Peak Market Performance Levels Reached More Often Through Theoretical Growth Portfolios (via PR Newswire)

Download image NEW YORK, Aug. 13, 2013 /PRNewswire/ -- A one-year 39% return from the stock market is uncommon. The S&P 500 Index has only reached that level three times over the last 25 years, but Halvorson Research Associates LLC's (HRA) Favorite…

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Online Education: Coursera

Online education has truly taken a new form lately with the development of Coursera. Coursera is an online education portal but it has a unique feature that makes it stand out from the plethora of other portals. Coursera is free. Not only is it free but the classes offered are administered by professors at accredited universities. The first class to catch my eye was 'Gamification'.

"Gamification is the application of game elements and digital game design techniques to non-game problems, such as business and social impact challenges. This course will teach you the mechanisms of gamification, why it has such tremendous potential, and how to use it effectively."  

This class sounds fun and progressive but not quite so serious until you realize it is given by Kevin Werbach, an Associate Professor at the Wharton School, University of Pennsylvania. Classes are offered in many of the traditional fields and range in specificity from 'Intro to Microeconomics' to 'Game Theory'.

Class materials are provided online with focus on video lectures, freely available readings, and exercises utilizing open-source software. Class duration ranges from 4-12 weeks weekly units and some offering live quiz sessions.

Most classes provide some sort of acknowledgement of completion. These range from letters of completion from the administering University, professor, or directly through Coursera. These acknowledgements are not the same as University credits and the accreditation space is unclear at best, but Coursera is perfect for individuals thirsty for knowledge and skills who are not so worried about degree credits.

This Investment Adviser Representative is looking forward to taking four classes in January through Coursera.

1. Computing for Data Analysis
2. Game Theory
3. Gamification
4. Building an Information Risk Management Toolkit

It is important, especially as an investment professional, to be exposed to new ideas and skills. All those who possess or are in the process of industry certifications are already accustomed to the online learning model. Why not take advantage of that model outside of the traditionally provided avenues.


Erik Hughes is an Investment Adviser Representative for Halvorson Research Associates, LLC
Market commentary and fundamental stock valuation available every on their website.

HRA Market Commentary

Tablet Wars: Kids

Ten times a day on CNBC I hear how tablets are taking over the crown of consumer computing, and say goodbye to home PCs.

First of all tablets are strictly for consumption. Despite Samsung note commercials, the only person actually designing a presentation on their tablet is frantically slapping it together during homeroom for their book report next period. Consumption is the name of the tablet game. News, Tweets, arcade games, multimedia, and email are the reasons for this computing revolution. Don't get me wrong, to someone giving a presentation on the road a tablet can be essential, but they better design it on something with at least a plastic keyboard and fingerpad. That said, the game changes when it comes to education.


 
Recently we decided to get a tablet for the family. It was to be mostly for my 3-year-old daughter to use educational apps, but we didn't want some off-brand without access to one of the big app stores. (cough.. Fuhu Nabi 2)




After some research I wanted to get a Google Nexus 7.
I was sold, at $200 you get a quad-core Tegra processor and every little bit of new tech except for a rear facing camera. People
who take pictures and video with tablets look silly anyway, so
who needs it. When we got to Best Buy to play with one my wife vetoed the entire 7-inch form factor altogether. She thought they felt like large phones and would be tough for our daughter to use. So with only 9 and 10.1 inch tablets to choose from I came to the conclusion that we were going to have to pay at least $400 for new tech. Well, at that price we might as well shell out $450 for the New iPad 16gig at Micro Center. Even for a staunch anti-Apple techie like myself I have to admit that at a similar price level, the iPad is superior hardware.

