"In the world ye shall have tribulation: but be of good cheer; I have overcome the world." –John 16:33

San Pedro Garza Garcia

Category: Money

Finals week and Economic Animation

Day 112 of 1000

This week is finals week at Wake Technical Community College.  Everyone in the house except me studied for finals.  I worked on a project for my new job which involved mostly study about a new product.  I am going to be glad for three weeks of non-study activities starting next week.  The one fun thing that happened this weekend was Christian’s Macroeconomics project.  He had to put together a brief video of some macroeconomic principle.  The first pass was not so good, so he decided he would try to learn how to do animation and use that to smooth over the rough spots.  This is what he produced:

Update: He did it in Linux with Kdenlive, Inkscape, pencil, paper, scanner, and his Nikon d90.

They give away YOUR money and act like it is a good thing

Day 108 of 1000 (212.9 lbs.)

I heard a Subaru promotion on the radio during my morning commute this morning.  They have a promotion where they pay $250 to one of five charities, two of which are liberal wacko charities when someone buys a car.  Why would Subaru think I would buy a car from someone who sends money to charities I find odious.  In addition, the price of the advertising, administration, and the money that goes to charity could have saved me an additional $500 on the price of the car.  Let ME decide where I want my money to go.  This is exactly why I object whenever a company for whom I work tries to strong-arm me into giving to the United Way.  Their methods are suspect, give money to hate organizations, and have been caught with there hand in the cookie jar.  Let me repeat, let ME decide where I want my money to go.  I work really hard to avoid doing business with companies who do this kind of thing.

Kelly has a new article up at The College Fix

Kelly and I just had the following instant message exchange.  The first link is an article she wrote.  The second link is about students who study hard stuff versus students who don’t.  After the exchange we discuss why it is OK to finish your career in something other than just STEM stuff.

Here is a great quote from the second article:

…people with an undergraduate STEM major make $500,000 more over their lifetime than non-STEM majors.

Kelly
hey dad check this out
12:48 PM

Kelly
http://www.thecollegefix.com/post/9828
and also this : http://www.thecollegefix.com/post/9824
apparently lots of STEM majors leave the STEM work after 10 years in a STEM career
which is sad

me
Very, very cool!  No it is not sad!  They move up in the world so they are managing STEM people.  You need experienced ex-STEM people to manage STEM people and sell STEM created stuff.

Kelly
oh ok

me
Some STEM people move right into the the sales/managment/marketing mode–that is not bad either.

Kelly
wow cool!

me
I am going to be wearing a STEM and a marketing hat.

Kelly
yeah that is super cool
12:51 PM

NCSU tuition increase causes serious hardship

NCSU caused hardshipNow that we found out NCSU is going to make dramatic tuition increases, Christian has decided he is going to make do with the equipment he had.  RWDub’s Reviews will be quite happy to know he uses Linux Mint on a USB stick to run the computer and persist his data between boots.  There is no money even for a hard drive.  It is good thing we had that old cardboard box from when we could afford to buy stuff from Amazon.  We are going to have dig up a mouse somewhere, too.

Cardboard box computer

Computer travails: Why we are not rich

Day 89 of 1000

When it rains it pours.  Between Kelly and Christian, there are five research papers that need to be written between now and November 30.  That means most of Thanksgiving break will be spent at the computer typing.  In addition to that, there is math and physics quiz, test, and lab preparation.  Now, when I was in college (I cannot believe I said that), we did all of our studying out of books.  The kids still have their books, but they rarely even use their math or physics books as reference.  They do their homework at online services like WebAssign.  If they get stuck, they visit places like PatrickJMT and Khan Academy for tutoring and examples (they like PatrickJMT best).

So, earlier this week, Christian tells me his computer power cable is broken.  Again.  He plans to order a very nice computer between now and the end of the year and asks if he should just wait until then.  I say NO, NO, NO!!!  We are in the middle of the hardest part of a very hard semester and we cannot survive without one computer per person–Christian, Kelly, and Lorena for school and me for work.  In the meantime, Kelly’s cheapo Dell computer starts manifesting a line through the middle of her screen.  The computer is an absolute work of art but wildly not robust.  Christian takes it apart to fix it and now we need to buy another computer for Kelly now instead of in time for next semester.

Kelly's new ThinkPad E520Christian and I put our heads together and decided to buy something a little more robust than the cheapo (but very colorful) Dell girly computers.  We got here a factory refurbished Lenovo ThinkPad E520 for $384.01 — a smokin’ hot deal.  It will be here before Thanksgiving.  Kelly will HATE the color (black), but it is a WAY sturdier computer and has that cool ThinkPad logo embedded in the rubberized top of the computer that gives immediate seriousness cred–much better the foo-fooness cred that derived from her previous pink computer.  Christian’s cable should be here any day now.  In the meantime, we have to survive the weekend with a need for four computers and only two on hand.

