Friday, November 30, 2007

Too much government?

Here's a story of a man being charged with animal cruelty with possible jail sentence for refusing to allow his old dog to be put down.

It's kindof like the canine version of the Shiavo case, except the dog was just old and arthritic, not in a vegetative state.

College Football Champion: N/A

Since every team has proven itself undeserving of this year's title, there's only one truly fitting way to end the season, by calling off the BCS title game. Vacate the title as they do in boxing, give everyone a trophy as they do in youth soccer—but don't make anyone national champion.

Read the full article from Slate Magazine here: "What a bunch of losers."

Month end holdings

I figure it's time to update my holdings for Nov07. There's been alot of movement over the past couple of months that we talked about, and I've been deploying alot of free cash into stocks over this time.

Here's where I'm at now - from largest to smallest holdings
CTSH Cognizant Tech - IT consulting/services, India. Loaded for bear in this position - by far my largest holding.
GRMN Garmin - GPS maker
VDSI Vasco Data Security - data transactional security (paying for stuff electronically) - primarily customers are banks
INFY Infosys - large Indian IT consulting/services.
TRAD Tradestation - online brokerage
LIFC Lifecell - tissue products (like growing skin for burn patients.)
ASFI Asta Funding - a collections company (example: purchase bad debt from credit card companies and try to collect).
HANS Hanson Natural - Energy Drinks
NTRI Nutrisystem - weight loss program/food
BLUD Immucor - blood tests
MLR Miller Industries - Tow Trucks

Anyhow, that's what I'm in now. Obviously I have more confidence in the larger positions than the smaller. Another that I'm looking at now is QCOM Qualcom, but I haven't opened a position there


I'm not educated enough about the issues this article addresses as I don't understand the balance sheet issues mentioned, but found it interesting food for thought regarding the factors driving the current financial bubble. I like his observations that "We are trading recessions for bubbles, on what seems like a regular basis," and in the article he points out what he sees as key contributors. Read "Welcome to the World of Dr. FrankenFinance"

Thursday, November 29, 2007

Wiser Time - I like this band's sound

I just ran across the band Wiser Time on Check these guys out if you like bluesy American rock. Sound is similar to the Black Crowes. There are a couple of free mp3 downloads for your ipod too if you like. This is good stuff imho.


Nasdaq 100's top 25 PEG Plays.

#7 and #8 are two of my larger holdings (I've been adding to). This is part of why I like their valuations right now.

The "PEG" is the ratio of a company's PE ratio to the earnings growth rate of the company. So if a company has a PE of 30 and an earnings growth rate of 20, then the PE would be 30 / 20 = 1.5. All else being equal you like lower PEGs because you're buying earnings growth at a discount.

The first place I heard about the PEG ratio was in Peter Lynch's book "One Up on Wallstreet," and he's credited with its widespread popularity as a valuation rule-of-thumb.

Wednesday, November 28, 2007

Taser story and other stuff

You gotta read story of a guy testing his new Taser

Check out the "shape of sound" vibrational patterns in this video

temperature swings?

and I just thought this photo was cool.

Monday, November 26, 2007

Out of Pattern

When I was in college a classmate was doing an experiment to determine "g", the force of gravity. The experiment attached one end of a yardstick to a tiny electric motor, with the yardstick able to swing like a pendulum from the pivot point where it is attached to the motor. (click to enlarge)

I don't remember the details, but by knowing factors like friction, the mass of the yardstick, height above sea level, the internal resistance of the motor, etc - "g" could be determined by looking at the electrical current that was generated by the motor (recorded by a computer). The resulting signal from the motor behaved as a damped oscillator, producing a damped sin-wave type signal like that shown (sorry for the poor drawing) when the ruler was raised and let fall.

A very accurate value for "g" was determined (very close to expected value for "g"), and for the most part the recorded observations fit very well with the expected damped oscillation curve. What was very interesting to me though, was that at the very beginning of the observations the curve didn't fit the expectation very well at all.

When I asked the professor why the curve fit so well except at the beginning he said something like "It takes it a little while for it to figure out what it's supposed to do."

I mention this example because I find the out-of-pattern observations like in this experiment as one of the more interesting parts of the experiment. The experiment mostly performed as expected, except the odd data when it yardstick was first released.

I think that's why I'm intrigued by alot of the things that don't make sense - that are a tad out of pattern - and probably why I get interested in some of the more "fringey" things I occasionally post about here, including UFO accounts and videos, near death experiences, and the odd behavior of the stock market. There's enough there to make me think there's something to some of these, even if it's something I can't know for sure. Makes for a more interesting world in any event.

Sunday, November 25, 2007

Marketocracy update

My main Marketocracy fund, similar to my real-life portfolio, has been getting it's clock-cleaned over the past month. As I'm writing this it's down 12% over the past month and down 4.5% over the past 3 months. Needless to say the portfolio isn't built to do well in down markets. This is probably one of the worst stretches I've had since starting the Marketocracy test.

Wednesday, November 21, 2007

Some Thanksgiving tidbits

Since it's always important to ask the stupid question, I got to wondering why we eat turkeys at thanksgiving. I did some google searches and turned up a few thoughts.

