Lending direct consumer to consumer...

I love this business idea. Found the link on digg.com:

Buddy, can you spare 10,000 quid?

"You've heard of peer-to-peer file-sharing. How about peer-to-peer lending? British startup Zopa pioneered the business, where people with bulging bank accounts cut out the middleman and lend directly to other consumers, earning the interest that would otherwise have gone to a bank....The Online Banking Report has released a study covering the company and a similar U.S. startup, Prosper.com."

Whitsunday Island Sails and Airlie Beach...

We spend the last 2 days and nights aboard the Wings catamaran cruising around the Whitsunday Islands. Stacey did some snorkling and Brent and Adam did some diving around the Great Barrier Reef as well as just taking in the sights and sounds of the sea. Lots of sea life all around the Reef, fishes of all shapes and sizes! The Coral was great in some areas, in some areas its obvious there have been too many people getting their fingers on it. I still can't get over the number of fish! We saw lots of 'Nemos' as they are now called (disney culture permeates the universe, perhaps it is the dark matter the 'soon to be found out' mistaken astronomers speak of), stingrays, dogfish, napoleans, etc., etc. We also have lots of underwater pix from the trip we'll post when we're back in the US.

Today we're in Airlie Beach just cruising about town until our final flight within Australia to head back to Syndey for one last day then we begin our trip home. While Stacey and I have had a great time, we both agree that it'll be nice to be back in Portland with friends and be able to talk on the PHONE with folks. Its been a great lifestyle the past few weeks, but one that I'm glad to say was just temporary. I want to have wireless internet, great coffee, my RSX, and wander around town wreaking havok with friends on bicycles and otherwise.

See or talk to most everyone very soon!

Hoping I still have a job when I get back :)

Buy my Book: Game Programming Gems 6 :)

Last year I was the General Programming Section Editor for Game Programming Gems 6. Its finally out, in time for GDC 2006.

Take a looksie here!

Surfing Byron Bay, Brisbane, Airlie Beach, Surfer's Paradise

The cyclone appears to have headed back off into the ocean now. We're booked to head out of Airlie Beach in 2 days to go on a cruisy catamaran and things are shaping up well. We have spent about 3 days in Brisbane (ummm...Brisbane is not near as cool as Sydney). Visited the XXXX brewery and did some sightseeing around town. We also went to see Koalas, Kangaroos, Emus, and Wallabys at a park. Then we went out to a fancy dinner and ate kangaroos, emus, and wallabys. We also had crocodile which was rather chewy and wombat for dinner. Wombat tasted okay.

We also spent some time in Surfer's Paradise. That place is not so good, although it does have the worlds largest residential tower, it was just kinda a tourist town with a not good vibe. Byron Bay, however, is absolutely wonderful. We spent some time there and came back after we found out abuot the cyclone and got ourselves a killer room at the Aquarius backpackers. Yesterday Brent and I even took some surf lessons. Today we're going to head out into the water and not sure if we'll rent surfboards, boogie, or just mess around. Tomorrow is travel all day to get to Airlie Beach. We've gone to see a few movies at their wonderful local theater that has these loungy sofas with zebra faux fur upholstery.

While we're happy it looks like we'll be able to head out to see the Reef, etc. it looks like we'll miss Cairns which is a bit of a bummer because they had a really cool looking gondola ride through the rainforest. Its the right tradeoff though and the time in Byron has been really great. Good conversations and interesting weather patterns as the hurricane battled with a high pressure system inland (just kept switching between rain and sun, all the time for the past couple days).

Ta ta....

Cyclone Wati and The Curse

No, we are not on our sailing trip. For those taking a glance at the weather, the eastern coast of Australia is caught in the middle of a category 3/4 cyclone. No, wait a second, 2 cyclones. Right now, Wati is off the coast pounding us. Just before, Cyclone Larry at category 5, blew through and devastated Townsville and the sugar crops in the area. We had spent a few days in Byron Bay then went up to Airlie Beach to catch our sailing boat. After flying up there they told us it was cancelled, so we were kinda stuck (we had called and they assured us everthing was on track, $700 in travel later we get told they were wrong, ahem....). We did some brainstorming: the coast was just hit by cyclone #1, roads were out, towns were blown away (Townsville was impassable by rail or car). We couldn't go north except by plane, and that was iffy cause the profile of the hurricane had it headed straight for us, and Cairns was being pounded. After sleeping on it, we bought some tix back down to the great town of Byron Bay about 10 hours south.

