Professor Beekums

Programmer's Tilt

noreply@blogger.com (Professor Beekums) — Wed, 25 Aug 2010 02:10:00 +0000

Negative emotions such as anger, fear and frustration can have severe negative effects. In poker or investing the cost is paid in cash. For programmer's the cost is in time. Debugging code is like solving a puzzle and puzzles are best solved with a clear head. Frustration causes a five minute task take a half hour or more. My problem is that even when I know I'm suffering from these negative effects, I can't bring myself to calm down. Its an odd feeling knowing that what you're doing isn't logical but being unable to do otherwise.

The best tactic is to just take a break and go away for an hour or so. This is pretty effective in college, not so much in the work place. There's always taking a break from the current task and moving to other tasks, but that isn't viable when there's an urgent task that needs finishing. Music does nothing for me and neither does brute force of willpower. If I wasn't such a lightweight I'd try drinking, but well I AM a lightweight so that isn't an option. I wonder what else there is to try.

Self Reflection

noreply@blogger.com (Professor Beekums) — Thu, 19 Aug 2010 03:47:00 +0000

I'll be the first to admit that I'm a deeply flawed person. While I'm still undeniably awesome and love who I am, there are some flaws that are worth spending the effort to fix. One of the many reasons I keep this blog is to put what I've learned into words so that I can organize my thoughts and hopefully gain a better understanding. However, it seems that blog posts are only good for reflecting on things that have happened recently (for me at least). My problem is that when I write about something I've learned, I assume that I will know it in the future and I don't give it much thought afterwards. This results in my forgetting about it and I have to learn it all over again at a later date. It sounds silly and obvious, how can any intelligent person make this mistake? Well knowing the right thing to do and being able to do it are two different things (something every poker player finds out the hard way).

Clearly I need a better way of reflection. Blogging is still great when I have complex thoughts, but my every day mistakes are conceptually very simple. What I'm going to try to do is keep a short journal of one thing I learn every day. Think of it as a personal twitter. With short thoughts its easier for me to go through the past and remind myself of things I learned so that they stick in my mind. I'm also allowing duplicates so that I can find out what my biggest problem areas are. This is where the system really shines when compared to blogging. Blogs with posts that say the same thing over and over are boring to read and boring to write. Short thoughts are trivial to write so I'm not going to get bored. Also no one but me is going to read them so I don't have to worry about what I say!

The biggest challenge is getting in the habit of doing this daily. I started it yesterday and almost forgot about it today!

Reviews

noreply@blogger.com (Professor Beekums) — Mon, 16 Aug 2010 20:41:00 +0000

I love to read, but I don't have as much time devoted to read books as I wish I did (The Economist sucks up most of my reading time). Yet I'm still always on the look out for new books that I need to read. The problem is that most books aren't worth reading and I don't have the time to waste on a bad book. This makes searching for new books to read a bit troublesome.

The easiest way to find a new book is to get recommended one by a friend. However this method fails when your friends read different types of books than you do. The next obvious solution is to use recommendations by book stores or reviews by the general public. The problem here is that now you're only going to see the books that are popular. Some of the best gems slip through the cracks of popularity.

Unfortunately there is no good way around this problem. Popular books tend to be popular for a reason. That reason could be that a lot of people are idiots, but on average a popular book is still more likely to be worth my time than a random book no one has ever read. It also acts as an excellent filter since the I've reduced the number of books I have to go through before I find a good one. I've traded the chance of finding something obscure and amazing for a higher hit rate on finding something just amazing. Its an ugly choice and I don't like having to make it.

This choice isn't restricted to books either. All forms of entertainment suffer from the problem. The issue even goes beyond entertainment to the work place. How do you filter our resumes for new college grads if you have 100 applicants for one position? The obvious choice is GPA which suffers the same trade-off. You can either waste time going through each applicant or you can create a cut-off with GPA as the metric. This reduces your chance of finding the eccentric and brilliant employee, but you have to go through fewer employees before finding someone that's just good.

I'm not clever enough to have a solution for this problem (yet), but if anyone else does please let me know!