Would you guess that turkeys might have something to do with Queen Elizabeth, a goose, and the Spanish Armada?

If Ben Franklin had prevailed in his attempt at making the turkey the national bird (instead of the bald eagle), would we still be eating turkey at Thanksgiving?

Apparently we don't necessarily know a whole lot about the actual first thanksgiving. There seem to be only 2 direct accounts. According to this website the first thanksgiving meal included:

From Edwin Winslow's account:
Corn (probably just for meal. Indian corn was not like present day corn)
Some pretty sorry peas (very bad crop apparently "not worth the gathering")
fowl (probably means waterfowl in the usage)
5 deer

From Governor Bradford's account written many years later:
Cod and Fish
Fowl and besides waterfowl there was wild turkey
venison (deer)
Corn (again, probably just meal, not like modern corn)

Also, the first thanksgiving in 1621 occurred at some point between Sept 21 and Nov 9.

Thanksgiving was an irregular holiday on different dates until made a national holiday by Abraham Lincoln in 1863. Later FDR made it the 4th Thursday of November.

What all of this has to do with turkeys I really don't know how that came to be, but for some reason they won out over deer through the years.


Given the collapse in so many of the financials over the past several months, I wanted to take a step back and put the declines into perspective to see where we are.

Take a look at this 5 year chart for XLF - the Financial Select Spider exchange traded fund. It's down about 25% from the high back in May07. From the chart you can see the financials were trading at similar levels back three years ago in early 2004.

Of note is how steep the decline has been and the current steepness of the decline. I don't understand how to properly value financials, so any exposure I get would likely come through an ETF like this or through a similar mutual fund.

UPDATE: I opened a small position in NTRI Nutrisystems today after it showed some upside strength. It's been in a terrible freefall and even given growth concerns seems like it's worth a bet at 7X earnings.

Tuesday, November 20, 2007

adding on the way down

Bought a little more Cognizant Tech CTSH on the way down today. I probably should be waiting for price declines to bottom, but the price just seems too attractive and figure it's good to increase exposure a bit.

Wednesday, November 14, 2007

Different view of regulations

Here's a good post on The Agitator about how big corporations might actually benefit and welcome burdensome regulatory structures as is it makes it harder for the little guys to compete.

Tuesday, November 13, 2007

National Press Club UFO Nov 12 followup

Here's a first hand blog post by Bijan Bayne, apparently a reporter who attended the National Press Club panel discussion. (I have no reason to believe this is anything other than a first hand account).

Here are brief clips of various speakers - unsure of network source.

Here is a pretty good CNN report

Here's another CNN report from the National Press Club UFO panel. The reporters can't seem to get past the "little green men jokes" used to discredit folks who see something incredible.

Here is a seperate interview with John Callahan, one of the speakers on the panel, regarding an incident in Alaska.

Overall it's been difficult to find information on the panel. I'm hoping C-Span shows the entire discussion in the near future as they often replqy National Press Club talks.

Galaxies and Neurons

I was watching a show on Discovery channel and happened to think of this image from the NYTimes from last year comparing the structure of a slide of 3 mouse neurons and a simulation of a galaxy cluster (including dark matter). Images of a Galaxy Cluster and Neurons

Anyhow, even though I can't understand why there would be such similarity, it's just kind-of one of those odd similarities that sticks in your head.

Here's a website with some interesting animations. In one of the animations you can sortof see the phase of formation shown above.

And if you want to feel small check this out

Sunday, November 11, 2007

Good reading in the Times today

Several of good articles in the NYTimes today

The money in NCAA football and an estimate of what players could make based on the revenue streams they create. (Article is by Michael Lewis, also author of excellent book Moneyball on how to evaluate underpaid/overpaid professional baseball players to help get most bang for your buck on the roster).

I don't normally get into politics, but it's sad how far we've come that congress is probably going to approve an Attorney General that won't state that waterboarding is torture. This is a criticism of the democrats for letting it slide.

And driverless cars might be nearer than you think due to powerful GPS and improving artificial intelligence.

And did you hear about this? Saudi King Abdullah visits the pope at the Vatican.

Saturday, November 10, 2007


You just gotta check out these rocks. The one with the goat standing on it gives me the heebes.

This experiment also applies to investing and fantasy football

Read this article about decision preferences - and how our evaluations of our decisions change our preferences after we make decisions.

The general idea is that we have cognitive process in place to reinforce the idea that the decision we made is better than we initially thought it was, and in the case of purchases as a result we value what we currently have more than we would value it if we didn't have it.

In fantasy football, I think it explains why there are so few player trades in my league. In my league hardly anyone wants to trade because they value their own players too highly. Very few fair trades can be found that are agreeable to both parties.

It can manifest itself as follows:
A. Let's say I have Shaun Alexander on my team. If I want to trade Shaun Alexander for another team's Lamont Jordan, the trade gets rejected.
B. However, if the situation was exactly reversed and I had Lamont Jordan and wanted to trade for Shaun Alexander, that trade would also be rejected.
C. Neither version of the trade will be accepted. Either Alexander > Jordan or Jordan > Alexander, but it seems in our league it depends on which one is on your team. One of the trades has to be better than the other.

