Monday, April 30, 2012

White People Problems

I've been so busy these past few days that I have not had time to write a "real" post. So let me just share this two-part Louis CK clip which shows us that maybe people worry about the economy more than they should.

Have a meaningful Labor Day everyone. See you again in a couple of days.

UPDATE 03 May 2012


From Abtruse Goose

Thursday, April 26, 2012

47 More "Life Hacks" from 4chan (42 to 88)

Because I know you can't get enough of these. Same rule applies (see Part 1).

42. While on a date, talk about something the girl likes. While doing so, do something simple, yet mundane, like playing with the pepper shaker. Later, when you want to suggest something you may be having confidence suggesting, play with the same pepper shaker. The suggestion will link back to the thing she likes and she'll normally agree.

43. ECA. Ephedrine, caffeine, aspirin. 20 mg, 200 mg, 81 mg respectively. Best way to burn fat and curb appetite. Take this twice daily and do sit ups and you will lose weight.

44. Always treat secretaries respectfully and go out of your way to help them--NEVER NEVER NEVER antagonize a secretary. Secretaries and admin assistants are the gatekeepers for resources and people that you will need to have help you--they also have very strong relationships with those in positions of authority and also serve as informers to decision makers. If they say you're good, or that you've always been great to work with, that will factor in on you.

45. When filling out important paperwork, scan it in to Adobe Acrobat and use the typewriter tool to fill it out if you have bad handwriting. Save the document. Now you have two things: a copy in case you lose the paperwork or there is a dispute and a very professionally filled form that can increase perceptions of you and reduce the chance of mistakes when important data is entered.

46. If you have more than 10,000 USD in your bank, start putting money in certificates of deposit that are very safe and boring. The sooner you start compounding interest, the more and more powerful it becomes. I will not give more complicated investment advice, but the simple advice is CDs will pay you and play with debt financing before advancing to equity.

47. You can throw clothes in the dryer for about 5 minutes to get wrinkles out.

48. Put smelly shoes in a plastic bag and put it in the freezer overnight. The smell is caused by bacteria, which will die when deep frozen.

49. Use lighter fluid to remove sticky stuff from price labels, etc.

50. A couple of grains of rice in a salt shaker will absorb moisture and keep the salt from turning into a miniature brick.

51. Sharpen scissors by using them a few times on a piece of sand paper.

52. If there's something you really need to remember the next day, put a weird object in a weird place. It helps you to remember anything by triggering your memory.

53. If you have to make dookies in a public restroom, you should first drop a big handful of toilet paper into the toilet to provide your turds with a landing zone cushion. This way, the nasty public poop won't splash back on (or in) your butthole.

54. Smiling suppresses the gag reflex.

55. To hasten the onset of night vision, close your eyes for about 20 seconds.

56. Don't admit you're a virgin if you're angling for sex. Most (sensible) people will avoid sex with virgins because they worry about them getting clingy.

57. Camwhores: take a screenshot of your image after opening a picture viewer and put it in MS Paint or whatever program you use instead of directly uploading it. This way, no creepy faggots can do shit like use your EXIF data to find your location or other personal information.

58. When throwing a punch, only close your fist at the very last second. You lose a lot of power and balance if you throw all the way with a clenched fist.

59. If you're at college/uni do yourself a favor and google "anki and spaced repetition."

60. When painting with a roller, spread the paint out in a "W" or "M" shape, then fill in the rest of the space. Your coverage will be much better this way. When painting a room, you'll eventually reach the bottom of the first gallon. Before getting all the way to the bottom, open up the next gallon and mix half of it with the first. The color will be more even this way.

61. If you have rat/mice problem, just cut the bottom of pop cans down so you have roughly one and a half inch deep aluminum cup. Fill it with antifreeze. The pests will be attracted to it due to its sweet flavor (DO NOT DO THIS IF YOU HAVE A CAT OR DOG).

62. When at a bar, try to order drinks from a drunk and/or busy bartender. Chances are they'll forget to charge you. Even if they do, you can easily ditch a tab if they didn't get your card.

63. Write in emails to any major company you can think of, the best ones are food companies like Kraft, Doritos, Pepsi, etc. Any food company you can think of. In the email say that you always buy their products but recently you bought one and it was terrible/broken/damaged/missing product. Nine out of ten times they will send you a coupon for some sort of free product. Just go to each company's website to get their customer relations email address. Most companies actually have a "Questions/Comments?" email address. Take an hour to send out about 20 of these emails to different companies and the free crap will start ROLLING in.