  

My 3-year-old daughter loves the iPad. There are lots of apps geared toward education for little kids and the 10.1 inch screen allows her to be less exact with her finger touches. The biggest reason I like the iPad for kids is there is only one button on the whole front of the tablet and it is a push-down button. My daughter often hits the 4 touch-sensitive buttons on the front of my Droid 2 by mistake. This frustrates her and myself to no end. She will be in the middle of a dinosaur puzzle and hit the voice search button which will pull up a prompt screen. Not only does this ruin the app experience but it also requires mommy or daddy to navigate back to the app. It is no wonder newer Android devices have dropped this button. Another bonus to the iPad is a large side and top bezel so kids can grip it without touching the screen with their off -hand.

The pain I will endure will be eclipsed by watching my daughter learn on her new toy. This means hours of transcoding my video library for craptastic iTunes.

Which tablet to buy for kids verdict is: suck it up and buy an iPad.


Java applets and flash enabled sites are not supported by either iPad or Android. How mobile is changing the content of the internet in our next post. Post coming soon




Erik Hughes is an Investment Adviser Representative for Halvorson Research Associates, LLC
Market commentary and fundamental stock valuation available every on their website. Link below.
HRA Market Commentary

Stock Quotes Within Spreadsheet- Google Docs does away with the need for Macros

Getting a stock quote within a spreadsheet is now super simple with Google Docs and their built-in function called GOOGLEFINANCE(). Excel solutions are available but none are as simple or robust. Kudos to Google for implementing their API on a level that requires no more technical knowledge than using a built-in spreadsheet function much like SUM() or AVERAGE().


Google Finance Function Documentation

Excel solutions
1) MSN Money Data Provider: functionality has been mostly removed since 2008
2) Macro: Provided by Gummy-Stuff. I do not endorse or verify the content of this macro, use at your own risk.

Erik Hughes is an Investment Adviser Representative for Halvorson Research Associates, LLC
Market commentary and fundamental stock valuation available every on their website. Link below.
HRA Market Commentary

Paul Ryan: Hedging is un-American

So why Paul Ryan, and why now? 

The republican zeitgeist is about ideals and Ryan wears his on his lapel, front and center. He describes himself "as pro-life as a person gets." He is "very, very pro-gun", does not believe in same-sex marriage or their right to adopt. The list of his beliefs reads like a cheat-sheet for conservative policy-makers. He often refers to Ayn Rand as a major influence in his youth and makes his congressional staff read her novels.

People like him for the stand he makes on ideals. After all, what could be more American. Transformational leaders of the past stood their ground based on ideals. It is not one's own responsibility to question oneself. That responsibility is left to the other guy. This mirrors our federal system of checks-and-balances and guarantees that the strongest cases (or politicians) be presented. Then conflict arises and compromise is made at the end, the final, the product. This is the best possible result we can hope for in the dealings of men. The age of middle road politics needs to end with a return to honest, stand behind something ideals.

If a case or politician is presented with reservations as to popularity or utility, then it itself is already a compromise. A compromise built on a compromise is nothing, nowhere, zero progress. Our laws are  pragmatic rules based upon moral absolutes, so why then are politics so much about consequences?

Believe, In Something

Focusing on consequences is what causes inconsistency in politics. We need to realize the inherent limitations of our political and legislation power structure, and not expect mountains from men. When the financial system was teetering over a cliff in 2008 drastic measures were taken by the Fed for stability. We have come to rely on outstanding ad-hoc solutions to problems such as this. Such may be a sign of strength in the will and effectiveness of the individuals involved, but represents a dangerous comfort of being in control. We as a country think we can simultaneously know everything and control everything.

All we know is that we can't know it all

The crutch of 21st century man is knowing too much. We are bombarded with information constantly, and ignorance of political hot points is simply unacceptable, just ask Sarah Palin. Transformational individuals of the past would be stumped by the sheer breadth of knowledge required by today's politicians and leaders. What exactly do we want from our leaders? And is it prudent to try to please the majority, or even moral?

Lines from the famous poem "The Rock" by T.S. Eliot follow,

Where is the life we lost in living?
Where is the wisdom we have lost in knowledge?
Where is the knowledge we have lost in information?