So, during the night the cyclone has turned SOUTH and headed this way. Brent, who flew from sunny and warm Austin to join us for the next 2 weeks, has pointed out that he has been through 5 hurricanes in the past year or so and we're pretty convinced this is all his fault :) Right now its raining like mad outside, we're in Byron Bay, and its very unlikely the storm will actually get this far south, but it has that look, like it really wants to, from the maos, and the rain pounding the pavement behind my head right now convinces me its just outside. Its actually warm, and we got ourselves a 2 story suite with a deck to watch the storm. Last night a GIANT bat landed on a palm tree by our porch, these things are like 36 inches tall with a 4 foot wing span, its an incredible creature.

We booked another boat for next week. Not the Avatar, which was an awesome racing catamaran, but another with equal promise: a little cushier and a little slower but still a fast moving cat. We'll see how things go.

So we're safe from cyclone Wati for now but our northern travels to the Great Barrier Reef area are kinda on hold. We're debating on some time in Tasmania and some other options.

More later...

Book Review: The Lexus and the Olive Tree by Thomas Friendman and Confessions of an Economic Hitman by John Perkins

These books should be read back to back. For me, it was just dumb luck. The Lexus and the Olive Tree is told by globalization cheerleader Thomas Friendman. He tells the story of the components of Globalization, the Global Herd, the IMF, and the World Bank, and how these organizations will force transparency and democracy throughout the world. He makes a very good case. He symbolizes this with a Lexus, to him a representation of the successful adoption of globalizations, the symbol of victory. The Olive Tree is the desire, while being pulled in the direction of globalization, to return to our roots, defend our traditions, be protective of our traditions. This tension is what motivates the title.

My favorite aspect is the way he puts a framework in place to discuss globalization using computer community terminology: hardware, software, operating systems, etc. Was actually a VERY useful analogy to be used in many future discussions :)

Tales of an Economic Hitman is the perspective of one man 'in the trenches' of globalization. Working for one of the firms involved in building up other countires (I'll avoid 3rd world, etc.) he talks about the process as an economist doing simulations and estimates for various projects like power plants and dams around the world. He paints his version of how the funding for these large projects takes place. And he should know, since he was the economist doing many of the forecasts. Essentially, he was told to AND WOULD, exaggerate demand of various economies and their energy requirements. For example, he would estimate at 12-18% a year growth for Indonesia when no economy anywhere had ever registered about 6% a year energy growth requirements, then defend these decisions fervently and with lots of 'evidence' when those numbers were questioned. Ultimately, he was convincing and thus, was promoted to very high levels in his company. Next, these governments would take out huge loans that they couldn't pay, then the 'pound of flesh' would be extracted from the country by the debt holders, making everyone rich except the country who was forced to spend huge amounts to finance their debts. Its funny, I try to talk to people about this stuff and they usually just have these weird looks of impossibility on their faces that this type of things happen. This is not Noam Chomsky talking, this is one of the economists involved with the inflation of these numbers. He has lots of examples. A great great book, one that balances the cheerleading of Friedman. I feel globalization is a phase, it will result in moving us in the next direction, which will likely be tribalism to cope with the globalization, but this tribalism will be less based on geographic topology than previous movements. Instead, social groups will form across the globe to push around the balance of power.

He builds an interesting model of how these processes work together and the mechanims imperialists lose when they don't, ultimately relying on 'jackals' to do attempted assasinations then finally all out war if the jackals can't assasinate. Rather than just claiming these to be true, he gives a great number of examples in very good detail: Panama, Indonesia, etc. I think it may be lost to history that the reason Germany and France opposed the war with Iraq was not that they had some noble cause, but was the loans that the current Iraqi government (Saddam Hussein) was servicing to their economies, and the damage defaults on those loans would do to their countries. Interestingly, both of these books are told with a US centric approach to globalization, not doing a good job of understanding what George Orwell taught so well in 1984, that many of these issues have less to do with being the United States and more to do with being a global superpower in the 21st century. The US isn't alone, and neither is the US financials. Some are german, some are swiss, some are british, etc.

Both great books, but Hit Man is the more important to read, Lexus is outdated and rather obvious nowadays, but I'd read the first 1/3rd of the Olive Tree if you're pressed for time. 4/5 for both.

Book Review: Lance Armstrong, Its Not About the Bike

An autobiography by a sports figure, ranks right up there as a classic, eh? I think the title grabbed me "It's not about the bike", so I picked up the book. I thought, "Wow, here's a guy, that in all likelihood, felt he was going to write one book in his lifetime (he since has a few other credits with other writers), and he's a hero cyclist, and the title he, the ultimate US rider chooses, "its not about the bike"...this should be good".

