Airline seating design

I'm a big guy and every time I've been on a plane I've wondered why seating isn't staggered somewhat to allow more shoulder room. Basically the seating design in airplanes seems poorly optimized to take advantage of the space in the cabin.

Click on the image below to enlarge the image of what I'm talking about.


The image on the left shows current standard seating with everybody's shoulder bumping into each other, and the variation on the right shows a proposed staggering of the seating to free up space. (Yes it's supposed to represent an airplane ;-) )

This doesn't even consider potential staggering in the "up and down" dimension but there is opportunity there also.



I saw another variation of this theme that prompted me to make this post, but this variation sits some people forward and some people backwards.

Quote of the day

First graders were asked to complete some common sayings.

Here's my favorite:
"The pen is mightier than the....pigs."

Runner up:
"A miss is as good as a .....Mr."

Read the rest here. Thanks to the Steve-Olson blog for the link.

Dog on a plane

This YouTube video reminds all to wear our seatbelts.

A great article telling the story of indexing

Here's a long but highly interesting article from the San Francisco magazine saying pay attention to the fees in your investments.

I like the premise of the article that rich fees create incentives placing the advisor in conflict with the client. Believe it - some products are preferred to others solely because they generate commission - the salesman's gotta make a living. I firmly believe different products would be sold if nothing but the commissions were different.

Some quotes from the story:

"Turns out that I ... was paying annual fees, commissions, and transaction costs well in excess of 2 percent a year on most of my mutual funds"

"Then he did something I doubt any other financial manager would have done. He fired himself."

"We work in the most overcompensated industry in the country”

“My job was to compile all the academic research on mutual funds, and that’s when it really became clear that active management doesn’t add any value”

"So why is indexing catching on so slowly? A big reason ... is that putting investors into index funds is simply not in the interest of the industry that sells securities. 'They just won’t accept indexing’s minuscule fees.'"

“Eighty percent of active managers underperform the market."

John Naisbitt's "Mind Set"

I just read John Naisbitt's book "Mind Set"

Some takaways:
- He sees China as the real deal - a balanced long-term growth economy with lots going for it.
- India is no China - not even close. India does not have the economic breadth of China. (Right now India is all IT and not much else).
- He see's Europe as economically on the long slide down by refusing reforms to ease the socialist strains on it's economy.
- Despite many concerns, he sees the United States as a dominant world player throughout most of the current century.
- Aside: An interesting observation: consider the transition to the visual world and business implications. He sees books and newpapers in decline to be subsummed by video and visual presentation.

Gravity Train

I found this Wikipedia discussion of a hypothetical "gravity train" very interesting.

It speaks of a letter containing a thought experiment from Robert Hooke to Isaac Newton about drilling a tunnel through the earth and using gravity to move items long distances around the earth without the expenditure of much energy.

At minimum a fun read.

The dancing kid

Time for a video? Check out this 25 month old dance.

If a musician plays and no one hears...

Wow. This is a fine fascinating social commentary on our rushed lives.

How many of us would stop to listen if a world class musician were playing unannounced and incognito? Violinist Joshua Bell participates in the test for the Washington Post. Article by Gene Weingarten.

This is one of the most insightful articles I've read in a long time. I guarantee it's worth the read.

Stocks I like - April

I recently went through an investment review and below is a summary of stocks I currently like as buys. I already own some of these and don't own others, but if I make additions in the following month it'll probably come from the following list.

Favorite Buys Right now that I currently hold a position:
HANS - Hanson Natural - health energy drinks. Probably my favorite overall buy at current prices.
CRDN - Ceradyne - ceramic body armor. My largest position.
NTES - Netease - Chinese internet gaming company. Recently added.
CTSH - Cognizant Technology. IT consulting.
INFY, WIT, or SAY - Infosys, Wipro, or Satayam. Indian IT consulting. I own INFY, but WIT and SAY are very similar. All should trend somewhat together. CTSH is a similar business also, although CTSH is an American company.
GRMN - Garmin - GPS systems.

Favorite Buys right now that I currently do not hold a position.
LIFC - Lifecell - Tissue Regeneration.
GOOG - Google. It's rare that a company as large as Google is of interest to me, but it seems considerably undervalued to me despite the hype.
NTRI - Nutrisystem - dieting
PMTI - Palomar Medical Tech - Cosmetic Lasers
PRAA - Portfolio Recovery Associates - collections.

Executive Compensation

The New York Times (i.d. required) ran an interesting article on executive compensation today. It cites a study by Equilar Inc. regarding executive compensation at the largest 150 public companies based on revenue.

