Sep

11

 What are your favorite podcasts?

Some of mine are:

Dan Carlin's Hardcore History and Common Sense - quirky commentary on history and current events

Freakanomics - by the author of the book 

99% Invisible - looking at design elements or things behind the scenes (like the tile pattern in the floor of the Atlanta Hartsfield International Terminal) 

Several from the How Things Work web site, and Stuff You Should Know site

Truth for Life with Alistair Begg (conservative pastor from Ohio)

Several Red Hat (my employer) specific including the DG Show which is two senior architects discussing general technology with a serious bent towards security.

I use Pocket Cast because it syncs across multiple Android devices and allows variable speed listening

Marlowe Cassetti adds:

I like to catch the podcasts from Porter Stansberry (on iTunes & stansberryradio.com).

Some other podcasts i listen to:

The Data Skeptic 

In Our Time with Melvin Bragg 

The Skeptic Zone (they did a three phase interview with me) 

Monster Talk 

Skepticality : The Official Podcast of Skeptic Magazine 

Skeptoid 

Oh No Ross & Carrie [ http://ohnopodcast.com/ ]

No, I'm not a podcast addict, although my wife has a different opinion.

Big Al says:

The one not to miss is EconTalk [ http://www.econtalk.org ]

Oct

1

 One thing I have been considering lately from an investor's perspective is the power of consumer brands.

What is the value of a well known brand? My inquiry is motivated by a few different angles, but I think what has most stimulated the question is my study of a a "prestigious" company that has been growing by purchasing OTC medicine-type brands from the major consumer goods and drug companies.

At face value it seems like a great strategy. The shorter term economics look favorable. Yet, when I look in my families medicine cabinet, I notice my wife buys almost exclusively store brands when it comes to things like cold medicine, etc. It only takes choosing the low cost option one time to realize that the store brands (Costco, Walgreens, Roundy's etc) work just as well as the higher cost name brands.

Will the familiarity of an old brand have staying power that can allow for an above average roe over time, or are they wasting assets? How long can reputation last when the underlying reality is not particularly distinguished?

A family relation of mine owns a fashion design/women's retail business. One discovery this person made in the manufacturing process (working with contract manufacturers) is that the big names in mainstream "luxury" goods often have completely average quality or only slightly above average quality in terms of material and construction. The desirability factor is almost 100% psychological - what other people will think, a giffin good type effect. This might seem reasonable with regards to items people use to create their public persona or to establish a sense of status. But what about consumer staples? It seems like a much tougher sell. I know that when I go to Costco, I instinctively grab the store brand and am very rarely disappointed. When presented with two very similar, low risk options, even a 50 cent difference can feel significant at the moment when one must reach for an item off the shelf (or maybe I am particularly cheap?)

So the question is, how to evaluate brands in a competitive, relatively uniform (in terms of quality) market. When are they worth investing in over time (in terms of long-term roe?) I see two big things:

1. Need for reliability/high trust in product (condoms vs. hand soap)

2. Items that signify status (LV logo vs. generic)

To bring things to a specific context, I am presently evaluating if the company Prestige brand's (PBH) strategy of buying "known" but relatively mundane brands will have staying power over time (say next 15-20 years). The short term economics look good, but what about staying power in these competitive markets where stores have an incentive to sell their proprietary brands?

Any thoughts are welcome.

Russ Herrold writes:

 Historically Sears also historically perfected the 'Good, Better, Best' model of offering several lines at varying price points.

That brand has huge value, at least out here in Flyover Country.

Jim Wildman adds: 

Good, Better, Best has been adopted by John Deere as to their lawn equipment as well. 1xx series are cheapos, designed to compete at the low end with the Craftsmen and MTD's. 2xx are better, but still not what one thinks of with a Deere. For those you need the 3xx series, which are what I grew up with as a kid.

Easy to tell the difference once you know where to look as well (pressed metal vs cast pieces, bolted vs welded, etc, etc)

Oct

21

A good friend of my daughter asked me for advice on the best way of winning a man's heart on a first or second date.

I told her to use the Jennifer Flowers Gambit (the surprise erotic interlude when stopped on a drawbridge) or the Lee Raziwell gambit (listen intently to everything he says and ask about his expansive greatness), or the Leona Helmseley Gambit (pretend that there is another suiter waiting for you that evening so you have to leave at 11 pm as nothing inflames a man more than competition) but I feel that others here are more sapient in this area and others and I  would appreciate your insights.

An Anonymous  writer comments: 

My conclusion is that the number one sign of a good long term relationship with a woman is based on the quality of her relationship with her father.

I am basically engaged to be engaged with a woman, and the emotional commitment on my end happened after a dinner where much of the conversation was her describing her relationship with her dad, and how he helped her with her math and physics homework, and then they would walk to the store for a treat, etc, and just the general way that her face lights up when talking about her dad.

So anyway, that's what worked on me. Perhaps she should try it.

/my 2 cents

 Gary Rogan responds: 

This sounds like good advice and the father thing is pretty well-known, but I'm just amazed that you have made some conclusions about long-term relationships after having dated women in around ten countries over two years. 

 Pitt T. Maner III comments:

Well then there are some who base decisions and strategies on a few minutes of observation. The HFT of the dating scene—your most important impression—the first 3 seconds!
 

 José Bonamigo shares:

From Forbes Magazine:

The mating practices of human beings offer a reason for thinking beauty and intelligence might come in the same package. The logic of this covariance was explained to me years ago by a Harvard psychologist who had been reading a history of the Rothschild family. His mischievous but astute observation: The family founders, in 18th-century Frankfurt, were supremely ugly, but several generations later, after successive marriages to supremely beautiful women, the men in the family were indistinguishable from movie stars. The Rothschild effect, as you could call it, is well established in sociology research: Men everywhere want to marry beautiful women, and women everywhere want socially dominant (i.e., intelligent) husbands. When competent men marry pretty women, the couple tends to have children above average in both competence and looks. Covariance is everywhere. At the other end of the scale, too, there is a connection between looks and smarts. According to Erdal Tekin, a research fellow at the National Bureau of Economic Research, low attractiveness ratings predict lower test scores and a greater likelihood of criminal activity.

http://www.forbes.com/forbes/2005/0815/096.html

Best regards from Brazil

JB

 Gary Rogan inquires:

 After a while this degenerates into just socially dominant and not necessarily intelligent men. This modified effect can be readily seen in the Charles/Diana coupling, at least in the older Prince William. Of course how did Charles come about if the theory is correct? 