I love being on my bike. I don't find it particularly interesting to hear about others riding their bike, nor watching other people while I am sitting on my couch, when I should be out riding my bike. Mostly, this book made me want to be out on my bike, riding up Mt. St. Helens, Mt. Hood, riding to Seattle, something long and hard, something to give me some sense, tiny tiny sense, that I am connected to that machine, the universe, that its like an an extension of my body, your legs churning and you are one, looking out across the horizon.

He's right, it really wasn't about riding. Its about relationships, quite a bit about his battle with cancer that makes the Tour seem easy, its about people and faith and determination, its about friends, family, children, and cancer, a personal story about IVF, etc. Its something we all hope we never have to deal with but all our lives are touched. Lance shows how perseveres. And he does it as a hero should, with dignity, here's my favorite story, makes me mad every time I think about it:

When the French company Cofidis decided to dump him while he was in his 3rd session of chemo (Nike, Oakley, and other sponsors stuck by him through his ordeal, doing the right thing), he doesn't rail on them in the book. As a classy sportsman, he just tells the story, the reader is allowed to draw the conclusion, and the most ironic statement of the book was a line where the representative of the French company says "People in France won't be able to understand paying somebody when they aren't working...". That is the final sentence of that chapter. I loved it.

None of us ever know what turns life will take. One day we're at the top of our game, it can all be taken away so quickly, by luck or chance. Ultimately, you find out who your friends are not when you are the top of your game, but at the bottom. Lance got to find that out.

I really enjoyed this book. its a quick one, 4-6 hours. 4.5 out of 5 stars if you're a Lance fan, or a current/former bike jock. Probably not recommended if you don't ride. But then again, its not about the bike. Really, its not....

Sydney, Australia

Sydney is a GREAT city!!! Auckland was a great city! Wellington was a great city!

We've been in Sydney for the past few days, mostly walking around exploring the town. We saw one of the best views in the world at the best mall cafeteria i've ever been to at Bondi Junction. We walked down to Bondi beach which was awesome. We had great Dim Sum on the 5th floor of a building in Chinatown (lonely planet secret treasure). Went down to see the Sydney Opera House, I never actually knew there were really 2 buildings not just one. Did a coastal hike from Bondi to Coogee yesterday and spent some time there then walked back to Bondi Junction. Went to a theater owned by the hare-krishna's to see a movie. The seating was more like lounge chairs and bedding instead of theater chairs. Great sound system, etc. Went to Darling Harbour to do some exploration. Visited the area of Paddington for some markets and some coffee shop people gazing and reading.

We're staying in the Kings Cross area of Sydney, about a 15 minute walk to downtown and the heart of lots of action in the evenings. Our hotel, O'Mally's has air conditioning and is quite cozy. To get to our room in the evenings we walk through the door to the lady's bathroom, then open this gigantic, huge vault like door to climb the stairs to our room, its quite bat-cave-ish. Its also quite disconcerting to people in the pub when they see us pop out of this door, no kidding its about 6 inches thick of steel.

Finished The Lexus and the Olive Tree, I'll post review later.

Tomorrow morning we head off to Brisbane area of the country on a very early 7am flight.

I've been reading the local papers when I get a chance. Its very illuminating to get the perspective on what is happening in their own culture and how they choose to write about it, but its also illuminating to read about how they interpret things going on in America or other parts of the world. I should provide some examples in future postings.

Portland Public Schools...

There's an article on the Portland Public Schools at OregonLive: Middle class losing faith in schools, city .

I am reminded of Ernest Rutherford, "We don't have money, so we must think".

I have lived in Portland for 8 years and had a few questions related to the article. For those that aren't aware, about 3 years ago there was a huge budget shortfall for the public school system (recall, this was a shortfall in being able to give them the increase they wanted). In order to fully fund the budget, they asked the shareholders of the city, its citizens, to approve a temporary 3 year 1% income tax (no, none of us believed it would be temporary). As a group we approved this 'temporary' measure and it was decided that the tax increase would go through. This would give them breathing room to determine what to do next, which is what they claimed they would do with this time.

And now, as a shareholder of this city, I'd like to ask a few questions, and propose a couple of ideas for any further budget increases:

[1] How have you, during this time, decreased the amount of administrative positions, relative to the student population? Relative to the number of faculty directly involved in teaching students?