Media Paywalls

noreply@blogger.com (Professor Beekums) — Sat, 17 Jul 2010 21:57:00 +0000

There's been a continuous battle between media outlets that believe in charging for content and those that believe that content should be free. As a diehard social liberal and having lived most of my life with internet access, I have tended to side with the latter. Everyone should have access to information. It is incredibly valuable and necessary for capitalism to work while maintaining some semblance of social equality. Charging for information makes it harder for the poor to climb out of poverty on their own.

Yet for the past few months, I've found myself actually paying for content! While The Economist offers all their articles for free online, I found that it was actually worth my money to pay for a hard copy that I can read anywhere. That's just a practical benefit though, there's also a benefit based on principle. The problem with the "content should be free" model is that the voters (capitalism is a democracy remember?) are not the people as a whole, but a much smaller group. It is this smaller group that decides which media providers stay afloat. You could argue that the people make a given provider more valuable by consuming their content, but that assumes that every content consumer is valued equally. Certain demographics are going to be more valuable than others. For example, mine is pretty worthless because people like me almost never click on ads. Advertisers are then less likely to purchase ads for media that is directed towards these demographics, even if the number of people in these less profitable demographics are similar to the more profitable demographics. A paywall, or at least a subscription option, provides an equalizer. Now those who don't respond to ads can now show their support for their media provider of choice.

Don't get me wrong, I still think that the majority of content should be free and I certainly don't think paywalls should be the only model in existence. I also think that only quality content should be charged for. Thankfully capitalism will handle that last bit. Those who try to charge for content that isn't worth paying for are going to lose a lot of money, and rightfully so!

The Wealth of Man

noreply@blogger.com (Professor Beekums) — Tue, 13 Jul 2010 00:35:00 +0000

I recently came across "The Wealth of Man" at Strand. The premise of the book is the history of humanity from the perspective of an economist. While I haven't read it yet, but I'm excited about it. I'm sick of all the "humanity is ruining the world" crap that's being thrown in my face on a daily basis. The world has been trying to kill us for millenia. Yet while humans are weaker and slower than most animals, as well as not possessing any natural weapons like claws or big teeth, we've survived. We've overcome bigger predators, volcanoes, blizzards, earthquakes, hurricanes and pretty much anything else that's been thrown at us. Humanity is at a point where many of us no longer have to worry about mere survival and can focus on other things be they musical pursuits, culinary delights or space travel. For once, I want to read about human accomplishments and there are a lot of them to read about. I'm sure the book is also going to go into humanity's mistakes, and it should, but too often are our successes overlooked or taken for granted. I just wish people who understood that were as vocal as the people who didn't.

Quick Updates

noreply@blogger.com (Professor Beekums) — Tue, 08 Jun 2010 02:45:00 +0000

Its been a busy month what with me moving and all. Didn't really have time to blog and over the past 3 months I haven't really had time to do much investing research either (though I still find time to read the Economist religiously). I'm a bit settled in now so its time to get back in the game!

What a time to start too, the market has taken a bit of a beating. Though my beating was greater (I went from a 39% lead over the S&P 500 to 31%), I'm excited. I've still got a bit of cash on the sidelines which I've been disciplined enough to use slowly. At my current rate it'll take me a year to spend all the surplus, though I may accelerate that if the market keeps falling.

I haven't found a new company to put on my short list in a while. Its a long a pain-staking process which is a big reason why I'm a long term investor, its just easier to stick with companies that you already know. I'm still bitter that Disney bought Marvel!

As for my current set of companies, I'm pretty happy with them. The biggest loser over the past few months was Dreamworks which went from 45 to 28 (this was the main reason I pulled back 8% against the S&P 500). Despite the massive loss in the market value, I'm somewhat happy with this development. As far as I can tell, people assumed too much from the latest Shrek movie and bumped up the stock price. Now they're all disappointed and the stock has tanked. Yet the value of the business is unchanged. Dreamworks still has strong franchises and despite not doing as well as people expected, Shrek has been #1 in the box office for weeks. I expect that there will be a healthy tail for Shrek (much like there was for How To Train Your Dragon) and even if the box office never fully achieves the highs that the previous Shrek movies have, it will probably still sell a lot of DVDs and Blu Rays. Also, while I'm not as confident in 3D as Dreamworks' CEO, I still think 3D will be common place eventually. When it does, Dreamworks will have a serious advantage having been a pioneer in the space. The significant price drop has reduced DWA's percentage of my portfolio enough that I'm comfortable with buying more shares.

