Back From Vacation Tater’s Takes

July 5th, 2011 by Potato

Out on the Island there’s a minor fad in putting giant decorative stars on the sides of houses, and more recently butterflies/dragonflies. We asked around to try to see if there was a reason why people had these stars on their houses here, if it was some kind of local tradition, superstition, or signifier. It’s apparently a common question from tourists, and there’s no real answer. The stars don’t signify anything in particular (though one person suggested it may have started as an Acadian thing), they’re simply decorative. It’s just a fad that happens to have caught hold here, but not back in Ontario.

The vacation was very much needed. Very much. I didn’t take my full vacation in 2010, and the week I took off I didn’t go anywhere, so it was good to just get out and sit by the ocean and read some books completely for pleasure, as well as play through some video games and watch the Game of Thrones mini-series. I can’t say that I’m fully, completely de-stressed from the thesis/future career uncertainty stress, but I no longer find my heart seizes and jumps 3 inches higher in my chest every time my email goes “boo-woop.”

Even on my vacation I had a to-do list. Some of it was merely playful: the top few books/games I wanted to read/play through (Girl with the Dragon Tattoo, Leviathan/Behemoth, Portal 2, Assassin’s Creed), some of it was things to do out east (garlic fingers, biking, visiting relatives, and garlic fingers), and some was to be somewhat productive in a non-thesis related way (enter a short story competition, draft a few posts to have a backlog for when my time is precious for the thesis, write some cover letters). While I got through most of the reading/playing list (didn’t get to a few books or Assassin’s Creed), I didn’t even touch the writing part of the to-do list.

I’ve already burned through many of my reserve drafts, and that was with a nearly complete shut-down of posting while I was gone. I expect then that I’ll only post once or twice a week at most for the rest of the summer, unless someone says or does something stupid that I can’t resist commenting on. Oh please say something stupid! Anyway, this post will have to last you a while. Fortunately, it’s long. Also, the comments have been re-enabled now that I have a stable internet connection to clear out the spam folder every day or two.

Speaking of internet connection, tethering to my BlackBerry was reasonably useful. For most of the trip I could access the internet, and it was reasonably fast to load (often a long latency time before it started, then the page would snap in pretty quickly). But as the trip went on, it got more and more screwy: taking longer and longer to resolve DNS requests, and often failing at that. It would give me a message about a hardware error in the modem and disconnect (i.e.: lost connection between PC and BB). Then one night the internet just went dead completely, even on the handset itself, though the signal meter still showed one bar (down from 3/4). Then, mysteriously, my BB displayed the red message light on solidly and shut itself off. I thought it was dead, but it came back to life not too much afterwards and I could connect again with the handset, but with less luck on the PC. So except for those last few days, it did work quite well. Haven’t received the bill yet to say how much Bell ended up deciding to charge me for the tethering.

Book mini-reviews:

Spoiler warning start!

A Game of Thrones: A Song of Ice and Fire: Book One: A fantasy book, with undead creatures and dragons present in the universe, but not making much of an appearance, so mostly court intrigue and betrayal. Knights and war and honour and blood. A very large set of characters seemed really well laid out, with depth to every one. In particular though, George R. R. Martin has no qualms about who lives or dies, or where the plot may take us. He is ruthless, and I have to say I was genuinely surprised at the plot twists (last chance before spoiler-ville!): for most of the book he seemed to be building up the Dothraki threat, even giving Drogo a good reason to get good and mad and charge across the narrow sea. I was so sure that that was what the book was building towards… when all of a sudden he’s felled by a common infection. The HBO min-series was also great: very true to the book, and in the few places where it wasn’t, I thought the show offered some improvements. For example, Catelyn Stark wasn’t as mean to Jon Snow in the show, which made her more likeable off the bat, and I much preferred “white walkers” to “the Others”. Who uses such a vague term as “the others” for a menace? I hated it in Lost, too. Very well-cast all around, too.

If you’re a fan of fantasy, or even just fictional political intrigue (and can at least tolerate swords and a fictional medieval setting), then I recommend it. And I’m highly looking forward to finishing the rest of the series.

End of spoiler warning section!

Girl with the Dragon Tattoo: This has been a pretty popular book, with two movies made of it now (a Swedish-language one, and a Hollywood version). It’s a murder mystery thriller, and it was pretty good, though I’m not sure I’d have even bothered to write about it if it weren’t already popular (and perhaps sadly, it’s popularity means my opinion matters even less). There are definitely some points in the book where you can tell it’s a translation. My favourite was the “and he was up for the Big Journalism Prize” — presumably translated from a named Swedish prize that English readers wouldn’t recognize. But it does read well. I liked the main characters, and the suspense built, making it a real page-turner. However, it’s not for the faint of heart: the crimes involved are vicious and graphic. The sex scenes are plentiful, and the morals are loose. Indeed, if it weren’t for the fact that it was already an international bestseller with lots of publicity, I wouldn’t feel comfortable recommending it: though it was a good murder-mystery novel, it wasn’t spectacular enough for me to want to come out and recommend it in light of the subject matter. If you have a sensitive personality, you may want to give this one a pass, despite the hype.

