them reach such an engaged audience, even only counting authentic accounts. One-seventh of humanity. That’s a community that shouldn’t be ignored. The other sites wish they had those kinds of numbers, and perhaps they will eventually.

I enjoy giving talks and teaching classes. Find something people want to learn about, check that against what I can talk about confidently, and talk to them and with them, not at them. This week, the local library system (Sno-Isle – which has nothing to do with a snowy isle but is based on the two counties of Snohomish and Island combining their resources and bits of their names) – the local library system asked those of us who have made presentations to fill out their database. Internet forms, such a joy, though this one had two benefits: 1) other libraries in the system will know what I can talk about and possibly schedule, and 2) I finally compiled the list of all the talks I’ve given within the system. It’s a long and diverse list. (Here’s version from this blog.)

Except for personal experience, I am not an expert in most of the topics in my presentations. Mostly, that’s because the topics are either so personal or because the topic is so new that any expertise is ephemeral. Maybe there are PhDs in social media, digital photography, and modern self-publishing, but any knowledge they gain in school is antiquated by the time they graduate. Such topics can be handled in talks that are guides in shifting landscapes rather than map directions marked by waypoints.

Helping people set up social media campaigns is fun, even with the frustrations. Twenty years ago, people with causes or businesses had to pay advertisers and buy ad space broadcasting to as many people as possible, touching on lowest common denominators, hoping to luck upon a small percentage of potential interested people. It cost money, time, and was very inefficient. That process is still in place. Social media gives advocates and businesses the opportunity to target niche audiences with specific messages for very little money and time – with enough practice.

And, there’s the trap. That ability to target an audience and sell to them is appealing to the organization. It is not as appealing to the audience. The audience rarely arranged itself specifically to be marketed to. (Though there are fans of teams and brands.) The audience is people, a group of individuals with something in common, usually gathered because they have something in common and want to share their thoughts; i.e. they are socializing. The communication has much more to do with what they want than with what an organization wants.

The trick is confusingly simple. Be social. Be authentic. Be curious about the community, but particularly the individuals. Sure, you have some message you want to get across; but, that’s secondary to their message, the sharing of which created the community. Be a part of the community, not an outsider trying to knock on the door hoping to get a foot in the jamb.

My favorite analogy is a party. If you walk into a party with a handful of brochures passing out business cards and a sample case treating the gathering as a sale call you’ll get a different reception than if you walk into the room with something for the potluck and spend your time asking people about their day and how they are doing. Just like in the non-electronic version of socializing, some people mingle naturally, some need practice.I enjoy crowds, online and offline, and there are periods when I find myself stepping back, deciding not to engage.

There was a street dance party a few days ago. (Okay, it was a parking lot, but close enough.) I talked to a few folks, tried to hear them over the music, got in some very sweet dances, and spent about half the non-dance time just watching the crowd. They are a community that I feel a part of. My business could use more business (got a project that needs to be unstuck?) but I wouldn’t play politician and shake every hand and kiss every baby. It would be rude, and a bit unsanitary.

I try to treat my social media presence the same way. I use it for socializing primarily, and use it for business somewhat. Facebook is mostly for friendly stuff (and am surprised at how much unfriendly material is posted – and then blocked). Twitter (@tetrimbath) is more for news, for my education, but also to learn about topics pertinent to my business and my clients’ interests. LinkedIn is all business, but with a nod to humor. Google+, Pinterest, Reddit, Ello, and others all have specific yet overlapping uses. I use them all as I need instead of wasting a lot of time placing them all at the same level of importance.

Ironically, the best way to give the Social Media talks would be to use social media; but that works best for me, not the people who want to learn more. That’s one reason I give the talks in person – because it’s more sociable.

So, here’s the part where I do mention my services because that’s one of the functions of this blog, which is yet another aspect of social media. Social media is a new part of the world. As long as the Internet is functioning, people will be socializing across it. Whether Facebook, et al persist or are supplanted by yet some new bit of ingenuity from some teenager, is impossible to know. The basics will be the same as the basics of human communication; be nice, be authentic, balance listening and speaking, and exercise good manners – with a sense of humor. That may be the best way to conduct the most important business – being a human in a community of humans, being sociable.

Posted in Uncategorized | Tagged , , , , , , , , , , , , , | Leave a comment

Economic Blip Or Slip

Here we go again? The weird thing about blogging about personal finance and frugality for so many years is that an entire economic cycle may be repeating, or not. (My first post was from November 2008, just as The Great Recession was gaining speed.) Inquiring minds want to know, are asking me questions; and I’m one of them. Recent events have me wondering whether we’re about to see the world’s financial pendulum swing again. I wonder. Let’s see if I can show you why.

Monday, August 24th, the Dow dropped over 1,000 points within minutes. It recovered, but it recovered to a level that would’ve been considered a major drop.

The Dow drop was supposedly because China’s stock market dropped, had been dropping, and efforts to curtail the losses weren’t successful – and that’s in a country that has an amazing level of control over its systems and citizens. The fact that the manufacturing index was down, and that investors had doubts about the extraordinarily high GDP growth encouraged many to switch their view of China from exemplary role model to possibly just another bubble economy.

For the last few months, the price of oil has been dropping because the Saudis were maintaining high production. Normally, OPEC and the Saudis would back off to keep prices high, but an internal price war broke out as the cheaper producers (OPEC and the Saudis) tried to squeeze out the expensive producers (North Dakota’s boom, Russia, Venezuela, etc.). It has been succeeding, but it also means there are several countries and regions that are going into recession because their revenues are down more than their expenses can be cut. Some blame the economic pressures on some countries’ military posturing, which may act as a distraction to their populations. More countries are then at risk, and the markets don’t like risk.

The price drops have happened just as solar and wind power prices are falling to the point that it is becoming cheaper to live off the grid than on it, at least for some. Some countries, like Costa Rica, Denmark, and Germany, are experiencing days or weeks of fossil fuel free electricity production. Costa Rica just set a record of over 90 days, and that was only interrupted by a one hour spike. Lower energy prices are good news, but the reduced demand for fossil fuels happening as there is increased supply of fossil fuels means the prices of fossil fuels will remain low, possibly undermining traditional power structures.

Some countries are just having bad financial times because of debt. Greece is frequently in the news, but Argentina also has problems. Puerto Rico isn’t a country, but it is in a similar situation. Bond holders are asking for their payments and are demanding austerity, which means less money for government services and less growth within the country – particularly as their citizens emigrate to better places.

