Learning about Finances...Graham Way

NetflixPrize. One milestone reached.

2008-09-26T12:26:00.000-07:00

Netflix.com has a programming challenge to improve their movie recommendation system by atleast 10%. Their system (Cinematch) has an RMSE of 0.9514.

See details of the challenge on www.NetflixPrize.com.

I registered in 2006 Dec. My initial algorithm was mostly based on creating customer categories based on their rating habits, seasonal moods etc. But I couldn't do better than 0.98. The problem was the customers that had refused to fit in any pattern. Their standard deviation of ratings in any group was pretty high (1.2+).

I gave up.

Last week I came up with an idea to take care of these unpredictable customers by linking IMDB genre data. The idea is to categorize the customers based on what kind of movies they like.

And I beat the Netflix's Cinematch 0.03 points. My new RMSE is 0.9287.

Now I am stuck again. Not sure what else to try.

Must. See. This. Movie.

2008-08-18T12:03:00.000-07:00

Mustache- check
Knife in each hand-check
'Bastard I will kill you' expression-check
Two lions regretting their decision to attack a true bad ass-check

Today I can safely say that I found the definition of 'Awesome'.

PXP. Stock Analysis.

2008-06-24T12:18:00.001-07:00

Ticker : PXP
Current Price : $76.85
More info: Plains Exploration & Production Co
Company Type : Growth
Sector : Energy
Industry : Oil & Gas Operations
Market Cap : Mid Cap. 8.261 B.

Current Stock Trend: Long Uptrend

Important Ratios:

Ratio	Company	Average Industry Ratio	Good?
P/E	22.92	15.00	false
PEG	0.51	1.00	true
TL/E (Total Liability/ Equity)	1.56	1.44	false
P/CF (Price/Cash flow)	0.00	0.00	false
P/B	0.00	0.00	false

Fundamentals during last 5 Quarters:

Dbt/CF (This ratio tells me how company is using the borrowed money)
17.74	21	18.76	20	74
Cash Flow
284	302	144	121	19.95
Debt
5,051	6,355	2,710	2,527	1,484
Net Income
163	80	32	25	20
Income increase
104%	143%	29%	23%

Fundamentals during last 5 years:

Dbt/CF
10.81	1.97	4.37	4.85	7.25
Cash Flow
588	674	463	363	118
Debt
6,355	1,332	2,023	1,762	858
Net Income
158	597	-214	8.84	59
Income increase
-73%	100%	-2,520%	-85%

MSN Caps rating.

Going to significantly outperform the market With less than average risk

Pros: Relative price change and consistency is very high. Very positive; Earnings was much higher than forecast. Positive; P/S is significantly higher . Very positive
Cons
The PE is higer. Negative

Opinion Bars

First bar: Industry analysts bar opinion about this stock. (Hold and sell are counted as sell. Buy is not counted. Strong buy's are counted as buy)
Analysts : 13: Buy 3: Sell

Second Bar: Opinions from socialpicks.com website.
SocialPicks: 3 Buy 0 Sell

Third Bar : This bar tells me if the mutual funds and institutions are buying this stock.
Market Action : 15 Buy 6 Sell

General Market buzz

Insider Trading (% of stocks traded during last 1 year compared to what they had before)

Delimitros Tom H (Director) :-37%
Dees Jerry L (Director) :-18%
Flores James C (Controller) :-62%
Feeback Cynthia A (CAO) :-12%
Buckwalter Alan R Iii (Director) :-5%
Lollar John H (Director) :-2%
Gerry Robert L Iii (Director) :-17%
Wombwell John F (COO) :-35%
Arnold Isaac Jr (Director) :-5%
Talbert Winston M (VP) :-6%

Report created on Tue Jun/24/2008 03:14

JQuery: The Good, the Bad and the Ugly

2008-04-03T17:23:00.000-07:00

Like the rest of the world, we are using JQuery now. We have been doing browser based rich client applications over the last 7-8 years now.

All this experience has taught us to be very skeptical of these 'cool' libraries that spring up every 2 months. Most of these libraries look good only on demos. But using them with our existing framework or mixing multiple libraries can lead to not so pleasant experiences. These libraries interfere with each other or try to hijack the CSS styles of other widgets.

JQuery is definitely one of the lowest maintenance libraries that we have used so far. So far so good!

