Friday, December 11, 2009

Taxes and the US Postal Service

It's December. And one of the times of the year when two government agencies particularly draw my ire. The US Postal Service and the IRS. It's a good thing Christmas is here this year so that I can have a breath of good cheer in the air.

With winter comes snow. With snow comes the drudgery of shoveling out the driveway. And as I found out the first year in Iowa, also making sure that the area in front of the mailbox is cleared. If not then I will undoubtedly get a nasty gram from the mailman telling me that I need to clear it or he won't deliver the mail. Now, mind you. I own my house (and the land that it is on). The city owns the sidewalk, but I am responsible for clearing it. The street/cul-de-sac that I live on is owned and maintained by the city. I don't even have a say in who does the plowing.

So, when the plow truck came by that first year and deposited three feet of snow and ice near the curb (in front of the mailbox), I get a nasty gram. After about the third time, I finally started snow blowing in front of the driveway and mailbox so that there was less stuff to be deposited. After reassessing the situation this year, I think I will just leave a nasty gram myself to the postman if he leaves one for me. "Dear sir, Thank you for your concern about getting my mail to me. However, if you leaf through it you will find over the course of a month there is only 1 or 2 letters that are actually worth opening. The rest goes in the recycle bin. So, please hold my mail until spring. I don't need it."

I am amazed that there is still individual house service by the US Post Office. Earlier this year when they knew they were going to be losing billions (again), there were whispers of maybe cutting service on Saturdays. However they weren't going to make a decision until the September board meeting, more than 6 months away. Doesn't that sort of defeat the purpose of whining about losing money if you aren't going to take any action for 6 months? So I came up with a plan if I was given control over the US Post Office to turn it around.

First, no service on Tuesday or Thursday. Also, I would cut service on every other Saturday. Postal workers would work 12 hour days on Monday, Wednesday, Friday, and every other Saturday. Second, no more individual mailboxes for each house. There would be a community mailbox area like I have seen in most new neighborhoods. My street has about 2o houses. These could be served by a single station with 20 boxes at the beginning of the street. I would be willing to bet that you could eliminate half of the delivery workforce just by doing this. Third, no more package delivery to the door. There could be a few large boxes at the community station for packages or they can be held at the post office. Fourth, rural delivery routes would occur once a week. No sense in wasting all that driving to deliver coupons from Bed Bath and Beyond (why don't they just lower all of their prices by 20% rather than sending me a coupon every single week?). Fifth, eliminate the franking privileges of elected officials. We pay them enough and provide enough for their office budgets that they can buy their own stamps. Some quick back of the hand calculations make me believe that these 5 suggestions would cut the postal expense by 75%. If you can't meet your budget after cutting 75% of your expenses, there is no help for you.

The US Postal Service is becoming an anachronism. Sure for 150 years, there was no other economical option to get documents from point A to point B if they were separated by more than 50 miles. However, there are several package/document companies that will do it for you now and overnight. Furthermore, if it weren't for monopolistic government regulations which require them (private companies) to charge more than the US Post Office, than their prices would be very competitive. Email and online bill pay has nearly eliminated the need to send checks through the mail. Frankly, the junk mail people are the only thing keeping the post office afloat. I send out more Christmas cards, than I do all other mail combined. And if there is ever a private company that will deliver them for 50 cents to a dollar a piece, I would use them. Even digital photography has made it so that you can share pictures with family without the mail. So, let's see if we can't get rid of the US Post Office in the next 25 years. Don't worry, private companies will come in to pick up the slack for less money, with better service, and faster.

So the next subject of my ire this time of year is the IRS (and subsequent state department of revenue). Every December, I do an estimate of my taxes to see how much I owe or how much I get back. This is so that my wife and I can budget out the next year. The last few years have been wacky, resulting in thousands of refunds. My work has always had a significant portion of my pay in the form of bonuses and overtime which is automatically withheld at 25% even though I claim enough deductions on my W-4 so that very little is taken out of my regular paycheck.

One of the results of the convoluted federal and state tax systems is that I have paid more SS tax than state income tax than federal income tax. In fact last year, once all of the credits were added in, I had zero federal income tax liability (Note: I am not foolish enough to believe that if I get a refund I don't pay taxes, what I am saying is that my federal refund was equal to or more than the total amount of federal income tax that was withheld). And I make a decent amount of money. The states that I have lived in that charge an income tax (Iowa, New York, South Carolina, Oklahoma) always seem to get more than enough. And while the federal return has enough deductions and credits to eliminate my tax liability, the states don't.

For instance, Iowa allows you a $40 tax credit for each person claimed on your taxes. $40! Compared to the federal child tax credit of $1000 + the $3650 per person exemption of income (which translates into $360 to $1200 of taxes depending on your marginal rate). The $40 is more like an insult than anything else. Why bother even giving it? Times like these, it makes moving back to Texas (with no income tax) look real promising!

The other thing I don't understand the logic for is underpayment penalties. Basically, both the state and federal systems are set up so that if you don't have enough withheld from your paycheck. In Iowa, the penalty is 5% of whatever your underpayment is. However, on the reverse side, if you overpay (i.e. get a refund) they don't tack interest on to it. So, the system forces you to overpay your taxes. Frankly, I'd be happier if we just had to write one check a year. So far our elected officials don't seem to care how much money comes in, they spend 10% to 50% more each year. Any complaint that the government wouldn't have a steady income flow is laughable.

Dividends are another big gripe. In case you didn't know, when a company reports earnings, that is the amount they are taxed on. To the tune of 35%. Then, the company pays out dividends (which have already been taxed at the corporate level), and the individual getting the dividends pays taxes on those (15% or 25% although for the next couple of years some of them are 0%). Double taxation at its finest.

I've blogged before about the federal budget. I support the Fair Tax. Is it perfect, no. But it is a heck of a lot better than the system we have. Now, I need to go look at some retirement properties in Texas, Washington, Alaska, Florida, Nevada, South Dakota, and Wyoming. I may work in an income tax state right now, but when I no longer am tied to a location for a job, you can bet I won't be living in a state where I have to pay income taxes.

Thursday, December 10, 2009

Firearms and the Medical Profession

In the last 10 years, there has been a small segment of the medical professional population that is pushing for more interaction with patients about firearms. I read an editorial here where a Physician's Assisstant makes a push for talking with patients about firearms. What ever happened to going to the doctor and discussing aches, pains, blood and sometimes snot or stool?

As the author correctly points out, firearms safety is not something that is covered in their training process. Here is a hint: it wasn't covered in my training process as an engineer either. I don't think teacher's go through it, neither do professional athletes (except the one's involved in the shooting sports). And I am perfectly OK with that. I want doctors and nurses to learn about aches, pains, blood, snot and stool. That is what they will deal with. Whether my pain comes from getting kicked by a horse or shooting a Mosin-Nagant 50 times in one hour is irrelevant. Just give me something to dull my senses!

So what do guns have to do with health anyway that we would want our doctors to ask us about them? Well, the author gives a few examples:

"Consider the child who plays with a loaded handgun that he found unsecured in his home" Well, storage of firearms is probably better talked about with a gun dealer or someone who sells safes. You know, the ones who actually know how to secure a firearm. Another good source of information might be your local Sheriff or District Attorney's office to find out what the laws in your area are. Do we expect physician's assisstants to tell us that we shouldn't leave matches where kids can get them?

"the intruder who wrests a loaded gun from a panicked homeowner's grasp in the middle of the night" Oh good, the straw man of someone taking the gun away. Could someone please explain how a doctor's advice (who knows far less about guns than I do) is going to help me out in this situation. It the intruder takes my gun and uses it against me I may (the author didn't like statistics so I am trying to contrain myself from using any) be dead/hurt, if I don't have a firearm the intruder may hurt/kill me anyway since he probably scoped me out and feels he has the advantage. So how is following this physician assisstant's advice any better?

"a gun-owning college student who is despondent over both a breakup with a girlfriend and his plummeting grades" I am guessing she is implying that the student goes on to commit suicide as opposed to his friend down the street who is in the exact same situation and decides not to kill himself because he doesn't have a gun. Its not like he was smart enough to use a knife, rope, pills, alcohol, car, bridge, or any other implement. Wouldn't a doctor be more concerned with the depression/suicidal thoughts and refer him to a psychologist? Furthermore, if the kid is anything like I was, he isn't going to see a doctor, nurse, or physician's assistant for all 4, 5, or 6 years that he is in college.

"the single mom who answers her doorbell, only to find her estranged husband standing there with a rifle—despite a restraining order that is supposed to keep him away." Wait a minute, we need our doctors and physician assistants to tell us that some people who shouldn't have guns get a hold of guns. What advice/counsel would they give to this single mom beforehand that would change this situation? Don't have guns in the home? That isn't the problem, the estranged husband with the rifle on the doorstep is!