With problems in Greece and a few other places, the European Union and particularly the Euro, seem less stable; which means yet another large economic zone isn’t as stable as markets would prefer.

From the inside, the US is always full of internal debate and concern about the nation’s money policy. It seems to be one of our defining characteristics. For decades we’ve had too much debt, according to some. The response to The Great Recession was to drop interest rates and increase ‘Quantitative Easing’. which funneled money into the economy, and which may have fueled the stock market rise. The Fed agrees with most people that the QE had to be temporary, and its curtailment was a reason to expect stock performance to diminish. At the same time, interest rates have been kept low to encourage borrowing and fuel growth; but the rates are so low that the Fed has eliminated the possibility of dropping interest rates if necessary.

One of the concerns is inflation. With so much more money in the system, inflation seems inevitable, yet it hasn’t been in evidence. Money is flowing in, but it isn’t appearing in paychecks. Without more money to spend, the economy isn’t growing as much. If the economy isn’t growing enough, and if inflation is so low that it switches to deflation, then the US economy is in a difficult position because interest rates are already too low. Aside from interest rates, there aren’t as many tools to fight deflation as there are to fight inflation. Inflation is measured across an arbitrary collection of expenses, and it is possible that parts of that collection are inflationary (food and health care) while others are deflationary (fuel and technology). As a result, it is possible that some Americans are already in a deflationary cycle.

Deflation has usually been academic, but it is already more prominent in Europe where interest rates are so low and inflation is hard to find to the extent that some savings rates are negative.

The economy is a system, and probably a chaotic one; which means it is inherently unpredictable. Systems theory, however, can look at such systems and draw some conclusions. There are a couple of TED talks that I’ve referenced in my posts. One proves that the world economy is not being run by a cabal, no conspiracy theory necessary; but the world economy is largely controlled by about 200-300 people who wield more than enough power to drive the system – and that they are probably unaware of their larger role. The analysis also shows that the system is unstable. The other analysis used a different approach to come to the same conclusion that the system is unstable. It just happens to be a system that drives the global economy, is unstable, and the instabilities are growing.

Wealth and income distributions reflect all of these effects because wealth and income are the money collections and movements that make up the economy. The last time income inequality was this bad was 2008 and 2000, just before The Great Recession and the Internet Bubble bursting. Wealth is concentrating into fewer hands such that 80 people have the same wealth as 3,500,000,000. Every year fewer people own half the wealth. A few years ago it was over 300 people. An increasing concentration is unsustainable because at its extreme one person owns everything (impossible), and as wealth accumulates, some fraction of it is taken out of the economy, limiting the economy’s growth because the rest of the people have less to spend.

That’s some of the bad news. If that was all there was, it would be time to climb into the bunker and close the door.

The good news is harder to find, isn’t any clearer that the bad news, and isn’t talked about as much because we humans more readily dwell on the worrisome.

Economies haven’t gone to zero. There is a lot going on. Billions of people are working. Technology innovations are improving lives and economies, and may not be properly represented in the numbers. And, humans are amazingly adaptable.

The Great Recession hurt. So did the Internet Bubble, the crash of 1987, the stagflation of 1980, the fill-in-the-blank of every economic crisis back to Egypt and Mesopotamia. We get through because we do what we must, frequently complaining about the old world fading while quietly incorporating new ideas like the wheel.

I haven’t watched the markets any more or less this week. I’ve seen enough cycles that many of the phases are familiar. Right now we’re in the phase where it is easy to create an appalling list of worries without knowing if this is a blip or the start of a major slip. I live a frugal life. I think I work hard enough, maybe too hard. I’m invested in several places, though not as much since my Triple Whammy. I’ll think about what’s going on, but I’ll spend just as much time thinking about working with my clients, teaching my classes, fixing my backyard fence, spending time with friends – and making sure I dance. Gotta dream. Gotta invest. Definitely gotta live.

(Most of the news items behind my understanding of the situation are posted on my other blog; PretendingNotToPanic.com, my daily newsfeed of “news for people who are eager and anxious about the future” .)

PNTP

PNTP

Posted in Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Maxwelton Meal

Blame it on the butcher. Without knowing it, they inspired the idea of a Maxwelton meal. South Whidbey, where I live, is considered rural; but most people living here seem to be either retired, commuters, artists, or some other more urban occupation. Very quietly though, the Maxwelton valley is one of the many places on Whidbey that has managed to maintain quiet enclaves of farms and ranches. When the butcher opened their business a few miles from my house, I realized that a bicycle ride through the valley could gather enough meat, produce, and wine for a local’s meal. The best way to see what the valley provides was to find a sunny August afternoon and fill the panniers. A frugal life can include fine food.

Whidbey Island DistilleryMaxwelton Meal
The first shall be last, or at least the first thing I bought was the last part of the meal. Five years ago Whidbey Island Distillery opened. That happened just as I was scaling back my expenses, so I never had the excuse to visit. They were known for their berry liqueurs, which seems appropriate considering all the blackberry bushes on the island. (Though their supply is off-island, but regional.) That sounded like a nice dessert, and I knew they had half-sized bottles, so it was definitely worth adding to the shopping trip. They were the northern most stop, so starting there made sense. The fun part was finding out that they also sell a rye whiskey. Oh, that was tempting, but the thought of having a $60+ bottle of boutique whiskey break in my panniers was too much. Maybe I’ll go back in the truck after pay day, or after saving from several pay days. I bought a bottle of their flagship product: Loganberry Liqueur. On the way out, one of the owners was setting up a bunch of chairs on the lawn. It turned out that it was their fifth anniversary of being in business, and that they’d won several awards. Happy Anniversary!

Spoiled Dog Winery
Drinking a liqueur throughout dinner seemed a bit much, but next on the list was a winery, Spoiled Dog Winery. That’s a winery named after a spoiled dog, not a dog winery that spoiled. There was a narrow window for the bike ride because of the various operating hours, but arriving ten minutes before closing wasn’t good enough. The gate was closed. They didn’t answer the phone. Oh well, that’s island time. For some businesses, posted hours are suggestions, not requirements. Rigid schedules get left behind in ‘Merika. That’s okay, another local vineyard and winery had just celebrated their anniversary, and I had a bottle of Whidbey Island Winery‘s Island White, the wine with a simple name but a flavor I like.