64. Save 10% of your earnings every payday. Hammer into your mind one simple rule: 10% of all I earn is mine to keep. If you can save more than 10% fine but 10% is the minimum.

65. Make a budget and stick to it. You should have your expenses planned out for each month. Look at ways of saving here such as home cooked meals or changing utility companies, always shop around for the best deal. Give yourself money to spend for fun but don't go beyond that.

66. Once you've got years worth of savings, invest in something. Stocks are okay, but a business or property is even better. Every rich person gets there through investment. Bill Gates isn't rich because of the money he earned through Microsoft; he's rich because he owned Microsoft and the company increased in value. His investment in his company made him rich.

67. Try bargaining with everyone. Sometimes you get a cheaper price just by asking.

68. Learn how to cook. Get a cook book. The Internet is your friend and pretty much the biggest cookbook you can get.

69. Duct tape holds the world together.

70. If you want a girl really bad, ask her in such a way that she can't say no, like in front of a lot of people or maybe even her parents. She'll see that you have an insane amount of balls, and her parents will also appreciate it.

71. Buy Japanese cars, they're less likely to break down. Hondas and Toyotas can go for about 300K to 400K miles before they bite the dust. That's almost 15 to 20 years of extensive driving.

72. Brunettes are usually bitchier than blondes, and blondes are easier going and easier to get along with. Just something I've noticed.

73. Get a capture card and just watch TV on your PC instead of having one big machine for watching TV and one for doing computer stuff.

74. Apple makes better notebooks than anyone. Use bootcamp to put Windows on it if you need.

75. Schedule every part of your day in Google Calendar and then sync it to your phone. Your phone will beep whenever you're supposed to do something. You'll get more shit done that way.

76. Don't buy N64 games used, ever. Get a USB controller or use your PS3 controller and download the rom for N64.

77. Have an emergency food kit in your car or home as well as a few jugs of water, just in case.

78. Relationship advice: The secret is keeping them interested. I've seen guys talk to a girl after meeting them for the first time, and they go on spewing out everything from their childhood to their political opinion. Keep yourself veiled a little, take it easy and don't rush to answer everything. Make it a game and keep her interested. If she asks what you do for a living, don't rush to answer, clever guy. Conversations like that don't interest a girl. They're just like you. It's very easy. They're begging for a guy man enough to fuck them. Instead of answering, just slowly, easily, laugh. Just laugh, practice your laugh in private, make it easy and charismatic, carefree and confident. Say something clever. Tell her she wouldn't want to know what you do for a living, and besides a job doesn't define me as a person. Another mystery, keep pulling her toward you mentally and slowly wrap your tentacles around her mind and heart.

79. For this example we will use a Nintendo DS, but it will also work with most gaming hardware. Buy the shittiest NDS you can find, second hand, pawn shop, whatever. Then go buy a new one. Remove the serial strip from the bottom of the new NDS (preferably razored off and reattached with glue) and apply it to the old one, put the old one in the box and return it.

80. If you are REALLY careful, you razor a new game out of the shrink wrap. As long as it looks like it's still in the original shrink when you return it, they will accept a used game. Great for pirates if for some reason you can't just torrent.

81. Put 1 dollar aside for lottery tickets every month. Even though it's a slim chance, you're always keeping your cards open to become a millionaire. Don't overdo it. Just do 1 dollar a month.

82. Some bills you have to pay a fee for printing the bill in paper. Just have them send you paperless bills to your email address.

83. Cook stuff for the week to come so you don't spend as muchnall time cooking throughout the week. Then freeze it into portions that you can eat later.

84. Instead of eating a lot of sweets, try to keep to just granola, raisins, or chocolate. Get an AeroGarden and grow your own lettuce or tomatoes or strawberries.

85. Ask people to help you do shit--basically, make your own personal army. Five people doing something that helps you is better than only doing something yourself.

86. Get a water filter for your sink instead of buying bottled water.

87. Be done with shit from the past. Learn to move on.

88. Don't keep books or heavy bulky shit. Read stuff on your iPhone or laptop or tablet. Keep everything as data.


via Reddit, but it's originally from 4chan.

Tuesday, April 24, 2012

41 "Life Hacks" from 4chan

Got the list from Reddit, but it's actually from 4chan (I will show the source next post). I've excluded items that may not be applied to the Philippines, but I've retained all the funny and interesting stuff. I'll leave it up to you to heed #28 and sort through the bullshit.

