Oops But FMD Was Only Down a Nickel February 28, 2007March 5, 2017 The Dow dropped 416 points yesterday, which is either one of those hiccups that scares a lot of people out of the market (it could easily drop another couple hundred points in the first few minutes of trading today) and then, after some ups and downs, is soon forgotten . . . or it could mark the beginning of a rough patch for the market (but when has the market ever not had the occasional rough patch?) . . . or it could be the first chickens in a large flock coming home to roost. If I had to guess, I’d bet on the hiccup or the rough patch, not the roosting flock. But that last is certainly possible and arguably long overdue – which is why investing is a serious business and risks are not to be taken with money that cannot prudently be risked. The rich get richer in part because they are generally better able to hang on through adversity, perhaps even retaining the cash to scoop up real bargains once true panic sets in. Not that it will – but it could. A dip in confidence could lead to an even tougher housing market and more foreclosures, leading to a further dip in confidence, lower stock prices and a recession, leading to even larger deficits and an ever tougher housing market and more foreclosures . . . and who knows what could happen with Iraq, Afghanistan, Iran, oil, and the rest? All this is above my pay grade. FMD Maybe you co-signed a loan to help your kid borrow tuition from a lender partnered with First Marblehead, stock symbol: FMD. It then bunched that loan together with thousands of others and sold them off as a package to institutional investors, ‘securitizing’ them. (That is, turning the loans into a financial security, like a stock or a bond or, in this case, a bundle of student loans.) Upon sale, it booked a nice big profit in anticipation of all the fees it would get over the years as your kid paid it off. It’s a complicated business, and a lot of really smart hedge fund managers (and some maybe not so smart) are short the stock, which was $25.50 (adjusted for a 3-for-2 split) when it was first suggested here about a year ago and closed last night, down a nickel on the day, at $44.25. Even as the market was stumbling yesterday, my FMD guru was e-mailing me this upbeat assessment: As you are probably aware, FMD released their preliminary estimates for their third quarter ’07 securitization this morning. The results were substantially stronger than even I had anticipated (and as you know, I was far more optimistic than the analyst community) – the most important elements being a continued expansion in margins and increased upfront cash flows. Unless something changes dramatically in the next several days (usually I wouldn’t expect that, but given today’s market activity who knows!), it would seem that fiscal ’07 earnings should be comfortably north of 4.00 a share. Also, given that the CEO signaled that he was buying stock himself (albeit a relatively small amount), I wouldn’t be surprised to see some aggressive corporate buyback activity this quarter. In my opinion, the investment thesis is gaining strength, not weakening. So what do the shorts think? I got to spend some time with one of the smartest of them recently. He’s lost a good chunk of change this past year as FMD has risen more than 70%. He gave these basic reasons for expecting an eventual collapse: 1. He’s never seen a company with ‘gain-on-sale’ accounting ultimately work out. 2. First Marblehead’s profits are based on the assumption of students taking a long time to repay their loans . . . but that once they graduate, he thinks banks will start competing for their business and that they’ll refinance the loans at lower rates, forcing FMD to take big write-downs. 3. The few big banks that now account for much of FMD’s business will begin cutting FMD out of the picture to make all the profit themselves. To which my guru replied: 1. I agree with him for the most part on the history of companies that stake their future on the accounting benefits of gain-on-sale arithmetic. The difference here is that the cash flow is real, not phantom profits implied by some future Net Present Value assumption. FMD is a cash generating machine – and three to four years in on some of the older vintages, the residual values seem to not only be holding up, but releasing greater than anticipated cash flows (but the story here is the upfront cash, not the residuals). Management has been very conservative in recognizing this residual income at the time of the securitization, so the trusts can tolerate an elevated level of prepayments and still perform very solidly. 2. The prepayment argument is an interesting one, but I don’t see substantive risk here: The original loans have an average duration of 20 years, the vast majority of the original loans are cosigned by parents, and almost all are guaranteed by TERI (if you check the trust vintage data available on the FMD website, you will see that they have yet to recognize their first dollar in credit losses). FMD also prices their loans variably based on risk and offers customers reasonably tight spreads given the risk of the loans. I’m not sure how a rational bank, that needs to demonstrate solid performance expectations to rating agencies in order to get access to funding on the open market, could possibly undercut the original pricing in a material way given that the student’s parent will most likely NOT cosign at this point and the loan will not be guaranteed. Plus if there are behavioral changes in loan prepayments, those changes will be taken into the upfront pricing assumptions on newer vintages, and – given the growth rate of the market and this business that I addressed in an earlier email – the newer vintages will overwhelm the older stuff, significantly muting any earlier miscalculation. Also (and the lack of focus by the bears on this argument mystifies me): If, in fact, private student loan consolidation becomes a threat, wouldn’t FMD be in the best position to refinance these loans given their substantive competitive advantages and their proximity to the customer? KEY POINT: It’s the relative level of respect for these proprietary advantages and a solid understanding of how they can be applied that are really at the core of this debate. 3. The concentration of institutional partners is an issue, but it has improved a bit over last year and, mainly, what the shorts fail to appreciate is the value of the expertise imbedded in FMD’s database. There’s no quick way for competitors to gain this knowledge. Without it, they’re better off partnering with FMD. Who will be right? My money’s on FMD – but not so much of it that I’d have to forego color on this website if it goes the wrong way. # Have fun today. If you’re in the market for the long-term, remember that you’re in the market for the long-term. If you’re in the market with money you’ll likely need to draw on in the next two or three years, remember that you shouldn’t be in the market at all.