It seems like the drop in THQ's stock price has been due to the company releasing guidance below analyst expectations. I've already talked plenty about my disdain for analysts so there's nothing much to say here except that I'm buying more shares!

One of my few stocks that haven't dropped has been Rocky Mountain Chocolate Factory. This is probably due to the lack of bad news (or any news) and the fact that its a very low volume stock. No one seems to care enough to trade it, which is fine by me. They're stores seem to be recovering from the recession and their co-branding strategy with Cold Stone Creamery seems to be doing really well. You probably know what I'm going to say here but I'll say it anyway. Time to buy more shares!

Charity Manipulation

noreply@blogger.com (Professor Beekums) — Sun, 02 May 2010 02:45:00 +0000

I passed by an ad for some charity today (that I don't know what charity it was for shows some fault with the ad, but that's another matter). It had the picture of a very adorable child in an attempt to get the viewer to donate to the charity (which once again is not helpful without knowing which charity its for). My first thought was "that's a pretty dirty way to manipulate people, I'm a little offended". My second thought was "there's got to be a better way of doing that".

I wonder if the charity's ad would be more effective if instead of promoting their charity, the promoted it as a service. "Help this child" would be replaced with "let us help you help this child", though some marketer would have to spruce up that tag line a bit. Its essentially pulling a Tom Sawyer on everyone, you would be forcing people to think that giving money to help children is an honor that they should seek help to achieve instead of a charitable donation that plays to their altruism.

Of course this would be a terrible thing do to and I would be really angry if anyone tried it. Yet I find thinking about these things to be very entertaining so I can't help myself but think them. What a conundrum.

Britain's Third Party

noreply@blogger.com (Professor Beekums) — Fri, 30 Apr 2010 02:27:00 +0000

Britain is having an election soon and The Economist has a lot to say about it. Last week's issue contained an analysis about Britain's third party, the Liberal Democrats (the other two are Labour and Conservatives). Normally they're a joke, much like America's third parties, but they actually have a bit of support this election. They probably won't win, but they could have significant influence which is better than what we have. I'm incredibly jealous, yet very hopeful. If a third party in Britain managed to claw it's way to being significant, maybe the same can happen here?

Job Hopping

noreply@blogger.com (Professor Beekums) — Tue, 27 Apr 2010 03:09:00 +0000

I recently read this excellent post on job hopping. I've had a lot of conflicted feelings on the subject ever since I had my first paid job (the fact that that was 6 years ago makes me feel old). Loyalty is a good thing and I tend to feel loyal to those I work with (the competent ones anyway), but I've seen a lot of employees get screwed over for their loyalty towards a company. Its not good to see someone who's worked at a company for 25+ years suddenly get laid off. I mean its fine if they're dead weight, but horrifying if they're not.

I've realized that there are two types of loyalty. There's loyalty to your co-workers and your direct boss, then there's loyalty towards the company. I find the latter to be a mistake. Despite my capitalist beliefs (or perhaps because of them), I understand that a company is usually a faceless entity, run by people who barely know the majority of their employees. An employee isn't a person, they're a resource. Keeping them or letting them go is a strategic choice, loyalty has nothing to do with it. Even if a company had a general policy of avoiding layoffs, the policy is purely a practical one to keep up morale. If it came down to it though, if the company had to choose between its survival or some of its employees, it will choose its survival. There's nothing wrong with this, if the company didn't do it then all employees would end up losing their jobs eventually. However, this cold reality also means that employees are justified in looking out for themselves.

On the other hand, this guy is right to recommend avoiding hiring job hoppers. While his advice is targeted towards start-ups, it also applies to larger companies. It takes a certain amount of time before an employee can reach their maximum amount of productivity at a company. Combine that with the overhead of replacing headcount, job hoppers can have a huge negative effect on a company. This not only effects the company's performance, but it effects the well-being of the other employees. This is where the other kind of loyalty comes in. When you leave a company you also leave your fellows with the pile of work that was meant for you. Your boss also has to find and possibly train a replacement. All of this is a pain in the ass.

