10 stocks for 10 years

Topic: Investment

I decided to look at selecting a portfolio of stocks I would be comfortable putting into an IRA for 10 years. My main criteria was companies with a history of large positive cash flow (that seemed likely to continue that trend).

The 10 stocks I came up with are (closing price on 22 April 2005 – % of portofilo invested):

  • Templeton Dragon Fund (TDF – 16.40 – 16%) – a closed end mutual fund investing in China, Hong Kong, Taiwan, Singapore… This one doesn’t fit the criteria but does a great job of filling out the portfolio in my opinion.
  • Dell (DELL – 36.43 – 12%)
  • Toyota (TM – 72.42 – 12%)
  • Google (GOOG – 215.81 – 12%)
  • Pfizer (PFE – 27.22 – 8%)
  • Amazon (AMZN – 33.04 – 8%) They are only just starting to generate cash but I like their prospects.
  • Intel (INTC – 23.24 – 8%)
  • Petro China (PTR – 61.68 – 8%) Investing in PTR is based on the potential for China, the prospects for oil over the next 10-20 years and Warren Buffet’s ownership of the stock.
  • Cisco (CSCO – 17.43 – 8%)
  • First Data (FDC – 37.48 – 8%)

Thankfully I don’t have to staying locked into decisions for 10 years. But, if I had to, this is a portfolio I would feel comfortable with today. It is overweighted on technology (which is another reason for including Petro China). Templeton Dragon Fund also provides a nice counter weight to all the technology. I would like to have a higher exposure to heath care, but I couldn’t find the stocks that seemed equal to those above.

I have been using marketocracy, since 2001, to manage a portfolio of stocks (marketocracy does a great job of tracking performance for you which I find quite convenient). This year my fund has suffered. At the beginning of this year the Darvamore Fund has exceeded the S&P 500 by over 10% annually on average). This year however the fund’s overall performance results have been reduced to just 5.5% over the S&P 500 annually. Hopefully that trend will turn around soon.

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Posted in Investing, Popular | 17 Comments

Beginning of the End of Housing Bubble?

Topic: Economics – Investing

re: Beginning of the End of Housing Bubble? – Dan Gilmor blog post

I doubt we are at the end of the bubble. However, financial bubbles are very difficult to time. My guess is the bubble will continue for over a year for most, if not all locations in the USA. And unless the bubble continues and prices reach levels much higher than they are now, the end of the bubble will not be dramatic decline of prices (say an drop in prices of over 25%) in most locations. Manhattan (with historically very volatile prices) and certain other locations will likely have dramatic declines. But overall the real estate market will slow down (fewer sales) greatly and may experience say a 5 year period where prices decline slightly (or increase slightly). Real Estate normally does not behave the same way the stock market does when a bubble breaks, but we will see what actually happens.

The risk of stagflation, while real, is small, I believe. The huge trade deficit, large unfunded liabilities (Social Security) and huge federal budget deficients are likely to cause problems. However I believe these problems will more likely result in long term slow degradation of the standard of living in the USA instead of a dramatic break of the sort that could result in stagflation.

The decrease in the standard of living due to these forces could well be masked by other forces that increase the standard of living. So the inevitable cost of us now living beyond our means (passing the bills on to our children and grandchildren) can be ignored fairly easily. It is not a good approach but it is likely the one we will continue to practice. A recession is much more likely than stagflation.

Real Estate articles:

Posted in Economics, Investing | Comments Off on Beginning of the End of Housing Bubble?

Management Improvement Articles

Topic: Management – Library Articles

Recent additions to the Curious Cat Management Improvement Library include:

  • Six Sigma and Kaizen Compared by Raphael L. Vitalo
  • Deming Retrospective Inputs by Gerry Hahn
  • Bringing Lean Systems Thinking to Six Sigma by Paul Mullenhour and Jamie Flinchbaugh
  • Risk Management during Requirements by Tom DeMarco and Timothy Lister
  • Innovation Now! by Gary Hamel

Find links to these, and other new additions, on the Curious Cat Management Improvement New Articles Page or search for management improvement articles.

Posted in Management | Comments Off on Management Improvement Articles

Performance without Appraisal

re: Managing with Trust post from Coding Horror

This interesting post includes the quote:

It seems cheap to dispatch [performance reviews] without suggesting some alternative.”

Dr. Deming would mention Peter Scholtes thoughts on why performance appraisals were bad management when asked about his belief that performance appraisals should be eliminated. In the short article Performance Without Appraisal: What to do Instead of Performance Appraisals, Peter wrote:

Dr. Deming said of Performance Appraisals, “Stop doing them and things will get better.” He was correct. Many organizations, however, wonder what to do instead.

For those that do require “some alternative” Peter included some good ideas in The Leader’s Handbook(see chapter 9 “Performance without Appraisal pages 293 to 368). This chapter has excellent material for any manager. In the interest of full disclosure I not only think Peter’s ideas are great I consider him a friend and host his web site (he is retired).

Abolishing Performance Appraisals: Why They Backfire and What to Do Instead by Tom Coens, Mary Jenkins (forward by Peter Block), 2000, is another excellent source of “what to do instead.”

I think the Managing with Trust post has some good ideas but I don’t agree with everything. “In order to manage a project, you have to objectively measure what your teammates are doing.” I don’t agree with this quote. I agree you must manage a project and “that trusting your team is not a substitute for managing them.” However a manager must manage many unmeasurable factors. The stuff that can be measured is the easy part. The largest part of the job is managing the things that are unmeasurable.