JQuery is based on the philosophy of consistent and limited API and compact codebase. John Resig, the creator of JQuery talks about this philosophy in this amazing Google video. http://video.google.com/videoplay?docid=-474821803269194441

With my limited experience, this is how JQuery looks to me:

1. GOOD methods.
2. Promotes BAD programming practices.
3. Code gets UGLY.

The Good:

$() Access function provides us flexibility of use. It's a great alternative to document.getElementById(). Also it provides consistency in accessing objects.

See following example:
var d = $("#MyDivId")

Above returns the JQuery object that represents the div tag that has an id="MyDivId".
Also I can do $(d) and I will get the same object back.

$(document.getElementById("MyDivId")) will also returns me the same JQuery object.

The main advantage of the last method is that it allows us to integrate JQuery techniques into any existing AJAX codebase.

Also I love the .html() and .text(), .append() and .prepend() methods. They are simple. (I hate the .prependTo() and .appendTo() though. They don't make sense. Seems like an afterthought.).
Another pretty method is .css() on a JQuery object. css() method makes it very simple to do the CSS manipulations on the objects without worrying about cross browser compatibility issues.

The Bad
JQuery examples promote some bad programming practices.

Most of the code snippets about JQuery seem to consistently follow some very bad programming practices. Every example insists on creating JQuery objects for every call. I haven't seen many code samples that use variables. I think this practice originated from John Resig's promotion of enclosures and inline functions in JavaScript.

Let’s see the following example of supporting hover on a div object:

function fnPageLoaded(){
$("#MyDivId").hover(function(){
$(this).addClass("hover");
}, function(){
$(this).removeClass("hover");
});
}

$(document).bind("ready", fnPageLoaded);

The above code should be written as following:

function fnPageLoaded(){
var d = $("#MyDivId");
d.hover(function(){
d.addClass("hover");
}, function(){
d.removeClass("hover");
});
}//fnPageLoaded

Even better,

function fnPageLoaded(){

var d = $("#MyDivId");

function fnOver(){d.addClass("hover");}
function fnOut(){d.removeClass("hover");}

d.hover(fnOver, fnOut);

}//fnPageLoaded

Try to use local variables for function and JQuery access pointers.

These local variables do the following things:
1] Reduce unnecessary calls to the functions.
2] Make code more readable.
3] Good variable names self document the code flow.

The access method $() in JQuery has a significant amount of code in it. Calling it multiple times will slow down your code.

Chaining these JQuery calls reduces the number of variables we need in the local scope. But it makes the code ugly.
This brings me to my 'The Ugly' part of JQuery.

The Ugly

One of the basic principals of programming is writing simple code. Even comments don't help a complex code.

The side effect of writing a lot of anonymous functions is ugly code. At first glace, most of codebase using JQuery looks like random mix of '#', '()', '{}' and ';' operators. If you haven't written that piece of code, it becomes impossible to step into and understand. This reminds me of debugging regular expressions written by someone else. Your JQuery code can end up looking like reg-ex code. It is easier to rewrite regular expressions than understand them.

Conclusion

JQuery is good. But remember your 'Pragmatic programmer' and 'Code Complete' lessons. Write simple code. Clever or tricky code is bad.

Best. Fight. Scene. Ever.

2008-02-16T12:26:00.000-08:00

Few of my brain cells died watching this fight scene. I am looking for this movie on ebay. Enjoy!

Shorting China Market

2008-01-22T17:41:00.000-08:00

I couldn't write my blog for last few weeks. We were in the middle of a product release. We alpha released first in our next generation of products.

And as always, during day I was scribbling on my white board and coding.
And during nights, I was dreaming about how I am gonna write code the next day.
Finally it's back to reasonable schedule now. ....After 10 years of doing the same thing, somehow it is still exciting.

This year has been very bad for stock market globally. Some are calling for global slowdown of the economy lead by USA.
China stock market has gone up more than 100% during last one year, many say that it is due for a big crash now.

This is a bad time for investing in the growth of the market. But how about investing in the crash of a market? People call it short selling or shorting a stock. This is against traditional wisdom, but might pay off big time.

There is an ETF which shorts the chinese market. It's called FXP (Proshares ULTRASHORT FTSE/XINHUA CHINA 25).

