Friday, August 24, 2007

The carpool lane

One of my early blog posts was a plea for California sponsored road safety infomercials. Simple things make a difference on the roads. We, in the Bay Area, can learn a thing or two about traffic efficiency from the South.

  • Take for example the carpool lane, officially called High Occupancy Vehicle (HOV) lane. Typically one needs to have 2 or more people in the car to ride int he carpool lane. A lot of rubber necking starts when cars from the carpool lane need to cross over to take an exit. Building a HOV specific off-ramp overpass does pay off. Such changes to the high way 101-85 merge in Mountain View solved a lot problems. On the other hand, the 101 South commute through San Jose is hampered by two merges: 101-87 and 101-880. In both cases, car pool riders need to cross all lanes to take the exit.
  • Weaving in and out of the carpool can be avoided by creating small separators between the lanes. Highway 5 near Rancho Bernardo is a great example of how traffic flow is encouraged by limiting when people can get in and out of the HOV lane.
  • In the Bay Area, the HOV lane rules apply between 6-9am and 3-7pm. A look outside my office shows that the traffic continues well beyond 9am, and starts as early as 1-2pm. Reward commuters by making the HOV lanes 24/7. (LA Times: Car pool lane revolution)
  • Traffic lights regulating the inflow to the freeway is a great idea. However, in the Bay Area, only one car is allowed to advance per green light. In San Diego, the traffic flow is smoother and stop and go traffic is reduced by allowing 2 or 3 cars to enter the high way per green light.

Friday, August 17, 2007

Common Sense Index Funds

The message of The Little Book of Common Sense Investing, by John Bogle is simple: Buy index funds and you'll do better than most investors. Yet the book counts 214 pages. Each chapter almost reads like a FAQ (frequently asked question). When it comes to investing, at the end, it all comes down to a single number: how much is left over.
"It may not be as exciting, but owning the classic stock market fund is the ultimate strategy. It holds the mathematical certainty that marks it as the gold standard in investing, for try as they might, the alchemists of active management cannot turn that own lead, copper or iron into gold. Just avoid complexity, rely on simplicity, take costs out of the equation, and trust the arithmetic."
"Remember, O stranger, arithmetic is the first of the sciences and the mother of safety." (Louis D. Brandeis, 1914)
"The two greatest enemies of the equity investor are expenses and emotions"
The lessons in the book are clear:

rule 1: Own businesses; don't speculate on emotions
  • Total investment returns - the gains made by businesses - were remarkably steady: 8 - 13% each year and averaging 9.5%.
  • The speculative return has added just 0.1% to the annual investment return.
rule 2: Own all businesses (best risk reducing strategy)
Don't look for the needle. Buy the hay stack.
  • Only 3 out of 355 equity funds (since 1970), or 8/10 of 1%, have survived and mounted a record of sustained excellent.
  • During the 39 year period (1968 to 2006) the S&P500 index fell into the bottom quartile of large cap core funds, in only 2 years and has not done so since 1979. The index has outpaced the average fund in 26 of the 35 years, including 11 of the past years.
rule 3: gross market return - costs = net return for the investor. Costs matter: compounding costs will eat your lunch and dinner
The "all-in" cost of equity fund ownership can come to as much as 3-3.5%/year. This includes the expense ratio, sale charges and initial sale charge. Compounding over 50 years, the investor who puts up 100% of the capital and assumes 100% of the risk, earned only 31% of the market return.
For 1980 - 2005:
  • S&P returned 12.5%/yr; $10,000 will grow to $170,800 before inflation (3.3%/yr); after inflation: $76,200.
  • Average Fund returned 10%/yr; $10,000 will grow to $98,200 before inflation (3.3%/yr); after inflation: $40,600
  • The impact of compounding costs over 25 years is a difference of 53%!
rule 4: gross market - costs - market timing and selection penalties = net return earned by mutual fund investors
There is a investment time lag which costs investors dearly. When you calculate it out, the $10,000K investment will grow to:
  • S&P invested: $76,200 (after inflation)
  • Average Fund: $16,700 (after inflation)
  • The impact of costs, counter productive market timing and selection penalties over 25 years is enormous: 22%! of what could have been if invested in an index fund.
rule 5: taxes are costs too. High turn over = taxes
Continuing the calculation:
  • S&P invested: 12.3% return - 0.6% (tax cost) - 3.3% (inflation) = 8.4%; $10,000 grows to $65,000.
  • Average fund: 10.0% return - 1.8% (tax cost) - 3.3% (inflation) = 4.9%; $10,000 grows to $23,100
  • Again the impact is substantial when compounded over many years.
So, this brings us to a simple summary: Bogle recommendations
  1. Serious money account = 95%
    Funny money account = 5%
  2. Invest serious money account 100% in index funds
    1. <>
    2. 85% S&P index
    3. 5% small cap index
    4. 10% value index
    5. short term bond fund
    6. inflation linked bonds
  3. Invest funny money (experiment)
    1. some in stock
    2. some in mutual funds
    3. commodity funds
    4. Avoid other funancial constructs
  4. Asset allocation: bond % == your age or (age -10) %