1. Buy stuff in bulk instead of buying it at a vending machine or news stand. You save money.

2. If you have an iPhone, jailbreak it and tether it to your laptop instead of paying 80 bucks for high speed wireless.

3. Instead of driving or paying to own a car, ride a bike. You'll save money on insurance, repairs, and gas. The bike will let you exercise while you're going places and you'll save time by not having to go to the gym.

4. If you want to go to the gym, go swimming instead. You burn more calories that way.

5. Invest in solar panels. The price for them has come down.

6. Date older women who have more experience. They have more money and are less likely to leave.

7. If you need to cheat on your girlfriend, come up with a fake nickname and use your middle name as your last name (in case you DO have an encounter with you and her and your real GF). Use a fake email, and a fake phone number (yes, cheating is expensive if you do not want to get caught, think Dexter on Showtime).

8. If you want to get a girl that is out of your league or super hot, pretend to be Mormon or Christian or any kind of hard to follow religion and go to church and meet women there. You can later be less religious and the woman is less likely to leave you.

9. Eat more complex carbs and proteins instead of starchy foods and ramen. You'll have more energy during the day and can function better.

10. If you have trouble reading books, get audiobooks instead and play them at 4 times their speed on your iPhone or iPod or while swimming (get a waterproof kit).

11. Do ab exercises during the day even while you're at work. Just flex them throughout the day and you'll be ripped much faster.

12. When buying something, think of whether you'll still have it in 4 years. You'll save money that way.

13. Read 4chan's message boards for threads like this and suck up as much info as you can.

14. Look for porn on boards like 4chan instead of having to look for it for hours. People usually post the best they've already discovered.

15. Never be afraid to ask. One answered question can avoid hours of searching.

16. Buy DVDs in bulk and burn all your files to them. It never hurts to have a backup.

17. Never buy movies. Download them from torrents. Same with music.

18. Go to parties if you're hungry. You could live off just party food without having to buy anything yourself.

19. If it's too much effort or takes too much time, there is an easier way.

20. Wear boxers. Wearing briefs makes your balls not produce as much sperm and you can run into all kinds of problems.

21. If you're circumsized, pull on your skin frequently to extend the nerves you have lost when you got cut. If you're uncircumsized, wash your penis frequently.

22. Brush your teeth at least twice a day. Some toothpaste brands have long lasting protection that will keep you from having decay for 12 hours. Get an electric toothbrush. Electric toothbrushes are at least twice as effective as regular brushing, if not more.

23. Cats are stress relievers. If you own one, you'll have lower levels of stress (I personally don't care for pets).

24. Consider a different point of view before making a decision. Pretend you're a different person like say... Tyler Durden and his significant other. You'll get more shit done that way and know what you'll really want.

25. If you can build it at home or prepare it, why buy it?

26. "The things you own end up owning you." Don't be afraid to throw out something you don't really need. Do a yard sale or sell stuff on eBay. If no one is buying it, it's time to give it away or just throw it out.

27. Eventually everything is going to be done by robots. Don't work at a job where you're not happy nor doing what you want. In the future, a robot or software program will replace you anyway (I'm serious). Study hard to become a doctor or artist to create things or do things no one else can do.

28. Even though 4chan is aggressive, 4chan is very knowledgeable and is like 40,000 minds put together. Ask honest opinions and you'll get them 33% of the time. Sort through bullshit.

29. Experiment with technology to become more knowledgeable. For example, get a screw driver and open any electronic device in the house, just to see how it works. It never hurts to have a general idea. Put them back together afterwards. I once fixed my USB hub on my monitor just by opening it up and soldering a loose connection back together. Saved me about 400 bucks.

30. Never invest in cheap stocks. Invest in companies that are doing well, like Apple and Google or Starbucks.

31. Eat lots of fish, vegetables, chicken, whole grains. Look at the package before you buy it. Eating too many calories will make you fat and slow you down. Figure out how the food pyramid works and stock your fridge and storage accordingly.

32. Don't have too many female friends. Women cost money. Have one good female friend, but keep track on how much you are spending on her. If you spend too much, it's time to dump her. Be straightforward and tell her she's too expensive to be around. Hold your ground and be assertive, you ruin your own life.

33. Don't be pushed around anywhere, get a third opinion. If someone is tricking you into signing a contract or buying something, see through it and stop right there and ask for a copy of the contract. Read everything before you buy.

