Patently absurd

Here's a really good article from NPR about the sad state of patent law in the U.S.. Especially software patents and tech companies. It appears tech companies are buying patents to defend themselves against the other guy's patents, and all the cost is really doing very little to spur innovation or bring anything new to market because so many patents are vague, broad, and obvious.

from the article:

"we talked to a half dozen different software engineers. All of them hated the patent system, and half of them had patents in their names that they felt shouldn't have been granted. In polls, as many as 80 percent of software engineers say the patent system actually hinders innovation. It doesn't encourage them to come up with new ideas and create new products. It actually gets in their way.

Many patents are so broad, engineers say, that everyone's guilty of infringement. This causes huge problems for almost anyone trying to start or grow a business on the Internet.

"We're at a point in the state of intellectual property where existing patents probably cover every behavior that's happening on the Internet or our mobile phones today,"

iPads instead of stacks of printed presentations

Here's an interesting article on a small local government buying Apple iPads to distrubute meeting documents and is doing away with printed agendas and presentations for meetings.

from the article
"At the end of the day, when you are printing agendas around 200 pages apiece and after the meeting they go into the recycling bin, you say, “Why are we doing it like this?” We have to run 20 agendas at 200 pages per agenda. That’s 4,000 pages just on that one, and that’s not including the time to put it together. And you usually don’t get it right the first time because everything changes. I would think it takes over eight hours per packet. "

Quote: Paul Tudor Jones

I was re-reading Paul Tudor Jones' interview in Jack Schwager's book "Market Wizards" and came back across this quote which I remember from the first time I read it. He pretty much called the 2008 financial collapse more than a decade in advance.

"Everything gets destroyed a hundred times faster than it is built up. It takes one day to tear down something that might have taken ten years to build. If the economy starts to go with the kind of leverage that is in it, it will deteriorate so fast that people's heads will spin. I hate to believe it, but in my gut that is what I think is going to happen."

"I know from studying history that credit eventually kills all great societies. We have essentially taken out our American Express card and said we are going to have a great time.... (snip) We borrowed against the future, and soon we will have to pay."

- master trader Paul Tudor Jones - interviewed approx 1989-1990.

Distribution of Stock Price Movements

So maybe this will be a boring post, maybe not. I found it interesting as I'd tried to google information on this subject before and had been unable much that was useful.

My basic question was "what is the distribution of stock price movements?" (what % of the time do they go up, down, and by how much when they do?)

I didn't really feel like a "normal" distribution made sense as down moves "seem" larger and more violent than upward movements in stock prices. (A normal distribution is the normal "bell shaped" distribution we've all come to "assume" in many cases so we can use basic statistical tools such as standard deviations and allows us to constrain probabilities - example if a normal distribution applied we could assume 95% of price movements would fall within +or- 2 standard deviations of the mean of the distribution. This is particularly useful understanding risk).

Well, I was reading Jack Schwager's "The New Market Wizards" this morning - the chapter on trader William Eckhardt and the topic comes up, and when asked about statistics and stock price movements - and he is talking about only using "blunt statistical instruments" and says "I believe that price distributions are pathological." Ha. I kindof cracked up when I read it, but he goes on to talk about fractals and the problem seems to be that sample variance increases as data increases when you look at stock price movement. The more you look at, the more weird, unusual, unexpected moves you find... The implication of this being "it means that lurking somewhere out there are more extreme scenarios than you might imagine". This book came out in 1992, so the term "black swan" wasn't used then, but what he was talking about is the "black swan" concept that's so popular now after the financial collapse of 2008. Market outcomes that you think might be so highly improbable as to not exist might in reality be far more likely than we expect.

By now I've read alot of the stories of these traders in both "Market Wizards" and "The New Market Wizards" and one theme that they keep coming back to is cut your losses fast - and keep your risk small so that no one event can wipe you out. It seems the field is littered with traders who can make money for years but then "blow up" when they run into something unexpected and haven't properly respected risk. Assume risk is much larger than you expect it is, because how you manage risk makes the difference between surviving and getting wiped out.

MIssissippi River Flooding and Hurricanes

I work in the insurance industry and a couple weeks ago the issue of this year's hurricane forecasting came up. At the time we were going through some of the worst MS river flooding in years, perhaps back to 1927. My thought is that MS river flooding should be correlated with hurricane activity as the MS river dumps so much water into the Gulf of Mexico - a major storm path for the hurricanes. My initial thought was this should impact hurricane activity because the temperature of water in the gulf is associated with hurricane severity and formation. If the MS river is dumping alot of excess "cooler" water into the gulf it should be associated with lowered hurricane activity.

Average year: From what I can tell an "average" year for storm activity is "The official NHC seasonal averages are 11 named storms, 6 hurricanes, and 2 major hurricanes." I think the 11 named storms include tropical storms, not just hurricanes. Recently it seems almost all forecasts have been higher than this, but I guess the above are much longer term averages.

I didn't investigate any of this throughly, mostly just quickly looked some stuff up - but thought it was interesting non-the-less. MS river flooding does seem correlated with below average storm and hurricane activity - at least from what I can tell - I'd be betting the "under".

