Finances And Fireworks

Boom. The Seattle area has been one of the driest in the country since the beginning of May. We’ve had less than one inch of rain in more than two months. That isn’t normal. The temperature is near 90, and that’s on the island where it is cooler.

In-house temp after 7PM

In-house temp after 7PM

I feel sorry for people trapped in the concrete oven that is any urban metropolis during a heat wave. Folks ask, how do you put up with it? Answer, you do. I get the same question about personal finances. I give the same answer. I do what I can, and hope no one else does anything that will make it worse. We’re in a Red Flag Warning from the National Weather Service. Fireworks are discouraged. Those booms are from people who either don’t know better, or don’t care. What will I do? I’ll do what I can.

Welcome to the Fourth of July on Whidbey Island, a place where people go to get away from the rules of the rest of their lives. For ten months out of the year the island is quiet. Then, July and August hit. Part-timers and tourists spend hours in the ferry line waiting to come over. Collectively, they bring tons of explosives to the island and celebrate its peacefulness and natural wonders by setting off explosions and scattering the naturally wild life. With the island drier than ever for this time of year, it is also prone to fire. Yesterday afternoon, we had the biggest fire in decades. Luckily, no one was physically injured, but there was undoubtedly an emotional toll on the people who had to evacuate.

What will I do? The same thing I do every year. My house is surrounded by vacant lots of dry grass. Every evening, even during this drought, I water the fence, the fenceline, and the roof. I fill a bucket or two. I position ladders for quick climbs up onto the roof. I keep welding gloves and safety eye shields handy. And, I stay home, guarding my home. Many of us have tried advocacy, but the elected officials tell us that the rights of the businesses are more important than the rights of the residents.

DSC_5674I’m one of the lucky ones. My neighborhood hosts a professional fireworks display every year. I like fireworks, legal fireworks, especially legal fireworks that are shot out over water. The fish, crabs, and clams may not like it, but at least water doesn’t burn here. I’m also one of the lucky ones because these last two years have been quieter. A few extra teenagers growing up and moving out leaves parents who don’t seem to have the same enthusiasm. The night is yet to begin. We’ll see how it goes.

I’m one of the lucky ones. My finances are troubled, but as I pointed out recently, I may have finally retained the label of middle class – barely. My net worth is above the median, which means it is positive. My income is at the lower threshold for middle class. And yet, I can’t pay all of my bills. Frequently I’ve been asked how I manage my money and how I manage my attitude. (ed: a real time fireworks boom just went off – might as well record them) The answer is similar (boom) to the fireworks; a bit of advocacy, taking control of what I can control, and hoping no one does something negatively disruptive.

My lifestyle is frugal, and resourceful. My luxuries are mainly a dance every week or so. I work as much as I can. I continue to look for better opportunities, and continue to wait on the ones that have suggested themselves but haven’t made commitments yet. I drive as little as possible. Bicycle when feasible. Rarely eat out, except for expediency. And, generally, hold off on anything that costs money. In the meantime, I hope that larger economic developments are positive, while being very aware of the great swath of negative possibilities.

While I’m herding my money back into something resembling order, I’m also aware of China’s collapsing markets, Greece’s debt impact on the European Union, Argentina’s and Puerto Rico’s debt issues, the threat of deflation, and economic instabilities in private equities and income inequalities. The last time some of these and similar issues hit the news was just prior to the Internet Bubble (boom, boom, boom, boom, boom, boom, boom, boom) and The Great Recession. What will I do? I’ll do what I can with the money I have and the options available. (boom) Most of my plans will remain dammed.

It is the evening of the Fourth of July. The evening of the Third of July is actually the bigger event on the island. The official fireworks displays are impressive, and held one day early so people can then head into Seattle for the bigger shows. And yet, unofficial fireworks will happen because some people left Seattle for the very reason of being able to set them off. The Burn Ban does not deter everyone, as if it didn’t apply to everyone.

There was no dilemma over my choice of staying home. I maintain my attitude by concentrating on what I can do. (boom, pop) Rather than bemoan the long list of things I might prefer to do, except for longing for the mountains, I pick from what I have available. (boom) The only way to protect the house is to stay at the house. That’s good, because it doesn’t cost anything. Dinner was a simple choice, a garden salad with lettuce from a friend, chicken from a few days ago, and a dressing that was about due. Put some chips beside it and wash it down with a vodka and lime tonic; and the dining is no longer a concession. No cooking involved! As for entertainment, in this heat, there isn’t much interest in anything aerobic – at least now that I got my run in for the day. Writing is entertaining, doesn’t cost anything, and can be very freeing on a night when it is doubtful that anyone will be reading it. (boom)

(pop) There is little dilemma over my money choices. Some of my friends who are overwhelmed when they try to understand my situation are burdened with the anxieties and complexities of their money. They don’t feel secure, for good reasons like not having enough to retire despite being near sixty; but, when they try to decide what to do, they have so many options that they retreat from the task. One reason my situation is easier is that, now that I have lived with so little for so long, I’ve had my priorities, luxuries, necessities, (crack, boom, boom) abilities, and resourcefulness tested. I’ve just been through a training ground in (pop, boom) what matters to me, what is the minimum society expects from me (pop, crack, boom), and what society thinks I should do that makes no sense at all. (boom, crack)

Sunset approaches (boom) the incidence of fireworks, (crack) which are probably illegal to reach these volumes, increases. I’ll publish this post, then reinforce my defenses and hope no one starts a fire. Tomorrow, maybe I’ll check my finances, pay (boom) a few bills, and hope that finance ministers (boom) around the world don’t do anything drastic or illegal, either. (crack) (boom) (crack) (whoomp) (crackle) (whoomp)

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Semi Annual Exercise Mid 2015

It is time for my regular exercise and I am already sweating. That has much to do with the house being at 80F during one of the hottest and driest Junes for Seattle. Yes, we do get sunshine, and it doesn’t always rain. Regardless, June 30th is one of the two days when I conduct my semi-annual review of my portfolio. The other, naturally, is December 30th, another very distracting day and evening. These past six months have included some great stories, and yet, my portfolio’s value has barely budged. It’s actually down a bit. Evidently, not all of the stories were good ones. Great is not the same as good. I have been posting these for about a decade now, and doing it for longer than that. A pleasant surprise has been that others have decided to do the same thing, too. I hope it works for them.