After complaining about gun control arguments devolving into a "battle of statistics," she proceeds to use survey results (statistics) to show that there is some hope for this profession afterall. Even though supposedly a majority of people said they wanted doctors to counsel on gun safety (a majority of people also want free food and housing - it doesn't make it a good or practical idea), the vast majority of doctors do not provide any counseling on firearms - probably a major factor in that result is that they have not been trained on gun safety themselves. Perhaps the reason is since Galen, nobody has shown how firearms (or any weapon for that matter) directly (as opposed to someone else misusing it or intentionally using it for harm) affects one's health. When used as the manufacturer recommends, firearms do not harm any innocent party. The author trys to compare guns to smoking or drinking, except that smoking and drinking when used the way the manufacturer intend, do affect one's health. Guns in relation to the medical field are better compared to automobiles or baseball bats.

Then the author has this doozy of a statement: "A gun in the wrong hands at the wrong time or handled improperly can kill instantly." I happen to agree with it (and if you don't you are probably an imbecile). Of course if you change gun with any number of words I would still agree with it: car, bat, knife, lighter, glass window, cement block, bathtub, battery, etc. Do we need our doctors and physician assistant's to be trained in every method that can do us harm? Can you imagine going to your doctor's office and having a display of flyers with the following titles: "Gun Safety in the Home", "How to Properly Jumpstart Your Automobile", "Remember Icicle Safety while Shoveling Snow", "Have You Child-Proofed Your Sports Equipment?". If they need training on all of these (and countless other subjects), when are they going to have time to learn about aches, pains, blood, snot, and stool?

Then she has three rules to counsel patients with:
"(1) Remove guns from your home, or keep them unloaded and locked up, with ammunition stored separately." Besides the removing guns part this is sensible. Should we also remove other things from the home that result in more accidental deaths such as bathtubs, matches, and stairs (I really want to use some statistics from a source the author approves of, the CDC, but I'll restrain myself). Why we need a doctor to tell us this is beyond me. Any training class on firearms will say the same thing. Most of the literature that comes with a new firearm will also say the same thing.

"(2) Treat guns as if they were loaded and ready to fire." Alright, if you are going to rip-off Colonel Cooper's rules, then use all of them. The 4 Rules aren't there to pick and choose from. Slipping up on one is forgiveable.

"(3) Do not allow children access to guns. " Sort of like not letting children have access to birth control, matches, or car keys. This rule is complete bunk. Children should have access to guns, under the watchful care of an experienced adult family member. How else are they going to learn how to properly handle them. I learned the rules of the road long before I could drive. Making things taboo only invites curiosity.

So, if on the 1 occasion every 5 years I go to the doctor, I am ever asked about my firearms, my response will be, its none of your business. If the issue is pressed further, I will engage in a conversation (which includes statistics) about how firearms "affect" my health. Finally, if the doctor/physician's assistant presses further, my visit will end, and I'll find another doctor.

And I would hope that everyone does the same thing. I don't waste my time trying to diagnose my doctor's heart condition. Why should he waste his time (and mine) talking about firearm safety (unless he wants me to teach him, in which case the doctor's office isn't the proper locale, a range is)? If he did have a question about explosives or projectiles, I'd be more than happy to help him with it.

Sunday, December 6, 2009

Thanksgiving Weekend New Shooters

The Thanksgiving weekend brought me two opportunities to take new shooters out to the range; one expected, the other unexpected. Let me get in to a little background on training.

The first opportunity was my oldest daughter. I have promised all of my children that I would teach them how to shoot a gun once they were eight years old. I had planned on doing this at a range near our home sometime near Christmas, but since for Thanksgiving we decided to visit my brother and his in-laws own a bit of land, I decided to do it then.

Some quick background. I don't hide firearms from my children. They know I have them and I'll let them hold them (properly following the 4 Rules) whenever I get a new one or I'm cleaning them after a range trip. I do keep them where they cannot access them without my help. So, the initial training of my children started long ago. But this was the first range trip for my daughter. My brothers and I had set up some old hay bales and a table about 5 yards away facing a hill (always a good backstop). My daughter chose the target we would shoot at (paintballs), and I also set up a steel swinging target and an old shovel head that I brought down.

I made sure everything was set up before hand so that my wife and I could walk out with her (don't want to introduce her to the drudgery of setting up the shooting range just yet). We had a review of the 4 Safety Rules and discussed how we would follow them. Then it was time to break out the firearms (all .22LR). One at a time. We started with the revolver. I showed her how to check the cylinder and then load the rounds. I took one shot at the target, exploding a paintball. Then I let her have the chance. The hammer was difficult for her to cock back, although she was able to manage it. After firing the whole cylinder we unloaded the revolver, and went to look at the target. She had almost hit two paintballs.

We returned and I asked whether she wanted to do the revolver again or use Momma's gun (semiautomatic). She wanted to use Momma's gun. So we put the revolver away and got out the semiautomatic. I explained how the action worked briefly, and then we put two rounds in the magazine (one for me and one for her). I showed how to rack the slide and then took a shot. Then I handed the gun to her and she took her shot.

With the semiautomatic, she was much more successful and was able to hit three or four paintballs. She liked Momma's gun a lot and went through several magazines. The only thing she didn't like was the flying brass. Then I was ready for the rifle. I don't have a youth rifle yet, so I might have to get one. Even full sized .22LR rifles are huge for kids. Basically, we had it tucked under one arm and she was shooting it from a seated position. Getting a sight in the scope was difficult for her because she is right eye dominant, but can't close only her left eye very well (probably related to the surgery she had earlier this year). After a few shots she was rather frustrated so I let her shoot Momma's gun again. She did say that she likes the semiautomatic (not having to charge it each time) but doesn't like the flying brass. Anyone know of a brass catcher that works on a Walther P22? I might as well get the sound supressor for it too!

As I mentioned before, the second opportunity was unexpected. I have a relative (who will remain anonymous for this blog to protect her identity) that we will call Janet (again, not her real name). I had taught Janet's husband to shoot previously and they were both at Thanksgiving with us. After shooting clay pidgeons on Friday afternoon with Janet's husband, on Saturday morning I made the joke that she should come and watch us shoot clays that afternoon so that she could see her husband's skill or watch him get knocked on his backside with the double-barrelled 12 gauge.

Laughter all around, and then as people dispersed to go and do chores, she quietly came up to me and said "I'll go shooting with you for a little bit this afternoon." OK, that is a total shock! If you can ever imagine someone who you would think would never pick up a firearm, Janet is it. She grew up in a place and culture that views firearms as objects that only kill people. At lunch I casually mention to Janet's husband that I am going to go shooting with her after lunch. He looks at me and says, "You'll never get her to go shooting."

"I don't have to convince her, she asked me." A dumbfounded look crosses his face. A short while later, Janet's husband and I go out to set up the range. "I have one rule for you." I say to him.

"What's that?"

"Keep your mouth shut. I'm the instructor here and I don't want her having any distractions."

"No problem, I'll do whatever you say."

Janet came out a short while later and I asked her about her experience with firearms. She had shot a rifle once about 20 years or more ago. We started by going over the 4 Safety Rules. I showed her the application of each one (as with my daughter), including looking behind the backstop. I then had her repeat them to me.

We started off with the revolver. One cylinder of that and she was ready for the next firearm (why people don't like revolvers, I don't know, I think they are a blast!). The semi-automatic handgun was next. We were shooting at a swinging target from about 5 yards and she was able to hit it several times. Next we went to the rifle. I told her that she needed to aim about 1 inch higher with the scope since we were so close (5 yards). She was able to hit the target again.

Then we moved the table back to about 25 yards and had her take another 10 shots at the target, this time aiming for dead center. All shots were hits. After this I asked if you wanted to try anything in caliber's about .22LR? She was willing as long as the gun wasn't going to come back and smack her.

So I pulled out the 9mm and the Tokarov. I lined up the cartridges on the table so she could get a visual idea of how much more power each of these cartridges held. I explained where each one was used (US military, law enforcement and Eastern Bloc). I then shot the 9mm first so she could see the reaction of the firearm and the target. The swinger when hit with a .22 makes a plunk and moves slightly. With the 9mm, it swung a full circle. She then shot the firearm once. We repeated the process for the Tokarov.

Now that she had been introduced to handguns and rifle, I wanted to let her have a feel for a shotgun. I had a 20 gauge single shot that had a decent recoil pad (it was one of the ones I was using to shoot clays the day before). I set up a couple of water jugs and grabbed three rounds of bird shot. The picture below is the only one of her. She didn't want any pictures holding a gun. After emphasizing that she needed to hold the shotgun tight to her shoulder (unlike a .22LR rifle) I took aim at one of the water jugs and blasted it into oblivion.

She then took her chance with two shots and was finished for the day. She did comment to my wife that she could see how shooting guns could be enjoyable for some people. Is she going to go out and buy one, most likely not. But she was willing to go through the experience, and now if she is ever asked if she has shot a gun she'll be able to say yes. Handguns, rifles, and shotguns. Who knows, maybe the next time we get together she'll want to go shooting again.