Bad MS flooding years:

1927: I started by looking at 1927 hurricane data - because 1927 was the worst year for MS river flooding in U.S. history. I honestly didn't know if they even kept hurricane records back then, but they did have records. The hurricanes didn't have names, but they did show tracks... we had 4 hurricanes that year, and interestingly all of the hurricanes stayed in the Atlantic / not entering the gulf of Mexico.

1951: A "moderately active" hurricane year. This is apparently the most active hurricane year of the MS river flood years looked at - 8 hurricanes in all, but interestingly none of the hurricanes made landfall in the US as a hurricane. Strong "stay in the Atlantic" tendencies here too.

1973: The 1973 flooding of the MS was some of the worst in U.S. history so I also looked there. Interestingly only 4 hurricanes that year also - although 1 did reach strong category 3 status out in the Atlantic. Like in 1927 there was a strong tendency for storms to stay in the Atlantic.


1983: 1983 MS river flooding was charactarized as the 2nd worst MS river flooding in the past century, so we look here also. Similar trends arise. 3 hurricanes that year - and the "lowest accumulated cyclone energy count since 1950". 2 of the 3 hurricanes did enter the gulf that year though.

1993: Another bad MS river flooding year per Wikipedia. 4 hurricanes that year with tendency to stay out in the Atlantic again.


Atlantic Hurricane Seasons

1927 4 hurricanes
1951 8 hurricanes
1973 4 hurricanes
1983 3 hurricanes
1993 4 hurricanes
2011 ?

1927 Wikipedia entry
1951 Wikipedia entry
1973 Wikipedia entry
1983 Wikipedia entry
1993 Wikipedia entry

Scrabble Triple Triple word score

Hey all, played scrabble w/ wife and Dad today. I'm normally not a big board game guy, but had something pretty cool that I don't recall ever happening while playing Scrabble. Check out the board below.


"Divulged" on the right covers two triple word scores and also used all 7 tiles. This is probably my biggest word ever - 167 pts. 13 x 3 x 3 +50pt for using all 7 tiles.

"Tempter" on the bottom was also a 7 tile word (along with "It" on the bottom) which gave me another 50 pt bonus. I don't think I'd ever had multiple 7 tile words in a game either.

Cooking Pizzas on Mother's Day weekend

When I was younger one of my favorite meals was home-made pizza. There was a lot to prepare with pizzas so usually me and my Mom, or me and my Mom and my brother would all help put the pizzas together.

I made some pizzas today - here's how it went - in picture collage style.



...and adding more toppings


..and the final product

Been adding back to my portfolio

I'd raised alot of cash a few months back, but now moved some of that back into the market recently.

This week I've added to or opened positions in the following stocks:

MSFT - Microsoft - back in again. I like the softy. It just looks cheap to me and I can't figure out why.
AAPL - aaahhhh! I broke down and bought the Apple too! First time for me, but it looks cheap too.
EBIX - Added some more back to my position today.
MDF - Metropolitan Health - I doubled up my position here. This is a deep value play for me.
MED - Medifast
DST - DST Systems

I've got my eye on a few others, but sticking my toe back in the market with these.

Photopic Sky Survey

Look at this Photopic Sky Survey of the night sky. Zoom in a few things. Find the Orion Nebula or Andromeda. This is impressive.

And according to this article, all the photos were taken by an amateur astronomer, Nick Risinger. Thanks Nick - very cool!

Hoveround

I saw an ad for the Hoveround watching the NFL draft today. Am I the only one that it upsets a little bit that they advertise "at little or no cost"? I'm all for devices that help folks get mobility, but with all the budget issues we face should they be provided at "little or no cost"?

I go on record and say no. Why wouldn't I want one if it was nearly free?

Uranus Visible at Dawn on Saturday

Uranus Will Be Visible at Dawn on Saturday.... Just thought I'd warn you.

Phantoms - Rose Reiter

This is the first song I ever heard by artist Rose Reiter many years ago, and I became an immediate fan. I heard it as I was clicking through tunes on www.unsignedbandweb.com - a website that hosts songs for unsigned artists. There's often a lot of "not so good" to wade through to find the gems, but then some-times you find something like this - something of such clear talent and quality that it makes you wonder why some songs/artists get a big push by a label, and why others remain heard by only a few.

This is Phantoms by Rose Reiter - one of the best songs that few people have heard.

Messy stores = more sales

As an investor in retail stores I found this article in today's NYTimes very interestng. It speaks to several retailers, but in particular Wal-Mart's efforts to make their stores more appealing and less "messy". Of the nicer/more orderly stores:

“They loved the experience,” William S. Simon, the chief executive of Wal-Mart’s United States division, said at a recent confer-ence. “They just bought less. And that generally is not a good long-term strategy.”

Here's the full story: Retailers Pile Stuff in the Aisles.

There's an investment angle to watch for here too. WMT pays a nice dividend, is cheap by my metrics, and has a powerful brand and competitive moat if they'll just get back to basics.

Mars with an ocean

Here's an interesting map, utilizing NASA survey data, showing what Mars may have looked like with an ocean.