The Sky is Falling!

Whenever the stock market takes a hit, some people (and lolcats) act like the SKY IS FALLING. As scary as a drop like this seems, it’s a good thing for the vast majority of us. For people who are retired and living off of their investments, or those who need to sell them for one reason or another, a huge dive like this really bad news. Hopefully, those people invest more conservatively than I do. Whenever the market takes a dive, my portfolio seems to get punished twice as much as the rest of the market. That’s probably due to the fact that I tend to invest in either less known or less popular stocks that institutional investors would want to distance themselves from at the first sign of trouble. Losing a bunch of money by investing in the same thing that everyone else did, is one thing. Losing a bunch of money in some stock nobody’s heard of is something else. Fund managers buying into Microsoft at the end of 1999 had plenty of company. Those who loaded up on Gigamedia like I did last week might face some tougher questions.

As usual, there are some cooler heads at the Motley Fool. For the majority of us, a drop in prices is a good thing. That’s because most of us who invest plan to be net buyers in the near to mid-term future and when we’re buying, we want prices to be low. It’s only for those who chose to, or, due to excessive margin debt, are forced to sell now, that low prices are a bad thing. There’s an old Chinese chengyu related to this situation.


Literally, 杞人 just means a person from the ancient country of and 憂天 means worry (about) the sky. This phrase comes from an old story about a man from Qǐ who often spent time sitting by himself considering all manner of problems. One day, he considered that the sky might collapse some day. The more he thought about it, the more worried he became. Realizing that everyone, good people along with bad would certainly be crushed by the sky when it collapsed, his spirits continued to sink. It disrupted his sleeping and eating and in the end, he worried himself to death. Ever after, “Qǐ man worrying about the sky” has been a short phrase associated with needless and possibly self-destructive worrying.

In the case of stock investing, selling out of everything after a sharp drop in prices is about as self destructive as it gets. A more logical position is that of Warren Buffet’s old mentor Benjamin Graham- be greedy when others are fearful. He should know, considering he made his fortune by buying stocks during the great crash early last century and then literally writing the book about value investing. The way I see it, whatever stocks I thought were good purchases three days ago are now even better purchases.

Right now, most of my portfolio is worth less than what it was in June, and most of the companies should be worth a bit more, since they’ve continued to grow. Considering the 15% plus dive in 盛大 prices, I was strongly tempted to buy more. It’s done so well since I bought it the last time the sky was falling that it represents a huge chunk of my portfolio, though. Buffalo Wings has dropped a bit, but it still isn’t what I would call cheap. Harris and Harris, Gigamedia, and Middlebury to a lesser extent, look awfully cheap, though. Other stocks I’ve been looking at also offer some bargains. A couple of Chinese power companies developing green power, Huaneng Power and Suntech Power, both look intriguing, as does online real estate company Loopnet. With this many bargains around, I’m very, very glad that I’ve been working so hard to keep a low margin balance and allow myself so much room for days like this.

In the end, I decided to make three investments.

1) Panera Bread- My investment choices continue to reveal my love of food. Fortunately, it’s a pretty safe bet that Americans will continue dining out in greater and greater numbers. Like Chipotle, Panera has an experienced, successful leader at the helm, is in the midst of regional expansion, and offers high quality, fresh, yummy stuff. Unlike Chipotle, Panera has hit a couple of set-backs in terms of meeting estimated EPS, and its price reflects that. I bought 50 shares at $40.47.

2) Panacos Pharmaceuticals- They’ve got a promising HIV treatment that’s making it’s way through phase 2b trials. It works on a different pathway than existing treatments, and it’s showing effectiveness on people who have already been given other treatments. The risk on this investment is extreme, but so is the upside. I bought 600 shares at $3.23.

3) Gigamedia- I did a thorough analysis of Gigamedia last week. With absolutely no new news, its price is down by nearly 20%. Buying the exact same good for way less than I was willing to buy it for two days ago is a no-brainer. I bought 175 more shares at $10.96.

Legal Disclaimer: All of the information in this article is accurate to the best of my knowledge. However, I make no guarantee about the accuracy of anything written above. I’m not responsible for any mis-typings, or any other errors in the information. If you purchase any stock solely because I did, you do so at your own risk.

Can a Voice-box Bleed?

This is insanity. I had eight hours of class yesterday. While that may not sound like so much to some, for a teacher at least, it’s a lot. While I’m in class, I’m basically at the front of the room, pacing back and forth like bull, shouting out directions and whipping my students into a (controlled) frenzy. Phonics drills for beginning level students are especially hard on the voice; I exaggerate and draw out each vowel sound at the top of my lungs.

Normally, a teacher at this kind of school only does four hours a day of class, but I’ve managed to line up twice that on Mondays. Part of it is that unlike many of the Modawei-decended schools, I not only have evening classes for third graders and up, I also have early afternoon classes for first and second graders. For most of the year, that has meant that on Mondays and Thursdays, I have five and a half hours of class. Then came the problem with Kristen.

