suitably penitent

The usual rather prolix update.

Worth restating my guiding principle for these blogs, I try and balance a reasonable frankness with avoiding offending and upsetting people. Which seems a fair compromise for making them reasonably true to my life, and reasonably readable. I put this into practice by being slightly careful about what I do write, so that I don't just rant on at who ever has annoyed me recently. As a longer term perspective has generally shown my judgement to be wholly rubbish, and folk that annoy me one day, turn out to actually be wonderful the next.

Also I don't intend rewriting past blogs, just to give myself the benefit of hindsight, so if I do have a rant about something, then I feel duty bound to "un-rant" myself in a subsequent blog. It is probably one of those things like nylon bedsheets, and school assemblies that is good for the soul.

Anyway, I was ranting on about hotdesking at my work. From speaking to people, it sounded like I would shortly be completely deskless, and reduced to sitting outside with a manky plastic bag, and some grubby Big Issues. However, although many desks do have putative occupants, they seem to be some way off, so with a mere modicum of ingenuity, it should be perfectly workable. I now feel penitent and suitably apologetic about my previous petulance.

Accordingly [one of my favourite words, which I use almost like a coder would to signify a change of tack] because of the fact that the work is interesting, and the people are great, I now want to stick with my current job.

Work week was not too busy, but getting to know my new colleagues better, and getting my teeth into some work at last. Not knowing much yet, I'm not much use yet, so I don't have much to do, so difficult to know how exactly to pace work. These half busy, half quiet times are much more difficult to pace, and I feel rather unmethodical and disorganised, till I hit a routine of working.

Usual darkness, in the mornings, in the evenings, which does leach your energies.


Slightly miffed that I had not made a punt on the Northern Rock shares, I was severely tempted, and clearly that was the rock bottom for them at the start of the week, I might not have doubled my money, but it would certainly have been possible to make a very quick substantial return buying early in the week, and selling a few days later.

Of course, this is all purely theoretical, as you would really have wanted to make a punt with around a thousand pounds, to minimise the proportion going out in commission, and I would only use less than a quarter of my portfolio, at most, for such punts, and I simply did not have the cash available to invest at the time.

However as my shares portfolio does build up, it might well be worth setting aside some floating monies, just for opportunistic punts.

Vexed by recent share fluctuations, but inclined to tough it out with my current shares, no point in selling at a loss if I don't like the shares, and the ones I do like, don't look set to fall enough to offset the transaction costs of selling to later re-buy. I will look at the next year as a time to just quietly buy more shares, like with housing, we seem to be at the top of the market, but it seems more likely to slow down, than to drop catastrophically.

I do try and think about how the basic economy is changing, and then use that to inform the shares that I invest in.

So, my quick predictions
UK property is overvalued, so not worth investing in
Banks and building societies, financials generally, the good will persevere, but room for fresh new blood, so avoid all but the really well run, overall expect the sector to decline
energy will get more expensive, but invest in those producing energy, including nuclear, not just those selling it, avoid the airlines
DIY will resurge slightly, as people make do with staying put, but not to previous heights
mining, worth a punt, but success relies on picking a winner, or getting in when there is mismatch between supply and demand, diamonds possibly worth considering

in terms of underlying structure, we are at the top of the market at the moment, however I would expect volumes traded to diminish, without actually leading to serious falls. However the market is excessively volatile, over discounting shares on bad news, and only correctly slowly. Hence the newsworthy suffer unduly, while dull plodders get away with their dull plodding.

There is a major issue of what to do with capital. There are the oil producers, China, India, building up massive surpluses, with relatively litle to do with the money, but invest in Western equities and the like. This has suited the West, because, we are not investing, we use credit instead of prudence. Accordingly needing to find somewhere for capital to go, has propped up the West.

One feature of this, is that in the West we own relatively little of the real wealth generating companies. Fine at an individual level we get a salary, but ownership of the real money-generators, the businesses themselves is drifting East.

Another feature is that investing in Western equities, rather forgets what equity investing was about, it was about generating capital for infrastructure. At its most simplistic, you raised capital to build and crew a boat, to go to the New World, to find gold, to come back, and make you wealthy.

We are now speculating on equities, but we have lost sight of them as their original purpose of a means of raising capital.

Why does this matter?

Well, now you look at an equity as a rival for a dull building society account. But as citizens of the UK, we should have a financial stake in the businesses that it consists of, if we don't, who will. And we do not look at equity as a risky punt, that might bring huge rewards, when the boat comes in, but could be dead losses, when the boat sinks.

In the East, they invested here because there was little else they could do with that kind of money. But, the world is shrinking. Look at Dubai, trying to reposition itself as a premier tourist resort, look at the infrastructure work going on across the world. Of course not all these infrastructure projects will work, but some will. These are opportunities we lack the ability to participate in, but for the East, they can use their capital to recreate themselves in new and improved ways. The economic victors of the second world war, were those countries that had been razed to the ground, had the educated people, and had to rebuild themselves.