 Stefan Jovanovich comments:

Trusting Forbes magazine on stories of family history is more than a bit like buying a Degas ballerina sculpture from Toby Esterhase's Soho gallery. The notion that the 5 founding brothers were "supremely ugly" is part of the standard viciousness of the portrait of the Jewish banker as Shylock that survives to this day. There is no evidence of any special ugliness in their portraits.

http://en.wikipedia.org/wiki/Salomon_Mayer_von_Rothschild

http://en.wikipedia.org/wiki/Amschel_Mayer_Rothschild

http://en.wikipedia.org/wiki/Nathan_Mayer_Rothschild

http://en.wikipedia.org/wiki/Carl_Mayer_von_Rothschild

http://en.wikipedia.org/wiki/James_Mayer_de_Rothschild

The Rothschilds married money - the Ephrussis, the Guggenheims and the Oppenheims. One suspects that, as in most things, the question of beauty was left to the beholders.

In the 19th century the great minds were certain that criminal behavior could be predicted by examining the bumps on people's heads. It should hardly be surprising that we are back to estimating future viciousness by measuring the asymmetry of human features.

http://en.wikipedia.org/wiki/Phrenology

http://en.wikipedia.org/wiki/Smiley's_People

 Jim Wildman comments:

I would say that she can't on the first or second date. Winning someone's heart in a deep, lasting way, takes time. Anyone can fake interest for a while. What about when she is sick? When he is grumpy? When life intrudes on the lovers? Are their hearts still connected?

Granted, I haven't dated anyone for over 3 decades, but I have watched 3 daughters struggle with guys..

 Marion Dreyfus questions:

My question:

And some may find this offensive–

Does the ubiquity of pornography, specifically for the ones who purvey it day and night (I understand that equals a LOT of the male population), make falling in love with and making love with real women –including the physical aspects of affection–much more difficult than it used to be before every late-night channel offered a raft of such virtual substitutes for real relationships?

Rocky Humbert comments: 

Choices:

(a) Korean BBQ. Nothing excites a man more than watching a lady handle chopsticks amidst an open flame. Alas, times change. Woo Lae Oak has gone out of business. http://nymag.com/listings/restaurant/woo-lae-oak/

(b) Take whatever advice a parent provides, and do exactly the opposite.

(c) Que Sera, Sera

(d) http://www.datingish.com/695368212/how-to-win-your-guys-heart/

Score 1 point for picking the right answer. Deduct 1/4 point for picking the wrong answer.

 Bill Rafter writes:

When you are fishing, you need to match the bait to the fish. Striped Bass like clams, but Bluefish and Flounder will eat anything, so you might as well use bunker. Think of it this way: a young lady would wear one kind of dress on a date and a different dress when meeting the young man’s mother.

If a man is 25 or younger he is probably only interested in one thing and he is not looking for lasting qualities. Not that there’s anything wrong with that. The interlude on the drawbridge is something he will never forget. A woman with an interesting job is attractive as long as it does not threaten him.

At some time the man starts to look for additional qualities in a mate. Maybe because of pressure from his parents he starts to think of having a family. Then he starts looking for someone who might be a good wife and mother. A schoolteacher is attractive in this case.

In foods, women are attracted to chocolate whereas men are attracted to cinnamon.

 Tim Melvin writes:

I told my daughter in response to a similar question that anything won so easily or quickly likely had little value in the long run. She should be herself at all times and the man who liked and fell for that woman was likely a better match. I taught all the tricks her old man had used over the years to win fair lady specifically so she could avoid them.

 Jose Bonamigo responds:

My intention with the Forbes extract was not to present solid evidence, just a likely explanation for couples like Charles and Diana (a common combination), as Gary pointed out.

Looking at the portraits it seemed to me they were "regular" uglies (just kidding)…

For a more scientific approach, at least in the physical part of dating:

http://www.ncbi.nlm.nih.gov/pubmed/17173598

http://www.ncbi.nlm.nih.gov/pubmed/16318594

Jul

4

 Some final cross country musings, mostly about business models.

On Scott's advice we stopped by Lambert's Cafe in Sikeston, MO. Delightful Americana decor and food (too much, go hungry, return stuffed). It is a large barn like structure with a small (maybe 5') sign on the outside (easily missed) that says "cash only". The entrance is full of stuff that obstructs your view of the receptionist (about 30' from the door). Naturally you wait in line. Having waited for your turn to be seated, you are now facing a VERY large "Cash only" sign. Not much choice here, circle back to the convenient ATM in the alcove in the lobby, say yes to the $3.00 fee and go eat. The cash only rule obviously saves credit card costs, bad charge fees, adds on some commission from the ATM, and gives you cash to tip the piano player. Clever. They do have a 'sticky' clientele as there really is nowhere else to eat and they are catering to travelers who've been reading the signs for 50 miles…

I needed some lug bolts and a tire remounted for my trailer while we were near Cleveland. Google located a nearby trailer store (which was recommended by the locals as well). Small fenced lot with a smattering of trailers for sale and a new Ford F550 parked. The proprietor showed up on a nice Gold Wing (Geezer Glide as my son called it). Big "cash only" sign inside, along with a sign that said "try our new finance plan, 100% down, no interest, no payments". The owner dug through some boxes for 8 lug bolts, remounted our tire, insisted we take the old one with us (along with his opinion of the laws that won't let him burn them), then asked if I needed a receipt. I said no, and it was $20. The remount and disposal alone would have cost more than that in most places. Not sure what the charge was if I needed a receipt, but I would guess $40. Again, no credit card fees, no bad debt and probably no taxes. Also no inventory system (other than his head) and no paper work headache. He has what he wants and the government ain't getting any of it if he can help.