Since there were plenty of water jugs left, Janet's husband, my brother (who was hosting the shindig) and I had to dispatch them. Janet's husband started complaining about the recoil after barely perforating a water jug with a couple of rounds of bird shot. So, I pulled out the slugs. Janet was still hanging around and basically I showed her that a slug was a giant bullet for a shotgun. Janet's husband was able to redeem himself by successfully exploding two water jugs. My brother also exploded some water jugs. During this I happened to glance at Janet and my wife and saw that a big smile crept onto her face as each jug exploded. Maybe that is what this world needs to solve more of our problems. We all go out onto the back 40 with our shotguns and explode water jugs. There is some primordial urge of everyone I've met to smile when they see some harmless everyday object, like a water jug, explode. It certainly brings me happiness. Remember, just because the plastic is shredded, doesn't mean it can't be recycled. In fact, they are going to shred the plastic anyway, so they should give you a bonus for turning in water jugs that look like this because you have saved them some money!!

Finally, I had to shoot the board of paintballs with birdshot to splatter most of them. Then, I shot the swinger with the slug. While the .22 made it go ping, and the 9mm and Tokarov made it do a flip, the 20 gauge slug turned it from a swinger, into a spinner.

Lessons learned:

1) Have a third person watch with new shooters and act as the "Safety Spotter." While you are concerned with a million things to make sure the outing goes well, it is always good to have someone catch (and correct) any violations of the 4 Safety Rules that you miss. The person doesn't have to be very experienced (my wife and Janet's husband worked fine), but they do need to know proper application of the rules.

2) Explaining a sight picture is a lot easier if you have a pencil and paper (or pre-printed pictures), I wish I had have had this.

3) Lots of varied targets are fun. Everyone likes to shoot at different things.

Thursday, November 19, 2009

Twilight Euphoria/Vomitting

My wife is going to go see the Twilight movie tonight with her friends. She never saw the first one or read the books. Neither have I. I found out about the Twilight series about a year ago when a friend of mine mentioned that he had read the books. He was a high school English teacher and likes to keep up with what his students read in their spare time. His opinion of it was that it was definitely something geared towards the teenage girl crowd.

This suprised me then when I read that Miley Cyrus doesn't like Twilight. She goes so far as to call it a "cult" or as one commentor mentioned, perhaps she means "occult." The word "cult" has been vastly overused and pretty much is meaningless other than as a derogatory. Going by Webster's definition you would find that you are probably a member of 2 or 3 cults. However, no one admits to belonging to a cult when asked. Some may say that they used to belong to a cult when they no longer like a certain group. So let's pretend she really meant occult. Which still means something.

Occult is derived from the latin root for hidden. It is usually associated with the paranormal or in the religious sense with satanic roots. Miley, being a professed Christian, understandably doesn't want to be associated with the satanic stuff. But to me, satanic stuff was things like Baphomet, or the Pentagram, or sacrificing goats. Vampires don't have anything to do with that. And if someone is going to say that Twilight is of the occult, where do we draw the line? I mean, Sesame Street has a vampire, The Count.

Vampires are not real. This is all just a fantasy story. Lara Croft isn't real either, neither is Luke Skywalker or Bilbo Baggins or Harry Potter. Yet all of them have had "cult" followings similar to Twilight. I know that Harry Potter has been accused of being occultish, but Hobbits and Jedi's and Angelina Jolie?

Vampires haven't even been around that long. It wasn't until Bram Stoker's "Dracula" that we get the modern incantation of vampires with the cape and fangs and crosses and garlic and wooden stakes and such. Naturally, being completely made up creatures everyone has their own version of it from Buffy the Vampire Slayer to the Munsters. Surely all of these can't be occult too?

So, maybe instead of trying to see the "evil" in everything, you should look at it for what it is. Its a love story written by a women for young girls who happen to like love stories. Besides, the author of the Twilight series is a self described devout Mormon, hardly the type of person who would be associated with the occult. Unless of course you belong to a church that believes everything from Jehovah Witnesses to Catholics are cults. But I digress. My guess, the movie would be incredibly boring for me, I really don't care for love stories. So perhaps if the cable channels were smart they would do this:

Let the theaters have their Twilight extravaganza. Let all the women of the world go to the theaters and be swept away by the romance. That will leave us guys at home to watch real vampire movies in peace. Dracula: Dead and Loving It, the Blade Series, Buffy the Vampire Slayer, Van Helsing. And lets not forget the greatest vampire movie of all time: Underworld. Vampires, werewolfs, guns, swords, other cool weaponry, explosions, and Kate Beckinsale in skin tight black leather.

UPDATE: Wife says the movie was very confusing and didn't make much sense (probably because she hasn't read the books or seen the first one). She did say that there was no need for Vampire-boy to take off his shirt, although she enjoyed the shirtless Wolf-boy. Now I don't feel guilty about the Kate Beckinsale comment.

Blood, Drugs, and Greed

Greed is considered a bad thing and in many cases is equated with capitalists like myself. Yet, it is that very greed that not only allows a home computer possible, but then also allows those who profited from it (i.e. Bill Gates) to dispense the largesse which they couldn't possibly spend themselves. One of the greatest philanthropists in the world, Andrew Carnegie became incredibly wealthy through steel, a product which has greatly enriched our lives. Acquiring wealth by force has never been a secure way to maintain it. Many of the rich nobles of the European middle ages and renaissance were actually deeply in debt to the bankers who financed their operations. The bankers were rich, the nobles just had the airs of wealth.

In spite of the proven track record that greed has in benefiting people, we still don't embrace it in many aspects of our lives. Drugs and blood are two areas where we just have not gotten it in this country.

The FDA regulates blood donations in this country. Blood can be donated by people, it cannot be sold. Is it any wonder that we have shortages all the time? Meanwhile, plasma (a component of blood), can be sold. I looked on line for stories of plasma shortages and the most recent one I found was from 1995. How much money can you get from plasma? Looking on the internet it appears that somewhere in the neighborhood of $20 to $35 per visit. And you can go twice a week, every week of the year. So between $2000 and $3600 per year. Suprisingly, prices have not gone up significantly over the last 20 years. So why not pay people for blood? What is the hangup we have in this country? Hospitals charge you somewhere in the neighborhood of $250 for a pint of blood that is used during surgery. So would the price of blood charged change if we started paying donors for the blood?

Not necessarily. The majority of blood is used in large urban centers. Unfortunately, these are also the places that have the lowest rates of donation. So, the urban centers have to buy their blood from an outlying area that takes in more blood than they need (you didn't think these non-profits would just give them the blood did you?) . In some cases, blood that is donated in Bismark, ND may be sold to Tulsa, OK and then to Memphis, TN, and then to Atlanta, GA, and finally provided to a hospital in Tallahassee, FL. Just like with any product, each stop gets an increase in price. So, if people were paid $50 (or $100) for a pint (which takes about 1 hour), there would be an increase in the supply of people. Whereas before, blood banks rely on people donating their blood (and time) out of their generosity, now, they can lure in the segment of population that is driven by a profit motive. Most people in this country don't make anywhere near $50 an hour, so in deciding whether to work a few extra hours or lie on a bed and read a book and get the same amount of money, I'll choose the lieing on the bed option.

Statistically, city dwellers are less generous monetarily than rural folks. That may be why cities take in less blood than they use. However, if now it wasn't a matter of generosity, but greed, cities which have a much higher percent of non-generous people than the rural areas will see an immediate increase in the amount of blood brought in. Hence, no need to buy from somewhere else. Which means that the four or five markups (from $50 to $200) is available to pay the people giving the blood.

Now, I wouldn't regulate the compensation at all. And what you would find is in less than six months, the market would be normalized. Sure AB- blood in New York City may command a premium of $200 to the person, while common types like A+ in Des Moines, IA were only paying $35. Shortages would vanish. Blood banks would get to become more choosy (thereby putting downward pressure on prices) because the number of people willing to sell their blood is much higher than those willing to donate their blood.

Does this work in real life? Yeah, there is no shortage of plasma. Another example would be sperm and eggs. You can get them in any variety you want, and the market has made it such that you can choose the socioecomomic background, intelligence, and athletic ability of the sperm or eggs. If the free market was allowed to control the blood supply, you would be able to choose to have blood that only came from non-smoker females who breast fed their kids if that is your desire. Government mandated generosity can't even keep up with the demand. We should be allowed to sell organs to. Since we don't there is and always will be a shortage. By the way, I still give blood, although it would be a lot easier to remember every two months if there was a financial incentive.

Drugs are another aspect that the government goes schizophrenic on. There are drugs that are herbs, non-drugs (alcohol, tobacco, caffiene, etc), good drugs (tylenol, advil, etc), strong good drugs (prescription drugs), and bad drugs (marijuana, cocaine, heroin, etc.).

Herbs are labeled as "food supplements" to avoid the regulation as a drug, but sold as "remedies" for all kinds of things that normally one would associate with good drugs. All said, the actual ingredients of herbs are rarely known or labeled and any doseage is unscientific at best - two plants growing next to each other could have drastically different levels of desired chemicals. The herbal market is big in the United States and periodically companies get in trouble when they cross the line between "food supplement" (little to no regulation) and good drugs (which require regulations that the herbal companies haven't met).