Great Americans, that is individuals, who have been responsible for great progress in the United States have always stood strong in the light of opposition. After all, what could be bolder than standing up to the superpower that was Great Britain of the late 18th century. No doubt it took steel resolve for our founding fathers to declare independence from Britain, with full knowledge of the hardships of impending war. Despite what Americans have been taught in civics class, the "atrocities" persecuted by the British in the 1700's range from mild to medium. If the founding fathers had to constantly field questions and worry about how their responses would be perceived by every family in the colonies they never would have accomplished the American revolution.

They instead relied on what they knew, what the believed to be right, and how to persuade others to follow them to the tune of these beliefs. As much as I personally disagree with everything Paul Ryan stands for, I oddly like him. At least he has spirit and belief.

The recent Clint Eastwood movie "J. Edgar" features Leonardo DiCaprio as J. Edgar Hoover the transformational Director of the FBI from 1932 to 1972. Hoover was responsible for empowering the FBI to investigate and effectively convict criminals who previously evaded locally organized law enforcement. Hoover was also particularly zealous about investigating radicals and those who aimed to subvert the Federal Government. This often meant that his agents were investigating people on the premise they might commit a crime. Still a hot topic today, Hoover was conducting intelligence operations against American citizens.

Whether right or wrong, Hoover believed radicals and subversives to be a greatest domestic threat to America. This belief is what motivated him to push for laws and reforms that enabled his FBI to carry out his goals. He was in power for 40 years and no president, attorney general, or federal judge would sway him in his goal. I am not saying what he did was right or moral, but his drive, his motivation is something that has been lacking in American politics for some time.


Erik Hughes is an equity analyst for Halvorson Research Associates, LLC
Market commentary available every 15 days on their website:

HRA Market Commentary

Standard Chartered: Iranian Banking For Dummies

 SCB has gotten themselves into some serious hot water recently with U.S. regulators. A basic overview of the situation goes thusly. SCB America is a subsidiary of SCB Group based in London. SCB Group (London) wants to take advantage of the lack of competition in wholesale banking for Iranian Clients. SCB America is in position to execute U-Turn transactions that benefit Iranian clients.

SCB America cannot execute the U-Turn trades in their original form because they are illegal under U.S. law. So SCB London decides the best course of action is to alter the SWIFT entries before they reach the U.S. in order to remove any reference to Iranian clients. Swift is the international communication standard for identifying businesses and financial institutions.

The more interesting question here is about who is at fault and if they can be reached by U.S. regulators. Because the impetus of the fraud is coming from SCB Group based in London to what extent can U.S. regulators address the problem. The obvious answer is to shut down the SCB America division for executing the trades.

Does this truly solve the problem? SCB America is simply acting as a transactional function. To what extent does SCB America deplore this practice? What we have seen from conflicting reports is that SCB America is at least concerned for its own reputation and skin. SCB America has been working with regulators as best it could while working under a script dictated by SCB Group in London. Not so much CAN U.S. regulators punish for these offenses but SHOULD they and what will the international community think of their actions.

I just wanted to present the situation in a condensed, easily understood, quick read so that more people can be aware of the underlying questions presented by this unique situation. In a increasingly interconnected world lines of jurisdiction begin to be blurred across space, communications, and conflicting interests.

I will leave you with the conclusion paragraph given by NY DFS in their report on the offenses:

"Motivated by greed, SCB acted for at least ten years without any regard for the legal, reputational, and national security consequences of its flagrantly deceptive actions. Led by its most senior management, SCB designed and implemented an elaborate scheme by which to use its New York branch as a front for prohibited dealings with Iran – dealings that indisputably helped sustain a global threat to peace and stability. By definition, any banking institution that engages in such conduct is unsafe and unsound."


Erik Hughes is an equity analyst for Halvorson Research Associates, LLC
market commentary available every 15 days on their website:

HRA Market Commentary

Big Bang Theory: Personality Affects Personal Finances

The Big Bang Theory is a hilarious hit sitcom on CBS that follows the lives of four scientists working at Cal-Tech in Pasadena, Ca. Our purpose is to see whether the two main characters, Sheldon and Leonard, could actually afford their lifestyles and habits in this very expensive area.