Budget Priorities February 27, 2007March 5, 2017 HOW THEY WANT TO SPEND YOUR MONEY Ben Cohen, of Ben & Jerry’s Chunky Monkey™ ice cream and Business Leaders for Sensible Priorities – which you should join if you are a business leader who favors sensible priorities – writes recently: President Bush sent his 2008 budget to Congress this week, proposing to spend 53% of the entire discretionary budget on the Pentagon. That’s . . . more than the combined military spending of all rest of the world’s 192 countries. While that doesn’t include spending to fight the wars in Afghanistan and Iraq, it does contain over $60 billion on obsolete Cold War-era weapons systems designed to thwart the now defunct Soviet Union. This hefty increase in military spending is paid for by cutting spending on human needs like education, child nutrition, children’s healthcare and medical research. HOW THEY SPENT $8 BILLION LAST YEAR A report in the new Vanity Fair on a sort of secret Halliburton. AL FRANKEN WOULDN’T SPEND IT THAT WAY Tamara: “I couldn’t get the Al Franken video to work using your link. Here is another link in case anyone else has this problem.”
The Words from Wyoming and Minnesota February 26, 2007March 5, 2017 THE WORD FROM WYOMING Dan Zwonitzer is a Republican state representative from Wyoming (‘the equality state‘). In the debate on a bill over whether to recognize marriages performed in other states, he recently rose to say: Thank you Mr. Speaker and Members of the Committee. I am not going to speak of specifics regarding this bill, but rather talk about history and philosophy in regards to this issue. It is an exciting time to be in the legislature while this issue is being debated. I believe this is the Civil Rights struggle of my generation. Being a student of history, as many of you are, and going back through history, most of history has been driven by the struggle of man against government to endow him with more rights, privileges and liberties to be bestowed upon him. In all of my high school courses, we only made it through history to World War 2. It wasn’t until college that I really learned of the civil rights movement in the 60’s. My American History professor was black, and we spent a week discussing civil rights. I watched video after video where people stood on the sidelines and yelled and threw things at black students walking into schools, I’ve read editorials and reports by both sides of the issue, and I would think, how could society feel this way, only 40 years ago. Under a democracy the civil rights struggle continues today, where we have one segment of our society trying to restrict rights and privileges from another segment of our society. My parents raised me to know that this is wrong. It is wrong for one segment of society to restrict rights and freedoms from another segment of society. I believe many of you have had this conversation with your children. And children have listened, my generation, the twenty-somethings, and those younger than I understand this message of tolerance. And in 20 years, when they take the reigns of this government and all governments, society will see this issue overturned, and people will wonder why it took so long. My kids and grandkids will ask me, why did it take so long? And I can say, hey, I was there, I discussed these issues, and I stood up for basic rights for all people. I echo Representative Childers concerns, that testifying against this bill may cost me my seat. I have two of my precinct committee persons behind me today who are in favor of this bill, as I stand here opposed, and I understand that I may very well lose my election. It cost 4 moderate Republican Senators in Kansas their election last year for standing up on this same issue. But I tell myself that there are some issues that are greater than me, and I believe this is one of them. And if standing up for equal rights costs me my seat so be it. I will let history be my judge, and I can go back to my constituents and say I stood up for basic rights. I will tell my children that when this debate went on, I stood up for basic rights for people. I can debate the specifics of this bill back and forth as everyone in this room can, but I won’t because the overall theme is fairness, and you know it. I hope you will all let history be your judge with this vote. You all know in your hearts where this issue is going, that it will come to pass in the next 30 years. For that, I ask you to vote no today on the bill. Thank you. ☞ We need more Republicans like this. THE WORD FROM MINNESOTA Eight minutes from Al Franken. ☞ Good reasons to be a Democrat.