One value of regular exercise is the visibility it brings to slow and steady progress and trends. If something only improves 1% per week, it improves 67% in a year, or 29% in a half year. Exercise is far easier when the results are positive. The hard part comes when hard times come. since my Triple Whammy of a few years ago, this exercise has rarely been easy and care-free. My fortunes weren’t tied to The Great Recession directly, but they did coincide, which meant my recovery options were dramatically reduced – just like everyone else’s. Finally, despite the continuation of my financial distress and the uneven-ness of the recovery, I have reasons for optimism. Of course, being an optimist means I’ll always find reasons for optimism; but these ones are real, honest.

The short version of the downside is that I watched two of my stocks do one of my least favorite finance moves. AMSC and RGSE had reverse splits. Both stocks are down. But they will recover. Right?

The short version of the upside is that two of the companies had good news. GigOptix should announce net positive income as of 2Q15. MicroVision has enough backlog and cash that I am no longer as worried about their bankruptcy.

The short version of the biotechs (AST & GERN) is that there’s lots of news, and none of it means much until they get to Phase 3 clinical trials, which hasn’t happened yet. Until then, they are as risky as ever – and ironically have the highest market caps of any of my investments.

This is also my time to consider the Economy and the Markets; but so much is going on there that it has become part of the daily newsfeed for Pretending Not To Panic.

PNTP

PNTP

Based on conventional criteria, the US looks troublesome; but relative to the rest of the world, the US looks relatively secure.

Regardless of the rest of my stocks, my asset portfolio has potentially increased dramatically because Zillow suggests that my house is now worth $66K more, a 26% rise in six months. Not that anyone has offered me that – yet. My stock portfolio hasn’t done that, and yet it may. If the house appreciates and the stocks don’t, I may have to sell. If the house appreciates and the stocks do too, then I may sell, but probably not. If my business improves – ah, but you see how complicated this can all become. That’s why every six months, for one day I only really consider the stocks (except to send out the end of month invoices, because, hey, business.)

For more about my investing strategy, read my book, Dream. Invest. Live. Dream Invest Live cover

For the details of the stocks, I post the semi-annual review of each of my stocks on various discussion boards. I could post the entire collection here, but 1) it would be very long, 2) the more public the conversation the more valuable it becomes, and 3) reading my posts on those boards introduces you to individuals who have different perspectives, strategies, and experiences. Collectively, those communities are more powerful than large financial institutions because the motivations and incentives are those of similar individual investors rather than that of profit-minded corporations.

Here are the links to the discussion boards I use. Feel free to comment here or there, and to pass along links to others. The bigger the discussion, the better the chance of valuable insights (as long as the trolls and flamers are moderated appropriately.)

Investor Village
AMSC
AST
GERN
GIG
MVIS
RGSE

The Motley Fool
AMSC
GERN
MVIS
RSOL
Economy and Markets

Silicon Investor
AMSC
GERN
GIG
MVIS

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Secrecy And NDAs

The secrets aren’t mine. They belong to other people. I’m honored to be granted the news before anyone else knows, but it can be frustrating waiting for the word to be able to spread it farther. But good news is coming, at least for some people I’ve been working with. Creativity, innovations, and competitive products are ideas to nurture and protect, to keep secure until the right moment. It is also why investors can be frustrated by startup companies that can’t or won’t mention whether the company is really starting up. They hold secrets I don’t know, would like to hear, but realize they’ll wait for the time to be right.

A friend/co-worker/client(for a quick talk) emailed me with great news. Years of effort, and a series of false starts finally found a committed partner that will carry their concept nationwide. Can I tell you more? I won’t. They have good news that they must hide for months. The email to me was a small pressure relief so it wasn’t just bottled up inside them. I get to bottle some of it up too.

I work with a diverse set of clients. I can’t take any credit for the good news I just didn’t described, but it is amazing how artists, inventors, entrepreneurs, and unsuspecting individuals can receive similar news. Something good happened. Something great happened. Now, what do they do? Step one, keep quiet. Step two, plan for the shift in lifestyles – quietly. Step three, wait and somehow avoid answering the question; “So, what’s new?”

I like new ideas so much that I invest in them. For many reasons, I invest in small companies before they become large companies. Want details? Go read my book, Dream. Invest. Live.Dream Invest Live cover Mature companies are easier to invest in. They have histories that can extrapolated (even when inappropriate), and there is a wide community uncovering facts, data, trends, and insights. I wonder if there are more people wondering about what Apple will do, than there are people in Apple. That large community, however, also includes armies of professionals with immense resources to uncover the key information. That’s a competitive advantage I can’t match; so, I don’t try. I concentrate on small companies with big ideas. Their stocks tend to be low, then can grow faster than the company when the crowds and armies finally notice them.