The FXP approximately moves two times against the ETF FXI (iShares FTSE/Xinhua China 25 Index).

When FXI goes up 100 points, FXP goes down 200 points.
When FXI goes down 100 points, FXP goes up 200 points.

This weekend I will spend some time to research FXP.

What is Inflation?

2008-01-20T21:56:00.001-08:00

I was talking to J about inflation yesterday. And today I found this very informative google video about inflation. If like me, you are trying to learn economics, this is a must see video.

If you can't see the embeded video, click this link : http://video.google.com/videoplay?docid=-7760821786905609611&q=inflation&total=3116&start=0&num=10&so=0&type=search&plindex=0

Predicting the stock market

2008-01-03T23:35:00.000-08:00

J.P Morgan was once asked what the stock market will do. He replied 'It will fluctuate'. This statement I think is the most perfect prediction ever done for a stock market. Since then, there have been a thousands of theories and formulas that took a shot at predicting the market direction. But none of them worked.

Well, now let me take a stab at predicting the short term future.

Here are my assumptions:

Market works on sentiments
Bad news about a company pushes the stock down
Good news about a company pushes the stock up.

Now the theory:

Look at the history of a stock performance
Gather the news at the begining of every upward trend and downward trend.

Categorize these news into the buckets of gain or loss based on how they affected stock historically.

After we've got all the news bucketed, run Bayesian filtering algorithms on each bucket data. The data in buckets will train our Bayesian filters. (Exactly the way email spam filtering works).
Monitor the news in realtime. We can do that using RSS news feeds. Google news, Yahoo news and AP news do a good job of proving RSS feeds for any stocks tickers.
Then try to match the new news to determine what bucket it fits in.

That's it!

The code should be pretty simple for this implementaion. Then we can run it patiently for a 3 months and measure the performance.

Coolest Bookcase ever

2007-12-27T16:58:00.000-08:00

This will confirm everyone’s suspicion that I have nothing better to do. I wasted another 5 hours of my life designing a new bookcase. Previous design wasn't symmetrical and it involved plenty of weird angles which will be difficult to implement.

This new design is approximately 57 inches x 60 inches. The top 2 shelves are 8" tall to accommodate the paperback and small books. Shelves 3 and 4 are medium size (10 inch) and bottom 2 rows are 12 inch tall.

Even with its tilt, the design provides the straight lines on the right and left edges. This will make it fit in any corner. I personally think the wall on the right corner will make the case look prettier.

Now the details...this looks tricky but is very simple. The idea is to implement the simple boxy structure like following. Then tilt it 27 degrees to the left. To maintain the tilt, apply a balancer on the right bottom.

The tilt will use gravity to hold the books together and not slip. The small cells will allow to categorize the books based on subject, thickness and theme.

To calculate the length of a balancer, we will consider following triangle:

We can use following formula to calculate the height of a balancer.
Sin(q) = Opposite / Hypotenuse

Since we know the height of q=27 and Hypotenuse=28 we get:

Balancer Height = 12.7117"

(Note: For commercial use, please ask for my permission.)

Difference between Roth and Traditional IRA.

2007-12-23T12:06:00.001-08:00

I was trying to decide the right Individual Retirement Account (IRA) for me and Dixa. There are two main type of IRA's.

Traditional IRA
ROTH IRA.

B is convinced that the traditional IRA is best for him. I intend to prove him wrong. It's 1 am and I think I have finally figured out the code for this. Since my goal is to differentiate between the two types, I am not counting inflation. This will keep my math simple. Ok following are the basics that I have learnt.

2007 IRA contribution limit: $4000
2008 IRA contribution limit: $5000
Spouse can also open an IRA account (Even if he/she is not working)
Tax structure for Roth: Post tax money.
Tax structure for Traditional: Pre tax money. (Saves 25% of 4K. i.e. $1000 every year)
Withdrawing money from Roth : No TAX. Any time.
Withdrawing money from Traditional: Basic income tax (25%) + penalty (10%)

My conclusion:
If I plan to withdraw the money anytime before retirement, Roth wins. Even if I invest for 1 year or 20 years, Roth has an advantage over Traditional IRA. Assuming very modest average 5% market return per year, this is what my total money looks like over number of years.