I expect the cash only sector of the economy to make a comeback, though by its nature, it will remain hidden.

On paying for gas. What happened to the zip code authorization on self pay pumps? At least half of the ones I used did not require it. Sample from 6 states, with the same cards. Some stations did, some didn't. I thought it was a requirement??

On fast food chains I don't really like McDonald's food, but.. McDonald's

- is the only fast food restaurant that can consistently staff and use the double drive through windows
- figured out how to use the spoon as a disposable stirrer for their ice cream treat. (It is square, hollow and fits over the shaft of the machine. Nothing to clean).
- is the only one whose lids consistently stay on the cup without leaking
- the food 'quality' and service do not seem to vary with the area of the country or neighborhood. (Chick Fil A is good on this one as well)

Really liked Russ's analysis of the gas prices vs. speed on the website. The truckers I know personally are making over $50K per year.

Jun

15

 So some more "how's business in the heartland" observations. I needed some new tires for my trailer and ended up at a truck towing/repair shop in southern, IL last week. Had a lengthy talk with two individuals, one (Randy) who was the owner of this shop and two others. The other was a stock broker turned truck driver for whom I have no name. Randy's observations (with a grain of salt, since it was 10pm and he struck me as someone who likes a good story…)1) Truckers are keeping their trucks longer. He attributed this to distrust in the new diesels which are designed to meet new emissions requirements. The new designs have proven difficult to maintain and expensive. He is doing a booming business repairing the old ones and "deleting" the emissions from the new ones (think back to the introduction of the catalytic converters). Those who want their new engines "improved" have to sign a waiver that the vehicle will be used for racing…. I suspect it maybe because the truckers can't get financing..

2) Randy's towing business is booming to the extent that he is turning away "road side service" contracts that would cut into his margins. This of course drives some of his repair business. The booming towing business would seem to indicate that the operators are delaying preventive maintenance until the trucks break as well.

3) The stock broker/trucker moved from Wall Street to the freeway in 2002-2003 to get away from the stress of dealing with clients. He is an owner operator under contract with one of the large brokers. He lives in Florida and is home about 1 week a month, though he mentioned taking loads to specific locations to visit his friends. Plenty of work, plenty of money to be made.

4) Also spoke to a tow truck operator who says the new Ford diesel pickups are dying like flies on the freeway. This is a new engine specifically designed by Ford to meet the new emissions standards and it is not doing well. Ford has done very well in the heavy duty pickup market in recent years (F350/450/550) and if their new engine does not hold up, it will affect their standing.

5) My observations about truck vs car traffic are holding up. Long distance traffic (inter city) is predominantly commercial/truck traffic. The hotels that are busy seem to be catering to the contractor/temporary worker market. The big trucks are definitely driving slower than the have in the past. I think I've only been passed twice in the last 2 days by a semi.

Jim Lackey writes: 

The important thing for Nat Gas as a fuel to work is stable nat gas prices. Fleet managers cant have the Nat gas go from 4-16$ back to 4$. All the new supplies LNG to CNG and the new transportation ships and lines are all nice. There is a need for just in time supply. Storage is a problem.

Yes! Nat gas works great as a fuel for cars and trucks. The problem is going from the pipe in the ground and compressing and filtering the gas at home or at the fuel stations. I looked into it for hobby use and it's a no go for me in the garage, so far. The fuel tanks to run a gasoline and nat gas system take up too much room unless you have a big SUV/ truck. If you're solo Nat gas it's then a round trip 300 mile only vehicle.

Westport technologies WPRT and FSYS Fuel system solutions are my idea for investments if this tech ever took off. It didn't. UPS and other fleets use WPRT at 10k a click for LA garbage trucks and 50k for long haulers. The costs would pay off if you had a route like UPS USPS and wanted to invest in the fueling station and systems to run all your tools..forklifts, trucks to tractors.

I am unsure on the delivery costs for LNG to CNG via trucks like they deliver fuels today. It only made sense to me to use the normal Nat gas lines, but then it needs to be compressed and water free. I don't want a CNG tank at my house. Perhaps when all my kids are driving and I own a fleet, Ill buy a Nat Gas compressor and build a shed refuel station. I do not want to burn down the house.

The Germans and Detroit Diesel spent a fortune in the emission tech. Mercedes and BMW use it in their small diesel car engines. Here is the gist.

Cummins, Detriot Diesel and all the engine makers had to deal with how to comply with the new rules set in 2007. Most bought new trucks right before the financial crises..so it was a double hit to production. In New Ford F series trucks the new engine is a 2009 design.. Cummins (for light trucks) is 2007, so lets say they have many of the bugs in the electronics, fuel and mainly the exhaust systems worked out.

The auto makers spent a fortune on Hybrid tech.. That is the gate way to fuel cells.. the cars are powered by electric.. The truck makers spent a fortune on clean Diesel tech. It's a hard lobby job to get all to say let's go nat gas.. even if it makes perfect sense..therefore don't look to free markets for solutions even if nat gas trades at a huge discount per BTU..

On Ford F-250-350 breakdowns…

The old school Ford 7.3 Powerstroke was the engine that went a a half a million miles. The new school Electronic fuel injection 7.3 to the mid 90's was even better with electronics and intercooled turbos.Ford made an awful 6.0 diesel in the 2000's that few liked. The 6.4 was the new engine for the 2008 rule change.. apparently it wasn't a good engine either.

The new Ford 6.7 'scorpion"is a killer engine. However all diesel truck engines suffer from soot clogging up the DPF.. This is how and why new trucks break down.. If you notice a new truck there isn't black smoke out of the exhaust.. here is how that task is accomplished.