Non drugs are the most ridiculous things we have. They run the gamut of caffiene which isn't regulated and freely available to everyone, to alcohol which is restricted but still allowed to advertise, to tobacco which is legal to buy but has become a scarlet letter if you use it. Our country tried banning alcohol once, with disasterous results. We're slowly progressing to a tobacco ban (which guess what...will have disasterous results). We don't like to call these drugs because they are substances that millions of people use (and are dependent on) every day. It doesn't change the fact that they are indeed drugs.

Good drugs are here to stay. Although sometimes we get a little too hysterical when one of them (Sudafed) is used to make a bad drug (Methamphetamine). Then we start doing stupid things like writing down your name and address everytime you buy a box. Do we do that for all of the other ingredients needed to make Meth? No, just Sudafed. What irks me most about it is then they have to come out with pseudoephedrine free Sudafed. That stuff is another drug that doesn't work as well or last as long. Just let me buy the good drugs in peace so I don't have to let my nose run all over your store. Another part of where we get a little goofy is when we let the government say what is good for us. Claritin was a prescription drug that was moved to over the counter because it was so effective. Did it cut into the profits of the company that made it, you bet.

Finally there are the bad drugs. These are still used in research and even in medicine in controlled manners, but the government has decided that the average person should not get their hands on them. So we have a ban. And guess what, it isn't working out to well. You might even say that it is a disaster.

All things are subject to supply and demand. Bans merely exacerbate the problem on certain things. The first thing that bans do is attempt to limit the supply. Since demand hasn't decreased, prices go up. When prices go up, there is more potential for profit and all sorts of undesirable people get into the business. So the "businessmen" find ways to meet the demand. As with any business, disagreements will come up. In the legal business world, these would be solved through mediation and litigation processes. In the illegal world, those options are not available, so disputes are settled by coercion and force.

If drugs were legalized, the crime associated with them (between the gangs and cartels) would go down, because the profit margins would decrease since the costs of smuggling would no longer be part of the street price. Would there still be people robbing stores or breaking into homes to get their money for their fix? Of course, but it wouldn't be any more than it is now. We already have a 200 year history of regulation for alcohol and tobacco. We know that banning them doesn't work but actually creates more problems. So why do we do this with marijuana, cocaine, and heroin?

If you believe that making drugs legal would somehow cause a bunch of people to start using them, you're delusional. Prohibition did nothing to decrease the number of people drinking, it only changed the location where they obtained their alcohol and where they drank it. Repeal of prohibition did not increase the number of drinkers, they just did it in the open. The consequences of drug use are known. More people die from alcohol and tobacco than all of the other drugs (illegal and legal) combined. This is probably a result of the government trying to tell us that alcohol and tobacco are not as bad, so some people act stupid and use them to excess.

Let me make one thing clear. I think recreational use (and definitely unecessary dependent use) of any kind of drug (from caffiene on up to Meth) is stupid. I think the US is even more stupid for trying to blur the lines as to what drugs are OK and not OK. Its OK to ban heroin right now, because Sam Adams didn't cook some up in his home. Maybe instead of focusing on trying to limit the supply of some drugs (which isn't working), the US should focus on addiction recovery for those that want it for all drugs. In the end, you have to admit that there will always be some small segment of the population that are willing to destroy themselves to get a high. No amount of bans or legislation or intervention are going to prevent that. Greed won't allow it. (It also is the reason bans don't work for anything.)

Monday, November 9, 2009

Reactive Targets

Several months ago, I wrote a post on the different types of gun owners. One of the things I have never understood is how someone can go to the range, shoot 2-5 shots from one gun and then pack up and leave. What is even more baffling to me is the people who take 2-4 hours to do this. I usually judge how well a trip to the range went based on how much ammo I return home with. One or two boxes, that was a good trip. Four to ten boxes, it must have been busy and I wasn't able to do all of the shooting I wanted. Zero boxes means that I had a blast (pun very much intended). No one was there and I had no obligations at home that would make me need to leave before the ammo ran out.

Some may ask how much ammo I take to the range. Well, usually on the order of 500 to 2000 rounds. This is spread between as many as six different calibers depending on how many firearms I took. A few days ago when I went, I was trying out some various ideas for reactive targets. For those who get a thrill out of putting a little hole on two intersecting lines, I ain't one of you. Sure, when I have the patience to sit down and take my time, I can put holes in an 8 inch circle at 200 yards with iron sights. However, to me that isn't gratifying for more than about 5 minutes.

Now there is a myriad of reactive targets that one can buy. Tannerite being the foremost among them, however at $5-10 per shot, it can get a little pricey if you are trying to do it 500 times. Steel targets that are designed for target shooting (basically a thick steel plate) are fun as well and quite economical at around $20 per target. Being the frugal guy that I am, I like to find a variety of things that are enjoyable to shoot and cost effective. Looking at the list below, you might notice that anything with the possibility of an explosion (however small) is a good option for me. If you do want to delve into the world of explosive targets, please don't be stupid about it. Explosives can and will hurt you without taking a second thought. Start out with someone who knows what they are doing, as you gain experience then you can venture on your own. So, without further ado, here is the list of inexpensive reactive targets I have used along with my review of them. I included a video of several of them for your viewing pleasure.

Pots and Pans: Price - Free to $3-4. Good for about 100 shots. These are an excellent taget for any distance type of shooting. Try to find ones with a handle (to stick in the ground) and a shiny back side (which make them easier to see). At 100 yards the report is audible with hearing protection on - a nice THUNK! At 200 yards you have to be paying attention to hear it. At 300 yards, you probably won't be able to hear it. Since pans come in a variety of sizes, it is also nice to be able to know that you are shooting at a 6 in, 8 in, 10 in, or 12 in target. .22LR will easily go through most common pans (aluminum and stainless steel) even at 300 yards (so any centerfire will as well). Be sure to ask your wife or mother if it is OK to use the old pans, because if you are a halfway decent shot, they won't be good for cooking when you're done. Cast iron cookware can be used as well. Just don't use it up close (less than 10 yards) to avoid richochets.

Fruits and Vegetables: Price- Free to $5. Good for 1-100 shots depending on caliber and type. This tried and true standby is especially good with high powered hollow points (read rifle/hunting ammunition). The high water content should cause good expansion which tends to show the exploding effects. If kids are watching, be sure to match the caliber with the size of fruit or vegetable to give them the maximum show. Thin skinned apples are obliterated by anything over 9mm (use thick skinned oranges or grapefruits instead). Tomotoes are great for .22LR. Melons of most types are good sized for 7.62x39 through .30-06. Lettuce, cabbage, cauliflower, and brocoli just eat up bird shot. Some stores might be willing to sell (or give) you their old produce at a steep discount. I usually just use what we forgot to eat from the fridge.

Milk Jugs: Price - Free. Good for 1-100 shots. These are great when filled with colored water. Better still, if the range day is going to be, fill partway (2/3) with water and then put it opened in the freezer. Take it out when the temperature of the water is just above freezing and cap it immediately. As the air and water inside warm up, they will both expand, creating a low pressure target. The great thing about this is you can still recycle the jugs after blowing them apart. Who new being green could be so fun!

Cans: Price - Free. Good for 1-100 shots. This standby is invaluable. With BB guns, you can make a dent and not continuously punch holes through them. With a .22 you can see how good aim you are by slicing one in half. Then there is the setting cans up on a ledge/table and shooting them off cowboy style. Its plain to see why this cheap alternative has been a mainstay for plinking for more than a hundred years.

Phone Books: Price - Free. Good for 100-1000 shots (depending on if you mulch). Whenever you think there is not enough paper in the world, the phonebook company prints another one. Thousands of companies print catalogs that they will send you for free too! Paper is actually a pretty decent stopper of bullets compared to the price of the materials. The reason they don't make paper bullet resistant vests is because you still would need 7 inches of it. That being said, tape some of these big books together and you can trap all sorts of bullets. Frankly, it would make a great science experiment for a young shooter (if his or her school doesn't go ballistic about the proper handling and use of firearms). Close range with birdshot is also a great way to turn a phone book into confetti!

Shoes: Price - Free. Good for 100+ shots. Shoes wear out eventually. The nice thing about shooting them with larger caliber weapons is they will jump. Kids love to see shoes jump (especially with no one in them). Steel toed or shanked boots have the advantage of a muffled but still audible report.

Old office equipment: Price - Free. Good for 100+ shots. Had a bad day at the office? Is your company getting rid of an old fax machine? Go Office Space on it! Be sure to get permission from your company before taking the old office equipment. One thing you will quickly learn as you shoot up office equipment, Hollywood has no concept of ballistic penetration.

Balloons: Price - 2-3 cents. Good for 1 shot (unless you miss). Balloons are very versatile. You can shoot them plain. Shoot them with powdered substance inside. Shoot them with a liquid inside. Or shoot them with a flamable liquid inside and an ignition source nearby for great fireball creation. Balloons are very good for long distance shooting (300+ yards) - the colors will usually contrast with the surroundings, you can make them almost any size, and you definitely know when you have hit one.

