21% Poorer

I spent New Year's Day 2009 figuring out that I am 21% poorer than I was on New Year's Day in 2008.

This depressing fact is actually better than focusing on the magnitude of my 401k decrease, 42%.

It is nice that my house only went down 17% in value. Ironically it is keeping the value of my portfolio up. :-(

I find little comfort from commentators like William Bernstein that I have just as much stock as I did before. If I don't sell, it what difference does it make what the value of it is? That is not the point. I could have done better. Eeek! what if next year is as bad as this one?

I still think that a well diversified portfolio is the way to go, coupled with rebalancing. Right now rebalancing says to perversely sell bonds to buy stock -- especially foreign stock. That is hard to do, but that is where the gains will be on the rebound.

And I am expecting, or is that just hoping, for a rebound.

It is nice to see that the January 2 market results are up. We can always hope for better in 2009. There does not seem to be any news driving it, but what Adam Smith called the "Animal Spirits" of the investors ( and/or savers, speculators and ponzi scheme operators.)

The Long Lead Time of Innovation

Bill Bixton of Business Week (himself discussing a monograph by Chris Anderson) discussed the notion that it takes a long time for an idea to catch on and be successful.

This seems to be obvious to some, but equally obvious counter examples are easy to find, like the iPhone or Tickle-Me Elmo. How about The Dark Night Batman movie? Prozec?

On the other hand, in the chemical industry it is taking longer and longer to make a break-though mass market innovation. The long induction time of Kevlar comes to mind, and it is still a specialty. It has taken over ten years for polylactic acid PLA to get to the minor share of the polyester market it has today -- is it even 1%.

In my division of BASF we joke about business forecasts with huge volume upswings, and we call them "Hockey Sticks" because of their shape. More often than not the huge growth does not materialize, and people debate on whose fault that was.

The time was when a new polymer or even a new molecule could storm the world. In Pharma I think that is still true today, but blockbuster drugs are getting rarer and rarer. Once something gets regulatory approval, we can see a fast ramp up, often even faster when the patent goes off.

In basic chemicals, the pace of innovation has slowed. I think because the state of knowledge has advanced over the last century, and the basic, generic product is less inferior to the new version. I understand that a new top 50 chemical has not been introduced since the sixties.

On the other hand, there could be new chemicals ripe for commercialization if we had the creativity to realize it. There could be a whopper, but we just don't know. Another Post-it or Velcro.

This reminds me of Clayton Christianson's Disruptive Technology, which might be the subject of another post. He claims that incremental innovation can never give "hockey stick" growth, only new, generally low cost innovations.

Lung Cancer

Lung Cancer can strike with deadly force, and when it strikes it kills over 60% of the time. It has the potential to take one from happy and oblivious to near death fast. Lung cancer kills 31% of all those who die of cancer. The chance of an American getting lung/bronchus cancer before the age of 60 is 1:92 -- surprisingly high. The chance between birth and death is a whooping 1:12. Link

The chance of getting all forms of cancer between birth and death is 50:50.






There were 160,000 deaths due to lung cancer in 2007, and about 2000 in Michigan. The greatest incidence of lung cancer is in Arkansas, and the lowest in Utah. Of course, smoking is the biggest factor in cancer incidence. Lung cancer is most common in African American men; least common in Asian & Hispanic women.

Lung cancer like fatal car accidents and other serious illnesses underscores the fragility of life -- something we all know, but don't think about.

Nassim Taleb in Fooled by Randomness discusses his version of the alternate world hypothesis where chance events take place differently. He says the value of a life is the average of all the possible worlds. Taleb is primarily talking about high finance, but I think the notion applies to disease survivors and victims as well.

The Christmas Tree

Every year I put up a Christmas Tree, for whatever reason, I always do this instead of my wife. After twenty years of discussion with her, I bought an artificial tree. She always complained about the needles in the living room, and thought that it was environmentally bad to get a natural tree. I never believed that natural trees were harmful, since they are a renewable resource, but I got worn down. I also hated driving the old tree to the dump.

The tree that I bought was a "9' GE Just Cut Aspin Tree," which appears to be made by GE, but is actually sold by a company called Santa's Best Craft in Wisconsin. I suspect the tree was made in China, but it did not say so in the packaging. "Santa's Best" is an actual brick and mortar company in Manitowoc (Wisconsin). The tree is made of PVC, and seems to be dioctyl phthalate-free. It has flexible molded PVC tips and less expensive PVC roll-stock garland branches inside. The PVC is not flammable, so it is safer than a natural tree. Since I used to work in phthalate-free plasticizers, I am interested in what plasticizer they are using, probably something like trioctyl trimellitate, but I'm guessing.