"DPF Filters require more maintenance than catalytic converters. Ash, a waste product of burning away the soot during regeneration, builds up on the surface of the filter and will eventually clog the pores. This increases the pressure drop over the filter, which when it reaches 8 pounds per square inch (55 kPa) or higher it will cause a significant increase in NOx emissions and fuel consumption. Regular filter maintenance is a necessity."

and check out how this works.Regeneration is the process of removing the accumulated soot from the filter. This is done either passively (from the engine's exhaust heat in normal operation or by adding a catalyst to the filter) or actively introducing very high heat into the exhaust system. On-board active filter management can use a variety of strategies:

1. Engine management to increase exhaust temperature through late fuel injection or injection during the exhaust stroke
2. Use of a fuel borne catalyst to reduce soot burn-out temperature
3. A fuel burner after the turbo to increase the exhaust temperature
4. A catalytic oxidizer to increase the exhaust temperature, with after injection (HC-Doser)
5. Resistive heating coils to increase the exhaust temperature
6. Microwave energy to increase the particulate temperature

All on-board active systems use extra fuel, whether through burning to heat the DPF, or providing extra power to the DPF's electrical system, although the use of a fuel borne catalyst reduces the energy required very significantly. Typically a computer monitors one or more sensors that measure back pressure and/or temperature, and based on pre-programmed set points the computer makes decisions on when to activate the regeneration cycle. The additional fuel can be supplied by a metering pump. Running the cycle too often while keeping the back pressure in the exhaust system low will result in high fuel consumption. Not running the regeneration cycle soon enough increases the risk of engine damage and/or uncontrolled regeneration (thermal runaway) and possible DPF failure.

Diesel particulate matter burns when temperatures above 600 degrees Celsius are attained. This temperature can be reduced to somewhere in the range of 350 to 450 degrees Celsius by use of a fuel borne catalyst. The actual temperature of soot burn-out will depend on the chemistry employed. The start of combustion causes a further increase in temperature. In some cases, in the absence of a fuel borne catalyst, the combustion of the particulate matter can raise temperatures above the structural integrity threshold of the filter material, which can cause catastrophic failure of the substrate. Various strategies have been developed to limit this possibility. Note that unlike a spark-ignited engine, which typically has less than 0.5% oxygen in the exhaust gas stream before the emission control device(s), diesel engines have a very high ratio of oxygen available. While the amount of available oxygen makes fast regeneration of a filter possible, it also contributes to runaway regeneration problems.The new big truck buying push….

As of December 2008 the California Air Resources Board (CARB) established the 2008 California Statewide Truck and Bus Rule which—with variance according to vehicle type, size and usage—require that in-use diesel engines (in California) be retrofitted, repowered or replaced in order to remove at least 85% of particulate matter (PM) emitted from diesel engines. Retrofitting the engines with CARB verified diesel particulate filters are one way to fulfill this requirement.[1] In 2009 the American Recovery and Reinvestment Act provided funding to assist owners in offsetting the cost of diesel retrofits for their vehicles.[2]

Jun

8

 My wife and I are making our way from Houston, TX to central OH and back over the next 2 weeks with our truck and fifth wheel trailer. Sunday was Houston to Dallas, yesterday was Dallas to Little Rock, today was Little Rock to Sikeston, MO. (I45, US380, I30, I40, I55). Because of time constraints and the size of our rig, we tend to stick to the interstates, but explore when we are unhooked. Just thought I would share some business/market related observations with the list.

1) Traffic composition. I typically drive 40-50K miles a year, mostly interstate, and would say I have a good feel for what traffic looks like. I've been struck by the composition of the traffic so far. It is very truck heavy, more like what I would expect for late night (midnight to 6 AM). I did some estimating and would say it is about 60-70% trucks, all apparently well laden (ie, no bouncing trailers). Good mix of flat, van, reefer and tank. So companies are ordering stuff and it is being delivered. There are enough loads that the trucks do not have to run empty. People are not traveling casually; in particular, the RV traffic is very light. I've been making reservations as we go, but no park has been full yet. Hotel/motel parking lots are vast waste lands. Think the travel industry is in for a rough summer.

2) Truck speed. Typically a good percentage of the trucks have the "hammer down" and are traveling well above the speed limit. Not so the last 3 days. My cruising speed with the trailer is 65MPH (or the speed limit which ever is less). I've yet to have a truck blow by me at 75MPH. And East Texas and Arkansas are prime speeding zones (flat and straight). A good number of the trucks are running 60-65, even when the limit is 70. Very unusual. My guess is that they are all looking for the sweet spot (RPM, engine, transmission combo) where they can milk the mileage allowance for an extra penny or two a mile. No more racing to be an hour early. The price of fuel is starting to cool the American racing tradition. This might have the effect of reducing demand considerably. Depending on the driver, you can vary from 6 to 10 MPG with a semi (I have 2 children who are/were drivers). So if a significant number are being incentivised to save fuel rather than deliver on time, it could have a major impact on diesel consumption. I'm also seeing a lot more trucks with under the trailer skirting and tight fenders over the tractor rear tires, which are both fuel saving devices. The under the trailer skirting almost all looks hand made (ie, semi pro body shop). Again, the truckers are facing tight enough margins that they are willing to sacrifice some load capacity as well as maneuverability (the skirting will hit the ground on railroads, etc) in order to gain a few pennies per mile. If this works, then the big fleet operators are either going to retrofit their trailer fleets or replace them.

3) Small town death While we drive mostly interstate, we do get off for food, fuel and sight seeing. Small town rural America is in deep trouble. Lots of empty stores. Many towns appear to have done some 'revitalization' or 'historic district' which all appear to be failing. Pretty banners, nice signage and empty store fronts sandwiched between antique shops, hair salons and second hand stores. The nicest building is usually the offices of the "economic development commission", or the bank. Was there Federal largess doled out in the last few years for this type of activity? If so, it has failed and appears to have dried up. While not strictly a "small town" North Little Rock has a beautiful riverfront trail and minor league baseball complex. The homeless seem to appreciate the nice grass to sleep on and the restrooms to cleanup in. One intersection appeared to have a section of bleachers for the homeless/pan-handlers to sit on. Not sure if the bleachers (one section 4 rows high) was provided by the city, or if the users had the gumption to haul it in from somewhere.

