Articles by mgedwards

A Fool’s bet

I subscribe to Fool.com‘s commentary on specific stocks.  One feature I especially enjoy is "Dueling Bulls," where two Fool commentators virtually duke it out over a particular stock.  One chooses a bullish outlook, and the other chooses to be bearish on a particular stock.  Recently the "Dueling Bulls" focused on whether to buy a share of Google or an ounce of gold.  On November 30, Rick Aristotle Munarriz argued that a Fool should invest in a share of Google.  The next day, Robert Aronan countered that it is better to buy an ounce of gold.  On December 5, I argue you should buy neither, because you can earn a better return on your investment and diversify your portfolio by buying several shares of stock with the same amount of money you would spend to buy a share of Google or an ounce of gold.  I enjoy Fool.com’s commentaries and have no doubt they are a smart group of investors, but sometimes I find their recommendations way off the mark.  Their recommendations on Google and gold are exhibits A and B.
 
On Friday, Google (GOOG) closed at $417.70 per share.  Gold recently closed at over $500 per troy ounce.  With so many analysts rating Google a buy or strong buy, it’s likely that Google will be on its way to $500 per share, putting it at near parity to an ounce of gold.  Is a piece of Google worth its weight in gold?  I doubt it.  That contention is debatable.  However, what is becoming increasingly clear is that the upside for both gold and Google is shrinking.  There is no guarantee that either will continue to rise or retain such high valuations, and the more expensive they become, the more likely they are to lose value.  Gold has not flirted with such high valuations since 1987, when the stock markets crashed (remember Black October?).  Just 16 months ago, Google went public at $85, and many analysts, including Rick Aristotle Munarriz and my idol, Bambi Francisco, believed it was overvalued at the time.  In fact, I sold my shares of Google at $200 per share, believing that they could not rise much higher than $235 per share.  At the time, my bearish sentiment was reinforced by many of the same analysts who now say that Google shares are on their way to $500.  I now believe a target price of $300 for Google is sustainable, but $500 per share?  I wish I had kept my shares and enjoyed the ride to $417, but I still would have sold a long time ago.
 
The value of a dollar is more than it was in 1987, so gold may very well be on its way to $600, and Google’s share price will probably continue to rise over the short term.  However, the risk associated with a return of 20%-25%, which many bullish analysts are predicting for Google and gold in the next year, is very high.  I would much rather take $500 and put it into several equities.  If I wanted to buy some Google, I might buy shares of Bill Miller’s Legg Mason Value Fund, which owns shares and is on the verge of beating the Standard & Poor’s 500 for the fifteenth year in a row.  If I wanted to buy gold, I might choose to purchase a couple shares of StreetTracks Gold, an exchange traded fund (ETF).  The ETF also saves you the trouble of buying and physically holding gold under your mattress. 
 
I would be more apt to invest my $500 in other equities and funds diversified by industry, market size, and region.  I prefer to invest my money in promising companies and sectors not pumped up by speculation, as is now happening with both Google and gold.  Gold may be alluring, but buying a diverse range of metals and materials is a much better bet.  A hypothetical $1 million metals portfolio I developed on Marketocracy two years ago has returned over 50% since inception.  The fictional portfolio includes a variety of mining companies and an assortment of materials manufacturers.  As for Google, it may eventually swallow up all of techdom and bring the mainstream media (MSM) to heel, but for now I think it’s wiser to spend investing dollars on Yahoo, Ebay, Dell, Oracle, Microsoft, Amazon, and any number of top tech companies with far lower stock prices.  For example, you could buy 125 shares of Sun Microsystems for about $500, and it would need to increase by just 85 cents per share to earn a 25% return.  In October alone, Sun increased 65 cents per share.  While I don’t recommend buying shares of Sun Microsystems, I believe it’s a safer bet than buying Google now.  Buying Google or gold now is a Fool’s bet.

Happy Birthday, World Adventurers!