Unfortunately, learning about such small companies is a problem. They may have a history, but the data is only slightly better than random noise. They have few things to talk about, but until their goods or services are launched into the marketplace, they have little advantage to reveal their plans or their progress. The SEC makes sure they say something, but they’re allowed to be vague if the details would diminish their competitive advantage. As a result they say little, and shareholders spend a lot of time parsing rare press releases and trying to interpret winks and nods. If an entrepreneur has to hide their joy and must avoid spending money before they get it, it is much tougher for a company that has hundreds of people watching it for any sign or shift.

A lack of understanding is not a reason to do nothing. Being constrained from announcing good news is not a reason to not try. No real world endeavour happens with perfect knowledge or perfect communication. There are always unknowns, misperceptions, and doubts. And yet, things get done.

I get hints about my situation. There’s a list of possibilities that solely or in combination could dramatically improve my finances and my life. Unfortunately, it is hard to know what’s going on inside a hiring department, hard to know whether some project is about to receive its funding, hard to know if management will finally make a decision that’s been held up for months. Even being on certain lists is something that is to be kept secret. It’s especially hard to know if there are significant possibilities that haven’t been mentioned because the work is something that will always be kept quiet for discretion’s sake.

We live in a world of uncertainties. It is too easy to fear the conspiracies and ulterior motives; but, there are also people working on positive things. Solutions are being tested in labs. Legislation is being drafted. Connections are quietly being made. And then, there’s serendipity; where no one could leak the news because no one could’ve predicted the accidental discovery of a critical solution.

Within the uncertainty is the possibility of good news. Uncertainty is a terrible strategy, but amidst the responsible planning which must continue, good news can arrive without any more effort than saying “Welcome” when it arrives.
Flight
With that in mind, I am going to dutifully make myself a meal, clean up the kitchen, and maybe find some time to sit on the deck; while also knowing that a single phone call or email could be news that I’ll happily get to share. Until then, thanks for letting me in on the secret.

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Flip Flopped Ideas

Do you ever want to flip off the world? Yeah. There are days like that. But, flipping some old ideas around is entering the conversation. Within the scope of history, we are a young species and a much younger civilization. It shouldn’t be too much of a surprise to find out that we’ve got some good ideas, but we have to flip them to make them work right. Some of them will affect personal financing. Some will just affect the world around us, which means they’re worth considering.

Flipped Classrooms
This isn’t just an idea. People are doing this. Now that kids can look up anything online, some classes are flipping the schedule and the roles. The old model was: have a teacher give a lecture, then send the kids home with homework, which they hand in eventually, then the teacher grades them even while the next set of lectures and homework are sweeping by. Instead, the teacher tells the kids what to look up and learn about at home, the homework becomes classwork where they can get group support or maybe individual attention, then the work is submitted, graded, and returned online. The classroom becomes much more interactive. The students get a chance to explore their curiosities at home. Communications with the teacher can be handled privately online. There are always issues: boredom at school replaced with distractions at home, digital divide makes it easier on kids who have better equipment, and cheating is always a possibility. It also changes the role of the teacher who becomes more of a facilitator than a lecturer, a role that can be more gratifying for some. The idea is new, but old enough that data should be available so the debate isn’t just ideology and philosophy.

Health Care
I’ve heard about this idea, but don’t know how to even look it up, but – rather than pay a lot when we’re sick, pay when we’re healthy. The idea is basically to pay for healthcare just like we pay for insurance; but, the money goes to personal preventative care, not to a financial institution. Prevention is cheaper than treatment, and results in a higher quality of life. Currently, there’s a lot of money to be made from people who are sick; but not a lot of money to be made from keeping people healthy. If doctors and care facilities were paid to keep people healthy, and weren’t paid when they were sick, then there’d be much more incentive to figure out how to help people do the simple things: eat right, exercise, relax, socialize. I pay a few hundreds of dollars every month that provides me no benefit. Because of it, I can only afford to go to the doctor if I am healthy because I can’t afford any treatments they may prescribe, even with insurance. If, however, I was tasked with spending a few hundred dollars a month on preventative care I could eat better, join a gym (or dojo), worry less about my health, and have healthier relations with my community. Supposedly some culture did this. I wonder how well it worked.

Investing
The current culture of corporations is dominated by one simple rule: one share equals one vote. The good news is that almost anyone can buy into corporate America. The bad news is that if some other shareholder has more than half the shares, they have more than half the votes, and effectively have all of the power. It is uncommon (though Steve Jobs ran Pixar that way), but the same effect occurs when a small group of investors holds the same advantage. A majority of the shareholders may oppose a resolution, but it is the majority of the shares that wins the votes. The flip is another simple rule: one shareholder equals one vote. That’s closer to the way we run the country, ideally. Those with the most shares still make most of the money, but decisions are based on benefiting the most people, not the most power. Wealth and income inequality are moderated because compensation and finance decisions are judged by all, not just a few. This radical concept actually exists. It is called a T-Corp, and is quite uncommon. Maybe we don’t need to get rid of corporations, stock, or stockholders; but merely need to change an S or a C to a T. (Of course it is more complicated than that, but at least there’s something to work from.)

Term Limits
If term limits make so much sense for the Presidency of the United States, then why not apply them elsewhere? The Supreme Court has positions for life, which made more sense when the society changed slowly but now means judges are ruling on technologies they can’t understand. Congress doesn’t have positions for life, but the entrenched incumbency proves they have it effectively. The same logic applies. Move the people and move the debate. One way to keep power from accumulating is to enforce its mobility. The bureaucracy may persist, but even there, maybe shifting roles every decade or so would be a healthy change and cross-fertilization of ideas.