Years   Roth   Traditional
---------------------------------
2     $12,610   $10,246
5     $27,208   $22,106
10     $56,827   $46,172
20     $142,877   $116,088

My calculator: I wrote a simple javascript calculator for these calculations. Try it yourself:

My IRA contribution every year:
Expected market return per year (%):
I withdraw after years:

Money I will get (Roth):
Money I will get (Traditional):

Logic behind calculator:

To calculate compound interest we have a formula:
Amount *(1 + Expected Return/100) ^ YEARS

First $4000 will be invested for all the YEARS. The next years $4000 for YEARS-1. And so on. Now I will repeat this formula for all the years of investment:

Amount *(1 + Expected Return/100) ^ YEARS
+
Amount *(1 + Expected Return/100) ^ YEARS-1
+
Amount *(1 + Expected Return/100) ^ YEARS-2
+
Amount *(1 + Expected Return/100) ^ YEARS-3

This is starting to look familiar now. This looks like our good old geometric series equations.
a + ar + ar² + ar³ + ar⁴ + ar⁵ ...
"Applications of geometric progression is a sequence of numbers where each term after the first is found by multiplying the previous one by a fixed non-zero number called the common ratio. The sum of the terms of a geometric progression is known as a geometric series."

Code behind calculator:
My JavaScript code for calculating above formula contains a very simple for loop. No explanation is necessary for the following code:

function calculateAccumulatedAmount(AMOUNT, YEARS, RATE){

//Add value to this variable
var FINAL_AMT = 0;

//Iterate through all the years and start adding amount
for (var y=0; y<=YEARS; y++){
FINAL_AMT += AMOUNT * Math.pow((1 + RATE/100), y);
}

return FINAL_AMT;
}//End calculateAccumulatedAmount()

Some Learning And 2008 Strategy

2007-12-08T08:23:00.000-08:00

I have been reading more about ETF(Exchange Traded Funds) and mutual funds. Here is my conclusion about different investment strategies:

Direct Stocks:
Very Risky. I want to beat the market.
Expected earnings: -50% to +100%.

Mutual Funds :
Risky. I expect some fund manager to invest my money for me. He will charge me some money for it.
Expected earnings: -30% t0 +50%.

Index Funds and Exchange Traded Funds :
Less Risky. I play with the market.
On average I will match the inflation + gain some.
Expected earnings: -10% to +10%.
(I think ETF are better)

Bonds:
Safe. (I don't understand bonds yet.)

Now for 2008:
The growth rate for USA economy for 2008 is not expected to be more than 2.x%. And the inflation is expected to be 2.4%. It seems like the return from US stock market will be a losing bet. The only way to beat the market is to play against the market and choose some very offbeat stocks and expect them to pay off.

Here is a strategy: Find 6 countries with solid economy. Then invest in the main exchange index of these countries. Staying with the major indexes and diversifying in 6 different markets will let me sleep better at night. And I will let ETF's to do this investing for me.

The countries are Australia, Singapore, Austria, Russia, Hong Kong and India. After some good searching I found following ETF.

EWA
iShares MSCI Australia Index
52wk high: 34.83
52wk low: 22.35
Dividend: 1.10
Yield: 3.50
Market Cap: 2.01 b

EWS:
Ishares Singapore
52wk high: 15.97
52wk low: 10.35
Dividend: 0.31
Yield: 2.20
Market Cap: 2013.31 b

EWO
iShares MSCI Austria Index
52wk high: 41.85
52wk low: 32.538
Market Cap: 613.8 m

RSX
Market Vectors Russia ETF
52wk high: 53.00
52wk low: 36.20
Market Cap: 50.3 m

EWH:
(Large cap, value-oriented equities)
Hong Kong.
Expense ratio: 0.54%.
PE ratio: 24.59
Price/Book : 6.45

IFN
India Fund, Inc.
52wk high: 64.95
52wk low: 35.51
Dividend: 4.89
Yield: 7.90
Market Cap: 2.79 b

Tech pick: Akamai(AKAM) or NDS Group (NNDS)

2007-11-28T20:19:00.000-08:00

Following is mine and B's conversation about two tech stocks. (Checkout B's thanksgiving blog)

B: Checkout Akamai Technologies(AKAM). I am not in tech stocks, but this looks good.

Me: AKAM. Growth looks good. Very low debt. Consistantly increasing cashflow. But PE is 75+

B: Still?

