Fucking YouTube...

God damn fucking YouTube!

Every once in a while I'll peruse YouTube's listing of popular videos so I can stay up on pop culture.  It's how I discovered Lady Gaga, at least.

But now I've discovered another artist.  Kesha.  And she's got a song called "Blah Blah Blah" which is really catchy.  It's got a great beat and you can dance to it, but the lyrics are about as insipid as you could get.  Worse, I'm sure that this is one of those artists that will be pushed onto the current generation of teens, and the subject matter just doesn't seem appropriate for the age group.  It makes me start to consider whether Idiocracy was an accurate prediction.

I just wish that stupid songs with even more stupid lyrics cold maybe not be so catchy, please?

What is a share of stock?

The answer to this question (what is a share of stock?) seems obvious to some, but isn't quite so obvious to others, so it's important to cover "the basics" here...

A share of stock represents limited ownership in a company.  Owners get to select the Board of Directors and, if the Board of Directors approves, share in profits.  Owners own the company's assets and are responsible for the company's liabilities.

Now... how much is a share of stock worth?  Theoretically, a share of stock is worth the present value of all future profit for the company at its point of liquidation divided by the number of shares outstanding.  Let me try to say that a little easier... over time, a company is expected to earn profit.  If you sum up all of the future profits and then extract from those values the expected inflation rate in order to state the value in present-day's terms, you calculate what the entire company is worth today.  Now divide that amount by the number of pieces that the company's ownership has been broken into (i.e. the number of shares of stock), and you get the value of a single share of stock.

An example...
Let's say that company A is going out of business today.  They have $2,000 in assets and $1,000 in liabilities, and they divided the company into 1,000 equal pieces ownership.  To calculate all future profit, subtract liabilities from assets (leaving $1,000) and divide that by the number of shares.  Each share should receive $1, meaning that each share is worth $1.

A more complicated example...
Company B is going out of business in exactly one year.  They have $5,000 in assets, $3,000 in liabilities, and they are expected to create and sell $20,000 worth of services over the next year, incurring expenses of $16,000.  During the next year, we also expect roughly 1% inflation, so if something is worth $1,000 in one year, it has an inherent value today of $990.10 today ($1,000 divided by 1.01).  So... in one year, the company will have $4,000 profit ($20,000 in revenue less $16,000 in expenses), increasing their assets to $9,000 ($5,000 today plus $4,000 next year).  Once they pay off their $3,000 loan they'll have $6,000 left over.  The $6,000 in one year is worth $5,940 today, so a share of stock is worth $5.94.

Now... different independent valuations of the same company can use a whole bunch of different underlying values.  Let's say that, in the above example, someone else thinks that the company is going to have a particularly good year and have revenues of $25,000 with expenses of $19,000.  Their valuation for the company would be that in one year they would have an $8,000 liquidation value, so today a share of stock would be worth $7.92.  That's quite a difference from $5.94, so the person who valued the company at $5.94 might be very willing to sell their shares of the stock for $6.50, and the person who valued the company at $7.92 might be very happy to buy a share at $6.50, so they might strike a deal, and that is precisely how the stock market works.

Something important to note, here.  Let's say that in the above example, the company was divided into 100 shares, not 1,000 shares.  That means that each share might have a price of $79.20 rather than $7.92.  While $79.20 is certainly a higher number than $7.92, the actual number provides absolutely no information about the worth of a company.  A company with a share price of $50 isn't necessarily more valuable than a company with a share price of $10.  A good example of this is to compare GOOG (Google) to MSFT (Microsoft).  Google's share price is about $484.50, and Microsoft's is about $25.00.  Does Google have 19.38 times the valuation of Microsoft?  No!!!  Google has been divided into 316,570,000 shares of stock, while Microsoft has been divided into 8,930,000,000 shares of stock.  That's right, Google's share of stock represents a much larger part of the company (28.2 times the size, to be exact).  So when we do the math, Google, as a whole, has a "market capitalization" of $484.50 * 316,570,000, or $153,378,165,000, while Microsoft's capitalization is $17.00 * 8,930,000,000, or $223,250,000,000, more than Google's valuation.  So clearly, the actual price of a stock isn't as relevant as how much that price changes on a day-to-day basis.

Selecting stocks...

Here's some information on my stock acquisition process.  It's not new info, but it's consolidated from several sources...