Pressurized Bottles: Price - 1-25 cents. Good for 1 shot. No I do not mean propane cylinders. I am talking about plastic coke bottles which you pressurize with dry ice or baking soda and vinegar. The goal here is to get the bottle near the rupture point (50 psi - 250 psi depending on the thickness) and then hitting it with the bullet to make a nice report. I am still in the experimentation process of figuring the correct amounts of vinegar and baking soda (remember the goal is maximum pressure without it exploding prematurely) for various types of bottles. The fact that materials science keeps getting better (and bottles are made with less plastic) compounds the problem and makes me believe I'll be experimenting my whole life, which I am OK with.

Paintballs: Price 1-3 cents. Good for 1 shot. These are great for .22LR through a pistol or a rifle. They provide a small target (about 3/4") that leaves a satisfying mark when hit. The only problem I have is a quick way of attaching them to the target. Currently, I pull a line of tape and then put one on every 2 -3 inches as I apply the tape to the cardboard. I am open to any other quick methods of putting these up.

Shotgun Shells: Price - 20 cents. Good for 1 shot. I'm not sure why I hadn't thought of this sooner, but a friend told me about it a month ago and I had to try it. I used .22LR shooting at 12 gauge bird shot (no sense wasting the money for buck or slugs). I put the shotgun shells in three different setups: 1) through drywall, 2) through 2x4, and 3) implanted in 2x4 (i.e. no through hole). The drywall was nice, I was hoping for a bigger hole though. The 2x4 also was OK, I was still wanting more. The encased 2x4 was great! It splintered out the end of the wood. If you are going to try this, use a 3/4" spade bit to make your holes (at least 4 inches apart). Push (don't pound with a hammer) the shells into the hole. Keep the targets at least 25 yards away.

Muzzleloading caps: Price - 5-10 cents. Good for 1 shot. Think of these as a smaller, cheaper version of shotgun shells. The targets are now only 1/4" diameter at most. Which leads to my favorite idea so far...

Muzzleloading caps w/ black powder: Price - 5-10cents. Good for 1 shot. There is unlimited potential with these. How big of a blast is dependent on how deep and wide your hole is and how high you fill it with black powder. The large puff of smoke from ignition is unmistakable and seeing a sturdy 2x4 obliterated has a satisfaction all its own. I'll definitely try different shapes of combustion chambers and maybe add some fireworks chemicals in the future to create a pleasing display.

Sunday, November 1, 2009

The Great Halloween Candy Swap

Halloween has come and gone and in our house Operation Candy Swap was a rousing success. Let's start with some background information.

Candy is a child's delight. While each child has their favorites, they are usually willing to consume any kind of candy. However, as we reach adulthood, our preferences end up having more prejudice. My wife and I have moved in the same direction. It has to be chocolate. Sure when I was younger, I would do stupid things with my friends like suck on multiple Atomic Fire Balls or see how many Sour Patch Kids I could tolerate at once. Those days are long gone. Now when the candy urge hits me, I want chocolate, and Lifesavers just won't do.

My parent's didn't care for Halloween much and while we got to go Trick or Treating until 12, we didn't do that much and therefore, didn't have a whole ton of candy to show for it. This was also back when everyone was paranoid about razorblades in candy so you only went to people you knew. Myself, I am indifferent towards the holiday, if it didn't exist, my life wouldn't change much at all. However, this year, my wife hatched a plan to net up as much chocolate as possible for as little financial outlay to us.

Phase 1: We didn't buy any candy. This created a net expense of $0. But we still had to give out candy to the neighborhood kids. Which led us to ...

Phase 2: This past week we attended two halloween parties where our kids were showered with goodies. We didn't have to bring any because A) my wife made great costumes so we didn't guilt ourselves into bringing candy to make up for our lack of participation in the costume department and B) we were chasing our gaggle of children each night (which as you know each child has a mind of their own and rarely do the minds coincide to the point that they want to go in the same direction). At the Wednesday party, I spent half the time scanning the area looking for Barney the Purple Dinosaur (my youngest). Which was good since she kept her clothes on. On Monday, she kept taking them off. So by Saturday, we had a large bowlful of candy.

Phase 3: As mentioned before there are two types of Halloween candy. Good candy which consists of chocolate, baked goods, and licorice. And trash candy which consists of Smarties, Sweet Tarts, Jolly Ranchers, and Pixie Sticks (also known as crack in a tube for kids). I sorted the bowl of candy into the two categories. The good candy we would save and the trash candy we would give away.

Phase 4: You have to understand the neighborhood we live in. There are a lot of older couples who have grandkids and only three families with kids on our street. The next street over has only two families with kids. The couples are all really generous, perhaps to invoke the good karma so that their grandkids do well on Halloween night. As such, I have noticed that the caliber of candy given out has increased. For instance, if you know that your are going to only have 8-10 kids total come to your house, you might as well go all out and buy the full size candy bars. Likewise, even the fun size bars are more prevalent in our neighborhood and houses will give out two or three per trick or treater (making them in some instances MORE than a single full size candy bar). So my wife took our kids out to the streets to gather in as much chocolate as possible. They started early at 6pm so that they could be back in time for Phase 6.

Phase 5: I stayed home with the trash bowl of candy. Now, since Halloween is basically about extortion, I do have a little twinge of guilt about soaking the neighborhood to indulge my wife & I's chocolate cravings. But it is just a little twinge and easily assuaged. Since I know that there are only going to be 8-10 trick or treaters over the course of the night, and I don't want to have too much trash candy left over (usually it gets thrown away around February), so I give out big handfuls of candy. Now, I make sure the bowl is low enough so that the kids can see how generous (with free candy mind you) that I am being. The kids go away happy because my house gave them more than anyone else, I am happy because I got rid of the candy that wasn't going to get eaten anyway (yes, I let my kids eat candy, I just don't let them consume whole bagfuls in one sitting), the environment is better off since 5 lbs of candy will be in some kids stomachs rather than the landfill, the candy companies keep making money (which benefits me as well), my guilt is assuaged, and most importantly, dentists will have plenty of business for the next year. That is what I call a win-win-win-win-win-win-win situation. And now on to ....

Phase 6: Since my kids went out early, they are back by 8pm. This is a good thing, because the trash candy is running low from my generosity. My wife sits the kids down at the kitchen table to sort through the candy. Chocolate is saved and the kids are allowed to pick a few pieces of the trash candy to keep. The rest of the trash is used to replenish the bowl. And just in the nick of time. Naturally, as the night wears on I become more generous. When the last trick or treater came by at 9pm, I doubled the amount of candy he had in his helmet (he was a football player).

Phase 7: We netted around 30 pounds of chocolate. I divided this into 5 bags and labeled four of them January, March, May, and June. These we put in our freezer so that we don't just horde it all in one day. (I may still have to check periodically to make sure my wife isn't sneaking all of the Milky Ways).

So, we considered Halloween night a success. This strategy can only keep up for so long. I imagine over time some of the kids will tell their friends about the house that gives out handfuls of candy, which will increase the number of Trick or Treaters, therefore, economics dictates that the quality of candy will go down. Frankly, I give it 3-5 years before the neighborhood payout of trash candy exceeds the payout of good candy. In the meantime though, I'll milk it. If you do want to get a bunch of trash candy, come to my house on Halloween at around 9pm. And for those who think this was a well thought out plan hatched between my wife and I, you're wrong. It was more of a Friday night, Saturday morning type of thing where my wife mentioned that she didn't buy candy and just planned on giving out the candy from the parties. The hoarding of chocolate came naturally for both of us.

Friday, October 30, 2009

The House is Done!

Well, almost. I haven't remodeled the bathrooms and a couple of closets yet, but for all intents and purposes, my family's two year journey to remodel the house we bought. The major project this year was the exterior. Below is a photo taken shortly after we bought the home. The front had a combination of mottled brownish brick facade with gray wood shake siding. The sides and back were gray steel siding. One of the goals that we had were to make the siding all of one type. We also didn't like the color of the brick since it basically looked dirty all of the time. And gray always looks dirty, too!

The Preparation
Looking around our neighborhood, there aren't a lot of houses with contrasting colors. There is a blue house with white trim. A couple of yellow houses with red/maroon trim. And a white house with green trim. So, we wanted to definitely add some contrasting color. We chose white as our trim color (soffits, windows, etc.) and decided to do the outside corner siding pieces in white as well to help accent the house.

Next, we looked at some various colors of siding and chose one called Stone Clay. It is a muted brown to tan and helps match the brown earthy tones that permanate our neighborhood, without looking identical to them. We selected a 5 inch dutch lap profile to be distinct (no one else on the street has dutch lap although a couple of homes on the street behind us do).

