Double Blind

Continuing on from my previous post nearly four months ago, I was in New Mexico late in September. I’ve had this post in the draft state, but will finally wrap it up here! You may wish to refer to the map in the previous post, as it gives the geographical locations of the various stops.

Stop #3 was at Carlsbad Caverns. The caves were gigantic and we signed up for a couple tours and also did the self-guided tour. The hotel we stayed at was in Hobbs, which is an oil town. The (small) cities in New Mexico have a very similar structure – very wide roads leading into the city and a relatively small downtown core. This is in contrast to most small towns in BC, where the geography usually restricts the urban development. When land is cheap (and flat), it makes urban planning rather easy.

There were many points of interest at the caves. We did the Slaughter Canyon Tour and this involved going to a separate entrance about 20 miles south of the main cave. It also involved a small hike up a hill in a creek valley.

Taking pictures inside the caves was somewhat difficult due to the lighting conditions, but I’ll try to post some anyway.

The really cool thing at Carlsbad Caverns was during the evening, there was an outdoor amphitheater that you can sit down and watch bats exit the cave in the evening. It was quite an interesting experience to be surrounded by tens of thousands of bats (small little things) as they emerge from the cave and fly opposite to the sunset. The other amazing thing is that not only could you hear them, but you could smell them! The odor of bats is unmistakable. It was a very nice and unique way to enjoy the sunset.

Just as a side note, after that evening the next destination was Las Cruces (west) and to get there the most efficient route was through El Paso, Texas. The highway between Carlsbad and El Paso (US-180) was very lonely – not a single gas station but the roads were very well maintained. At the state border line was a sign with a “Welcome to Texas”, a Texas flag, “Drive Friendly – The Texas Way” and finally on the bottom “Proud Home of President George W. Bush”. Now if you click on the picture, you will see bullet holes in the sign, which I found infinitely amusing.

The second picture was taken in El Paso at night – as El Paso is a border town (sharing a border with Mexico), there is a structure not too far from the border that displays a huge lone star (since Texas’ motto is the Lone Star State) that can probably be seen by aircraft and everybody on the Mexico side. Some people despise the American (primarily Texan) way of making everything big and grand, but I tend to consider it a culture all in itself.

During the trip, I added three confluence points to my records: 35N105W, 35N106W and 32N104W. 32N104W was probably the more interesting of the three since it was right along the New Mexico-Texas Border and it had only been explored once before. We managed to find a cairn that was setup by the previous explorers. All three were relatively easy to get to. I wanted to do some more confluence points of moderate difficulty, but just ran out of time.

Stop #4 (before we made the trip to El Paso) was in Roswell. Any science fiction fan knows that this is where a UFO crashed in 1947, and you just have to check out the downtown core:

It was always one of my things on life’s “to-do” list to visit this place. Other than the rather thematic downtown core, Roswell is just like any other New Mexico city in the area, just slightly larger (population is about 50,000). It also so happens that I have a friend that lives in the area who works for the oil industry and we explored the International UFO Museum and of course had to dissect an alien body:

The UFO museum was a total riot and I highly suggest that anybody in the Roswell area go visit it if they have a drop of science fiction blood in their veins and a couple hours to read the stories. The previous owners of Storyeum should take a lesson here. They also have a gift shop which I summarily proceeded to raid and buy infinite amounts of alien-related Christmas presents for my brother, including the infamous alien Christmas stocking.

We all ate at some Mexican restaurant on the north side of the city which was a pretty good way to conclude the evening. Much to my surprise, the food actually digested well and the trip back to Hobbs in the dark was routine.

Stop #5 was in the City of Rocks state park. What’s remarkable about this place is that it’s an outcropping of rocks that was deposited by a volcanic range nearly 30 miles north of the present location. As a result, it looks like Stonehenge times a hundred. The even cooler thing is that they let you climb the rocks and if you were not careful enough you could even kill yourself doing so if you fell off the wrong way.

A crowning achievement of mine is in the realm of photography – while running around the place, I discovered grasshoppers having sex. So you, my loyal readers, can see my debut as an Etymopornographer. I’ve got better pictures than this one, but I’m trying to sell the rights to them to PlayLarvae Magazine.

Climbing around the rocks and just surveying the vast landscape was both fun and spiritually uplifting.

All in all, this was a very enjoyable holiday. I would highly recommend visiting New Mexico for anybody that likes open terrain, unpopulated areas, long road trips and a healthy appreciation of nature. I wouldn’t mind coming back and taking a bunch of friends for an extended camping trip.

