Friday, November 29, 2013
My friends Carol and Mike had a get together at their house at the end of last month. It was to celebrate Carol's birthday.
I used to work with them at Trader a number of years ago. I believe Carol left in the mid-2000's. I was let go in 2009. I'm pretty sure I hadn't seen her since she left. And, of course, I hadn't seen Mike in four years.
We've "kept in touch" through Facebook. So I'm sure we all have a general idea of what the other person has been up to (depending on how frequently you update your status). But it's not quite the same.
I think one thing that prevented me from visiting earlier was the fact that they live in Brampton. I know it's not that far from where I live, but it's far enough. Anyway, when the invitations were sent out for Carol's birthday, I figured it was long enough. I had to go over.
I got there relatively early. Not too many people had arrived yet. Carol's sisters, Claudia and Jackie, were there as well as a couple of Mike's friends.
Some of Carol's co-workers from her latest, but still former job were there. She had been working at Blackberry for awhile. But, like many others in the now struggling to stay afloat company, she had been laid off.
I was the only former Trader employee who had made it out. So I didn't have a ready made circle of friends to chat with. I made small talk with some people, but most people tend to hang out with people they already know.
Carol's parents came too. I hadn't seen them in a long time. I believe they still live in their old home in the Finch and 427 area. It was good seeing them again.
Mike and Carol have a nice house. In the basement Mike set up a small office with some of his special Star Wars "toys". I suppose you wouldn't really call them toys since they're probably quite expensive and rare. Maybe you could categorize them as collectibles.
He also set up a small theatre in the basement. It's a miniature version of a full size theatre. I have to admit it looks great. He did a really good job with it. He showed a few of us some 3-D movie trailers on it. They looked spectacular.
One movie that looked particularly good to me was The Croods. It's an animated movie about cave people and their adventures in moving from their old home to a new place. I'll have to try and make it back to watch that one sometime.
Anyway, it was good seeing Carol and "Rock" again (as in Rocky Balboa, my nickname for Mike, after his Judge Dredd, Sylvester Stallone impression). Until next time...
Sunday, November 24, 2013
I'm in the process of reading The Warren Buffett Way (Third Edition). Unfortunately I ran out of time to completely finish it before having to return it to the library. So, here's a partial synopsis of what the book is about.
Born in Omaha on August 30th, 1930, Warren Edward Buffett is considered to be one of the most successful, if not the most successful investor in history. As of 2013, his career managing money has spanned nearly 60 years. It has been divided between the time he managed Buffett Investment Partnership, Ltd. (1956 to 1969) and the much longer period of managing Berkshire Hathaway, starting in 1965, the year he took control of the company. From 1965-2012 his company earned a compounded annual gain of 19.7% compared to 9.4% of the S&P 500 (with dividends included). His overall gain over that period of time was 586,817% while the S&P 500 was at 7,433%. Astounding.
His philosophy flies in the face of convention compared to that of financial advisors today. While they preach diversified portfolios and quick turnover, Mr. Buffett says one should pick a limited number of high quality stocks and hold them long term. He calls it Focus Investing - Choose a few stocks that are likely to produce above average returns over the long haul, concentrate the bulk of your investments in those stocks , and have the fortitude to hold steady during any short term market gyrations.
Chapter 3: Buying a Business: The Twelve Immutable Tenets
Also, Mr. Buffett has what he calls the Twelve Immutable Tenets (of investing). These are things you should look for when considering investing in a company.
Is the business simple and understandable? Mr. Buffett is able to maintain a high level of knowledge about the businesses he choses to invest in because he limits his selections to companies that are within his area of financial and intellectual understanding. He is acutely award of how these businesses operate in all aspects.
Does the business have a consistent operating history? It has been Buffett's experience that the best returns are achieved by companies that have been producing the same product or service for several years. Undergoing major business changes increases the likelihood of committing major business errors.
