Entries from November 2008 ↓

Quick update to the site: I changed the comment system this afternoon to use Disqus, so you may see some changes. I noticed that a few of my favorite financial bloggers used the system, but I never figured out the secondary benefits of Disqus. Now I see the theme: collaborative social filtering, a metaweb that sits atop the web.

The walled gardens are dead.

The conversion process was straightforward. Fifteen minute, with all the old comments successfully ported. It remains to be seen if this will actually help me with the spam (or give me better tools to deal with it).

Earlier I posted a very brief post on how I got Twitter. Recently, Tim O’Reilly did the same.

The key insight, which I’ve made elsewhere while trying to explain the value of Twitter in one-on-one conversations, is this:

In many ways, Twitter is a re-incarnation of the old Unix philosophy of simple, cooperating tools. The essence of Twitter is its constraints, the things it doesn’t do, and the way that its core services aren’t bound to a particular interface.

I truly believe that Twitter, or something like it, will be looked upon as one of the essential tools of the internet, as transformational as email or RSS/Atom syndication: a universal utility.  The only impediment is standardization, and that path would seem to lead through XMPP.  Unlike a distributed service such as SMTP, Twitter’s utility relies on centralization of identity and service; an XMPP-based Twitter might have to arise out of a million internal corporate Twitter clones being exposed over the net via XMPP, in much the same way as external SMTP gateways eventually obliterated AOL’s walled garden approach to email.  The race will be whether that outcome, facing many barriers, will come before Twitter itself is enshrined as a free public utility used to drive other business in the same way that Google search became a free service.  Right now (as O’Reilly points out, Twitter has no credible competition which itself is a risk; if Twitter sits still, the walled garden becomes a fatal limitation since it will effectively become a bet against the internet.

Tangentially related to this, today I was reading MacroMates’s TextMate documentation and ran across this clear passage on the philosophies of TextMate:

From UNIX we get that Tasks and Trends Change. In concrete terms this means that instead of writing a command (in UNIX) to solve the problem at hand, we find the underlying pattern, write a command to solve problems of that type and then use that command in a script.

Connecting O’Reilly’s post to the TextMate/Unix philosophy, we see that Twitter, by design or by accident, solves problems corresponding to an underlying pattern encompassing user-extensibility, fast evolution, web transcendentalism, and simplicity.

The evolution of StockTwits as a social investing medium at a time when the market is punishing investors demonstrates the value of the principles the utility supports.  StockTwits is a great Twitter hack, and it evolves quickly (e.g., after starting with ticker symbols prefaced with dollar signs, market updates get prefaced with double dollar signs; the filtering mechanisms inherent to Twitter eliminate the downsides of traditional first generation web-based stock discussion media).

If I had to describe Twitter, it would be “like useful ESP”. Or maybe more accurately: “like ESP, but with useful filters.”

Postscript: I’m on StockTwits as firebones…

And the PETS shall lead them

A long time since the last update—very busy with work and the vacation days and weekends have been spent trying to salvage some alpha by putting cash to work in very aggressive daytrading behaviors which have netted around 110% return on a very small amount of cash, mainly through a combination of swing trading AAPL and hedging the rest of my shredded long portfolio with SPY puts.  More details on my foray into trading in a future post.

But the family stock picking contest is in need of an update, just to humble all idiot retail investors like me who think that individual stock picking combined with a buy and hold strategy makes sense in the long run.  Of the 40 stocks selected by the 5 participants, only one is in the black: PetsMed Express (PETS +48.18%).

I happen to be in a close second in the contest now, with my eight picks (BRK.B, MR, PHO, BWLD, MWA, CEDC, CTSH, GRP) down only 37.88%; the worst participant, identified only as “The Nephew” is down a miserable 69.06% on the heels of his -5% performance last year.

The quick rundown from top to bottom:

In the lead

The Nephew’s Bride (pets fxi vlo nvs pep wfmi fpl ba) -37.79%.  PETS is up an amazing 48.18%, but this can’t offset FXI (China) being down 84.4%, and Whole Foods (WFMI)  down 74.07%.

Me: (stocks—see above) -37.88%.  I’m basically getting killed due to a combination of Buffet’s financial exposure and my global exposure (what I thought was a lesson learned last year).  Best stock: Buffalo Wild Wings (BWLD: -1.12%).  Grant Prideco was acquired for a combination of cash (yeehaw) and Valero stock (booooo!) in April; that didn’t help.

Berkshire Hatha Class B Ord Shs	-26.12%
Mindray Medical International Ltd	-57.92%
PowerShares Water Resource Portfolio	-36.54%
Buffalo Wild Wings Inc	-1.12%
Mueller Water Products Series A Ord Shs	-35.29%
Central European Distribution Corp	-59.30%
Cognizant Technology Solutions Corp	-43.43%
Grant Prideco Inc	-43.34%

Middle of the Pack

Mrs Firebones (down 40.15% with AET DE ARG CVS NTDOY AAPL COST GMCR) got creamed due to Aetna and Deere (each down around 62%).  Retail exposure hurt as well, although some of the quality stocks held up okay relative to the market.

Firebones Jr (down 51.48% with CERN ADDYY VIA.B PEP SNS TWX SCHL PIE) has one down 67% (PIE—picked solely because the ticker symbol was PIE).  I like his chances to improve before the end of the year through strength in Scholastic.

Bringing Up the Rear

The Nephew (down 69.06% on bidu isrg fwlt vip cmg stp nov rimm).  Suntech is down 89%; when your best stock (ISRG) is down 58.97%, it’s hard to dig yourself out of the hole.  Quick analysis is that this is overexposed to energy at the height of that market; looking at it another way, the double whammy of oil falling from $140/barrel and the falling dollar crushed him.

Overall

Overall the combined portfolios are down 47.17%, compared to a positive return of 15.82% last year.  There is not a single major index that the combined portfolio is beating.  My picks happen to be beating the S&P, the NYSE Composite and most of the international indices, but trailing the three Dow Jones averages (Industrial, Transportation and Utilities).