Co-housing U-Pick
Dinner needed something solid. The first U-pick was working from a limited crop this year. Drought and other interruptions meant they had to rely on beans, but they made up for that with variety. Sure, green beans are common enough, but it is so much easier harvesting yellow and purple ones, too. They even had zucchini. Oh wait. Everyone has zucchini. I wonder what they’ll have next year.

7 Generations Artisan Meats
The instigators were next: 7 Generations Artisan Meats. The place for carnivores who appreciate meat that hasn’t been mass-produced, and the place where the people preparing the food obviously care about taste and flavor rather than just profit margins. I think bacon sausage sums it up. Bacon = good. Sausage = good. Bacon sausage? I’m looking forward to breakfast. Sure, they have steaks, roasts, and burgers. But they also have about a dozen other things in the case like sausages, salamis, jerky, and bacon – the best bacon I’ve ever had. They even have beef bacon. Usually the thing that limits me is my budget. This time it was also my pannier. I had to make sure there was room for a couple other stops. With a bit more money and a bit more cargo capacity I would’ve picked up stir-fry, bacon, and maybe a steak for a special event.

Britt & Eric’s farm stand
Doh! I can’t remember the correct name for Brit & Eric’s farm stand. Brit & Eric run a small farm, and sell most of their produce to subscribers and in the local farmer’s markets. (We have at least four every week – Thursday in Clinton, Friday in Langley, Saturday in Bayview, and Sunday at Tilth, each different with some familiar faces.) They must have had a good week because the only things in the self-serve stand were kale, green beans, and zucchini. I skipped the kale.

Maggie’s U-Pick
Maggie is hitting her stride. Her U-pick had more vegetables and fruits to pick from than any other place except the grocery. Every year her operation improves. I bought onions, peppers, beets, squash, and an apple. It took a while to decide because in each case there were so many options. Yes, she had onions, but not just one type. The same was true for all the fruits and vegetables that I can recall. Her white board listed more. A signup is available for eggs. All of that was already picked and in the farm stand. With a bit more effort there was an entire garden to harvest, with instructions about what to harvest, what to leave for later, how to harvest, and suggestions about preparation and storage.

Bailey’s Corner Store
The last possible stop was far enough out of the valley to not be considered in Maxwelton (which is also somewhat true about Maggie’s) but Bailey’s Corner Store was on the way home and they had one thing I was willing to consider as a stand-in for the wine: locally brewed beer in a growler. They’re becoming much more than a corner store. My panniers were packed. I don’t know how I could fit the big heavy bottle into the pack, but it might be worth it – as long as it didn’t shake too much on the last mile and a half ride home. It was moot. They were out of growlers. Beer and sausages go so well together. Oh well.

For those expecting haute-cuisine, go check with a chef. I’m a cook. I cook for myself, and occasionally for friends. I unpacked the bike, heated up the oven, sorted through my haul, and proceeded to fry up the onions, peppers, and sausage. Then I added the beets, covered the skillet, and let it all roast in the oven while I started writing. Near the end, I threw in the beans and zucchini to let them steam. During all of this, I enjoyed the wine. After I’ve posted and shared this blog, I’ll uncork the liqueur.

P82A0176

In some ways, this is a splurge; but it was a frugal splurge. The total came to less than eighty dollars for a harvest that will become about two weeks of meals. Divide it out and I’ll have spent less per meal than almost anyone going into a restaurant. I know where everything was grown. Even the cattle are local. The farmers and ranchers are more likely to treat the food well because we are all in the same neighborhood. There is community instead of anonymity.  I know who is getting paid. There is no intermediary, and if there is, I probably know them too.

This is what is happening in one slice of one part of one island. It is also happening throughout the country. Don’t like GMO? Shop local from someone you trust. Don’t like corporate farming? Buy from the family farmer – directly. Want to make food shopping fun? Deal with people for whom food is a passion. If farmers and ranchers were solely interested in profit, they’d sell out and get a job in IT, or anywhere that has better returns than hoping plants and animals will grow. Maybe you only do it as a splurge every few months, but it is a fine way to explore your community, realize there is one, and be part of it.

If you’d rather have a tour first, take the Whidbey Island Farm Tour, September 12-13. And, it’s free, a fine frugal word.

Now, where’s that bottle of Loganberry liqueur?

Posted in Uncategorized | Tagged , , , , , , , , | Leave a comment

A Minimalist Photographer

Nature photography is natural. It’s amazing how complicated it become: f-stop, shutter speed, depth of field, et al.
Nature is sweet, DSC_2695
awesome, Finale
introspective, DSC_0007serendipitous, DSC_0126serene. DSC_4293Photographing it should be the easy part, and yet photography requires a camera, and a camera is technology, so understanding a few details makes a big difference. As a minimalist, I try to rely on as simple a camera as possible, as few details as possible, and enjoy it as much as possible. Life as a frugal is like that, reducing the experience to the essence, seeing past the clutter. Evidently, I do that well enough that I’ve been asked to teach a class on nature photography. (Page 62 in the off-line catalog and page 64 in the online catalog.) How that happened is as example of persistence and intuition at work; which applies to much more than taking pretty pictures.

I celebrated the news by telling some photographer friends that I was going to teach the class. One laughed, and then apologized. I understand. Most photographers have armies of lenses, filters, tripods, and flashes. I have a Nikon D-40, a camera so far down the line that it could be replaced for the price of one of their lenses. My favorite tripod is an old ski pole, so it’s really a monopod. I don’t have an MFA. I do have forty years of taking photos. I can’t talk tech specs. I can talk about how to schedule a sunset session that spans the wildlife, lighting, and environmental issues that vary over three hours of photography. I also know that I can sell my photos. (Whidbey Island & Washington’s Cascades)

Life has changed dramatically within the last decade. The change has been rapid, yet not so rapid that people haven’t embodied the change. Once upon a time, Kodak sold film. It is anachronistic to point out that people had to use a camera, tended to only take as many pictures as would fit on a roll, then would drop off the film to get processed and printed (maybe getting dupes on Tuesdays!), and share them by handing them around with friends. It wasn’t that long ago, and yet it was a different era. Food porn wasn’t possible. Selfies were self-portraits. News events captured on film were rare. Now, if you’re carrying a cell phone, tablet, and laptop you are probably carrying anywhere from three to six cameras. And, you might even carry a camera that does nothing else except take photographs (though it probably also does time lapse, panoramas, and videos with audio.) Photography has become easy and very common.

