Buffett, the legend

Considering the number of books I’ve read on, and the multitude more that are available, on Warren Buffett I thought he is worth a post on this obscure kid’s blog.

This is a man born in Omaha, the son of a simple (yet highly ethical) stockbroker, and later right-wing congressman. From a very young age he was obsessed with business (much the same as me), and he purchased his first stock at age 11. Many years after that first investment, and quite importantly after taking classes under Benjamin Graham, he began his first limited partnership. He had 7 partners, raising $108,000 between them, and Warren added in $100 of his own capital, for good measure. Warren’s worst year in his early investment days was a 7% gain, while the Dow lost ground.

He also simply stepped out of the market in the “Go-Go” period in the 1960s. While everyone was trading like madmen, with wall street hitting 13 million shares traded in one day at its peak, he simply retired his funds. This is key to Warren’s success, he knows exactly what his ideal market is, and he sticks to it for the big returns. His caution also paid off, with the Dow dropping from edging the 1000 bar to below 800 in the space of a few weeks (late 1960s).

After that drop is when he began making big money..he is the second richest man in the world today, worth $52 billion (trailing Bill Gates by a mere $4 billion.) Considering his fortune was made entirely on the stock market, his achievements are immense.

Considering Warren’s success, one would think any investor would make him a priority case study, but it seems most are only interested in the speculative wall street brokers’ advice, paying attention to the stocks and not the businesses behind them. Warren’s focus is on exactly that, the business behind the stock, and that is where I am concentrating my efforts. Understanding the economics behind a business is no mean feat, but the rewards of making the right (business perspective) choice can be great. I’m not interested in the stock’s day-to-day trading price, but in the return on equity, and whether this is growing. I’ll pay no attention to the Broker’s excited phone call, but only to the business and how its consumer monopoly operates.

This lies core in Grahamian style investing. Warren has added his own touch also, providing more answers as to what a stock’s intrinsic value is, and what to do with it once that value has been reached.

Next on the list of books to read is the 1950 edition of “The Intelligent Investor” by Benjamin Graham. I’ll read this and attempt to apply Warren’s expanded theories, seeing where they can be applied in order to achieve greater profits.

Seems as though my blog has taken a turn for the corporate world of late, hope noone is disappointed.
Eric

Rubik’s cubes and the stock market…

Hey

I came back a few days ago after completing the vacation work for my Electrical Engineering degree course. It was a great opportunity to learn and was time well spent. A company like Fluor is truly impressive.

As I posted a couple of weeks ago, I’ve started playing around with Rubik’s cubes quite a bit. I ordered cubes from Cube4You a while ago, and they arrived within 3 weeks (China to South Africa), so I was very impressed. I ordered a 3×3x3 DIY cube which is super smooth (best solving time is 38.11sec), 4×4x4 “Rubik’s Revenge” and a 5×5x5 “Professor’s cube”. I’ve been playing with the Professor’s cube lately, solving time is around 20mins still though.

Since I’ve gathered a bit of a lump sum in my bank accounts I’ve decided its a good time to invest some of it, since the interest earned on the money while it’s sitting in a bank is very very low (with inflation, you’re likely to be losing money.) Even though there is a lot of interest in growth stocks, I am more concerned with value share investing. And I guess most of us have heard the name of the king of value investing, Warren Buffett. I am currently reading Buffettology, after which I’ll read The Making of an American Capitalist. Buffettology has been an incredible book so far. After reading a book on growth stocks, titled “Become your own Stockbroker”, I realise that value investing makes much more sense in the long term. Of course this long term effect allows one to take advantage of the effects of compound interest. I’m trying to learn as much as possible before I make any investments myself, but the lull in the global markets may just present me with an opportunity to buy value shares below their intrinsic value.

As for an update on electronics, sadly, like many of my ideas, it has been all but forgotten. It’s too expensive and I think its wiser at this stage to try grow my savings.

On a side note, my girlfriend and I have been together for over a year now (anniversary was 02/01/08.) I should really upload a nice picture of her.

Cheers
Eric

University results

For those of you who haven’t read the “about us” section, I’m an engineering student at the University of Cape Town, SA. I received my first year results this week, and here they are:

African Studies:: 60%
Technical Drawing:: 71%
Computer Science (Java programming):: 90%
MATLAB:: 96% (Class medal)
Mathematics:: 95%
Physics:: 92%
Engineering1 (power+electronics):: 100% (equaling class medal)

Vacation work, Rubik’s speedcubing and some politics

Hi all

I’m in Johannesburg (yes, the SA capital of crime) at the moment doing vacation work, which is a requirement for my degree. I’ve been doing cable sizing and so on for a refinery up in Africa, and I find it quite interesting. Setting up new cost estimate spreadsheets now.

