Kosmix Launches Finance, Video Games, and News Search

Last week, Kosmix quietly launched a couple of new features!

Now we have added two new topics:
Video Games Search
Personal Finance Search
and we also have current News results sprinkled into all of our verticals now (our previously launched verticals were Health, Travel, and Politics).

For example, in Finance, here's the latest news about commodities, inflation, and the latest IPO. Our news is updated pretty frequently too- many times a day!

Architected Modern Condos

I have always wondered why most housing and condos are so dull and ordinary in design- ESPECIALLY large residential projects. Here in California, cookie-cutter homes and McMansions are everywhere. The cost of hiring a world-class architect is often insignificant compared to the total project costs. Well, at least a few projects are beginning to change that as designer condos catch on.

Famous Names Design New Luxury Condos

Starchitecture Comes Home

80 South Street Tower - in New York City, these condo townhouses are a unique stacked cube architecture designed by architect Santiago Calatrava. It fuses both modern art and architecture.

Museum Residences in Denver, overlooks the Denver Art Museum. These residences were designed by Daniel Libeskind.

Aura Condos - Another Daniel Libeskind condo, this one a high rise located in Sacramento, CA. (Warning, annoying audio track in this link). Also related is a condo project in Sacramento called Epic. Here's a list of All Daniel Libeskind Projects.

Out of this world architecture - Dubai

The amount of money and opulence in the middle east is amazing. It seems that Dubai is becoming the playground for the rich. And so, Dubai is becoming a world center of innovative architecture.

* Burj Al Arab, currently the tallest hotel in the world. It is billed as the world's first 7 star hotel and has a unique sail-shaped architecture. See also the Wikipedia Link

Where do you think the world's tallest building will be? The U.S? Malaysia, Taiwan, or China? How about Dubai?

* Burj Dubai (see also Burj Dubai on Wikipedia ) to be completed in 2008, this is expected to be the World's Tallest Skyscraper when it's done.

* Al Burj is another tall Dubai skyscraper whose height is still unknown, and may possibly compete with Burj Dubai for the tallest building title.

Remember the underwater city of Atlantis? Stuff that dreams are made of. Imagine the beginnings of that, an underwater hotel in Dubai.

* Hydropolis which will be built about 44 feet underwater. See also this link

Perhaps the most amazing project of all- the Palm Islands. This project aims to build a whole series of islands in the ocean into a palm-shaped design, and building residences there. See also this link

Berkshire Hathaway 2006 Shareholder Meeting (Part 2)

This post is part 2 of my series on the recent Berkshire Hathaway annual meeting. The topic: Warren Buffett's thoughts on investing. These are my notes and *interpretations* of Warren Buffett and and Charlie Munger's answers on various investing-related questions.

On Investing in Tech Companies
Tech companies are hard to predict. Five years from now, who know what's going to be hot, or who's going to be on top? We know the edge of our competency- if you don't know your edge, you don't have a competency.

Economics of investing in ethanol?
Agricultural processing has not earned high rates of return in the past. It's hard to have competitive advantages. It also takes too much fossil fuel to be worth it.

Is there a Commodity Bubble?
Not in agriculture, perhaps in copper and oil. At the start of a bubble, it is driven by fundamentals. What the wise man does in the beginning, the fool does at the end. We don't know how far up a bubble can go. Be careful that everyone will turn into pumpkins at midnight (and there's no clock on the wall).

Investing in South America and Emerging Markets
We invested in PetroChina (would have like to buy more). Brazil is not off limits. In general, due to emerging market uncertainties, we want cheaper prices.

Investing in Russia
Bad experiences in the past working with Solomon- oil drilling in Siberia. Hard to develop confidence in Russia.

Exposure in Silver?
Used to own silver, but sold it. Consumption of silver is down in photography, but there are few silver mines. It's non-interest bearing, there may be overconsumption.

Investing in Regions of High Per-Capital Natural Resources
This is too macro a trend. We don't play big macro trends.

Views on Chinese Currency and Debt
High probability of a weakening dollar. Expect higher inflation. Fiscal and current account deficits are bad.

Does the CPI track Inflation?
It's not great. The core CPI doesn't include food and oil. The rental factor is lagging and housing factor is not accurate. Overall it understates inflation.

Investing in Newspapers
Circulation is down, advertising in papers is down. Demographics change is going the wrong way (younger people tend not to read them).

Modern Portfolio Theory
Modern Portfolio Theory doesn't make sense. Modern Portfolio theory is assinine. Jeremy Siegel is demented.

Naked Short Selling
There's nothing evil about short selling. But it's dangerous.