B: Aah..didnt check very carefully. I read a report that claimed...growth is going to stay very good. Essentailly its OK....for high PE. On principle...I dont like high PEs though...I am cancelling

Me: Forget AKAM, I know a guaranted winner

B: ....who is a garunteed winner?

Me: More than 80% of analysts say 'strong buy' and more than 13 institutions and mutual funds bought it in Oct as opposed to 3 who sold it.

Me: NNDS (NDS Group plc). Good PE, Very low debt, 30%+ increase in income every quarter. And it is your favorite size Mid Cap.

B: What do they do?

Me: Communications Equipment. They do Telecom, IT, DVR's and Pay per view

B: hmm....looks good

Me: I know.

B: The 3 who sold it..were they just booking profit? It doesnt matter essentailly.

Me: Here is the institutional holding data : http://moneycentral.msn.com/ownership?Holding=Institutional+Ownership&Symbol=NNDS

B: hmmmm

Me: I think NNDS will be a good buy. Guaranted 20% profit in next 6 months.

B: putting your money where your mouth is ? It makes IT telcom shit. 100% in a year and half

Me: 100% is not possible in normal investing. You need a lot of luck with that.

B: Some people say..that luck is an extension of ability. Are you investing in NNDS?

Me: I think so. This tuesday. Lets still do some more research till sunday. Then make a decision. Put your black hat on and try to find negatives in this stock.

B: All right.

Bottom fishing Real Estate and Finance stocks

2007-11-19T16:24:00.000-08:00

Harry Domash suggested to bet now on the real-estate rebound . Harry's step-by-step filtering brought him down to only two good mid cap homebuilder stocks NVR(NVR Inc) and TOL (Toll Bros).

Harry is always very methodical and sensible. I always take his recommendations seriously. Currently investors are not touching anything to do with real estate, which means it might be a right time to buy RE stocks.

Today market panicked again after Goldman Sachs analyst William Tanona downgraded 4 finance biggies. The victims included Merrill Lynch (MER), Morgan Stanley (MS), The Bear Stearns (BSC) and Lehman Brothers Holdings (LEH).

This kind of downgrade will affect these stocks very badly. I think this analyst is right about Morgan Stanley and Bear Stearns. They are BAD stocks with BAD fundamentals. But I think this downgrade is unfortunate for Lehman Brothers and Merrill Lynch. This makes them good candidates for trying out my value investing strategy. Also my other favorite beat down finance biggies are Citigroup(C) and Wachovia(WB).

According to above chart (From money.cnn.com), Citigroup has already wrote down insane amounts for Q3 and Q4. This just means that the company wants to admit its mistakes and move forward. Also market seems to already have priced these losses in the stock price.
This strategy is against the flow of the market. Since nobody can time the bottom, I have to reduce the risk by doing incremental investing. I will start investing close to $200 every month in each of the stocks in my list.

Obviously I don't want to pay $10 for each transaction using my Ameritrade account. I will be using my Sharebuilder.com account. I currently subscribe to Sharebuilder’s Advantage pricing plan which allows me to invest in up to 20 companies for $20 per month. Also the investments will be done automatically for me.

This is how my list of watch-the-bottom-stocks looks like: (Scroll down to see the table. Blogspot's table layouts suck big time)

Company	Comments	Mkt Cap	Start investing	Will start making money by
Citigroup Inc. (C)	Chuck Prince is gone.	159.48B	Dec 2007	Dec 2008
Merrill Lynch & Co., Inc. (MER )	Stan O’Neal is gone. They haven't done any writedowns in Q4. This either means they don't have any more bad investments (very unlikely), or they just haven't announced it yet (will slam the stock further).	45.97B	Dec 2007	Dec 2008
Lehman Brothers Holdings Inc. (LEH)	This company never had a negative net income. Cash flow is negative during last 5 quarters.	32.09B	Dec 2007	Dec 2008
Wachovia Corporation (WB)	This bank is expanding like crazy in the west coast. There is a new branch office in every other block in Orange County. They are aggressive, big, and cheap.	73.05B	Dec 2007	Dec 2008
NVR, Inc. (NVR)	Seems like NVR hasn't felt a pinch of a RE downturn yet. That might be because NVR doesn't have significant operations in risky areas.	2.32B	Feb 2008	July 2009
Toll Brothers, Inc. (TOL)	Good finances. I also like its competitor HOV (Hovnanian Ord Shs).	3.16B	Feb 2008	July 2009

Mutual Funds for bad times

2007-11-09T22:23:00.000-08:00

Market had another tumultuous day of trading yesterday.
I don't think the worst is over yet. Until the housing market corrects itself, market will stay volatile.
(Note to myself: For short term investment, check out the volatility index)
During next couple of quarters, I will be looking at my mutual funds to provide stability to my portfolio.

