President Barack Obama's State of the Union 2010

I am typing this with a cat on my lap, somewhat restricting typing. I apologize in advance for any large delays or missed items. Though, to be fair to myself, I don't have any plans to provide 100% coverage or anything.

Obama is starting with a little bit of inspiration, or perhaps more of a lowering of expectations. This is another crisis similar to so many other problems we've overcome, and this is how bad it is. I definitely like how he says this is why he ran for president, and how the problems are nothing new. It's a decent way of establishing himself as a man in control; a man with a plan.

The first round of applause! Arg. I can't really echo his hope for the future at the moment. I don't see things improving so much that it's the most hopeful time for the country.

Starting with the economy makes me wonder if there will be any time for other topics. Listening to these speeches always makes me wonder at the validity of many of these statistics. FactCheck.org will eventually come back with an analysis, but that doesn't help at this very moment. The personal stories are nice, but there are plenty of people that are still unemployed. And what do you know, Obama has just addressed that. Good job. Now I'm curious as to what this new jobs bill might entail.

While the Republicans aren't cheering, and Fox News has had plenty of talking points about the TARP repayments being spent when that wasn't the deal originally, I like the idea of $30 billion to community banks to lend to small businesses. The TARP funds were meant to get banks lending again, and they didn't much. It seems right that those funds are being put back to work more directly for this purpose.

The fastest trains aren't all that important to me. Trains are among the most efficient transports we have for cargo, and that should be emphasized. Truckers might not like a more efficient train shipping system, though.

Serious financial reform. I have a feeling the threat to send a bill back is somewhat hollow. But, as vague as his statement is, I support the general idea. I think.

Advanced batteries? Did you hear about IBM working with the DOE on Lithium Air batteries? Exciting stuff. Safe, clean nuclear power plants is a very good idea. It's been a long time coming. I wonder if thorium reactors will end up being the way things go. Clean coal technologies still sounds like an impossibility.

The government stepping in to alter the affordability of clean energies is a touchy issue. It's messing with supply and demand, and that's always worrisome. I think it's necessary to encourage more research and development in this area, and that can only be done by making them commercially viable in the short term - otherwise no money comes in. It's necessary for the long term to avoid an energy supply crash in the short/medium/long term (depending on the study you are referencing), and I wish people would make that point better in their debates.

Exporting more of our goods is great. No one understands how to do that, though, except maybe a few people. Oh well.

Education is a major key to long term prosperity. I would argue that we have a lot more issues than funding for college. We have tons of people that do not wish to go to college. We have tons of people that don't apply themselves at all in high school. There's an attitude problem in too many young people. That's hard to change with federal policy.

Health insurance reform is absolutely necessary. Health insurance is readily accessible for the wealthy, and keeps them from going bankrupt. The poor can't afford health insurance, and then are kept down by every little doctor visit. It makes it harder for people to get ahead and succeed. I strongly support health care reform. I think the currently proposed plan has a lot of problems, though. We'll see what happens, I guess.

There's a lot of truth to what Obama says about inheriting the deficit. MediaMatters.org has a pretty good analysis in quite a few of their articles (copy and pasted every time someone on Fox News blames Obama for the entire deficit). The spending freeze is a fine idea, but from everything I've heard it is quite limited in scope.

Obama is absolutely correct that the public does not trust the government. There is too much fighting over basic facts to ever get to policy debates. Basically, there is no debate happening, and that doesn't encourage anyone that government is actually getting things done.

I like Obama's slap at the Supreme Court. I can see the argument on both sides, but I think it is dangerous to treat corporations as equal to citizens - they really aren't the same thing. The power corporations have is enormous already.

I am very glad Obama has called the Republicans out on just saying no to everything. It definitely isn't helpful in the least. And the name calling he is talking about now is one of my biggest problems with politicians. It doesn't help get anything done. I don't think this will actually help that stop, but wouldn't it be great?

There are too many questions as to how to pull out all combat troops from Iraq by August to cover in this speech. I really hope a very detailed plan will follow soon.