Frugality is the appreciation of the value of everything. When you realize how valuable some things are, there frequently isn’t a need to acquire more things. In my case, that applies to cameras, too.

I enjoy nature, and haven’t been getting enough doses of it. I’ve almost always carried a camera on my hikes, ski trips, and bike rides. When I’m carrying my camera, I’m carrying it; the work is being done by a car, a plane, a bus or a train. The bicycle helps, but there and with the rest of my trips, every pound I carry I have to spend energy and effort to move. The more things I carry, the more things I have to take care of, and the less time I spend enjoying the journey. I naturally reduce and refine until I’m usually carrying one camera and one lens – and then relying on intuition and trusting to my choice. As many artists practice, it is the self-defined constraints that help define the art. One five year photo essay I completed was done without tripod, almost exclusively with one lens, with no flash, without cropping, and only minimal color correction. The biggest alteration was having a professional remove the inevitable mist and dust marks from the images. Photographing by the seashore has some messy elements, just like almost all nature photography.

The good camera on an iPhone 6 captures more pixels than my old Nikon. The bad camera on the iPhone 6 is better than the camera that I used before that. Yet, both of my cameras produced images that sell. Allow me a big of self-acknowledgement. Using both of my cameras, I’ve produced images that have sold. Photography is as much about the camera as cooking is about the oven. Yes, a high-end Viking oven is an awesome thing, but I’m making tonight’s chicken and rice dinner from scratch in an oven that may be original to this 1965 house.

Too many people downplay their abilities, and lately assume it is because they are not good enough for their equipment. Bah! I’m amazed at people’s abilities. Much of what’s required to use today’s technology is knowing what to turn off, not trying to understand every option and menu built in. That’s true of cameras, ovens, cars, and software. It’s more important to understand what you want to do, than understanding everything the equipment will allow you to do. Just because your car can go over 100 mph doesn’t mean you have to practice driving that fast. If all you need is 55, then don’t think about 100 and beyond. (But I do still enjoy Top Gear, but that’s another story.)

The world is overwhelming. Before we were global we weren’t as aware of every crisis in every community. It is easy to get to the point where you just want to unplug. Good. A nature walk is not an escape. A nature walk is a return to reality. Nature Walk Feb 2012The photo that became that poster is from a 3 mega-pixel point and shoot (that sadly was subsequently accidentally dribbled across a parking lot.) The most important thing in using any tool is your intent, what you want to do or say, rather than what the machine can do. Whether it is photography, or writing, or living your own life, your intent is the most important thing. Discovering a person’s passion and intent is something I enjoy doing. That I can teach, regardless of the camera. That’s something we all can learn, regardless of the topic.

Now, if only I had a point and shoot to show you the chicken and rice with roasted tomatoes that’s coming out of the oven. But, the important part of dinner is the flavor, and that I can’t catch on film.

If you want to take the class (and missed the link above), here’s the link again. If you want me to teach it somewhere else, contact me. If nothing else, we’ll have a good time chatting.

Posted in Uncategorized | Tagged , , , , , , , | Leave a comment

Housing Oil Yuan And Tea Prices

There isn’t just one number for the price of tea in China. The only number that matters to me is how much it costs when I buy some. A bunch of prices are bumping around in my head. They’re all connected because the world’s economies are all connected. The price of housing in San Jose, Seattle, and south Whidbey; the price of oil; and the price of the Yuan, China’s currency. For a frugal person who doesn’t need much to get by, I certainly think about money a lot.

Seattle’s housing market is – hmm – bizarre, gonzo, bubbly. Instead of a healthy six months of inventory, there’s 1.18 months. The median time to sell a house has dropped to about nine days. More than half the houses on the market are bought within two weeks. The median price is about a half a million dollars. In the pricier neighborhoods, the number is closer to three-quarters of a million. I’m sure there are some neighborhoods where it’s closer to a million. That’s not the most bizarre part. The Bay area is worse. Median home prices are about a million, and I suspect pricier neighborhoods make that number look small.

South Whidbey’s housing market, not quite the same. Zillow puts the median price at just under $300,000, which is a bit below their estimate for my house. My Make Me MoveDSCN5593 price is $325,000. No one’s made an offer yet. I won’t dwell on the consequences until someone makes me the right offer. Houses are starting to sell. Two on my street sold within the last few weeks. Others pop up, but there’s still only about three months of inventory from what I last read. The greatest increase in my net worth has been in an appreciating house value, not from my portfolio and not from working almost every day. (Hey, I took about five days off this year – wait, make that four.)

The price of houses are a bit above and below a million dollars. The other price I’m watching is only a few dollars a gallon.

The price of gas dropped months ago. The price of a barrel of oil dropped from over $110 to under $50. Today, the price closed at $42.50. Screenshot 2015-08-14 at 19.04.45Fracking and the Saudis mean more oil is being produced that usual. Renewable energy is becoming cheaper and easier to use, so people are using less fossil fuels. Supply is up. Demand is down (or at least not growing as quickly.) Prices drop. The major players like OPEC are involved in a price war that is targeted at companies and countries that produce expensive oil like: Russia, Venezuela, even Canada and its oil shale. Recessions are occurring as oil revenues drop in regions that have little else to sell. I’m surprised the local gas price hasn’t dropped by the same proportion.

Even the price of money is changing.

Currencies always have shifting values, but most of us tend not to worry about it much. Retailers near borders or who export and import need to know about such things, but if you’re personal finances are all in one currency, the main thing to watch is inflation or deflation, not currency exchange rates. China, however, has many people worrying because it began adjusting its currency, the Yuan. Maybe it’s nothing. Maybe it’s something. One of the worries is that China’s phenomenal growth economy may have been a bubble instead of a stellar success story. Maybe they’re adjusting the currency to strengthen the economy because other mechanisms aren’t working well enough. A currency that is changed a few percent doesn’t sound as severe as a house price that doubled or an oil price that halved, but when the largest country and one of the largest economies shifts itself a bit, many people worry, and react.

Personal finance conventional wisdom works best when the world is simple. Dream Invest Live coverSpend less than you make. Invest the rest. Keep ahead of inflation. Bubbles and busts interrupt those plans because the numbers change dramatically.

