Blessed by the Potato

Behold bath toys:

On the right is the ducky I have (and let us not now get into the issue of why a grown man with a PhD has a rubber duckie of his very own). It is an “evil duckie”, yes, but it has been built from the traditional, recognizable form. On the left is a new duckie that Blueberry has.

I do not understand this duckie.

Frankly looking at this thing just freaks me out. It sits there on the bathroom counter at night, watching me brush my teeth.

The wrongness of it gets under my skin and gives me the willies. The strange spiral markings, the hyper-dilated pupils, the weirdly-shaped beak, the centre-line seam, and the tiny head positioned in the middle of its body, with just a bit of off-kilter attitude evokes a sense of being amongst the alien other that the red tint and horns of mine do not come close to doing. There is a part of me that does not want this evil thing to be anywhere near my child, though her abstract amoeba bath toy is totally cool with my subconscious as would be the red duckie with horns (which is supposed to evoke evil).

This is not the only toy of hers that I find to be creepy — just the other day I came home to find a creepy stuffed horse in my bed, and wondered if the baby mafia was out to get me — but this is the one that turns my stomach the most.

I’ve mentioned speculative holding before as something that underlies a bubble, but haven’t really gone into any depth on the subject. Basically, it’s a speculative behaviour that isn’t as obviously speculative as buying something purely in the hopes of future appreciation: instead you hold something you may have bought for other reasons on that hope.

One of the more typical examples is to hold on to an old property to rent out after you buy a new place to live in. The purchase you make at the time may not be speculative, but often the decision to hold on to excess property is — if you weren’t counting on large future gains, you would have sold off the old place, rather than take the risk and hassle of becoming a landlord.

Less obvious is buying preconstruction while owning. Even if you plan to sell as soon as the new place is finished, you have double the real estate exposure for the duration of the construction, which could be a few years. When people are advised not to time the market, that means they should be selling a their old place as soon as they buy a new one — even if the new one isn’t built yet — in order to limit risk. Many may chafe at that advice, in which case they shouldn’t speculate in the preconstruction market unless they have the capacity to take on the risk, and instead shop around for homes that are already built.

One of the more subtle effects on supply is the decision of whether to buy first and then sell, or go the other way around. Deciding to buy first then sell has a small effect on supply and is like a minor version of buying preconstruction (for a time you are exposed to double the risk). It is a small effect, and the market adapts to whatever way is accepted as the norm (or even some mixture of methods). But when the shift happens from one scheme to another en masse, it can sway the supply. Take the case where everyone considers that the way to transact in real estate is to buy your new place first, then go out and list the old one. If then everyone changes their mind, perhaps deciding that the market is softening and the old way was too risky, and sells first, it could shift months of inventory over all at once: suddenly new houses are coming on the market while inventory sits. If “the” way to transact is different in a “buyers’” market than in a “sellers’” market, then once the shift is proclaimed, it could lead to a short-term swing in inventory and put pressure on prices.

I think one of the largest effects of speculative holding is the shift that occurs in the supply curve under the influence of rising prices, the holding on in the face of steady price increases. Imagine if someone comes out of the blue and offers you $1M for the house you paid $500k for just a few years before. Many of you would be all over that deal, telling your neighbours about it who would rush out to list their houses and take advantage of the opportunity. You’d think the buyer was nuts and that it was a one-time, not-to-be-missed opportunity. Hey, you could go move to the next town over (where houses were still $500k) and practically retire on that kind of money. But if you got to the $1M offer via a succession of offers: one at $550k that you turned down, then again a bit later the buyer comes back to you offering $600k, then again a few months later with an offer of $650k… by the time you got to $1M in a few years, you would have been expecting that price, and possibly even projecting out to the $1.2M offer you were sure was in the works for you. The price itself was still just as insane, just as much of a windfall, but because of the path to get there you’re less likely to actually put your house on the market and take it. You were inoculated against the crazy, so it seemed right.

