Irrational

A friend of mine got married recently. At the reception, I asked him if he'd seen the NBA brawl involving Ron Artest, the Pacers and the Pistons. He said he had, and in fact had stayed up a few extra hours watching replays of the brawl...instead of going to sleep before his wedding day.

I dream of having that sort of customer loyalty.

Northwest

The other day I flew Northwest. I was hungry and it was a long flight. They didn't offer me food, but instead offered airplane food for $5.

I probably won't fly Northwest again, unless their price is considerably lower.

Travelling again

Nonetheless, I can't believe how little I've blogged in the past couple weeks.

I'll get back on that horse.

Memory

I just upgraded my computer's memory by 512 MB for about $100. It's a great decision; I regret not doing it earlier. In fact, I'm likely to upgrade it another 400ish MB (replace the 128 MB card with a 512) in the next year.

I did it through crucial.com, which I highly recommend. Crucial.com is a division of Micron Technology. They make it easy to find the right kind of memory for your computer, which is the hardest part. They offer reasonable prices and free shipping.

Their support was also excellent. Highly recommended.

College Homecoming

I went to my college homecoming last weekend. I never thought I would answer the question "what are you doing now?" so many times. That said, I loved it. It was a great opportunity to catch up with people about what they were doing. The question is worth answering because that way others have to answer.

I get alot of ideas out of interactions like that. And some folks offer valuable connections.

Important lesson learned from my father

Always have a book with you wherever you go. It's amazing how having an interesting book can make otherwise frustrating waits into an enjoyable time. The 10 minute wait at the dentist's office can be productive if you let it be.

What I'm reading now: Eyewitness to Power by David Gergen. Gergen is a former speechwriter to Nixon who went on to work in the White House for Ford, Reagan and Clinton. He's a very moderate Republican who now teaches in the Harvard Kennedy School of Government. His book is supposed to be about leadership lessons from those four presidents. In other words, it seems like he wrote the book with his classes at the Kennedy School in mind. So now he can make students buy his book, and he can profit from teaching. [This is a personal pet peeve of mine.] The book is much less anecdote-heavy than usual. I'm underwhelmed thus far.

I also got The New New Thing by Michael Lewis of Liar's Poker and Moneyball fame. The Tipping Point by Malcolm Gladwell, which seems to be a highly recommended business book. Netanyahu: The Road to Power, a 1998 biography by Caspit and Kfir (originally written in Hebrew; translated by Cummings).

Rocket

I know that this blog focuses mainly on business and related topics. But I still have to brag on my Astros, even if I am the ultimate fair weather fan.

I'll let the article say it all:

At 42, Roger Clemens is the oldest Cy Young winner and an unprecedented seven-time honoree. The right-hander won the award six times in the American League — three with the Boston Red Sox, two with the Toronto Blue Jays and one with the New York Yankees.

With this latest honor, Clemens is the only player to win BBWAA postseason awards with four teams. His eight trophies, including the 1986 AL Most Valuable Player award, are the most for any player or manager. He joins Gaylord Perry, Pedro Martinez and Randy Johnson as Cy Young winners in both leagues.

After pitching for the Yankees in the 2003 World Series, Clemens posted an 18-4 record and 2.98 ERA to help the Astros qualify for the playoffs, resulting in them coming within a victory of reaching the World Series for the first time in franchise history.

Clemens is a hometown Houston boy.

Oil prices falling

The Houston economy is still very affected by the price of crude. The price has finally declined below $50 to about $48.

As I love Houston, I do hope that the price of oil stays as a reasonable level long-term. However, sustained short-term oil price plunges create buying opportunities in the real estate market as the economy suffers. I'll be watching the price of oil.

Merck

Merck is trading at about $26 or $27. This is about a 75% decrease from the stock's January 2001 high.

Merck obviously has troubles. It faces expensive litigation even if it wins, and possible regulatory review. It has lost the earnings of one of its primary performers. According to rumors, Merck resumes are floating around the industry.

I still haven't done a thorough investigation of how I think the stock should be valued. However, my gut is telling me that the market is overreacting. Traders have a tendency to do this. The PE is 8.5, the dividend yield is almost 6%. Even if the price can only hold steady, 6% yield is pretty good.

Product lines for PR

This story makes me laugh:

Jones Soda Co. takes the idea of a liquid diet to a new low. How does Green Bean Casserole Soda strike you? And how about an aggressively buttery-smelling Mashed Potato Soda?

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Even the creators of the fizzy concoctions at this small Seattle soda company can hardly stomach the stuff. But last year's unexpected success of the Turkey & Gravy Soda means another round of bizarre food-flavored soft drinks.