Apparently the Conservatives are buying ad space on television stations to attack the Liberals and Stephane Dion. You can see them on the internet at the Conservative website. Just by virtue of this, they have received free airtime on the Channel 11 newscast without even having to pay for a time slot.

A good barometer of how effective an anti-Liberal attack campaign is if it gets mentioned by one of the major Liberal bloggers such as TDH or the Calgary Grit. (I’ll give Declan an honourable mention here as well, although his blog is not party-centric). The overall reaction that usually comes out of every party (whether it’s the Conservatives or Liberals getting slammed) is “The Canadian public doesn’t want to put up with low-ball approaches like attack ads since we’re clearly more honourable than the opposing party.” No matter who’s doing the attacking, this statement is always a pile of bull excrement.

Looking back at political history suggests that attack ads work. Right now the Conservatives are trying to ruffle Dion into making a stupid mistake, which remains to be seen whether it will be successful or not. The Liberals used attack advertising with great success in the 2004 election campaign, whereby their only good tactic saved them from a coin flip whether they’d form a minority government to a guaranteed minority. It did not work nearly as well for the Liberals in the extended late 2005/early 2006 campaign since the public was so desensitized to them. Paul Martin made a huge mistake (either through lack of preparation or otherwise) in thinking that a 2004-style campaign would work.

Comparisons with the Republican party is also a dangerous assumption – it assumes the Conservatives can’t think on their own, which isn’t the case. The Conservatives paid attention to what went wrong in the 2004 campaign and are using it, lock stock and barrel against the Liberals.

I think Stephen Harper is using the mantra of “don’t get mad, get even”, and I think he’s likely to get even this spring election. It is also highly likely that the campaign is not going to be about policy, but rather credibility of the top guy. The real question is how much mileage Dion can get out of income trust ads and pictures of senior citizens on the streets after their $500,000 income trust portfolios took a 10% hit. My answer – not a heck of a lot.

One thing cannot be denied – the election campaign has already started.

(Update, January 30, 2007: My brain has not been too functional when I wrote this, I made two significant corrections since posting this. One I will thank Richard for correcting, my misspelling of “hypocrisy” was “hypocracy”. The second error I made was when I said Declan’s blog was party-centric, I missed out the “not” preceeding that statement – I was going to say non-partisan, but for some reason I wiped that out and said party-centric, thinking that the “non” part was still there. Guess not.)

At minimum brightness (when I use the notebook without the AC power), the left side of my laptop screen (15.4″) is about 20% darker than on the right side of the screen. On maximum brightness it’s still difficult to distinguish the difference in brightness so some illuminating white LED’s are no longer functioning.

I think it’s time to look for a new laptop, especially considering that lots of places are blowing out their inventories of Windows XP installations in favour of Windows Vista. Since I have no desire to upgrade to Windows Vista, I think I might do a little speed shopping for a notebook this week and see what sort of bargain I can pick up.

My initial scan will be for an Intel Core Duo, Windows XP installation and a 5400 RPM hard drive. Potential features to look at (but not necessarily will get) would be a notebook with a 17″ display and a non-integrated video card (e.g. one with an ATI or NVidia chip). This will be a requirement that is contradictory to the others, but I would also prefer something with long battery life. I have to think about what trade-offs I want.

The Canada Revenue Agency released an update of their regulations concerning the purchase of Basic Groceries so you know exactly what is charged GST and what is not.

I am convinced that as soon as you start introducing exclusions (or inclusions) to any sort of tax, the result of such actions will result in documents like the one I linked to above.

It’s best to keep tax systems simple, otherwise over time there will be enough complexity layered into things that will require the creation and maintenance of six million rules, of which nobody will have total comprehension of. One doesn’t need to look further than the income tax act as the prime example.

For example, have you ever wondered why buying a single doughnut at Tim Hortons results in a GST charge while buying a half dozen doesn’t? Read no further than the following paragraph:

87. Supplies of cakes, muffins, pies, pastries, tarts, cookies, doughnuts, brownies, croissants with sweetened filling or coating, or similar products are taxable where:

* they are pre-packaged for sale to consumers in quantities of less than six items each of which is a single serving, or
* they are not pre-packaged for sale to consumers and are sold as single servings in quantities of less than six.

And if you were ever wondering what the Canada Revenue Agency considered to be a “single serving”, you have the following:

89. For GST/HST purposes, a single serving is a serving of cake, pie, muffin, pastry, tart, cookie, doughnut, brownie, croissant with sweetened filling or coating or a similar product weighing less than 230 grams or a portion or part of a good under paragraph 1(m) when offered for sale as a single serving.

