Mid June Update

...sort of tired these days. Rob just started his new job in Seattle and Rachel has started her new job in Tacoma. We live right in between. This still follows our "live where you work" anti-urban sprawl ideal - at least as much as possible. We've now realized that Jackson is a chub - an 8 lb yorkie is twice the size as a normal "teacup" yorkie. Jeanne is currently visiting us from Portland. Rachel and Jeanne made apple pies - we gave one to our neighbor as a "welcome to the neighborhood but in reverse" gift. Eric (the neighbor) had taken our mail and newspapers from our front porch last week so potential thieves wouldn't know we were gone. I just sent an e-mail to my old Peace Corps colleagues. I'm sure we're all making the world a better place in our own ways. I say that only half jokingly. The other half is serious - our team of volunteers was pretty fun, talented, and motivated. Back to our house: it smells much better. Yes, old houses have a bit of a funk. But nothing that those Pier 1 scenty-oily-sticks can't fix.

This Old House

A few days ago we said goodbye to our friends in Houston and boarded a plane for Seattle (special thanks to Katherine, Jerrod (visit their blog), Ryanne, and Jude for your help, encouragement, and party-planning skills). The movers had already come, packed, loaded up boxes and our cars. On the plane, sedated Jackson was a trooper. He didn't make a sound until we exited in Seattle. At which time he started squealing like a pig, reminding us that he hadn't gone to the bathroom in about 7 hours.

We are now officially Seattle residents. Home is ours for the next 13 months. It's tucked into the Fauntleroy area of West Seattle, between downtown and the airport. We have two extra bedrooms, an extra bed, and extra sleeping pads, so we hope our family and friends visit us often. Consider it Rob & Rachel's Bed & Breakfast. Caffe Ladro is just down the street, and we have a nice little view of Puget Sound, Vashon Island, and Mt. Rainier.

Photo tour of our new (rental) house:
White picket fence
Front door & yard
Side angle
Dining room
Living room
Another dining room angle
Cozy kitchen
Retro bathroom
Bedroom # 3 (office)
Master bedroom (loft)
Another master (loft) angle
Back patio
Back of house
View of Puget Sound

Winding Down in Texas

Rachel and Rob have lived, learned and grown much these past three years in Texas. Many new friends, coworkers, and classmates have enriched our lives considerably. We now move on to a new adventure in Seattle. The movers come tomorrow, the plane leaves the next day. A bit of uncertainty and excitement remain on the horizon. After five years living in Romania, Austin and Houston, we are now returning to our native Pacific Northwest. What a journey. Drum Bun!

Rice Graduation

Rob is done with grad school - here is proof:



(PS - Rachel was done with grad school back in 2005)

We Don't Need No (more) Education

Quick update to family on what you probably already knew:

Rachel is now Rachel, CPA. Her certificate finally came last month, so she is fully licensed to do your taxes or be called to court as an "expert witness." Ask her about energy derivatives and FAS 133. Once you get her going, she won't quit. Its like talking sports to her. She's also a graduate of The University of Texas, McCombs School of Business, Master in Professional Accounting.

Rob just finished his MBA from Rice University's Jones Graduate School of Management. I'm not about to toot my own horn, so I won't say much, except that I'm happy to finally be done. Without a doubt the best two year investment in my young life; I now know how to create a forward interest rate curve, value your company, and identify your companies' strengths, weaknesses, and how to fix them.

Prior to graduate studies, both Rachel and Rob are proud graduates of George Fox University in Newberg, Oregon.

GOOG 411

A very handy tool for road warriors and soccer moms alike: 1-800-GOOG-411. The good folks at GOOGLE (NASAQ: GOOG) have integrated their online service with a toll-free number that lets you get directions, phone numbers, and information about almost every company in America. For instance, you're driving through Centralia, WA. You know there's a McMenamins somewhere off I-5, but you don't know where. A quick GOOG-411 cell phone call reveals its location and connects you for free. Repeat this for almost any situation you find yourself in. This is yet another way that technology is making the world a smaller place.

News Junkie

According to the Pew Research Center, only 4% of America potentially (but not likely) knows more current events than I do. What do I do with this vast pool of mostly useless knowledge? Maybe one of you will be a contestant on a game show, and you'll use me as your "phone a friend."

I'm sure Rachel would score highly too. She's become quite the current events buff since the Peace Corps provided us with 2-years worth of Newsweeks (one of the "perks" of service to our country). She's busy creating energy forward curve benchmarks, otherwise her score would be listed here too.

