Happiness by Command

Bhutan's Govt. claims to manage the lives of its people for greater happiness! Sounds more like prison to me!

Last year the BBC visited the landlocked Himalayan region, paying a visit to a country that only recently legalized the use of TV broadcasting and Internet service.[2]

Throughout the segment, viewers learn that residents of this country live in a Hollywood-esque feudal culture, but not by choice.[3] Rather, they are omnipotently regulated by an absolute monarch and many other pillars of Statism, such as legislators  who have seen fit to ban tobacco, some street advertising, and even plastic bags.[4]

All this in the name of preserving the traditional culture of short, brutish lives. Purportedly happy lives.

Not unlike their socialist neighbors, much of the legal economy in Bhutan is managed by 5-year plans.[5] Under the rallying cry of stemming the tide of "commercialism" brought on by — presumably — unhappy Western culture, stringent visa requirements prevent many foreigners from even visiting this bastion of happiness.[6]

Natives are legally required to wear Buddhist clothing known as gho and kira and strict regulations prevent many employment opportunities to those not of Bhutanese descent.[7] Thus, few outsiders get to experience this happy lifestyle first hand.[8]

Source: Happiness by Will or by Writ? - Mises Institute

Economic World Map

A map showing the distribution of world income.  Pretty neat!

Shared items from Google Reader are available

I use Google Reader to subscribe and read various blogs and news sites using RSS. It has a very nifty feature to share and publish items that you like. You can read my shared items through this RSS feed. The latest items from the same RSS feed are also available near the middle of the right column on this blog.

I actually liked the earlier version of the Google Reader. In the latest update, Google dropped the facility to search through the subscribed feeds.

Cisco Ups the Stakes in the Outsourcing Game

SAN JOSE, Calif. // Wim Elfrink's climb up the corporate ladder has taken him from Holland to France, Italy, Switzerland and the United States.
But his latest promotion will take the Dutch polyglot far from his Western comfort zone. As the chief globalization officer at Cisco Systems Inc., Elfrink is taking his wife, two daughters and the family dog from suburban Silicon Valley to Bangalore, India.

...

The 50,000-person company wants 20 percent of senior managers working at the proposed Globalization Center in Bangalore by 2010. The executives will be a mixture of rising stars from San Jose and Bangalore and talent plucked from acquisitions and competitors worldwide.

International business experts say Cisco's executive migration is a shrewd move that should give high-ranking employees critical insight into one of the world's fastest growing economies.

Source: Cisco Shifts Executives to India - baltimoresun.com

Bay Area has 2nd worst traffic jams

Via Burbed, America's Worst Commutes - Forbes.com.

California wins the award for worst traffic jams, with Los Angeles and the San Francisco metro area coming in first and second. The Riverside-San Bernardino area tied Orlando, Fla., for ninth place. In Los Angeles, the average annual delay per traveler is 93 hours.

But don't you worry, the house prices will continue to rise as they always have!

China vs India

While India and United States are natural allies, it is the fear of China that is currently driving United States and India into each other's arms. In "The New Great Game",  Daniel Twining details China's plans to contain India's influence through numerous low intensity regional conflicts and how it is in US interest to help India. A must read article.

Investment Strategy

Over the last few days, I have refined my investment strategy and decided to put it in writing. The idea is to get feedback from others, discover any holes/mistakes in the strategy and develop more commitment by making it public. So, here is the basic philosophy:

1. The goal is get above average returns (compared to the market, or more specifically S&P 500 Index) after inflation and taxes
2. Invest for the long term. No market timing or buying mediocre  companies  even though  they are cheap. It also means, be prepared to handle low returns (or potentially negative returns) for an extended period of time (say, 4% real returns over next 15 years). This is important, because stock market has returned a huge returns in the recent past, and thus, it is likely to perform much more modestly over next many years.
   
