Garybsmith

Trading, Golf, General thoughts. Not necessarily in that order.

Month: December, 2011

Best column of 2011. Period.

Every so often, something I read touches such a nerve, it resonates for days, weeks, and sometimes years.  I’m thinking the writing below by Joe Queenan is going to be one of those pieces.   I attach it, unedited:  the writing is terrific (as usual for Mr. Queenan); the message even better.  Happy New Year to everyone!

In 2012, I’m Getting My Hopes Up

2011 was the year that Americans were constantly told to avoid getting their hopes up. Case in point: When the U.S. unemployment rate surprisingly dropped to 8.6% a few weeks ago, the experts said: “Don’t get your hopes up. The only reason it dropped is because so many people left the work force.”

Then, when the Dow Industrials soared after the euro crisis seemed to abate a bit, the experts cautioned: “Great, but don’t get your hopes up. Greece could go under. Spain and Italy, too. And then all of Europe could implode.”

Similarly, when word got out that the U.S. economy had grown at a much faster rate than economists had predicted, the experts sniffed: “Big whoop. If Europe goes into a recession, all bets are off.” Sure enough, when the trade deficit substantially narrowed, the experts carped: “Great. But if the euro collapses, the trade deficit will go right through the roof.”

I for one am tired of being told not to get my hopes up every time it looks like there is something to get my hopes up about. I am tired of being told to take things with a grain of salt, to hold my horses, not to get ahead of myself. Just once I would like to see a report reading: “Housing starts grew at their fastest pace in five years. That’s it. No caveats. No statistical anomalies. Nope. Happy days are here again. Everybody, grab a Champagne glass.”

I am no Pollyanna; I realize that tough times may still lie ahead. But what’s the point of spending all our time waiting for the other shoe to drop?

For starters, hedging bets is not the American way. Just ask Patton. Or Sherman. Or Custer (maybe that’s not a good example). Still, imagine what would have happened if previous generations of Americans spent all their time worrying about those gathering storm clouds instead of keeping their eyes peeled for the silver lining?

“George Washington and the boys pounced on the British garrison at Trenton and put those despicable Hessians to flight. That’s nice, as far as it goes. But it doesn’t make up for our crushing defeats at Brooklyn, Fort Washington and White Plains. And it doesn’t change the fact that the British are better trained, better supplied, and can actually field a working navy. And, oh yeah, their troops actually have shoes. So don’t get your hopes up.”

But Americans did get their hopes up. Just as they got their hopes up in the summer of ’42 with word that the U.S. Navy had defeated the Japanese fleet at Midway.

Today, news like that would come festooned with qualifications: “Close, but no cigar. The Japanese are still dug in on Iwo Jima and Okinawa, not to mention Burma, Indonesia, the Philippines and China. And, oh yeah, Guam. So don’t get your hopes up.”

When the Berlin Wall fell in 1989, the experts were there to tell us that it wasn’t such a big deal: “It’s nice that the Berlin Wall came down, but we’re not out of the woods yet. The Soviet Union, with its massive army and vast nuclear arsenal, still dominates Czechoslovakia and Romania, not to mention Estonia, Latvia, Lithuania and Ukraine. The collapse of the Wall is a cute, heartwarming story. But don’t get your hopes up.”

Well, we did get our hopes up. And look what happened. Maybe that’s what we should be doing today.

I’m not denying that we may still face some rough sledding. I’m not oblivious to the potential for a second economic downturn if things go south in Europe. I just don’t see why we have to think about the potential bad news immediately after we get the good news.

Why can’t we have 24 hours to enjoy the declining unemployment rate, the faster housing starts, the soaring stock market, the burgeoning GDP? Why can’t we have a few hours’ breather from the doom and gloom? There will be time enough for gloom and doom later. There always is.

That’s why the very next time I read some good news—any good news—I’m casting my fate to the wind, putting the cart before the horse, and counting my chickens before they’ve hatched.

I’m planning to get my hopes up.

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Idiotic obsessing.

For the past few weeks, I’ve been obsessing about, of all things, the saddle height on my bike.  Now, you may find this hard to believe, but there are a number of scientific ways to figure out the exact number — to 3 decimal places no less! — the perfect height.  Think I’m kidding?  Here’s one method:

Also using inseam length as a guide, this formula calculates 88.3% of your inseam length and uses it to measure the distance from the centre of the bottom bracket to the top of the seat height.

Of course, it doesn’t stop there with such procedures as the “Holmes Method” advocating the use of a goniometer for

measuring the angle of the knee joint at the bottom of the pedal stroke. Holmes recommends an angle of between 25 and 35 degrees and closer to 25 for those with a history of patella tendonitis.