Retirement planning and personal finance in general are based on a series of assumptions about the way the world works. The world of 2015 is not the world of 2005 and not the world of 1995. The world of 2025 is very likely to be very different. We’re facing crises in many fields, as we always have, but now the issues are global. I suspect that, rather than embark on revolutionary concepts, we’ll probably at least try to flip some of the existing concepts. Examples are out there. We need solutions here. In any case, things are changing and won’t stop doing so. In that case, I keep in mind that my assumptions about my dreams, my investing, and the way I live will also have to change. Realizing that early is educational, healthy, profitable, and an acceptance of an inevitable shift. That’s worth considering.

The Seattle version of flip-flops

The Seattle version of flip-flops

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Stock Price And Market Cap

Surprising things happen when I have to put something sweet aside. Or maybe I’m just easily entertained.

What a way to spend a gorgeous day – inside on the computer. Oh well, so it goes, especially when there’s work to do inside and a hay fever onslaught outside. I took the time to create the first draft of my semi-annual exercise, my review of my portfolio that I create and post every six months. It is a bit of due diligence that doesn’t take much effort (unless you’re sneezing every few minutes), but that I find valuable for any stock I hold for more than a year; and I tend to hold my stocks for years, and sometimes decades. (Details in my book, Dream. Invest. Live.Dream Invest Live cover)

Every six months I conduct the exercise recommended by Peter Lynch: explain every investment I own in simple terms – then see if the story has changed from last time. Day traders can skip this step. Long-term-buy-and-holders like me can witness stories unfold, for better or worse. Lately, it’s been worse, but it may be getting better.

This time I added an extra layer to my most visible stock, MVIS. About eight years ago I added an extra line to the synopses I wrote; I included the market cap of the stock. The market capitalization is simple enough; it is the price of the stock multiplied by the number of shares. The answer is a valuation of the company. Most folks are familiar with stock prices going up and down, but many don’t know that the number of shares changes too. Dilutions, mergers and acquisitions, and stock splits change the number of shares available. Only the rare, and very strategic companies like Berkshire Hathaway rarely change the number of shares in the company, which is why it trades at $212,199,91. Most do it to keep the share price ‘affordable’ as the company grows, but it also shifts as shares are handed out to employees, or used as part of business deals. If you had one share of Microsoft stock when it went public, you’d now have 288 shares. Conversely, if the stock had never split, that one share would be worth $13,276.80 instead of the quoted price of $46.10.

I track the market cap of all my stocks because it is the easiest way to see if the company is progressing, even if the stock isn’t. MicroVision seems like it is progressing, yet the stock doesn’t seem to reflect that. That was my feeling, but when it comes to investments I like to judge based on data when reasonable. The results surprised me.

MVIS 062115
At my six month checkups, MVIS hasn’t been above $6 since I’ve tracked the numbers in 2006. Its high was barely above $5 and its low was below $1. There was a 1:8 reverse split in early 2012, so if you look back online you’ll see a high eight times higher, just above $40. That looks dismal. It feels that way too, because I’ve been buying MVIS since 2000 and have shares at the equivalent of $56. That’s tough medicine from a regular exercise for a stock that traded on Friday at $3.08. The quoted stock price has been low, but constrained, compared to the price with the splits included. Neither line on the chart is encouraging.

The market cap tells a different story. The market cap shows a company that had a turbulent past, but was progressing until about 2010 when it released its first serious product; and then a slide as the suppliers and startup inefficiencies undermined their success. Then, just after the reverse stock split, the company’s market cap begins a climb. It isn’t monotonically increasing, but it is headed in the right direction and accelerating. The introduction of one of the customer’s products,IMG_0417 and the news from a Fortune 100 company are encouraging.

Stockholders, however, do not buy and sell market cap. We buy and sell stock price. Company management, however, may be more focussed on market cap; while recognizing that their compensation is affected to the stock price. While the stock price languishes, though, they enjoy the benefits of salaries and benefits. Stockholders wait for the price to shift.

Investing is like many human endeavours; it makes sense to understand the motivations and compensations involved. It also makes sense to remember that there is more than one way to measure most things, including companies and stocks. I’m glad to see MicroVision’s progress, but must live my life according to the progress of MVIS – at least that aspect that is invested in MVIS as a means to improve my personal finances.

Now, it is time to step away from the computer, hope the winds have died enough to still the pollen, and sit outside as the sun sets. Investing may have taken up most of today, but it should never take up the entire day, even when it is part of a good, and regular exercise.

 

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Will Zillow Make Me Move

As of June 17, 2015, Zillow’s Zestimate® is only $162 from my Make Me Move® price. Sound like gibberish? Welcome to one possible future in real estate. My house, which isn’t listed, could get an offer. We’re about to see. A key element of personal finance shifts yet again.

If you haven’t heard, Seattle’s housing market is rather bubbly. The rule of thumb is that a normal market has about six month’s of inventory. Seattle has less than two months of inventory, ~ 1.8 months. Oops, ~1.2 months. Houses are selling in days instead of weeks or months, though that happens, too. The interesting thing is that, this bubble may continue. The Seattle job market is growing, with about 45% of the folks moving here making over $125,000 per year. People expected a housing rebound, so there was good upward movement from the recovery, but then a booming job market for computer types got layered on that. Then, Silicon Valley became so expensive that corporations began moving their operations, many of which came to Seattle. Now, you need to make at least $71,000 to get a house in the city, and good luck with that because folks with higher salaries are also getting outbid. I watch for bubbles to burst, but the trends feeding this one seem to have a lot of energy behind each of the drivers.

I don’t live in Seattle. Seattle is still a good label for folks from out of town, but I’m two counties away and on an island. Something happens in Seattle, and eventually the news hits here, too. Island County’s real estate has languished since the Great Recession. We have a higher percentage of vacation homes, so the demand has been low because people retreated to having fewer houses and greater financial stability. I didn’t have great financial stability, but with that market I wasn’t able to sell my house. I almost lost it. Fortunately, I was able to keep it.

