Monday, March 02, 2015

Rust Never Sleeps

And so it begins…another possible unnecessary run on retail ammunition. If this happens count on shortages, high prices, hoarding and black market resellers turning an obscene profit all over again.


If you missed it a recent claim being made by the BATF is that commercially available military equivalent of the 5.56x45 XM855 cartridge is capable of piercing stage 3 armored vests. Since some manufacturers  have been able to downsize the AR15 rifle into what is claimed to be a handgun size variant, this ammunition is considered to be deadly for law enforcement when confronting a hostile element possessing a weapon classified as a handgun capable of firing the XM855 cartridge.

They had to dig up previous language in some old legislation and compromise the definition of handgun to support an effort to mount yet another assault on the rights of law-abiding citizens.

Saturday, February 28, 2015

Saturday Night Flyover Country

Changing Behavior

Most of this post will go below the line because, as Dan would say, it's boring.  This post is about behavior change since I've tried to do a lot of it over the last year or so.

Wednesday, February 25, 2015

The Next Big Thing

Dan posted this up at Chicago Boyz and it also has a great discussion thread there...
A few weeks ago while sitting around, my wife and I started discussing the Next Big Thing. My new smart phone is simply an improvement over the last one – that isn’t it.
I will tell you what is the Next Big Thing – driverless cars.
I had heard about them a few times before reading America 3.0, and they are mentioned in that book. I send Lex links about testing and we have both come to the conclusion that the big hurdle with them won’t be the technology – it will be regulatory hurdles. But this is coming faster than we all think – and there really won’t be much anyone can do to stop it since the demand will be intense.
I imagine the cops will be trotting out “safety” issues when the real reason will be that their days of writing dumb speeding tickets will be over. That revenue train, along with the DUI industry, will take major hits. I imagine they and others will fight this to the end. Insurance companies will likely see damage done – as crash rates go lower, they will be forced to drop premiums, or people will just go to a simple liability policy and chance the crash.
As for me, I lose 70 minutes a day of productivity sitting in my car. All isn’t lost since I listen to Bloomberg business news, however if I could have that 70 minutes to catch up on email, or to simply further myself by reading a book it would be a huge plus in my life. How about being able to have more than one glass of wine with dinner with my wife at a nice restaurant or at a wedding reception and not having to worry about a DUI?
Elon Musk says that we will be ready, tech wise, in five to six years:
Mr. Musk expects autonomous driving to be safer for riders and pedestrians by a factor of 10.
I absolutely believe this. In addition, when the computer gets traffic reports, it will choose the quickest way to the destination, and will choose the speed to use the least amount of fuel.
But for some mass market brands like Chevy, Honda or Volkswagen, Winterhoff says it will tougher to compete and win in a world where self-driving cars usher in the idea of mobility on demand.
“Autonomous drive vehicles will mean many families will need fewer cars and if you only have one car instead of two, you will likely make it a premium brand,” he said.
Imagine having only one car for a family of four. In my life, it would drop me off at work, head home and transport the wife if she needs to go somewhere, pick up/drop off a kid at school, head to the market where my groceries will be loaded by a clerk there that I have already paid for with Google Wallet, etc. etc.
When you get talking heads speaking about winners and losers, you can feel that it is on the way. I just can’t wait.

25 Stories About Work - The Difficulty of Verifying Cash

I was recently on a plane doodling and thought of some funny / interesting stories from 25+ years of working and traveling. So I decided to write them up as short, random chapters of a non-book with the title of this post. Hope you enjoy them and / or find them interesting. Certainly the value will be at least equal to the marginal cost of the book (zero)...

The Midwest, early 1990's

For a long time many governmental entities did not have audits from outside firms.  Beginning in the 1980's and 1990's it became common-place for them to have to open up their books and bring in third party professional audit firms to review their accounts.  If they had not been audited before, we called it a "first time through" audit because the amount of work was exponentially higher - you had to document the controls, figure out who was who at the client, validate the opening balances, etc...  Typically after the first audit it was much easier because the 2nd year audit just followed the work papers of the prior year auditors (unless you were like me and asked a lot of questions, which is a story for another "25 stories about work" article).

Recently I thought about my experience when I read this article about the state of New Mexico while reading this article from Bloomberg (a fantastic news source) titled "New Mexico's $100 Million Accounting Error". From the article:
New Mexico can’t balance its checkbook.
Cash in the state’s bank account is at least $100 million short of what’s recorded in the finance department’s ledger, pushing officials to adjust reserves by that amount, to about $650 million. The blame, the current administration says, lies with the introduction of a new accounting system in 2006.
While it would seem astonishing that in this day and age, when you have on-line bank statements and immediate access to data for personal accounts, that a governmental entity could be that far off the mark, it wasn't shocking to me. As a new auditor at this first-time through audit, I was given what was thought to be the simplest of tasks - auditing the cash on the books and reconciling this cash balance to the bank statement.