Tuesday, August 07, 2007

Unclutter

Unclutterer.com is on my list of favorite blogs to read. For the last month we have been uncluttering our house and most importantly our garage. We had "inherited" numerous items from our friends who moved back to Belgium. Last weekend I took inventory of our regular drinking glasses. This does not include wine glasses or shot glasses. The picture on the left is exhibit A. No wonder our cupboards were full. We uncluttered to a simple set of glasses. We also kept the specialty beer glasses, such as a set of six Duvel beer glasses.

Wednesday, August 01, 2007

Buenos Aires, city of the thin

People in Buenos Aires always look in great shape. Women are obsessed by their looks (even more so than in many other places). But also men are in great shape (regardless of the amount of beef, beers, empanadas or media lunas consumed). I am impressed about the amount of sports done in this big city:
  • Soccer is everything in Argentina. In the parks of Buenos Aires, or on any patch of green, you'll find many impromptu games of soccer. Soccer is everywhere. Day and night.
  • Dogwalkers keep in shape by walking 10, 20 or 30 dogs at once.
  • I have not heard of any famous cyclist from Argentina (except for Rebellin exchanging his Italian passport for a dark blue Argentinean one) in order to participate in the Olympic Games. However, on the route from the airport to down town, in the cold of mid winter, we encountered many cyclists on the freeway to the airport (Sunday 10am). They all were in great shiny outfits of the major European teams.
  • Jogging along Avenida Libertador
  • Rugby is very popular, although I did not see any game or people playing it.
  • Tennis is gaining strong in popularity, thanks to a group of excellent male players, including Nalbandian.
  • During the winter, I noticed a fair amount of people with squash rackets.
  • Polo, although more a game for the rich and famous.

Monday, July 30, 2007

Countries visited in the world: 18 (8%)

Obviously there is still a lot of untouched ground. Two continents stick out: Africa and Oceania. A trip to Canada would be nice as well. The last couple of years we have however been visiting the same countries over and over again.



Save @ and / !

I spent most of the month of July in Argentina on vacation. Vacation however does not mean I will turn  the computer off entirely, nor access to the (internet) world. I read my personal email regularly and kept up to date with the blogosphere. Argentina is quiet computer savvy. There are many internet cafes, and many people have broadband internet. The computers on the other hand are often a little dated, because of the cost. (We did bring an Apple iMac Mini for my brother in law. The price difference between the US and Argentina is substantial: more than 30%.)

One thing kept bugging me however: the Spanish keyboard layout. I am not referring to the fact that the punctuation keys are swapped. The two basic internet keys: @ and / are hidden away.


  • @ is Alt Gr + 2
  • / is shift + 7
In the age of the internet, it is time the keyboard layouts are updated.

Monday, July 16, 2007

Hangar One

The history of the Bay Area intrigues me, especially how it became the center of computer technology. I´ve spent many hours in the Computer History Museum in Mountain View and have even organized corporate events there. This story in the The Register tells the story about the big hangar at Moffett Airfield.
By Austin Modine in Mountain View
Published Friday 13th July 2007 21:02 GMT

On the morning of May 12, 1932 — long before the area was transformed into the nation's technology hub— more than 100,000 spectators braved traffic on the still-uncompleted Bayshore Freeway to congregate at the Mountain View-Sunnyvale border.

The crowd had arrived to watch the arrival of "sky-queen," a jewel of America's lighter-than-air craft era dock at Hangar One. Standing at 211 feet, the still-incomplete Navy structure would be home only briefly to the USS Akron as it made its way to Lakehurst, New Jersey.

Less than a year later, the "sky-queen" would crash off the coast of New Jersey, killing 73 of the 76 officers aboard — among them Admiral William Moffett who helped establish the base that housed Hangar One, and for whom the airfield is now named. Eight days after the tragedy, the station was commissioned.

For 71 years, Hangar One has remained a cherished landmark in Silicon Valley. And for 71 years, the hangar has poisoned the landscape around it.

The structure's toxic secret wasn't discovered until 2003 when Navy, NASA, US Environmental Protection Agency and local government officials began looking for a source of contamination in the nearby Moffett Field wetland, which flanks the NASA Ames center.