Asset Allocation Strategies - Assaults on Modern Portfolio Theory

Asset allocation (modern portfolio theory), that is, diversification of investments into non-correlated asset classes, is a core principle espoused by many financial advisors. The core idea is that having non-correlated assets reduce risk and maximize returns.

But, what is now happening is that previously uncorrelated asset classes are now becoming more correlated! The core idea of asset allocation is unchanged, but, it seems that commodities, hedge funds, and small cap stocks, which have been touted as good diversification assets are now much more correlated with the S&P 500 than they used to be. This makes what was a previously low risk diversified portfolio a little more risky.
According to this Fortune article, the correlations of various assets has changed from February 2000 to February 2006:

Asset classes   2000   2006  
--------------- -----  -----
 T-bills         34%   -58%  
 LongTrm Treas.  37%   -54%  
 Commodities    -14%    33%  
 Small stocks    62%    94%  
 Hedge funds     35%    96%  
 Non-U.S. stocks 32%    96%

(Correlation of Asset classes to the S&P 500)

Buffett and Munger dislike Modern Portfolio Theory

At the 2006 Berkshire Hathaway annual shareholders meeting, both Warren Buffett and Charlie Munger expressed their dislike of modern portfolio theory. They also strongly disliked the views of the wizard of Wharton, Jeremy Siegel. In fact, Charlie Munger called it assinine! Strong words from some of the most respected investors in the world. They would rather buy good solid companies with predictable earnings. Well, it's worked for them! I can see their point somewhat- if you want to maximize your returns, just pick the best companies, instead of diluting your investments with companies or assets that are not as good. The problem is, a lot of random events cause unexpected things to happen. In addition, for many people who do not live for reading company reports and balance sheets, it's impractical to expect someone to do the level of research needed to select the best companies. Maybe if Warren would publish a book about how he values companies, that would help out some of the rest of us :)

Diversification and asset allocation will probably not give you the highest possible rate of return, but will give you a reasonable return with reasonable risk. Nevertheless, we should all be open to criticisms of popular investing strategies, as often what works for one time period ceases to work for another. Here's an excellent article discussing flaws of MPT. And here's another article on the criticisms of MPT.

Berkshire Hathaway 2006 Shareholder Meeting (Part 1)

The Berkshire Hathaway Annual Shareholders' Meeting is a BIG event. This year, over 24,000 people attended. It was held in Omaha, at the Qwest Convention Center, which was pretty much filled with shareholders. It was also of interest that we were sitting in the same room as the two richest men in the world, Bill Gates and Warren Buffett. Bill Gates happens to be on the board of directors of Berkshire Hathaway (BRK), while Warren Buffett is the founder of BRK.

In order to attend, you have to own at least 1 share of his company stock, which doesn't sound like much, but is actually quite a bit because he doesn't believe in splitting his stock. The class A shares, BRK-A, cost about $90,000 a share. The class B shares, BRK-B, cost 1/30 of that, about $3,000 a share today.

We got to the convention center around 6am, well ahead of the 7am door opening. There were already what seemed like a thousand people in line ahead of us. Fortunately waiting in line was not too boring, as there was entertainment to keep you somewhat occupied. Among the entertainers were a guitar player, a man on stilts, a bull(?) rider, and abortion protesters. As the doors opened, the crowed hurried in. Apparently, it's good to be at the front of the line because then you have a chance to snag one of the spots for asking questions by standing in front of a microphone. Since the meeting doesn't start until 8:30am, after snagging a set, you have about an hour and a half to wander around the exhibit floor filled with Berkshire company products.

The meeting portion starts off with a short fun movie about the company. They apparently make a new one each year. This year's movie featured "Omaha Idol", a spoof on American Idol, where entrepreneurs pitched ideas to Warren Buffett and Charlie Munger. My favorite invention was the Specks Pod (iPod with wearable video). Also featured in the movie was Bill Gates and his quest for a present for Warren's 75th birthday.

The meeting itself is rather long- over 4 hours of question-and-answer. Warren Buffett and Charlie Munger field just about any investing-related question. Getting the views of one of the most successful investors of all time is a great experience. His knowledge of a wide range of topics gives you confidence that he's aware of the details in a wide range of economics topics. And, unlike many other CEOs, he's willing to share his opinion.

(Stay tuned, future posts will talk about specific things Warren Buffett and Charlie Munger addressed)

Pilgrimage to Omaha - Berkshire Hathaway Shareholders' Meeting

It's here... the Berkshire Hathaway Annual Shareholders' Meeting. This is the big yearly "Woodstock for Capitalists" event that Warren Buffet holds. This year I'll be checking it out for the first time.

See Also:
Warren Buffet acolytes descend on Omaha