Finally, the brick had to change. Masonry is an expensive job to replace. I thought of painting the brick to get it a different color. The issue was, I didn't want it to look painted. Which meant instead of using the spray gun and taking an hour to do all of the brick, each brick would have to be painted by hand in order to keep the mortar joints their natural color. After painting several hidden pieces of brick, we settled on a color Sienna Red. We thought the brick red color was a good contrast to the Stone Clay and White and would help to accentuate the house. Also, we planned on laying down a red mulch in the flower beds and get rid of the gravel covering. All of this was done by April of this year and the fun part really began.

At the beginning of the year, we had budgeted an amount to get the siding done. After talking with some neighbors on their homes, I figured that we could hire it out and come in about for what we budgeted. But, my wife and I aren't like that. We like to squeeze as much out of our budget as we can. So, I priced out the materials myself and came up with a figure that was about 1/3 of the budget. So we talked about it and decided to replace the windows as well. We would install everything ourselves, and the total cost left about 1/3 of the original budget for any contingencies. For anyone about to embark on a home remodeling project, contingencies ALWAYS happen. If you haven't put room in your budget for them, you are going to be hurting later. If you have, and the contingencies are not as large as expected, you can always buy guns and furniture.

After our trip to Disneyland in May, I started off by power washing the brick. It is important to wash brick before painting it since the paint helps to seal up pores and if there are bird droppings on it, then you have basically sealed these onto the brick. Depending on the type of bird droppings, there may be chemicals that combine with the paint or form on their own to eat away at the brick. Power washing is relatively easy and only took about 1 hour. The next part was letting the brick dry for about 3 days. We had a good stretch of sunny weather to help us out. You want the brick dry so that excess moisture isn't trapped underneath the paint. This could surface later and bubble up the paint.

By Memorial Day, I was ready to paint. I started with the far left section of the garage and painted all of the brick. Going on wet, the paint looked like a satiny pink (it was suppose to be a flat Siena Red). After that section was done, I called my wife out and had her look at it from the street. She looked hesitant, and I said "I know the wet stuff looks pink, but when it dries and the sun dulls it out, it will look red."

"OK, I trust you."

"If you want to change the color, now is the time to do it, since I calculated it is going to take me 20+ hours to paint it brick by brick. "

"No, go on."

And I did. I worked on it about 2 hours a day when I could and was done before the end of June. A couple things to keep in mind. I didn't paint it in the direct sun. I wanted it to dry in the shade. So on sunny days, I would paint sections in the morning and then other sections on the other side of the house creating a jigsaw pattern of "new" brick and the old brick. Also, I didn't paint when it was raining or threatening to rain. During this time, I only had one major mishap when my youngest daughter found the unattended paint can. It was in an out of the way place, and unless you know to look you probably won't find it.

The advantage to painting so early in the process is I didn't have to be careful around the old siding. It was all going away. I did have to watch myself around the garage door and the front door since they were keeping their white trim.

Tear Down
After the paint was all done, the fun part of tearing off the old siding began. Originally, my plan was to tear off one side at a time and then put the new siding up and then go on to the next side. In practice, after tearing off one whole side of the house, I realized, it would be easier to just tear it all off. Metal siding is really easy to tear off if you don't plan on reusing it. Just get it started and pull. About the only thing you have to worry about is the sharp edges. Originally, I wasn't planning on replacing all of the soffit trim, however because of the way the siding was installed, I had to. So contingency #1 came into play (good thing we had room in the budget).

Underneath the siding was 1/8" rigid foam board. This stuff is good for insulation. although, 1/8" doesn't really provide much. Under the insulation was the bare walls of the house. Our house was built 30 years ago and the walls were made of compressed fiber board. Basically a non structural material that wouldn't hold the unless you actually hid studs. All of the homes I have helped build have had oriented strand board (OSB) or plywood walls. I decided to staple on 1/4" OSB over the entire house so that I had a decent solid nailing surface. While putting up the sheets, I made sure that I was nailing it through the fiber board into the wall studs. It wouldn't be good to have a huge section of the wall just fall off.

While tearing off the siding and insulation on one side of the house, I found where someone had been really creative before. At one point in time, there was a slight overhang of the attic portion (about 3") from the lower wall. Whenever they had put the steel siding on, they decided to make this all one plane. So they built up the wall by adding 2x6s (1-1/2 inch thick) and cutting off the sheathing from the attic portion (about 1" thick). This left the only thing keeping the blown in insulation in the attic on this portion of the house being the 1/8" rigid foam insulation that I had just torn off. Needless to say, that was a long Saturday as I had to tear the siding off and then re-sheath that wall in one day, by myself.

Residing Fun
Once all of the siding was off, I piled it up in the backyard. Eventually, I took the old windows to the dump (cost $30) and the old siding to the recycle yard (value $70). Just a quick fact, there was approximately 1300 pounds of siding on my house. After replacing all of the windows and resheathing the house, I put house wrap all around. Housewrap wasn't even required by the building codes until about 10 years ago. The stuff is great. The day after I got the house wrapped we had some decent rainstorms. I was pleased.

With the house wrapped it was time to start the siding. I had left the old starter strips on two adjacent walls after checking to see that it was level along the length. After all of the prep and trim is done, siding goes up very quickly. I had three friends help on a couple of days, but the majority of the house was done solo. For many of the upper pieces, this required some skillful balancing so that I could get the pieces in.

Since I had never hung siding before, I started at the back of the house and worked my way around, that way, I would be able to make all of my mistakes where fewer people see them. I didn't make many mistakes (that I can tell, I'm sure a professional would be able to point out a plethora). I miscut only two large pieces of siding, but was able to use the cut pieces for other places. A hacksaw and a utility knife were all that was needed.

Besides several smashed thumbs (it happens from all of the pounding), I didn't injure myself until I was almost completed. I had four pieces left to cut and was working on the roof in some hard to reach places. I decided to cut a piece in place rather than taking it down to my work bench. Mistake, I slipped with the knife and sliced my index finger, right to the bone. It bled an awful lot and I am sure my roof and front porch looked like a crime scene for a while. I momentarily debated jumping off the roof to the ground (about 12 feet) to save time, but decided it wouldn't be good if I broke a leg since I had already lost one bet with luck.

One of the nice things about getting cut with razor sharp knifes is that the cut is clean, no ragged edges, so it was easy to hold the thing together and wrap some gauze and tape around it. If I had have been in the middle of the project, I would have stopped for the night. However, I pressed on, which reopened the wound and as I was putting the last pieces up, there was blood streaming down my arm (I made sure I wiped it off of the new siding). The only thing left to do on the outside is remove the old chimney, but I'll wait 5 years until I need to replace the roof.

I finished up the soffits over the next two weeks and this is what my house looks like now:

At the beginning of the project, I was going to the range regularly with my wife and friends. After taking my kid brother to the range for his first time in July, I decided to wait until I finished to go again. Sort of like a reward. So, that is the story of my house for now. I have to go load magazines!

Wednesday, October 14, 2009

When ROI Really Isn't ROI

Return on Investment (ROI). It is a rather important number to know, especially if you want to make a good financial decision. Unfortunately, to the novice investor, ROI isn't really ROI. I have been following the stock market and learning about investing since I was in the 4th grade. When I was in high school and college, the dawn of day trading occurred. (Actually, it has always been around but with the internet and low cost online brokerage firms, day trading became something that the "average" investor could participate in). I have always been a buy and hold kind of person. I'll have some funds available for short term trading if I see an opportunity that presents itself, but, 90%+ of my investment funds are for the long haul. Short term trading strategies (i.e. <90 align="left">

First thing that you should understand is where the owners/operators/inventors of these systems get their money. They do not get their money from actually trading with their systems, they get their money from selling you the system. Now, there is nothing inherently wrong with this. You just need to realize that while the creator of a certain system may boast of the great returns that are possible, it doesn't mean that he is willing to put his own money on the line. STS (again not the real name) sells for $350 to 600 per year depending on how long of a contract you buy. Judging by the website and having run a web business before, I would say that STS could get by with 3 people working full time. If they had 5000 paying customers, the company would gross at least $1.75 million. Assuming company expenses of $250K (this is just a computer program in the end), it would leave about half a million dollars for each of the 3 people. Not a bad salary at all, and that is without actually making a single trade. Don't you love capitalism?!!

Like I said before STS has done a far better job of providing their potential customers the resources to evaluate their system than most people. Which brings us to the next step. Investing in any system has to beat the market average, or else you are just wasting your time. I happen to use the S&P 500 as my benchmark. Any day the markets are open I can buy or sell S&P Depository Receipts (SPY) which is an exchange traded fund that tracks the S&P 500 index. Therefore, any system has to advertise that it beats the market average. STS does this and boasts a 36% annual rate of return (using their data I calculated 31%) while the S&P over the same period had a 4.0% annual rate of return.

After seeing that they boast a return that beats the average, I look to see if they have a substantial track record. STS has a 14 year history (which coincides with the beginning of the tech bubble in the late 90s). Any system (or mutual fund) should have at least a 10 year history to be properly analyzed. The longer the better. This allows one to look back and see how the system did in both good times and bad. If you are a novice, only look at systems that have more than a 10 year track record.