Where do you score? Check it out here: Pew News IQ Quiz

PSA: Allergy Season

If you have allergies, give Allernone a try.

As a kid I lived with horrible allergies, 365 days a year. I downed Benadryl, Claritin, and Allegra, which caused my heart to race, gave me bad dreams, and required that I never miss a dose. Eventually, an allergist (ie, a “super expensive” luxury) concocted a unique mixture of inactive allergens that she shot into my arm every week for three years. When I moved away from Texas, my allergies went away. Six years later (I thought I was “immune to all allergies” by this time), we moved back to Texas, and the allergies came back overnight. It was horrible. Rachel was frustrated, maybe she was reconsidering her 3 year marriage with me – I don’t know… A lady at Whole Foods begged me to try Allernone. “But it’s $30 a bottle!” Her response: “Do it for me!” Unnecessary story short, I tried it, and it worked like a charm. 3 years later, my allergies are nonexistent. All I do is take about 10 drops of Allernone, 2x a day (I’m down to 1x per day), and I have no allergies whatsoever. Dog, ragweed, mold, whatever. Allernone uses the same ingredients in expensive allergy shots, but instead of injecting it into your arm, you drop it under your tongue. It doesn’t make your heart race and it doesn’t make you sleepy, because it isn’t medicine. It’s just inactive allergens that your body uses to build up an immunity. Long story short, if you’re suffering like I was, give this stuff a try. I laugh when I see those ridiculous Claritin commercials, because they are so expensive and ineffective compared to Allernone.

Scootin Around Texas

A few weeks ago, Rob and Rachel visited the San Jacinto Monument. Not many people know it exists (even in Texas), but it's worth a trip if you happen to be visiting Houston. At 567 feet, it's 12 feet taller than the Washington Monument, and situated in the actual spot / swamp of the battle where Sam Houston exclaimed, "Remember the Alamo!" Given its size and the sacredness of its location, we found it a little bizarre that it was so unkempt. Let's just say there is a lot of opportunity for improvement around the facility. For starters, the sidewalk that surrounds the reflecting pool is sinking into the water...







Recent photos of Jackson for Grandma (Carol):
Jackson at 4 months
Jackson eating flowers
Jackson getting air

From yet another trip to Austin (3.30)
Rachel at the Blue Bell factory
Rob at the Blue Bell factory
Bluebonnets in Hill Country

Houston Rodeo and Livestock Show

For now I have just posted pictures from the event - but seriously, the calf scramble was the funniest part of the rodeo so I might have to at least explain those pictures...


Rob wore his Texas shirt to fit in with the cowboys.


The calf scramble... a bunch of kids are given the challenge of wrestling a calf to the ground and pulling it into the middle of the arena - If they succeed, they are awarded $1,000 to buy their own calf to raise.


Rob was most excited about the fried food offerings of the rodeo. He ate a bag of fried Oreos - they will seriously fry anything.

Off to Fredricksburg

In honor of Rob's last day of Spring Break (and his birthday), we took a little trip to Fredricksburg, TX. For those of you who are not familiar with hill country, it is about an hour and a half west of Austin. We took Jackson with us. He does okay in the car and loves meeting new people. It was a beautiful day!

We came home and enjoyed a nice long weekend of watching Smallville episodes on DVD and checking out rental properties in Seattle. We also went to a swanky restaurant called Brennans to celebrate Rob's birthday!



Here is one more picture of Jackson... We will find out on Saturday for sure, but I'm pretty sure he's about 4.5 lbs now. He just keeps getting bigger and bigger.

Deconstructing WACC

"Business School is WACC!" Google that in quotes. Looks like this catchy Urban Outfitter-like jingle has never been used before in the capitalist history of the world. You heard it here first. I would TM it, but it doesn't really identify a product or service offered by Rob & Rachel Co.

What is WACC (weighted average cost of capital), how do you calculate it? You may not care, but it is sort of interesting. It's a great way to impress potential employers if they ever cared to ask how one values something. In short, to determine the value of something that makes money (like a rental property, a baseball player, a dump truck, or a company), simply add up the cash you expect to get. Then divide the cash by a small amount. That's the value. Why divide? Time value of money. For example, if inflation stayed a constant 3% for the next couple of decades, then $1M in 2020 would be worth $681K today. You have to divide future cash by something. In the world of valuing companies (or anything with a debt and equity component), we use an average of the cost of debt and cost of equity - hence WACC:

[equity/(equity+debt)]*cost of equity + [debt/(debt+equity)]*cost of debt*(1-tax rate)