 4) Agriculture Crop planting is WAY behind. I already knew this since my brothers in central Ohio are just now planting corn, which should all be in the ground by May 15. I can just confirm it based on my own observations. The numbers say that they have already lost 25% of their yield potential by missing the optimum planting season. In years past, significant acres would be switched from corn to soybeans (which get planted later). I need to get the details from my brothers, but I think the government "price support/insurance" programs have become so lucrative, that it is better to plant the corn, harvest what you can and collect the difference from Uncle Sam. If this is true, then there will be extra payments due from the Treasury in the fall that are probably not accounted for anywhere. And in the great scheme of things, it is probably only a few billion (rounding error). Perhaps more importantly is what a 25% crop short fall will do to the world and domestic supply, demand and pricing. I am not really in tune with agriculture anymore, but it should make for an interesting commodities futures ride.

5) Outdoor advertising. Lamar (the most common name I see) and similar are in for a rough time. LOTS of empty billboards, or billboards touting the advantages of bill boards. Also a lot more of churches, hospitals, public service announcements, short term (gun show, event, concert). I take all these as indicators that the market is still very soft and that the billboard companies are dredging the pond looking for new customers, and adjusting the pricing to fit.

6) Replacing rest stops Texas, Arkansas and Missouri are all redoing rest areas. It seems to be driven by green/ecology forces. The new ones feature "eco friendly" designs, solar power, recycling toilets etc. Again, is there Federal largess involved? Or are the states just trying to save some operating costs by reworking old high maintenance rest stops into lower cost "green" ones? I doubt that this is a very consolidated market, probably lots of one off designs.

7) Arkansas Freeways. The state appears to be figuring out how to build smooth freeways. Though stretches of I40 still make you want to walk. And it is not potholes, they just did not understand how to lay 2 slabs of cement beside each other in a level fashion! I've been on gravel roads that were smoother than the remaining bad sections of Arkansas interstate.

Scott Brooks writes:

 If you pass thru Sikeston, MO again, you MUST stop at Lambert's Cafe (Home of "Throwed Rolls"). It's something that must be experienced at least once!

If you are passing anywhere near St. Louis on your way back, stop on by my house and I'll throw some pork steaks and venison (from my farm) on the grill and give you a real St. Louis treat!

And as always, all specs are always welcome to stay in my guest house anytime they're in St. Louis!

Rocky Humbert adds: 

Revisiting this post, a little bit of arithmetic puts point #2 into clear perspective, and allows one to calculate the optimal truck speed versus truck driver hourly earnings. The Kenworth Truck Company website says: "A general rule of thumb of thumb is that every mph increase over 50mph reduces fuel mileage by 0.1 mpg" See this paper.  

That means reducing the average MPH from 75mph to 55mph will increase the average fuel economy by 2mpg.

Let's assume that a typical day's journey is 500 miles. That means the journey will take 9.1 hours at a speed of 55mph or 6.7 hours at a speed of 75mph. And increasing one's fuel efficiency by 2mpg will burn approximately 16 less gallons of fuel. So, if diesel fuel costs $4/gallon, reducing the speed takes an extra 2.4 hours of driver time, but saves $64 in fuel. So the incremental driver time is worth $26.66/hour.But if fuel costs $4.5/gallon, reducing the speed takes an extra 2.4 hours of driver time, but saves $72 in fuel. So that's worth $30/hour.Everything else is ceteris paribus. Conclusion: if the trucker's salary is less than $50,000 per year (and most are, based on industry surveys), then it makes sense to drive slower…. and the pivot point is likely somewhere around $3.75/gal … which is EXACTLY the current national average diesel price.

May

26

 So if there is no NFL, where does the entertainment dollar get spent? Or does it even matter? Are any of the possible destinations for the consumer dollar of the correct size to be seriously impacted by the NFL dollars?

I.e, if 100% of the NFL entertainment dollar goes to NASCAR, does that matter to NASCAR related businesses? (actually, that would about double NASCAR's revenue). Not sure if the seasons overlap, just what came to mind.

Ken Drees writes:

No NFL season impacts economy greatly:

Dave Gibson wishes he had such a safety net. Gibson is sales director for a Holiday Inn located one block from Reliant Stadium in Houston. Here is how heavily his hotel's bottom line is tied to the NFL: The food and drink tab on a typical weekend is $2,000; it's close to $12,000 on a weekend when the Texans are home. There's also a bump in occupancy. All 238 rooms were rented for both preseason games last year and they sold out for a Monday night game 1 months in advance, which never happens, he said.

Jan

5

 I recently made a potentially serious mistake. I updated a web site and left it in a world writable state (i.e, anyone in the world could change it). Fortunately, a good friend noticed and fixed it temporarily while I scurried back to my computer to implement a permanent solution. Naturally one of the things on the web site is a page (by me) discussing the importance of a security mindset.

Mistakes are only useful if you learn from them, so I wrote up my thoughts on the subject. In summation, I set up rules, then broke some of them. Fortunately I had multiple layers of defense (stop loss rules) which made recovery easy.

In the bigger picture of my life, I see that most of the recent (last 5 years) decisions that I now consider mistakes are of the same sort. I had a rule or principle in place, then ignored it. At my age (50+) I'm not really getting surprised by much anymore; when I make a mistake, it's because I ignore what I know and charge ahead.

For example.. I REALLY wanted xyz, so I bought it despite the price, condition, etc, then did not like it, did not use it, broke it, etc. I was REALLY in a big hurry…broke something, ignored the rules, etc I was NOT going to ask for help/go back to the store again

So what strategies are there for stop loss rules, or layers of defense in life? How do you implement them without turning into a cold, heartless SOB? How do you identify reactionary rules (I'll NEVER do that again) that are not sustainable?

Time for some beginning of the year introspection. Here's what I wrote about this on my blog:

As I note in the overview, one of the things I want to focus on is security by design. Nice thought.

I switched from my hand crafted php scripts to Dokuwiki for the web site. Shortly after I pushed the web site out to the world, a good friend called me to say that the entire site was world writeable. Ooops… He was kind enough to flip it to read only while I scurried back home to fix it.

Obviously this was not a good outcome. I've spent parts of the last few days analyzing where I went wrong. How or why did I violate my principles?