34. Never make yourself look like a fool. Make controlled moves around people. More chicks will dig you if you're confident and know what you want.

35. To win at rock paper scissors, before actually playing show some subliminal moves that they think you are going to make i.e. keep clenching your fist, open your palm, etc. to make them think you're going to throw rock/paper. Women throw scissors the most. Men throw rock the most. When shaking the fist for the count, do so first and hard. This makes them hesitant and they play the same moves over again.

36. Bacteria that cause tooth decay, acne, tuberculosis, and leprosy can be cured with cashews.

37. If you cut a "V" shape into your toe nails, you can prevent "in-grown" toe nails.

38. Here's a little psychology trick, it's called anchoring mental states. You want to make a girl smile? Try this out. Once you start talking to a girl and you have her in a conversation try to notice her breathing pattern. Try and inhale and exhale at the same time she does (don't make it obvious, and it takes some practice). Next, wiggle your left hand fingers anytime she smiles while you are talking to her. Eventually, you will have anchored her smile and her mental state to the wiggling of your fingers. Every time you wiggle she will return to that mental state. NOTE: You don't have to use wiggling. You can pretty much use any subtle move. Try using the left side of your body though. ALSO, if you have the balls, instead of creating an anchor with your own body, use hers. Touch her left shoulder every time she smiles or laughs.

39. If you're given a cocktail napkin or coaster with excessive condensation, sprinkle salt on it. It will cease to lift up with your drink.

40. If you park your car somewhere where you think it may get stolen, remove something small but vital, like the fuse for the fuel pump.

41. Use packing peanuts when setting mice traps. Don't use peanut butter or cheese, they will attract other rodents/insects. But mice need house supplies.


There are tons more, more than enough for a follow up. What's your favorite so far?

Thursday, April 19, 2012

Making Forecasts with Linear Regression, Part 2


In Part 1, I identified my goal to estimate when Investor Juan will earn 50,000 monthly pageviews given 20 months of historical data. I also discussed the basic premise of linear regression forecasting and how it's only applicable to data which displays a linear trend. In this post, I will proceed by discussing how to define the trend line and how to use this to make forecasts.

Step 2: Estimate the "best fit line"

In linear regression, we identify the general linear trend of the data by fitting a straight line to the data points--the best fit line.

In high school, I remember doing this with our physics experiment results mechanically--as in taking a straight rule to find a straight line that touches most of the plotted points. The problem with this technique is that different people will get different lines given the same data since the qualifier "best fit" becomes a matter of personal judgment. In statistics, there is a way to find the best fit line objectively and mathematically: the method of ordinary least squares finds a line such that the sum of the squared distances of the data points to the line is minimum. The result is a unique straight line defined by two parameters a and b, such that

y = a + bx

where y is the dependent variable (e.g., pageviews), x is the independent variable (e.g., month), and a is the y-intercept and b the slope of the best fit line. Computing for a and b can be quite troublesome when done by calculator (to which my past statistics students will attest); fortunately, spreadsheet programs like Excel and Google Spreadsheets have features and functions that can easily solve for these parameters.

For Google Spreadsheets, we can use the INTERCEPT and SLOPE functions to get a and b, respectively. For example, using the SLOPE function, we enter the data this way (I find it easier to use reference values for "month" instead of the actual months):

Following the same procedure for the INTERCEPT function, we get the following parameters for our best fit line

a = 929, b = 792 (rounded to the nearest whole number)

resulting in the best fit line or linear regression equation

y = 929 + 792x

What do these numbers mean? a = 929, the y-intercept, is the interpolated number of pageviews when x = 0, which is on August 2010. Meanwhile b = 792, the slope, is just the predicted number of additional page views per month. Now that we know where we started (y-intercept) and by how much we change per month (slope), forecasting future pageviews is easy peasy.

Step 3: Use the linear regression equation to make forecasts

Let's say we want to forecast the monthly page views in April 2013, or 12 months from now, we just enter x = 32 (which is 20 + 12) into the equation and compute for y. We get y = 26,273 pageviews in April 2013. 

For the objective that we defined at the beginning of this exercise, we do things a bit differently. Instead of the number of pageviews y, we want to know x when y is 50,000. In equation form, this is

50,000 = 929 + 792x

Solving for x, we get x = 61.96 ~ 62, or 42 months or 3 and a half years from now. That's October 2015; let's see how good our forecast is then. ;)

There you have it, a brief introduction to forecasting with linear regression. I'm sure you can find better uses for it than projecting pageviews of an obscure personal finance blog, hahaha.