As with anything, there is a need for balance. Being too loyal can get you in trouble if your company gets itself into a lot of trouble. Being too disloyal is the sign of a sleazebag and you deserve not to be hired by anyone.

F8 Aftermath

noreply@blogger.com (Professor Beekums) — Sat, 24 Apr 2010 03:09:00 +0000

I should note that the following is my opinion and mine alone. They do not reflect the opinion of my employer.

Facebook recently had its F8 conference, which I had attended. As a developer, the the conference was exciting. They have made their API significantly easier to access and they have changed their privacy policy to allow longer caching among app developers. This reduces the number of calls we have to make to Facebook which is good for both us and them. Facebook credits also seem interesting even with the 30% rake that Facebook is taking (I have a lot more to say about the credits later).

As a consumer however, I'm very worried. App developers had access to a lot of user information before, but now its going to be even easier. Many app developers will probably take the responsibility of this trust very seriously, but there are also less scrupulous developers who would abuse access to this information.

There's also this OpenGraph initiative that Facebook has started. Facebook essentially wants every website to have a bar at the bottom of the page that shows you your friends as well has making a "like" button more visible. They also created the option, ENABLED by default, to share your information with these web pages. Anyone with a basic understanding of psychology knows how significant it is that this option is automatically enabled. Most users would either be unaware of this option or be too lazy to turn it off (and finding the opt-out button isn't that easy). Most users also don't understand the significance of the information they reveal about themselves. In my opinion, this is a very sketchy move on Facebook's part and is far worse than Google's mess-up with Buzz. There will probably be less blow-back since the privacy issues are less apparent, which only makes this worse.

On the other hand, I see some usefulness in what Facebook is doing. Perhaps I was just influenced by the fantastic closing note made at F8, but Facebook is a great utility in connecting people. While I prefer to keep in touch with my closest friends by hanging out in person, IM, or e-mail, those channels are not as viable with people I have lost touch with. IM and e-mail is a very direct form of communication, when you initiate one its like you're forcing the other person to respond. Communication through Facebook is much more casual. I can post something on my wall which is free for anyone to respond to if they wish or ignore. The new "like" functionality also expands on that which provides even more opportunity to re-connect with old friends. It can be hard to start a conversation with someone you haven't talked to in a while. Likes and wall posts make excellent ice breakers.

Facebook and social networks in general (note that some are better with privacy and some are worse) remind me a little of the Internet in the late 90s. The Internet back then was a fantastically useful tool, but it also had its dangers. We adapted though, people today have learned not to click those "punch the monkey" banners or "win a free ipod" pop-ups. Education about social engineering tactics has also gotten better. Today, few intelligent people could argue that the Internet is too dangerous and we should get rid of it. The benefits clearly outweigh the costs. I believe the same will be true of social networks someday. People will just have to learn to be cautious with their information much like Internet users have to be cautious with their web browsing.

How To Train Your Dragon Has Staying Power!

noreply@blogger.com (Professor Beekums) — Tue, 20 Apr 2010 01:58:00 +0000

"How To Train Your Dragon" is apparently at the top of the box office last weekend (though the latest numbers on fandango show it being edged out by Kick Ass). I can't help but feel a little vindication since I loved that movie as both an investor and a film goer. There is still an unfortunate lack of 2D showings which is probably hampering the movie. Yet word of the film's greatness is spreading and people are going to see it despite the high prices for 3D. I can't wait to see what the final box office results will be for the movie. Regardless, I imagine the DVD sales are going to be spectacular (so long as Dreamworks doesn't neglect regular DVDs in favor of Blu-rays like they are with 2D showings). The odds for a sequel are looking better!

Negative Associations

noreply@blogger.com (Professor Beekums) — Thu, 15 Apr 2010 04:34:00 +0000

I'm currently reading "Buyology" by Martin Lindstrom (a book I borrowed from the library). In one of the early chapters, Lindstrom discusses how Ford and Coca Cola both spent a ridiculous amount of money for advertisement on American Idol. The difference was, Coca Cola has its product placement embedded in the show and Ford just had traditional ads in commercial breaks. The result was increased brand recognition for Coca Cola, but DECREASED brand recognition for Ford. The main issue was that commercials are something most people have trained themselves to ignore. Ford therefore associated themselves with something to be ignored and their ads worked against them.