And finally, the incarnation of speculative holding that made me think to write this post: taking the house off the market for “when it recovers in the spring”. Sales in Toronto and Vancouver dropped double-digit percentages over the past year, to the lowest levels since the financial crisis. Prices barely budged, but were down a bit in many sectors. Thus it’s quite common to hear on the subway, in the restaurants, the newspaper articles and the chat boards that famous idea of trying to relist later when the market looks better. That is perhaps the baldest speculative holding of all: the person wants to sell, but will hold on in the hopes of higher prices later.

There is a legitimate reaction of fear and disgust when a dividend-paying company cuts their payout. The cut can often just be the first of a series, and after all, companies that are growing with steady profitability don’t need to cut so it must be a clear sign of trouble. However it’s far from a certain sign: sure, Priszm and Yellow Pages went through a series of cuts before becoming worthless, and investors who bailed at the first cut (or earlier) were in the right — there was not just one cockroach. On the other hand, many companies have a clear plan and future path to follow with a dividend cut, and an over-reaction to the news can be a great buying opportunity.

Superior Plus was recently featured in the Globe and Mail with a very bullish article, yet just after cutting their payout nobody loved it despite the attractive price (indeed, it’s almost doubled from that point). The business was not growing, but it was not crashing at the time of the cut, either. The problem had been too much debt taken on in the past, and no wiggle room with a 100% payout ratio to get it paid off. By slicing the dividend in half, SPB laid out a plan to start paying that debt off in a meaningful way. This was in my opinion the wiser use of their cash, especially given the interest rates they had to pay on the debt. It shouldn’t have been the first cut of many — just a one-off cut, that would likely last for five years or so before going back up. Investors liked the company at $10 before the cut, then even though the underlying business hadn’t changed, were only willing to pay $6 for it after the cut (and now, back to $12).

Similarly, HR.UN had to cut their dividend when capital markets froze up in 2008 and they were caught with their pants down and a half-finished building. They used the cashflow they would have given to unitholders to fund the construction, with a plan to reinstate the dividend at the conclusion of the project. Partly due to this, and partly due to general market uneasiness, there was a point at which you could have bought H&R for roughly a quarter of where it is today. Even if you factor in that the overall market was down roughly 50% at the time, H&R had shed an additional $3/unit. So there might be some value to looking into companies that have recently cut their dividends in case there is an over-correction in the price.

I think Extendicare might fall into this category now. I bought some a few months ago on the thesis that their payout ratio was near the edge: they had refinanced some debt into low-interest long-term form, which is good, but profitability concerns with Medicare cuts left them dancing around the 100% payout mark. I figured they could go either way on a cut, but it would likely be shallow (to get them down to an 80% payout ratio), and that the US and its insurers were likely done trying to squeeze care homes for additional savings. Now clearly I was wrong on the depth of the cut, and possibly on the rounds of cost-cutting coming to an end, but I don’t think this is just the first of many: in the conference call they say that basically they can now fund the payout entirely from the more stable Canadian operations. That should make EXE a pretty decent buy at these levels (<$6). I wouldn’t be too surprised if 2 years from now it’s back at $8 and that’s when all the bulls come out of the woodwork to exclaim in the press about what a great buy it is at that price.

Any other potential over-corrections to look into out there?

Ever since Blueberry started sleeping through the night, I have been the one on baby monitor duty. She’s a pretty good little sleeper — and so am I for that matter, so I can sleep through the little non-emergency noises that would otherwise wake Wayfare. Most of the time I’m only woken up by the false positives of the breathing monitor going off (which, now that’s she’s 1, I can’t wait to turn off).

Well this morning I had to get up earlier than normal, so Wayfare agreed to take the monitor from me whenever she got up to pee in the night. Normally I wouldn’t even hear her come in to get the monitor, but for whatever reason today I did wake up to the creak of a floorboard. And you now have to keep in mind that I’m more than a little bit sleep deprived.