Here's the step by step on how to calculate from scratch:

1. Equity, debt & tax rate = available and easy to find. Equity & debt are in actual dollars, tax is a percentage.
   
2. Cost of Debt = percentage of what you're paying for your debt / loans. If it's a home, what is your loan interest rate? If it's a company, how much are you paying for your debt? This is super easy, found in the 10K or easily calculated by taking interest expense divided by debt. It's usually less than cost of equity.
3. Cost of Equity = A fluffy but important (percentage) measure of how much equity-holders (investors) expect to be compensated for gracing you with their money. If you search the textbooks, you'll get a doctoral thesis on whether or not humanity can accurately measure cost of equity. Never mind the fluff. Use the CAPM method of calculating cost of equity: Rf + Beta*(Rm - Rf)
   

• Rf = Risk Free Rate. Basically Rf = interest rate for treasury bills. Granted, in 50 years when China dumps our bonds on the world market, our t-bills won't be quite so risk free.
• Rm = Market Risk. Use whatever you think is a good representative market for that which you're valuing. If it's a company - use an appropriate benchmark like S&P 500 (if you're valuing a big company), NASDAQ (if valuing a tech company), or Fidelity Aggressive International Fund (if valuing a small Romanian toy company).
• Beta = measure of risk for your firm. Obtain from Yahoo! Finance, or calculate it yourself - it's very fun!
• Download onto Excel the daily returns for your firm & the daily returns of an appropriate market benchmark.
  
• Calculate the daily percentage change for each
• Beta = Covariance (% changes for firm & % changes for benchmark) / Variance (% changes for benchmark).
  

I proudly admit that knowing how to decompose WACC sealed me an internship last summer (even though, ironically, Intel discounts at 15% for everything).

Yet Another Roadtrip

Up to Austin this time. Had a weekend, took advantage of it. No great stories to speak of, but Trudy's was amazing as always. Whole Foods' HQ + flagship store was great, and Town Lake was a blast with little Jackieboy.

Trudy's - our favorite Mexican restaurant in Texas. If you're only there once, get the stuffed avocado with suiza sauce (in foreground).










Town Lake is always a fun destination if you are visiting Austin. If you visit between July and October, you can see the bats.

Galveston Field Trip

The day after Aggieland, we ventured down to Galveston... had no idea it was during Mardi Gras (Texas-style - just as much drunken debauchery, but with a redneck tinge). Needless to say, we tried our best to avoid the trashy beer fest and stick to the beach. Galveston ... what can you say. It's there. I bet it would have been a rockin' town if the 1900 hurricane didn't wipe it off the map.

Running into the sunset










Obligatory hold-out photo










Dirty dog

Road Trip to Aggieland

Whoop!

Hey, let's go to College Station! It's a lazy Saturday, not much going on (final exams maybe...). And bonus points - we'll have something to talk about with our Aggie friends and coworkers other than, "so uh, how about that Freebirds. They sure do make a mean burrito." Often misunderstood, Texas A&M to many (including Rob and Rachel) seems like America's biggest cult. It is home to over 40,000 students any given year, but the school does such a great job of integrating every one of them that after graduation your classmates end up being lifetime friends and business contacts. Even the two- or three-dozen Aggies at Rice's MBA program share a kindred spirit that the rest of us can't quite understand.


We return to Houston super impressed with pretty much everything and everyone. We started our day at Messina Hof Winery where we enjoyed a fabulous yuppie lunch. We highly recommend the place. Their facility reminds us a lot of a typical vineyard in Oregon, but they also have a 4-star restaurant and a bed and breakfast. If we were in Texas another year or two, we would have enjoyed a restful weekend stay.

Not sure what else to see, the server recommended we walk our dog around Barbara Bush's pond. Okydoky... not sure what that means, but it's next to the Bush presidential library. We never saw ourselves visiting the Bush library in College Station of all places, but it was right there - when else would we ever go? We paid our $6 and ran around the museum. We were very impressed - one of the finest museum's we've been to (and we have seriously been to a lot in the seven years we've known each other). George was a great guy - hopefully he will be known as one of the best 1-term presidents.



After driving by Kyle Field (in Rob's opinion, in the pantheon of college football stadiums, this is in the top 5), we stopped for a caffeine pick-me-up at Starbucks, and ate dinner at a local dive, the Dixie Chicken! Yes, it was a dive of a place, but it's so popular! We are sure to bring it up in conversation with any Aggie we run across in the future.

What a good day... who knew College Station was so fun and quirky...