Fund SRPIX:
My real estate short fund. I bought this fund early July this year. This has proved to be my wisest investment this year. This fund invests against real estate market in North America and moves opposite Dow Jones U.S. Real Estate index.
I plan to hold this fund till March of 2008. Then I might invest the same money in the Dow Jones U.S. Real Estate index. Unfortunately the fund has raised it's minimum investment limit to 15 grand.

ProFunds Short Real Estate Inv
SRPIX

Min Investment:$15,000
Expense Ratio:1.39 %

Domestic Funds:
Following are my domestic fund choices. There is no entry or exit load for these funds. Since I don't understand mutual funds, I am trying to stick to mostly 5 star funds. Also as a safe bet, I prefer large cap investment strategy.

Homestead Value
HOVLX

Min Investment:$500
Expense Ratio:0.71 %

Amana Trust Growth
AMAGX

Min Investment:$250
Expense Ratio:1.35 %

Ivy Science & Tech
WSTCX

Min Investment:$500
Expense Ratio:2.33 %

4 International funds:
Since I don't keep track of overseas market, I am sticking to all large cap companies and 4 and 5 star funds.

5	UMB Scout intntl UMBWX Min Investment:$1,000 Expense Ratio:0.97 %
6	Van Kampen intntl Grwth VIFIX Min Investment:$0 Expense Ratio:1.06 %
7	Dodge Cox intntl Stock DODFX Min Investment:$2,500 Expense Ratio:0.66 %
8	Fidelity Southeast Asia FSEAX Min Investment:$2,500 Expense Ratio:1.04 %

Me a Bear

2007-11-01T18:21:00.000-07:00

I am feeling very bearish right now. These constant fed rate cuts make me uneasy. They are just going to devalue the dollar.
I see all these so called investing gurus on CNBC wanting more fed rate cuts and bailout plans. How can people be so shortsighted? Seems like the only thing Wall Street cares about is an immediate profit. They don't mind screwing up our economy in the long term. Every spike in the chart is greeted with big cheers and high-fives. Virtually no one talks about cheaper dollar.

I have been following interviews on CNBC. When asked a question of devalued dollar, most people see it as a good thing. They talk about how cheaper dollar is going to help American exports and how we will make a lot of money exporting goods. I think I will someday take an econ 101 class and create an animated explaination on how it is bad to have a cheap currency.

Also when asked about bad housing market, most market gurus (including great Alan Greenspan), consistently say that the worse is behind us. Well, it doesn't seem like it is over yet. Following chart clearly shows that we have a long way to go before housing market cleans itself up.

All this denial of reality, is it only because we are scared of scaring the investors and we desperately want to keep the market moral up? It does seem like a big conspiracy to keep investors from seeing the truth.

I came across this great interview of Peter D. Schiff. He is an aggressive bear, but he has a point.
He says things that make sense. I think after finishing my Code Complete 2, I will start on his book Crash Proof.

Shall I buy Duke Energy?

2007-10-24T21:17:00.001-07:00

I like Duke Energy. They sell electricity and natural gas. I found this stock when I ran my screener using following criteria:

Big company

Low Stock Price

Low debt

Positive Cash flow

Dividends more than 5% per year.

Only Duke Energy qualified. Here are the numbers:

Big company : Large Cap (23.5 Billion)

Low Stock Price : PE is 13.41 which is way less than the average for this industry. Industry PE is 19.18.

Low debt : Total Liabilities/Equity is 1.37. I look at TL/E instead of Debt/E. Debt/E can be manipulated to look good.

Positive Cash flow : Consistent +ve cash flow since last 5 years or more.

Dividends more than 5% per year. : This is very unique for a large cap to give these kind of dividends.

Even if the stock doesn't go up, dividends will make up for it. This will be a recession proof stock.
Worries:
Duke took a big dip early this year. It came down from $33 to $19. This happened when they spun-off another company called Spectra Energy Corp.