When it comes to foreign policy, statements get even more vague than they are on other giant topics. It makes talking about them here very difficult. Everything he's saying about freedom and equality for all people is nice, of course.

I'm afraid I missed how he transitioned into homosexuals in the military, but I'm all for ending that discrimination.

It sounds like he's wrapping up now with political unity. He is absolutely right that there is a lot of cynicism. We do need people to lift the level of debate. I have the urge to switch to Fox News after this and see if they immediately start calling names again, or if they rest for a few minutes to notice that he is talking to them (among others, of course).

Overall, I liked the speech, and think it was pretty effective. There were some inconsistencies, but it should at least help set the stage for some more details in the near future. Let's hope they come.

Fox News is saying now that it really is the Democrats' fault because they had complete control of both houses. The fact that Democrats are not 100% united is encouraging to me. It shows that they are thinking for themselves. I like independent thought.

One-Time Expenses

A couple of days ago, my friend and I were talking about many things. One of these things included a comment about one-time expenses and how there seems to be one every month. I decided to analyze my one-time expenses over the past year and see what I can learn about my budget (as informal as it is). So:

• December: Living room TV: ~$800, second 24" monitor: ~$300.
• January: Video games: ~$100. Not too bad...
• February: Ladder to fix the roof: ~200, paying some guy to fix the roof: ~$60.
• March: No big expenses. Go me!
• April: Nothing again!
• May: Fiona died, and I took Apple in to get tests and shots: $130.
• June: Adopted Mac & Cheese: ~$100, initial vet visit for Mac & Cheese: $110
• July: Apple's eye infection: ~$50, Mac & Cheese declawed: ~$260, new tennis racquets: ~$230, video games: ~$100.
• August: I did good again!
• September: Video games: ~$75, miscellaneous family expenses: ~$200.
• October: File server parts & digital camera: ~$400.
• November: Planned car repairs: ~$400

This puts me at just about $300 per month for one-time expenses. I also want to get a new bed at some point, a storm door for the front, a new car eventually, and probably a few other things I have forgotten about while compiling the above list. The storm door will improve the heating/cooling efficiency of the house. The bed, at least, will likely be purchased at Nebraska Furniture Mart (can you believe I used to be anti-NFM at one point?) and therefore be spread out over the following 24-30 months...

I think the video games will also be a less frequent expense for awhile, since a lot of the video game purchases were large packs of games, and should keep me busy for quite a long time, really. There are still at least 10-20 games I haven't even installed/tried. I really hope my pet expenses (one-time, that is - food and litter are frequent purchases) are very low going forward. Regular check-ups only, please! My file server is running much smoother now (see future post), so that will hopefully truly be a one-time expense for the year or more. I remember justifying my living room TV as roommate retention. It's at least getting use. Some car repairs are definitely necessary - I worry about every strange noise I hear when I drive right now, which is not pleasant at all.

...I think what I learned is that even after compiling a list of one-time expenses while expecting a ridiculously high total, I still went into justification-mode after seeing it. I do keep my regular expenses fairly low, and I'm not at all worried about my cash flow. As I discussed previously, I save $200 each month, and that's after maxing out my 401(k) and Roth IRA contributions every year. I save a lot of money each year, and have multiple layers of financial cushions should I ever need to cut back on expenses. However, even if it's not strictly necessary, I think an occasional analysis of spending patterns is helpful.

Update: Speaking of Nebraska Furniture Mart, I forgot about my living room couch. It was purchased on my NFM card, though, and I technically haven't started paying that off yet - I'm still working on my dining room furniture. Or maybe it is my downstairs TV. I love 0% interest! Also, I think it important to mention my new furnace, since it was almost a full year's worth of one-time expenses by itself. Things happen.

New Cat

Monday, November 19, turned out to be a fairly eventful day. It all started when my brother, Brian, called about 10am letting me know that he was in the neighborhood tutoring math with Aimee and they'd be happy to stop by in about an hour, if that was alright. For some reason, this didn't strike me as particularly odd, so I naturally agreed.

