Housing cools....

So...its finally happening. Burst 2.0 of my investment lifetime is happening before our very eyes. Rising mortgage rates have taken their toll, inventory is rising, articles everywhere are going to pop up (already have)....while i was able to share my anecdotal stories on the upside i found shocking, tis also interesting to see in my condo complex 3 units for sale all lowering prices around 10% and others who want to sell waiting until this inventory clears (good luck). all over NW portland we see inventory...hasn't been like this for 2 years.

i'm thankful i have taken the advice of a few friends on a condo investment in florida i walked away from a few months ago (this was not for rent, i was going to flip the contract when the unit was ready for occupancy in 12-24 months). the most convincing argument they made was this: "when amateurs (read: idiots) like you start thinking this is a good idea is exactly the time you DON'T want to make the buy".

good advice, thanks chris :). it'll be interesting to see the selling price on those units in a year. and now....in the panic...how to exploit all those crazy no doc and low doc loans that were made, ARMs to people that had no business qualifying, etc. etc.

great reading: housingpanic.blogspot.com

Threading game engine basics...

A short article I wrote with Henry Gabb a few months ago has made it to the front page of gamasutra. If interested, check out:

http://www.gamasutra.com/

Book Review: Don’t do, Delegate by James M. Jenks and John M. Kelly

I picked this book up at a garage sale for about $.45. I’m reporting on it not so much because I thought it was a good book as to share that one nugget, that ‘ah-hah’ moment that it provided, an insightful observation about motivation of people. My reasoning for reading such a book was an insight made by a manager who said I was stricken a year ago with ‘super stage II’ syndrome. Basically, delegating a bunch of tasks to folks who were given deadlines and deliverables. Then, when those deadlines were slipping, inserting myself to catch them up and make them on time. He pointed out that this is not how delegation is done and that I needed to do less of this and suggested I learn (among other things) some alternative coaching styles to improve myself in this area (one thing is simply acceptance: you are given increasing responsibility because you have demonstrated mastery of the previous challenging skill set, its time to help others achieve similarly and it will take time and patience). In addition to the coaching styles, he nudged that it would be best I strengthen my delegation skills. At any rate, here is the book highlight, in abbreviated form:

on motivating:

managers think subordinates are motivated by (in order): good wages and job security. subordinates actually care about “full appreciation of work done with a “feeling of being in on things” second. in other words, managers do not understand what motivates their employees. According to the famous psychologist Maslow we can sort the motivations of people:

1. bodily needs
2. safety
3. belonging
4. esteem
5. self actualization

Supervisors mistakenly think the lower needs are important to their subordinates (wage levels and job security address bodily needs and safety). workers feel that higher areas are more important. Good delegation relies on motivating around these higher needs.

Next, there are two examples given. Mgr. A: “Corporate wants another Q.C. report. I don’t know why. You’ll have to go around and note procedures used on all products and report” Mgr. B. says “our customer is especially interested in quality. we want to have a reputation of high quality. What I think we can do here is find ways to improve quality control by reviewing the current procedures.

what’s the difference? Mgr. A appeals to neither belonging nor achievement. Its ‘yet another order from corporate.’ He doesn’t emphasize the results that the subordinate is to achieve but starts right off on the method. The only motivation is the fear of a reprimand.

Mgr. b, on the other hand, presents the same assignment in a different light. First, he lets the subordinate know why the achievement is important. he put it in the context of the mutual efforts of everyone in the company and the status that results from achieving an important objective. Also, one can feel pride from participating in the teamwork of the firm.

Not a recommended book, but the highlight above is a useful observation and one to put into life's tool chest.

1/5 stars.

XBox 360 at best buy already!