Tuesday, April 17, 2012

Making Forecasts with Linear Regression, Part 1


The tricky thing about investing is that we don't know what's going to happen in the future--if we did then we'd all be millionaires (is this actually true? bonus points to anyone who can tell me why it is not). This is why forecasting is one of the most critical--although, unfortunately, often also the most mishandled--aspects of business and financial management. For example, almost all of an enterprise's processes--budgeting, strategic planning, operations, marketing, financial management--heavily rely on a well-thought out sales forecast. Also, when people talk about stock price movements we almost always hear the phrase "earnings projections" mentioned in the same breath because essentially, the price or worth of a stock or any asset is just a measure of how much cash flows it can generate in the future.

There are perhaps a million ways to forecast something, ranging from the mundane (e.g., applying the latest growth rate to this year's numbers) to the esoteric (e.g., autoregressive integrated moving average models). What I'll discuss in this post falls somewhere in between: forecasting with linear regression is simple enough that it can be easily performed with spreadsheet programs and powerful enough that it can be pretty reliable given the right data set. Unfortunately, linear regression is not enough for what most of you are actually itching to do: forecast stock prices. If you really want to do that, you might want to learn the "esoteric" method that I mentioned above.

Throughout this post, to be fair to those who have managed to exorcise Microsoft out of their lives, I will be using Google Spreadsheets.

Step 0. What are you trying to forecast?

I will try to use linear regression to answer a very relevant and timely question: when will Investor Juan reach 50,000 monthly pageviews?

Step 1. Take a look at the data--literally!

The basic premise of linear regression forecasting is that the data follow a trend that somewhat resembles a straight line and that there's reason to believe that this linear trend will persist in the foreseeable future. This premise implies two requirements. First, that there is enough data to be able to clearly distinguish a trend. In this example, I will use Investor Juan's pageviews in the past 20 months.

Second, the data should exhibit a clear linear trend, even if the trend is not perfectly linear (as is always the case). Regression analysis, in general, evaluates the possible linear relationship between two variables--an independent variable and a dependent variable; in using linear regression for forecasting, we just use "time" as the independent variable. Therefore, before we process the numbers, we need to first plot the data (using a "scatter" plot or graph) to "see" whether two variables have a somewhat linear relationship.

For example, from the graph below, it's easy to see that the two variables have a positive linear relationship; the plot shows that in general, high grip strength is associated with high arm strength, and vice versa (notice that I just said "associated with" and not "caused by"; that's an important limitation of regression analysis--it can only show correlation but not causation).

In this second example, the relationship is not so clear. While we can still use regression analysis to derive a line that best describes the relationship, the result will not be meaningful.

So would our data pass this inspection "test"? If you use create a scatter plot using the pageview data I provided above, you'll see that monthly pageviews--our dependent variable of interest--seems to increase in a linear fashion over time, making linear regression an appropriate tool for forecasting.

In Part 2, I will continue the procedure by identifying and defining the linear trend using Google Spreadsheets functions and using the results to forecast.

Thursday, April 12, 2012

Investing in Toy Collectibles, Part 2

The dude who started it all

As I hinted in Part 1, I'm not really a big fan of modern Transformers designs and engineering--I find these new toys to be too fiddly and complex for my old-school tastes. But when I saw pictures and video reviews of the Transformers Prime First Edition Voyager Class Optimus Prime, I was a bit intrigued: first, it seemed like a solid, good-looking toy; second, I've always been a pretty big Optimus Prime fan. I remember seeing the figure offered in toy stores here for 300 HKD (around 1,700 pesos) back in December, but knowing that it's cheaper in Manila (where it was selling for around 1,500 pesos), I decided that the price is too much for something I did not really like. When I saw the same toy being offered at a toy store in Wan Chai for 200 HKD in January, however, I did not hesitate to buy one.