Several endangered species make their home in the adjacent tidal marsh, such as the California clapper rail and Alameda song sparrow — which spend their days fluttering about the waters that have been tainted by polychlorinated biphenyl, DDT and various toxic heavy metals.

Officials first assumed the pollution came from the Moffett airfield runway, but the chemical trail soon lead environmental investigators on a b-line for the massive blimp garage instead.

It was already known that Hangar One was bad news. Its insides are filled with chemicals known to cause cancer and neurological damage, its outsides are coated with lead-based paint and the roof panels are made of materials high in asbestos and PCB. What wasn't apparent, however, was that toxins were washing off the hangar every rainy season and turning the marsh into a chemical broth.

The debate on whether to destroy Hangar One or pay more to clean it up has made little progress over the years. The Navy, NASA and government officials have created the perfect storm of long-term environmental studies and government bureaucracy to analyze the situation. The Navy wants to destroy the building for $12m and be done with it, but an organization called Save Hangar One Committee has fought tooth and nail to preserve one of Silicon Valley's last few remaining historical structures.

Hangar One

Hanger One

Last evening, attendance was sparse at the Restoration Advisory Board Meeting as Navy officials reported that no progress has been made since the last meeting two months ago.

Solutions continue to trickle in. One private group is seeking funding to pay for Hangar One preservation costs to turn the hangar into a NASA museum.

A local architect suggests that Hangar One could be covered in a Teflon-coated Fiberglas fabric, sealing the outer toxins from leaking into the marsh. The cost for the installation of materials and fabric would run about $12m — money NASA doesn't have to spare.

What remains to be seen is if Silicon Valley cares enough about a landmark to raise the money. Mountain View and the surrounding suburbs seem content to let historical sites such as the original building for Shockley's Lab become an abandoned fruit stand, and simply slapping a historical marker on the original Fairchild building before calling it a day.

Apparently, toxic material isn't enough to light a fire under anyone's ass. Maybe when mutant Alameda song sparrows start attacking, we'll be singing another tune.

Tuesday, June 12, 2007

Three B-S of design reviews

I am in San Diego this week to be at the critical design review (CDR) of my main project. In a CDR, we present the software architecture, go over design decisions made, discus risk items and schedule. A CDR takes about 4 hours (when lucky), but they can get very long depending on the questions and side discussions. To keep CDRs within schedule, I picked up a great tip: the 3 B-S of design reviews
  1. Be Sincere - when you do not know the answer to a question, say so. Don't try to wing it or dance around it.
  2. Be Succinct - be short and clear in your answers.
  3. Be Seated - answer the question and close it. Don't linger, or leave answers half open. It is just an invitation for others to put in their 2 cents, a comment or open a can of worms.

Thursday, May 24, 2007

A WholeMeal


This week, I was on business in Fair Fax (Fair Lakes), Virginia. It was the first time I visited Virginia. I spent three days in the Fair Fax area. On the last evening, I made the 45 minute drive into Washington D.C. to see the squeeky clean center and the national monuments.

During the day, I went for lunch with the team of the company I was visiting. In the evening, I was on my own. On the way to my hotel, I decided to stop for a bottle of sparkling water at Whole Foods in Fair Lakes. It is always an experience to walk into Whole Foods. This one was wonderful and very spacious, unlike the cramped Whole Foods stores in the Bay Area. While strolling around, I noticed a lot of people were dining inside Whole Foods. I am not referring to the tables at the end of the checkout, where you can eat the food you just bought inside the store. No, in the middle of the stores, at various locations, you find tables and chairs, or a counter to sit at.

I ate tuna prepared with miso and sesame seeds in the middle of store and right in front of the fresh fish counter. The food was delicious, made right in front of me. The scenery is fun: people strolling by, grocery shopping. The price is like a medium priced restaurant ($15 I believe). A nice detail is that there is a no tipping policy. ("We already get paid enough by WholeFoods", the waitress told me.)


The next day, I checked out the meat counter. Pork is smoked right in front of you. This is a great idea. I will keep my WholeFood shares a little longer.

Premium Passengers


You've read it before: everybody is equal; just some are more equal than others. This was especially obvious when you have to go through airport security. I snapped this picture at Washington Dulles Airport (IAD). But I've seen similar signs at San Francisco Airport (SFO). The plebs is separated from the Premium Passengers into shorter and special lines when approaching airport security. The only thing missing is a red carpet for the "premies" so their feet don't get cold when taking of their shoes. I thought airport security was run by the federal government, and not by the airlines.
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