The last step before looking further is to see the year by year performance. While you know that the average annual return is beating the market, what you need to do now is see how year by year it compares. I like to look at this as an honesty check. No one can beat the market all of the time. So, I am looking to see that in a few years, the return was negative and in a few years, the system didn't beat the market. I would be very suspicious of any system that never had a down year or always beat the market. Madoff did that and his investors were happy taking their checks to the bank. Until it all came to light that there was no investments. It is possible that there is a system that always wins. But why risk it? STS had 2 years with negative returns and 2 years with underperforming the market. So from this angle it looks legitimate enough to examine further.

To continue on with any analysis, the system will have to provide you with a history of trades (either actual or recommended). STS has tens of thousands of recommendations in its history and operates on the basis of buying and selling at the market open. I took a random sample of their trades to make sure that the prices matched the historical values. No discrepancies. Another positive thing that I noticed is that all of the trades were from companies on the two big exchanges NYSE and NASDAQ. Several trading systems rely on over-the-counter and penny stocks and are really just a place to gamble your money away.

So, my initial impressions of STS are that they definitely believe in their system and are willing to provide the trade information to back it up. Now, that doesn't mean I'm recommending it, just that I haven't thrown it in the trash yet. I downloaded all of the reccommendations and went through the STS website to re-calculate all of the numbers that I could. I came up with similar numbers to what they had, so I will use the numbers I calculated in my spreadsheet from now on. ROI is the percent return on a given investment. If I invest $100 and sell it for $110, then my ROI is 10%. This is from the following formula:
100 * (Final-Initial)/Initial
However, when calculating the ROI for a series of stock trades, one has to find the return for each trade ( (Sell -Buy)/Buy) and then average all of those trades. For STS, I found it to be 0.86% per trade. Now in order to compare this to the return of the S&P 500 (4% per year over the lifetime of the STS system), I also calculated the average length of time a trade was open (8.2 days). Dividing 365 days (1 year) by 8.2 and then multiplying by 0.86% I get 31%. So in the end, 0.86% per trade may sound small, but since each trade occurs over a period of just 8 days, it adds up.

This is where the analysis comes of with some problems. First, the ROI is based on the opening and closing prices only. However, there are two major expenses to consider when trading short term: commissions and taxes. A commission is paid each time a stock is bought or sold. If all of the STS reccommendations were acted on, over a 14 year period, with a $10 commission, an investor would have paid $220K to his broker. This should be the first clue that this system is geared towards investors with several hundreds of thousands of dollars to invest.

Second, I did an analysis of the number of positions that were open at any one time, I found that a maximum of 501 positions were open at one time. This would indicate that even with a nominal investment of $1000 for each reccommendation, one would need at least $500,000 to be able to use this system. So I went back to the website to see if these issues were addressed.

In the question and answer section, the creator of the system addresses commissions in the first question. Basically, he says that you are trying to minimize the percentage of the trade that is paid in commission - this is good advice. Unfortunately, for the small time investor, this means increasing the amount invested on each trade. STS recommends at least $8000 per trade. (So to cover the maximum of 501 open positions, one would have to have $4 million to use). I found this odd, since in the statement above he says that you could profitably participate with as little as $10000.

The total open positions issue is addressed in another question. STS acknowledges that to exactly match the ROI, one would have to put equal amounts of money in every recommendation. They also acknowledge that this isn't practical since in some cases you would have to have millions of dollars in your account (which is what I showed above). So, they say you should develop your own strategy based on their recommendations to approximate the ROI. Alright, this is starting to sound like the "system" doesn't work. In other words, their system will shrink my possibilities each day from 5000 down to 2-100. It is then my responsibility to come up with my own system to select from their system. Well, I'll continue and see how it goes.

So, how much of that 31% return does the commission eat up? Well, it all depends on how high of a commission your broker has, and how much you are investing in each buy. But in short, it can eat up all of your money when you are constantly trading (as the STS system advocates). Additionally, unless you are trading in a tax advantaged account (IRA, 401K, etc), you are going to end up paying a portion of your earnings in taxes (the higher the return, the more in taxes you will pay). Based on the average return per trade, I calculated what the minimum amount one would have to invest in each trade to match the S&P 500 return (afterall, if you can't beat the S&P 500, you are better off just buying an index fund or ETF and then spending your time doing something else).

In a nutshell, if your discount broker charges you $7.50 per trade, then to just match the S&P500 return using the STS system, you would need to invest $2000 in every recommendation. If you factor in a 35% tax bracket for short term gains, then the minimum amount increases to $2150 per recommendation. (In order to get the 31% ROI, you would need to be investing at least $200,000 per trade). Since the maximum number of positions held at one time is 501, you would need $950,000 (or probably $700,000 in a margin account) to buy each of the recommendations. This is not something for the small time investor. Furthermore, making 1100+ trades a year does take time, and that is only to match the S&P 500.

So while the 31% (by my calculation - 36% by their's) ROI sounds good, it looks like those with $1 million will only be able to get 1/10 of that amount. But, even that isn't true. It all has to do with how the ROI is calculated. With the S&P 500, if I have $1 million to invest, buy it and hold it for 14 years, I will average 4% per year. In other words, at the end of 14 years, I would have $1.73 million. However, using the STS system, if I dedicated $1 million and bought $2000 of each reccomendation for 14 years, I would only have $1.035 million at the end of 14 years for an average annual return of 0.26% - less than 1/100 of the 31% nominal ROI. Why? Because with the S&P500, my money is fully invested the entire time, so all of the money is constantly growing. With the STS system, only a portion of my money is invested at any one time (although the entire amount is needed for the few times when 500 positions are open). I did an analysis and found that 75% of the time, less than 20% of the $1 million is actually invested.

Well, why not divide the extra amongst the stocks that are owned? That would increase commisions as portions of the stock would need to be sold to invest in new recommendations. What about investing the money in a money market? Well, most brokerage accounts do this, and those money markets have a return of 0.5-2%. Granted this would increase your overall ROI (of the entire $1 million) from 0.26% to 1.8% (assuming a 2% money market), but if your money market account is making more than the STS system, why not just invest in that. And therein lies the problem with almost every stock trading system. The ROI boasted about is based on hypothetical accounts and only considers the amount actually invested in the stock picks, they do not reflect how a real investment account would operate.

The question and answer section glosses over this issue indirectly. One question was whether a mutual fund could be set up. The answer given is no because the large sums of money ($50 million+) would cause to large of movements in individual stocks. I disagree. The reason it wouldn't work is because the mutual fund would hardly ever be fully invested. If you look at any mutual fund's holdings, a small portion (5% or less) is kept as cash to take advantage of new positions. When a stock is sold, something else is almost always bought immediately. The STS system doesn't work like this. The system may spit out 0 recommendations or 200 recommendations in a single day. Based on my review of their published recommendations, there would almost always be a significant (80-90%) cash reserve in the fund (which is needed to capitalize on the trade recommendations) that severely limits the earning potential. In other words, while the STS system has a 31% ROI in theory, if it were started as a mutual fund, that would plummet 2-3% or less because the funds in the account would largely remain uninvested.

Up to this point my analysis relied on the assumption that all recommendations were acted upon. The STS founder admits that this is not practical for most people, so let me test some of the statements that he makes such as choosing as many as 20 positions to approximate the return or that someone with as little as $10000 could profitably participate. Remember, stock systems get their money from selling the stock system not necessarily from actually trading with the stock system. So, it is in their best interest to make the system as "workable" for as many people as possible. If they started off by saying that you needed $1000000 to just match the S&P 500, then they wouldn't get many people buying.

Without a system (which would need to be analyzed separately) to select which of the STS recommendations to act on, I selected randomly. First, I picked every third, ninth, and eighteeth recommendation to determine how much difference the ROI would change. The nominal ROI per trade was 0.86%. For every third recommendation it was 0.83%, for every ninth recommendation it was 0.73%, and for every eighteenth recommendation it was 0.89%. Some below, some above, but no changes in an order of magnitude. Remember, that when I put the STS system into actual account conditions, the return I calculated was 1/100th of the return from the S&P500.

To test it for actual account conditions, I chose an account with $300,000 and a commission of $5 per trade.





Per Trade ROI





Trade Amount





Maximum # of Positions





Actual Annual ROI





Not so impressive compared to the S&P500. It does appear that the more money per trade, will increase the ROI. However, the total funds needed will increase as well. In fact, after going over 50+ scenarios using their recomendations I am of the opinion that there is no way to even beat the market over the long term with the STS system. Sure, you may be able to for one or two years, but throwing darts is just as effective as a method for choosing stocks. Bottom line is that the STS system requires too much money to be held in reserve (ergo not making money).

And frankly, that is the problem with almost every stock picking "system" out there that I have examined. 1) Too much cash is left on the table for the next stock that may come along. 2) The constant changing of positions severely desreases the return from commissions and taxes. That is why long term investing has remained tried and true for centuries.