A friend passed along a comment made by someone in San Jose. If you want to visit the Bay area, sit still, it is coming to Seattle. The Bay area has become so expensive that people and businesses are moving out, and Seattle is one of the favored destinations. The atmospheric, demographic, geographic, technical, and financial environments are similar enough. The industries driving the growth are key to the Information Age which has proven itself to be much more than a fad. Seattle’s housing booms.

The price of energy, not just oil, is dropping. Falling prices are welcomed by consumers, especially frugal ones. Falling prices, however, worry economists. Inflation can be a threat, but there are many more tools for trying to control it. Maybe the US quantitative easing and the overall debt will eventually trigger high inflation, but the prices of many commodities are falling. Few expected oil to ever come down. After it exceeded $100/barrel, many expected it wouldn’t stop until it exceeded $1,000/barrel. Massive investments, like fracking and drilling in the Arctic, assumed that higher prices would produce higher profits that would pay off the investments. Now, as prices drop, oil industry bankruptcies are expected to rise. Falling prices are central to deflation, there are fewer tools to control it, and those tools work best when interest rates are high – which they aren’t.

Then, there’s China.

China has been producing significant wealth, an interesting result from a communist country. Some of the wealth is looking to leave the country, and one way it does so is by buying real estate. The west coast of North America already has a large Pacific Rim culture, so buying in places like Seattle is buying into a comfort zone, whether the properties are occupied or not.

China is also one of the major consumers of fossil fuels, and also one of the greatest proponents of renewable energy. They benefit from low fuel prices and also from more efficient and cheaper wind and solar power. Their economy and their people benefit from the recent trends.

China is also worrying economists, financiers, and many others because of the possibility that they are in a bubble that is bursting. Chinese citizens may also be worried, and worries are another reason to move money out of the country.

Influences that are usually inconsequential to most people are bumping into my considerations. What’s going to happen to the global economy? Are we about to watch another bubble pop, just like in 2008, 2000, and before? Are we about to enter into deflation, something I’ve never experienced but have considered and then felt myself shudder? Are we about to enter a period when expenses are down, pollution is down, excesses are moderated, and wealth becomes more distributed?

I don’t know. (Yeah, I probably should’ve said that at the top.)

What I do know is that, with all these phenomenal influences jostling each other, my best response is to keep working, continue investing, live frugally, and remain open to opportunity. Who knows? Maybe someone from Harbin will come over and make me a full-price, no inspection, sight-unseen offer for my house. Hey, it could happen.

In the meantime, while a rare storm blew through on this August afternoon, I sat and sipped a cup of tea while enjoying the play of massive forces that did nothing more than make a lot of noise, water the lawn, and give me an excuse to put aside work so the lightning wouldn’t fry my computer.

(The Drum Mountain White Cloud I just bought from Dandelion Botanical cost $3.25/ounce, some of which was shipping fuel costs from China to Ballard with a bit of profit included. The tea was fine. Glad I took the time to enjoy the show.)

Posted in Uncategorized | Tagged , , , , , , , , , , , , , , | Leave a comment

Finding Time

A friend told me a tale today. He’s losing track of the days. He’s worked until midnight every night for the last week. Working until midnight isn’t new, but there are marathon sprints that are epic. He’s not alone. Maybe it is a sign that business is increasing and eventually the business will provide enough profit to take a vacation to recuperate, and then another vacation to enjoy. Maybe it is a sign of the new normal where the main way to make more money is to spend more of your life working. Check back in about five years to see which way it went. In the meantime, as I apologize to my friends for not socializing as much I usually receive the same apology. Somehow, sometime, we’ll find the time.

I am not an absolutist. Yes, there are plenty of people lounging in Langley’s sidewalk coffeeshops and cafes (a couple of nouns that should be redundant, but aren’t – which explains the problem of learning English). There are millions of people with regular jobs, discretionary income, and paid time off. Paid time off is a concept so foreign to some entrepreneurs that it’s received with laughter by small business owners and freelancers. Cruise ships cruise by in my view of the Sound. Sometimes their traffic is thick enough to look like three massive dragsters vying to somehow pass in the shipping lanes. How much horsepower is devoted to getting to the destination one hour earlier? They’re filled with people with leisure time. Good. I’m a fan of leisure. Someday I hope to have some, too.

The folks I’m talking about are the ones that were struggling when The Great Recession hit. Costs were cut back. Employees let go. Product lines and service options were restricted, but highly negotiable to anyone interested in helping pay the bills. Now, businesses are busier than ever, but profits have yet to arrive. They built momentum over the last few years, and they’re going to keep pushing until business rolls a bit freer.

Unemployment is down to about 6%. That’s a good move considering a few years ago. Millions more have jobs now than then. Wages, however, aren’t moving. Total wages earned is improving, but the wage rate is nearly constant. It turns out that much of the population is making more money, but only by working more hours. Good news for paying the bills is also less time left for living. While unemployment is down, employment participation is not. Employment participation is at about 67%. The way the numbers begin to add up requires an insight into the people who aren’t employed, but who aren’t counted as unemployed. So many of them either lost their part-time jobs or gave up trying that they weren’t counted against unemployment.

So, unless you’re a major corporation, profits and wages aren’t rising, and the best way to make progress is to trade more of your life for the same wages. This might be temporary.

Discussions about wealth and income inequality can quickly quote ideological extremes of libertarian self-reliance versus socialist common support. A warning sign that ideologies are ruling the discourse is when words crowd out data, when positions are defended or attacked rather than solutions being sought. Maybe this bit of freneticism is temporary, like the last chaotic winds of winter just as seedlings are finding the sun and rain.

Personal finance is personal because every person has to make choices based on their situation, resources, and constraints. When millions of people are making the same choices because they are in similar situations with similar resources and similar constraints, the problem isn’t personal and is systemic.

With this many people working longer hours, and some running up until midnight, there is a limit to their growth. Aside from the health issues of working too hard for too long, advice from pundits and politicians to simply work harder and longer ignores the fact that many people are already working as long and as hard as they possibly can. If a person works until midnight, then works past it, they didn’t extend the day. The day is still only 24 hours. They’re working the next day and losing sleep. Working that long and hard isn’t sustainable for the person, and people working that long and hard isn’t sustainable for the society.