One Continent Down . . . February 23, 2007January 8, 2017 ONE CONTINENT DOWN, FIVE TO GO Darren Herflicker: ‘Australia Banning Incandescents – here’s the story.’ ☞ I know there are seven continents; I’m not trying to Plutoize Antarctica. But apart from its insignificant population, think about it: the excess heat from an incandescent is never wasted in Antarctica. Even at the height of summer, it just cuts down on the heating bill. AND YOU THOUGHT WE WERE DONE TALKING ABOUT THIS Well, so did I. James Dienes: ‘Actually there is a need for further discussion on CFLs. We bought our GE bulbs at Sam’s Club for $1.37 each. I haven’t done the math, but I think that’s better than four for $10.’ ☞ Where’s one of those promotional solar calculators when you need one? THE GREENING OF JOHN RYAN John Ryan: ‘Last summer I was in San Francisco and not having anything to do one night I went to see the Al Gore movie, ‘An Inconvenient Truth.’ When I got back home I was wondering what I could do to help with the climate change situation (having already purchased a fuel efficient car). Well, one day I was in Sam’s Club and saw 12-packs of compact fluorescent bulbs. I bought one pack of 100 watt equivalent and one pack of 60 watt for about $25 total. When I got back home I went around the house (10 rooms) and put them everywhere except reading lamps and chandeliers etc. I even put them in ceiling fan light fixtures (a necessity here in SW Louisiana), the laundry room, and the garage. Well, my electric bill has averaged $150 for the last year or so. After the light bulb conversion last summer, my electric bill has steadily gone down. This month’s bill was $118. Of course I can’t prove that my lowered bills were the result of just changing the light bulbs, but to my knowledge nothing else has changed.’ ☞ And $32 a month for 40 years invested in a Roth IRA at 15% a year (I needed to use a big, unrealistic number t make this fun) works out to $728,953. Less the cost of replacing the bulbs every few years. THE BEST RECYCLERS IN NORTH AMERICA Anne Vivino-Hintze: ‘In our rural township, recycling is a once a month affair at the community hall, manned and womaned by volunteers like myself. Everything goes to our three-county waste management facility, which has developed into an amazing system. In fact, it has been recognized more than once as being the ‘Best Integrated Solid Waste System in North America.’ They now have a working system of collecting gas given off by the landfill, piping it to an onsite cogeneration facility which produces electricity and hot water. The electricity gets sold to the electric company and the hot water goes to a hydroponics greenhouse. This is on top of processing and marketing around 3500 tons of recycled material per year. The whole system is self supporting financially, though a grant paid for 14% of the greenhouse.’ ADDENDUM: PER DIEM (NON CARBORUNDUM) Mark Centuori: ‘As with anything money-related, travelers should be knowledgeable about per diem rates. The per diem authorities for domestic and foreign locations are the U.S. General Services Administration – see the rates here – and U.S. Department of State, here.’ John Stein: ‘The best comment on this and related travel expense issues was from the famous quality expert W. Edwards Deming. I’m paraphrasing a bit because I’m working from memory, but his take was that the travel department does not exist to save the company money. The travel department exists to get the traveler where he’s supposed to be, when he’s supposed to be there, rested and in the proper frame of mind to do what he’s there for.’ SUNDAY It’s – the Oscars! Enjoy . . .
Don’t Sell February 22, 2007January 9, 2017 But first . . . Peter Thibeau: ‘How does one watch the sun rise over the Pacific?’ ☞ With an elaborate series of strategically placed mirrors, or from Japan. Jeff Bauer: ‘You write: ‘They have poisonous toads. One lick and you’re dead.’ Forget the toads. How do I avoid whatever’s out there that eats the toads?’ ☞ Good point. And now . . . DON’T SELL YOUR TXCO The company appears from this press release yesterday to be doubling its domestic reserves, financed mainly by added – yet not excessive – debt. You never know, but, at $11.70, I am holding on. (We paid $4.50 three years ago.) DON’T SELL YOUR WARRANTS With GLDD closing at $7.25 and the warrants at $2.29 (a tiny premium over their $2.25 intrinsic value, in that they give you the right for another two years to buy the stock at $5), we’ve now either tripled or sextupled our money in under a year, depending on what we paid for the warrants. It remains a speculation, but a good one, I think. If you own it in a tax-free account, you could sell a third (or a sixth) to get your initial cash back out. Otherwise (famous last words), I’d wait at least until the warrants go long-term – not because they are sure to be higher, but because they are as likely to be higher as lower, which means the odds are with you. (That’s because the tax will be less if you wait.) Tax advantages aside, my real hope is that the stock might rise three or four more points over the next couple of years, which would more than double the value of the warrants. But – no kidding – this is a speculation. It is not for money you can’t truly afford to lose. DON’T SELL YOUR FMD Post split, we’re still doing fine on First Marblehead despite the recent sharp dip (from around $56 to around $46). Split-adjusted, we paid under $30. The dividend was just raised again, the earnings growth is rapid (my guru is looking for $4 a share or so for the year that ends in June), insiders own half the stock (so their interests are the same as ours), and the CEO just bought another $250,000 worth – peanuts to a CEO, but still nicer than seeing him sell. Add to that an expanding market (the cost of college is going up by 6% or 7% a year even as the student population increases by roughly 3% per year) and a proprietary database that can’t be replicated by competitors in the short to medium term. Analysts continue to increase their earnings estimates on this stock, while never raising their rating. They don’t believe its growth can continue. The shorts, meanwhile, believe this is a rotten business. But having a large short interest is not a bad thing if the shorts are wrong. The company has a large cash position, no debt, what my guru considers an admirable management team, a rapidly expanding client roster, and very significant advantages versus the competition. If my guru is right, it’s sort of like Progressive Insurance in the old days (or Berkshire Hathaway): if you’re smarter than the competition in knowing which risks to accept and which to reject, you can make money even when competitors don’t. DON’T SELL YOUR DD Suggested a year and a half ago at $38.61, DuPont closed at $53 last night and has paid out a couple of dollars in dividends along the way, giving us about 42% on our investment so far. I know nothing about chemicals or biofuels, but the company seems to have good management and to be selling for a modest 16 times earnings. It’s certainly done better than the GE and CBH suggested that same day, and up a much more modest 10% or so. I’m keeping all three. (And no, of course, I’m not selling my you-know-what, either.)