Saturday, October 10, 2009

WalMart - Evil Incarnate! Or Maybe Just a Really Good Company - Part 5

Finally, the conclusion of my critique of the Wake-up Walmart website:

49. There are 76 class action lawsuits alleging wage-and-hour violations at Walmart. Well, this is sort of a disappointment, I mean after linking Walmart to terrorism you would think that they end with Walmart killing babies or something. If they did wrong things (again these are alleged violations), then I fully expect the courts to rule in favor of the plaintiffs.

50. Walmart's settlement is worth little to the workers and less to the company. OK, if the plaintiffs had such a strong case, why did they settle (there is nothing that forces them to settle as far as I know). Could it be that their case isn't as strong as they proclaim and wouldn't get anymore than the settlement amount anyway? I mean, if these are slam dunk cases, then let them go to trial. Next, if the settlement is worth little to the workers why did you bother to settle? To say that the settlement is only 14 hours of sales for Walmart as your proof that it is worth little to Walmart is rather misleading. Since after tax profit is what matters to the shareholders of the company, compare it to this. In which case, the settlement is equal to a half a month of profit. Half a month of profit is a big deal!

51. Walmart's Minnesota settlement is a raw deal for local workers. Walmart settles for $54 million. Actually, what should have been said is that the class of plaintiffs (or their lawyers) settled for $54 million. They weren't compelled to accept it. Sure Walmart may have been liable for $2 billion in the penalty, but the key word there is MAY. They also could have been liable for $0. Which means that the lawyers would have gotten zilch. Sorry, but even the class action lawyers follow Rule #1. At least this time they compared the $54 million to Walmart's profit (a little over a day and a half). Still, one should look at what was accepted $54 million versus the maximum of $2 billion and get a rough idea of how likely the lawyers thought they would get more was: 54 million/2 billion = 2.7%. Not good odds.

52. Walmart is still appealing $380 million in awards to workers in Pennsylvania and California. So now it is a bad thing to avail oneself of all legal recourse if you believe the judgment against you is wrong? Of course they are going to appeal, they have nothing to lose at this point. Appealing it all of the way to the Supreme Court will cost maybe another $1 million-$5 million dollars. If during those appeals the judgement is just cut by 10%, then Walmart that $1-5 million is money well spent. If nothing happens, $1-5 million is only about 1% more than before (and that $380 million has been reinvested in the company for the next 5-7 years while the process is going through the courts). That is how the civil justice system is designed. Every company worth half an once of wilted beans would do the same thing if a $380 million judgment was made against them. Nothing sinister here. Walmart is not going to roll over for you just because you don't like them. They abide by Rule #1.

53. Walmart's claim that it's a changed company is betrayed by very recent lawsuits. Walmart will always have lawsuits against it for the simple fact that A) it touches more peoples lives than most companies (both employees and consumers) and B) they make a ton of money.

That is the extent of the facts that WUW has to offer. Now, many of you may be wondering if I am a shill for Walmart. Let me say that Walmart did not pay me a dime for this critique. They never contacted me or had some 2nd party contact me. I have however made a lot of money from Walmart stock. So maybe that does make me a shill.

For any Walmart executive out there, if you would like to pay me obscene sums of money to scour the web and write critiques about those who criticize your company, make me an offer. I can be bought in most cases for the right amount. (Actually, that goes for any company).

Do I think Walmart is perfect? No, they have lots of problems. Not any more than the average multinational corporation that employees 2.1 million people and has sales of $400+ billion each year. However, the way to solve Walmart's problems is not to write websites that have innuendo of terrorist ties and other boogeymen. The way to change how Walmart operates is to become an owner. Anyone can do it. Buy stock. Attend the company meetings. Make your proposals and gather support of other shareholders for those proposals. One day, you may be voted onto the board of directors. Myself, I am content to make money off of them. I have other problems that I have to deal with that take my time, so I'll let Walmart continue with all of these "nefarious" practices.

WalMart - Evil Incarnate! Or Maybe Just a Really Good Company - Part 4

On again with the screed against those who are against Walmart! From the Wake-up Walmart website:

33. Walmart repeatedly broke child labor laws. Before we get into all the evils that Walmart is perpetrating against our children, lets get some other facts out in the open. Child labor in the US and child labor oversees are not the same thing. Oversees when people rail against child labor, they are usually talking about 5-12 year olds who are working their fingers to the bone. Here in America, they are talking about 14-18 year olds. Walmart doesn't employ 12 year olds in the US. In fact, the number of 14 and 15 year olds they employ is probably under 1000. That being said, they still broke child labor laws. Namely, every state (and some cities) have their own child labor laws which can be vastly different covering everything from the types of jobs they can do to the hours they can work. So yes, the country's largest employer of children (i.e. 16 and 17 year olds) occasionally violates laws of the hundreds of jurisdictions that it does business in. Guess what, other companies who hire children occasionally violate the law as well.

34. Walmart got a sweetheart deal as part of their settlement. Giving notice to employers when there is no criminal intent is not unheard of. Particularly when you are A) the biggest employer around and B) the largest payer of taxes. Sorry if we do not live in Utopia, but getting rid of Walmart will not bring on the 2nd Coming!

35. Walmart's own internal audit found extensive child labor violations. Minors working too late - if the law says not past 9:00 PM and you clock out at 9:01 PM, then your employer has violated the law. It is no surprise that their internal audit found violations, especially since the labor departments have found violations. Now, what would be shady is if the internal audit found NO violations. Once again, companies always have violations. What is really important is the severity of those violations. Were children (16 and 17 year olds) working 15 minutes more than they should or were they working 2 hours more than they should? Both are considered violations, and in many cases would be fined the same amount.

36. Walmart continued to break child labor laws. And drivers continue to break traffic laws. The fact is our country has become obsessed with having laws to cover everything. There is a report out there (I can't put my finger on it right now) that shows the average person (not criminal) commits three felonies a day. Now, I'm not sure that I believe that, but it does illustrate the point that it isn't very difficult to break a law. If you hire children, you are probably going to break a few child labor laws.

37. Walmart and undocumented immigrants. First, they are called illegal immigrants because they are in the country illegally. That is the US Government's responsibility. At one point in time there was an e-verify system where an employer could verify the work status of a worker. Not anymore. So, Walmart has been fined by the US Government (which continues to allow illegals into the country) for hiring another company which hired illegals. That is pretty hilarious to me, especially since various state, county and federal agencies have been found to have hired illegal immigrants.

38. Walmart is America's largest importer of port containers. Wahoo! Go capitalism!

39. A Walmart container arrives in the US at a rate of 1 every 45 seconds. Yeah!

40. Since 9/11, America's ports remain vulnerable by only inspecting about 5 to 6 percent of cargo containers coming into our ports. Uh-huh, are they trying to link Walmart to terrorists now?

41. Members of congress agree the risk to port security could lead to the "Nightmare Scenario." So could allowing the flow of illegals, drugs and guns across our borders, but it doesn't see like we're too worried about that.

42. Port security experts have outlined the threat of unscanned containers. Why do we need security experts to outline the danger of bringing in big boxes from all over the world?

43. Ignoring this threat, Walmart lobbies members of congress to resist tightening port security. Actually, it is the RILA, of which most retailing organizations are a part of. What they understand is that there is a finite amount of resources at any given time. While inspecting every container may have "insignificant costs" per item or per container, the total aggregate of those costs adds up to billions of dollars. Hypothetically, if you knew that someone was going to break into your house and steal $1000 worth of stuff, how much would you be willing to pay to prevent it? What if it was $10,000 or $100,000? The whole point of lobbies is to look out for the best interests of their constituants. They provide a valuable service by providing information (good and bad) to the members of government. It is members of government's job to sort through the information and decide what is best for the country and how to use the resources that government has. So far, congress has not decided that port security is important enough to divert resources from rain forest museums and snail mating practices research. That is congress's problem, not Walmart's or the RILA.

44. Walmart uses RILA as an anti-security lobbying organization. No, Walmart uses RILA to lobby for their interest. Their interest is to make money for their shareholders. That is the sum total of all security, child labor, Chinese products, safety, etc, etc decisions. One could argue that the Berlin Wall made East Germany very secure.

45. Walmart and RILA: Putting profits before security. Rule #1 says this is true. However since security is a part of profits as both a real and potential expense, the statement is meaningless.

46. Port security experts dispute the potential cost to Walmart. When faced with the cost impact, I am going to have to trust Walmart here. Why? Because they actually have to pay for these costs, the port security experts do not. Supposedly it will only raise the price by .2%. In the retail market, profit margins of 1-4% are not unheard of. 0.2% price increase equates to a profit decrease of 5-20%. Shareholders don't like that.

47. Walmart uses money and influence to pressure politicians to oppose strengthening port security. Every organization does. Because only individuals can vote. Walmart doesn't elect politicians. People do. In the end, a politician that wants to get re-elected has to please his constituents (voters). If his voters don't care about port security, then neither does he.

48. Walmart uses lobbyists who have close ties to the Department of Homeland Security. All big business uses lobbyists with ties to the government. That is the only influence they have and it helps to have someone who A) knows Washington and B) knows the people who are going to make decisions that affect your business.