I've found that a similar thing happens in my Netflix queue. Whenever I'm browsing for a movie to watch, I see a bunch of movies that I was interested in, but not in the mood for at the time. The logical thing was to add the movie to my queue as a bookmark for something to do later. The problem was that I'm very fickle about my movie moods and regularly skip most of the movies in my queue when looking for something to watch. I end up associating most of those movies with something that I skip and so I become less inclined to watch them the longer they stay in my queue. It goes to show that what may seem logical at first, may end up being silly when one takes into account the machinations of the human mind.

Department of Labor Attempts to Reform 401ks

noreply@blogger.com (Professor Beekums) — Wed, 14 Apr 2010 02:58:00 +0000

The Department of Labor seems to want to force 401k advisors to be more honest about the mutual funds they promote. In a way I should be happy due to my opinion of the advice most financial advisors provide. Unfortunately, the proposal doesn't address the underlying problem. Those who participate in 401ks need to understand what they're investing in. Its not easy, but there's only so much one can regulate honesty. Even if financial advisors can't use past performance, I'm sure the less scrupulous ones will find another way to mislead people. The government can of course add additional regulation to cover the new lies, but then the financial advisors will find something else. Its an endless cycle and in the meantime a plethora of regulation will be added onto the bureaucracy. This bureaucracy will only make it more difficult for the honest financial advisors to operate.

The only true fix would be financial education. One could argue that the average person does not have the time to learn about 401ks. Yet people spend a large amount of time researching the appliances they buy or the cars they purchase. I would argue that a 401k is significantly more important and it would be foolish to find time to save money on lesser purchases without spending at least an equal amount of time researching the 401k. The person with the highest stake in an investment is the investor, not the financial advisor nor the government. It is then the investor that should be responsible for their investment.

Overcoming Cheapness

noreply@blogger.com (Professor Beekums) — Tue, 13 Apr 2010 02:59:00 +0000

I recently bought an $11 dollar shirt off Teefury. Neither the fact that I bought a t-shirt nor the fact that it was $11 are of great significance. What is significant (for me anyway) is why I bought said shirt. I'm normally a cheap bastard. The reasons may range from growing up without much, focusing too much on the future, or a simple need to power-game through life. Regardless of the reason, the point is that I'm fairly stingy. I agonize over 30 cents on a tube of tooth paste. I compulsively check Amazon prices like a trader would check stock prices, just to save 5 bucks on a blu ray disc. I even told a friend yesterday that a couple years ago, I would take trips to the mall because I liked air conditioning but I didn't like paying for it.

I've always known that the purpose of money was the spend it. Yet saving and investing money will allow me to spend more money later. The problem is that there's always a later and I always think about it. My thoughts keep me from parting away with the money in my wallet. I get buyers remorse before I even make my purchases, and the remorse is pretty epic. One thing I've been trying to do over the past couple of years is to force myself to spend more money. Most people keep budgets to try and save money. My budget ended up being a way for me to spend money. Unfortunately my budgeting skills are a failure. I have an extra 6-8% of my 2009 salary that I had dedicated to spending. This was on top of the 25-28% of my salary that was saved/invested.

The real problem is, my first thought before every purchase is "do I really want this enough to pay for it?" The answer was usually no. I have however been slowly throwing such cheapskate thoughts aside in favor of purchasing. This is where the $11 dollar shirt was significant. See Teefury sells one shirt a day. When the day is over, the shirt is gone forever (shirt.woot does a similar thing). I'm almost always on the fence when it comes to these daily shirt sales. My usual thoughts have always been to play it safe and just not buy the shirt. Today I just bought it. I still don't know if I want it, but I will have it just in case I want it later. Making a conscious purchase without being sure of my desire is a big step for me.

With anything comes a need for balance. I need to make sure this doesn't end up being a slippery slope where I end up saving less than 10% of my income. Or even worse, spend more than I earn like some people.

NOTE: Notice that I saw an $11 dollar shirt as an apocalyptic sign for my wallet. This is what I have to deal with on a daily basis.