In other news, I seem to have been cought up in speedcubing. That is, solving a Rubik’s cube as fast as possible. I’m not very fast, but I can live with it considering I’ve only been cubing for a few weeks. My best time as yet is 1:16, looking to hit 40sec then I’ll stop attempting to improve. Beyond 40sec it is most likely that I will need the Fridrich method last layer algorithms, which means that where I now use 2 algorithms to solve the last layer, I will need 54 more of them. I use a layer-by-layer approach, and certain Fridrich F2L algorithms to solve the first two layers (where the name F2L comes from).

I have ordered a 5×5x5 “Professor’s cube”, which should arrive this week. I’m quite keen to start playing around with that.

Although I hardly ever delve into politics, since I’m no expert, what do my South African readers think of the possibility (probability?) of Jacob Zuma as our next president? I am worried about the future of SA with him as the next president. This is the man who thought he would not be contaminated with aids after sleeping with an HIV positive woman, as long as he took a shower afterwards. What kind of message does that send? The only good thing I can see him bring to the table is the possibility of bringing back the death penalty. That may do something about the crime situation. As it is, I don’t feel safe walking in the streets.

Let me know of your opinions
Eric

Robotics project and other updates

Yes, I realise it has been nearly a year since I last posted on my blog. To be honest, I stopped because I no longer had anything of interest to say. I want to keep the blog full of quality content, and so I didn’t want to ramble about my life, since that most likely doesn’t interest many of you. Instead, I plan on using this blog to post more news thats important to me, and to voice my opinion on such goings on. Also, it will be my place to update any of my future projects, such as the potato canon.

So, about the robotics. I’ve liked the idea of robots for a long time, and I’m itching to try build something. It will be very basic and largely just to teach myself about more electronics. Can anyone provide any ideas for me? I want to do a full design before I go out and buy anything, or build anything for that matter. My friend Takumi suggested Meccano parts for the physical arrangements, and it seems like a very good idea. I see they also have nice wheels and so on, even some small electric motors. What household objects are worth raiding for parts? I’d like to get everything I can for free, as I can see this project getting very expensive very quickly.

As for an update on my life, I’m currently studying Electrical Engineering at the University of Cape Town in the Western Cape, South Africa. Really enjoying it at the moment, although exams have been keeping me busy. I have a 4 year contract with my bursar Fluor Corp, and I will work for them when I finish my degree.

If anyone has anything they’d like to see on my blog, in keeping with the themes of course, I will consider it. Just let me know by posting on the site. For now though, its back to Matlab revision.

Fire at will!

Hey

I just took the potato canon to the back yard and had my first successful shot. I tried it a few days ago without success. I am not yet ready to load up the canon with a potato. If the pressure is too much for the PVC, it is going to blow up in my face. So a few days ago I simply left the barrel unloaded and tried to fire it. It was a long shot, and it didn’t pay off. All the gas (deodorant) was simply seeping down the barrel. I had mentioned this to my brother, and I told him I was looking for a piece of ammunition that would trap the gas, but not allow pressure to build up in the combustion chamber. He said I should try a sponge. So thats what I did this afternoon, and it worked.

I nearly had a heart attack when it went off. The igniter didn’t work first time, so I wasn’t expecting it to fire at all. It was incredibly loud and I’m pretty sure I upset all my neighbours.

Before I fire a potato I need to arrange a new igniter. I am not willing to stand next to it when pressure builds up in the chamber. There are two reasons for that, first off I don’t trust the PVC. Secondly, it’s too loud. I want some distance between me and this thing. A set of earplugs would also be a good idea.

A picture of the completed canon is attached. At this stage it looks terrible, but I am waiting to get a new igniter and to get it 100% finished. Then I will spray paint it and maybe make a holster for the deodorant ;) At this stage I am using the old 40mm PVC pipe to push ammo down the barrel. If I build another one at a later stage, I will definitely make a breech loader. This way takes too long.

My Matric Results

I just got back from my school’s prizegiving. I received my final school-leaving results there. They are as follows:

Eng 1st lang(HG): 82%
Afr 2nd lang(HG): 91%
Math(HG): 96% (highest in school)
Science(HG): 93%
Geography(HG): 94%
Compsci(SG): 97%

Considering that I skipped the second last year of school, I am really happy.

AMD, ATI, nVidia, Intel and The Dark Horse

I am not a specialist on this subject, but the current change in IT manufacturing and design landscape does fascinate me. Probably because now more than ever, I am exposed to office politics. but i digress.
The topic, or rather my concern is the death of ATI discrete graphics cards.