Isn’t bureaucracy grand? So anytime you go to a bakery, just ask for a 230 gram cookie, not a 229 gram cookie, otherwise they’ll charge you GST.

Since I was tired of manually searching through real estate records on the BC Assessment site (automated searches is not an authorized use), I decided to ask somebody at the government whether this data could be bought. The response I got was as follows:

Sacha, property sales data is available for public viewing free of charge in our local offices, and this year, for the first time, we are offering a Sales Select system on our public website (www.bcassessment.ca). We do not sell copies of the sales data. However, Landcor Data Corporation, our licensed data reseller, does sell copies of sales data. If the first two options mentioned above don’t work for you, you can contact Jeff Puhl at Landcor (604) 606-7907 for a detailed explanation of what they offer.

I hope this gives you what you are looking for. Feel free to call me if you have any questions.

Landcor specializes in this sort of data. Unfortunately I didn’t see any pricing data on their website and I’m too afraid to call Jeff mainly because if you have to ask, you probably can’t afford it. They do sell a $30 valuation service based on recent sales around the area selected, but this sort of information can easily be obtained from the BC Assessment database.

My best guess is that they’d sell the entire dataset for about $10,000 providing that you don’t share the information.

Anchorage is getting record amounts of snow. Must be climate change. Vancouver had stormy weather in November and December. Must be climate change. Vancouver right this very second is sunny, which is very unusual for a January. Must be climate change. New York is freezing in January. Must be climate change.

So my question is… what should the weather look like? Is any variation considered to be “man-made” and an excuse to stop living? Or is every single fluctuation of weather going to be reported as “news” when in reality this has been going on for the past billion years?

So here’s my prediction. The “right” weather for Vancouver in February, 2007 will consist of 22 days of rain, 4 days of overcast, and 2 days of sunshine, with average precipitation no greater than 20 centimeters and no less than 5. If there is a deviation from this, then it must obviously be “climate change”, while if it isn’t, then it’ll be buried in section “E” of the newspaper, right next to the classifieds.

I think proponents that believe that global warming and climate change is man-made are really doing themselves a disfavour by saturating every headline with weather and environmental related factors. Does anybody remember the time ten years ago when Hollywood went on a blitz of natural disaster movies? It feels like this now, except with the real “news”.

Rogers Sugar is the familiar brand of sugar that sells in every shelf of every supermarket, at least here in western Canada. The sugar industry in the country is dominated by Rogers (no relation to the cable or chocolate company) and Lantic in the east. There is a degree of protectionism going on in the North American sugar market, but suffice to say, the company has a secure hold on the Canadian market in terms of manufacturing and marketing. Both companies are consolidated into a single entity which formed one of the first income trusts a decade ago (Lantic was acquired in 2002) and as such, isn’t structured strictly for the purpose of enriching management and trustees.

Since the sugar market in the country is quite mature, there isn’t going to be any opportunity in terms of seeing three times your investment over a two year period, but the income trust is a steady performer – financially its net income is greater than its level of cash distributions ($35.7M in cash distributions for FY2006 vs. $40.9M in net income) and is a relatively predictable business to the point where you could have confidence they will continue cranking out income for the foreseeable future. Right now with a unit price of $3.85 and a distribution rate of 42 cents per year, that means an approximate 11% yield. Just by this number, the market assumes that the units are risky. My claim would be that it is less risky than the market perception. When you see trusts like Aeroplan trading at 4.6% while Rogers Sugar is at 11%, you know what the right course of action is.

Now, we insert the announcement that the government is going to tax distributions of income trusts. This proceeded to take down anything related to the income trust sector, including Rogers (from $4.20 to $3.60/unit).

One effect of enacting such legislation on the income trust sector, other than destroying it, is it will force “legitimate” businesses (opposed to income trusts structured to enrich management) into the private domain. Thus any income trusts remaining after the 2011 deadline are pretty much guaranteed to be crap. One of the first causalities was the Halterm Income Fund. Rogers Sugar is such a natural candidate for a private takeout that I would mention it here. The only question is what price private investors will be able to fetch for the units.

Even if there wasn’t a warranted premium for an implicit takeout, the units would still make a good investment if you’re looking to boost your income beyond the 4% that a GIC would deliver. As such, I will disclose that I own some units in my RRSP. While anything is never as safe as a GIC, I would think that Rogers Sugar would consistently deliver better than the risk-free return rate for a long time to come. Please note anything I recommend as an investment goes down the minute I recommend it, so this post does not constitute a formal recommendation, just something to look at.