How you and I and almost everyone else operates is that you have a checkbook balance and as you make a payment (write a check), you deduct that amount from your available cash and you then know how much money you have left in your account. Since deductions can come in many forms (ATM withdrawals, auto-payments, and manual checks) you need to balance your checkbook periodically to make sure you don't miss anything, but other than that it isn't that difficult conceptually. The same process obviously works in reverse for deposits.

The governmental entity I was auditing in the early 1990's, however, used a totally different philosophy. They assumed that they HAD the cash forever until you proved that the check was cashed by whomever they sent the payment out to. Thus when you started to look at the bank balance "on the books", it showed hundreds of millions of dollars. When you looked at bank statement (from the bank), you saw a few million dollars. Thus my nearly insane task was to reconcile out the hundreds of millions of dollars in payments that had been made over the years to get from all the cash deposited back to the few million dollars left on hand. To be fair, staff at the governmental entity had taken a "crack" at this task and there was lots of manual records attempting to bridge the gap, but it was still a giant effort. New Mexico apparently uses the same "model" today - per that Bloomberg article:
Officials commissioned a study on the variances between the state ledger and its bank accounts from fiscal 2007 through February 2013.
Contractors could match only 2 percent of 160 million entries to a corresponding bank transaction, according to a Jan. 19 memo to lawmakers from Legislative Finance Committee staff.
Hundreds of thousands of transactions totaling more than $836 million are absent from the system, the study found. It estimated that the state could have from $76 million to $400 million less than its records reflect. Clifford said he requested $3.4 million to create processes to properly record cash balances. It will take about two years to achieve a “clean” annual financial report, he said. Should the imbalance exceed $100 million, the gap would come out of reserves, he said.
I still remember writing up memos attempting to explain this situation to the partner on the engagement. We did not have a lot of time set aside for auditing cash, which is supposed to be simple, and when you bid out these governmental jobs we were already doing the work at a loss (compared to standard billing rates) so there was little or no tolerance for spending extra work at this unprofitable client. Thus I was not only handed an impossible task my own firm was not pleased with my careful documentation of this situation which caused them to have to spend even more time writing memos to provide credence to the numbers so that we could complete the audit.

What I want(ed) for Xmas...

Growing up my sister had a copy of the "Fabulous Furry Freak Brothers" comics and the spinoff "Fat Freddy and His Cat". These comics, to me, were the height of strangeness - three down and out and strange stoners in a filthy apartment in San Francisco, along with their persistent and curious cat.

It was very hard to find these comics back then - there was no internet, and you had to find a comic book store that carried them.  Most comic book stores liked typical superheroes and these comics were far from that.


Later on I started to understand that there was a bunch of writers with similar, experimental styles including of course Robert Crumb, a man with strange tastes in women and a singular weirdness.  The biography "Crumb" is definitely worth watching, especially when you meet his two brothers who are even nuttier.  Williams, who drew the original "App*tite for Destruction" cover for Guns' N R*ses (which was banned and replaced with the new cover you see today) is also part of this group.

This box set of all the Zap Comix is available for $350 on Amazon.  I am trying to get rid of lots of my books but I may have to get this in physical form.

Tuesday, February 24, 2015

MacBook Pro Follow Up

I wrote here about my plan to upgrade my MacBook Pro from 2011.  I read about it in Business Insider how I could just buy a solid state (SSD) hard drive and upgraded memory (RAM) for $200 in total and my machine would perform like a champ again.

My friend Brian knew what to do and it was very easy... it took a few hours to make a copy of my mac drive onto the SSD but other than that he said it was about 10 minutes with the case open and a couple of screws to get the job done.  Now it is super fast and you don't have to watch the excel icon "bounce" for 30 seconds while it waits to load up if you have a web page open.  The new Mac OS automatically encrypts everything and I started using a third party anti virus scanner and both of these changes contributed to my previous performance issues.

Solid state drives are a thing of beauty... compared to mechanical drives, not only are they exponentially faster, but they are far less likely to fail because they don't have any moving parts (or hardly any, I'm not an engineer).

When you have a computer - the question is - what do you keep and throw away out of the original boxes?  When we swapped out the drive Microsoft came up and asked for the product key on my Office for 2011.  Luckily I kept that key (about the only thing left from the 2011 Mac purchase, I long since threw away everything else) and then Office is as good as new.