Here is the link.

The dip is not necessarily bad. But I hope this spin-off hasn't weakened the original Duke Company.

I will think about it little bit more.

Edit: Bought DUK today.

PE or PEG?

2007-10-23T15:54:00.000-07:00

I have been struggling to understand the difference between PE and PEG.
I turned to B for explaination. Here is our little talk:

Sk: ....I am trying to understand PEG. I read numerous definitions of it, but still don't have a simple explanation.

B: PE and PEG are diff

Sk: yup

Sk: PEG is supposed to be a PE with EPS growth account for.

Sk: That still confuses me.

B: what's EPS

Sk: Estimates for Earnings per share.

B: exactly..

B: so PE is simple..price versus earning

B: PEG ..seems to be like price vs..projected earnings growth? isnt it

Sk: Thats what the definition says.

Sk: But still, lets say Dixa won't understand it.

B: yeah...we need to fit it into a real life example with nos..why dont you do that :)

Sk: I guess. For that I need answers to following questions:

Sk: What does a good PEG with bad PE mean? What does a bad PEG with good PE mean?

Sk: Is it possible to have a good PE with good PEG?

B: let me take a stab

B: good PE..just means price to earning (past) is good

B: good PEG means....price is very good when you factor in future earnigns growth (where for example google kicks ass)

B: there PE is high

B: not good

B: but PEG ..is very very good

B: supposedly

Sk: Hmm.....

Sk: I think I got the good PEG with bad PE.

Sk: Example of google explained it.

Sk: Now I need a bad PEG with good PE.

B: well...good PE

B: INFY

B: great PE for industry it is in

B: but dollar is falling

B: satyam is snappin at heels..PSLPL

B: so future growth questionalbe

B: good PE..bad PEG?

Sk: According to this, market should just lap up the good PE and good PEG stocks. They seem like sure money.

B: the problem is good PEG is always good

B: good PE..is sort of flaky..what industry...what competitors etc

Sk: But doesn't PEG is calculated based on what analysts are estimating ??

B: yes..and you gotta hope they are right :D

Sk: And according to my friend 'Amit Behere', we shouldn't bet on analysts

B: we need dollar value types :) good solid example

This is where our conversation ended last night. I will post the next bit later.

Also checkout B's blog.

Bookcase

2007-10-20T18:04:00.000-07:00

Dixa wanted a new bookcase since the day she moved in. We got one.
But later I realized that the bookcase shelves are just rectangles.
Ie. We have to arrange books so that they are standing and leaning on each other.

But after every new book we add in the shelf, the angle reduces incrementally.
After a while the books refuse to stand vertically and they slip.

To solve this problem, I designed this new model for a bookcase.
I wanted it to be simple enough so that I can build it myself.
This design is inspired by one article I once saw on
Reddit.com.

The proportions are pretty exact.
Every 10 pixels represent an inch.
I drew them first using VML then exported it to an image.

And here is the 3D model of the same design.

I am using the cross browser javscript library for drawing my 3D model.
This 3D AJAX API is pretty simple to use. It took me only 15 minutes to write my model in it. For the home page for this API see Lutz Tautenhahn..
Check out his website, he has got some more good stuff.

Future Education Portfolio

2007-10-08T20:53:00.000-07:00

Here is my conservative portfolio for our future education.
I tried to put all the 5 star funds here. Except maybe Asia fund. All the funds don't have any front or exit load. I think I will invest in these funds soon.

1	Homestead Value HOVLX 11%	Min Investment:$500 Expense Ratio:0.71 %
2	Amana Trust Growth AMAGX 11%	Min Investment:$250 Expense Ratio:1.35 %
3	Waddell & Reed Adv New Concepts Y UNEYX 11%	Min Investment:$0 Expense Ratio:1.04 %
4	Waddell & Reed Adv Science & Tech Y USTFX 11%	Min Investment:$0 Expense Ratio:1.01 %
5	MFS International Value I MINIX 11%	Min Investment:$0 Expense Ratio:1.14 %
6	Van Kampen International Growth I VIFIX 11%	Min Investment:$0 Expense Ratio:1.06 %
7	DFA Intl Small Cap Value I DISVX 11%	Min Investment:$0 Expense Ratio:0.70 %
8	DFA Continental Small Company I DFCSX 11%	Min Investment:$0 Expense Ratio:0.62 %
9	DFA Asia Pacific Small Company I DFRSX 11%	Min Investment:$0 Expense Ratio:0.64 %

Russian Wireless Telecom Companies

2007-10-08T18:07:00.000-07:00

Looking at some communication companies.
VIP
MBT
GLDN

All 3 are russian/east European cell phone companies.