I bought the tree at Lowes, and it was on sale Thanksgiving weekend. The following weekend, Lowes had their whole Christmas stock on half-off -- a new example of rushing the season. I got it on sale. I was thinking about deflation while I was buying it -- if I would have waited another weekend I would have saved more.

After I put the tree up, I did not like it. The tree seemed too even and perfect. When I am right up next to it, it looks artificial. The new tree looks better from across the room than close up.

Reflate This Economy Now

Now is the time to combat inflation.

I know that Ben Stein is a comedian, and that you can't take him seriously, but I am telling you: Take this seriously. See his post on yahoo/finance. The world economy is falling apart, and falling prices are the problem. Gas prices are down; housing prices are down; stock prices are down; Commodity prices are also down. Today the Wholesale Price index was down in October.
Here is a graph of the price of oil from forecasts.org.




See how dramatically prices have fallen. Gold is the same:



As Ben Stein says, all the spending now is "FREE." because there is no risk of inflation. The government needs to simply print money.

Plasma Globes

The plasma globe was invented by Bill Parker who was playing with neon and argon as an undergraduate at MIT. Later as an artist at the Exploratorium in San Francisco, he made a larger one for display. See more in C&E News for Oct 27, 2008. The site is down this weekend, so I can't put in a link. Of course, the original invention of the glowing plasma was by the great Nicoli Tesla in 1894. It seems Tesla never gets proper credit for anything.

Electrodes ionize the gases, which flow inside the globe and form a current. It is important to have AC current so the gases & current actually flows inside the ball. The current flows from the center electrode to the glass, and then through whatever path to ground. (Some of the current flows out into the globe, and then back to the center electrode when the field reverses.) Voltages vary from 3000 to 30000V depending on the size of the ball and plasma. The gases are between 2-10 torr, or about 1% of atmospheric pressure.

The plasma is attracted to your finger when you touch the ball, and that is the fascinating thing about them. Your finger provides a better path to ground than the surrounding air. Wikipedia has more details.

There are also some interesting non-globlular plasmas at: http://www.plasmarama.com/



The above caught my eye. It is by Morgan Crook, and is called God City.

Virtual Reality News on Election Night

I was taken by the unabashed use of glitzy visual effects on election night. One of the flashiest was the bar-chart that popped up from the floor in beside Ann Curry on MSNBC and NBC. She is in a virtual room where the signage changes reflecting the subject matter. The columns and the walls are all virtual. I understand the panning of the camera around the room required dense computing power.

.

MSNBC was tame compared to the Holographic Girl on CNN. Jessica Yellin appeared superimposed electronically in the studio with a glowy halo around her like Obiwan Kanobi. She was photographed from 360 degrees by 35 cameras, digitized and then electronically pasted into the frame. Her image was oriented based on the camera position in Wolf Blitzer's studio. In this case, it had novelty value only. It is better to see a correspondent the field, or even the anchor at the news event. I don't need to see the field correspondent in the studio -- who cares about the studio? This technology might be better for an interview subject rather than a reporter. 

Wired Magazine has details.

Auto Sales Crash, Lowest in 25 Years

Having moved to the Detroit area, and having bought real estate here, I can't help feeling awful about the auto industry.

This town would be so much nicer and more prosperous if the US Auto Industry would hit better times.

I know that automobiles are not going away, so that even though cars may be downsized, somebody will have to make and buy them. I was hoping that the weak dollar was going to help them. With the dollar back up to $0.79/Euro, that is less and less likely.

Some say that the US does not have any distinctive, competitive advantage over other countries. I am not sure that's true because the US competes in airplanes and other mechanical equipment. In addition, these companies are not really national companies because they are so global.

I hope our new President takes on US competitiveness issues.

November 4, 2008 Election Day

At long last the election is here. Hasn't this been counting down for 100 weeks?

In my Michigan neighborhood, I am worried about how long the line will be at the polls. I have an early morning meeting at work, and I'll have to vote near closing time. I am going to bring an ipod and a Blackberry. There is good chance the winner will be declared before I get home.

Circus Contortionist Holds Herself Up by the Teeth

Here is Maria Sarach (18) at the European Youth Circus Competition holding up her whole weight with a mouth-piece. The picture describes this better than I can.

After I saw this, I looked on Google, and it seems there is a Youtube clip of her whole act. The act starts slow and artsy, and the above stunt is about six minutes in -- in case you want to skip to the end.