Cables at RadioShack

Day 82 0f 1000

I just bought three USB cables to charge our telephones at Amazon for $5.37 total including shipping.  That was after Lorena bought one cable at RadioShack for $24, then turned around and took it back.  We never buy anything at RadioShack anymore.  It is kind of sad.  Why don’t they at least TRY to compete?

Math and Engineering degrees are great even if you want to do something else

Day 80 of 1000

I found a great article in the Wall Street Journal this morning titled Generation Jobless:  Students Pick Easier Majors Despite Less Pay.  It had some startling statistics:

Workers who majored in psychology have median earnings that are $38,000 below those of computer engineering majors, according to an analysis of U.S. Census data by Georgetown University.

Wow.  The article tells a story about a student who switched from Electrical and Computer Engineering because her team stayed up past midnight in a lab to write a soda machine program.  They could not get it to work, so to keep from getting a bad grade, she withdrew from the course.  Then she switched from engineering to a double major in psychology and policy management.  Her grades went from B’s and C’s to A’s.  She said her high school did not prepare her for the rigor of an engineering degree.

So the upshot is that she is willing to work in a low-paying career for the rest of her life because she was unwilling to do what was necessary to pass a few hard classes.  I have had this discussion with people before.  If you cannot handle a specifc course, you can do a TON of things to make it happen. You can get a tutor.  You can take the class two or even three times if needed.  You can take a more remedial course, then try the tough one again.  Is it worth it to go to school for a year or two more to do something you like and that pays well for the next forty or fifty year?  It seems like a no brainer.

The crazy part is that even for those who want to do less technical jobs, it is best to prepare for that non-technical job with a hard degree.

Research has shown that graduating with these majors provides a good foundation not just for so-called STEM jobs, or those in the science, technology, engineering, and math fields, but a whole range of industries where earnings expectations are high. Business, finance and consulting firms, as well as most health-care professions, are keen to hire those who bring quantitative skills and can help them stay competitive.

We joked about this quite a bit, but I wanted to get it into the kids head that, if they went to college (not necessarily a given–preparation for many careers–pilot, electrician, writer, and small business owner are monumentally better served through some type of preparation other than college), they could study their passion, but they needed to start with a rigorous degree.  We defined rigorous as anything that involves hard math.  The use of hard math and statistics is creating new breakthroughs in a lot of fields right now:  medicine, agriculture, sociology, etc., etc. etc.

One of our pet peeves during our homeschool years was a couple of homeschool guys from Oregon who wrote a book titled Do Hard Things when they were in high school, then went off to a liberal arts college whose only majors are Government, Journalism, History, Literature, and Classical Liberal Arts.  Those are fine things to study, but are very far from the type of “hard” we are talking about here.  The only math I could find in their core curriculum was Euclidean Geometry.  If you want to get a book on doing hard things, forego the Harris book and get this one by Katie Davis has done at Azima.

Stock picking stuff for Rigo

Rigo,

This is the stock picking stuff I promised I would write for you on the internet.  A book was written by a guy named Joel Greenblatt for non-professional traders on how to invest in the stock market in a secure, but effective way.  In a nutshell he says to buy “good” stocks “cheap” and hang onto them for a year.  In his book he describes what he means by good (return on capital) and cheap (earnings yield).  I wrote a program that goes out onto the internet and ranks as many stocks as I can find according to their goodness and their cheapness.  I throw out the fad stocks (clothes, restaurants, etc.) and the financial stocks (banks, insurance companies, etc.), then pick two of the best to buy each month.  I am really not recommending that anyone use these stock picks–they just happen to be the stocks I, myself, am purchasing. The following are links to stuff I already wrote from oldest to newest:

November 30, 2006:  Robot, computer and investment stuff – Re-writing the program and how I did in 2006
December 6, 2006:  Blogging on life, homeschool, programming, writing, and investing –  More about the rewrite and how I did
December 28, 2006:  Homeschool education – A little on why I wrote the program
January 16, 2007:  First real stock purchase – The first time I put real money into the stock picks
January 29, 2007:  Stock pick update – I had a good start with my first pick – it went down later, but it was a pretty amazing start
March 15, 2007:  Stock purchase day – After the stock market tanks, I am still ahead of the S&P 500

This is a link to the place I keep the list of stocks as I purchase them along with the S&P 500 comparison stocks:

My stock purchases

This is a link to the book by Joel Greenblatt on which I based my program:

The Little Book that Beats the Market

This is our webpage:

Chapman Kids

This is where I blog every day:

Chapman Kids Blog

Current status:

  • Amount purchased:  $6000
  • Number of stocks:  5
  • Commission per trade:  $12.99
  • Service:  Etrade
  • Average time in the market per stock:  33 days
  • My picks return (including commissions paid):  +1.27%
  • Equivalent S&P 500:  -0.61%

If you have questions, you can post comments here and I will try to respond as best as I can.  It is OK if you want to use Spanish.