Sunday, February 22, 2015

The Liquidation of Markets

Every weekend I read Barry Ritholtz's recommended reading and there are a lot of gems in there.  Recently he posted this Credit Suisse graphic about markets at the turn of the 20th century by market share and compared it with 2014 on the topic of global equity investing.

In his article he mentioned the fallacy one might fall into as a UK equity investor in 1899... why bother investing in the USA when the UK market is so much larger?  And then this line of thought ends up missing the huge growth in US market share over the next century.

However, the real issue here isn't the relative change in market share by the different countries; it is the fact that almost all of these markets were entirely extinguished at one time or another by political, economic or military events that wiped out the investors.

The implicit "long run" theory of investing can be pithily summarized as "leave in your money indefinitely, keep investing, and it will all work out for you".  Sure, the USA had a near-death experience in the 1920's-1930's with the great depression, but if you would have been able to hang in there, long term gains would have more than made up for any of those losses!

But this model doesn't work out if you are completely liquidated by a discontinuous event somewhere along the line.  There is no ability to recover from lows if your equity basis is driven down to zero. The only way to survive in this sort of long term model is to pull out entirely from markets at some point, put your capital in a different market, and return to that marketwhen those calamitous events have passed.  This is at complete odds with the "long run" model that I vastly simplified in the previous paragraph.

25 Stories About Work - "Don't Run" and Rental Cars

I was recently on a plane doodling and thought of some funny / interesting stories from 25+ years of working and traveling. So I decided to write them up as short, random chapters of a non-book with the title of this post. Hope you enjoy them and / or find them interesting. Certainly the value will be at least equal to the marginal cost of the book (zero)...

The Midwest, late 1990's

Along with air travel, renting a car is part and parcel of the traveling business persons' experience. Over the years I have rented hundreds if not a thousand rental cars at airports across the USA.

In the earliest days we'd always get a map from the rental car agency and then use it to navigate our way around town. Rental cars are typically near the airport and kind of tucked away often with lousy signage so you need to know how to find your way out and how to find your way back. Nowadays most of the airports have a "single system" for rental cars where all the buses drop you off at the same facility but back in the day each one had their own pros and cons.

The big innovation in rental cars came when Hertz implemented "Neverlost". Neverlost was the first in-car navigation system that I was aware of and we started getting it in their cars in the mid to late 1990's. Neverlost spoke to you as a woman in an English accent and she was forever telling me to
Return to the designated route
In her peeved manner whenever I made a wrong turn or disobeyed her orders. Any sort of new directions took a long time to take effect and the system was remarkably clunky compared to whats' available on your smartphone, but back then it seemed like an enormous leap forward. One negative element of this is that I started listening to the machine rather than learning the cities I drove through - in particular Memphis is a city I should have explored with a map but instead sat like a zombie and was told what to do by machine.

Friday, February 20, 2015

25 Years After

Twenty five years ago this month the first version of Adobe Photoshop was released. Since I was already creating digital images on expensive sophisticated DEC based computer systems the release was greeted with amusement by some cohorts and myself (snark) at the time. The news that Photoshop has been around for twenty five years brought back a lot of memories for me personally since my experimentation with the very first version of Photoshop led to unending career changing opportunities.


For 25 years a copy of the latest version of Adobe Photoshop has occupied space on each one of my computers and does to this day. It was one big, fat fun twenty five year ride that paid off handsomely. But there were times when I wailed and gnashed my teeth while working overtime after a server crash erased hours of hard work.

In the years BP (Before Photoshop) the realm of retouching photos belonged to seasoned artists/craftsmen. That was back in the days when an apprentice studied under a veteran professional for years before being allowed to execute the costly and time consuming task of photo retouching.

Monday, February 16, 2015

Frozen Lake Geneva

That's me out there on the frozen lake.

Saturday, February 14, 2015

Saturday Night Flyover Country

Our Need For Categorization

I am an enormous fan of "top lists" and almost any sort of categorization. If it is the top 100 guitarists, the greatest bands, a type of warship, or anything else - I like to see it in a category and classification that can explain trends and try to cut through complexity by organizing the data into different groupings.

Sirius XM radio stations are a great example of categorizations. Recently on a trip with Dan and our friend Brian we had the station stuck on "Hair Nation" - and then we started thinking through the different stations and how Sirius has chosen to allocate music across each of them.