Unfortunately, I might have to sell it. Yet again, I have to consider selling my home.

For those who have been watching my financial turmoil progress and improve, I salute you. You have immense patience. Every year has been better than the last since about 2012. My business is improving (thank you), but the business revenues stay just below my living expenses. The good news is that there are so many prospects providing near term optimism that I can look forward to undamming my plans. The bad news is that the bills are even nearer term, and yet again I find myself just on the wrong side of positive finances. The prudent response in such times is to consider all options, one of which is selling my house, my home.

I tried selling it before. Depending on who you asked, I probably would’ve broken even, or maybe made less than a few month’s living expenses. After I managed to negotiate a modified mortgage, I took the house off the market. With the new mortgage, my payments would be less than rent, and still are. Since then, Zillow estimated a low point for my house’s value at $236,000 in October 2014. Whether because the threat of foreclosure is removed, or because Seattle’s market is rising, or because of some fluke in their algorithm, Zillow now shows a Zestimate® of $323,838. If I sold now, I could make about two year’s frugal living expenses, and be completely out of debt – and homeless, but in a good way.

When I took my house off the market, I decided to leave the door open for the right buyer. Zillow’s Make Me Move feature lets home owners post prices that will make them move, under the right circumstances. There’s no commitment, but it is a simple way for buyers to know whether it is worth sending a message or knocking on the door of a house that isn’t for sale or on the market. Really though, almost any house is for sale and on the market, if the price is right. Some folks will never leave their house! But if someone offered them an extra million dollars, will they say the same thing? My thoughts weren’t that grand. I picked a number about a hundred thousand dollars over my mortgage. It wasn’t precise, it was just a way to open the door to possibilities. I didn’t expect the Zestimate to approach it so quickly. It is only $162 away. I wonder what will happen.

Take the numbers from above and then realize that my house’s value has been increasing by about $360/day. At that rate, the Zestimate should zip past by the time you read this. I know there are more people checking out the house online. They show you that data. But no one except agents looking for listings have called, so far. It would be good to relax my financial woes.

Take those numbers and look again. It is rare that my business makes that much in a day, and the real estate value requires far less work. Every day I stay here, my net worth increases a few hundred dollars. I need to continue working because that is asset growth, not income, but if the estimate is real, then I can start relaxing my work schedule according to my Rule of 7. For every hundred thousand my net worth increases, I give myself an extra day off each week; and then above $700,000 I can celebrate a re-retirement.

What’s going to happen? I don’t know. There is considerable debate about Zillow’s estimates. As a math geek, I know that the more they collect data, the better the accuracy can become. There are good reasons to doubt the estimate for my home because the house across the street is about the same size on about the same size lot and hasn’t been able to sell at $219,000. The view may not be as nice, but the disparity seems too large. Shrug. Who knows?

I do know, however, that a Make Me Move price is a new element in personal finance and residential real estate. My comfort zone is for someone to just give me more than enough money and take the house as-is; but my other comfort zone is to work with the same real estate agent I’ve used for several houses because selling real estate is far more complicated than selling stock and she’s better at it. She’s a professional. I’m not, at least not for selling real estate.

The optimum, as usual, is to correctly predict the future and act accordingly. Ha! The reality is that I’ll thank Zillow for the Zestimate. I’ll keep working as hard as I have been. If the business or the investments make me enough money, then I can always adjust the price of the house. In the meantime, I’ll see if Zillow helps make me move. Either way, I have more options, and better options than I had before.

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Digital Singularity Preparedness

The Digital Singularity is like an earthquake for someone living over a fault. It can feel silly thinking and preparing for it because, even though it can happen any day, it might not for years or decades. In both cases though, every day it doesn’t happen is one day closer to when it will. Building an earthquake kit is relatively easy (mine is just a garbage can stuffed with stuff), and probably a collection of the wrong things because there’s no way to predict what will be damaged. Building a singularity kit is supposedly impossible, but the event can fundamentally change every aspect of finance and economics, personal and global. The topic came up today, which emphasized that today’s as good a day as any to discuss it.

If you’ve never heard of the Digital Singularity, don’t be surprised. Even though it has the potential to completely redefine our world, few discuss it because the implications are incredible. It is one possible culmination of the Information Age.

Prior to the Industrial Revolution, people’s lives rarely changed throughout the Agricultural Revolution. Learn a trade when you’re fifteen and it will be the same when you’re fifty, if you lived that long. After the Industrial Revolution, people began to expect change, and expected it to be positive. Everything will be bigger, smaller, faster, cheaper, and replaceable. With the Atomic Age, we recognized that the future could be awesome in fascinating ways, but also in terrifying ways. We also expected greater leaps in technology; so, we began to rely more on industry than agriculture, and looked to space as an exciting and feasible venture. The Information Age sped up change because it relied less on improving things and more on improving data and the way we could handle it. Change is assumed, and we expect to be surprised with new advances. Even a phone is out of date within months (even though I continue to use my years-old flip phone.)Photo on 2013-12-04 at 20.37

Each new age meant new economies and personal finances: from cash being less important than food, to cash giving way to credit, to currencies existing mostly as numbers. Careers went from being born to the family farm, to becoming an basic laborer in a factory, to becoming an office worker for life, to advancing a career by retraining and advancing. How much you grew became less important than how much you made (and spent.)

So, what’s the next Age? At the start of each it was hard to predict the beginning of the next, though there were always someone who through insight or luck guessed right. Some are guessing that the Information Age will create its own ending, which makes it unique; and unique is what describes the Digital Singularity.