GLDN's management sold a lot of shares recently.

Fundamentally VIP looks the best.
VIP's management haven't sold any shares during last year.
The annual net income increase look great: 31%, 75%, 53%, 80%

With USD going downhill and the danger of recession looming, investing in other economies seems like a good idea.

On the negative side, the shady accounting practises in Russia might be making fundamentals of VIP look better than they are. Also I heard about the owner Mikhail Fridman being involved in some illegal nuclear deals.

I might still buy VIP.

And I am still thinking about WFMI. Anne today reasoned that during slow economy, it's niche markets that get hit hard. Whole Foods might suffer. She makes sense. On the other hand, AmitB bought Whole Foods. He sees it as a sure winner over long term. He makes sense too.

The only bad thing i see about WFMI is it's PEG is 2.39. Based on my limited investment knowledge, I think higher PEG reflects growth stocks. Does this mean WFMI is a bad choice for long term? I am not sure.

{And I have been practising my listening skills. It produces better results when I keep reminding myself. Hopefully it becomes a habbit.}

Don't talk too much

2007-10-07T10:07:00.000-07:00

Last night Dixa gave me a feedback. She said I talk too much when I get excited, to the extent that I cut people off during discussions.

This is Bad.

I guess I need to be more aware of my habbit and conscientiously start restraining myself while talking.

Back to the finances, I should buy Whole Foods tomorrow.

Bought Dress Barn

2007-10-01T10:24:00.001-07:00

Bought Dress Barn (DBRN). I am very confident about this stock.

Today Garmin went down 10%. I guess Nokia's buying Navtech for 8B makes market uncomfortable.

Also I posted my Self-Aware-Self-Adjusting-Network specifications on another blog. Someday I need to start an opesource project to add this feature in Tomcat.

http://khobra.blogspot.com/2007/10/self-aware-self-adjusting-network.html

Will buy Dress Barn tomorrow. Also thinking about TGIC.

2007-09-30T20:08:00.000-07:00

My screener thinks good things about DBRN.

P/E : 11.73
PEG:0.72
TL/E: 0.94
P/CF:7.24
P/B:2.07

Solid fundamentals:
Dbt/CF
2.92/ 4.15/ 6.97 /3.94 /3.02

Crazy Income increase
28% / 50%/ 69% / 330%

Cash Flow
164 / 105 / 57 / 59 / 77

Debt
478 / 437 / 403 / 236 / 232

Net Income
101 / 78 / 52 / 30 / 7.18

Company is buying back 10% of it's cap from the market. That is HUGE.
They serve niche market, seems like women love this store.
I must hold it for atleast 2 years.

Now TGIC

Management is buying shares. During last year this is what they bought:
Whitehurst David W (CEO) :5%
Ratliff William T Jr () :3%
Tonnesen Mark Kristian (CAO) :11%
Jones Kenneth W (VP) :35%
Van Fleet Ralph Bruce Iii (President) :100%

Analysts are 50-50.
Institutions bought it in the market before 3 months. Since then the stock has gone down by huge 52%. This is because of mortgage worries. They must be regretting their decision now.

I think Buffet would buy this stock right now. And I should too. I still don't have the courage though. I will think about it after I buy DBRN.

Fire Your Stock Analyst

2007-09-30T20:01:00.000-07:00

Finished 'Fire your Stock Analyst' today. It was a nice read. Cleared my some basic ideas about stocks evaluation. I guess the most important thing that I learnt is the ratio of TL/E.

Total Liabilities/Equity.

TL/E is a good guage of financial strenght of a company. I also added this criteria in my screener.

Currently I am assuming 1.6 as my cutoff value for TL/E.

Now I am gonna take a break from my financial reads for a while. I will get to 'Design of Everyday thing' book. I bought it before 3 years but never read it.

Also I will get some cheezy James Patterson thriller to take a break from these serious readings.