Billionaires are tending to agree. The millions of struggling people have enough votes to change the situation, but don’t have the power to change the ballots. A person working until midnight has a tough time collecting signatures for ballot measures after they get off shift. A person outside a political party has higher hurdles. Billionaires have very few votes, but they have the power. Billionaires are not clones. Some will think that more is never enough; but many are watching the growing inequalities in wealth and income, the stagnation of economies, and general civic unrest. They are becoming advocates for changing the system. Stereotypes fail and fall: many people in poverty work hard, don’t abuse the system, and can’t get past financial hurdles like debt; many people with wealth realize they have more than enough, are accumulating it passively and in some cases almost accidentally, and realize that every time great disparities are allowed to grow societies fall. Yes, there are abusers at both ends of the spectrum, but they are anecdotal aberrations, not constructive examples.

Personal finance is personal, and most of the discussions about changes may work generally, eventually. I am a short term realist and a long term idealist, a short term pessimist and a long term optimist. Whether the economy, government policy, social attitudes, or some common consciousness enact solutions, all of us have to deal with the short term problems of paying bills and finding time for each other.

I’m almost paying all of my bills. That’s a great improvement. I’m hardly visiting friends at all. That’s a great cost. I make time for dancing, and may make time for hiking (really, honestly, I’ll get back into the mountains)Rock Garden In Green Water, but I’ve spent enough nights working until 9pm or later, and starting over with less than eight hours of sleep. Four years of this and I know I have to find another way because I can’t do this for four more years (and, really, if you got political with “four more years” you’re missing the reality). Governmental policies are important, but personal choices are more important. Money is precious when you don’t have enough, but time is more precious. I’ll continue to try to find more money, but after four years, it’s time I spent more time finding more time.

Posted in Uncategorized | Tagged , , , , , , , , , , | Leave a comment

Celebrating Projects Progressing

Celebrate progress. Some friends have launched a new phase of their business. I’m launching into a new phase for mine, too. Slow, steady effort creates progress. Sometimes it is hard to see it from inside, but it happens. It should be celebrated.

Two stories are intertwined: my smaller story, my friends’ bigger story. Both take place on Whidbey. Both started in Langley. Both deal with art and unexpected directions. Neither is over. Both are just beginning a new phase.

I moved to Langley, Whidbey, a town that is willing to be part of Washington but sometimes has issues with ‘Merika. The liberals can be excused for thinking everyone’s a liberal, because there are enough of them. The conservatives can be excused for thinking everyone’s conservative, because there are enough of them. The same thing can be said for many communities of people on the island because most people move here to live specific lifestyles. I think the most impressive thing they all have in common is that they are leading intentional lives. Except for the folks who were born here, most people made a conscious decision to live here because they found a community of like-minded souls. It certainly isn’t on the way to anything, except a terrible commute.

I moved to Whidbey because I’d visited it for decades and liked the fact that it was a bit less conventional than Seattle. I liked Seattle because it was a bit less conventional than the rest of the US. I like the West Coast because it is young enough that convention has uncertain roots and is willing to grow in new directions. I miss Pittsburgh, too, because I was born and raised there, but going to college got me a degree in Aerospace Engineering and gave me a new set of perspectives to explore. Now, Whidbey feels like, actually is, home.

About the time I moved to the island I was finishing writing my fourth book, Twelve Months at Merritt Lake merritt cover, the third in the series of nature essays about Washington’s Cascades. (The other two are Twelve Months at Barclay Lake and Twelve Months at Lake Valhalla.) Progress on the books led to compliments on the photos which led to requests that I sell the photos as well as the books. Okay, I can take a hint.

I was a recently semi-retired engineer. I didn’t know anything about the art world, so I visited the local printer in Langley, a small shop run by Joe and Nancy (his mom). I was so naive that I didn’t know the questions to ask, didn’t understand the technical answers, and went home to take my best guess at printing, mounting, and selling the photos. That worked well enough that I sold a few, maybe covered my costs, and learned a lot. By the end of that experience I convinced myself to get a digital SLR instead of a digital point-and-shoot, and embark upon a much more serious photographic endeavour, a five year photo essay of my new home, Whidbey.

While I was progressing, they were progressing. Fine Balance Imaging moved from Langley to a better space a few miles away in the Bayview Cash Store. They shifted their focus to fine art. I had a better understanding of what to ask and what to expect. Over the next five years they coached me from home prints on paper to professional prints on exotic materials like bamboo (because it is renewable), and satin (because it is translucent.) Feel sorry for them because they also had to teach me about file formats (RAW rather than JPG), resolution limits (especially for my low end camera), and how simple things like dust spots became too noticeable and too expensive to fix when working to the levels of fine art. But hey, I was using my camera on beaches with lots of salt spray. Water spots happen, okay? Nature photography has so many natural nuisances. (They were also nice enough to provide an online gallery for the photos.)

DSC_4293

In those years, they grew because they found their niche and served it well. Printing fine art isn’t just hitting Print from a file on someone’s camera. There are color corrections for inks and materials. There are various hanging and display options. And there is being the voice of reason when an artist (me) wants to print larger than they should. With their coaching, I found my preferred medium, printing minimally corrected nature photos on satin that can be hung in windows where the light enlivens the colors. By the end of the five years, they’d moved into a bigger space, brought in better equipment, expanded their clients’ options, and performed one of the exemplary feats of American business, staying in business through the worst financial crisis since the Great Depression.

From paper to sating to metal

From paper to sating to metal

Now, they’re expanding. Yes, they print on paper; and yes, they print on satin and silk. They’ve had ways to print on wood and metal, but the process was cumbersome – until now. Now they can print on metal, and slate, and wood, and fabric. They can print on t-shirts, but in a way that far exceeds simple silk screens. They can print photos, or any graphics, all around a shirt, or a scarf, or a bandana covering seams leaving no white space except as designed. They just printed a softball team’s outfits with an innovative, total coverage graphic in hours instead of days or weeks. Now, I can see my next show (as soon as I finish another series) including wearables instead of just wall art. A photo of water cascading to the sea seems appropriate for a scarf draped across shoulders.

From Feather & Fox – another branch of the story

Fine Balance Imaging has progressed to the point that they needed a more national presence, so they are making their abilities available to as broad an audience as possible by launching YourPrintStudio.com. They’ve always been online and not limited to Whidbey, but this is a major step as they recognize that they can serve many more people, many more artists.