[2] What have you done in terms of decreasing costs of infrastructure? For example, closing down inefficient buildings, outsourcing non-core functions like janitorial staff?

[3] How have you provided an increase of value for the amount of money you have been given?

[4] What is the cost per student and how has it gone down? How are we doing relative to other school systems? If we are doing poorly, why are we doing poorly, and how can we continue to bring these costs down (what paperwork is in the way)? Could technology be leveraged to help bring these costs down? What is your record compared to other school systems?

As shareholders in this community, we have a right to expect continuous improvement. As employees, if you are doing an excellent job at enhancing shareholder value I believe you deserve an increase in your standard of living. If you are not, you should either be replaced or reconsider your role in leadership.

As a member of this community I would appreciate that any further incentives be tied directly to improvements rather than just given away. We have failed, as citizens, to make you directly accountable for your compensation, and now we as citizens need to fix our mistake. I am not critical of any one person in particular, but we are all to blame for this mess. One thing we should all come to terms with is that any public school system is financially constrained, and everyone wants their budget increased, but you don't the budget you want, you get the budget you have, and must find a way to do a great job with it. I know the teachers care passionately about their students and quite frankly, 10 days of free work is enough and unacceptable to ask them for more than they already have given.

Stop gap solutions are not the way, we must plan for a future that does not require tin cupping to the taxpayers when things go awry. Another temporary tax increase will encourage irresponsible financial behavior (tell your children there are no consequences to putting their hand in the cookie jar, but tell them not to eat any cookies, see what happens). The best way to strengthen our schools is to encourage the middle class who enjoy the quality of life and values of the Portland community to migrate to our beautiful city. Another is to continue to encourage young single urbanites to continue their migration and let nature take its course, they too will soon become middle class urbanites interested in great quality educational infrastructure. I also believe we, as a state, should encourage tourism (jointly with Washington and Idaho) and use funds from this industry for enhancing our natural resource base as well as strengthening our citizens via educational and job opportunities throughout the northwest. These simple ideas can provide significant return on invested capital. Finally, we should leverage our technology industry infrastructure via low cost or free wireless broadband within the city. All city organizations can use the infrastructure for cost, citizens pay a reasonable fee, libraries have free terminals for everyone. This acts as a credible conduit for future growth and utlization of technology to liberate the creative genius of our community.

As a taxpayer, I would be delighted to reward positive results in the community with my tax dollars, but I am unclear, due to my ignorance of the answers to the questions above, that the money we have already invested has been used as I was told it would be. Can you please provide some insight?

I have lost faith not in Portland public schools, but in the school infrastructure as it has existed for decades in our country. This century needs an educational infrastructure appropriate to the times, rote memorization mechanisms and rigid communistic student/teacher roles need revisited to explore avenues for a more enlightened approach. The role of public school as babysitter needs to evolve. In the long term, compensation should be merit based, graded by employer feedback (parents and students). No system of employee evaluation is perfect, they are all approximations, and the rest of the community has their pay based on how well they do, why should there be an exception for educators?

Let Portland Public Schools be a beacon to the rest of the world as to how to educate for the 21st Century, and not a relic of the past. Let us show how a community of diverse and educated citizenry can create a socially lucrative community.

New Zealand: The North Island!

Since we only had 7 days on the North Island we've been busy and haven't had much Internet time. Did find out a friend of ours will be joining us in Australia for 2 weeks due to his recently available free time. Sweet as!

So, after our boat ride across the channel we got to Wellington. We decided we liked it there so much we decided to spend a few nights. We went out and saw Biscuits and Coffee, a play at a tiny little theater called Bats, saw a movie or two, Syriana and Walk the Line, both good but dramatically different plots.

After Wellington we headed up to see the glowworms at Waitomo caves. We abseiled down a rope, did some caving and rolled around in some inner tubes in the cold cave water, and climbed back out of the cave. The whole trip was about 5 hours and the guide and people we went with were great, Rap, Raft and Rock. Highly recommended bargain. If you've never seen glowworms before they are absolutely AMAZING creatures.

After our caving adventure, we headed up to Auckland and did a very cool ropes course just west of the city. They had 8 courses and we are now totally sore, well I'm totally sore, I actually fell off of the 8th course but no worries cheers mate sweet as no problem cause I was caribinered into a safety rope. I just fell cause I got tired trying to cross these horseshoe things about 40meters off the ground. Ugh. Stacey cleared them all like a champ. If you've ever played Psychonauts there are a few levels, particularly the last one, that have some moves just like the ones we were doing, with the nets and everything. We did that today.