Li'l Jackson Hole

We're not going to be like "those people" who talk about their dog all the time ... but our family and friends asked for more pictures of little Jackie Boy. Click here:
Acting coy
Family photo
Attack dog
Those silly yorkie totes

F-Score

Want to earn a free buck? How do Wall Street analysts justify their rock-star lifestyles? By taking their job seriously. They take the time to learn about obscure advances in finance and use quantitative tools discovered by PhD students from around the country to outsmart the average Main Street investor. One such tool is the "F-Score." A quick background and summary:

• For years, smart people (Fama, French, et al) have known that companies with low market to book ratios outperform companies with high market to book ratios. This in itself is no doubt a tool that traders look for on their Bloomberg screens.
• Among low M/B (or B/M) stocks, Joseph Piotroski sought to discover some characteristics that separate the winners from the losers. I'm guessing he ran a whopper of a regression with dozens/hundreds of lagging ratios and indicators against prospective stock returns.
• In the end, he came up with the insanely simple F-Score model that Wall Street uses (among many other models) to help allocate their portfolios.

And here it is:
Look at the most current financial statements for a company. Ask yourself the 9 questions listed below. If the answer is "yes" enter a 1, "no" enter a 0:

1. Is net income positive?
2. Is operating cash flow positive?
3. Is operating cash flow > net income?
4. Has return on assets increased (from the prior year)?
5. Has gross margin improved?
6. Has asset turnover improved?
7. Has LT Debt / Total Assets decreased?
8. Has the current ratio improved?
9. Has there been no new equity issuance?

Sum up the numbers. Buy and hold companies with a score of 8 or 9, and short stocks with F-Score of 0 or 1.

Seriously, a Female President?

Rachel wanted her colleagues to know that, indeed, the "world" is ready for a female president. However, whether or not "America" - the most enlightened corner of the free and democratic world - is ready for a female president, remains to be seen. Though we don't have the time to exhaustively research the many female presidents and prime ministers of the world, I (Rob) do know that since 1960, the following countries have had female presidents or prime ministers: Sri Lanka, India, Israel, Argentina, Central African Republic, Great Britain, Portugal, Bolivia, Dominica, Iceland, Norway, Yugoslavia, Malta, Netherlands Antilles, Philippines, Pakistan, Lithuania, Nicaragua, Ireland, Ecuador, Haiti, East Germany, Burma, Bangladesh, France, Poland, Canada, Burundi, Rwanda, Turkey, Bulgaria, Bermuda, Guyana, New Zealand, Switzerland, Mongolia, Panama, Latvia, San Marino, Indonesia, Serbia, Georgia, Austria, Liberia, Chile, Germany.

Several countries have had more than 1 or 2 female heads of state. Yes, that list includes such bastions of female empowerment including Pakistan, Indonesia, and Bangladesh. This list also does not include queens or heads of state prior to 1960. I can name another couple biblical heads of state (or "kingdom"), as well as a couple leaders of ancient China and medieval Europe. Probably the history books of most other countries list other female heads of state.

Is the world ready for a female president? Yes. Is Good Ole' America? I don't know, what do you think?

Sharin' the Love

We have a new addition to the family! Li'l Jackson! A little 2 lb bundle of spitfire and nervous joy. We're not sure of his full name yet, but we're leaning towards Jackson Cannery Mardock. We will have more to update soon. Maybe tomorrow after our first funny story.































Update: Night two was very bad. Who is the poorer of the two: poor Jackson, missing his mom, dad, and brother ... whining, whimpering, and barking all night long? Or poor Rob and Rachel, who missed out on a good 3 - 4 hours of sleep? This will be great practice for children!

Update # 2 : Li'l J-Dawg and his parents are doing much better now. Here are some photos: 1, 2, 3.

Delta to Merge with Northwest

Prediction for today (Jan 13): Delta will announce a merger with Northwest Airlines within the next 10 business days. Why?

• To thwart a hostile bid by scrappy US Airways
  
• Because airline mergers are inevitable in the very short term (this year)
• Because James Whitehurst, Delta COO, canceled a Deans Lecture Series speech at Rice MBA that was suppose to occur next week

Another prediction: Albus Dumbledore was not killed by Professor Snape. He will "pull a Gandalf" and help Harry take on Voldemort! In the process, Professor Snape will be killed while saving Harry's life: he was a good guy after all.

Update: Okay, I took a chance. Delta will still probably merge with NWA, but it may take a month or two...