In investing, I think it helps explain why we may tend to have a better opinion of our own holdings than the market overall has, and why we might hold onto a loser too long - or do what I've been doing recently and average into a stock that is dropping. In the past I've found this is not a good practice, but as we've seen I sometimes cant help myself because I've convinced myself of the value of a current holding. These psychological experiments in the story show that simply by making a decision to buy a stock I am also making a decision to overvalue that stock.

Knowing that this effect is in play can at least help us understand our thinking and control against these counterproductive tendencies.

Friday, November 9, 2007

Stocks look cheap to me

I added to Cognizant Tech CTSH and VASCO Data Security VDSI today. I can't help but think both of these are just far too cheap. The market's obviously telling me I'm wrong and maybe I'm discounting some things that I should take more seriously, but these (and others) just look out of whack to me.

I read through Cognizant's conference call and while there's concern about IT budgets in Q4, we're talking about a company whose revenue increased 48% in Q3, EPS increased 60%, and reading between the lines the management seemed to be telling me the business has strong prospects looking into 2008. The company's PE is @30 right now, and it's forward PE is closer to 20. It's not often I can buy companies like this at these prices. I increased shares another 40% today.

Here's some numbers I like (current data doesn't include current quarter. y1 = last fiscal year. y2 = previous fiscal year, etc)

Return on Equity
curr 25.3
y1 26.0
y2 28.5
y3 27.5
y4 26.1

Book value growth
curr 47%
y1 45%
y2 51%
y3 57%
y4 57%
y5 63%

Sales per share change
curr: 48% current quarter change
y1 55%
y2 45%
y3 52%
y4 52%
y5 24%

I also am making a big move into VASCO Data Security VDSI. They've gotten hammered and I'm not as comfortable with the story there and expect greater volatility, but revenue and earnings are growing at over 60% clip, so they could still slow considerably here and still justify the current 33 PE. This is a smaller company, without as established trends as CTSH, but Return on Equity and Total Capital seems to be settling in around 40% over the past couple of years. They're clearly getting excellent returns on their capital.

Anyhow, I guess I look around and am just seeing so much cheap stuff out there. CTSH and VDSI were buys today, but looking to keep putting more cash to work moving forward.

I'm keeping an eye on the Garmin GRMN story. Sortof hoping GRMN drops the buyout offer for Tele Atlas and instead works with Nokia long term to have the Navtech maps give them the data they need. I honestly don't see why a partnership couldn't work, instead of having to buy one of the map providers outright. Garmin clearly has good places to put their capital to work other than a buyout offer.

National Press Club UFO panel discussion Nov 12

I find this interesting. The National Press Club is hosting a press conference revealing some apparently new data on Monday Nov 12. The conference includes a governor and many military officials, both American and international. Here's the press release.

It's interesting that a UFO sighted by many ground-crew at Ohare airport in Chicago is prominently mentioned in the press release. I'd heard of the report at Ohare and wonder if there's new data. Here's the report from the Chicago Tribune. Here's a video of the reporter for the Tribune talking about the story.

FOLLOWUP/POSTSCRIPT: Here's a link to some clips following the panel.

Link Gallery 11-09-2007

Here's an interesting illusion.

Too much to drink.

Here's some air traffic control humor.

and the tallest man in US.

Thursday, November 8, 2007

Whew! Getting Smoked

I just got back from a business trip and the market and the stocks I've been holding have been getting smoked! I plan on sorting through the wreckage this weekend, but there's bound to be some buys at the bottom of this mess. It makes me a little mad that I added some just a week or so ago and wish it would've tanked a bit earlier, but this is why it's nice to have some cash sitting around. Might also make sense with big price changes to move "heavy-in" on some of the favorites.

Saturday, November 3, 2007

Comet Holmes

Those of you out in the country might want to try to see comet Holmes which is apparently about the 1/3 the size of the moon currently.

Here's the detail from Astronomy Pic of the Day

It says the comet looks like a fuzzy cloud in the sky below the constellation Perseus, to the west of the Pleidies.

Bourbon and Bluegrass

Each weekend the NY Times has a travel section that talks about sortof out-of-the-way places. This week they had an article titled "Bourbon & Bluegrass" talking about visiting the Bourbon Distilleries in and around Bardstown in central Kentucky , visiting a little music spot in Mercer county KY called "the Barn", and visiting a bluegrass festival in Rosine KY, the home of Bill Monroe in Ohio county. (Per Wikipedia the population of Rosine is 41 people).

When I was little I remember going to one of the distilleries up there. As a kid I remember the smell being - how shall I put it - strong - and also being afraid of heights because the big tall vats of mash were surrounded by see-through metal grills that we walked on about 20 feet up in the air. I was afraid I'd fall through so was glad when the tour ended.

Anyhow, here's the link to the article. It think it requires a NYTimes i.d., but it's free to setup.

Thursday, November 1, 2007


Look at how this factory was hidden during WWII.