Does the business have favorable long-term prospects? Mr. Buffett looks for companies that provide a product or service that is (1) needed or desired, (2) has no close substitute and (3) is not regulated. These traits allow the company to hold its prices, and occasionally raise them, without the fear of losing market share or unit volume. It allows the company to earn above average returns on capital.
Is management rational? When considering a new investment of business acquisition, Buffett looks very hard at the quality of management. They must be operated by honest and competent managers whom he can admire and trust. The most important management act is the allocation of the company's capital. Because, over time, it determines shareholder value. Deciding what to do with the company's earnings - reinvest in the business or return money to shareholders - is an exercise in logic and rationality.
Is management candid with its shareholders? Buffett holds in high regard managers who report their company's financial performance fully and genuinely, who admit mistakes as well as share successes, and are in all ways candid with shareholders.
Does management resist the institutional imperative? Buffett looks for managers who resist what he calls "the institutional imperative" - the lemming-like tendency of corporate managers to imitate the behavior of others, no matter how silly or irrational it may be.
Focus on return on equity, not earnings per share. Mr. Buffett considers earnings per share (EPS) a smokescreen. To measure a company's performance, he prefers return on equity - the ratio of operating earnings to shareholders' equity.
Calculate "owner earnings." Instead of cash flow Buffett prefers to use what he calls "owner earnings" a company's net income plus depreciation, depletion, and amortization, less the amount of capital expenditures and any additional working capital that might be needed.
Look for companies with high profit margins. According to Buffett there is no big secret to profitability: It all comes down to controlling costs. In his experience, managers of high cost operations tend to find ways to contunually add to overhead, wheres managers of low cost operations are always finding ways to cut expenses. That's what he looks for.
For every dollar retained, make sure the company has created at least one dollar of market value. Buffett looks to select businesses with economic characteristics allowing each dollar of retained earnings to be translated eventually into at least a dollar of market value.
What is the value of the business? Paraphrasing John Burr Williams, Buffett tells us that the value of a business is determined by the net cash flow expected to occur over the life of the business discounted at an appropriate interest rate. Buffett uses the long-term U.S. Treasury rate as his discount factor.
Can the business be purchased at a significant discount to its value? Focusing on good businesses by itself is not enough to guarantee success, Buffett notes. You have to buy at sensible prices and then the company has to perform to your expectations. It is Buffett's intention not only to identify businesses that earn above average returns, but to purchase them at below their indicated value. That difference between price and its value represents a margin of safety. If the margin between purchase price and intrinsic value is large enough, the risk of declining intrinsic value is less.
Chapter 4: It discusses Common Stock purchases. It is a case study of nine companies Berkshire Hathaway decided to invest in - The Washington Post, GEICO Corporation, Capital Cities/ABC, The Coca-Cola Company, General Dynamics, Wells Fargo & Company, American Express Company, International Business Machines (IBM), and H. J. Heinz Company.
Chapter 5: Portfolio Management
1. Calculate probabilities. This is the probability you are concerned with: What are the chances this stock I am considering will, over time, achieve an economic return greater than the stock market?
2. Wait for the best odds. The odds of success tip in your favor when you have a margin of safety; the more uncertain the situation, the greater the margin you need. In the stock market, the margin of safety is provided by a discounted price. When the company you like is selling at a price that is below its intrinsic value, that is your signal to act.
3. Adjust for new information. Knowing that you are going to wait until the odds turn in your favor, pay scrupulous attention in the meantime to whatever the company does. Has management begun to act irresponsibly? Have the financial decisions begun to change? Has something happened to alter the competitive landscape in which the business operates? If so, the probabilities will likely change.
4. Decide how much to invest. Off all the money you have available for investing in the market, what proportion should go into a particular purchase? Start with the Kelly formula then adjust downward. 2p - 1 = x where 2 times the probability of winning (p) minus 1 equals the percentage of your total bankroll you should invest (x).
Here's a list of the first two chapters.