It can be tough making such a move. It takes a bit of vulnerability, but that’s necessary for anything that grows. Grow.

I’m happy because they’ve also asked me to help. They know about my consulting business, and how I am enthusiastic about people with passions and projects. At least until they get past getting familiar with the new strategy, I’ll be helping them with their message. (Though I’m doing this post for free because it is fun.) Progress like theirs is invigorating (from the outside) while tiring (from the inside).

As they’re making progress, I’m making progress, too. Consulting and writing keep me busy, but I continue my photography. There have been a few joint ventures that were sadly postponed or cancelled, but something new is happening. In September, I’ll begin teaching a weekend workshop in Nature Photography at the local community college (Skagit Valley College). I taught the class before, in a more informal setting, but my progress has proved to me an others two things: 1) I understand nature photography well enough to teach it, and 2) I have a teaching style that emphasizes demystifying processes.

The unanswerable question I have for Joe, Nancy, myself, and everyone else I know who is making progress is; “What will this lead to next?” How about a celebration?

And, because this just happened as I was about to post…

available upon request

available upon request

Posted in Uncategorized | Tagged , , , , , , , | Leave a comment

Triple Whammy Fourth Anniversary

Has it really been four years? Four years ago my life changed from semi-retirement to scrambling to survive. Survival may sound like hyperbole to some, but to anyone who realizes they may lose their house, may lose a way to feed themself, and may lose health, survival is reality. Millions of people had similar situations during the Great Recession, but my situation was different. The Great Recession started in 2008. My Triple Whammy hit in 2011. I’m recovering, but there’s a lot of recovery to go before I can relax and enjoy. This is less a lament and more of a reminder that bad luck can trump diversification, frugality, and optimism. And a reminder that good luck can happen, too.

If you’ve been reading this blog that long, then you may remember a brighter time when following conventional wisdom allowed me to retire at 38 as long as I led a frugal life. The Universe had fun with its brand of irony by having The Great Recession hit just as my book on personal finance was published (Dream. Invest. Live.Dream Invest Live cover published November 2008). That certainly didn’t help sales, and the recession made life tough for almost everyone. I lost a lot, but gained that and more back again thanks to diversification. AMSC and DNDN stood out and carried me almost all the way back to real retirement. Then, the summer of 2011 hit. AMSC lost a customer worth hundreds of millions in annual revenue – and then discovered that the customer had stolen AMSC’s intellectual property, cancelled their orders, and began competing against AMSC. Dendreon was successful in getting a radical cancer vaccine approved by the FDA, getting it to market, making hundreds of millions on the treatments, saving lives and money – and then being horrendously slammed for missing earnings. MicroVision was due to come to market with an innovative and disruptive display device – and then had their major supplier back off, throwing the company into financial machinations at the very time when money was tight. I called it my Triple Whammy.

Three stocks out of a portfolio of about a dozen positions, all impacted by influences out of their control, at a time when the rest of the economy was sicker than it had been in seventy years.

Ah, but I’m an engineer. I have backup plans.

  • I had optimism in my portfolio because surely a patent theft would be resolved, a shortfall in earnings would be temporary, and a logistical hurdle would be navigated.
  • I had a business that I could grow, or at least try to grow; and had encouraging words about my revenue potential as a consultant. Evidently, my blend of technical, managerial, entrepreneurial, and communication skills is in high demand and short supply. Besides, I also had books and art to sell.
  • I could get a job for the same reasons that my business had great potential.
  • I could sell my house, because I built in equity by making a large downpayment.
  • I also believe in serendipity and the fact that good luck can happen, too.

Four years later, after almost losing my house, my finances are recovering but not to the extent that I can pay all of my bills.

  • My portfolio hasn’t recovered. It doesn’t look like AMSC is going to win a patent fight in China’s courts. DNDN went bankrupt for reasons so bizarre that someone should make a movie about it as commentary on the dysfunctional influences in American finance. MVIS looks like it is finally recovering, and could do something incredibly positive any day, or I could be as wrong about that enthusiasm as I’ve been for the last four years. AMSC is down 93%. DNDN is down and out, a rare occurrence. MVIS is down 64%, the best of the three. As for the rest of my portfolio, the only rising star is GigOptix (GIG), that just had its first profitable quarter, but the market is uncertain about what its new valuation should be.
  • My business has grown! Thank you clients and patrons. Please pass along the testimonials to people who can appreciate and benefit from what I can do for them. Another large project or a few long term small projects are all it would take to make it easier to pay the biggest remaining bill, taxes.
  • Years of trying to get a job have resulted in only one interview for a full-time job. When I showed up, they told me that only wanted to meet someone with such an impressive and unbelievable resume. I was just there for their grins. But, at least they gave me an interview. I continue to try, but maybe there’s just something about being a mid-fifties guy that isn’t appealing.
  • I tried selling my house, but over a year on the market didn’t produce an offer. Thanks to some excellent help, I was able to keep it and refinance at about half the original payment. Now, Zillow tells me the market value is back above what I paid.
  • I continue to believe in serendipity and good luck, and know that they don’t work to schedule.

Four years later, I have a much better appreciation for the lives of many Americans. We have a culture that equates wealth with wisdom, even as we make fun of it. We have a culture that equates poverty with stupidity, even as the judgement is wrapped in advice or abstract compassion. The dysfunctions in our society are most visible when seen from inside the systems that are failed or flawed; and disillusioning to see the consequence of ideologies purposely undermining the systems at the expense of people.

In the last four years, I’ve studied numerous biographies to understand what helps some succeed. Education helps, and doesn’t require college. Perseverance helps, and is free for the cost of time and maybe health. A willingness to take risks is almost a necessity, because rewards usually require some vulnerability. Risk does not guarantee reward. Reward can happen without any risk. Risk relies at least somewhat on luck. People can break themselves free of bad situations by taking on some risk; but the success rate is less than 100%, and those who took on risk and failed are usually in a worse situation than before because they’ve spent scant resources and may have no more.

Key to almost every biography and success story has been at least one element of luck. Listen to the successful person talk, and usually there’s an event or two when they were in the right place, or acted at the right time, or knew the right people. They may not use the word luck, but there are always elements that we can’t control. It is within that lack of control that I find optimism. There is bad luck in the world, but there is good luck in the world, too. There are no guarantees, but what I can do, in addition to everything else I do, is to visit more than one place, be ready to act at almost any time, and be glad for the people I know.

