June 23rd, 2005

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Investments and commodities trading

My father died in 1972. He left me a bit of money. Not a lot, but some. My mom invested this money, and it's value reach about $40,000 by the time it was turned over to me in 1993. I had some shares in Microsoft, and some investments in mutual funds offered by the American Funds Group. I used the mutual funds to pay for some of my college expenses, and I forget what else. I didn't touch the Microsoft stuff. By 1999, my Microsoft stock was worth over $200,000. Then they lost their monopoly case. Today, my Microsoft stock is worth something like $70,000.

Why do I bring this up? Diversification. Everything was in one basket and when that basket went down I went from well-off to large savings. It could have been worse.

I've been making a point to invest my Expedia stock option dollars differently. Mostly I have it in exchange traded funds (E.T.F.s, tradeable mutual funds). Some in E.T.F.s for international stocks. One is a junk bond E.T.F. One is a real estate E.T.F. Three U.S. index E.T.F.s (S&P smallcap 600, Dow Jones, Amex Intellidex). I only have three individual stocks. The Microsoft, Schering Plough, and some IAC (which is the parent company for my employer). A lot of my co-workers got their stock options and converted it into Expedia stock. I sold most of it and spread it out. Basically, it'll take the entire market as well as the Asian markets going down for me to drop. I lose out on the possibility of buying into the hot stock and seeing my money go up 300% in one year, but I also don't have to worry about IAC getting caught in some sort of Enron/Worldcom/HealthSouth/Adelphia/Qwest/Tyco problem and me losing all my money.

I've been looking at oil recently and gas prices. Demand is going to grow, and world oil production is near capacity. And building up new production capacity takes time. Years. Which means oil prices are only going to go up for a while. So how do I get in on that? Could invest in oil companies. There's a couple of commodity based mutual funds as well. So I'm doing something like that. My broker pointed out the Rogers Raw Material Fund which buys commodities futures, with something like 40% of the commodities being petro. It's not a mutual fund and not regulated like one, so I'm a bit worried about that. But the mutual funds cheated despite regulation. This one is an unregulated limited partnership. I spent two days reading the prospectus and the partnership agreement, trying to decipher all the stuff. Nothing horrible, though they do dispense with some arms-length requirements that would be in place in a regulated environment. For instance, rather than go with the cheapest subscription manager, they use Uhlmann Price Securities which is owned by a manager of the fund. The prices they pay to U.P.S. might be cheapest, they might not. Don't know. I know the limits of the fees the Rogers Fund charges. So I'm covered in that respect. Was looking for the fund to do things like funnel trades through affiliated brokers who give them kickbacks. That's not allowed in the agreement.

Anyway, as I said, it's an attempt to diversify from stocks. But it's relatively risky. I feel like a day trader, or like i'm investing in a hedge fund or something. I stopped at my broker's office this morning to sign the paperwork on it. One of the items in there is something to verify that I am able to take on the risk inherent in a hedge fund or other alternative investment. You can't invest if you are putting in all of granny's nest egg, for instance. On the one hand, I want to run back and get my money back cause it's stepping into something that's not safe. On the other hand, I feel like a big shot investor for stepping into this world.

School

Eco 200: grade

I just checked my grade for for my micro-economics class: 4.0. I'm assuming that means I got an A. Also, I now have a 4.0 G.P.A. at Seattle Central. That means my cumulative G.P.A. at community colleges (1 class at Seattle Central and 1 class at Shoreline in 1985) is 4.0, and my cumulative at regular university (University of Idaho) is something like 2.X, where X is less than 5. (I dunno what it is exactly. I never opened my last report card.)

Books

To The Flag, Richard J. Ellis

To The Flag
Richard J. Ellis
Best Price $19.06
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Just finished To The Flag by Richard Ellis. This is a history of the Pledge of Allegiance, the ritual saying of which is familiar to many. Having attended a fundamentalist Christian school in my youth, I certainly am. In my old age though I became deeply skeptical of the rote repetition of patriotic fervor.

From reading the book, it's apparent that Mr. Ellis is also skeptical. Certainly those who have been proponents of the pledge come across as jingoistic rather than heartfelt, while those who have objected appear to fight the good fight as underdogs in his retellings. The only proponent of the pledge who doesn't come away looking scared of dissent is Francis Bellamy, the writer of the pledge. He worked at Youth's Companion which created a celebration of the flag for the Columbian Exposition and got the Congress and the President to endorse it. Through good P.R. work, the celebration took place across the nation in many of its public schools.

Those who came afterward fair more poorly, mostly because they were efforts to ward off disloyalty that some feared was rampant among immigrants or left-wingers and radicals. Ellis describes the efforts to change the pledge to refer explicitly to the United States, as well as the addition of the phrase under God. None of these efforts received much opposition, nor did attempts to compel obedient recitation. It wasn't until the 1960s that opposition became more than the occasional instance. At it wasn't until the 1988 presidential race between Michael Dukakis and George H. W. Bush that one party (the Republicans) attempted to co-opt political ownership, which they've done successfully.

Most interesting to me was the older history, as well as the early court cases. Later court cases, such as Newdow I am pretty familiar with, and the passages in the book covering them seem to add little to understanding. But knowing who created the pledge, which organizations supported it. Why and when it was pushed to ever greater use in indoctrinating the youth of American. These are the things I wanted to know. And Ellis covers them pretty well, even if he doesn't give much depth to some of the people behind the efforts.

Ellis, Richard (Richard J.)
To the flag: the unlikely history of the Pledge of Allegiance / Richard J. Ellis
ISBN 0-7006-1372-2
1. Bellamy Francis. Pledge of Allegiance to the Flag—History.
2. Allegiance—United States—History.
3. Patriotism—United States—History.
4. United States—Social conditions
JK1759.E37 2004
323.6'5'0973—dc22
2004023110