Do you remember the beautiful apartments from FRIENDS? Do you remember how far beyond their means the characters lived? Television producers generally don't think about the real life viability of their characters. Getting back to Big Bang Theory, the cast eats yummy takeout food every night which causes jealous mouth watering and the natural question of whether they could afford that in real life. I hope you will find the conclusions we reach satisfactory as well as relevant to your own personal finance decisions.

INCOME AND MAJOR EXPENSES

The median salary for Staff Scientist and Post-Doctoral Researcher at Cal-Tech in Pasadena is $64,682.96. (Note: Cal-Tech pays better than the average research university) Using the tax rate of 2.8% (relax this excludes Social Security, that will be addressed in expenses) demonstrated for this category in the CE, their after tax income is $62,851.32. The total rough cost of consumer expenses computed using housing data for Pasadena, CA and modified for the habits of our geeky friends is $56,824. At first glance, the data shows that it is possible to live the lives portrayed on the Big Bang Theory, but we must look deeper into the question to truly understand the situation. Below you will see just how the personalities of the Leonard and Sheldon have consequences on their finances.

First we must discuss the short-comings of the data. The majority of the data used herein comes from the Bureau of Labor and Statistics' Consumer Expenditures Survey (CE). The data reflects all 50 states. California has one of the highest costs-of-living and while location specific data is substituted wherever possible, many items remain a national average. Note the difference in housing costs from the table below. Pasadena has a very high median gross rent, so this was used to adjust housing costs. There is not a similar method to compensate for the high transportation costs in California i.e. high gas and insurance prices.

The CE Survey uses Consumer Units (CU). Most CU consist of families or at least married couples. Sadly there are not good statistics for expenditures by individuals, especially individuals sharing a rented dwelling. Sheldon would not be pleased. Leonard and Sheldon qualify as separate CU's because they are financially independent despite mutual rent and furnishings. Due to their peculiar living situation, we have picked and chosen data from different categories of expenses while ignoring others. Purists be damned, there is just not enough information and inferences have to be made. Some items are simple, such as tobacco. Neither character smokes so we can disregard that item.

EXPENSES	BLS CE Survey 2009
		National Average	Leonard	Sheldon
		for all CU
HEALTHCARE		3157	3157	3157
HOUSING
	SHELTER	9812	15228	15228
	UTILITIES	3660	3660	3660
	OPERATIONS	1007	1007	1007
	SUPPLIES	612	612	612
	FURNISHINGS	1467	1467	1467
TRANSPORT		7677	7677	0
APPAREL		1700	1700	1700
ENTERTAINMENT		2504	2504	2504
INSURANCE AND SS		5373	5373	5373
GIFTS		1029	1029	0
MISC EX TOBACCO		4238	4238	4238
Total Before Food		$42236	$47652	$38946

There are, however, major differences between the costs incurred between Leonard (social, dating, and more normal) and Sheldon (anti-social, defies social convention). The biggest glaring difference between the two is transportation. The average transportation cost (for all consumer units in 2009) is $7,677. This includes all the expenses relating to owning a vehicle i.e. auto-loan, insurance, gas, maintenance. The average costs of gifts given annually is $1,029. Sheldon does not believe in gifts, and other than the one gift he gave Leonard because it was a "non-optional social convention", he generally avoids gift giving. As is the general norm with Sheldon, his anti-social behaviors save him money.

The guys also spend more money on entertainment than the national average of $2,504 (per CU). Sheldon and Leonard both have expensive gaming laptops.  Sheldon has a Dell XPS while Leonard has an Alienware, which is a premium priced gaming computer manufacturer owned by Dell. They also buy lots of comic books, movies, toys, and memorabilia like the time machine prop used in the 1960's "The Time Machine" movie. Even though we can easily assume the guys spend more than the national average on entertainment, it is very hard to quantify how much more they might spend. So, as a result, we will keep the national average for entertainment.