I heard the floor creaking and got really freaked out, I was like “someone’s in my room” and then part of my inner monologue was like “it was probably Wayfare getting the monitor” and then I waited, heart pounding, for about a minute, and slowly,
s
l
o
o
o
o
w
l
y
reached my hand out to check if the monitor was there AND IT WAS GONE just LIKE I EXPECTED but somehow my brain only latched onto that first bit and for like 20 seconds I was all OMG someone is in the house and stole the monitor and they’re going to steal my baby and do I call 911 first or am I being crazy and I should just rush out and stop them and the police aren’t going to do anything and I don’t want to accidentally wake Blueberry up at this ungodly hour but I have to rescue her yet these guys are obviously pros and probably have guns with silencers I mean come on they snuck into my room to grab the monitor so the sensor pad wouldn’t go off when they snatched up my baby and seconds matter here get out of bed and… oh, right, Wayfare.

So I’m off to bed early tonight.

Here is a recent TED talk on philanthropy and advertising you should go watch.

This is an interesting perspective. As someone who is currently “overhead” I can, to a certain extent, agree. Besides my current day job, I also recently picked up an interesting freelance gig. A donor hired me to rewrite and revamp a fundraising brochure for a local hospital. Because I’m being paid directly by the philanthropist and not the foundation, my fees will not appear in their books as overhead, though I hope that the work that I’ve done indeed helps multiply the donations they eventually receive regardless. (You can see a PDF of the brochure here.)[Update: I did a second related one.]

To some extent there is a need for scale in philanthropy. A charity attempting to say fund research looking for a cure for cancer is not going to be able to make much of a dent with an annual budget of $100k — that’s barely one research grant (and even then the lab has to have some other source of core funding). It takes millions to be able to have enough to get together a panel of peer reviewers to examine grant proposals, or to buy expensive pieces of infrastructure such as PET scanners. And that takes some kind of investment to scale up — whether resources for advertising, or the volunteer effort to go viral on the internet.

But there’s a limit. At some point you could just be raising money to pay people to try to raise more money. In the talk he mentions that charitable giving has been stuck at 2% of GDP for decades. If there is some sort of mechanistic reason for that — it’s the amount people are capable of giving, or some sort of unconscious philanthropy budget in the population as a whole — then pushing for more overhead is just shifting the charity spending around, and in fact a net negative due to the overhead. It is possible that, by being able to tackle large challenges smaller organizations could not, we would be better off with one (or a few) massive billion-dollar charities spending a total of $240B than with a bunch of smaller million-dollar charities spending $275B with lower overhead costs. But if outcomes are directly related to dollars spent, more overhead would indeed simply mean more waste.

Consider a parallel with investing: you could pay a brilliant manager some percentage of your funds under management, and they might be able to beat the market for you. But there’s only so much return out there to be had: if everyone else hires an investment manager then everyone is on an even footing and is back to getting basically average returns… less the overhead to the managers.

There were three other points of his I want to discuss.

The first was on compensation. The big unanswered question for me was whether you would get value for that extra $300k spent on talent in his hypothetical. Perhaps everyone is better off if the MBAs pursue for-profit $400k salaries and donate $100k to the charity, who can then hire an $87k/year executive. If the charity tried to hire someone for $400k, would they get more than the ~$300k difference back in value? Charities, after all, don’t have all the things to manage that for-profit businesses do: maybe the extra money buys you advertising and capital markets experience, which you just don’t need as a non-profit. And why doesn’t that logic apply all down the chain? We pay grad students and post-docs a disgraceful pittance for trying to find the cures to our modern medical ailments, but brilliant technically-minded and driven people can make far more in the private sector. Would we have long since solved this pesky cancer problem if we were only willing to retain top talent in the research enterprise by setting post-doc starting salaries at $400k, and grad student stipends at $75k?

The second was on the whole comparison of the for-profit and not-for-profit sectors. You see, the two are very different fundamentally. When I give my money to Coca-Cola for a beverage, or to Amazon for a book, I am transacting with them for something. I don’t care how much they spend on overhead, because I am making my decision on whether or not to give them money based on what they are giving me in return at that moment. I need to only extend a small amount of trust to them (trust that Coca-Cola hasn’t diluted my Coke Zero, trust that my book from Amazon will arrive undamaged in a under a week), and I have recourse if my trust is violated: I can demand my money back, sue for breach of contract, etc. But once I send my money to them and receive my item, it is no longer my money. It’s their money, they can do with it as they wish.