Christmas '06

Goode Co. Brand Audit

Example of what a brand manager thinks about when analyzing his or her brand. I can do these for a living. Page 1, 2, 3, 4 (hopefully in the future Blogger updates its picture / document uploading capabilities).

If Elected President

Did you know that 5000 Americans die every year from food-related illnesses? That's more people every year than all those who perished on 9/11. If elected president, I promise to fight the "war on food poisoning" and to bring the fight to the bacteria before the bacteria brings the fight to us. You're either with me or against me.

"My View"

In preparation for a job interview, a friend asked me, "be sure you have an answer if they ask your view." My view? What do you mean? "Your view of the economy, of financial markets, of a good stock pick..." One better than that - here is a whole slew of various views. Some of which have already come true:

Urban trends: Today the AP reported that more suburbanites live in poverty than urbanites. My prediction has come true: People moving to the suburbs to escape crime and poverty are now confronting it in the suburbs. Suburban master-planned communities' inexpensive home boxes and strip malls that were once gleaming stucco and brick (a whopping 5 years ago) are already showing their age and looking more dilapidated than the urban center of cities. The guy I wrote to in the WSJ, Joel Kotkin, likes to say the idea of urban redevelopment and responsible development are crazy liberal and elitist. He always counters with the great example of Sugar Land, TX: a microcosm of America with an abundance of jobs and cheap land. I'm not sure when was the last time he saw Sugar Land (or where in Sugar Land he lives), but it's not looking that great. Houses that were built 10 years ago are already over-run with broken down cars and weeds. The MBA nerds who developed the communities have moved on to their next projects, while the good citizens with dreams of starting a family and owning a swing set and swimming pool (death traps! :-) are stuck watching their neighborhoods turn into the hood. Grand 6-lane boulevards in Sugar Land are now lined with shuttered storefronts, tiny propped-up trees, litter, and crabgrass.

Stock pick: I love Starbucks, it would be a blast to work there. So should any prospective Starbucks employer read this, be impressed rather than annoyed when I say "short SBUX." How is it SBUX can trade at 50 times its earnings? Ostensibly because Wall Street expects its sales growth to continue at 20% annually for at least the next 10 years. More likely there is a disconnect between expected performance and behavioral bias. A 10 year 20% sales growth justifies a PE ratio of 50/1. You don't have to be a fundamental analyst to know that something is wrong with that scenario. This year SBUX's revenue growth was a whopping 19% - congrats!. But despite Starbucks' recent announcement to increase its long-term store opening total to 40,000 (from 30,000 ... currently there are about 13,000 stores worldwide), a 10-year 20% revenue growth rate is highly unlikely. That is like saying Wal-Mart will grow by 20% for 10 years when investors know that would equal a Wal-Mart on every street corner (including Cedar Mills, Oregon).

Update: As of May 1st, if investors followed this advice in November, they would have earned about $1600 for every $10,000 shorted. SBUX is a great company, and I hope I can work there one day. This analysis just illustrates how basic industry knowledge can yield big gains.

Investment strategy: Unless you have millions to spend in a hedge fund (or an ETF - poor man's hedge fund), simply invest in a passively managed index fund. You can capture some positive beta in a passive fund - mostly because the management fees are kept to a minimum. Active managers try to capture alpha but end up performing virtually the same as passive - except active management costs money! In the end, you're better off without their help.

Next Step: optimize your portfolio. To do this, all you need is market returns. Calculate as follows: 1) Make a list of all the funds you can invest in and get their returns for the last 5-10 years. 2) Find out the annualized mean and standard deviation for each of the assets. 3) Calculate the correlations (or covariances) between them. Excel does this in one simple formula. 4) Use Excel's solver feature to determine how much of what fund to invest in. Easier said than done - Excel doesn't have a "portfolio variance" function, hence my earlier blog post complaining to Microsoft. If you want to learn more about a 2, 3, or 6 asset optimization model, just ask. Anything above 6 assets is just silly unless you're willing to learn Excel's ridiculously tedious matrix multiplication functions (If my employer wants this, I may learn it).

Term life insurance vs. whole life insurance: The basic premise of Todd's and my investments project is "buy term and invest the difference." That is: buy temporary, short-term life insurance. At the same time, start investing all of the money saved from not buying whole life insurance into your 401k. Specifics of the analysis can be found here and here.