On selecting companies:
  • Select companies that make products you believe in, i.e. you would sorely miss if the company folded.
    • Many companies are conglomerates and produce a wide variety of products.  If you select a company based on a product, try to find out what percentage of that company's revenues come from the sales of that product.  If it's a small percentage, consider how you feel about the other products and their risks.
  • Do not invest in your employer.  If bad things happen to the company, you may lose your source of income _and_ your investments.
  • Try to keep diversified such that no more than 25% (an arbitrary number) of the value of your investments is invested in a particular industry or geographic location.  The geographic location is often overlooked: what would happen to your California investments after an earthquake?
  • Occasionally, select random companies that you've never heard of for further research.
On researching a company:
  • Read the company's financials.  What is their profit margin?  What is their return on assets?  How fast has their revenue been growing, and is that rate sustainable?  Are their current assets larger than their current liabilities?  Do they pay dividends?  Does anything odd jump out at you, like a particularly bad or good quarter?
  • Read the company's last few quarterly and annual reports.  Does management sound sane?  Have they identified anything that warrants special consideration?
  • Once you've found companies you like, do not buy the stocks.  Watch the stocks for a while.  Read their press releases and any news about them.  Get a feel for how the stock price fluctuates over time.
  • DO NOT follow your instincts.  Instead, let your instincts guide your research.
On buying stock:
  • Have a plan.  Know what price you want to buy the stock for and what price you want to sell the stock for (based on your research).
  • Figure out a total dollar amount you're willing to invest on the company.  Set aside that cash, but don't necessarily buy all your stock at once.  Do some staged buying, if the price drops a little.
  • At your target price, sell enough shares of stock to make up for your initial investment, transaction cost, and taxes, even if you think the stock is going to go up further.  Once you do this, the shares that remain invested are pure profit, and you can sell them later.  Even if they take a huge bath, you've made money.
  • Continue researching the stock, now that you own it.  If fundamentals start to change, systematically reconsider your target price.  Again, do not follow your instincts, but let your instincts guide your research.

Vacation: Day 6 - Hoover Dam and Happy Hour

Shaina and I awoke in Las Vegas and had a leisurely morning.  We left for the Hoover Dam mid-morning.  Took a _ton_ of photos of the new bridge arch, which was complete and suspended by only one cable which they were in the process of removing.  One side of the bridge had all the cables removed.  I think the bridge would have looked better with the temporary towers and suspension cables, but oh well.  It's just going to be an arch and a flat roadway, so when you drive over it you won't get to see much at all.

Shaina and I parked and walked across the dam, taking plenty of photos, still.  We then went back to get tickets for a tour.  I opted for the most expensive tour because it actually took us inside the dam.  While it was nifty to see, it was so short that it wasn't really worth it.  I'm not sure that the less-expensive tour, which just shows you the generator room, would be worthwhile, either.  Anyway, the Hoover Dam was impressive and neat to see, as was the bridge.

On the way back to Vegas, we stopped in Boulder City at their local brewery and enjoyed a pint.  They had some _tasty_ beer.

Back to the house to retrieve my computer, so I could share photos with Rich.  And then back out toward Henderson (Pecos Street) for happy hour at a local Mexican restaurant/bar ($2 margaritas) with more of Shaina's friends.  On the way, I grabbed a 20-inch eggplant parmesan sub from Carpiotti's, which I intended to enjoy on both Thursday and Friday.  Once happy hour ended there we walked across the parking lot to PJ's happy hour (half-priced drinks).  We had a mostly good time.  I did really well shooting pool until I sank the 8-ball while my sister wasn't watching.  I figured she'd notice eventually and she'd be happy she won and she'd continue to enjoy shooting pool against her brother, so I didn't tell her.  She found out when I scratched a few shots later, though, and she pulled the 8-ball as well.  We returned home and slept.

Is this thing on?!

Just curious... do people actually read in here anymore?  I know a few of you do (and if you post regularly in LJ, there's no need to reply to tell me that you are still active on LJ (jkusters, ysengring, ...).

If you do read here but don't post in here anymore, are you facebooking?  If so, do you have access to your history of updates or, if not, do you care?

Vacation: Day 5 - Bryce and Zion

**note** I'm still sorting photos from Zion - I took many, and am trying to select the few that exemplify my travel.  Check back here if you're interested in seeing them; I'll put up photos soon.

We awoke in the Best Western Bryce Canyon Grand hotel, a new hotel in Bryce Canyon City, a community which changed its name from Ruby's Inn in 2007, which explained why _finding_ the place was so challenging.  Anyway, once found, it was very comfortable.  I think Shaina and I slept well.  We got up for the hotel's complimentary breakfast (which was a good deal more than just a simple continental breakfast!) and then headed back to a different section of Bryce Canyon to hike.  It was supposed to be an easy hike, and I suppose that if we'd stuck to just that hike it would have been.  We headed back into a canyon with a running stream and found our destination, a mossy cave, however a beautiful waterfall, not on our trail, became a no-brainer to visit.  We climbed to the top of the waterfall, and then Rich and I noticed that there was a steep path up a hill to a "window" through the rocks, which I had to climb.  It was maybe another 50 or 100 feet up, so I took it slowly, and getting up wasn't much of a problem.  The problem was getting back down.  At one point, my legs slipped out from under me and I twisted back, stomach first, onto the path in order to prevent myself from going down the hill and off the cliff below on my butt.  I'd mis-estimated the danger of the slope pretty badly, but obviously figured out how to get back down in one piece (_slowly_).  There was just a bad patch of gravel where I just couldn't get a grab on anything that was firmly stuck to the hill.