Benefits of Bubbles

noreply@blogger.com (Professor Beekums) — Sat, 10 Apr 2010 04:37:00 +0000

There's a general negative view of bubbles. Its easy to deride those who get caught up in bubbles as greedy and foolish. I have done so myself. Warren Buffet once made a speech to a bunch of dot com executives in the last 90s. He explained how when the car was invented, there were a myriad of car companies trying to get in on the boom. Most went bust. The same happened with the invention of the air plane, and many airlines to this day have trouble with profits. His point was that new technology, while good for society, was the bane of the investor and that a similar thing would happen with the dot coms and it did. A similar thing will probably happen with all the green technology and social networking that we're going under today. Some bubbles, such as the housing bubble, are obviously detrimental to society with few positive effects. However, I think the bubbles caused by technology, while harmful to the individual investor, are beneficial for society.

Let's think about what causes a bubble in the first place. One usually starts when there is an immense amount of excitement about some industry or concept. New technologies are the best catalysts. When we discover something new, our imaginations go wild and the possibilities seem endless. This results in an endless amount of experimentation as we explore every possibility with the new technology. The result is a lot of failure with a few fantastic successes. Yet, to think that those successes would be achievable without all that failure would be to fall under the fallacy of hindsight.

The euphoria and excitement caused by a bubble results in a large amount of experiemention done in a short amount of time. Without this experimentation, how would we know the best way for developing and using our new technology? It would be arrogant to think that we can just get it right on the first shot. We need to try things, and when we fail we have more information to try it again. A technology bubble allows us to see an immense amount of failure (and thus receive an immense amount of information) in a relatively short amount of time. When it is over, the strongest ideas survive for society to benefit off of. The pain of the bubble burst is overshadowed by the prosperity the new technology can provide afterwards.

Government Medicine

noreply@blogger.com (Professor Beekums) — Fri, 09 Apr 2010 02:30:00 +0000

Last week's special report by The Economist had a fantastic image. The analogy of government acting as medicine is brilliant. Government, like medicine, can do a lot of good, so long as the doses are correct. If doses are incorrect, the effects can be extremely detrimental. A person who overdoses on medicine could die. An economy that overdoses on government can crash. The Soviet Union provides an excellent example.

Even without overdosing, there are always side effects. Not all side effects are necessarily bad. The primary purpose of Viagra was originally a side effect. If government taxes gas, the primary purpose would be to generate revenue but the positive side effect would be that people try to use less gas.

Side effects can be bad though. Acutane causes depression. Rent control increases homelessness. The key is deciding if the side effects are worth the benefits of the medicine (depression is probably not an acceptable cost for getting rid of pimples). Fortunately for humans, side effects on medication is nicely printed on the bottle. It may be in small print, but at least its there. If only the side effects of government intervention could be printed as easily.

Interacting With Children

noreply@blogger.com (Professor Beekums) — Wed, 07 Apr 2010 00:50:00 +0000

I had dinner with my family last night. As usual, my 12 year old cousin Alice was playing her DS while everyone around her was talking. I've tried talking to my cousin before, but she's usually unresponsive. That and I have no idea what to talk to her about. I decided to give it another shot last night though because everyone appeared to be enjoying themselves except her (and my relatives were criticizing her as Chinese people love to do with their kids). At first she was still unresponsive. However, after dinner she came up to me and started talking. It was annoying 12 year old talk, but that was expected.

I toughed it out since I don't want my cousin to feel entirely alienated from her family. I do wonder why she opened up after ignoring me during dinner. Perhaps she's so used to being ignored that she didn't expect nor knew how to react to someone trying to talk to her? Especially about a topic that wasn't her not spending enough time studying. Maybe she just needed time to process and realized that she liked attention? Children are curious creatures.