- I forgot the rules. In the rush to get things done, I forgot to stop and think before I pushed send. The tyranny of the urgent got the best of me.
- I was complacent in my thinking. In the back of my mind, I knew Russ was watching things (or more correctly that his monitoring systems were). He is a very experienced admin and I trust his infrastructure.
- I did not think carefully enough about my actions. Sort of a variation of point #1, but I did not stop to think about what I was doing and the effects it might have.

In the end, even if Russ had not caught it, there was little chance of damage (other than egg on my face for a defaced web site). I've designed the site with defense in depth in mind.

- By design, the site is read only. It is the target node of the push. I never edit the site directly and never move information from the site back into the development environment. The content of the site is in a Subversion repo on another machine.
- I can easily repush the site from my secure repo
- The host that the web site runs on is not trusted by any other machine. There are no keys or logins on it that can be used on another machine that I control.
- OS level security in the form of SELinux is enabled.
- Logs are monitored
- The entire environment (OS and all) is snapshotted regularly

So the web site is in at least 3 sandboxes, each a little larger, each with their own monitoring system and recovery system or methodology.

Lessons to learn
- Think
- Use check lists to guide your thinking, especially when doing something new or different
- Have experienced people check your work
- Belt, suspenders, boots, raincoat, umbrella. Many layers work together to cover the gaps of each other
- Not only think before you act, but think about how to recover from a mistake ahead of time.

All in all, the best kind of mistake: small, relatively private, easily recoverable but widely applicable.

Nigel Davies writes:

One of the great problems with creating a lot of rules is that it simply gives you more to think about and these are usually not central to the activity itself. I believe that the only answer is to reach such a high level of mastery in a field that one feels an innate sense of revulsion when doing the wrong thing.

Easan Katir comments:

One important word for this topic: checklists. The more items from a list that can be computerized, automated, the better, the routine things, leaving one's mental capital for the important trading decisions .As you know, many working with high risk activities use checklists: pilots, some surgeons, etc..

Jan

2

 There is something about True Grit that is truly loathsome. Each of the 3 main characters is deeply flawed. Marshall Rooster Cogburn is a drunk and dead beat who speaks unintelligibly. Texas Ranger LaBoeuf is a show off, loser, and a chauvinist. The girl is sharp tongued, litigious, and naive (no wonder she didn't get married). It all fits in with the idea that has the world in its grip, that the purpose of life is to keep oneself small by sacrifice. There is no chemistry or romance between any of the characters except for Pepper the Quixotian leader of the outlaws, who as could be predicted was the only man good in his every day business of being a outlaw. No wonder this Western follows the code of the west breaking, denigrating Brokeback Mountain and no wonder that Louis L'Amour's novels have sold more than all western authors combined since the beginning of time, and that they dare not make one of them or an Atlas Shrugged, in favor of this disrespectful Portis trash that violates all the rules of good mystery by having one hair breadth, extraordinary, lucky escape after another, and stereotyped snake bite scene (a la Larry Mcmurtry) release the tension.

P.S I have never written about a subject not directly related to the multivariate analysis of time series that Mr. Jovanovich has not corrected and amplified on where I was astray. And I must admit that I didn't realize that the Western Novel was yet another of his expertises. Okay, I want to know from him if he agrees with me, on this one point that Monte Walsh is the greatest western novel, (if the chapter where the accountant comes to reduce the pay of the hands that took vengeance on the trainmen doesn't make you cry, I'll eat that hat the accountant wore that was so tempting to Hat, Cal and Monte), and the best business novel of all time.

Stefan Jovanovich replies: 

Grub street used to honor the basic code for reviewers: read the book first, then slander the author. We should do the same. Portis' book is like neither of the movies; the John Wayne version comes much closer in spirit, but it is still far, far too "nice". The actual novel is a memoir written by a tough-spirited, one-armed spinster Presbyterian capitalist remembering the one man whom she loved and how they avenged the murder of her father when she was– by other people's standards– "still a girl". Blaming authors for what Hollywood makes of their books is like blaming men for the conduct of their ex-wives after they finish paying the alimony; all the authors can be held accountable for is the size of the check they cash.

I am old enough to have lived near (but definitely not in) Beverly Hills when Louis L'Amour still gave readings at the library. He was a great and good man, and– yes– Monte Walsh is the classic. As is often the case, my anger is misdirected; what infuriates me about this latest version of True Grit is what is says about the Coen brothers' decline and fall. The novel will survive their abomination of it; hell, it will probably be reread again. But for the Coen brothers, what hope is there now? Intolerable Cruelty is the best and funniest film ever about Hollywood and lawyers and now the guys who made it can only do splatter trash.

P.S. Eddy just called. She thinks our only hope is to pray that South Park's explanation once again holds true and blame it all on Matt Damon and his friend. 

Dylan Distasio writes: 

At the risk of raising some hackles, I'd make the argument the McCarthy's "Blood Meridian or the Evening Redness in the West" is one of the greatest Western novels in that genre and one of the best I've read from 20th century authors in general.

J.T Holley writes:

If you like Blood Meridian then go read Suttree. IMHO, it is an existential masterpiece. Cornelius being a man of the "made, trust-fund baby, life of given not earned goes to be a fisherman in TN. Though the content could be considered as a rebellious misguided stab at the establishment, I found it a read that was of self-introspect, self-realization, self-reliance while battling vices with choice by going to the extreme to find such. Once again not oft mentioned amongst Cormac's works, I feel it is one of my favorite reads to crack open and read again. I'm a Southerner so the read is much suited to me, so some of the "in between the lines" stuff might not be appreciated.

Jim Wildman writes: 

My personal favorites in the Western genre.

"The Virginian" (Wister) if for no other reason than "Smile when you call me that"…and the baby swap prank.

"A Man Called Noon" (L'Amour) always makes me think about how I define who I am.

In "The Last of His Breed" Mr L'Amour applies similar themes from his Westerns to modern times. For my taste, the book is a bit long, but in fairness, it takes a while to walk across Siberia. And it has a great last line.

Trader Craft comments: 

Another great classic of the West is Thomas Bergman's "Little Big Man". Much better than the Dustin Hoffman movie.