Giving money to a charity is a completely different thing. I’m not getting a thing or a service, I’m giving my money to the charity to make the world a better place. I am trusting them to put my money to good use. Though the money is out of my hands and I have no recourse to get it back once I give, at no point do I consider it “their money” to do with as they please. Maybe they could give me a better “product” if they spent three times as much on overhead as I had reasonably expected — but that is a lot of trust for me to give. While only people donating staggering amounts of money expect to be able to direct their donations precisely, I still expect that, in general, my donation will be used for the stated purpose — ultimately mostly directed towards some kind of program spending rather than churning overhead or as risk capital. Their use and governance of the money will continue to be the concern of the donors, and so there is a very real reason for spending on overhead and risky activities to be perceived differently than in the for-profit sector.

In an analogy to investing, let’s say that there was a company that raised $100M in a stock offering to pursue a business idea. They went out the first few years and spent $90M of the money doing what had to be done (hiring people, renting office space, advertising etc.). After a few years of losing money they discover that the business model is just not viable. To continue is to throw good money after bad so they wind up operations. As a shareholder, through the first few years you would have been obliged to let management take the risk and pursue the business, spending your capital on whatever “overhead” was needed to do so. After it failed, you would expect that any residual money ($10M in this example) would be returned to you as the business was shuttered, and promptly. If they dragged their feet in the wind-up, paying salaries for years, burning through your capital with no purpose you would rightly be pissed at that loss.

In the not-for-profit sector, overhead spending that is going to have a multiplicative effect is difficult to discern from the telemarketer full employment program. How do you know whether you’re in the phase of risk capital spending that is pursuing the innovative business model with lots of potential, versus the phase that is basically the insiders stealing from the other contributors of capital? The risk-reward equation is not the same in the not-for-profit and for-profit examples, and the governance is different: profits are much easier to measure than “impact” or “do-goodery”. And as unethical and despicable as it was for the executives in the hypothetical example to burn the remaining shareholder capital after it was clear nothing would come from it, it is even more morally repugnant to live large off people’s charitable donations — hence the aversion to overhead spending.

And the last point I wanted to discuss was that of spending more overhead as a percentage to scale up. In the presentation he just kind of implicitly assumes that to scale up an organization might have to spend a larger percentage on overhead. But should this be so? Shouldn’t scaling up offer economies of scale? If instead of spending $100 to raise $1000 at a bake sale, a charity should spend $100M on organizers for a massive event and TV air time, then shouldn’t that investment be expected to pull in $1B for program spending, rather than just $250M as his 40% figure would indicate? Now again, maybe the efficiencies come on the spending side (perhaps spending $250M in one organized way with a unifying strategy does more cumulative good than spending $1B in separate $1M chunks).

So while I can see some of his points about needing large-scale charities to tackle large-scale problems, and that sometimes investments have to be made (to train people, to build infrastructure, etc.) and sometimes more overhead has to be spent (for strategy, for advertising), I do not fully agree. Sometimes overhead is just money not going to program spending, and I would hope that scaling up would bring about more efficiency rather than less. The not-for-profit and for-profit sectors are have larger fundamental differences than he suggests. And when you come right down to it, I want to be able to know that my charitable donation is going towards the stated purpose and not to the Canada Foundation for Telemarketer Employment. Maybe looking at the percentage of spending on overhead is not the best way to choose where to donate — perhaps we need some impossible measure of impact per dollar donated — but we will naturally gravitate towards metrics that are easily enumerated.

This has been a really weird spring. A week into April, and we still have hail and snow, including just this past Thursday. On that miserable morning, with the cold April wind blowing and the hail falling down, in the middle of rush hour the TTC decided to put a train out of service. At Davisville — one of only two outdoor stations on that line. In the hail.

WTF were they thinking? Unless the train is actually on fire, there is no reason for pulling it in the middle of rush hour halfway down the leg — take an extra 40 minutes to finish the loop and, if for some reason it must be pulled at Davisville, pull it on the northbound leg. Or given the weather, why could they not have limped one more station to the indoor St. Clair? It makes me wonder whether malevolent spirits haunt and possess the TTC, for that is the only explanation.