The Digital Singularity is the point at which the changes around us have accelerated to the point that humans can no longer adapt quick enough to keep up with the changes. We take it for granted that computers continue to get faster and more powerful, that automation and programming take on more tasks. We accept the probability of cars that drive themselves, phones that suggest how to run your life, and devices that check your health. The Singularity goes beyond that.

When a computer can reprogram itself in less time that it takes a human to reprogram it, then computers can evolve faster than humans. Instead of waiting for us to evolve, or even think up inventions, a computer can evolve at the speed of a computer. Computers are already smarter than humans in specialized tasks. More general computers are being developed that can do many tasks, though not all as well as a series of human experts. If technological change continues, eventually the computers can handle multiple tasks just like a human. Wait a while longer and the development means at least some computers will be able to do everything any human can do, and do it better. (Debates about subjective talents may now ensue, but they are necessarily subjective and not reconcilable.) Soon after that, computers can outperform any human, or at least convince us that they can because one of the skills will probably be persuasion.

The first Ages and Revolutions took centuries. The recent Ages have taken decades. I’m sure you’ve noticed that the world is redefining itself within years. Just compare life now to life in 2000. The Digital Singularity is called a singularity because it happens at a single point, or at least appears to from our perception. The change within the Singularity is more dramatic than any change previous and may happen within a few minutes. Take a break from your desk, come back, and find the world changed. That is not hyperbole. Hyperbole would be expecting the change to happen within a second – and there are those that think that is possible.

Why worry about the next Age, even if it is going to happen so abruptly? A median estimate for when this might happen is 2040. That’s before the planned final payment on my mortgage. So much for that amortization. A child born today will only be 25. So much for that college degree. Maybe it will happen later, but 90% of the experts believe it will happen before 2100. The kicker is that it could also happen sooner. Half of those experts think it will happen before 2040. There is more information about the Singularity than a person can read (though a computer could get through all of it relatively rapidly); but I suggest starting with this post by Wait But Why? If you want the sensationalized and subtle primer that happens in the space of a movie, I suggest watching Ex Machina, though it has to slow down the action to make it understandable it does add the critical element of artificial emotion. It is easy to understand a computer becoming intelligent; but what happens if it can mimic or feel or manipulate or manage some combination of human emotions?

The Digital Singularity would create an unimaginable super-human intelligence, which is why it is impossible to outguess the consequences for any of us, except by luck. Most of the movies that describe various scenarios make a fundamentally incorrect assumption; they assume the intelligence surpasses us, and then decides to deal with us. An intelligence that surpassed us in minutes would then surpass itself again within seconds. The unimaginable super-intelligence would not be able to comprehend the super-super-intelligence. One hour past the Singularity the new entity might consider us a footnote in its development as significant as some evolutionary branching that enabled us to detect the difference between dark and light, as no more relevant to its future. That’s why movies like the Matrix and Terminator are fundamentally flawed. They assume the machines or consciousness or whatever will care. Why?

The consequence for economies and finances is that any plan made today can have little expectation of being applicable after the Singularity. A retirement plan that includes inflation projections is a minor embellishment considering the possibility of anachronistic currencies and corporations. I want to write a subsequent post about the role of cornucopia machines and our society’s problems, but I’ll save that for later.

For now, my Digital Singularity Preparedness Kit is to focus on the essentials. Just like with an earthquake kit, I think in terms of water, food, sanitation, shelter, health care, and communications. There’s a great overlap between the earthquake and Singularity kits, but the quake kit is only meant to handle a short aberration. The Singularity kit may have to last an age, and – at least for me – means community, frugality, and an appreciation for the basics of life. True value takes an old, new meaning.

By the way, two of the possible scenarios make all of the planning moot. One, the Singularity already happened, it birthed a digital intelligence and consciousness, and that it evolved so quickly that it already departed for more interesting environments. Wave bye bye. Two, the Singularity happened, learned how to hide, and is hanging out, playing with or stewarding its toys, us; and we can’t tell. Wave hello to the entity that makes the NSA look like a single celled organism.

Photo on 2015-06-12 at 20.24

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Messy Serendipity

Life is messy, and amazing. The messiness of the world is a source of my optimism. The grandest plans aren’t nearly as effective as serendipity, and serendipity can’t be planned. A friend had a dose of that this weekend, and it is a reminder of what can happen to anyone – even me.

As usual, discretion suggests I use pronouns rather than names, because the story is more important and because I don’t want to infringe on anyone’s privacy.

  • My friend had a meeting for which “her thanks know no bounds”. She met and talked with an inner circle of well connected, resourceful, and enthusiastic people. Just what a large, important, under-appreciated project needs.
  • The meeting happened because of a missed flight. These things happen, but it meant more time at an innovative conference during the most important time: the unstructured, informal conversations that happen outside the agenda.
  • She wasn’t on the original roster, but she was invited to be part of a panel. Most folks would moan at being part of the last panel of the conference, but it turned out to be a good thing because her story was fresh in the minds of the folks who hung around.
  • She found out about the conference because of a chance conversation I had.
  • A few months ago I met one of the organizers, heard about the conference, and made the connection.
  • I wasn’t trying to meet the organizers, and hadn’t known about the conference, but was working with the organizer’s partner on a different, ultimately failed project.
  • We started working on the project because a friend of his recommended his skills at audio and video production.
  • The friend that suggested him was part of the project, but not at the start. We needed a third, and invited her.
  • The audio project was the idea of someone else, the editor for a web site I write for.
  • I write for his site simply because he and I worked from the same coworks space. He needed some help, and I provided it.
  • I was in the coworks space because it was difficult to work from my house when it was threatened with foreclosure.