Stock purchase day

In my on-going effort to buy “good” stocks “cheap”. I bought 32 shares of IDCC at 31.22 and 57 shares of WDC at 17.93 today. The whole market is way down from when we got in, but we are still well ahead (1.5%) of the equivalent amount of S&P 500 stocks.

Stock pick update

After less than two weeks, my stock picks are up 5.21% and the S&P 500 is down 2.82%. We are doing over 8% better than the S&P 500.

First real stock purchase

Today is my first day to buy stock using the stock purchase plan I developed to evaluate good and cheap stocks. I had decided to buy PWEI and RAIL, but PWEI got bought yesterday so I am going with RAIL and WIRE. I will track it against an equivalent amount of an S&P Index fund, ^GSPC. I will try to do my purchasing around the fifteenth of each month when I have enough money together to do so. I have January, February, and almost enough for March covered. This is VERY good timing because Christian, Kelly, and I started reading a great little book about economics theory based on the “Austrian” school of economic thought that is associated with Friedrich von Hayek and the “Monetarist” whose leading proponent was Milton Friedman who just recently passed away. The name of the book is What Ever Happened to Penny Candy? by Rick Maybury. The subtitle of the book says it all: A Fast, Clear, and Fun Explanation of the Economics You Need For Success in Your Career, Business, and Investments. It is a fun read and we are learning a lot. I am going to try follow this book up with an investing book so that I can explain why and how to invest in a fun way. We will track these stock picks as a part of the course work.

It rained and froze last night, so there will be no government school again in Albany. It is really nasty out there. I almost fell down when I got out of my car to walk into work. I called Lorena and told her to stay home.

Homeschool economics education

I believe economics education is very important, but have had a struggle trying to figure out how to teach it. I think I have finally come up with a plan to get us started. We have been covering the basic issues all along and have even started the formal academic study of economics with a great little book titled Whatever Happened to Penny Candy. The kids have earned some money and we have laid down some rules that with any money that comes in, ten percent goes to charity, ten percent goes to retirement, fifty percent goes to college savings and the rest is for spending. The two big things we think we are missing are the parts about day-to-day management of money and investing.

For the day-to-day management of money you can only go so far with the management of a weekly allowance. Most of those knowledgeable about homeschool recommend that homeschool families start a small business where the children can keep the books and manage the business. Of course the purpose of the business is to make money, but the amount of money that is made is secondary to learning about running a business, being responsible, and managing money. We plan to do that in a year or two. We are not sure what kind of business we want to start, but we want the kids to be fourteen or fifteen years old. We will probably spend a year before we start to identify a business and write a business plan that includes goals such as how much money we want to make and the expectation that the business will shut down after two years of operation.

The more immediate goal is to find a way to teach the kids about long term investing. It is quite evident that the early one starts saving the better off they are going to be when they get old and the more options they will have, even in middle age. To that end, I am going to have the kids keep track of some investments in stocks we will pick together. The idea behind our investing will be that any stock we pick we will hold at least a year, give or take a couple of weeks based on tax issues. We will pick the stocks based on their goodness and cheapness. I will have them take turns tracking the stocks values versus the S&P 500 which is a good representation of the market as a whole. In conjunction with that, we will set a target amount of savings for them to start investing for themselves. In a couple of years, when they have been tracking the stocks for awhile, they should have enough money together to start investing themselves and enough experience to pick stocks with their investing goals in mind. We will post our results here.

Blogging on life, homeschool, programming, wrting, and investing

I have been evaluating what we do here on this blog to come up with some additional blog topics. If anyone has any ideas, please let me know by posting a comment. I would be happy to do some research, especially on homeschool, Linux, and investing issues. Kelly is doing better and better about writing down her thoughts and doings on the blog; she is especially good when she does poetry. I am going to encourage her to do excerpts from her book and from articles she and Christian write for their Kaktus Kids magazine. It dawned on me, though, that at any given time, most of the people who read this blog are wildly disinterested in at least a third of the stuff I write. When it comes to homeschool, programming, and investing–the things about which I write–I can imagine that our readership is interested in one or two out of the three. Nevertheless, the point of this writing is to have a dialog with our friends and eventually print out the blog and bind it into a diary for the kids to show their kids what it was like to grow up in our household. I really have enjoyed the writing. I hope we will enjoy looking back at it in future years.