Then that same day on the way home, the train lost power at York Mills.

Including leap years, assuming my vacation days escalate with the corporate schedule, that there are 11 stat holidays in a year, that I will have on average 9 flex/lieu/sick days per year, and that I retire at 60, there are only 5699 more days to deal with rush hour on the TTC…

Cyprus has been in the news a lot lately for the seizing (”taxing”) of some assets. Some have questioned whether the same could happen here. The sad truth is that there is always the possibility of the government deciding to seize your assets; whether they’re insured or not, in a bank account, mutual fund, or real; through legislation, crooked courts, or by military force.

But it is not an event that happens often or lightly. In general, governments do not suddenly seize assets — that’s not what good governance is about. Of course, if the hole is big enough and the options limited (as in Cyprus) they may not have a choice, which gets into a moral lesson about not choosing “bread and circus” leaders.

There’s a slightly higher chance of loss with more “virtual” assets and those that can be divided for tax (e.g., the income trust Halloween massacre). But the government could decide to appropriate your house, eliminate your principal residence capital gains exemption, or tax your assets instead of just your income.

This knowledge may not help you sleep well tonight. Do remember that it is quite unlikely. Ideally, your government would be open and logical, so you could anticipate such moves (or rather, sleep soundly anticipating the lack of such moves). Of course, for the Harper government that was my big beef with the income trust fiasco — not that they decided to tax them, but that they broke an explicit promise not to do so, with no justification given. How were we to know what the next materially important decision would be? Ditto with strategically important takeovers — there was next to no way to anticipate what might or might not be allowed. In the depth of the US financial meltdown some (e.g. John Hempton) complained that the FDIC just stepped in and closed certain banks over the weekend, arbitrarily deciding to make bondholders whole while wiping out equity and preferred holders — though in a more controlled liquidation and wind-up, it’s likely that either the bondholders would take a haircut, or the preferred shareholders would be left with some value. The process is often just as important as the outcomes…

I’ve been saddened by a rash of product shutdowns by Google. Lately the announcement that Reader was being shut down is making waves, but that’s the third Google product I use that got shut down.

First there was Sync, which was awesome. It was a blackberry app that synced my contacts, some other crap, and importantly, my calendars with my BB. After shutting it off there is still a mechanism to sync the blackberry calendar and contacts list with Google’s — but it is far inferior. In particular, Google Sync was able to figure out that I can have more than one calendar in my account, whereas the crap I’m left with will only sync the main calendar, forcing me to manually sync up with my shared calendars.

Then iGoogle was given the kiss of death. It still operates, but constantly reminds me that it will be “sunsetting” soon. For those that didn’t try it, it was just a way to customize your Google homepage. You’d have your usual search box, and then boxes for RSS feeds or little widgets. It was basically what the Windows 8 start screen was except better and properly encapsulated in a web browser. And now, Reader will be going too.

The thing is, I don’t understand why they’re being killed off. Was Sync really so hard to maintain? Does syncing all my calendars through an app take up much more Google bandwidth than having my BB sync one?

We bought the Graco Snugride 35 carseat initially because all the safety research suggests that keeping kids rear-facing longer is safer. Rated up to 35 lbs, we figured that this car seat — though large and heavy — would keep Blueberry rear-facing until she was pretty much two years old. Though it’s large for an infant carrier, I was able to fit it in the Prius and still manage to get my seat to a decent position for driving (it’s about an inch further forward than I had it when I positioned my seat without any such constraints — not the most comfortable position but a workable compromise). Blueberry is very tall for her age (obviously a mix-up at the hospital), and though she still has over 10 lbs to go before hitting the weight limit she’s getting close to the maximum height for her infant seat. Time to move up.

So now we’re off shopping for convertible car seats, the next step up that can be either rear- or forward-facing. With these larger seats, it’s almost impossible to find ones that can fit behind a front seat well enough for me to drive or for Wayfare to comfortably sit. I’ve been checking various forums for tips and reviews and pictures of how they fit, and it seems like the two on our shortlist are the Britax Marathon/Boulevard or the Diono Radian. I’ll spare you my pro/con lists, coin-flipping, and hand-wringing on this decision (though feedback on those seats is welcome in the comments).