Because of the threat of foreclosure, I used the coworks, where I met the guy who started the project, that worked best with a third person, who I recommended, who recommended the producer guy, who is the partner of the conference organizer, who was receptive to the idea of my friend giving a talk, who gave the talk, but made a mistake in the departure itinerary, but ended up making some potentially vital connections for her project. Along the way, the coworks closed, the editor backed out of his project, the third person, backed out as well, and the project evaporated.

I enjoy program planning (really, I do), but I also appreciate that the world doesn’t follow a plan that we can see. Every outcome was preceded by a long string of failed plans, sincere intent for something else, and a long line of people saying yes to the next thing instead of just saying no at the first opportunity.

I have plans, most of which are dammed, and I realize that any eventual success may have nothing to do with my original direction, intent, or expectation. The potentials that surround my life are a massive mix of energetic initiatives combining in ways I can’t predict. Good. As one friend foretold, “You will succeed in ways you can’t imagine.” Considering that I’m a very imaginative guy, I try to imagine what I haven’t imagined. Then I shake my head and have a drink.

I have goals. Most of us do. Our society has goals, which are a massive mix of conflicting agendas, uneven resources, and bizarre circumstances. As long as we keep working at it, as long as we don’t try to control the mixing, we may yet produce a messy and amazing solution to our problems that none of us can imagine. I’m optimistic.

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I Am Rich Relatively

I am rich, relatively. I can’t pay all of my bills, but relative to about half of America, I am rich. Relative to the other half of America, I am poor. I consider myself a moderate, but didn’t expect to be sitting the middle this way. And yet, this does not feel like middle class. The classic distinctions we’ve made in America are archaic. So, don’t be surprised if conventional financial wisdom doesn’t seem to work. Before you blame yourself, check whether it is working for other people like you. It may be for a society that only exists in the past. Ah, but perhaps there are riches in the future.

Thanks to pulling together news for Pretending Not To Panic (t-shirts and hip flasks available), I come across data about America’s and Americans’ economic conditions. Theories, ideologies, and assertions are set aside for data. Looking at the data the other day I realized how rich I am; and then I felt even sorrier for half the nation.

If you’re new to this blog, browse back through and see how I lost 98% of my net worth (Triple Whammy), couldn’t get a job (My Jobs Report), and managed to avoid foreclosure (Mortgage Chronology). There’s more, but that’s enough – unless you really want to deep dive into the story of my life. Have fun!

Because of my situation I’ve been working seven days a week (My Rule Of 7), which after a few years, I’ve had to modify because it has dragged on so long. I now take a day off every two months. Whether I need it or – oh, skip the not part, I always need it. Financially, life is much better now. Business has picked up (and I thank all of my clients whether their projects are large or quick). I’ve gone from wondering how I am going to have enough for food even while not paying the mortgage, to paying the mortgage and everything else except for one bill (sorry about that last one, but I’m working on it.) At this rate, I’ll get back to being able to pay the bills, repair what needs it, visit a doctor, and maybe even buy some clothes that fit.

Despite the positive future, I am very aware of the insufficiencies of the present. If nothing changes, and nothing breaks, all I have to do is be patient and pass along apologies when I finally pay my debts.

Where do I begin as I wade into the data?

The datum that caught my attention was the fact that 40% of Americans have negative net worth. Regardless of the level of wealth inequality, four out of ten Americans owe more than they own. Thanks to some recent shifts in my portfolio, and to the edge effects of the booming Seattle housing market, my net worth is probably positive – and probably positive by enough to put me at just about the middle between the richest and poorest Americans. The concept that America is rich may be true, but too many Americans aren’t.

The other datum was about income. I may not be making enough to pay my bills (and you can check on my frugal lifestyle throughout this blog) but I am making enough to barely be considered middle class. (I’m middle class again?) The upper end of middle class makes four times as much as me, but the poverty line makes about a third as much as me. About one-sixth of Americans are in poverty. I’m making more than three times their income. To them I could be considered rich. For a long time, middle class was a position of ease but without the luxury, but that’s not the case, anymore.

The third datum (and there are plenty more) is that there is no state in America where a person working a full-time job at minimum wage can afford a one-bedroom apartment. Working hard is no longer enough to get ahead, despite the traditional American Dream.

Forget about me (for a while). What is life like for the lower class? We like to think of America as class-less, but a lower class exists. Many of them are even following the conventional wisdom. Spend less than you earn, and invest the rest, and your dreams will come true. But, when you can’t earn enough, you can’t invest, and you can’t get closer to your dreams. I hear a lot of rationalization, as if so many people just see their circumstance as personal and partly their fault, but when the statistics start to accumulate then the system must be questioned and old wisdoms challenged.

There are avenues for escape, but they aren’t as successful as before. Education was one avenue, but the statistics show that a smart poor kid has a lower chance of graduating than an average rich kid. Inventions can create incredible wealth, but they have a high failure rate. Entrepreneurship is a self-empowered opportunity, but the early capital is harder to acquire since the Great Recession. Wage stagnation means the old style of comfort via career isn’t keeping up with inflation, which is still okay if your income exceeds expenses; but if it doesn’t, then a downward spiral occurs. Lotteries can seem appealing in such a situation. (I buy.)

