EclecticLip

(originally written Jan 25)

I’m in training pretty much the whole week — which fact one of my horoscopes must’ve predicted.  I mean, there are so many of them floating out there, that one of them must’ve been right!

 

The past couple days covered FMEA, an engineering topic so obscure I’ll give the unabbreviated name (Failure Modes and Effects Analysis) and immediately move the story forward.  We were fortunate to have had a great teacher — a grizzled veteran of industry who tossed out great one-liners such as:

 

"an FMEA without action [items] is called Charmin — because if you print it on softer paper, THEN it has a function"

         (Charmin is a brand of what polite butlers would refer to as ‘bathroom tissue’)

 

"product development is a failure factory"

 

          ….as well as the sentence clause,

" — not that it ever happens here — "

 

delivered each time he described a wince-worthy product development process which had indeed, never happened here. 

 

He also described how a good FMEA meeting ideally comprises the design engineer, a reliability engineer, a facilitator, and a fourth engineer playing the role of "The Opposer".  (Or as they say in the Biblical Hebrew, "Satan".    )

 

 

It turns out this fellow was a co-op student at Ford when FMEA’s were brought there in the 1970’s, due to the tendency of the Ford Pinto to explode in rear-end collisions, as a $4-per-vehicle fix was deemed too expensive.  Though to be fair, that doesn’t account for inflation; according to an unverified internet source, such a fix would cost a whopping $20 today.  That totally changed your perspective, didn’t it? 

 

In crisis, Ford brought in experts from NASA — which had regrettably extensive experience with exploding products — who brought in this FMEA technique.  So, as our teacher wryly noted, FMEA’s are actually rocket science, ported over from the Space Program which invented them.  The very Space Program which employed a colleague on an unsuccessful Mars Lander.  (Not the one which missed the planet; the other one, which stopped phoning home.)

 

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Come to think of it, it’s turning out to be quite the lesson week for me.  At the weekend gold show — bereft of decent freebies, apart from some USB drives — the busiest company booth was from some no-name junior exploration company (read "investing lottery-ticket") which had set up a big-screen TV, broadcasting the big Packers-Bears NFL game.  During commercial breaks, the marketing rep would mute the screen and begin a spiel about how "today’s game is brought to you by XYZ Resources; we have millions in cash flow, hot properties, and you need to buy our stock" — though better-finessed than my paraphrase.  They even had a functioning popcorn-maker to feed the crowd.  Pure genius.  Pity his company has a snowball’s chance in hell.  

 

Then there was the fellow I bumped into, wearing a suit; made of brown corduroy.  See, lessons all around! 

(originally written Jan 17; posted Jan 23 as part of some backfill) 

Now that the Globe and Mail’s GlobeInvestor site has mutual fund performance data for calendar 2010, I decided to check in on ubiquitous business-channel commentator and investment guru Dennis Gartman’s performance this year.  As you may recall, his ETF (exchange traded fund — basically, a mutual fund that trades as a stock) did rather poorly last year.  Outperformed by 98.3% of mutual funds (!) in calendar 2009, I calculated his SAT-equivalent score to be 288.

This is based on the assumption that SAT scores follow a normal distribution, and are scored such that the median (50th percentile) scores 500, with each standard deviation representing 100 points.  As such, scoring in this system would look like:

• 99.8th percentile: 800    (top 0.2%)
• 98th percentile:    700    (top 2%)
• 84th percentile:    600    (top 16%)
• 50th percentile:    500
• 16th percentile:    400    (bottom 16%)
•   2nd percentile:   300    (bottom 2%)
•   0th percentile:    200    (bottom 0.2%)

The good news is that Dennis did much better than last year; indeed, his shareholders actually made money! 

The bad news is that his 3.8% return for shareholders put him in the 18th percentile.  That is, 82% of mutual funds beat him.  (9452 of the 11577 GlobeInvestor tracked.) 

As such, his SAT-equivalent score for 2010 is…  410.
 

At this time I should note that investments are a poor reflection of a person’s financial prowess — last I checked, Mr. Gartman convinces people to pay $400/month for his advice, despite his track record!  Clearly, he’s got amazing skills.  Or at least, chutzpah.  …can you imagine how much he’d charge if he actually outperformed the market? 

Further context:

- half of all mutual funds tracked by GlobeInvestor gained 8% or more in 2010 (SAT-equivalent of 500).

- the Toronto Stock Exchange Index gained 14.2%, which would’ve placed it among the top 16% of mutual funds (1810 / 11577).  This is consistent with the rule-of-thumb that only 20% of mutual funds beat the index in any given year.

- because his ETF started at $10 in 2009 and stood at about $9.33 at end-2010, Gartman’s investors lost about 7% in a two-year period during which the TSX index rose 46% (from 9234 to 13530; and that doesn’t include dividends).  So over the past two years, the Gartman portfolio has underperformed the index by 50%!  Though a pecuniary pundit of Mr. Gartman’s self-assurance would surely dismiss that as a temporary underperformance of “only” 50%. 

[originally written July 28.  Posted Nov 18.] 

While stuck, iPodless, in a near-interminable supermarket lineup the other week, I swallowed my dignity and perused the celebrity magazines near the cash register.  And you know what?  They’re actually pretty good!  While I’m veering into fiction, the fashionista in line behind me complimented me on my Vibram Five Finger shoes — the first footwear I ever bought to make a fashion misstatement.  I’m planning to take casual Fridays to the next level. 