Lets make a simple and logical assumption: AMD needs to effectively compete in all spheres of Intel’s domain to become wealthy. That’s where ATI comes in: a designer of wonderful graphics cards. Now buying that talent allows AMD to enter the the integrated graphics sector, and with it’s recently announced Fusion program, things could get really really difficult for Intel. Sure, AMD cant compete toe_to_toe against Intel in the CPU sector, but the Athlon64 is not ineffective wrt to the needs of the end-user. It all boils down to how fast you really need your CPU to be to cost-effectively run office productivity software. This is what the OEMs want. High power at low cost. Bigtin always wants this, with the added criteria of Power usage.
Some might say that Core 2 Duo does all this better than the AMD. True, but there are things such as investment cycles. AMD didnt just suddenly face a shortage of manufacturing capability to keep up with a true upsurge in demand. Most of it’s chips went to the OEMs. It needed to saturate that market to grab as big a chunk as possible of that market’s investment cycle.
Make no mistake, C2D is a mouthwater prospect, but is it really needed right this minute? Simple answer: No.

This could mean that if AMD keeps winning OEM wins, and there are many battles like this, and worse still, they are cyclic, then Intel’s voice will be loudest in the gaming sector only . Rather niche isn’t it? There is a gap here for more revenues. Losing bread & Butter markets like OEM wins requires the investors be kept happy another way, and thats the discrete graphics card market. This is probably AMD’s Achilles heal. Sure, Intel could try and make a better integrated solution that matches AMD’s offering, but at this stage, they would be pretty even keel in terms of offering, but AMD’s is the more ‘interesting’ prospect. I do believe brand loyalty has gone the way of the Dodo, if you get my drift. Nothing like a couple thousand subpoena’s to rock that boat abit.

So can Intel on it’s own develop a worthy competitor to the GPU market traditionally dominated by the Red and Green teams? Of course they could, but it could be difficult. Very difficult indeed. Unless they get help bootstrapping them into instant competitiveness. Rumors were floating around about an nVidia buyout. Somehow, I dont quite see that happening just yet. The nvidia CEO once stated that he wants nVidia to become the next intel. He can’t realize that goal if he sells out.

Now one would think that buying ATI would give AMD an instant advantage in both graphics sectors: the discrete and the integrated markets. Yet, things seem very very quiet on the discrete front. One would also believe we would be seeing more chipset developments in the roadmaps considering ATI recently stunning successes at chipsets for AMD systems, that is the RD480 and namely, the RD580 chipsets.

So the question that crossed my mind this morning is: is this a misstep due to the distraction provided by the buyout of ATI, or is this a deliberate attempt. Attempt at what is the question? and I believe it’s an attempt to not upset nvidia until such time it has won enough Bread & Butter markets to grow its financial war chest. and THEN only start squaring up for battle in the discrete and chipset markets again. (ATI is does very very well for itself in the commercial electronics sectors mind you. That is another curiously understated portion of AMD’s recently updated portfolio of products. Hmmm)

Yes, all very simplistic arguments. But AMD has been very very quiet of late. There are ‘new’ products coming to market, but very little fanfare. IDF is traditionally a good ambush marketing occassion for AMD. AMD was a no-show this year. The newest graphics tech from ATI, the R600 is verrrry slow coming to market, and there’s no solid GPU roadmap. Some talk of an R700 that will introduce a modular design approach, a branching from the currently monolithic method of GPU design if you like. But no test silicon. Nothing. zero. Zilch.

So what has AMD been doing all this time? In gaming parlance: OEM FTW!

Canon Update

Hey

I received all the new PVC piping and fittings on friday. I spent some time today cut all the pieces to size, and sanding down the areas that are going to be cemented. All that is left to do is set up the igniter, drill the two holes for the screws into the chamber, and cement the PVC pipes together.

I expect that it will be finished by late next week.

Eric

Combustion Cannon update

Hey

So I picked up most of the parts on Friday afternoon to build the potato cannon. Unfortunately the piece of 40mm pipe that is to be used as the barrel is not perfectly straight. I also had to get a whole series of reducers, 110mm > 90mm, 90mm > 50mm, 50mm > 40mm. To solve both problems, I think I’m going to order a new barrel of 50mm, and ask them to ensure that it is perfectly straight. Using th 50mm barrel will definitely lower the projectile speed, but it does mean that I can fire larger projectiles.

I want to start actually constructing the cannon once I have all the parts I need. The PVC will also need to be cleaned properly.

I’ll keep you informed on any developments.

Eric