Health Care Membership

noreply@blogger.com (Professor Beekums) — Tue, 06 Apr 2010 01:58:00 +0000

I recently came across AMG Medical Group who have an interesting business. They charge a monthly fee in exchange for medical services. The cost is between $79-$119 a month, which is far cheaper than most insurance plans. Some of you are going to claim that your company pays for your insurance so its free, but that is not the case. Every dollar your company pays for insurance could instead have been a dollar in your salary. I calculated that my plan at Enterasys cost 500-600 a month, and I'm only 25 now! Now while the services are probably less than what is normally covered under and insurance plan, its still a worthwhile alternative considering the price. Yes emergency services can be astronomically expensive, but think of it this way. Insurance companies are notoriously stingy when it comes to paying claims, if they weren't your premiums would be even higher. With the savings of going to AMG Medical, I could have pocketed over $15k while at Enterasys (which I would have invested and it would be at least $20k now). Assuming I continue to not need severe medical care, I would be saving a hell of a lot more. Probably enough to cover my medical costs WITHOUT having to deal with insurance bureaucracy. Yes there's a lot of ifs involved. Yes, had I been given the option and taken it, it could have been a huge mistake. Yet it should have been my mistake to make. Even if I would have still taken the employee health insurance, I'd have appreciated the ability to make my own choices. I'm an adult, capable of making my own decisions. I need not my employer nor my government to make those for me.

A Trip To The Library

noreply@blogger.com (Professor Beekums) — Mon, 05 Apr 2010 02:28:00 +0000

Despite not having been to one in a while, I love libraries. I recently went to the library that is two blocks away and got a new library card. Throughout the library I saw notices asking for support or services being ended due to budget cuts. This is nothing new, this particular library seems to be running on a thread ever since I was a kid (I made my first trip when I was 5). I'm a bit upset by this and I hope it can stay open. Public libraries are one of the things that I don't mind my tax dollars going to.

The reason public libraries are so important is the accessibility they provide. While I'm just cheap and use them to lower the amount of money I give Amazon, there are those that have trouble paying for books, computers, or Internet access. Libraries are the only way many can obtain access to information. As technology advances, the need for unskilled labor will decrease. People will need access to knowledge in order to obtain skills and avoid the unemployment lines.

I'm all for capitalism and that people should earn what they have, but people need the opportunity to do so. An education is important in obtaining opportunity and libraries are an essential complement to schools. Allowing our libraries to fail would be a huge mistake.

Thoughts on Unions

noreply@blogger.com (Professor Beekums) — Fri, 02 Apr 2010 02:44:00 +0000

I'm against unions. I'll admit that they served a good purpose when they first started, but that's because most employers were monopolies. With the breakup of monopolies should have come the breakup of unions. Today unions serve only as a vessel for corruption and wasteful spending. The US Post Office is going broke because unions prevent them from shutting down underused post offices. The MTA provides poor service at high prices because they're forced to pay union employees above market rates. GM went under because unions forced them to pay employees NOT to work. Education is suffering because unions prevent bad teachers from being fired.

That being said, unions have and still could serve a purpose. The main problem that they solve is a monopoly employer. If there is only one employer for a given skill set, then they can easily abuse their employees. Unions provide a mechanism to fight back. However, a monopoly employer probably also has a monopoly on consumers as well. In this situation the monopoly needs to be broken up. When this happens, the usefulness of unions goes away. Unfortunately, power corrupts and unions don't go away when they're not needed anymore.

Increasing Health Care Coverage

noreply@blogger.com (Professor Beekums) — Wed, 31 Mar 2010 02:57:00 +0000

There's a lot of buzz about the new health care reforms. I wasn't orignally going to write anything about it since I've already written so much about it (the best articles that represent my opinion are here and here). However, after reading all the economic analysis on it I can't help but notice one important factor being neglected. No one seems to be mentioning the increased productivity that can be gained through increased health coverage. If access to preventative medicine will reduce the amount of time a person spends being sick, that person will end up working more. This will result in an increase in the amount of goods and services offered in the market and/or an increase in corporate profits which translate into more tax revenue. Unfortunately, this metric would be extremely difficult to track which might partially explain its non-use. However, just because something can't be tracked doesn't mean it won't have an effect.

NOTE: This is not a post promoting the new health care legislation. I think its overall effect will still be negative, but no fair analysis would be complete without listing potential benefits.