Naturally, I’ve been going crazy trying to figure out which method and which measurement will give me the “right” number, and usual, started obsessing about it.  I finally realized I’d gone overboard when I stumbled upon Sheldon Brown’s (noted common sense bike guru) simple advice:

 “I suggest gradually raising your saddle, perhaps half an inch (1 cm) at a time. Each time you raise it, ride the bike. If it doesn’t feel noticeably worse to ride, ride it for at least a couple of miles/km.

If it had been too low before, your bike will feel lighter and faster with the new riding position. If raising the saddle improved things, raise it again, and ride some more. Keep doing this until the saddle is finally too high, then lower it just a bit.”

Ah, there you have it.  Keep raising it until it’s too high, then move it down a bit!  Simple and straightforward.

Anyway, I bring this up because if you’re like me, you tend to do the same damn thing to with trading: you make it WAY too complicated when simple would work a lot better.

In fact, in looking back at the history of my trading, my simple strategies (usually along the lines of buying stock in companies I use and holding them until they go up!) are invariably the most profitable.

So, in 2012 I’m going to obsess a little less and just stick to the simple stuff.  Yes, 25 years of trading and I’m finally discovering simple trumps “smart.”

10 things I learned in ’11

While nearly everyone is looking ahead to ’12, I find it’s more helpful to look behind and see if I learned anything in the past 12 months.  Usually, I stumble upon something useful…which I quickly forget about the second week of January.

Anyway, this year I’ll at least have a record of my insights/discoveries, and won’t make the mistake of “re-learning” them in 2012.

1.  “Breaking Bad” might be the best show on TV.  I recently discovered this via Netflix about a week ago, and have been watching a new episode each evening.  Not sure how I missed this.

2.  My WordPress column, “How to be a d*ck,” was the most read column in the past year.  Did people like the title?  Do they strive to be a d*ck?  Did they think I meant DUCK??  Not quite sure.

https://garybsmith.wordpress.com/2011/11/09/how-to-be-a-dck/

3.  My most notable talent is the ability to grind away.  I admire superstars in any endeavor: the trader who posts a 1000% year; the cyclist who can put out 1500 watts; the golfer who can drive it 300+ yards.

Sadly, I am none of those, in pretty much every thing I’ve tried.  No, I’m a lunch pail carrying “mudder” who’s primary resource is consistency.

I guess that’s something, though, as “showing up” is a pretty big part of success. Hopefully.

4.  Dividend.com is an excellent resource.  I have about 3 or 4 outside resources I use as sanity checks for my investing/trading.  Dividend.com is a recent and valuable addition.

5.  I am dull.  Or maybe just “consistent.”  In any event, a great day for me is breakfast, email, trade, workout, nap, walk the dogs, dinner, TV, bed.  And, apparently, I can do that 365 days a year with zero deviation and be quite content.  Again, is that dull or consistent?  Both, I guess.

6.  Twitter exposes nearly everyone’s need for approval.  I’ve written about this before, but the sheer volume of “look at me” posts (including from myself) is mind-boggling.  I guess very few of us are all that secure.

7.   July is my favorite time of year.  It’s when the Tour de France is on.  But, you have to be a cyclist, I think, to truly appreciate it.

8.  DC sports teams are pathetic.  I really only care about the Redskins, who are maddening in almost every respect.  But, the Wizards, Caps, and Nationals are also terrible and look to remain that way for the foreseeable future.

9.  I like butternut squash. This is the Breaking Bad of vegetables.  Nancy whips it up so they’re like sweet potatoes.  Heaven.

10.  When I’m giddy, it’s time to sell.  I think I’ve learned this every year for the past 20 years, but it finally dawned on me this year to go to cash when I’m feeling great about my trading success.  Hope I don’t forget it in 2012.

 

Useless predictions

It’s about that time of year where financial pundits start making predictions about 2012.  Trust me, I know I’ll have my turn in a week or so on TV.

In general, though, I think long term predictions about the market are useless.  In fact, maybe they’re worse, because if you invest or trade around them, you could lose some serious money.

My strategy has always been to fall into one of two camps: either the very long term, or the very short term.  For the former, I’m always optimistic.  I buy companies I like when they fall, and then sell them when they rebound.  Pretty simple and if you have patience, almost always a winner.

For the short term — and here I’m talking no more than a few weeks — I’m strictly a momentum player.  If the market is trending down, I try to be short. If up, then long.  But even then, I have a number of money management techniques to get me out if/when I’m wrong.  And I’m wrong a lot.