[Note, the above links are to my affiliate link at Amazon, and at the moment, Game of Thrones is on a pretty good sale. I do get a small kick-back if you buy via that link, but it doesn’t affect my enthusiasm for the books.]

A site I hadn’t seen before, Metal Augmentor put up a thorough look into some of the background issues with Sino-Forest, including the confusing terminology. Indeed, quite aside from any fraud issues, MA points out that I made one of the mistakes mentioned, over-counting the amount of owned plantations (where seedlings are planted and money is made by patience and silviculture) based on the company’s confusing use of terminology.

I was just having an off-line discussion about the Sino-Forest issue, and how the MW report had at least a few mistakes, while the company’s response was lacklustre, so it was hard to say what the truth of the matter was. Though I had a passing interest in the many hunters of Chinese frauds, and had heard of MW before the scandal broke, MW wasn’t one of my most esteemed detectives. The person I was talking to was interested in making a small bet on SF, and I said that if one were in a gambling mood, perhaps this could be the one sketchy-looking company that was indeed real. But, I warned, while I might bet on MW getting this one wrong, I wouldn’t bet against Hempton. Wouldn’t you know it, the next bloody day Bronte Capital has weighed in on the side of shenanigans in a series of posts. John says:

“As for analysis of the accounts – the Sino Forest accounts contain enough red-flags to make any eagle-eyed observer cautious. I am sympathetic to making an investment without looking at the accounts at all because limited time and shortcuts often make that an efficient way of behaving. […] But if some analyst really did a detailed look at the accounts and did not spot the red-flags then they are incompetent. For that I have no sympathy at all.”

Well, I guess I have to publicly admit I’m incompetent. I’m an amateur and lack experience, granted. But before I bought I was looking (albeit with a much more limited time budget than a full-time professional fund manager) specifically for signs of fraud. I’ve been up on my game enough in the past to avoid a few doozies (though never gone short), and to follow along with the analysis of some other alleged frauds, but totally missed this one. Indeed, I still can’t see it as clearly in TRE as these guys allege. I’m merely confused, as I was before, which is how I ended up making an investment based on a weak heuristic.

This post also happens to come at basically the half-way point of the year, so I figure I’d update my spreadsheets and see how I was doing. I thought it would be absolutely dismal: I took a bath on Sino-Forest, and lost nearly as much on TEPCO. I’ve been holding Yellow Media since 2008, and it’s had yet another bad year — down some 60% (not including dividend). Was it really just a few months ago (when it was trading around $4.50) that I said you couldn’t get much more contrarian sentiment? Yikes. Though I mercifully kept my positions in TRE and TEPCO small, I can’t say the same for YLO, so I figured that those three big losers would pretty much sink me here.

Indeed, I did underperform my personal benchmark (50/50 TSX/S&P500) by a noticeable margin, but not as badly as I feared. I was saved by a few good moves: Canadian Helicopters was up ~50%, TD was up 10% YTD, and up 16% at one point (where I sold half so locked in some profit). A few other positions had modest returns, in particular Canexus and Veresen — though the moves weren’t big, the positions were (and I’ve since trimmed them both down, trying to not let any one position get over 10% of the portfolio). My Freddie Mac preferred shares are up nearly four-fold in the last six months, but since it began as a small position and was down 65% in the first place, that big percentage gain was small in absolute terms, and just barely balances one of the TRE/TEPCO losses. Overall I’m down less than 1%, compared to the TSX up about 1%, and the S&P500 up about 5% in CAD (I’ve estimated the dividend yield since I don’t know of a good site for total returns stats, though in the past I took the time to create a model portfolio with XIC & XSP). So a miss of about 3.5%. Not terrible for having made some truly godawful investment decisions recently, but not the kind of performance I can keep up if I’m going to continue attempting active management. Unfortunately I don’t see any catalysts for outperformance through the rest of the year, so I don’t think I’ll be making it up this year.

One thing I did do right was my rabbit analogy for the way the TFSA works. Someone even called it “perfect” in a recent CMF thread, which is a nice ego boost :)

Oh, and finally: I have a defense date! Just another month and a half, and I get to run the Gauntlet of Science and prove myself a true doctor. Or you know, fail miserably or whatever. Either way, it’ll be done before the end of August!

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