Of the 7 companies with CEO compensation of $40 million or more, 6 are from big Wall Street firms. While I'm a fan of free markets, I'm also cynical and this to me is another reason to be skeptical of what the big Wall Street money houses are doing with your investment dollars - and is another reason to learn to do it yourself whenever possible.

Company CEO compensation
Goldman Sachs $54.2 mil
Occidental Petro $52.1 mil
Merrill Lynch $46.4 mil
Morgan Stanley $41.4 mil
JP Morgan Chase $41.2 mil
Lehman Brothers $40.7 mil
Bear Sterns $40.0 mil

By the way, here are the CEOs on the list recieving less than $1 million.

Company CEO compensation
Apple $1 (Steve Jobs took $1 for comp.)
Berkshire Hathaway $214,250 (Warren Buffett)
Costco $454,629 (James Sinegal
Publix $912,785 (Chales Jenkins)
Microsoft $976,149 (Steve Ballmer)

I'm personally a big fan of Warren Buffett and admire his stance in creating compensation plans at Berkshire that align managment and shareholder incentives - even when it means his compensation is far less than comparable CEOs.

CEO as shareholder advocate: Buffett is in a position where he could take advantage of shareholders, but goes out of his way to bend over backwards to make sure he places shareholder interests before his own.

Funny things seen today

Your pledge class photo

high drama in low places.

"Catch a Snapalope"

and Leonard Nimoy rocks out.

Trend to very high Return on Equity

In many of the stocks on my watch list I've noticed an increasing trend toward historically high returns on equity (ROE). ROE = net income / average balance sheet equity.

To the degree that increasing ROEs are not sustainable it made me wonder to what degree is the overall market seeing the same trend? The data below seems to indicate overall market returns on equity are at a fairly high level.



While the increasing ROE leads to increased profit growth, if it's already at a high level it makes me wonder if there's any more upside earning growth due to more efficient deployment of equity. The more reasonable expectation is that ROEs should return to more historical averages.

Below ROEs are shown for stocks in various sectors. While the very high ROE in energy right now is driving much of the trend, we see that many other sectors are at historically high levels also.



It seems likely to me further expansion in ROE is increasingly unlikely, and should not be counted on to help drive overall market earnings growth.


Data source: AAII Stock Investor Pro database with a handful of tickers excluded due to incomplete or missing data.

Housing Value Roller Coaster

This is cool.

US Real housing values over time, converted into a roller coaster ride.

Here's a link to the graph of real home values showing the unprecedented recent rise we've experienced.

Diarrhea

Warning: This post is a bit red-neck and in very poor taste, but I found my situation too funny to resist. Please don't hold it against me.

As I was leaving business trip to Jackson MS Monday morning I got sick and threw up in the parking lot as I was leaving. Now it turns out the throwing-up had nothing to do with Jackson MS, but was non-the-less foreboding.

By the time I made it to Jackson and checked into my hotel I knew something was seriously wrong with my gut. I hadn't eaten all day. I ordered room service but only ate a scoop of ice cream and a couple bites of salad as all of the food tasted bad. That was around 9:15. From that point on my schedule went something like this:

10:00 pm sitting on the pot
11:00 pm sitting on the pot
12:00 am sitting on the pot
1:00 am sitting on the pot
2:00 am ... you get the idea... every hour on the hour...clockwork

If you've ever seen a dairy cow taking a leak you know how I was feeling.

To stay hydrated I tried to drink water throughout the night, however I think drinking water was more like reloading the cannon.

Now to compound problems, my digestive troubles were coupled with an itchy throat / cough. Now everybody with diarrhea knows a cough is not your friend. Especially when you're trying to sleep...

Well, anyhow at some point in the night I must've been sleeping and coughed as little to hard .... yep, I'd soiled my pants while sleeping.

At that point I was so used to running back and forth to the bathroom that it didn't matter much anyhow.

I wasn't presenting my part the next day until the afternoon so I checked out late and did my presentation in the afternoon. I quit drinking anything and kept popping pepto and that sortof dried me out for a while. Everything went well at the meeting. I actually got to feeling better and ate a sandwich on the way home to Nashville late Tuesday.

Wednesday morning arrived and the big D was back though. I awakened once in the middle of the night with a bad spell, and then another when I woke up late for work.

That morning I was rushing brushing my teeth getting ready to jump in the shower. Have you ever been standing around naked brushing your teeth, coughed, and had poop shoot out your butt onto the carpet? I twisted as fast as I could to try to get my back-end onto the toilet but it was too late.

Luckily I have an understanding wife who didn't laugh at me mercilessly when I asked "Can you get the Rug Doctor?"

Thanks to my wife for putting up with my crap.