Don’t Lick the Toads February 20, 2007January 9, 2017 Costa Rica – with its exceptionally warm people, stable government, spectacular mountains, beaches, and biodiversity – is not un-Eden-like. (There’s even a snake.) Its President won the Nobel Peace Prize. The coffee is good. But, oh, the bridges. GETTING THERE Our particular little piece of paradise can be accessed one of the three ways. From San Jose (to which American, Continental, Delta, and USAir all fly): Take a 25-minute hop to Quepos, just 33 kilometers from our front door . . . except that the hop to Quepos is over a mountain range in a 12-seat single-engine plane . . . unless you take a 30-or-more-minute taxi ride to San Jose’s domestic Tobias Airport (I kid you not) to catch a 12-seat twin-engine plane . . . which is probably not worth the extra hassle, since the real danger you face is not the scary flight but those final 33 kilometers from Quepos. OR Drive from San Jose through the mountains to our door – safe (and surpassingly beautiful) in the hands of our driver – but four to five hours. OR Drive from San Jose to the Pacific Coast and then south to Quepos and, yes, those final 33 kilometers from Quepos – which could save you an hour, but did I mention those bridges? In a year or two, those 33 kilometers – 20.5 miles – will be paved and all 14 bridges from Quepos Airport will be replaced with – how about this for starters? – two-lane bridges. Work has already begun. But at the moment, the road is dust and rock (mainly dust, when you’re behind another vehicle) and the bridges allow traverse in only one direction at a time. Ten of the 14 bridges seem solid. Three of them lack sides. (Oh, the things we take for granted.) Worse, they lack some of their slats. You can see down through the gaps to the river bed below. And because you are frequently following directly behind an 18-wheeler (with another behind you), you can assume the bridge will collapse and you will die at almost any moment. (The 14th bridge gives you an option: take the left lane to cross it; or take the right lane and just drive down through the water and up onto the other side. A crocodile supposedly lives in one of the rivers, but I don’t think it’s this one.) In short, you would be insane to drive yourself to paradise, which is why we will have Magdiel or Jose pick you up at either airport, for your choice of #1, #2 or #3. It’s included in the price. Next time, I’ll probably fly to and from Quepos. But I will never regret or forget yesterday morning’s drive through the mountains (#2, above). Complete with a cooler for water and soft drinks, a rest stop in the clouds at 10,000 feet (look! humming birds!), and a ceiling-mounted DVD player on which you could watch a 90-minute English-language Costa Rican travelogue (or DVDs of your own) – but we didn’t, because the view is just too compelling. The vans we send for you seat up to five in sprawling luxury; up to ten (plus the driver) if configured in three rows of three plus one passenger riding shotgun. We do not warrant that Magdiel or Jose will not send you careening to a fiery death; only that big trucks routinely make these trips, and that Magdiel and Jose have a great deal of experience, plus kids they’d be loath to orphan. No matter what, it’s pretty much a full day each way. Some of it is fun or beautiful, but that’s a lot of travel for a weekend. Better to go for a week. THERE Ah – and look at this. With all this blather, perhaps you didn’t even notice it, but up ahead is the sign for Las Brisas Del Paraiso / Paradise Breezes. We’re there! Having once titled a book chapter ‘Never Buy Real Estate Over the Phone,’ here I had gone and done it again. And in a language I don’t even speak. (Como se dice, ‘el grande money pit?’) I, for one, was very curious to see what I had invested in. Upon arrival I still had the flu (compliments of the demon child), so my reporting may be skewed, but here’s an overview: The three homes at Paradise Breezes are not up to the standard of $30,000-a-week rentals in St. Bart’s (as one of our number gently let me know) – but their views (he allowed) ‘are A-plus’ and the homes themselves ‘rate an A.’ How wrong can you go with marble showers, granite countertops (I would have gone with the plastic, myself), and a small infinity pool? Oh, you can quibble that some of the flat screen TVs are too small, but that’s only because some of the bedrooms are too big. And, sure, with one of the houses, the washer-dryer is in a utility room out back, not directly inside the house. But let the maid worry about that. The thing is . . . the overarching point . . . the transcendency . . . is that when you look over the greenery below and 30 miles out across the Pacific . . . no one deserves even this much luxury, let alone whatever goes on in St. Bart’s. WARNING! Renting a house for $4,000 a week is nuts – that money should go to fund a Roth IRA. ‘Nuff said. Stay home. WARNING! The bugs are as big as birds (we saw a grasshopper that may have been an iguana) and not only does the Garden of Eden have ‘a snake,’ it is famous for its snakes. But none of us saw one (we were 8 in all), and I’m told that they are more afraid of us than we are of them – although this cannot possibly be true in my case. WARNING! They have poisonous toads. One lick and you’re dead. Even touching one if you have an open wound will likely kill you, the toxin on their skin is so strong. (And sure, you’re not walking around with an open wound now, but what if you are running back through the rain forest after being bitten by a snake?) WARNING! There are rip tides. People have drowned. The beach in front of your house is 150 yards wide at low tide, with fine dark sand that stretches for miles in either direction. On Sunday morning, six other people shared it. The water was warm, the body surfing gently magnificent – but there are no life guards. (If you are ever sucked out to sea in a rip tide, just relax and paddle laterally, parallel to the beach. Once you escape the pull of the rip tide – they are generally fairly narrow – you can ride a wave back to shore.) WARNING! There are sharks in the ocean (though not in any particular abundance down our way, so far as I know). There are also whales that could, I have read, swallow you (and that you just might be able to spot with binoculars from your balcony). WARNING! Costa Rica lies just north of the Equator. The sun is very hot. You need