Kristen is the cutest, most adorable second grader in the world, and she tried to take my evening class. I recommended to her parents that they wait six months and then have her start my class. You know how willing Chinese parents are to put off any sort of schooling for their children… In the end, we gave it a shot. She worked hard, I gave her a few remedial classes, and I kept in touch with her parents. It didn’t work, though. She was too little. She had a hard time remembering the grammar, her writing was too slow, and her homework was taking her way too much time. Over a couple of months, she slowly started disliking English class. She always had a great attitude while she was there, but she complained at home.

The solution was simple- move her into an afternoon class. There was a problem, though. I only had one class for first and second graders, and they had already been studying for 7 months. They’d finished almost all my phonics curriculum. They’d also gone through level five of Up and Away, 20 Up and Away readers, and eight Dr. Seuss books. There was no way she could fit into that class. That class doesn’t end until fall, and by then Kristen will be a third grader and won’t get out of school early enough for my afternoon classes.

Faced with all of these problems, I did something crazy. I pulled her from my evening class, and opened a summer first and second grader class for her. It’s two hours a day on Mondays, Wednesdays and Fridays from 12:45 to 2:45PM. So far, she’s doing wonderfully, she loves English again, and fortunately for me, five other students have trickled into the class. After eight teaching hours yesterday, I woke up feeling like I’d swapped voices with a 50-year old smoker, though.

Milton Friedman on Drugs, Limited Government

Milton Friedman, who passed away less than a year ago, was undoubtedly one of the greatest minds of our time.

Milton Friedman (July 31, 1912 – November 16, 2006) was an American Nobel Laureate economist and public intellectual. An advocate of laissez-faire capitalism, Friedman made major contributions to the fields of macroeconomics, microeconomics, economic history and statistics. In 1976, he was awarded the Nobel Prize in Economics for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy.[1]

According to The Economist, Friedman “was the most influential economist of the second half of the 20th century…possibly of all of it.”[2] Alan Greenspan stated “There are very few people over the generations who have ideas that are sufficiently original to materially alter the direction of civilization. Milton is one of those very few people.”[3] In his 1962 book Capitalism and Freedom, Friedman advocated minimizing the role of government in a free market as a means of creating political and social freedom.

Wikipedia: Milton Friedman

Friedman’s words about the War on Drugs are just as relevant today as they were two decades ago. Currently, America leads the entire world in prison population, both in total number, and on a per-capita basis.

The proper role of the government is to prevent other people from harming an individual. Government never has any right to interfere with an individual for that individual’s own good. The case for prohibiting drugs is exactly as strong and as weak as the case for prohibiting people from over eating.
We all know that over-eating causes more deaths than drugs do.”

-Milton Friedman

The following video is about Milton’s idea about the limited role of government:

Milton’s definitive work on the subject, considered by many to be amongst the 100 most influential post WWII books ever written, is Capitalism and Freedom.

Obama: Impeachment is not acceptable

WASHINGTON (AP) — Democratic presidential candidate Barack Obama laid out list of political shortcomings he sees in the Bush administration but said he opposes impeachment for either President George W. Bush or Vice President Dick Cheney.

“I think you reserve impeachment for grave, grave breaches, and intentional breaches of the president’s authority,” he said.

USA Obama: Impeachment is not acceptable

At this point I’m wondering what Bush or Cheney would have to do in order for Obama to consider their actions a “grave breach” or “intentional breach of the president’s authority”. I guess lying to Congress, lying to the UN, breaking the Geneva Conventions, illegally firing federal prosecutors, claiming the authority to declare martial law, revoking habeas corpus and torturing people who haven’t even had a chance to see a lawyer doesn’t cut it. Would Obama draw the line at gas chambers?

Or, is he hoping to inherit those authoritarian powers rather than abolish them?

Thomas Jefferson was already onto this problem nearly 200 years ago. In 1819, he said: “Experience has already shown that the impeachment the Constitution has provided is not even a scarecrow.” Those who seek power are the last to condemn their authoritarian predecessors who extend its reach.

Mike Gravel on the Colbert Report

This is great. My favorite Democratic candidate in the primaries, Mike Gravel, made it to the Colbert Report, and absolutely pwned Colbert!

Colbert: Let’s face facts. You’re a little bit behind in the polls. As a matter of fact, The USA Today poll has you running neck-and-neck [at 1%] with Someone else.

Gravel: Yes, but I’m here and I’m going to get the Colbert Bump… if you can get me to double-digits, I would consider you as vice presidential material.

Related post: Mike Gravel: People are dying and they’re interested in the symbolic vote?
Related post: YouTube fame propels Ron Paul to mainstream media coverage