I knew that there was an abnormal demand for this and other Transformers Prime First Edition figures in several countries, including the US and UK, because of Hasbro's decision to stop selling particular figures such as Optimus Prime in these markets. So the first thing I did when I got home was check how much First Edition Optimus Prime cost on eBay: several sellers were offering it for 60 USD and up, excluding shipping, which was more than twice the retail price for the figure. So just for kicks, I resisted opening my new toy, took a picture of it, and put it up on eBay with a starting bid of 49 USD and a "buy it now" price of 59 USD. It sold within three hours.
The next day, I went back to the store and bought six Optimus Primes. I posted them all on eBay at the same time, and in three days they all sold at prices ranging from 60 to 68 USD. I had been doing this for the past two and a half months: replenishing my stock, listing them on eBay, and shipping items, all during my free time. At first I was one of the few non-Canadians who was doing his (for some reason, Hasbro decided not to discontinue the figures in Canada), but eventually other sellers from Hong Kong, Malaysia, and even the Philippines started doing the same thing. But even as the additional supply momentarily brought prices down, selling these figures on eBay remained sufficiently profitable. And with that last lot that I've sold a few days ago, I've managed to earn around 50,000 pesos in profit in less than three months.

This is what I was talking about, something any of you can do to earn a few thousand extra pesos. On my last trip to Manila in March, the Transformers Prime First Edition Voyager Class Optimus Prime figure was still available at retail, and I'm pretty sure that it still is now. And while the demand for the figures might persist (eBay prices have gone up again to at least 65 USD per figure), supply is dwindling fast (production of the entire line has already been discontinued worldwide, and I'm guessing that the Philippines has some of the last figures at retail) so this may be your last chance to exploit this opportunity and become an arbitrageur.

Arbitrage: Exploiting violations in "The Law of One Price"

According to The Law of One Price, all identical items should have the same price in all markets where the items are available. A violation of this law presents an opportunity to profit at zero risk--an arbitrage.

In the Transformers Prime First Edition situation, two factors have led to the violation of the one price law and the subsequent arbitrage opportunity:
  1. Hasbro deciding to halt the sale of the figures only in select markets like the US and UK.
  2. The unified selling platform that is eBay and Paypal. Without this platform, it would not be possible for sellers to exploit the price differences.
The key in profiting from this opportunity is, of course, information--the knowledge that an exploitable price difference exists. With regard to dealing toy collectibles, relevant information could come from several sources: pricing and availability information from brick and mortar toy stores and online auction platforms in "source" countries (e.g., Yahoo! Auctions Hong Kong and Japan); demand information from special-interest Internet forums and communities (where I found out about Hasbro's decision) and eBay. 

To end, I would like to share one very interesting point that I have learned from this experience: information is a necessary but insufficient condition for exploiting arbitrage opportunities; if it were all that's needed, then enough sellers would have flooded eBay with Transformers Prime First Edition toys soon after the Hasbro story broke out in January until profits have become low enough to make selling the toys not worth one's while. But like I said (and as you'll see if you check eBay prices now), the opportunity to profit and profit substantially is still there today. I've noticed that despite the availability of information to a sizable number of people--despite the clear opportunity to profit from the situation--for some reason people were unwilling to act on the opportunity at all. 

A case in point. I have just told you all you need to know to exploit this arbitrage opportunity: go to the nearest toy store, buy all the Transformers Prime First Edition Voyager Class Optimus Prime that you see (1,200 pesos each, if I'm not mistaken), post the items on eBay one at a time (set up an eBay and Paypal account if you don't have these already), and profit handsomely. I'm betting that out of all of you who are reading this post, out of all who are actually capable of acting on the opportunity, only a small number will actually do so. And this refusal to act is actually what makes it possible for people like us to profit from such situations. So really, thanks. :)

Monday, April 9, 2012

Investing in Toy Collectibles, Part 1

I've just sold my last lot of toys-for-sale on eBay and made around 100 USD off it, after all fees. I've been doing this--buying and selling Transformers and related toys--since January of this year, partly to exploit a money-making opportunity that presented itself and partly to perform some kind of informal experiment that would lead to academic research ideas. I've already made close to 50,000 pesos in profit doing this, but this lot is definitely the last; I've made my money, I've made my point, the experiment is over, so it's best to just quit while I'm ahead--at least for this kind of short-term play.

Apart from buying toys to sell, I also buy toys for my personal collection. I'd like to think of myself as a more reasonable collector than most--my collection count is easily under 100 when a lot of others have theirs at 500 and up. I have specific rules, like they have to be part of a particular series (Generation One Transformers, Yuusha/Brave, and Eldoran, for example) or fit a specific theme (the cast of the 1986 Transformers animated movie, for example, or some version of Optimus Prime); in general, I'm more into the old-school, 80s stuff and tend to avoid more modern figures. Also, rationality in collecting toys in Hong Kong is necessary given the fact that space is a very scarce and expensive resource here.