Chapter 1: A Five-Sigma Event talks introduces us to Warren Buffett
Chapter 2: The Education of Warren Buffett tells of his education and the people who influenced him, namely Benjamin Graham, Philip Fisher and his partner at Berkshire Hathaway, Charlie Munger.
Here's a list of the last three chapters which I didn't get much of a chance to go through.
Chapter 6: The Psychology of Investing
Chatper 7: The Value of Patience
Chapter 8: The World's Greatest Investor
Wednesday, November 20, 2013
I went to The Indian Hut for dinner with Dickie the other day. It's located on Church Street just south of Bloor. I had bought a voucher from Groupon for the restaurant. It was $17.95 for dinner for two (half price with the Groupon). The only parking is street parking at $3.00 per hour.
The restaurant is located in a converted house. It's long and narrow. Not too fancy, but it was fine.
I was a bit disappointed with the small number of items you could choose from. Though the ones they had tasted good I thought. I have to say I'm not really much of a food connoisseur, so I might not be that hard to please.
The "suggested" tip on the bill was a bit tacky. I mean, pretty much everyone gives a tip, so I don't think you really need to put that there.
A better value to me would be Chef of India which is across the street from where I live. It's bigger, has more selection and it's lunch buffet is $11.99 if I remember correctly.
Friday, November 15, 2013
I just finished reading Hope After Faith, an autobiography written by Jerry DeWitt a Pentecostal preacher turned atheist.
Mr. DeWitt grew up in DeRidder, a deeply religious town in Louisiana (as he puts it). His family was very religious and, naturally, that faith was passed on to him.
Mr. DeWitt's childhood wasn't all that rosy. He was a sickly boy. As well, he was a loner, never engaging much with the other kids at school.
To top things off, his biological father ended up killing himself after crashing his car while driving drunk. His mother remarried a car salesman named George. His job required him to move his family quite frequently. Not the most stable of situations for young Jerry.
The big turning point in his life was when he attended a Jimmy Swaggart revival with his elementary school teacher, Ms. Blair, and her husband. Not only did he find acceptance amongst his fellow Pentecostal brethren, but he was greatly inspired by what he heard. It was at that time he knew he had to spread the Word of God to the masses.
The next part of his life was more tumultuous than you could ever imagine. He attended a seemingly endless string of churches. First as a member of the congregation and later on as an assistant pastor. All this with the hope of one day starting a revival that would bring the Holy Spirit to all mankind.
This goal of his brought incredible hardship on the now married young man and his family. He kept his wife, Kelli, and young son, Paul, constantly on the move. First from town to town in his home state of Louisiana, then to Des Moines, Iowa. This move necessitated the selling of all their belongings and basically starting afresh sans family and friends.
Jobs pastoring were infrequent. They were interspersed with low paying non-religious work. He did whatever it took to keep them afloat financially. That being said, they were dirt poor for the majority of his early years.
What broke Mr. DeWitt was not only the nagging doubt he always had of the doctrine of Hell (how a loving God could send people there to live in torment for all eternity), but the many ne'er do well pastors he met over the years while preaching the Word. Some of them were like cult leaders more than anything else.
Then there was the problem of so many good people dying around him. He lost his grandfather as well as his dear cousin, Gary, a fellow pastor. As well there were many other members of congregations he pastored to that passed on from various causes. His fervent prayers of healing as well as those of many others went unanswered. Was God really in control? If he was, did he even care?
These things combined with the fact that he toiled so hard over the years trying to spread the Word, only to end up failing miserably, pushed him to the point where he could no longer believe in an omnipotent God.
In the end he renounced his faith, his marriage fell apart, and he was shunned by his community.
Monday, November 11, 2013
So we did another Sandwich Run yesterday. I'm not sure where the group was from, but they were late. We were supposed to meet at the back of Knox at 2:30 p.m. Lilian, Tim and I called them, perhaps, at 2:45 and they were still on the Gardiner Expressway somewhere stuck in traffic.