What really got me in our search was the oft-stated fact that carseats are improperly installed some huge portion of the time. I heard numbers ranging from 80% to 95% depending on the source, and it got me thinking: where does this bit of conventional wisdom come from? I’ll grant that installing the old-fashioned way with a seatbelt is difficult both in terms of skill and strength required, but I really had no issues with the LATCH install. After all, that’s what LATCH is supposed to help with. Plus, the epidemiology data all says that kids in car seats are safer, so either the install error-rate is over-stated, far more people are managing to get/pay for a professional installation, or seats are safe even if installed incorrectly. I started to wonder just how true this conventional wisdom was, or if perhaps this factiod had been invented by the stores offering a $25 installation service and picked up by the media, so I went off in search of a source.

There are some NHTSA reports that seem to be the origin of these figures. This one, for instance, gives a high error rate for installation, topping 95% for first-time installers, who in this study (or a similar one I just read) were recruited from a university’s volunteer pool (i.e.: first-year psych students giving their very minimum effort for $10 and a course credit).

The most common error is loose installation: a carseat, when properly installed, is supposed to be able to move less than an inch. Now, a carseat that can be wiggled an inch and a half is not meaningfully more dangerous than one that can only be wiggled an inch; likewise, the carrying handle for a removable carseat has a specified position for use in the car for each brand (and it is often different for each model) — though many first-time installers got it wrong, it’s also not usually critical. If they apply a severity score, then “only” about 30% of seats were incorrectly installed in a really bad way. The good news: the error rate drops in half once parents/caregivers who have carseat experience are tested, rather than novices. The bad news: that’s still a nearly 50% error rate. To pick out one more interesting factoid, there was a higher error rate for those who drove cars with leather seats.

I’m surprised that even digging into the data, the “legitimate” error rate still appears to be shockingly double-digits high. That really says that something needs to be done to make carseats easier to install safely. Some kind of standardization is most likely the answer: either continue with LATCH but standardize the connectors, or create a universal base that the manufacturer’s individual seats can clip into. Angle adjusters with a wide range of motion are also likely going to be needed — far too many official installation instructions include the use of towels or pool noodles (sold separately) to prop up one part of the base, which is frankly ridiculous. Many require a great deal of strength to tighten properly, or that the adult put their full weight on the seat to jam it down into position — a ratcheting belt-tightener would be a great feature on many of these seats.

As an aside (and not necessarily a product recommendation) this car seat is a neat one from a human factors point of view, with sensors and a display to help ensure correct installation. The video there is only about a minute long if you want to go have a watch.

My new computer arrived the other day, but I had to wait until the weekend to have time to set it up. Setting up a new computer has definitely gotten faster from the old days when you practically had to reinstall Windows to get rid of the bloatware. Nonetheless, it still takes hours to track down all the little programs I had installed, transfer files off my old hard drive (which yes, thankfully, was still working), and get going.

Anyway, I’m just about fully up and running again over here, now under Windows 8. So time for a quick review! I’m not going to get too far into Windows 8 just yet as I haven’t had much time to use it. In short, it’s fast yet annoying. In the desktop mode, Windows 8 is pretty much just Windows — it’s only under the tablet mode that it’s gone full retard, but aside from launching less-frequently-used programs, I have no reason to venture there. The default PDF viewer is an “app” and just really really dumb and bad, but there are a number of “desktop” programs that do the trick (including Acrobat). I’ve been hitting the web trying to find solutions to a number of things, only to find that there really isn’t a way to fix some stuff. For example, even with “small” icons, quick launch items will spread out and take up valuable taskbar inches, and it appears as though there is no way to make them cuddle up closer together actually this quick launch work-around does the trick, but still, why isn’t there a spacing option to avoid the work-around? It reminds me of Office 2007 and that idiotic “ribbon” — changing the default UI is fine, but leave me the option to make it work the way I want it to work. Also weird is that instead of “clicking” on something, the tooltips and prompts now suggest “tapping”. Further proof that Win 8 is a tablet product MS kludged onto a desktop.