Still, to a lot of outsiders--those who don't share or "get" the hobby, including a lot of my friends--I'm crazy as hell for spending "so much" on these toys. So sadly, part of the motivation for writing this post is to make them understand that what I'm doing is not as stupid as it seems, that if you are open-minded, resourceful, and patient enough you can actually make good money both in the short and long run from buying collectible toys, and that if you actually like toys, you get to feed your hobby at the same time. I will share some of my experiences in this post, including enough specifics so that those of you who are willing can actually replicate some of the things I've done and make a couple of thousand pesos yourselves.

Long-term investing: Buying low and selling high

Back row, left to right: Brave Maximus, Victory Saber, Overlord, Scorponok
Front row, left to right: Powermaster Optimus Prime, Star Convoy, Predaking, Metroplex, Omega Supreme

Unlike a lot of "durables" that people typically buy--cars and electronic gadgets, for example--some toys, like the ones I collect, retain their value after purchase, sometimes even after use, and increase in value almost always over time. So my toys are not just toys but are also assets in that they may be resold to a fairly big and active secondary market. And because there is a fair chance of an increase in value over time, they may also be considered investments.

Overlord: One of my "holy grails" and the centerpiece of my collection

To illustrate, 21 years ago when it was introduced, Transformers Generation One Overlord cost around 50 USD; today, an unused Overlord that is in fairly good condition would easily sell for 1,000 USD, for a nominal annual return of 15%--compare that to an annual nominal return of 6.4% for the S&P 500 in the same period. If you had the toy brand new, played with it but kept the figure and the box in pretty good condition, you'll be able to sell it today for at least 600 USD, for a still-remarkable 13% annual return.

But you don't have to go back in time to the 80s or 90s to make a killing on a toy investment. There are good deals to be had in the secondary market that can provide attractive returns in the medium to long term--you just have to know where to look.

I guess I'm pretty lucky to be in Hong Kong because this is one of the better places to find such deals. Apart from the numerous toy stores in Mong Kok and Yau Ma Tei (In's Point and Richmond Shopping Center, to be more specific), you can also find very good deals online through Yahoo! Auctions Hong Kong. In general, goods are cheaper when bought via Yahoo! Auctions that from brick-and-mortar toy stores; while you have to physically be in Hong Kong before you can register and buy stuff, understanding Chinese is not a requirement since Google Translate is almost always good enough. Unlike in eBay where transactions are completed remotely, in Yahoo! Auctions Hong Kong buyers and sellers have to meet in person, usually at one of the MTR stations, to consummate an exchange. I've done this at least 25 times, and it has almost always been a pleasant experience (I remember telling my girlfriend how the idea of being a part of Hong Kong's underground economy has always excited me, and she thought I was being weird).

For rare, Japanese-exclusive toys, your only recourse is Yahoo! Auctions Japan, for which you would need the services of an agent like Shopping Mall Japan (I've tried Celga, but SMJ is cheaper and better). Despite the agent's markup and shipping costs, if you play your cards right you can still end up paying significantly less than what the same item sells for in eBay.

Speaking of eBay, remember that to make money, you buy items from places like Hong Kong and Japan, where they are cheaper, and sell them to the rest of the world through eBay. So having an eBay and Paypal account is very important in taking advantage of toy-related investment opportunities.

In Part 2 on Thursday (I promise), I'll talk about one such opportunity. And I'll tell you exactly how you can make at least 100% of your investment in a span of a month by buying and selling a particular kind of toy (it's not unlimited, though, the supply dwindles even as I type; but the demand is definitely still there).

Tuesday, April 3, 2012

Magnum's Success and Consumer Ignorance

The only person who does not know about Magnum
Unless you live under a rock, you should now be familiar with Magnum: no, not the gun, not the condom either, but Selecta's Magnum ice-cream-on-a-stick.

So it's ice cream. On a stick. What's so special about that?

1) It's "made with Belgian chocolate"--but WAIT, THERE'S MORE!

2) At 50 to 55 pesos per bar, it costs at least twice as much as its closest local competitor (so imported premium ice cream brands don't count).

3) It's at the center of an aggressive marketing campaign that has taken over the local social networking landscape. To have an idea of what I'm talking about, try searching for "magnum" on Twitter and you'll see something like this:

4) What's really interesting is that regardless of whether Belgian chocolate is actually worth paying that much for, people are buying Magnum in droves, and no, I do not exaggerate--I have seen and experienced the phenomenon first hand.