So, i wandered into Best Buy looking at scanners yesterday, and my wandering eyes catch a glimpse of a shiny white new white box. That's right folks, the XBOX360 is available to play/demo at Best Buy already. I was kinda suprised. The other interesting thing is there was this 'casual shopper' who was a bit more...knowledgeable than your average 19 year old snowboarder about the games, graphics available, and demos. He was giving out all kinds of information on the different games, demos, etc. and trying to get folks to stick around as long as possible to chat. When one guys g/f stopped by to go, the guy was like 'oh no, wait, wait...did you see the new blah blah blah demo'. i'm pretty sure this guy was getting a paycheck for his efforts, but it definitely wasn't apparent (no name tags, no mention of being there to demo, etc.). congrats to the marketing machines and the authenticity movement within.

call of duty and ghost recon looked unbelievable.

no, they were not available for purchase.

Tornado in Evansville and Newburgh...

Early Sunday morning a tornado tore through my hometown, destroyed many homes and killed over 20 people. At this point, all family and friends have been accounted for and are thankfully doing fine. Chad and I lived about a mile from each other in Newburgh, he sent me a link to some images:

Here is a slide show of some areas close to where I used live. Evidently, the tornado went up Bell Road, and down Lincoln and then out by 261 and 66.

When things like this happen, so close to home, its always chilling, and those terrifying moments when you just don't know if everyone is okay, and if they aren't okay you can do NOTHING about it from so far away, its just scary as hell. Normally, when there is a tornado, you can see the sky changing and you know its a possibility, but this happened late at night, in a season when tornadoes aren't as common. I think its taken everyone by suprise and it makes it that much harder to handle.

Dinner!

I couldn’t resist taking a picture of this amazing and healthy dinner dish Stacey cooked up the other day. Its got spinach, mushrooms, and a light sauce with pasta shells. was very tasty. just had to take a picture!

Lattes...

Since moving to the pacific northwest I’ve become quite an espresso snob (don’t drink coffee much but I do love the latte’s). We tend to steer away from Starbucks unless it’s the only thing around. Personally, I think Starbucks is quite good when the barista is good, I just look for alternatives when I’m in a town like Portland when there are so many shops to choose from that make delicious drinks. There is a web site to help you find your non-corporate coffee at http://www.delocater.net/.

some of my favorites (and all of them have free wireless!):
World cup at 18th and Glisan, Powell’s, and the Ecotrust building in the Pearl
Common Grounds around 50th and Hawthorne
Stumptown on 3rd, one on Belmont, and one on Powell.

In Seattle: Victrola on 15th and Bauhaus on Pike/Pine near downtown.

Book Review: My Life as a Quant

Spent a good part of my weekend reading through the autobiography of Derman. This book really didn’t start to talk about quantitative finance until over 1/3 of the way through the book. Up to that point it was a biography of a physicist. He gave an inside look at the life inside academia for a ph.d. student, several postdocs including one at Oxford, time at Bell Labs back when they were relevant, and his time at Goldman and Saloman. I enjoyed reading it but it really was more of an autobiography than a book about the math. if you’re considering a life on wall street as a quant this would be a great read, if you want to know more about the math stick with the Mandelbrot book reviewed below.

4/5 stars

Book Review: (mis)behavior of markets by Benoit Mandelbrot

This was a fantastic book if you’re interested in a very simple description of Mandelbrot’s work and its relationship to how markets work. I really had no idea until reading this book that CAPM (capital asset pricing model) was so widely regarded as incorrect yet still so widely used. While this is true, Dr. Mandelbrot misleads by making one think its just totally wrong when really it does provide a simple approximate model that is correct to a first order. What he does a great job of pointing though is the subtlety of the different methods…it’s the corner cases that matter the most (the days the market makes most of its movement up or down, those are the days that create the most gains or losses by a SIGNIFICANT margin). He does a great job of explaining intuitively, with figures he calls ‘cartoons’ to describe the multi-fractal behavior of markets.

Recommended. 5/5.

The references at the end of the book provide a compendium of a significant amount of the work Mandelbrot has touched in his lifetime.