And then we drove to Zion.  At first, I thought that we'd give Zion a pass considering the beauty of Bryce, but Lola had convinced us that she'd liked Zion more than Bryce so we should give it a look-see.  Wow.  I'm so glad we did!  Bryce _was_ spectacular, and Zion was a completely different kind of spectacular.  Driving into the canyon on Highway 9 through the tunnel was a winner.  Spectacular views above of rocks.  But then, once you're in the canyon... wow.  Surrounded by cliff faces between 1500 and 3000 feet above, in spectacular colors.  I was too tired to do more hiking in Zion, so we just took the shuttle loop up the canyon and back.  It was enough.  Zion is awe-inspiring.

The drive home was relatively uneventful.  The Virgin River Gorge isn't exciting after Zion.  We stopped in Mesquite, Nevada to find dinner, and I had some really crappy pasta alfredo which I cut with tomato sauce to improve.  And then back to Las Vegas to sleep.

Vacation: Day 4 - Bryce Canyon National Park

Woke up.  Got out of bed.  Dragged a comb across my head.

Okay, maybe no comb.  Anyway, we pack for an overnight trip and hop in the car to meet up with Lola and Rich (and his 42-foot RV) at a Denny's on the north side of Las Vegas.  Once together, we begin the caravan up I-15 through southern Nevada, into the canyonlands of Arizona.  I really hadn't expected that, by the way.  At one point in Arizona, there's a large cliff and the freeway appears to go straight into it (because you can't see that there's a canyon from the angle you're driving).
Sure enough, the 1600+ foot cliffs have a very narrow canyon to permit the Virgin River to pass.  Driving through the Virgin River Gorge was awe-inspiring, and, sadly, blew away any previous river gorge I'd seen (i.e. the Snake River in Idaho).
We continued up into Utah and drove to Bryce Canyon City to get situated at our hotel.
The hotel was hard to find because it and the name of the city are so new that they didn't appear on GPS.  Anyway, following this we entered the Bryce Canyon National Park (I bought my America the Beautiful pass for $80 (park entrance was $25 otherwise)) and hiked the Navajo Loop, a 1.3 mile loop through the Bryce Canyon hoodoos with a 550-foot de/ascent.  It was challenging; I didn't think I could make a hike like that...  I had to take it very slowly, but I managed.  I took about 200 photos during this hike.

Then back to the hotel for a swim and then a fajita dinner in the RV courtesy of Lola (and Rich?).  Then back to the hotel room for some sleep.

Vacation: Day 3 - Pahrump, Crystal, and Rhyolite

So we wake up, hop in the car, and head out to Pahrump, not having the slightest clue what's there.  Long before we get there, we are in awe of the beautiful geography/geology:
We decide to visit the Pahrump Valley Winery, Nevada's first winery.  It was both a pleasant surprise and a disappointment at the same time.  The surprise is that there were several wines that I really, really liked.  The disappointment is that the grapes were imported from other regions; I was really looking forward to trying some local grapes.  Seems that the local grapes are very difficult to keep, so they had a small quantity and made a very expensive bottle of wine from them.  Ah well.

Driving from Pahrump, we enter into a large valley with a few odd-looking hills.  I saw a possible road to one of them that was very rocky and fit probably for SUVs which I attempted and turned around after about a quarter-mile.  Fortunately, there was another road, paved, which existed as access to Crystal, NV.  Shaina and I parked and headed out to the hills.  We found tons of quartz on the ground, which typically indicates other minerals may be present, alas we found nothing of interest.  We continued up to the hill, and I continued up the hill, which was made entirely of rock that looked like this:
which is virtually identical to the rock I found outside of Zzyzx, excepting in grey rather than in a pale mineral.  Definitely volcanic, but I'm at a loss as to what it is.

Crystal, NV, happens to be home to several brothels, which we passed when turning around to continue on our trip.  We made our way to Highway 95 to head to Beatty/Rhyolite, and saw some ruins on the right, which we pulled off to see, driving up another rocky road.  I found ruins of an old mine and hosue, there:
From there, on to Beatty and south to Rhyolite, where we toured a large ghost town.  I climbed up to one of the hillside mines:
however I made that trek alone, due to the rattlesnake warnings:
even though I didn't see a single one.  I did see some other critters, though:
Following this, we headed back to Las Vegas for a lovely Thai dinner, and we slept quite well from the long day of driving and walking in the sun...