I'm sure a lot of those who buy are just intrigued enough by the buzz to at least try the product (well I sure was, during my last trip to the Philippines a couple of weeks ago). But I've seen signs that people go beyond "just" trying it: in the supermarket, for example, there was a small mob of shoppers who were hovering around the Magnum freezer and the couple in front of me in the payment queue were already munching on their Magnums even before their first item was scanned; and when my girlfriend and I were going around the city, we've seen at least two groups of young people who were delightfully ravishing Magnums in front of convenience stores.

So what makes Filipinos buy this debatably-so-so and expensive product, collectively in huge quantities? It's all about the marketing, right? So I guess the more appropriate question to ask is: what makes this kind of marketing campaign so effective on us?

Economist Tibor Scitovsky, in an essay he wrote more than sixty years ago entitled "Ignorance as a Source of Oligopoly Power", offers an answer which, in my opinion, makes the most sense: marketing campaigns, such as the one used for Magnum, works on us because we are ignorant consumers. Before anyone gets offended, by "ignorant" Mr. Scitovsky definitely does not mean stupid or foolish. To be more specific:

"An ignorant buyer is a person who is unable to judge the quality of the products he buys by their intrinsic merit. Unable to appraise products by objective standards, he is forced to base his judgment on indices of quality, such as the price of products and the size, long-standing and general reputation of the producing firms. Moreover, aware of the shaky basis and insufficiency of his judgment, the ignorant buyer dare not rely on his judgment alone and falls prey to the emotional suggestion of advertising."

Since we are unsure of the quality of Magnum before we try it (actually, even after the first try the quality of the product remains fuzzy for many of us) we look at other cues like price (higher price = better quality) and the reputation of the names behind the product (i.e., Selecta, Unilever) to gauge quality and reinforce our initial impression of the product. And the fact that we are susceptible to high-budget marketing campaigns may be a sign that we are ignorant buyers (please take note that I just said "may be a sign", meaning it does not necessarily follow). Remember that this is not the first time something like this happened in recent history; if you recall, a few years back Unilever (slow clap, everyone) unleashed a monster of a marketing campaign for Clear, which was able to successfully usurp P&G's Head and Shoulders as the top shampoo brand in the country (and, according to the grapevine, was the reason why the P&G country manager then was sacked).

To summarize, I argue that Magnum has been very successful in the Philippines because its marketing campaign has been very effective, and that what makes this campaign effective is our ignorance--or lack of expertness or sophistication--as consumers.

As long as you don't start by saying "I have a fucking MBA from AIM, who are you calling ignorant?", I'd be happy to hear your thoughts. :)

Note: Scitovsky's essay is actually very interesting to read in its entirety. He posits a few more ideas that I'd love to talk about, if only this space were not so limited (it's hard to see the invisible walls, I know, but they are there). I can't post the whole article for download because of copyright issues, but if you want a copy, just send me an email and I'll give you one.

Sunday, April 1, 2012

4 Things That Need To Be Done

Yeah, I've just turned 35, which kinda sucks. So I've spent the last couple of weeks thinking about things--my studies, this blog, my investments, my life--and I have realized that some changes need to be made.

1. Invest more aggressively. Ever since I got here, the Hong Kong stock market has been nothing but boring. This more-or-less led me to liquidating most my investments a couple of weeks ago. And seeing that things have been doing very well for the Philippine stock market in the past several of months, I have decided to transfer a sizable chunk of what I own to that market. But I don't want to just hop on the bandwagon--I want to beat it, so I am going to pick a few select mining stocks and go ALL IN (I'm looking at you, GEO).

2. Live a little. What remains after investments, I will use to buy a new car. I've gotten tired of Hong Kong's public transportation system, it has become "too efficient" for me. So I'll use the money I have left (plus whatever I can borrow from the bank) to buy a new Audi A3.

3. Get a girlfriend, BECAUSE I DON'T HAVE ONE. I really hope the car would help.

4. End Investor Juan. I have already given more than two years of my life to this seemingly fruitless cause, and I have just reached a point when I feel that enough is enough. Now I just want to concentrate on finishing my studies and enjoy my life, because ultimately IT'S ABOUT ME AND NOT ANYONE ELSE. I guess nothing more needs to be said about that.

Wait, I lost track of time. What date is it again?

EDIT 02 APR 2012

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