As an added bonus, they're calorie-free.

This week Jones Soda Co. launches a full meal deal of five Thanksgiving soda flavors, from the bile-colored Green Bean Casserole to the sweet — but slightly sickly — Fruitcake Soda. Last year's Turkey & Gravy is also back on the menu.

I think this is a PR stunt.

Jones is a smart, quirky company. They make "gourmet" sodas, which are generally very tasty. I believe they are from the Northwest, and seem to love that quirky semi-hippie vibe from up there. Their problem isn't so much in keeping customers; it's in getting the distribution that allows them to go after customers. Jones isn't available many places so far, but I'm sure they'd like to build some brand recognition for places that they go in the future.

And look -- they've managed to get very good coverage. Most newspapers have picked up the story!

Probably last Vegas post

When you've been to Vegas for the first time, it makes you think. As I wrote yesterday, they turned one simple idea -- legal gambling -- into a huge enterprise. Today Las Vegas is a booming metropolis, but it has no industry. It is mainly populated by the people who work at casinos and the entrepreneurs who offer services to those who work at casinos. Plus some retirees who like warm weather, low cost of living, and gambling.

My guess is that Vegas provides an excellent opportunity for lower middle class of the West to get middle class service jobs. Then they have kids and the kids have the opportunity for social mobility. Given my experience, this seems particularly true for immigrants.

A couple of the suburbs looked pretty cute. I thought Henderson and Boulder City looked like a nice place to live. They were cute, suburban, and not far from some beautiful views. Living in the mountains is fun.

What I wasn't fond of: being a single guy on the street, you get mobbed by people trying to give you cards for hookers. I'm smart enough to not take things from people on the street.

I also had four different occasions on the street late at night of black guys my age walking up to me and saying in a low voice "chronic, man, chronic." Yeah... I've never done drugs and I don't think now is the time to start, buddy.

The glitz was also underwhelming to me, perhaps because I had my expectations raised by so many other people. I have to say though...it's amusing that even the McDonalds and Motel6 have neon flashing signs.

More Vegas

I'm not entirely sure of the history behind Nevada's gambling. It is obviously libertarian on gambling and prostitution. The Wild West generally had a pretty libertarian bent, in general.

I do wonder if the folks who originally made these laws envisioned the potential for business. Were they thinking like entrepreneurs? Or were they just degenerate gamblers?

Election over

With the election over, productivity can resume.

Personally, I know my productivity slumps significantly during election time. I keep politics out of this blog, but I'm a news junkie. When it's election time, I can't resist.

Being out of town was like being a fish out of water. I had no way to get my fix, and it drove me crazy. Then I got used to it for a few days. Still, I was glad to get home in time to watch the returns roll in.

I wonder how much employee productivity time is lost to election watching?

The Vegas Strip

Having never been to the Vegas Strip before, I always figured it was something like the downtown of a city. It's not.

The Vegas Strip is several miles long. That's quite a bit of real estate. Most of the casinos are huge parcels of the Strip. Not only do they have a quarter mile (obviously, this is towards the high end of the range) of land on facing the strip, but the property usually goes back quite a ways too.

Even on the most developed sections of the strip, there are still properties facing the strip that aren't very developed.

The point is: while longtime Vegas residents probably feel like the Strip is incredibly long, I predict that the Strip will continue to get longer and longer for the next few decades.

Out of town

Been out of town recently. Posting should resume imminently.

The new business - FSBOAustinTX.com

I haven't written nearly as much about the launching of the new business as I had planned. I just didn't feel like it was very interesting to talk about the details of getting started. However, FSBO Austin TX has now launched. FSBO = For Sale By Owner.

The internet has allowed people to take control over their real estate purchases. Previously, a seller had to contract with a realtor to sell their home and pay them thousands of dollars (generally 3% of the selling price). But the internet offers the opportunity for exposure without paying a real estate agent to get an MLS listing. For $200 (although we are giving away free listings right now), a FSBO seller can list for 6 months and have the exposure necessary to sell their house.

There are several national FSBO chains that generally don't appear to have been very successful. That's no surprise -- you don't want to list with a national website when you want visitors targeted to your area. Several local, targeted sites like FSBOMadison.com in Wisconsin have been a huge success.

Cutting out the real estate agent middleman also lets buyers and sellers increase their control over the process. In the biz blog world, Michele Miller has written about how frustrating it can be to search for real estate:

With the mantra, "Good things come to those who wait," my husband and I spent three years searching for a new house in Arizona. We put thousands of miles on the car and went through realtors like numbers at a New York deli counter. Armed with the real estate section of the local paper, each and every weekend was spent on the hunt for the "Open House" signs that matched the ads we'd circled in red ink.