to wear #30 or #50 sunscreen at all times – even if you’re out for just a few minutes going from one shady place to another. WARNING! An ‘infinity’ pool is not infinitely deep; it is so called because its ‘negative edge’ is meant to blend into the horizon. Be careful: even at their deepest, our pools are not deep enough for diving – NO DIVING. (And it’s just possible you could float over the infinity edge and tumble down the side of the mountain, but I haven’t tried it to see.) WARNING! Our homes are not child-proofed. There are lots of things to fall off of, bang your head against, or drown in. The truth is, I’m a little worried even about adults, if they’ve had a drink or simply fail to watch where they’re going. WARNING! Finally, on the driveway up to your home, you really need to be careful not to hit the gas when you mean to hit the brake, or go into reverse when you mean to go forward, or panic as you let out the clutch and begin rolling backwards before you engage first gear. The driveway is paved (we are very proud of that), but it is steep. And there are places you could go over the side if, through some automotive mismanagement, you were to leave the road. NOT A WARNING Guess what? The water’s fine. It’s still probably a good idea to stick with bottled, the first gallon of which we supply. But for teeth brushing and ice slurping and coffee making, it should be a non-issue. BEING THERE There is nothing to do in paradise (part of its charm) – or lots, depending on your point of view. Unless you truly want to just hole up for a few days, which is by no means the worst fate I can imagine, anything you want to do will require an expensive rental from Alamo or National – four-wheel drive recommended. But I don’t want you renting it at the Quepos Airport, because then you’d have to drive those 33 kilometers yourself. We can have it delivered to you at your door. (Yes, you could walk down from your house to the road, but walking back up would not be most people’s idea of a vacation; and there is no satisfactory way to walk to the beach.) > Scenario #1 You wake up with the sun and laze in bed for an hour watching it climb over the Pacific. Check CNN or Bloomberg News if you like, check your email if our broadband is working (it should be, but this is Costa Rica), phone home to gloat about how warm it is (my Cingular wireless cell worked basically fine, though at a price). You and yours have some coffee (your house will be stocked with the basics when you arrive), then drive carefully down our driveway to the dust-and-rock 33 kilometer main road, turning left (South – away from Quepos and those bridges). All of 50 or 100 yards down the road is a wonderfully friendly little 10-table open air restaurant. (Like most of the area establishments, it has a high roof to keep out the rain; ceiling fans, and open sides.) There’s ‘arroz con pollo’ and burgers and even vanilla ice cream with caramel sauce and coffee. But in case you like ceviche, you can get it in three sizes, 500, 1000, and 1500 colones ($1, $2, and $3), at least as fresh and delicious as it would be in Miami for five times the price. But wait – it’s too early to eat. Keep driving. About a kilometer further down the road on your right you see the perpetually patronless Iguana Bar (either that or its clientele are literally iguanas, too short on their bar stools to be seen from the road). Proceed several hundred yards further down the road to your first right, which takes you 200 yards to the beach. Having first applied plenty of #50 sunscreen, you spend an hour or two swimming or bathing (at high tide, that 150-yard swath is just one gently sloping bathtub) . . . walking miles in either direction . . . gazing up at the lush mountainside. (Oh, look! There’s the coral-red roof of your house!) You could probably walk all the way to Dominical, a surfer town another two or three miles south, but this is your first day, so you get back in the car and drive there instead, asking the locals (who are largely American) how to find the Internet Café. With luck, you will not need the café because its eight computer stations have only dialup. But adjoining it is a restaurant that makes a French-toast cube stuffed with tropical fruit that will leave you thinking life is just too good. After exploring Dominical a bit, and maybe watching a few surfers surfing (think California 1960s, kids on hammocks and sleeping in their cars), you head back up to the house to take a dip in the pool, shower, and then, at the height of the sun, enjoy the air conditioning as you begin one of the delicious little novels you brought with you. (I brought Chris Buckley’s forthcoming Boomsday and Patty Marx’s Him Her Him Again the End of Him. One of my pals brought Jeffrey Archer’s Kane & Abel, he loved it so much the first time years ago.) Round about 4pm your masseur arrives with his table, for those who want a laying on of hands as the sun begins to set. And round about the same time, Wilbur arrives – having shopped – to begin to prepare dinner. (We are a resortlet, not the Four Seasons, so these kinds of things generally have to be arranged the day before.) There was some argument among our group as to whether Wilbur should be called a cook or a chef. Most thought the food was great and that he looked terrific in his chef’s jacket. On St. Bart’s, he would be the cook. While Wilbur works, come sip some wine on the balcony and watch the sun set. Or sip and watch from the Jacuzzi. But really, folks, isn’t it warm enough in Costa Rica without needing a Jacuzzi? Why does everyone insist on a Jacuzzi? Okay. Dinner is served. Wilbur, like all the Costa Ricans we met, gives you a genuinely warm handshake and smile as he comes and goes. (Don’t be surprised – or put off. The Costa Rican custom is for everyone to shake hands.) In case you’ve choose to make dinner yourselves, without help, don’t worry about cleaning up. Melba will take care of all that for you in the morning. To bed. The sun rises at 5:47 am. The black out curtains will spare you that, but you may soon come not to want to be spared. > Scenario #2 Okay, you’re up and, raring to go, you drive carefully down our driveway, turning left (away from Quepos and the bridges) and proceeding even a little beyond our beach to the nearest zip-lining rainforest tour, less than 10 minutes from your door. The two-hour tours, offered thrice daily beginning at 8am, involve a gentle guided hike through the rain forest and a gentle push (once you’re strapped in) along a zip-line from one tree-top to another (and then another). I know all this because St. Bart’s himself took the tour and pronounced it ‘just right.’ I stayed behind because under no circumstances did I want to see a toad or a snake or a monkey. I prefer the Discovery Channel. (Charles might have been up for it, but he was stuck in New York designing Fall.) Back in the car, it’s not even 11am and you head for the beach – sunscreen! – and then, after a suitable swim, stop at the foot of our mountain for some ceviche and a cold Coke or beer. Then up to the house . . . frolic . . . the novel . . . do some emails . . . sunset . . . and, driving very carefully, back down the hill and off to Dominical in shorts and flip flops for a 75,000 colones dinner at one of the area’s nicest restaurants. That’s $150, including wine, tax and tip, for six. The second night, at a Thai place, it was 72,000 colones for eight. And these delicious eateries were the most expensive we could find. Along the way to dinner, you might stop alongside the road at the huge fruit-and-vegetable stand and pick up enough tomatoes and mangoes and bananas to keep you happy and healthy for the rest of your stay. > And More Also driving South – away from Quepos and those bridges – you will find more beaches, snorkeling – all kinds of stuff. This afore-linked Dominical web site suggests surfing, bird-watching, sport-fishing and kick-boxing lessons. Drive up into the mountains toward San Isidro and you can join a horseback tour. Or drive north 38 kilometers, just past the Quepos Airport, to Manuel Antonio, a beautiful and much larger resort town – but accessible only by traversing even more insane bridges. All preposterously dangerous, if you ask me. The amazing thing is that, just 5 kilometers south of us, even before you get to Dominical, the dust-and-rock road suddenly becomes Connecticut – a road like any other. One day in the not too distant future, even the 33 kilometers will be like this. For now, I just want to sit reading my book, dazzled by the view and all but overcome at my good fortune in being able to enjoy this for a few days. I’ll save for another day the contrast of my experience with that of the workers who lived fifteen to a tin shack on the mountainside building our magnificent houses.
From Lincoln to Lettuce to Lamb (to Paradise) February 16, 2007March 5, 2017 If some monumental event occurred yesterday, whether financial, political, or volcanic, please understand I am ignoring it only because this was written the day before yesterday. Yesterday I left to visit paradise. If there is no column Monday, it means Broadband access is not yet working in paradise and I wasn’t able to post one. Or – wait! Isn’t Monday a holiday? I don’t have to post one! If there is no column Tuesday, it means I simply could not tear myself away. LINCOLN’S WORDS Who but me has such a wonderful readership? Monday, I made a throwaway reference to the Gettysburg Address barely one step above ‘the dog ate my homework,’ and even that elicited a serious (and worthy) response: Ralph Mason: ‘With all due respect for the Gettysburg Address, which by itself would have established Lincoln’s reputation as an orator, let me suggest, along with a great many others, that Lincoln’s most impressive and sublime speech was his Second Inaugural. First, in a little over a paragraph he dispatches all the arguments of the apologists for the Confederacy to the dustbin where they belong. Then he embarks on a rumination on the large currents of history that culminates in the most astounding words any President has ever leveled at his own people: ‘Yet, if God wills that it continue, until all the wealth piled by the bond-man’s two hundred and fifty years of unrequited toil shall be sunk, and until every drop of blood drawn with the lash, shall be paid by another drawn with the sword, as was said three thousand years ago, so still it must be said ‘the judgments of the Lord, are true and righteous altogether.’ That statement must have hit his audience in the chest like a cannon shot after four years of our bloodiest war. But Lincoln was not done, because he had one last ‘turn’ to make. ‘With malice toward none; with charity for all; with firmness in the right, as God gives us to see the right, let us strive on to finish the work we are in; to bind up the nation’s wounds; to care for him who shall have borne the battle, and for his widow, and his orphan–to do all which may achieve and cherish a just and lasting peace, among ourselves, and with all nations.’ Read the whole thing if you haven’t recently.’ A SMOKE DETECTOR COMPROMISE Gary Diehl: ‘Of course you should change out the smoke detector batteries twice a year. Just don’t throw those batteries away. Save them and use them up in something less critical. I keep a small box of partially used batteries from several sources and every Christmas the grandkids get something that sucks them dry. Also, a battery that barely registers a charge will still operate certain items, like a remote control, for months. Unless of course that remote is for your Tivo, in which case I give it three days.’ ☞ Four, at the outside. FOOD FOR THOUGHT Let them eat Veggie Patch jalapeno cheddar meatless gourmet sausages. With enough ketchup, they’re not too bad. (Charles says I will eat anything.) But my real point is to get you to read this, on the environmental case for vegetarianism. I’m not a vegetarian, but I list that way. Ms. Freston’s post makes me want to list even further. You don’t have to be ‘all vegetarian all the time’ to make an impact. Perhaps her post will make you want to move a notch or two to the left on the continuum from lettuce to lamb. THE LAST WORD For now, anyway. John M.: ‘Home Depot has superb CFL bulbs by N:Vision. UL listed, Energy Star rated, 8000 hour life. If you get ‘soft white’ type the light is indistinguishable from incandescents; only difference is they take about 30 seconds to get to full brightness. They only cost $10.00 for a pack of 4, and come in 60-watt and 100-watt equivalents (using only 15w and 23w, respectively). N:Vision is Home Depot’s captive brand and has gotten good reviews. If people need bulbs for lamps and fixtures that are indoors and not on dimmers, there really is no need for further research or discussion.’ ☞ Lotta my readers will be grateful for that.