The world is an uncertain place, and even more uncertain as change accelerates. My best response is to work hard, learn a lot, persevere, take some risks, and accept the fact that I am not in complete control of my world. That’s true for all of us, and with the right perspective, that’s powerful.

Posted in Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Small Companies With Big Events – GIG And MVIS

Oh no. Not more about MicroVision. Yep. But not because it is MicroVision. This blog is an extension of my book, Dream. Invest. Live.Dream Invest Live cover, which I knew could only represent what happened up until it was published. The world continues to change, and that’s why I write this blog. MicroVision and GigOptix, however, are doing a fine job of illustrating the vagaries of the investing world. Rather than write about abstractions, I write about these very real case studies that directly affect my life because it is the best way to illustrate what it is like to invest for the long term. This week, the investing world raised a small cheer for GIG, and couldn’t decide what to do with MVIS. So goes the world of Long Term Buy and Hold investing. Good news doesn’t always receive a DNDN kind of response, even when investors think it should.

Long term buy and hold (LTBH) is an investment strategy that some consider anachronistic. Buy a stock that is undervalued. Wait a few years while the company grows and matures. Sell the stock at a higher price to investors who want a growth company or a mature company. Repeat as necessary. It is a style that worked well enough for me that I retired at 38. It was a style that worked well enough that friends encouraged me to write the book. It was a style that stopped working about the time of The Great Recession (and the end of my early retirement). One current question is, “Has the world changed enough to invalidate a strategy that relies on patience measured in years instead of quarters, months, weeks, days, hours, minutes, or seconds?” When computers can control trades with buy and sell cycles measured in micro-seconds, does it make sense to trade on the scale of years?

Of course, I think LTBH is still valid, just like knowing that gusts of winds can upset a sailboat, but it still makes sense to pay attention to the prevailing winds for long voyages.

A critical event for any small company with a new idea is the transition from hope and plans to reality and confirmation. Find a good idea. Develop it well enough to make it marketable. Market it. Hope enough customers buy enough of the product. That first bit of marketing and those first sales represent the key event. After that key event, successful companies expect to have steadily increasing sales, increasing profits, and increasing demand for their products and stock. That critical transition time isn’t one event; it is a series of events. GigOptix and MicroVision are in their own versions of that transition. This week saw good news from both.

GigOptix announced their first profitable quarter that would please accountants. MicroVision announced their best earnings report, which some investors considered impressive enough to suggest profitability within the next year or two. Profitability is a big thing. In previous posts I’ve documented my estimates for GIG and MVIS. For both stocks, a tripling of the stock price wouldn’t surpass my conservative estimate. For the week, GIG was up 39% and MVIS was down 3%. GIG’s action was appreciated, but leaves a lot of potential before it reaches my expectations. MVIS’s action has become too familiar; investors buying the rumor, selling the news, and waiting for the really big announcement, whatever that may be. It could happen. Any tangible mention of Apple and MVIS spikes the stock, or at least the blog traffic.

Conservative estimates of the market suggest planning for a return of about 7%. The daily reality is different. Any day the markets are open, there are usually a few stocks that have gained more than 20%. The highest I’ve witnessed was 640%. The highest that’s happened in my portfolio was 240%. More commonly for small stocks hitting big news is a rise of 140%. With that perspective, +39% and -3% aren’t big news.

I was fortunate. After the beginning of The Great Recession, my portfolio recovered much more quickly than the market because of small stocks reaching critical events. American Superconductor (AMSC) made a smart acquisition that created a half billion dollar revenue stream. Dendreon (DNDN) received FDA approval for a transformative cancer vaccine. Within three months DNDN went from $2.60 to $25.74. The day with the biggest news, DNDN went up 130%. About a year later it hit $54. (Then it went bankrupt, but that’s another long, and yet to be resolved drama.) If you want to vicariously experience such an event, go back to my original, orphaned blog.

Those closest to the news frequently don’t understand why the rest of the crowd isn’t cheering. Familiarity has a value.

GigOptix expects to continue growing, probably at about 20% annual, given their recent performance (which is not a guarantee of future results.) If GIG increases by 39% every week, it will reach my conservative estimate in less than a month. My nominal estimate is based on Present Value of Future Revenues Discounted for Risk (read the book for details), but I haven’t calculated that lately. (Got a value for the 100Ghz eletro-optical switch market with projections?)

MicroVision expects to continue growing, and expects to finally tell us more about what they’ve been working on in secret with at least three, and maybe a half dozen, major customers. From barely avoiding bankruptcy in the last few years, to surviving on development contracts, to finally transitioning to multiple revenue streams based on licensing, royalties, and component sales, MicroVision may have finally cleared the major hurdles and can begin running at full speed. Sony has announced that a MicroVision enabled pico-projector will be released this October. There’s good reason to expect an innovative smartphone from another customer this year. And there are various hints about several other customers who showed prototypes back at the Consumer Electronics Show in January, plenty of time for companies like Celluon to bring a product to market.

MVIS_Catalysts_072915

MicroVision’s, MVIS’ problem probably comes from the lack of quantifiable evidence of the potential new business. The company did announce one of its best earnings reports, but the revenues only suggested eventual cash-flow positive, and pointed to eventual profitability. Without substantive evidence, risk-averse investors will walk away and watch from a distance. The best earnings report ever, wasn’t sufficient for them.

Since The Great Recession, investors are more risk-averse, wealthy investors are more likely to hedge their investments, and computers are more likely to take advantage of sporadic trading patterns. That may be why small stocks that were dominated by individual investors no longer act the way they did. Or, it could just be that I need yet more patience as good news from small companies arrives under the fog created by major news items from Greece and China.

My best response as an individual investor is to follow logic and math, and to trust myself, and to question myself. The situation is improving. My portfolio only reflects a small portion of the potential, which may only be a temporary delay. Yes, I’ll continue to write about GIG, MVIS, AMSC, and others, because the reality of investing is best told in long form, not in pithy catch-phrases. If you want to witness a bit of investing reality, continue staying tuned, and I’ll endeavour to continue chronicling the journey. (And, if you want the back story, go buy my book. It has data and details, and hopefully humor.)

Posted in Uncategorized | Tagged , , , , , , , , , , , , , , | Leave a comment