Macroeconomy: I envision a day - sooner rather than later - when something happens in US / China relations that causes the US economy to basically collapse. Perhaps set off by a geopolitical event caused by some minor tiff. Or perhaps because the US Congress will keep adamantly pushing China to float its currency against other currencies. But the end result will be the US stuck with a trillion dollars of debt to pay off. The big issue with floating currency is that China keeps theirs artificially low. For the longest time I didn't quite understand what this meant. Basically, China keeps its currency "artificially low" by economic chicanery. The biggest trick up its sleeve is to buy lots and lots of US bonds. China: "We buy US bonds today - the most secure, no-risk investments on planet Earth, and get a modest return from the US government tomorrow." A couple of the results of this are seemingly innocuous act are:

China's currency is "artificially low" because China is buying so much US currency, thereby making sure that its currency, the Yuan, stays incredibly stable. For the longest time it was 8.2 yuan : $1. Seriously, for like 10 years it was 8.2 yuan to $1. In the meantime, every floating currency in the world did something more interesting than that. Now Chinese mom and pops can sell their goods to America and the rest of the world at prices that cover their own costs + profit. And yet because their currency is so low, whatever price the mom and pop sold their plastic toys for is artificially low and American (or any other countries') firms cannot compete. This is the main gripe of the US Congress. "Our firms cannot compete against an artificially low Chinese currency!" Hence the entire US economy is also affected. Additionally, US home mortgages are kept artificially low. China subsidizes our ability to obtain low mortgage rates.

Eventually China will change its domestic policies and it will effect the USA. China will stop buying US bonds and sell its US bonds. The US will be stuck with a horrendous bill to pay. If the US doesn't default on its debt, the good US citizens will be forced to ante up. Big increases in long-term interests rates, no more toys inside Lucky Charms, and significant job losses - especially in the service sector. You can imagine the spiraling effect of this scenario. And the sad truth is that it will happen. Eventually, China will sell its US bonds - its inevitable. No one really seems to care about this, but your economic future depends on how China handles its domestic policy.

Armageddon: I remember watching the 1972 ultra-cult Christian classic (a very niche category) video A Thief in the Night with fear and trembling. Imagine “bell-bottoms and free love” meets “fire and brimstone, end-of-days eschatology.” The premise is as follows:

· Step 1: Every believer disappears

· Step 2: Every disbeliever who “almost believed” was left behind on earth to suffer seven years of intense persecution from non-believers. Non-believers progress from “what happened, millions of people disappeared” to “let’s all fight each other” to “we need a leader to unify us – this guy seems really charismatic, let’s elect him our supreme earthly leader” to “oops, we chose our leader incorrectly. I guess he was Satan incarnate. Here comes the Lord on his fiery chariot to punish us all.”

Along the way, meteors, pestilence, and war ravage the earth for seven years. It’s a very intense story, and both A Thief in the Night and Left Behind paint an extremely bleak picture. Throughout it all, however, Christians escape as being virtuous and smart; while those left behind are carnal, primeval warmongers.

All that to say: The book of Revelations states that “Only God knows when He will return,” and that any attempt to guess when he returns will be utterly futile. Despite this truth, Christians universally believe that end times will be caused by the violent tendencies of non-believers. Therefore, it is reasonable to deduce that because Christians seem to universally think Armageddon will occur almost uniformly the same way, God will no doubt surprise us all.

I foresee that Christians themselves will unwittingly cause Armageddon. Yes, Christians just like me. My “view” gets hazier after this. Several scenarios could follow, including:
General macroeconomic malaise covers the planet. Possibly instigated by China dumping trillions of dollars of US debt, possibly caused by the Middle East malcontent with seeing the excesses of Western culture as their own governments continue to espouse 7th Century economic principals (such as “interest is immoral”). More likely, the divide between the haves and the have-nots continues to grow, creating Marxist-type leaders (a la Hugo Chaves) that endorse class warfare. Economic imbalances beget bickering, begets fighting, begets terrorism, begets warfare. The US enters the thick of the problem, trying to solve the world’s ills by using what Jim Wallis calls our only diplomatic tool, “the hammer.” We pound and pound at the world, trying to solve its problems, until we unwittingly lead the world to the point of no return.

The key to this scenario is that all along, the US was run by a strong, evangelical Christian. Someone who reflects the voters’ own values. Someone that reflects their own moral principles. This leader isn’t necessarily good, but “good” leaders are no longer necessary because we’ve created a political system whereby what “feels good” and is “identifiable to our self-schema” takes precedence over a solid Jeffersonian or Lincoln-type leader (an otherwise crazy character who happened to be a great founding father. You think Jefferson could ever get elected today?). Every night, before s/he goes to sleep, like King Solomon, our US president prays that s/he makes Biblically sound decisions. Those decisions, today, mean “Old Testament” rules of engagement. We can see some of these well-meaning Old Testament rules of engagement in our society even today.