That's what I love about this. Because of technology, people don't have to depend on an agent anymore, they can do it themselves and save money. FSBO isn't for everyone; some people don't have the time. But for sellers and buyers who want to save money and not surrender control, we're a good alternative.

We've got a fancy FSBO Austin TX yard sign too.

'Stros!

The Astros have won 3 in a row to lead the Cards 3-2 in the NLCS. Last night the game was scoreless until the bottom of the 9th, when Jeff Kent hit a walkoff 3 run homer.

There was talk about Clemens taking the mound for Game 6, but manager Phil Garner decided to give the nod to Pete Munro.

A wise move. Pitchers throw much much better on an extra day of rest. Clemens is over 40 years old, so the extra day of rest will be good for him. If the Astros win game 6, then Clemens can start Game 1 of the Series. And if they lose game 6, is there anyone you'd rather have on the mound for game 7?

Heinz CEO

The New York Times has an interesting interview with Heinz CEO William Johnson.

Among other things, he claims:

1. The Atkins fad never hurt sales.
2. The Kerry -- Heinz connection hasn't hurt at all. He hasn't tried W ketchup.

Interesting. I don't know if I buy it.

(link via Bainbridge)

Are people born lucky? Are some people luckier than others?

From Robert Rubin's memoir In an Uncertain World:

Anyone who is honest about having done well will acknowledge the enormous role played by chance.

I agree. I think some people are born lucky. Some people are luckier than others.

I don't actually believe that people are inherently luckier than others, but by virtue of a small sample size some people end up luckier than others.

How many decisions in life really matter? Sure every decision you make steers you towards some decisions and away from others, but only a few are really life changing.

For example, take standardized tests like the LSAT, which selective law schools prefer that you only take once. Once you get to a certain level, three or four questions can make the difference between acceptance to Harvard Law and getting rejected from Penn Law. Anyone who has taken a few LSATs will tell you that your score can easily fluctuate five questions on any given day.

Or to take a more egregious example, some people get rich due to winning the lottery. Over the long run, playing the lottery is a ridiculously negative expected value at almost any level -- especially once taxes are figured in (of course, even in the lottery there are often ways to give yourself a small edge). But some people get lucky.

This isn't to say that I think successful people got there due to luck. I think most successful (measured in financial terms) people are successful because of hard work. Even most rich kids don't have as much of an edge as one might intuit, as the rich kids' parents I know aren't willing to give them money. They'll pay for nice schooling, but after that they're on their own.

There are alot of factors in financial success of course. For example, career choice. Anyone who is smart enough and willing to work hard enough can go to law school and make a few million being an ambulance chaser.

This was very disjointed. Maybe someday I'll take these thoughts and organize them into an essay.

How Meriweather created loyalty

Meriwether obviously did a fantastic job of creating loyalty among his team. They were furious when Salomon sacked him, so they eventually jumped at the chance to join him at LTCM.

1. Brought in his own people. By being the first person to hire academics, Meriwether not only brought in the best in the business, but they were his people. Until Meriwether, they were academics who studied the issue. Then Meriwether gave them the opportunity to put their ideas into action and make a few million bucks.

2. Chose his traders over the firm. Salomon did a china service lunch for its partners, but Meriwether chose to eat with his traders. So every day a waiter would bring Meriwether a bologna sandwich, a TAB soda, and two apples under a silver dome. Every day Meriwether would give one of the apples to one of his traders as an "attaboy." The traders were soon competing hard for the apple.

3. Didn't make people work when they didn't need to. One of the great things about Salomon's group is that they didn't need to make every trade, just find a few very good trades. So they would take the time to leisurely discuss the merits of a certain position. Or they would gamble.

4. Encouraged gambling. As bestselling Moneyball author Michael Lewis wrote in Liar's Poker, the group played liar's poker constantly, both at work and not at work. When the group went out to dinner, they'd play liar's poker to see who picked up the check.

Of course, this was a good way to keep his trader's instincts sharp. What do you do in gambling? Assemble information, analyze it, figure out the odds, and pull the trigger. Same thing as in trading.

5. Group outings to compete. His group would frequently go -- and were expected to attend -- compete against each other. They'd go to the horse track together and place wagers. They'd go to Antigua with their families for yearly vacations. Day trips to Atlantic City. Betting on elections, sports. They bought a resort in Ireland to play golf. In Ireland, they devised elaborate betting pools on their scores.