Some bands are solidly "Hair Nation" - Poison, Warrant, LA Guns, and everything else with spiky hair and all about having a good time. While Dan is more "Hair Nation" - I am more on the "Boneyard" station, which has a big overlap with Hair Nation but a whole host of songs that aren't on Hair Nation, such as UFO and older heavy metal like Judas Priest.



We started to have a mock "debate" in a snooty English style of "Dear Sir - I beg to differ with your classification of the band Skid Row. "Monkey Business" is more of a hard Boneyard song while their ballads of course could reside properly within the confines of Hair Nation.

One item that is sad for me is when a genre gets "closed". Some genres are closed specifically on the basis of time - "90's at 9" (meaning channel 9) obviously selects only songs from the 1990's, so that station is pre-defined. On the other hand, if Poison put out a new album (CD? Stream?) tomorrow, it belongs on Hair Nation. I don't listen to Hair Nation enough but I figure that "the door is always open" for Poison's return over there. On Boneyard I did hear the new Black Sabbath album 13 when it came out so I know that someone cracked open the heavy vault for some new music over there.

In the otherwise excellent book "Louder than Hell" which carefully walks through a history of heavy metal and its various sub-genres, the author explicitly stays away from the band Alice In Chains (except to mention a show that they opened for another band where someone threw bottles of urine at them) because they are likely classified as "grunge" (the Lithium channel in Sirius XM terms) when to all who understand heavy metal they are definitely a heavy metal band. They have long hair, loud and down-tuned guitars, and rock anthems that we've all heard for 20+ years (damn I am getting old). In fact, if I could take 1-5 albums on a desert isle, "Dirt" would make the list - with the blistering start of "Dem Bones" "Dam that River" and "Rain When I Die" starting off with 3 punches to the face and capped off with "Would" and "Rooster". However, the author took the (probably technically correct) path of not classifying Alice in Chains as "Heavy Metal" for various reasons and in the end it just doesn't make sense to me personally. However, the fact that I am worked up of what is the most minor of minor things just shows how I am a demented fan of categorization and how it re-shapes history and frames our points of reference. What if 1000 years from now someone is trying to re-construct the history of heavy metal and they don't know about Alice in Chains just because they wore flannel? Now that's a damn shame.

Cross posted at Chicago Boyz

The End of An Industry

When Best Buy first moved into town maybe 15-20 years ago I was excited. I could spend hours in there looking at gadgets, components, routers, TV's, and had thoughts and dreams of tying them all together. Later, Fry's opened up, and you could walk through the aisles and buy all the pieces to build your own PC out of parts and make it the hottest gaming platform in town.

Recently I saw this article in Business Insider (I really like that app / site / etc...) about how to upgrade your MacBook pro (the machine I am writing this blog post on). If you have an earlier model (2011-2), you could spend less than $200 to upgrade your RAM and install an SSD drive (one without moving parts, essentially a big memory chip) and pull out your old (mechanical) hard drive and your machine will then give you many more years of excellent Apple service. Apple's integrated operating system / hardware plan means that my older machine takes advantage of all the new features in every software upgrade of the operating system (now my Mac "rings" when I get an iphone call and that is a bit annoying but who's complaining) as long as it has the horsepower to keep up.

So I took the (minor) plunge and went on Amazon and bought an SSD drive and upgraded RAM and it arrive in a couple of days for less than $200. I am going to take this over to my friend Brian's house since he's better at this than me and we are going to take apart the machine and put in the new drive and memory.



The real point of this story, however, is that the implicit industry of "taking apart devices and rebuilding them" that existed on the consumer side for the last 30 or so years (that I have been part of, at least) is dying. You can't take apart newer Apple machines and upgrade them. While you can theoretically "jailbreak" your iPhone, fewer and fewer people I know even think of that and instead they are part of the world that views them as integrated devices that you can either use, take to a tech, or replace.

On the Windows side you can absolutely still take it apart, but the stakes are getting to be so low that it makes little sense. By the time you fix up / build your old system, you could have just bought a new Windows machine for almost no cost. There are excellent Windows machines that are very cheap and you will have to get used to Windows 8 anyways or Windows 10 (soon).

The new Chrome Books take this to an extreme in that you get a completely integrated device with OS for $200-$300. These devices have made a giant splash at schools and they are all SSD and so cheap that there is no economic point to pulling them apart, either. At least on the windows machines you might have some incentive in order to "save" the operating system or expensive version of MS Office that you bought.

It isn't that "tinkering" is dead - look at the Rasberry Pi machine that you can buy for almost pennies - but that it is pretty pointless economically. There was an entire industry of people that opened up machines and upgraded with strange screwdrivers and this industry is mostly in our rear view mirror.

Cross posted at Chicago Boyz