The Lord will use our future US president – a good, solid, morally upright Christian – to fulfill his own ends. After the fact, no Christian will have guessed the tragic comedy of Armageddon. They had been trying to interpret signs of evil extremist warlords and Russian presidents without ever considering that their own Christian leaders might be the ones to set a course towards Tribulation.

Deloitte Holiday Party

(Rachel) Rachel and Rob got all dressed up to go to the Deloitte Holiday Party on Friday night. They had some great food and socialized with many of the delightful people in the Houston practice. Here are a few photos in case anyone hasn't had the pleasure of seeing Rob in a suit!

They had a lovely evening and it was fun to have an excuse to wear formals.




Pictures from the Party - compliments of Deloitte!

Rob and Rachel

Ryanne, Ejituru, and Rachel

Two for the Price of One

Timothy (a younger and bulkier version of Rob … what Rob should have looked like if he hadn’t inherited his mother’s skinny Irish genes) wed the beautiful and vivacious Sara over an already full Thanksgiving holiday. Sort of a wham-bam wedding, nevertheless it was wonderful. It was the first time in five years that the entire “Bob and Carol” clan of 25-odd people assembled in the same place. Grandparents, Ratzlaffs, Lusks, and Mardocks enjoyed four days of food, fun, fellowship, and festivities in Springville, CA.

Major players:
A couple of months ago, Bob and Carol saw the light and moved from the sprawling, over-developed mass that is “LA-SD-Riverside/San Bernardino” to the foothills of the Sierra Nevadas. (It would have been better if they moved into a townhouse in the foothills of the mountains, but such is the appeal of the American Dream!). Fun fact: Bob and Carol were recently awarded Azusa Pacific University’s “Alumni of the Year” award for their indefatigable non-profit and humanitarian aid efforts – including helping to place over 3,500 orphans in loving homes across the 50-states (and Americans living overseas).

About four years ago, Matt and Jen were asked to be executive director(s) of the famous 67-year old Quaker Meadow Christian Camp – nestled 7,000+ ft in the heart of the Sequoia National Forest. Thankfully the entire forest burned down all around the camp two years ago, so the camp itself should be safe for another 60 years. (I’m such a pessimist; I don’t know how my family puts up with me). I can’t imagine a more fairy-tale job than being the boss of a summer / winter camp. Fun fact: Matt, a singer and songwriter in his spare time, was recently asked to be part of a MAJOR contemporary Christian music band until the original members decided to retire early.

Mitch & Kel live in Dallas, OR where Mitch operates his own State Farm agency. He is nearing the end of the tortuous start-up phase of his business and continues to be a top-rated agent. He founded the Dallas (Oregon) chapter of Le Tip, and still has time for his other passion: bird watching and sportsman-stuff. Fun fact: Mitch is an avid ornithologist with articles published in birding periodicles, and leads university ornithology trips to eastern Oregon. He has also been assistant coach of the George Fox men’s basketball team.

Grandpa and Grandma had the financial foresight not to count on social security and had a portfolio of fixer-upper homes in the LA area. Today Grandpa spends his autumns growing "giant pumpkins" and eviscerating his church denomination's political-correctness. He's a giant among men. Fun fact: in addition to being a PhD and former professor of English, Marvin Mardock was also honored as NAIA's track and field coach of the year in 1980. Don't believe it? Check here. At Azusa Pacific University, he trained Dave (of 1992 Barcelona Olympics' Dan and Dave) and personally brought the Kansas City Chief's Christian Okoye from Nigeria to California to throw the hammer on APU's track and field team (Marvin was also director of international student admissions).

Of course, there's the rest of the family ... but I'll give them a couple more years to start making the world a better place. In the meantime, Tim, Sara, Nick, and Angela are leaders in their own circles and I know they all will go far in life.

Hannah and Christina sporting their chic Urban Outfitter t-shirts; each representative of their unique personalities

Mitch and Matt carving two of the three birds (Dad in background)

Monster table at Matt and Jen's house

Even our photogenic Uncle Richard and Aunt Linda came up from Hollywood!

"The Clan"

Tim and Sara: no longer "living in sin," or, final picture as virgins. Whichever.

4 Tests Down

Rachel is almost a CPA! Congratulations!