Scott Brooks writes:

 As one who doesn't read a lot of westerns, (and I'm sure the purist will scoff at me) I have to say that Larry McMurtry's, "Lonesome Dove" is my favorite of that genre.

Good guys and bad guys. Multiple story lines all intertwined. Sudden and unforgiving death. Fortunes made and fortunes lost. Adventures piled on top of adventures. Good choices and bad choices. Friendships that are strong, but that don't override honor. Human foibles that override honor to do what is perceived as the "right thing". False friendship's that never were except to be used as seen fit by the "user".

Story of youth and aging and lesson's learned, lessons shared and lesson's taught. Love found, love spurned, and love lost. The superficial wannabes intermingled with the intellectual drivers. The high self esteem and low self esteem of characters revealed for the world to see.

Characters that arrive unexpectedly and stay and others that depart just as unexpectedly. Ego's that clash and feelings that are hurt. Life and time wasted on loves that can never be.

High risk adventures fraught with deadly consequences. People that love risk, taking more and more risk because the downside never happens to them…until it does.

Their are cowboy versions of "Eddie Willer's" (hard working and reliable) tying their horses to the wagon's of cowboy versions of "John Galt" (hard working reliable, but intellectually superior)…..but in a much more realistic sense….i.e. there's no mythical "static electricity generator" or "nearly infallible hero's"….just really smart people who make more good decisions than bad decisions…but who make bad decision…sometimes with catastrophic consequences.

I could go on and on, but something has just struck me as I write this general description of "Lonesome Dove"…..am I describing a Western Novel, or the modern day "Spec List".

Jack Tierney writes:

The Chair's mention of L'Amour reminds me that I've neglected to comment on the man's autobiography, "The Education of a Wandering Man". Unpublished during his life, the manuscript was found in his desk only later. The author of the Introduction speculates that L'Amour purposely put off publication fearing charges of braggadocio.

After reading the book, it's a possibility. For many years he kept a written record of the books he had read– the selections are so diverse and numerous that it's impossible to pigeon-hole his preferences or determine how he found the time.

Because of finances, he left home at early and, Hoffer-like, rode the rails in search of employment. He also shipped out for as many foreign ports as he could find, baby-sat an abandoned mine for three months in the middle of nowhere without any human contact, and took up small-town prize-fighting when he really needed money and the locals really needed a fight.

But no matter where he was or how broke, he always had books. If there's any drawback in his story it's the realization that one could have read much, much more if he hadn't been sidelined by trivialities.

Pitt T. Maner III writes:

 It looks from L'Amour's autobiography that, from the years from 1930 to 1937 in particular, he tried to read approximately 100 books and plays each year. They were not what you would think a man writing Westerns would be reading.

Not a bad New Year's resolution if one has the time. It takes discipline too.

A quick perusal indicates he liked to read several books by one author or playwright that he liked within each year. Certain themes or genres captured his attention. Perhaps he was buying books in bulk or series from bookstores.

In 1930, for instance, he read many of the plays of Eugene O'Neill. In 1931 he read Flaubert. Shakespeare and Detective stories were popular with L'Amour in
1932. It looks like works by H.G. Wells and Conrad were favorites. L'Amour's lists are interesting because there are many books included that are not commonly read these days.

For instance "Trader Horn" by A.A. Horn and Ethelreda Lewis was a book made into a movie with filming done in Africa under extremely difficult conditions (they don't make movies like the used to).

The world was less explored and a bit more mysterious just 80 years ago.

The best writers often do a tremendous amount of critical reading and know a little bit about a vast array of subjects— even things that would be considered controversial today.

Sep

15

 At this moment in the earth's history, we are closing in on being in a calorie per acre race against starvation. I know food shortages have been predicted for years/decades and we have not seen them (at least in the US) yet. But population is rising, and in the most optimistic scenario arable land would be a fixed commodity (it's not, we have less each year). At some point, the math takes over.

Part of the hidden cost of organic farming is the production lost. You can't grow 200 bushel an acre corn or 60 bushel an acre soybeans or 50 bushel an acre wheat "organically".

Organic farming can be economically feasible for certain crops in certain situations. I don't see it being able to replace "modern agriculture" in production capacity.

Chris Cooper comments:

Perhaps organic farming has some benefits. According to this study, strawberries grown "organically" are better.

Ken Drees adds:

Isn't the premium paid for organic foods more than enough to compensate for yield? Of course this is not regarding staples, but for boutiques?

An organic radish commands a higher premium then a pesticide radish to the right consumer. So the cost of input to the radish crop is covered in both cases and then health benefits are the "kicker" that can not really be proven and are thus under the umbrella of cult. 

Jul

29

 Recently I have posited that the market to an inordinate degree shows the main attributes in its daily moves of the most vivid sports game that has not been used. I would add to this that during each hour the market is likely to move to the rhythms and dynamics of the most likely classical music being played on a classical music station in home town, for example the former WQXR in New York, in full knowledge that these programs are often selected 2 months in advance, and noting that I was a subscriber to same when I was 12 years old.

I am adding to my list of mystical encampments and predictions that the fortunes of Apple and Lady Gaga will follow a similar arc in the future, and as soon as the Lady loses her luster, or a substantial base of her gay support, Apple will be ready to nose dive.

Do you feel that because of these ideas that I should resign my post as chair of Daily Spec which is designed to deflate bally hoo, or is this just a symptom of that predilection that old men such as the sage and the fake doc have to maintain their romantic aura?

Ken Drees writes:

Lebron James' Cavs win over the bulls to end that series correlates to the spy top (04/27/10). That was the zenith of his career in Cleveland. They were then going into Boston on a full tank of expectations. The last game (as a cav) in that series marked a secondary top 08/13/10–then the melodrama begins. His great choice to go to Miami did not mark the low but was the midpoint of the latest rally—he is losing his market moving mojo–his ability to focus the market energy . So now he has lost his core fan support like lady gaga at some point will lose her core fan base. No, I don't think the Chair is that off-kilter.

Popular culture icons somehow bleed into market consciousness.