I guess if pressed, I’d always say the next 12 months are going to be great.  I mean geez, who knows, and if given a choice, who wants to be Debbie Downbeat thinking things will get worse?  Sure, you sound really smart pointing out all the pitfalls, but folks like that always strike me as being pretty depressing, and we all have enough in our lives to worry about other than some guru saying the Apocalypse is near.

Especially when most of the time they’re dead wrong.

Losing weight!

In general, I’m not a fan of self-help articles or columns.  They’re always so damn tedious, the tone overrides the message.

That said, here’s MY self-help column of the year.  And, of course, it’s on a subject which I have no qualifications or expertise.  That subject is weight loss.

Huh?  “You’re already thin, you Man-orxeic!”  And yes, I am.  But, I decided to drop another 5 lbs during the winter to a) get to my optimal cycling weight, and b) give me some kind of off-season challenge.  And c) yes, I know, I’m nuts.

Anyway, I’m almost at my goal, so I decided to share “my secrets.*”

1)  I stopped eating all sweets.  (Well, except for one piece of toffee each night. )  Now, don’t get my wrong, I’m as weak as the next guy and used to LOVE having a piece of cake or cookies with milk every single night at bedtime.  And I still would….if we had them in the house.  But, I decided we’d stop picking them at when supermarket shopping, so they’re simply not an option because they’re not around.

2) Substitute good for bad.  But, I have to have something at bedtime, so I substituted a bowl of grapefruit.  For me, that’s not like substituting tofu for a burger.  I LIKE grapefruit, so it was a no brainer.  (But, I also put my one piece of toffee on the side.)

3.  Eat slowly.  I know, you’ve read this before, but it works.  I eat just a little slower (but still, admittedly faster than almost everyone else.)  As a result, I feel fuller more quickly.  And then I eat less when I go back for seconds.

4.  One big salad a week for dinner.  Another no brainer. I like salads.  Never thought of them as a meal until recently, but why not?

5.  No french fries, few potatoes.  I must have some Irish in me because I love potatoes of every stripe and color.  So, this was hard, but I just asked Nancy to cut them out and instead — yuck — substitute vegetables.  Or at least some veggies (oh, how I hate that nickname), I can stand.  Spinach, broccoli, and asparagus make the list.  I draw the line at cauliflower and beets, however.

6.  Half a beer.  I would never call myself a big beer drinker.  In fact, I get sick on more than 2 beers.  But, I would call myself a regular beer drinker.  Probably about 1 beer a day.  But, now instead of pouring myself an entire beer, I just pour a half glass (we have a beertender, which makes it easy).  Same taste, half the calories.

7.  A jar of nuts.  I snack throughout the day from a jar of almonds we have on the kitchen counter.  I grab a small handful whenever I’m hungry.  Helps stave off giant cravings later on.

8.  I still eat crap.  I’m not a monk, for crying out loud.  I’ll still eat a burger, pizza, etc.  I just try not to gorge myself.  So, instead of 2 burgers for dinner, I’ll start with one, eat it just a little more slowly than a rabid dog, then go back for another HALF burger.

9.  I still eat crap, II.  When I’m coming back from a bike race, I always stop at McDonald’s.  It’s a vice.  But, I let my thrifty side show by ordering off the $1 menu: 2 burgers, 1 small fries.  Saves me money and calories.

And that’s it.  That’s all I’ve done.  Sure, I could do better.  But, for now that’s plenty.

 

* The real science is here, btw:  http://www.menshealth.com/weight-loss/truth-about-calories

 

You could have predicted this…

About 5 weeks ago, Nancy and I had a nasty incident at the local dog park.   (Actually, I was the real culprit.)

https://garybsmith.wordpress.com/2011/11/14/my-people-skills-must-suck/

In any event, I decided to rectify things by dutifully sending off dog license applications to Montgomery County.  5 weeks later I’m still waiting for a reply, and finally decided to call.

After 3 attempts, I did get someone on the phone who informed me I’d be hearing back…in another week or so.  He said that response time is normal given the volume of mail they get.

So basically, a simple transaction — which, btw, could all be handled online in about 30 seconds — takes 2 MONTHS for the government to handle.  Criminal.

Again, and I don’t want to beat a dead horse, this is the exact reason why having the government take your money and spend it as they wish, is simply idiotic.  It’s not that they sometimes don’t provide a needed service.  Rather they provide it so inefficiently, it’s just a pathetic waste of time and money!

Rude?

Every year a neighbor of ours hosts a large company/holiday party.  So large, there’s valet parking, with cars parked a quarter mile away.

Now being that we live next door to this fellow, our driveway is a convenient place to park if you don’t want to wait, post-party, for the valet to get your car.