So, right now, the thing I have been enjoying and finding very interesting is the development of my investment program. It is coming along quite nicely. My goal is to have it finished by the end of the year so that I can start picking stocks again for 2007. I am programming the system to run on both Windows and Linux using KDevelop as my IDE, the QT API to develop the GUI, and libcurl for internet access. I am successfully pulling the information down from the web now. I will try to add multithreading to application so that the GUI is a lot more snappy and the downloads happen in parallel, because it is dog ugly right now. After that, I need to extract the data I need from the pages and sort them according to the criteria of the investment program. I have done it once before, but I want to make it a little more automatic. The current program only stores the data in a comma-delimited file which has to be processed in the OpenOffice.org spreadsheet. My hope is to be ready to start posting my picks in late December or early January.

Update: Just a note on how the investing is going. Using the stock picking program to pick and buy (pretend) $1000 each of two stocks on February 15, March 13, and April 15 of 2006 for a total of $6000 and tracking equal purchases of the S&P 500 gave the following results:

Stock program picks
Initial purchase: $6000
Current value: $7225
Annual gain percent: ~27%
Feb. 15, 2006: 33.3333 shares of PONR @ $30.00
Feb. 15, 2006: 25.3165 shares of NSS @ $39.50 – merged with IPSCO on Dec. 1, 2006 – paid cash @ $66.00 per share
Mar. 13, 2006: 44.4444 shares of TNH @ $22.50
Mar. 13, 2006: 11.3310 shares of RS @ $88.25 – split 2:1 July 19, 2006
Apr. 15, 2006: 56.5931 shares of ITWO @ 17.67
Apr. 15, 2006: 34.5781 shares of PWEI @ 28.92

Equal amount of S&P 500
Initial purchase: $6000
Current value: $6617
Annual gain percent: ~14%

Robot, computer, and investment stuff

Christian showed me his last Lego NXT creation yesterday. It is a scorpion that walks around and stings stuff. If he has time to email me a photo or a video of the thing, I will put it up here on the website (Note to Christian: Get your all of your homework finished before doing this!). It was one of the example projects in the manual, but he wrote and used his own programs. There are several other things he can make and program, but he is getting to the point where it would be great for him to program it with something other than the point and click software that comes with the Lego NXT. His latest innovation is that he set up the computer and the robot controller so they can communicate over Bluetooth, so he no longer has to connect to the computer with a serial port. Christian is far enough along in his C# programming tutorials now that I think the next step will be to get him programming the robot controller using C#. He has downloaded the SDK (software development kit) from Microsoft), so I think I can get him going with a minimal amount of hand-holding. The biggest issue is getting the programs download from the PC to the controller.

As for my programming projects, I have decided to port my stock picking program from C# mono to C++. The stock picking program implements the methods described in Joel Greenblatt’s book The Little Book that Beats the Market. The methods are what I would call conservative methods for long-term investors; Day traders need not apply. I am doing the port for two reasons. The technical reason is that I do not know if C# will have much of a future in the Linux world and I love programming in C++ using QT and KDevelop. The second reason as that I plan to use the program and the book next year as a homeschool program to teach Kelly and Christian about investing. I blogged, earlier, about making stock picks. The first two stocks I picked with the program are spectacularly bad–I actually had one of the two formulas upside down in my program when I picked those stocks. The subsequent six stocks I picked with the program are fabulous. I am just doing dry trading (tracking the stocks only without buying any). Of course, I am going to run this for at least a year and a half longer before we start putting anything into it for real. That will give the kids a year of practice and the program two years of testing.

After an average of nine months in the market, a $6000 pretend investment in the S&P 500 is up $559 for an annual growth rate of almost 12.5%. Program picked stocks purchased at exactly the same time as the S&P 500 investment have returned $1110 for an annual growth rate of over 24.5%. We are in a growth market, but this is not an inauspicious start. Most of all, though, it will be a fun way for the kids to learn about investing for the long haul while they are learning about business at the same time.

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Protected: STOCK PICKS: January 2006

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Investing and money management for homeschool

I have been thinking about how to teach Kelly and Christian about managing their money and investing for the future. We talk about money and its place in our life, but we have not yet put together a formal program. When I first considered homeschool, I read Raymond and Dorothy Moore’s book The Successful Homeschool Family Handbook. They highly recommend homeschooling families start a family business to help teach fiscal and general responsibility. I agree completely and plan to start a small family business within the next couple of years. In the mean time, I want to teach Kelly and Christian to manage and invest their money in a systematic way.

When Kelly receives money, she puts it into a little purse that she owns. When Christian receives money, he puts it into his piggy bank. They get money as gifts, do odd jobs, and have generally been proactive about finding ways to increase their nest eggs. A couple of months ago, Christian wanted to buy a remote control airplane, so we dumped all his money out on the bed and talked about what might be a good way to divide it up in a responsible way. Kelly participated and this is how we decided to divide up the money:

  • 10% – Charity
  • 10% – Retirement
  • 30% – College savings
  • 20% – Discretionary spending on small stuff
  • 30% – Savings for something bigger and cooler later on
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