My brilliant wife is amazing. She passed all four exams on the very first try - each well above the minimum score required. That's not normal. Rachel's smarts and leadership skills will certainly serve her well as she becomes CFO of some big company. All of her hard work is finally beginning to pay off. Diligence and determination. Go Rachel! The sky's the limit!

Okay, just to clarify - this post originally said Rachel was a CPA, but technically passing your CPA exams is the main hurdle, but small tedious steps still remain - getting documentation, passing another two silly ethics quizzes, and paying more money for the actual certificate. As soon as Rachel gets her darn CPA certificate, then she'll be a CPA. I'll post when she gets it.

'Tis the Season

...for Egg Nog Lattes from Starbucks!

We live in Highland Village: home of several upscale chain stores, Central Market, and Houston's first Starbucks. HV hung the Christmas lights in mid-October. At first we were annoyed by the flagrant implication of holiday binge buying so far before the holidays. But we quickly forgot our annoyance and learned to love our wonderful commercial home.

Ben Folds Live

Our apologies for the poor quality picture below. It's the only one we have from a fabulous Ben Folds concert with the Houston Symphony (from Rob's trusty camera phone). Rachel and Rob were amazed that it sounded so great. The symphony created a solid wall of sound that's often lacking in live performances. Rachel described it as, "crazy good. So awesome," and "the best concert I've ever been to." Rob says, "ditto, it's a lot like his Austin City Limits concert but with a rockin' 90-member symphony behind him!" Ben Folds was hilarious: "These musicians behind me are trained to make difficult music sound easy. We rock stars try to make easy music sound hard." BF is the white blob in the middle.

Rachel's New Bob

(I guess bob is a kind of hair cut)

Unsolicited Letter to Microsoft

Dear Microsoft,
Please update the next version of Excel to include a portfolio variance and portfolio sigma function. Otherwise, we poor users have to resort to equations like this for a mere 6-asset optimization: =((AK18^2*$Q$5+ AK19^2*$R$6+ AK20^2*$S$7+ AK21^2*$T$8+ AK22^2*$U$9+ AK23^2*$V$10)+ (2*AK18*AK19*$Q$6+ 2*AK18*AK20*$Q$7+ 2*AK18*AK21*$Q$8+ 2*AK18*AK22*$Q$9+ 2*AK18*AK23*$Q$10+ 2*AK19*AK20*$R$7+ 2*AK19*AK21*$R$8+ 2*AK19*AK22*$R$9+ 2*AK19*AK23*$R$10+ 2*AK20*AK21*$S$8+ 2*AK20*AK22*$S$9+ 2*AK20*AK23*$S$10+ 2*AK21*AK22*$T$9+ 2*AK21*AK23*$T$10+ 2*AK22*AK23*$U$10))
If we call the new function "portvar," then the whole equation is simply: =portvar(I4:N142), and that is much more efficient.
Sincerely,
RM

Haaktoberfest

This weekend I (Rob) took a stroll down memory lane - and dragged Rachel with me. We attended my high school alma mater's football game; my first time at Friendswood High School in 10+ years. It was quite a hoot being back in the pastoral 'burb. Friendswood's band is much better than when I was first-chair saxophone. I showed Rachel the band hall and an old plaque with my name on it - documented proof that I had "leadership skills" back in high school. Kelleigh: I also have pictures of the Wranglerettes. My sister Kelleigh was once so limber she could put her feet behind her head. So could most of the Wranglerettes. After 10 years, they still look the same - like Macy's Rockettes on caffeine.

The next day (today) we visited Haak Vineyards in Santa Fe. To the best of our knowledge, it's the only vineyard brave enough to have settled in the swamps of the Gulf Coastal plains. Today is their "Haaktoberfest," complete with a Bavarian polka band, yodler, and lots of bratwurst. We encourage anyone in the greater Houston area to check the place out.

To Another Five Years

Rachel and Rob vacationed in San Antonio over the weekend for their 5-Year Anniversary. Can you believe it? We stayed in a fabulous 19th Century B&B on the famed Riverwalk. Our room literally looked down onto the water. After two days of walking up and down the Riverwalk, we got bored and dove to our favorite Mexican restaurant in Texas: Trudy's. Anyone who has been to Trudy's knows that the 90-mile drive to Austin wasn't too far out of the way. Lastly - unrelated news - Rachel found out she passed part 3 of the CPA exam. That's 3 down, 1 to go. What a smarty-pants!

Free creme brule at Pesca - Portugese for "really good seafood"










Our B&B - our room is the top right corner ... it was rad










A trip to SA is never complete until you visit the Alamo










Trudy's in Austin