So tonight, we'll be heading up to the sky tower of skycity for a last night in Auckland buffet feast and a look about town before we head off to Australia tomorrow!

Good bye New Zealand! We're tired and sore, but we've enjoyed our stay, especially our deluxe $12 accommodations this evening in a tent at a backpackers site next to a big old smelly dumpster. $12 tent site, $50 dinner. We got a nice pad at o'malley's in Sydney, we can sleep later!

Chapter 2....

The Intelligent Investor by Benjamin Graham

This is one of two classics of value investing by the inventor of the field that has brought the likes of Warren Buffett and others great wealth in our financial markets. The other book he wrote is actually the textbook used for value investing courses at places like Columbia, UPenn, etc. titled Security Analysis written in the 1930's.

Turns out, things haven't really changed all that much. Sure, the actors have changed, from railroad tycoons to internet tycoons, but the story has remained the same. Benjamin Graham continued to update the earliest version of this book through the early 70's modifying it with information relevant for the stocks and bonds of the era. Jason Zweig, a value investing guru and Money magazine columnist, has added invaluable commentary to each chapter of the last version of Benjamin Graham's classic text as it relates to the markets in the late 90's through 2003. His writing reinforces the viewpoint of Benjamin Graham.

I started reading this thinking that I was going to learn how to be a value investor and how to do analysis myself. I ended thinking "Woah, if it takes this much work I'll stick to value investing funds and index funds and use the time I would have spent doing the recommended analysis on other things." I am fairly serious about that based on the current capital I have to commit to the markets. I love the field of finance and love exploring the mathematical aspects, algorithms, predictions, securities analysis for fun, but with a full time job I really don't have the time to invest the significant amount of time it would take to get it right and seems I'm better off letting somebody else with a track record and the resources assist.

Highly recommended reading, 4.5 out of 5, very illuminating, but mostly in a pessimistic way. Time spent reading this will save you lots of money and hassle in life. Attain financial enlightenment through Benjamin Graham! A long read, takes quite some time to get through, but you can skip around a bit and get the point. I'm a bit thick skulled sometimes so I had to read the entire thing and enjoyed every minute.

I'll add here a few of my favorite enlightenments from the book:

The Foolish Four from the Motley Fool
First, around page 45, Jason Zweig takes a swipe at the Foolish Four. While the Motley Fool is a great place to start one's investing career, its hardly a place to put too much faith. Basically, the Foolish Four algorithm is as follows:

1. Take lowest price/highest divident yield stocks from the DJIA.
2. Discard one with lowest price.
3. Put 40% of your money in the one with second lowest price
4. Put 20% in each of the remaining.
5. One year later, do it again.
6. Repeat until wealthy.

Guess what?!? Money magazine found that a portfolio made up of stocks whose names contained no repeating letters has performed nearly as well as The Foolish Four--and for the same reason: luck alone. (See the article, False Profits, Money Magazine, August, 1999, page 55-57.) The author's main point using this example is that it was not based on any kind of thorough analysis, putting 40% of your money is not minimal risk, and 4 stocks are not diversified enough to provide safety of principal capital.

What you can expect as a return in the stock market
Another interesting discussion is stock valuation and the fact that it is based on 3 factors (page 85): real growth (the rise in teh companies' earnings and dividends), inflationary growth (the general rise of prices throughout the economy), and speculative growth (any increase or decrease in investing public's appetite for stocks).

In the long run, yearly growth in corporate EPS is around 1.5 to 2%, inflation in 2003 was 2.4%, and the dividend yield was 1.9% for stocks. Therfore, 5.8% to 6.3% is what you can reasonably expect stocks to average. Not 20%, not even 10%, but 6%.

Bonds
Something that has been lost on my generation is bond investing. I need to learn more about bonds as this is critical to a well diversified portfolio.

Growth Stocks
Benjamin Graham discussed growth stocks. On page 158, he says: "The authoritative manual entitled Investment Companies, published annually ... , computes the annual performance of some 120 such "growth funds" over a period of years. Of these, 45 have recoreds covering 10 years or more. The average overall gain for these companies--unweighted for size of fund--works out at 108% for the decade 1961-1970, compared with 105% for the S and P composite and 83% for the DJIA. .... Similar results were found in our earlier studies. The implication here is that no outstanding rewards came from diversified invesetment in growth companies compared with that in common stocks in general."