Patience Hans Walitzki - HE's the Man (If HE Can't Do It, NOBODY Can) February 15, 2007March 5, 2017 Slavishly loyal readers of this page may recall the ‘patience, Jackass, patience’ story that so convulsed my brother and me, aged 11 and 7 at the time, and that became legend in our family. (What family doesn’t have its legends?) After an endless shaggy-dog buildup . . . the jackass asking the camel for water and the camel responding ‘patience, jackass, patience’ and the jackass asking the camel for water and the camel responding ‘patience, jackass, patience’ and the jackass asking the camel for water and the camel responding ‘patience, jackass, patience’ . . . my dad fell for it and asked my brother to get to the point – and my brother responded, ‘Patience, jackass, patience‘ as he, and then I, wide-eyed with disbelief, burst into hysterical laughter. (Joined soon by my mother and, eventually, my father.) The idea of my brother, aged 11, saying anything that incredibly disrespectful to my father was so risky, so out of character, so edgy for 1954 – well, it was Lenny Bruce come to Apartment 6C. And now you know. I can’t think of the word patience without thinking of this story, and today I have been thinking of the word patience on two fronts: DON’T SELL YOUR FMD It dropped from 55 to 47 over the last few days before recovering a little to $49.56 yesterday, and – while there are certainly no guarantees in any of this – my guru tells me he used the dip to buy more. I am constitutionally incapable of buying shares at nearly double what we paid less than a year ago (adjusted for the 3-for-2 split), so I haven’t bought more myself. But knowing that he has makes me feel comfortable hanging on in hope of the gains he believes are yet to come. Three cheers for my FMD guru. DON’T SELL YOUR BOREF With the stock back up to $12 or so, triple where many of us started buying it, oh, so long ago, and double where it was just a couple of weeks ago, there is the natural temptation to take the money and run. And you absolutely should if your circumstances have changed and this is no longer money you can’t truly afford to lose – because you truly may. But the point of this crazy speculation was never to double or triple our money – why risk total loss for that? The point has always been that we just might win the lottery. (Or some real-world equivalent thereof.) At $12, the whole company and all its subsidiaries and patents and so on are still only valued at $60 million, the cost of a single Gulfstream 5 corporate jet. So it may all go to nothing, but it may also be that – even after all these years – the game has only barely begun. In addition to Monday’s hopeful news on the mining front, Borealis yesterday issued this press release, announcing some new patents I could never hope to comprehend . . . and the hiring of Hans Walitzki, whose credentials I am not remotely competent to evaluate. The release says Dr. Walitzki has come on board to ‘manage the final development and commercialization of Power Chips and related technologies.’ Could this mean that there is actually the prospect of achieving ‘the final development and commercialization of Power Chips and related technologies?’ Well, who knows. But to me, it’s worth remaining patient a few more years to find out. (And did I mention that the plane moved? That’s a whole separate technology that could be worth a great deal – mystifyingly slow though the progress has been.)
