Monday, April 17, 2017

Movie log

This post will serve as a log of movies I saw and my rating of the movie.  I'll update it with movies old and new that I think are worth seeing.

Mainstream movies
Youtube movies

Sunday, April 16, 2017

Affordability and assets

A question that often comes in financial forums is the following:  Most affordability numbers are based on annual income, e.g. affordability for a house or car.  What happens if one has a large amount of assets, through a windfall or inheritance, but very little income?

Let's take a hypothetical example.  Someone is looking to buy a house that costs $200,000.  They have $500,000 in assets, but only make $50,000/year.  Can they afford the house?  On the one hand, they have cash to pay for it outright.  But then what about maintenance costs, property taxes, and insurance?  On the other hand, the income is too low by conservative standards because house price divided by the annual income is 4, which is much higher than the recommended 2.5 to 3 times.

A crude way to determine affordability is to look at the assets and see what kind of income it is capable of generating.  This part can be tricky depending on what type of investments one is considering.  As an example, one can use the rate of a 30 year treasury bond to determine how much income can be safely generated.  If we use 3% for that number, then $500,000 is expected to generate about $15,000 per year.  Add that to the original income and we get $65,000.  Now the price to income ratio is about 200,000/65,000 ~ 3.0.  This makes the house appear a lot more affordable.  On the other hand, if we use the current rate for a savings account which is about 1%, the investment would generate only $5,000 in income annually and would increase the original income amount to 55,000.  200,000/55,000 ~ 3.6 which is still a little high.

If one decides to purchase, whether one choose to finance the purchase or pay cash is a different matter than affordability.

Another related discussion that came up was the following.  If one has a portfolio of a certain size, then given that portfolio value fluctuates by 1% on a daily basis, does it mean that 1% of the portfolio is not a lot of money for that person?  Taking an example similar to the above one, if one has $500,000 invested and the portfolio fluctuates by $5000 routinely, does it mean that they person can spend $5,000 without thinking twice about affordability?

The best objective answer that I saw to that question was that daily fluctuations in portfolio should be 100 times larger than sustainable average daily spending.  In this case, that translates to an average daily spend of $50.  This would include meals and all regular daily spending.  Big ticket expenses are fine as long as they are occasional.

Saturday, April 15, 2017

BMWCCA Car Control Clinic

Last year in May, I attended a day-long BMWCCA Car Control Clinic held at Monterey Bay.  The CCC is an event that is geared toward teaching one about how to drive safely by understanding the capabilities of the car and vehicle dynamics such as weight transfer.  I have been to driving events before, but I thought this one was the most thorough.  One is required to take this class before being allowed to participate in higher speed events.  The cost of attending the CCC is very modest (< $100) since one is using one's own car and all of the instructors are unpaid volunteers.  It is a low speed event (max speed < 30 mph), so the wear and tear on the car is not too bad.

The event was held in the parking lot of the Marina airport which provided for a large open area.  We were told to push the car as hard as we could since the worst that would happen would be skidding out of control and hitting a cone.

The details of the exercises are described in this document.

It was raining most of the day of the event, and the even happens rain or shine.  The day started with an inspection of the car.  They didn't really do as detailed of a check as is described in the document.  What they did was a cursory check of the engine bay and then just asked about tire pressures.

Next, there was instruction about seating position (pedal reach, steering reach, seat height), position of the hands on the steering wheel and how to move the hands when turning, and adjusting mirrors.

We then had a bunch of exercises as described in the document above--braking, avoidance, skidpad, and slalom.  During the exercises, we were accompanied by one or more instructors that would make observations about our driving and coach us to do the right thing.  Despite prodding from the instructor, I didn't push the car hard enough to hit my personal limits, so I didn't hit any cones and I didn't skid out of control.

Wednesday, April 12, 2017

The United fiasco

It's everywhere so I might as well add my 2 cents.

United has had really bad customer service for a long time.  I wrote about that in my post here.  In this particular case, they crossed the line--getting law enforcement to throw someone off the plane instead of sufficiently incentivizing some of the passengers to voluntarily give up their seat.  And had the passenger not protested, but just deplaned silently as asked to, we would never have heard about this incident or how airlines routinely throw passengers off overbooked flights or how badly airlines in general, or United in particular, are treating their customers.

There was a time when airlines took pride in their hospitality but that time is long gone.  I'd be willing to wager, there are a bunch of senior level management folks sitting a meeting room at United's office talking about how to repair the airline's image at minimum cost, rather than actually talking about how to improve the customer experience.  The sad truth of the current economic environment is that most companies use marketing and PR to show they care when, in reality, they do not.

United got caught because they just happen to be at the absolute bottom with respect to customer service.  Most other airlines are only marginally better.

Tuesday, March 28, 2017

The art of bread making

This a video showing how bread is made in the traditional way sans yeast.  The video was made by a small baker called Artisan Lavinia in Oregon House, California.   

It is rarity to find such a process in use even among those selling so called gourmet products.  Some bakers that use a traditional process are featured in the WSJ article titled Can You Carbo-Load Your Way to Good Health?

Tuesday, March 7, 2017

How to die

A morbid topic, but I came across a discussion on bogleheads about how to die.  It posted a link to this article titled How Doctors Die.
It’s not a frequent topic of discussion, but doctors die, too. And they don’t die like the rest of us. What’s unusual about them is not how much treatment they get compared to most Americans, but how little. For all the time they spend fending off the deaths of others, they tend to be fairly serene when faced with death themselves. They know exactly what is going to happen, they know the choices, and they generally have access to any sort of medical care they could want. But they go gently.
It's a sobering article worth a read.

Closely related are Death with Dignity laws.  As of this writing, five states have laws for this -- California, Colorado, Oregon, Vermont, and Washington.