Deming explores the idea of rating people on page 109 of Out of the Crisis and states “fair rating is impossible.” He goes on to explore what is commonly known as the “red bead experiment” where he shows an example of how easy it is to assign numbers to people to aid in managing. But the experiment actually shows how easy it is to be distracted by numbers instead of actually managing. It is easier to make decisions based just on the numbers you have than to take on the challenging task of managing. And to help this process along it is easier to reduce employees to simple numbers (ratings or rankings) than to deal with the complexity and interdependence that actually exists.

The Managing with Trust post also mentions Tom Demarco. I am in the midst of reading the second edition of Peopleware: Productive Projects and Teams by Tom Demarco, Timothy Lister and it is an excellent book.

Posted in Deming, Management, Performance Appraisal | Tagged , , , , | 10 Comments

Management Improvement Books

My recent post on Statistics for Experimenters: Design, Innovation, and Discovery , 2nd Edition reminds me I have not mentioned other good books that have been published recently. Three great books published last year are:

And Beating the System: Using Creativity to Outsmart Bureaucracies by Russell L. Ackoff and Sheldon Rovin will be available soon.

For more great management improvement books see Curious Cat Management Improvement Books.

Posted in Books, Management | Tagged , , , , | Comments Off on Management Improvement Books

NCAA Basketball Tournament

Sign up for the curiouscat.com group on ESPN to compare your picks to other Curious Cats.

You can link your existing entry to the group or create your account for ESPN, then make your picks and then link to the curiouscat.com group.

Go Badgers

Posted in curiouscat.com, Fun | Tagged , | Comments Off on NCAA Basketball Tournament

Who Influences Your Thinking?

Comments on Who Influences Your Thinking? [broken link removed] – Survey results [broken link removed]

> 1. Are people getting most of their information
> from other sources?
That would be my guess.

Similar to the phenomenon of “the long tail” which is an interesting topic in its own right. We tend to focus on the popular few (books, musicians, movies, authors, computer programs…) but often the sum of the less popular many is more significant. See:

  • The Long Tail [broken link removed], by Chris Anderson, Wired, Oct 2004 “The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon’s book sales come from outside its top 130,000 titles. Consider the implication: If the Amazon statistics are any guide, the market for books that are not even sold in the average bookstore is larger than the market for those that are”
  • Continued discussion of the Amazon figures in a Chiris Anderson’s blog. “I’ve now spoken to Jeff Bezos (and others) about this. He doesn’t have a hard figure for the percentage of sales of products not available offline, but reckons that it’s closer to 25-30%.”
  • The long tail – a secret sauce for companies like Amazon.com, Netflix and Apple Computer, Motley Fool, NPR Audio Recording

Getting back to the question raised by the “Who Influences Your Thinking” post; More importantly I believe they (we) are just failing to get all we should.
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Posted in Management, quote | Tagged , , , , , , , , , , , , , | 4 Comments

Statistics for Experimenters – Second Edition

Buy Statistics for Experimenters

The classic Statistics for Experimenters has been updated by George Box and Stu Hunter, two of the three original authors. Bill Hunter, who was my father, and the other author, died in 1986. Order online: Statistics for Experimenters: Design, Innovation, and Discovery , 2nd Edition by George E. P. Box, J. Stuart Hunter, William G. Hunter.
I happen to agree with those who call this book a classic, however, I am obviously biased.

Google Scholar citations for the first edition of Statistics for Experimenters.
Citations in Cite Seer to the first edition.

The first edition includes the text of Experiment by Cole Porter. In 1978 finding a recording of this song was next to impossible. Now Experiment can be heard on the De-Lovely soundtrack.

Text from the publisher on the 2nd Edition:
Rewritten and updated, this new edition of Statistics for Experimenters adopts the same approaches as the landmark First Edition by teaching with examples, readily understood graphics, and the appropriate use of computers. Catalyzing innovation, problem solving, and discovery, the Second Edition provides experimenters with the scientific and statistical tools needed to maximize the knowledge gained from research data, illustrating how these tools may best be utilized during all stages of the investigative process. The authors’ practical approach starts with a problem that needs to be solved and then examines the appropriate statistical methods of design and analysis.
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Posted in Books, Data, Design of Experiments, Innovation, Management, Manufacturing, Six sigma, Statistics | Tagged , , , , , , , , , , , | 2 Comments

Curious Cat Articles and Links

We have created a new blog, Curious Cat Articles and Links, where we will post links to articles and web sites we find interesting.

Posted in Management | Comments Off on Curious Cat Articles and Links

Control Charts in Health Care

This post is an edited version of a message I sent to the Deming Electronic Network.

I find the “control charts in health care” thread quite interesting.

From Mike Woolbert’s post [link broken, so I removed it]
> I have read many comments about the 8 minute ambulance trip.
> This doesn’t seem to be a system measure, but a result measure.

It seems to me the 8 minute (90% of the time) measure is an attempt at a process measure (in a sense, you can see it as a result measure, but it is also a measure that will have an impact on overall results and as such can be used a process indicator). For it to be a process measure rather than than a process target however, it should actual be a measure of what has happened not a statement that we want to have 90% arrive within 8 minutes.

Jonathan Siegel’s comments [link broken, so I removed it] on this topic were excellent.

The control chart was developed to aid in process improvement. A control chart helps monitor the process (to aid in putting in place counter-measures, when needed, and for identification of special causes). The control chart can be used to see if the process is in control and what the expected results from the system are.
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Posted in Data, Deming, Health care, Management, Quality tools, Statistics | Tagged , , , , , , , , | 3 Comments