No More Lightbulbs February 14, 2007March 5, 2017 I promised you no more lightbulbs . . . but I’m siiiiiiiiiiiick! So let me just pull out some more of the good information you sent me from my bottomless bag. Approximately 22 percent of the electricity consumed in the United States goes toward lighting, according to the U.S. Department of Energy, so this is not nothing. (Or, if you prefer emphasis to understatement, not not not nothing – the rarely used and thus punch-packing quadruple negative.) CFLS John Kasley: ‘CFL’s are so effective that in Ottawa, Canada, there has been a program giving one bulb to each household for f-r-e-e. Here‘s a cost-benefit sheet.’ James Karn: ‘In all this talk of CFL’s and LED’s no one has mentioned how terrible the light is from fluorescents and LED’s. They are fine for work, but when I come home the last think I want is bright white light. Incandescents aren’t perfect, which is why I burn so many candles – energy inefficient as they are expensive and raise cooling costs in the summer. Why can’t the scientist save energy in an aesthetic way?’ ☞ Have you tried yellow-ish, brownish lampshades? That seems to be helping in my case. Jeff: ‘Can one of your brilliant readers just give us the simple bottom line without discussing ballasts and the inner working of which gas excitement method is being used to create the light bulbs? Should we use CFDs, and how? Should we use LEDs, and how? And which ones?’ ☞ Use CFLs to replace all incandescents that are left on a fair amount. If they are on dimmers, you need to get special ones. Use LEDs to replace incandescents that are really hard to reach, where the extra cost is justified by not having to risk your life on a 20-foot ladder every year or two. As to which ones . . . I’m siiiiiiiiiiiick! SOLAR LEDs George Mokray: ‘I’m enjoying the conversation about CFLs and LEDs and energy efficient lighting. Gee, it only took about thirty years for CFLs to become popular. I’ve made the next step – solar LED lights for my bedroom. The two lights cost me about $125 and have worked fine for over a year. The day I put them up, there was a power outage. Coinicidence? In any case, I had light for the two hours or so my neighbors didn’t and will have light the next time the power goes out. You can see video of the lights here. I even took the lights (they’re portable) to Jamaica for a recent trip. You can read what I learned about affordable solar here. Small-scale solar is applicable in the US and Europe for emergency, camping uses, and some daily uses, like my bedroom. It can also help the developing world leapfrog into the 21st century. We need mass market commodity solar products, the last of which was the solar walk light, introduced a few years after CFLs entered the market. I’d like to see solar rechargeable reading lights as available and affordable as disposable lighters, solar/dynamo cell phone and battery chargers, and a solar/dynamo flashlight/radio and battery charger. In fact, I have a whole series of small-scale solar products mapped out here. Solar is civil defense,’ SMOKE DETECTORS Mark W. Budwig: ‘Maybe I’m wrong, but it seems to me this business of changing the batteries in every smoke detector twice a year – every time we adjust the clocks to and from Daylight Savings Time – is a scam promoted by battery makers. Those batteries are good for two years or more. Changing them once a year would leave plenty of safety margin and remove thousands of tons of toxic metals from the waste stream. Is there any sound reason for changing them so often?’ ☞ Dunno. But hereby disclaim all liability from now until the end of time, in the United States and throughout the known universe and any universes yet to be known, in case a reader is persuaded by your logic and it proves to be faulty. A++-WOW Trisha: ‘This is my vote for second best of show at the 2007 Consumer Electronics Show. It’s from Sanyo and it has the ridiculous name of eneloop. AA and AAA Nickel Metal Hybrid batteries that take more photos per go than the standard batteries (by quite a lot) like three or four times as many . . . can be recharged around 1000 times . . . and get this – and why I think they are amazing – can be used right out of the package. Normally, if you buy a rechargeable battery, the damned things don’t hold charge very well and you have to recharge them first. They hold their charge so much longer you can forget about them, come back to your camera months later and it will still work. Try that with a set of normal rechargeables. Unlike many things shown in CES, you can buy them right now.’ ☞ And Trisha’s vote for first best of show? I missed this somehow, or Trisha was just teasing me to see if I really read her email. Well, I did, Trisha – so tell us! Oh, and . . . HAPPY VALENTINE’S DAY!
Borealis Sends a Demon Boy to Warn Me February 13, 2007January 9, 2017 JET FLU No rational person could be anything but grateful for a $119 aisle seat with extra ice for his Diet Coke and a bag of those great ‘blue chips.’ Not to mention the inflight TV I never watch. (When they add Tivo, I’ll watch.) But oh, do I blame the 11-year-old demon child seated across the aisle from me in 21C – loosely surrounded by five inter-generational family members who had been scattered around the back section of the packed plane, and who seemed oblivious to the presence of anyone else in between. Seat 21A conversed continually for three hours with 22F, an aisle back and across and the full width of the plane, about the cell phone one of them may have left in the rental car they dropped off at LaGuardia. Muhammed, at National Rent-a-Car, was working on it and was to call the father back at 917-302-‘5555’ – oh, how I ache to give you the real number – if the phone were found. Every ten minutes, the demon child would let out a cough that reverberated so deeply the little horns peeking through his red hair seemed to strain to protrude a little further and the airplane itself vibrated in harmonic sympathy. I was chewing Airborne Gummis for three hours straight – so desperate, I even ate the green ones – but it was just not enough. And here I already used my sick day yesterday, when I wasn’t sick. DON’T SELL YOUR BOREALIS The proximate cause of my fever is, without question, the demon child. I know: I was there. But who sent the demon child? I have long assumed that if our Borealis ship ever really did come in, something terrible would happen to keep the universe in balance. Specifically, a thunderbolt. Is it possible that, with some reports of a ship on the horizon yesterday, the demon child was sent as a warning? A foretaste? Here was the news release, the gist of which, as best I understand it, is that Borealis may have found a competent partner to move its mining project forward. And here is the column from August 2, 2005, where I argued that Borealis shares could be a good speculation up to $100 a share, albeit only for money you can truly afford to lose, because you well may.