The Little Book that Beats the Market by Joel Greenblatt can be summarized as follows:

Buy a portfolio of stocks that:
a) Has a low earnings yield to price ratio;
b) Has a high tangible return on asset ratio.

While the stories are amusing, essentially the point that Greenblatt tries to explain in 176 pages can be condensed down into a single appendix on the back of the book. It’s something you can almost read entirely while at Chapters.

Greenblatt does address the question of “If this system works so well, how come it won’t stop working in the future when everybody follows it?” which I think is the most critical question to ask of any “winning” market system. The market is a minority game and a winning system will only continue to work if a minority of participants continue using it. As soon as the majority “catches wind” then it’s game over – time to move to the next thing.

His argument is that the system only works for extended periods of time (3 years minimum) which is usually longer than the horizons of most investors. I can see his point – if you took a bone-crushing 40% loss after year 2, would you still be sticking with the same system? Ironically enough the best time to hop on board, assuming the system is a winner, is at that point, when things look worst.

Struck by Lightning by Jeffrey S. Rosenthal is a fantastic book if you’re interested in learning how statistics apply to the real world. If you ever intend on doing anything involving finance or prediction markets, I would strongly suggest borrowing this book at the library and reading it cover to cover.

The book is not written assuming any mathematical knowledge, so you don’t have to remember any first year calculus when flipping the pages. It reads quite well and there are a lot of stories to demonstrate the concepts presented. I will recommend this book.

Despite what you may hear in advertisements, there are only three providers of cell phone access in the country.

Telus and Bell operate a CDMA network. Since Telus controls the western part of the country and Bell controls the east, they signed an agreement to share access to their cell towers across the country and effectively they provide the same service no matter who you sign up with.

Rogers is the other provider – they operate a GSM network which is country-wide. Most people think Fido operates a GSM network, but Rogers took them over a few years ago and Fido is as much as a virtual network provider as Virgin Mobile is. A virtual network provider is a company that uses the physical infrastructure of another company, but sells it through their own name. Fido is 100% owned by Rogers (using the Rogers GSM network), while Virgin Mobile Canada is owned 51% by Virgin and 49% Bell Canada (using the Bell CDMA network).

When you compare cell phone packages between each of the providers, you notice that they are all frighteningly expensive compared to our US counterparts. Back when the cell networks were in the building stages, things were competitive, but that day has long since passed and has descended into the cash generation morass we see today. Due to the lack of competition, companies have been able to slowly whittle away benefits (e.g. “evenings” used to start at 5pm and now even go as far as 9pm for Bell).

The latest moves in the cell phone world has been Bell raising its “system access fee” (something which is not required by government regulation) from $7/mo to $9/mo which is an actual cost. I find it funny considering that you have all the providers advertising prices of $20/mo for cell phone services when after you add fees and other mandatory elements (such as voice mail and caller ID) that the total bill becomes somewhere closer to $40/mo.

It is obvious that these businesses are in a cash collection mode. Whenever there is a lack of market innovation and competition, prices tend to creep up until others jump into the market or the product in question becomes obsolete.

Providing that you don’t talk on your phone all that much, I’d still recommend the Fido or Virgin Mobile pre-paid plans. For example, right now Virgin Mobile is offering a 250-minute a month plan for $20/mo and they include voicemail and caller ID without a system access fee. This is a pretty decent package considering that the closest competition offers 200 minutes a month without voicemail and caller ID for $27.70/mo, or $36.70/mo if you wish to have voicemail and caller ID enabled.

Alternatively if you plan on using your phone less than 100 minutes a month, then Fido’s 20-cent a minute pre-paid plan seems to be a good option.

It’s interesting how each of these companies seems to have hit some sort of market niche of low volume and high volume callers, and also daytime vs. nighttime callers with respect to their pricing. It makes it very important to shop around for the best provider that will mirror whatever calling habits you may have.

On a side note, roaming in the USA is also ridiculously expensive on a Canadian cell phone – the cheapest option is $1.20 per minute to receive calls when in the USA. It is cheaper to buy a cell phone in the USA for US$19, get a free US$20 pre-paid card with the phone and talk for 18 cents a minute anywhere in the country (since their cell providers don’t care where you are calling or receiving calls, as long as it’s within the lower 48 states). Since such phones only cost US$60/year to keep active, if one frequently commutes to the USA, it’s probably worth it to keep such a phone specifically for using down there. For calls to Canada there are always phone cards, which can be used on cell phones.