3. Don't loose money. Best way to do this is to look for margin of safety when buying stocks of good companies. However, to prepare for the worst, invest only after putting enough money aside for taking care of important needs and prior commitments (such as mortgages, insurance premiums, etc.).
4. Invest in the companies that have strong competitive advantage (or in Warren Buffett's words, a wide moat). One sign of a competitive advantage is higher returns on invested capital. But the best sign is a history of price increases. If the company can consistently increase the prices of its products, despite of the competition (and even while competition is actually reducing the prices) then the company has got a wide moat. The company that cannot raise the price of its product will loose to the inflation.
5. Another characteristics I am looking for is the low continued capital investment. If a company has to make heavy capital investment then you can bet that it doesn't have a wide moat. Many tech companies fall into this category. They have to keep investing in the R&D just to stay competitive.
6. Honest and straightforward management. Look for simplicity and clarity in annual reports and other filings. Also, letter to the shareholders by the Chairman and CEO is critical. Mistakes should be acknowledged and there should not be smoothing out of the earnings. Management focused on selling the products and not the stock. Management focused on  the long term business performance, and wiling to take short term hits. No excessive stock options and dilution. No buybacks just to increase the stock option compensation. Look for high insider ownership to ensure that management's interest is aligned with that of shareholders.
7. Easy to understand business; good recognizable brand
8. When to buy - Out of favor temporarily. Panic selling.
9. Stay within the circle of competence -- consumer brands, retailers, etc.

Over the next few days, I will refine this strategy based on the feedback and review of the reference material. I will also post references to the articles, books, and other items, and also mention a few stocks that I believe fit the above criteria.

Travel Booking Tips

I was searching for last minute vacation deal to Mexico for this Christmas holidays. Based on the  Travel Search Engines review from the Consumer Research Magazine, I searched the Kayak, and  the SideStep sites for flights to Cancun from San Francisco. Kayak consistently turned up  pretty good deals.  In fact, Kayak deals were cheaper by $250 per person on average. All the cheap flights were by Alaska Airlines (found on Orbitz and CheapTickets). I couldn't find the same flights on the Orbitz and CheapTickets when searching directly on those sites.

Kayak allowed me to only enter adult travelers. There is no option to add infant to the flight search. So, I tried the exact same option on Orbitz directly and flights from Alaska Airlines were now available. Apparently, Alaska Airlines does not handle bookings for infants, even on their website also. Finally, I called up CheapTickets sales and got added my daughter to the flights manually as there is no way to edit the flights found through Kayak.

It's pretty strange that neither the Travel Search Engines nor the Alaska Airlines caught this issue. So, if you want to take advantage of Alaska Airlines flights through Orbitz or CheapTickets beware of this issue.

John Kerry apologizes for a botched joke

Kerry Apologizes for 'A Botched Joke'

Sen. John Kerry apologized for "a botched joke" about President Bush's Iraq policies that led Bush and fellow Republicans to accuse him of insulting U.S. troops.
...
At issue is Kerry's speech to a group of California students on Monday, where he said people who don't study hard and do their homework would likely "get stuck in Iraq." Kerry said he mangled the delivery of a line aimed at Bush - according to aides, language which was originally written to say "you end up getting us stuck in a war in Iraq."

Belated and begruding apology! One question tough, the students who laughed at his joke couldn't have known it was a badly delivered joke. They believed the John Kerry's "joke" as it was delivered. Not sure, what reaction John Kerry had when he heard the laughter. He could have corrected himself and admonished the students for laughing at the expense of the soldiers.

Link: Pasadena Star-News - Dem stars rally on campus.

Kerry then told the students that if they were able to navigate the education system, they could get comfortable jobs - "If you don't, you get stuck in Iraq," he said to a mixture of laughter and gasps.

Science and Free Markets

I was very glad to see free markets being defended by someone from academia! The comparison between scientific progress and the free market is right on!
Link: Pure Pedantry : On the parallels between science and the free market.

I have always been struck by the parallels between the free market and the scientific enterprise -- yet I am puzzled that so few scientists embrace free markets.

Let me put it this way. What would happen if the government decided what scientific questions we should pursue by fiat? Most scientists would tell you that new discoveries would be stifled because the scientists could not pursue those questions that they find most interesting. Bureaucrats would not be as educated in all the areas the scientists were studying, nor could the enterprise benefit from the plurality of techniques employed in the absence of central planning. Science -- it would appear -- benefits from a form of entreperneurial competition.

Yet, most scientists -- at least the ones I have met -- are not whole-hearted proponents of free markets. Most scientists I have met have a strong socialist bent. Why they fail to see how what is beneficial to the process of science would not be desirable for the rest of society is a source of continuing puzzlement to me.

...

Scientific enterprise would be perfectly amenable to central planning if we knew what the answers would be in advance. Unfortunately, we don't. Similarly, state planning of the economy would be lovely if we knew what technologies would turn out to be important and where resources should be allocated years into the future. Unfortunately, we don't. Because we do not operate in a world filled with ideal information, Phelps argues that society benefits from the dynamism and creative destruction of the free market. I would argue that the same premise applies to the scientific enterprise -- and that scientists should recognize the parallel.