One point in Win 8’s favour is that the confirmation dialog to delete things has gone away — the recycle bin is there for second-thoughts.

As for the XPS 8500 itself, there are a few things that really annoyed me before I even got to turning it on. The first is the video card: it has a DVI and HDMI connector. And that’s it. It came with a DVI to VGA adaptor (which I threw on the pile of the other 4 I have now), but not a HDMI to DVI adaptor. WTF, Dell? The Dell monitor I bought just a year ago was top-of-the-line, and didn’t have HDMI-in. Of the dozens of monitors in my home and lab, only one aside from the TV had HDMI-in. I can’t run dual monitors until I run out and buy a dongle (or downgrade to my old video card). HDMI is a nice feature if you want to use your computer on your TV (as a gaming system or home theatre PC), but two computer-monitor-friendly outputs should have been standard, with the HDMI as a third, particularly for the XPS line. At the very least, the appropriate HDMI-converting dongle should have been included. [Update: there is a bios option to use the the integrated VGA port to control a second monitor, strange because it beeped at me and refused to start when I tried that out of the box. I’m still going to have to buy the dongle though, as there’s a “wiggle-woggle” of scan lines on grey backgrounds with VGA — it’s not quite meant for 1650×1080 resolution.]

One thing I’ve been impressed with in the XPS line has been that extra bit of care Dell takes to neatly secure most of the wires, so you don’t open up your case to a rat’s nest. Unfortunately, they’ve gone too far this time: there aren’t enough expansion power cables to do much upgrading later on. Though the case has room for up to 5 drives, with 4 SATA heads, there are only two drive power cables. Now, they are the type that has a second SATA power connector located partway along the cable, so in theory you can power 4 drives from the two leads. In reality, the connectors are so close together that you can only power a pair of drives that are in adjacent bays. So if you want to put in a 3rd hard drive (as I was planning to do, and as the specs and reviews indicated I could), you have to put it up in the 5 & 1/4″ bay (somehow), buy an extension, or de-power the DVD drive. I do have a bunch of 4-pin-Molex-to-SATA power converters, but there aren’t even any old-fashioned 4-pin Molex power rails to use. I already thought that the case should have supported more hard drive slots (if I’m going to use 2-3, there’s almost certainly someone out there who wants 4 for a RAID array), but the power set up will really limit expandability, even if you get a PCI-e expansion SATA controller.

The keyboard is a “chicklet” style, which I associate with laptops rather than desktops. Pity, I rather liked the old Dell keyboards, and it was getting time to replace my old one, so I thought that was a benefit of buying vs building my own system. There’s no numlock key, which at first I found a little strange, until I realized that I never used my number pad for anything but entering numbers, and I only ever toggled numlock to make the light turn off. The insert/delete/home keys have been squished to make room for some media keys, including a mute button. Things that are missing and that I find weird in their absence are the little plastic tabs to adjust the angle of the keyboard. Instead, the keyboard features little rubber feet that help keep it from sliding around on my desk. Fortunately the keyboard is at a bit of an angle. That works for me — I always have the little feet fully extended — but I know a lot of people prefer a flatter keyboard.

The case itself is a fair bit smaller than I was expecting. It’s not quite a compact form factor, but it’s definitely smaller than my old desktop (which is “standard” ATX, with a total of 10 drive bays). It’s nicely optimized for living on the ground under my desk: the power button is on the top, along with the headphone jack and some USB ports, including one that can be used to charge devices even when the computer is off. There’s a little dip up there to help hold phones or MP3 players in place (and I’m sure one day soon, the cat).

What’s impressing me so far is how quiet it is. I think a lot of work in advancing computer technology in the past few years has gone into making them more power efficient, which reduces the cooling needs. My old system had six fans (plus the one on the video card), this one just two. I haven’t run a game on it yet, but with web surfing and installing programs it’s staying cool — my old system made my room noticeably warmer than the rest of the house.

Anyway, at least I’m up and running without data loss. I’m sure at some point soon I will join the chorus of old fogies ranting about the slew of minor changes in Windows 8 that herald the end of civilization as we know it.