About an hour later, they arrive at my front door. When I open it, Aimee greets me with "We brought you an Apple," while handing me a gray kitten. She was extremely tiny, especially given that she was supposed to be about 3 and a half months old. The vet said she was probably the runt and had her food stolen, but that it shouldn't affect her overall development much. She has definitely added some weight, and so looks more normal. She no longer smells like a ferret, but still is a smelly cat.

Here are Fiona and Apple together.

Apple is very cuddly and likes to rub her face on people's faces, which is cute. However, she hasn't learned how to jump, so she claws her way up things, including legs, which is painful. She's learning, though, and is a very cute cat regardless.

Small Company Earnings

HYTM was listed as releasing it's earnings yesterday, November 5. Instead, their expected earnings release date was pushed back until November 12. I think this is a phenomenon pretty much unique to small companies. I can't imagine Google, IBM, or Apple getting away with a week's delay in releasing financial information.

In fact, HYTM hasn't really gotten away with it. The past couple of days have seen HYTM drop down to $4.71 so far. Incidentally, this puts me fairly deep in the red. We'll just have to see what the implied volatility does after earnings. It may still be worth holding on to if I can still get >5% a month in options premiums. Or perhaps earnings will beat analyst estimates and I'll get my shares called away after all.

In other news, Garmin (GRMN) is down below $100 again. I think if I had $10,000 or multiples thereof, I would buy some GRMN shares and write more out of the money covered calls. Garmin seems to be down on fears of a TeleAtlas bidding war with TomTom (TOM2.as). However, I see this as both a good move and temporary. Garmin has about $1B cash on hand and is worth >$20B, while TomTom probably has less on hand and is worth ~$6.3B.

Garmin used to be in a position of having TeleAtlas in the hands of TomTom and Navteq in the hands of Nokia, meaning they might face an increase in mapping costs. Garmin has either put TomTom in this position, or forced them to go deeper in debt by upping the price of TeleAtlas. If Garmin gets stuck buying the company, they at least have the advantage of being able to afford it, and they have a longer history of acquisitions, which implies to me a better ability to integrate TeleAtlas. It will be interesting to see how this develops. Unfortunately, I'll be watching from the sidelines.

Earnings Strategy: The Aftermath

So, Earnings for Google (GOOG), Apple (AAPL), Garmin (GRMN), AMD (AMD), Amazon (AMZN), and Akamai (AKAM) were all done by August 1. I've delayed writing about my findings because I've been highly distracted by Harry Potter. I'm done with that now, though, so here it goes.

Even though GOOG moved down 30-40 points after earnings, no reasonable combination of 540-560 strike price options make money. For AAPL, I tried looking at further out of the money options. Once again, the movement wasn't large enough to make money. GRMN was interesting in that it had a spike up after earnings, but then kept rising another 10 points. I don't think I would have made money off the initial movement, though. I didn't do any real analysis of AKAM, but after the fact, I think it's movement of 20% would have resulted in some profit. AMD barely moved at all (meaning a large loss in strangle options), which I found surprising given it lost another $600M last quarter.

So, what did I learn? First, I learned a bit of new terminology. When you buy a put and a call option at the same strike price, that's called a straddle. When you buy a put and a call, both out of the money, it's called a strangle. Second, I learned that a very large price change is required to make either of these work through earnings. Third, my previous talk of increased volatility was mostly wrong. It turns out that statistical volatility will indeed increase, but implied volatility (IV) will plummet. Thus, options tend to lose half their value right after earnings, everything else being equal. Bummer.

In the future, then, I'm going to analyze longer-term options, which tend not to have such high IV shifts because of earnings. I'm also going to look at what is required to write both a put and call option to take advantage of the IV crush. Normally, to write a call, you have to have the 100 shares in your account. To write a put, you have to have the cash available to buy 100 shares at the strike price. I'm not sure what assets I need, exactly, to buy both, as I'd think they'd cancel each other out to some extent.

For now, my overall earnings strategy is GET THE HELL AWAY! Things are just too wild around earnings season. Now I just need the overall market to improve so I have money to invest again.