What advantage does old money have, when the new money is smarter!

Accordingly, Western Equity markets are not the only show in town, they will decline in importance as the world remakes itself in the next few decades.

Another intriguing feature is the growth of businesses with no variable costs. In the past these were very rare, now they are increasingly common.

Elementary lesson in Costing -
fixed costs in a shop - the rent and rates, always there,
variable costs in a shop - purchase costs of goods, the more you sell, the more you need to buy

So, a farmer has labour variable costs associated with each tonne of barley he harvests
but Bill Gates, has virtually no additional costs associated with each copy of Microsoft Office that he sells. Additionally there is no limit to the number of copies that Bill can produce, whereas the farmer has finite land.

Once again, why does this matter?

Well it serves to accelerate the trend that money making potential is concentrated, rather than spread out. The successful business can make a huge amount, there are often fewer barriers to entry for the many hopefuls. The market is now more 'perfect' as knowledge is more accessible.

The issue is not just one for Microsoft, Jonathan Coulton recording music, Scott Sigler recording podcasts, developers of software, they can all now access a global market with relative ease, and at minimal cost. This is great for the bright and talented.

However the grunt work is not so necessary, it is lower paid, lower status, easily outsourced, or performed by migrants. The world will belong to a highly paid and highly skilled and well connected elite.

There is a limit to how many flat screen televisions you might want, but is there a limit to how many ringtones you can buy, or software plug-ins, is fashion and ephemera going virtual, as we live digital lives, spending online, and defining ourselves online.

One thing that is not scalable is trust, I remember at university the rich and well connected stuck together, they had gone to the same private schools, they went to the same classes, they would end up working in the same places. These networks are not easily broken into. I don't know which networks will be the crucial ones, it might not be the well connected upper classes. But we will need to pick our networks well, and use them effectively.

The old rules, plenty of experience, being here a long time increases status, you've paid your taxes, you are entitled, won't be so good in future, and might even be a hindrance to developing the skills and attitudes that you do need to succeed.


Anyway on the IT front, I have also been continuing to play around with various hardware and software. The problematic external hard drive from LaCie has been fixed and returned, and seems fine now. So that out of the way, I've ordered some additional RAM as it is cheap as chips these days.

I have also been playing around with Bento, which really is lovely, and the tech support is like the really enthusiastic support you get with shareware, developers participating really actively on their forums, and being bright eyed and bushy tailed, rather than dull and corporate. Not sure that it is really a database, in the dull boring sense, reporting and searching seem pretty rudimentary, but it is a lovely fun piece of software, and for home users it could very quickly become indispensable, for silly little things like tracking Christmas cards and the like.

I have been tracking some of the various things that seem to trigger my migraines, and in parallel with the Hawthorne Plant findings, the fact that I am noting these things down, seems to discourage me from doing anything that is too bad for me. The mere fact of knowing that the details will be recorded seems to make a difference. There might be scope for extending this slightly to some of the other things that would be good habits to have, but are difficult to make time for. One hint on these, is aiming for longer and longer sequences of good behaviour, so that if you do forget to do something, then you simply start again at building up a long chain of good behaviour. Like the signs on the building sites, we have been accident free for 100 days, because you are never accident free forever, so why get depressed over it, focussing on the negative.

I have also been playing around with RapidWeaver and the new plugin from YourHead, Kwix. Basically this is moving menu, that is quite fun. It is reasonably easy to set up, and does look wonderful. I've mentioned this before, but it does strike me as intriguing that there is now such an infrastructure of these things. To reiterate a previous posting,
RapidWeaver is a piece of software for Mac Users to code their own websites. It is not exactly basic, but there is scope for additional bells and whistles.
YourHead produce plug ins, which allow you to create more elaborate pages, including the aforementioned Kwix, which creates bouncy menus.
Henk Vriesll....?? then produces additional themes and icons that can be used within Kwix, so that you can customise it further.

Now RapidWeaver is a serious bit of coding requiring a decent team and support, but Kwix is relatively simpler, and a decent coder could probably create something similar themselves, but it would take a lot of time, and you would really want to know that you were going to get paid at the end, or love coding, before you would attempt it. Finally the themes and icons that Henk does would probably not be much beyond my abilities, but would probably require quite a lot of time and fiddling around, so I would be happy to pay for someone else having done this.

Having done the work, and set up the website, these people can then just let the money roll in. Obviously the market diminishes as it gets more specialised, there is no market for Kwix without RapidWeaver and no market for Kwix themes without Kwix and RapidWeaver. But the effort and support required is also correspondingly less, so there is probably enough potential income in relation to effort for each level of the ecosystem to be perfectly viable. And the more players within the ecosystem, the healthier it is, and the better for everyone.