So, for the few people we know attending the party, we have no trouble having them use our driveway.  In all cases, though, they’ve phoned or emailed ahead of time to make sure it’s okay.

This year, however, I came home to find one of our friends pulling in to our driveway ready to walk the short distance next door.  I had not spoken to him in months.

He looked kind of sheepish when he got out of his car and asked if he could park there.  I said, “of course,” wished he and his wife well, and bid them good night.

But, the whole thing struck me as odd.  Even kind of rude.  Again, I have zero problem with him parking outside our front door.  But, if it was me, I know I’d always ask ahead of time, even if the give-and-take is perfunctory.

But, maybe I’m just overreacting…..

 

 

Maybe ’12 will be a GREAT year for the market

The 2012 market forecasts have started pouring in from the pundits and by-and-large, they’re fairly negative.

It’s Euro-this, debt-that, gridlock here, deficits there.  Or maybe it’s downgrades, the sinking dollar, a crisis du jour, and etc, etc, ad nauseum.   Oh, and your house?  It’ll be worth nothing!

All in all, it can all be pretty much summed up by the predictably downbeat Paul Farrell:

http://www.marketwatch.com/story/our-decade-from-hell-will-get-worse-in-2012-2011-12-13

Now, I’m no pollyanna, but almost nowhere do I read where 2012 could be a terrific year for the market.  I mean, based on the forecasts I read, there’s pretty much a 0% chance the market will go up.

And it’s usually in cases like that — student body left — that the market goes right.  The “black swan” event no one sees coming.

At heart, I’m a trader who tries to adjust for whatever the market throws at me.  But, if I had to guess, I think conventional wisdom again has it wrong: 2012 is going to be a pretty good year.

K-cup goofiness

Of all the products that have taken hold of our consciousness, none seems sillier than this K-cup coffee craze.

I understand the convenience, but are people so lazy they can’t brew a simple cup of coffee?  Add to that the expense: by my estimates the coffee runs about 25 cents per cup.  I figure our home brew is less than half that.  Plus, we don’t have all that waste to deal with.

As for quality, I’ve tried a variety of different K-cup flavors, and nothing comes close to what we can whip up at home.  (the secret is in the hot water, which almost no coffee maker ever get right.)

Instead, save yourself money and improve your coffee flavor by doing what we do:

Step 1: Buy a Technivorm Moccamaster.  Simply the best coffee maker on the planet.

Step 2: Buy a burr grinder.

Step 3: Use filtered water

Step 4: Buy decent coffee and grind your beans fresh each morning.  (BTW, you can even get away with stuff like 8 o’clock coffee.  Starbucks, Peets, etc are good, but the store brands work just fine.)

Step 5: Enjoy.

See, now you have better, cheaper coffee that maybe cost you an extra 60 seconds to make.

 

 

 

Hard going up; SCARY going down

This past weekend, I drove down to Wintergreen, VA to “recon” a race I’ll be doing in April.  It’s an uphill time trial that ascends the slopes of the Blue Ridge Mountains up to the Wintergreen Ski Resort.  Or better stated: it’s a bitch of a climb.

I was ready for it, though, and slogged through for 47 odd minutes.   Hard, but not overwhelming.  Of course, I didn’t do it a “race speed” and I was carrying an extra 20 lbs of winter clothing, my “training bike,” water bottle etc.

http://app.strava.com/runs/2567823/embed/31f88d9821cd4a9fb4b33286ce6e00e631274a18

Going back downhill, though, was a different matter.  Even after riding up, I still wasn’t all that familiar with the roads, and I didn’t want to push it going down.  Now, I’d say I’m a pretty good, but not great, descender.  Moving down 15% slopes with hairpin turns, though, pushed me right into the “terrible” category.

And when you’re terrible, you’re forced to ride the brakes to curb your speed.  The problem?  When you’re on the brakes, the bike doesn’t want to turn.  So, you’re either going 50 mph and not being able to turn because of the speed, or 20mph, but not being able to turn because of braking.  Not a good choice!

But, I inched down until the road straightened and I let it go, hitting nearly 40mph.  At that point, I heard a clear “thump, thump” every time I touched the brakes.  I thought a rock or something had wedged into my brake pads, but I made it back to my car safely.

Only then did I see my brake pads were worn down the nub, and my entire rim had heated up so much, the carbon was warping.  I figure if I had ridden a bit longer, I’d have had a nasty blowout.  And a nasty blowout at 40mph, would have been, uh, disastrous.

Next time I do the course, I’m only going uphill and meeting Nancy at the top.  Much less scary that way!