Even though it was a Saturday, traffic downtown can still be both painfully and unpredictably slow. Not only that, after exiting the Gardiner, they had to wind their way up Spadina. Another headache. Eventually they arrived by, let's say, 3:15; 45 minutes late. Normally I wouldn't have cared too much, but I had to meet my father for dinner, so I was on a somewhat tight deadline.
Tim did the orientation. Only five of the 14 young attendees had gone before so he was got quite in depth. Tim likes talking and may have been unaware that I was in a hurry (especially since we were already behind schedule). I was kind of anxious to get rolling, but what can you do?
We split into three smaller groups after Tim finished speaking. Lilian and Tim each took five people and I took four. Tim was going to do his regular Spadian/Queen route; I was going to do my now regular College to Allan Gardens/Seaton House route; and Lilian was going to go across Gerrard and down Yonge with us all converging at the Tim Hortons near Ryerson at Yonge and Dundas.
My group and Lilian's started off the same way going south on Spadina, then heading east on College. Her group took the north side of College, mine the south. We met up at the Salvation Army Hope Shelter at McCaul and College looking to give out some bag lunches, but there weren't many guys out. It was at that point we parted ways with my group continuing east on College and hers going south on McCaul.
Now, I have to say, our group didn't get very far. Shortly after crossing University Avenue we noticed an elderly lady walking in front of the MaRS building wearing only a light T-shirt, pants and fuzzy, white slippers. This might not have raised eyebrows in the middle of summer, but this was the first week of November and it was quite chilly outside. The high was no more than 10C and it was dropping as the daylight quickly faded.
I asked her if she wanted a bag lunch. She mentioned that she had dementia and was lost and couldn't remember where she lived. She had gone out to get something (I can't remember what now and I don't think she did either) and now was just wandering the streets trying to find her way home.
It was at that moment that I figured we'd better put the Sandwich Run on hold and get her some help. Fortunately we were only a block or so from Police Headquarters on College and Bay. So we put a too small hoodie on her that the young folks brought along to give to someone who might need it, gave her a box drink and headed over there. Slowly. Wilhelmina (I think that was her name) wasn't a very fast walker being elderly and walking in fuzzy, white slippers which fell off a number of times.
As we neared the building the young, female officer at the duty desk came out to help us into the lobby. While there we tried to find out more information that would give us a clue to where Wilhelmina lived. She mentioned she lived on her own. We also found a MedicAlert bracelet on her with her name and an I.D. number.
After a bit of detective work the officer found out where she lived. She contacted some other officers to come pick her up and drive her home. We decided to wait with Wilhelmina to keep her company since there was no one else around. She was still a bit confused and we didn't want her to become anxious or anything like that. While there she kept trying to give her Parker pen away (numerous times) because she didn't realize it was hers.
A couple of the young volunteers sang some gospel songs that they liked for her. It was a funny scene being in the towering lobby of the headquarters with singing like that.
Now, of course, since it wasn't an emergency the officers who were called to take her home took a long time. I had planned to be at my parents' place to pick up my dad to go eat for his birthday between 5:30 and 6:00. It was already after 5:00.
I got in contact with Lilian who was nearing the completion of her route and she sent Tim up to take over for me. His group got to Police Headquarters by around 5:30 p.m.
At that point we had to say, good-bye, to Wilhelmina. I hope she was okay waiting on her own. Tim took my group (who still had all their bag lunches) straight down Yonge towards the Timmies. They would hand them out to whoever they saw along the way. Any extras, I assume Tim and Lilian would take over to Seaton House on their own.
I ran back to my car which was parked at church and hurried as best I could to my parents' place. Traffic on the Don Valley Parkway was terrible and I arrived at 6:45. Hmm.
Anyway, my father and I had a decent dinner. We went to a small, Chinese buffet restaurant on Eglinton at Brimley. Other than the Saturday special of all-you-can-eat lobster, the food was typical, deep fried, Chinese buffet fare. Not that great. But it gave us a chance to hang out together, which was the important part.