Vince Fulco writes:

I've long thought that the culture has moved into a greater phase of bally hoo, perhaps a derivative of the Romans' 'Bread & Circuses'. We are now just starting to realize or are being forced to understand that flat incomes, poorly funded retirements and insufficient skills in the aggregate set against historically outsized obligations are a recipe for disaster. Fighting falsehoods would seem to be a necessity of survival and good investing for the long haul. Moreover, one has great opportunities to choose from post deflation.

Jim Lackey shares: 

Actually no. AAPL has talent and is'nt just a fad or a show. Not sayin' that the Lady doesn't have talent, but if and when I see her write and produce tunes for others and sing Jazz, then she will be an AAPL. But no! No I did buy AAPl in 2003 when Mr. Eyerman stood right here on list and said buy it now. Jobs is back, and Itunes is brilliant. It's been a ten bagger since, which is what got me to tell the father in law naaa na na no this Xmas as he was on visit to Music City and toyed with his new Iphone all week. He's a MD and a tech freak and he said, "you know what, I don't need a PC or internet at home anymore with this"

It's not CSCO when it was on the way to a trillion dollar market cap in year 2,000. It's post crash now. Also it's no shorted up fad stock, but yes it's a fashion device an ipod in all 3 colors for different outfits. If I had to guess its a DELL circa late 90's. It never crashed and burned until much later in the tech wreck. It just stopped going up and in these markets AAPL must trade 299.75 but not 300. ha. 

Craig Mee writes:

Just like Seinfeld had the bravery to sell the high and knock back the 10Mil for a tenth season, (one of a tiny minority who do) maybe the gagas and apples should too. To keep up the product development and create new bizarreness no doubt gets harder and harder with everyone hot on your tail. Im sure income changes, say for Seinfeld, from shows to marketing, but he has been smart enough to cut and run, and keep the value. A lesson for us all. 

Marlowe Cassetti writes:

The chair has touched on a point of interest that has bothered me. I don’t know about Lady Gaga, but Apple’s climb towards the top of market valuation appears to be inline with the phenomenon of a bubble. Yes, I understand that we cannot declare a bubble until it bursts, but let’s look at the facts:

There are some 47 stock analysts that cover AAPL, all but two have either a buy or a strong buy recommendation. It is the darling of the market. Its market cap is approaching $ ¼ trillion and at the rate it is moving it is on its way to challenge Exxon Mobile Corp. XOM produces stuff that the world needs, AAPL doesn’t produce stuff that the world needs just what they like to have, until something else strikes their fancy.

It reminds me in the 1980's when people couldn't buy enough Wang stock. You hadn't arrived if your office didn't sport a Wang word processor. The bubble will burst when the last fool buys in at a nose bleed price.

Thomas Miller writes:

 Sometimes one's instincts or gut feelings can't be counted or explained but you feel its true. Probably based on years of different observations made subconsciously. A trader may feel strongly a market is about to break without being able to explain exactly why, because subconsciously they have seen patterns many times before. Considering the source, I wouldn't immediately dismiss this as ballyhoo. Instead of resigning, further testing is called for.

Steve Ellison comments: 

Mr. Aronson noted in his book that it is no fun being a skeptic and that the scientific method leaves deep human yearnings unfulfilled. Facts are often tedious and dull, but stories are captivating, which is why people who have bought into a narrative continue believing it even when presented with strong counterfactuals. "Story stocks" have always been prominent in bull markets.

 

Marion Dreyfus writes:

A new study reveals that people are at their angriest on Thursdays. Thus, perhaps deals might better be made on Friday, when people are delightfully anticipating the weekend, or Monday, when they are somnolently reviewing the events of their past free-time indulgences.

interesting … We have been doing product development on a tool to gather data, and do reduction for self-introspection to find and permit prediction of cyclic true 'more productive' highs, and 'down in the dumps' lows.

Jim Wildman comments:

I've been thinking a lot about rhythms. I've noticed on the treadmill at the Y that people tend to fall into step with each other. Being on treadmills, this is easier since you can be running at different speeds, but the same step count. It creates an interesting effect when the treadmills are on a suspended 2nd story as it was at the last gym. I've wondered how many people it would take to collapse the floor.

This study seems to indicate that there are (at least tendencies towards) rhythms in 'group' emotions. What other rhythms are there and how do they affect me? How do they affect the markets?

Vincent Andres adds:

Here is a good paper on this topic of frequency coupling

Some more infor:

Steven Strogatz

Steven Strogatz's publications

A good book

TED video (look at the part on fireflies, near the 10th minute on metronomes (1st historical notice by Huygens), near the 13th minute and the bridge (not Tacoma … but not very far !)… in fact the whole video examples are interesting). 

Easan Katir writes:

In a year when Paul the Octopus correctly picked 7 consecutive wins, well-documented to the world, when the underwater plume in the Gulf of Mexican Oil matched the plume of gritty ash from Eyjafjallajokull, and the rig explosion coincided with the April market top, who can say anymore what is mystical and what isn't. Lead on, Chair! Lead on!

Craig Mee writes:

Looks like Schumacher should of stayed off the track, as HIS value, now may be plummeting: "For all his greatness, he never knows when to give up. He is a shadow of his former self," added hugely experienced former driver David Coulthard" Ouch!

Jul

27

Steven StrogatzI've been thinking a lot about rhythms. I've noticed on the treadmill at the Y that people tend to fall into step with each other. Being on treadmills, this is easier since you can be running at different speeds, but the same step count. It creates an interesting effect when the treadmills are on a suspended 2nd story as it was at the last gym. I've wondered how many people it would take to collapse the floor.

This study seems to indicate that there are (at least tendencies towards) rhythms in 'group' emotions. What other rhythms are there and how do they affect me? How do they affect the markets?

Vincent Andres writes:

Here is a good paper on this topic of frequency coupling.

more: 

Steven Strogatz

a book on the subject .

and a TED video: (look at the part on fireflies, near the 10th minute on metronomes (1st historical notice by Huygens), near the 13th minute and the bridge (not Tacoma … but not very far!)… in fact the whole video examples are interesting).

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