FOOD: ALL THAT TAKEOUT!

Food cost is the most substantial way our physicist friends differ from the average household. Dinner for the workweek consists of all takeout food, save the Tuesday trip to Cheesecake Factory. Judging by the amount of food as well as the variety of dishes they order, an average cost of $15 is a fair assumption.

For example, a BBQ Burger @ Cheesecake is $11.99 plus a soda and tip is at least $15. What about pizza night? Two medium, supreme pizzas cost only $32.26 according to Kraft's DiGiorno marketing study. This splits 4 ways to only $8. We have to keep in mind that Leonard is lactose intolerant, so he probably would order a pasta. If you watch many of the eating scenes in the show, there is often an abundant variety of food. They may order out all the time, but they don't order like college kids.

We all know that lunch is taken at the Cal-Tech faculty cafeteria. After looking at menu prices for many workplace cafeterias, we think $7 is a fair assumption for cost of lunch. Lunch at work is usually a wrap, sandwich, or salad with a side and soda. To wrap up food away from home, we are left with lunch and dinner on weekends. The guys are usually busy on weekends going out and doing geeky activities so to be conservative, we can assume that they eat lunch at home and eat dinner out.

FOOD AWAY
	Lunch	Dinner
Monday	7	THAI: MEE KROB AND CHICKEN SATAY	15
Tuesday	7	BBQ BURGER @ CHEESECAKE FACTORY	15
Wednesday	7	HALO NIGHT	15
Thursday	7	PIZZA PASTA	15
Friday	7	CHINESE: TANGERINE CHICKEN	15
Saturday		?	15
Sunday		?	15
Frequency	240		360
Total	$1680		$5400

The total cost of eating out this much is $7,080. This is astronomical compared to the norm of $2,505 (per CU). A high cost to pay for food, but also essential to maintaining such a tight group of friends. Group meals are the primary means of socialization and provide for most of the scenes in the show. 

The meals that are left to eat at home (with store bought food) are breakfast every day and lunch on weekends and holidays. Because the guys eat out so often, they spend much less at the grocery store than an average household. The norm is $3,624 (per CU) while Leonard and Sheldon would spend  just $1,680 each a year on groceries.

Food @ Home
	Breakfast	Cost	Lunch	Cost
Meal	Coffee, Cereal, Juice	3	Sandwich, Soda, chips	5
Frequency		360		120
Total		$1080		$600

The national average for alcohol expense is $412. Sheldon does not drink so it does not affect his expenses and Leonard on the other hand does drink. It would be safe to say Sheldon is the cause of Leonard's drinking.

CONCLUSIONS: BE A PARASITE

Wait! All of our expense data is from 2009. It is 2012 now and things cost more than they did 3 years ago. If we take the change in the Consumer Price Index (CPI) between June of 2009 and June of 2012, we get a 6.39% rise in prices. Because the CPI is a composition of a basket of goods that represent consumer expenditures, we can simply multiply the total cost we computed from 2009 by 1.0639.

Income Statement	Leonard		Sheldon
Avg. Income		64,682.96		64,682.96
		-------------		-------------
Total Expenes 2009	56824		47706
CPI increase	6.39%		6.39%
		-------------		-------------
Consumer Expenses in 2012		(60455.05)		(50754.41)
		-------------		-------------
Tax Expense		(1,831.64)		(1834.64)
		-------------		-------------
Net Income		$2,396.27		$12,093.91

Even after correcting for inflation, Leonard and Sheldon can live their quirky, geeky, lives in Pasadena, CA. They even have some extra money to spend on comic books, gaming, and dating. The more interesting point made by the data is how much you can save by being a mooch. Sheldon's antisocial behaviors saved him $9,698 in 2012 dollars. So, finding a roommate with a car and the propensity to give into social pressure may be the best financial decision you ever make.

"I have informed you thusly." (Sheldon)

Erik Hughes is an equity analyst for Halvorson Research Associates, LLC
market commentary available every 15 days on their website:

HRA Market Commentary