Thursday, November 7, 2013
My friends from Nadurra had a booth at The National Women's Show at the Metro Toronto Convention Centre over the first weekend of November. While I couldn't help them set up because of work, I was able to help them tear down.
Michael asked me to come by at 5:00 p.m. on Sunday (the time the show was over). So, after church, I hung out downtown a bit with Yeon Hui. We dropped by the Umbra store down on Queen and John before heading over to the Chapters by the Scotiabank Theatre.
While there I showed her my trip photos from New York City, Chicago and Washington on her new iPad. She's interested in going to New York City and maybe some other places.
After looking through the shots I still had a bit of time to kill. So we walked over to Marshalls, the relatively new discount fashion store from the States. It's just south of Chapters on John Street. Yeon Hui bought some winter boots there. They were a bit big, but they looked nice and were warm. They said you had until January 12th of 2014 to return them if you wished. So we may check some other locations to see if they have her size (7).
By then it was nearing 5:00 p.m. So we walked to the Metro Toronto Convention Centre. That's where we parted ways.
I got an Exhibitor pass from the show office to get in just before closing time. I was wondering why I couldn't have just walked in since it was so close to finishing.
When I saw Michael at their booth he said I was early. It turns out my stupid Wind Mobile phone didn't change over to Day Light Savings Time like everyone else's and I was an hour early. It did the same thing last year only changing later in the day.
Anyway, now I had an hour to kill. I figured I could take a nap somewhere, but I thought I'd take a look around instead.
I have to admit I felt like a fish out of water. It was weird walking around in a place where just about everything was geared towards women. It was kind of like the time I mistakenly walked into the teenage girls' fashion store Forever XXI at Yonge and Dundas. Previously it had been a GAP, but they changed hands and renovated really quickly a few years back. I walked in and got really confused because I couldn't find the guys clothing section.
One good thing about The National Women's Show was there were a number of food vendors who were more than happy to give free samples out. I had some Greek yogurt, some pizza and sampled some curry sauce on rice that was too spicy for me.
The weirdest thing was the so called "fashion show" starring the buff Toronto fire fighters from the annual fire fighters calendar. They were supposed to be showing off clothing from Marks Work Warehouse. But, all they were really doing was strutting around showing their muscles to hooting and hollering ladies. It was pretty funny.
All-in-all it was a pretty good spy mission for me. Now I know what women are really interested in... well... not really.
Sunday, November 3, 2013
The main purpose for our trip down to Long Island was to attend my aunt and uncle's 55th wedding anniversary. They held it at the Sand Castle, an event centre on Long Island where their son-in-law, John, is the executive chef.
The party was a ritzy affair. It was held between noon and 5:00 on Sunday, October 20th. All the relatives met up a bit early in one of the reception rooms where they served hors d'oeuvres and booze. Any of the guests that arrived early hung out there too.
After that we moved to a large dining area on the second floor. There they served all manner of meat, pasta, seafood and other goodies at different stations around the room. In the middle of the room there was a replica sailing shipped stocked with sushi, shrimp, oysters and lobster. It was all you can eat. And, of course, you could have whatever you wanted to drink. There even was a bartender who descended from the ceiling in a mini bar who made "Chuck-tinis" and "Betty-tinis" in honour of the couple of the day.
But, that was just the warm up for the main sit-down meal which was served in another lovely decorated room back down on the main floor. Diners started with a fruit medley, followed by penne a la vodka and mesclun greens. They then had the choice between filet mignon, rack of lamb, grilled swordfish, sauteed veal chop, French breast of chicken or a vegetarian platter. That was followed by a Viennese café bar where they wheeled out, perhaps, ten trolleys full of a variety of desserts and ice cream to finish off the afternoon (...as if you could actually eat any more).
In between courses there was music played by a DJ and the MC gave dancing lessons. As well there was a photo booth where you could go have your picture taken. You could do three poses and the machine would print out two copies; one for you and one for a souvenir scrapbook.