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(originally written Nov 2; posted Nov 16) 

It looks like the Democrats are going to get clobbered in next week’s tomorrow’s today’s US elections.  Economic malaise tends to do this to governing parties, which is one reason currency devaluation is the policy-du-jour: if country A can make its currency cheaper, it becomes more competitive and can export goods (and unemployment!) to countries B, C and D, whose currencies remain more expensive.  It’s this kind of race to the bottom which has given gold aficionados their current decade in the sun.  Of course, though Hemingway never lived to write about it, the sun also sets… 

The Tea Party’s emergence has been an interesting but predictable phenomenon.  The stagnation in American incomes for the past generation has finally hit a boiling point (what took so long?).  Increased prosperity has largely been confined to the top 1% — and even then mainly the top 0.1% — of income earners in the population; those nice folks whose job titles begin with “Chief” and end with “Officer”. 

In many cases, union-busting concessions levied in the name of improving competitiveness went straight into C-suite compensation: “trickle-up economics”, as it were.  I don’t have the American numbers handy, but here are some Canadian ones.  Perhaps one day, left-leaning parties will realize that they’ll get more support if they confine talk of tax increases to the very, very topmost folks.  Noblesse oblige, and all that.

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As a preamble, let me note it’s not my normal manner to poke fun with a bayonet — this is a special little something I reserve for pompous commentators of such oracular conceit that they greet all others’ views with a dripping disdain. 

To be clear, I’m sure that — like George W. Bush — Dennis Gartman is a nice man.

I’m also confident that — like George W. Bush — Dennis Gartman is a victim of the Dunning-Kruger Effect, which causes the cripplingly incompetent to think they’ve got exceeding expertise.  (To be fair, Dunning-Kruger is epidemic in the financial sector; how many “expert” mutual fund managers actually beat the index?  There is no cure.)

Lastly, I’m certain that — like George W. Bush — Dennis Gartman still has enough fans that this qualifies as “pricking the powerful” as opposed to “kicking the downtrodden”.

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I’ll chatter more about SeaWorld in due course, but wanted to comment briefly on the San Diego Zoo’s “pandarrific” showcase exhibits, featuring China’s monochromatic bears.  Fascinatingly, the Zoo doesn’t own them; the pandas are loaned from China.  Like so much American prosperity. 

Despite their current vegetarian diet, pandas’ ancestors were carnivores, so they have a fairly short digestive tract.  As such, they don’t derive much nutrition from bamboo.  As such, they spend up to 14 hours a day eating — not altogether unlike cruise ship passengers.    Interestingly, the pandas only like the inner portion of the bamboo shoots; they’d “peel off” the outer strip of the bamboo shoots with their teeth — not unlike kids eating those “cheese-strings” sold in supermarkets today.  There was also a panda cub, sleeping in the treetops, ignoring the flashing cameras and cooing humans.  Preoccupied with panda life, the orca-patterned ursines were oblivious to the merchandising empire they supported on their furry little shoulders.

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Another of my financial commentaries (”worth every penny you paid!”)…

Due to persistent economic stagnation, countries are trying to push their currencies lower.  (See the Der Spiegel article here.)  The reasoning is that if the currency is worth less, countries’ exports will be more competitive, and through greater exports they can recover economic health.  The problem is that everyone can’t do this at once — and right now everyone is trying to do this all at once.  Now, try as I might, I couldn’t make an elegant “currencies are worth less” / “currencies are worthless” pun, so I’ll just commemorate my valiant efforts with this here sentence. 

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(written Sept 27, posted Oct 9.  Got a lot done that day…    ) 

As to our trip to San Diego, we made it back, safe, sound, a bit lighter in the wallet and heavier everywhere else. 

The cruise ship was a fun experience; for three days we enjoyed a panda-esque lifestyle, eating and sleeping.  I’ll report more later, but very quickly, cruise ships — like all-inclusive resorts — are accessible to the First World’s middle classes due to differences in currency and labour valuation.  If staffed by fellow Westerners at prevailing rates, the experience would’ve been out of reach; it was made affordable thanks to the fact that wage standards in the crews’ home countries is much lower than here in Canada.

There’s nothing wrong with this arrangement of affairs, but from a sense of fairness one hopes that in the coming decades or centuries, future Filipino and Indonesian cruisers will enjoy the services of a Western crew, just to even things out.  And don’t get me started on building Chinese railroads…

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(originally written Sept 14, posted Oct 9)

Despite cruise ships being the ‘tar sands’ of tourism, we’ll be heading to San Diego next week on one of them.  I remember something about us having visited both Whitehorse and Yellowknife, a travel deal, and “quid pro quo”, but it’s a bit of a blur really. 

The boat ride will, however, give me a chance to do battle with Edward Gibbon’s The Decline and Fall of the Roman Empire, a second time.  Back in my university summer-job days — lackey to a post-doc lackey of a tenured professor — I started the book, figuring my encyclopedic ignorance of Roman history would be an overcomeable hurdle.  After all, that’s why I was going to read the book, right?  To learn history!

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Today’s occasional edition of visual poetry comes from someecards, via Climate Progress:

Priceless.