How To Train Your Dragon Has A Disappointing Opening

noreply@blogger.com (Professor Beekums) — Tue, 30 Mar 2010 00:46:00 +0000

"How To Train Your Dragon" was released last weekend with a 97% rating from Rotten Tomatoes and a mediocre $43 million opening weekend. After seeing the movie I'm a little surprised that it didn't do well. That 97% rating was well earned. Yet facts are facts, few people went to see it. The result was a 9% drop in the stock price. I'm still optimistic on the company though. I believe the movie was fantastic, word will get around and people will see it.

The main issue in my opinion was the 3D push. Yes 3D is most likely the future, there is going to be some lag before it catches on due to cost. Its not that pushing the movie into 3D screens was bad, it was that 2D screens were neglected. Out of the 4 theatres in NYC that I frequent (all have heavy traffic in Manhattan), only one even showed the 2D version and even then it was only a handful of showings! Add to the fact that theatres just raised prices on 3D tickets this weekend and its no wonder that the movie didn't do so well.

Despite these issues, Dreamworks still has a fantastic movie and has an opportunity for a great franchise if they play their cards right. Unfortunately, "Monsters vs Aliens" wasn't deemed suitable for a sequel and it made more money on its opening despite being a lesser movie. I hope Dreamworks realizes the potential of "How To Train Your Dragon" instead of comparing its performance to "Monsters vs Aliens".

Investing Sheep

noreply@blogger.com (Professor Beekums) — Sun, 28 Mar 2010 23:39:00 +0000

THQ went up 13% last Friday due to an analyst upgrade. I almost let myself get upset, because god forbid investors actually make decisions based on fundamentals instead of what someone tells them to do. However I have to wonder why I'm upset about this in the first place. So what if people buy or sell based on analyst recommendations? Over the long term these minor blips won't affect my returns. In fact, they could only help. The kind of sheep that blindly follow analysts are what create over-valuations and under-valuations which provide excellent investment opportunities for those such as myself. Yet despite the obvious benefits, the lack of independent thinking among investors upsets me and I can't seem to figure out why.

Buyers. Sellers, and Volume

noreply@blogger.com (Professor Beekums) — Thu, 25 Mar 2010 02:38:00 +0000

I'm always amused when I hear that the market is running out of buyers or the market is running out of sellers. For every trade there has to be a buyer and a seller so shouldn't the market be out of both at the same time? I saw a headline stating that the low volume meant that there was a lack of buyers and the market might crash soon. This is a nonsensical theory. Even if the market went down, the real reason would be something other than a lack of buyers. It could just as easily be people not wanting to sell their shares. Low volume doesn't mean a lack of buyers or sellers, it just means they can't agree on a price at the moment.

Expense Ratios

noreply@blogger.com (Professor Beekums) — Wed, 24 Mar 2010 02:31:00 +0000

A 401k adviser came in today to explain our benefits to some of my coworkers and I. I had to resist the urge to correct some of the errors she was making (despite being a smart-ass I try not to sound like one). The most egregious one was the nonchalant manner in which she dismissed the expense ratio of the funds she was promoting.
For those who don't know, the expense ratio is the fee funds charge every year for managing your money. This fee is paid regardless of performance and it is a percentage of all the money in the fund. Index funds have low fees because the amount of management needed is minimal. All they do is mirror the overall market. Actively managed funds have higher fees because they're trying to beat the market. Funny thing about market average is that its well... an average. Picking a fund manager who's actually capable of beating the average requires a mix of skill and luck. Past performance is no guarantee. The history of Wall Street is filled with guys who have made fantastic returns for years and then lost everything they made plus then some.

The smallest difference in expense ratios can make a big difference in your retirement portfolio. An example would best demonstrate. Assume you invest in two different funds, one with an expense ratio that is 1% higher than the other one which is an index fund, and you make regular contributions to this fund. Assume that after 30 years you'll have $1,000,000 in the cheaper index fund. If everything else is equal (contribute amount, return rate, etc.) the more expensive fund will only have $750,000. That's a pretty big cut off the top!

The funds provided aren't too terrible though. The lower expense ratios in my plan are .6% - .7%. Expense ratios for most of the Vanguard plans I was using in my old 401k were between .1%-.3%. The same scenario listed above would only show a different of about $100,000 for an expense ratio difference of .5%. Still, a 10% difference maybe be relatively small vs a 25% difference, but its still money out of my pocket and into the pocket of a guy who isn't doing any good.