One year ago, World Adventurers began as a way for me to keep track of our family’s adventures.  I posted my first entry on December 3.  However, since Korea is 14 hours of the U.S. East Coast, World Adventurers began on December 4, Korea time.  52,000 hits later, it’s been quite a ride.  It might not be as popular as Jason Mulgrew’s blog, but it holds its own (then again, I’m not an oddball, eligible bachelor posting my entire private life on the Internet, trying to refute claims that I’m actually gay–thanks Monique for pointing out his wacky blog).  In the past year, this blog has been featured in Slate Magazine (August 3) and on MSN Spaces’ “Best of MSN Spaces” (September 19).  My analysis of the red-hot Baidu.com IPO (July 30) also got some traction, and World Adventurers recently got a nice plug from “The Marmot’s Hole,” the most popular Korea blog.
Thank you to everyone who’s surfed by World Adventurers over the past year.  Thanks too for all the great comments I’ve received from you (sans the one or two spammers and flamers).  I especially want to thank the following people for keeping in frequent touch:
  • Wade3016:  Cuz’, I haven’t seen you post any comments lately, but you are always good for a good antidote to my occasional claptrap.  Thanks for helping me see the error in my ways as I foolishly perpetuate the Google bandwagon.
  • Angeline:  Thanks for being so sweet and letting your light shine.  Thank you for your great comments and letting me know that someone is reading.
  • Insadong KR:  I have to give a shout out to the best Korean restaurant in Vancouver, B.C., Canada I’ve never visited!  It’s definitely on the itinerary the next time I’m in Vancouver.  Cool Mustang.  It’s good to see the Canucks do well.  You’ll have to teach me how to play bandy.
  • Monique:  It was great meeting you in Busan at the APEC Summit.  Love your blog!  Keep up the good work.  See you in Seattle.
  • The Marmot’s Hole:  You’re one of the nicest guys I’ve met in Korea.  You blog is a great way to get all the scoop on Korea.  Thanks for the shameless plug.  We’ll get together soon once the Christmas craziness has simmered down.  Have fun in China.
  • Courtney:  Thanks for stopping by and going out of your way to say hello.  I enjoyed meeting you in Seoul.  Thanks so much for the necktie!  I wore it with pride last Friday and did my best to keep it away from the counter.  LOL
  • Exiled_attorney:  You’re a good friend and a great blogger.  Play it cool.  We’ll get together for drinks soon.  Stop complaining about the Oilers leaving Houston–viva the 1-10 Houston Texans!  They need all the support they can get.
  • Mars_wolf:  You’ve been reading practically since the very beginning.  I’m glad to see you stop by and post comments from time to time.  Your photos are awesome.
  • Speedy Sea:  Thanks for stopping by!  You have a sweet spirit. 
  • Dezcel:  Thanks for stopping by this year and reminding me of good times in Seattle.  Glad to hear you had a good time in Korea.
  • KingRoseMouth:  My friend, you are a hidden gem.  You are one of the best writers I know and one of the most interesting people I’ve ever met. 
  • A Plus Proche de la Nature:  C’est un blog tres interessant et beau.  Merci beaucoup.
  • Ljiajianchengchul:  Thanks for stopping by from time to time and posting comments.  Your photos of China are wonderful.
  • timeless_traveler:  Hope all is well in South Africa.  I haven’t seen any posts from you for awhile.  Stop by sometime to say hello.
  • Allader:  I’ve seen you stop by from time to time.  Although you haven’t posted a comment, I’ve stopped by your blog as well.  How is North Korea?

And to everyone else who’s stopped by and I missed (unintentionally)…thank you!

100-day birthday celebration

We spent the evening at a friend’s place celebrating his son’s 100th day birthday.  My friend is a World Adventurers reader, so I’m sure he’ll read this post.  He’s welcome to post a comment, but I’ll leave it to him to reveal his identity.  He’s always good for a quicky witted, pithy comeback, so I’m sure he’ll take the bait.  Yesterday I told him we planned to bring gifts for the entire family, but he protested, “Please don’t buy any gifts if you haven’t already.  I feel guilty [taking gifts].”  Well now, let’s see.  Although he is American and his wife is Georgian, true to Korean custom they threw a 100-day celebration (Baek-il, or 백일) for their son.  As is Korean custom, guests should come bearing gifts whenever they are invited over to someone’s home.  Therefore, our friends must accept our gifts with glad hearts.  I also bribed them with some cilantro, which they have had difficulty finding in Korea. 
 
I did a little research to understand why the 100-day celebration is such a significant milestone in a child’s life.  The 100-day celebration is also observed in Chinese culture; it is virtually unheard of in western cultures.   Baek-il is the second of three events in a child’s first year of life celebrating his or her continued health.  According to Korean tradition, these events should only be celebrated if the child is healthy.  The first event, the 21-day celebration, celebrates the child’s first 21 days of life.  It is not as well known as Baek-il because at 21 days the child and mother are traditionally confined to the home and are not allowed to see guests.  The child’s family members traditionally observe the day in absentia by praying for the child.  Baek-il is the official coming-out ceremony for most Korean child.  The child’s first birthday, or Tol (돌), is the third and perhaps most important of the three events.  Once the child passes their first birthday happy and healthy, it is very likely that they will live a longer life.  It’s easy to forget in this day and age that many of our cultural celebrations such as birthdays originated out of the need to survive.  Child mortality was very high in Korea until the 1960’s, and these celebrations are testaments to the fact that many Korean children did not live to see their first birthdays.
Now that you’re thoroughly depressed, let me share the happier side of these celebrations.  Baek-il and tol are opportunities for families to come together and meet the newest members of the clan.  It is often the impetus for family reunions, just as Chuseok (추석), a day to remember one’s ancestors, brings together Korean families every year.  These celebrations give families an excuse to share their bounty with family and friends.  They serve foods that are typically served only at special occasions, such as rice cakes, or deok (덕).  Food becomes even more significant on the child’s first birthday, when the child is seated in the midst of a variety of foods.  Korean tradition maintains that a child’s future will be determined by the first food that they touch.  (I wondered whether that led parents to game the system by putting the most desirable food closest to the child.)  Traditionally, the children have received money, gold trinkets, or clothing as gifts, although modern families may give more eloborate gifts such as toys or tech gadgets.  Thus, it is customary for guests to bear gifts to these types of events, just as we did.  If I didn’t, I couldn’t call myself Korean.  Oh wait, I’m not Korean.  That’s OK.  He better accept them anyway.
For more information on Korean birthday celebrations, visit:
 
 
Note to Quemino’s World:  Welcome back to Seattle.  I hear there’s been some snow in the area.  It was great meeting Alex and you for dinner and drinks in Busan.  I hope you had a great trip to Thailand…at least better than your last day in Busan!  Sorry to hear about the bummer ending to your APEC trip.  How did I blog during the APEC Summit?  Well, when you are stuck at a hotel near the airport, as far as you can get from the action, and you get back to your hotel room too late to do much, your family is five hours away, and the cable TV features one English channel but has an Internet connection, you cope by posting blog entries.  I’ll see you in July when we return to Seattle for a visit.