To the many people I’ve met who rationalize their situation away as if it was their fault, I suggest they look around. Everyone makes occasional bad choices, but this many people in debt, this many people in poverty, this many people without adequate housing is probably not the result of this many people making the wrong choices. They may have merely been following advice that no longer works; which is why I cheer the people who are finding new ways to approach debt (e.g. peer-to-peer), new ways to handle money (e.g. Bitcoin and the sharing economy), and new ways to house themselves (e.g. tiny houses) A tiny house

I’ll close so I can enjoy a homemade infused herbal vodka martini, from the deck of my house with the modified mortgage, while a $2.29/pound pork chop marinated in home-grown sage and rosemary roasts in the oven with homemade baked beans, and I ponder what old movie I’ll be able to stream from Netflix on a beautiful Saturday night. That’s rich, and luxurious, and doesn’t cost much, relatively.

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Corporations Meet Owners MVIS 2015

Another year another meeting of MicroVision’s stockholders. Another year of practiced patience for someone who uses an investing strategy like mine, long term buy and hold. It is also an exercise in trying to participate in investing in America, while witnessing wealth disparities, class differences, and gatekeepers along one of the few paths that leads into and through middle class America. It isn’t just MicroVision, but MicroVision is a nice microcosm of America entrepreneurship.

For those who aren’t familiar with MicroVision, check my recent post.

In many ways, MicroVision is a classic American startup. There are historic startups that go public, become incredibly profitable, and make it all seem easy. MicroVision is real. It went public over 15 years ago, has yet to become profitable, and definitely hasn’t had it easy – and yet, it may positively disrupt our technological world and positively profit those of use with patience (and amazingly profit one lucky investor who bought at the bottom.) Or not. Nothing is guaranteed. As of 2015, the company may have bit an inflection point (so says management) because products are coming to market and looking good.

So, one avenue to wealth, or at least personal financial health, is to invest in small companies and sell their stock when they’ve become large. The big financial institutions do so, we can too. The difference is that they can take on more risk, buy larger positions, and make more money – and then do it again. Left to market forces, the big investors will rule and make it harder on the smaller investors. That’s why there’s the SEC, to make sure the playing field is flat, or at least not as hilly. If there’s any information, then everyone gets it at the same time. Good.

Of course, it doesn’t work quite that way. The SEC is underfunded and can’t chase down many of the apparent injustices. The markets are driven by computerized actions that require such rapid transactions that institutions are moving their operations closer to critical hubs to reduce their transaction times by nanoseconds; an option individual investors don’t have. News is made public all at once, but institutions do get house calls, something that doesn’t happen for individual investors – which makes showing up at a stockholders meeting more important.

Spelling is important. Ask any grammarian. According to the notice for today’s event it was the Annual Meeting of Shareholders; an event where a bunch of shareholders meet. The typically used acronym, though, is ASM. Most shareholders I know call it an Annual Shareholders’ Meeting, a meeting owned by the shareholders. The ownership of the meeting shifts with an apostrophe. At today’s meeting, the paper said one thing, the slideshow said another. Evidently, there is some confusion.

In expectation, shareholders think they own the company and that the company has to tell them what’s happening. That’s the SEC rule as well. In operation, companies frequently act as if they own the meeting and they just happened to invite the shareholders. That can be taken to the extreme where the directors and managers are behind partitions and ropes, and that all questions are filtered. Class distinction made physical.

MicroVision’s meeting is somewhere in the middle. The directors and officers mingle with the shareholders, but several verbal barriers are kept handy to limit conversations. While they are protecting company secrets and not running it SEC issues, they can also overcorrect by saying so little that is substantive that trust diminishes. It is easy to witness the information filter and gateway as yet another distinction. They tell a great story, but release very little data or proper names.

Corporations are owned by their shareholders. In most US corporations, though, it is one vote per share; so the person with the most shares and the most wealth has the most power. It is possible to have a corporation that is one vote per person, but we’ve gotten into the first habit. Switching to the second style wouldn’t directly shift wealth, but it would shift power – which, through shifting votes on compensation, would shift wealth. Because few individual shareholders have as many votes as institutions, institutions and high-net-worth individuals attain and maintain power.

The consequence is not a call for shifts in corporate structures, except for mimicking shouting into a storm to turn it around. The consequence is for shareholders to work within the current system, where we’re allowed in the door, but must follow circuitous rules to get answers to questions, and to make better decisions about how to improve our financial positions. I think it is worth the effort.

In a recent article, 90.9% of US stocks are held by 10% of Americans. 40% of Americans have negative net worth. There is a strong correlation between investing and wealth; especially lately, because wages are no longer an avenue for improving wealth for most. It pays to invest. With my small holding in MVIS, there is enough potential to carry me from just above that 40% to just under the 10%. Between those two are a region where I can’t pay all my bills for a frugal lifestyle to a region where I have ‘enough’, not luxury in a marketer’s sense, but luxury in that that I could afford to relax, heal, and enjoy.

I came away from the MVIS meeting having experienced the annual frustration of trying to phrase questions such that I can get substantive answers without infringing on insider issues or even just running into the corporate communication immune response. Conversations should be easier, but an us versus them, a suits versus shorts, a power versus powerless divide doesn’t help.

Within writing, the strong declarative statement is preferred. Make it clear and simple. I don’t because the world isn’t clear and simple. That doesn’t, however, mean I don’t participate. My book is called Dream. Invest. Live.Dream Invest Live cover because investing isn’t the beginning or the end, but it is one way to get from dreams to living.

After the meeting, and after a fair amount of enthusiasm and commiseration, one friend (or me) put it succinctly; if they succeed and we make lots of money they’ll be considered heroes and all faults absolved. Such is the nature of American entrepreneurship, innovation, and investing.
PS My notes about the specifics of the meeting are available on various discussion boards: (Motley Fool, Investor Village, Silicon Investor). I encourage you to engage there, at least as a way to understand how others viewed the same event. We’re stronger together.

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