Amazon

I recently made several purchases from Amazon.  I didn't have a very positive customer experience.  On one purchase they offered me a $10 credit to sign up for their 'pay with points' program in which you can use credit card reward points to pay for Amazon products.  This isn't actually a bad idea as I have lots of reward points which I should do something with.  But when I signed up I didn't get the credit.  Amazon customer service did give me the credit when I complained but by that point I was so annoyed I had unsigned up.  So Amazon ended up paying me $10 not to sign up.  I also bought a TV.  Amazon claims to offer price protection on TVs, if they drop their price within 14 days you can get a credit for the difference.  But again I had to email customer service to actually get the credit although according to their help pages this should not be necessary.   On another item I was ready to buy but there was no buy button on the product page.  It showed up some time later but only after I had wasted considerable time.

A general complaint I have with Amazon is that if you get to the final page before buying and notice something wrong there doesn't seem to be an easy way to fix it.  At least I didn't see anything to do but abort and start over which is quite annoying if you had several items in your cart.  Another general complaint I have is about their numerous significant price changes (both up and down).  Perhaps these are somehow revenue maximizing (although I find that difficult to believe in some cases) but I wonder if they are properly accounting for how annoying this is.

My most recent purchase was TurboTax Deluxe 2014.  I ordered it Friday night (during a brief period when it was selling for under $40) and surprisingly it was delivered around noon on Sunday by the USPS much earlier the estimated arrival time.  This was kind of impressive but also seems sort of pointlessly expensive, why not just deliver it with the regular mail.

As for TurboTax, Intuit has annoyed a lot of people by removing a bunch of long standing features from the Deluxe version (in order to force upgrades to the much more expensive Premier version) but fortunately it appears I don't need any of them for my 2014 taxes.  I did have some trouble installing it and was worried when it first came up with the Basic version logo but this eventually changed to Deluxe and it seems to be working ok.

Snow Day

It appears that perhaps 6 inches of snow fell from Monday through Tuesday morning at my residence near Princeton, New Jersey. This is not nothing but is not at all unusual for a winter storm in this area and was nowhere near the alarming prior predictions. These predictions were bad enough to induce my employer to announce Monday evening that my work location was closed Tuesday. Perhaps this decision was a little premature but it is nice to get notice as early as possible.

It is not too surprising that the predictions of potentially record breaking snowfall totals did not materialize (at least not in New York City and areas south and west). For a record snowfall everything has to go just right (or wrong depending on your point of view) which means most potential record breakers will fall short.

Two Dollar Gas

On April 24, 2004 (when I was living in Ossining, New York) I bought gas and paid $1.939 per gallon.  A couple of weeks later I bought gas again and the price had risen to $2.039 per gallon.  This appears to have been the first time I had ever paid over $2 per gallon and I vaguely recall noting that at the time and wondering if I would ever pay less than $2 again.  For a while this seemed doubtful as the price bounced around but stayed above $2 and trended higher.  On July 26, 2008 I paid $4.499 per gallon.  But then the financial crisis hit and demand plummeted driving the price ever lower.  Five months later on December 26, 2008 I paid $1.979 per gallon.  This was more or less the low and the price had moved back above $2 at my next fill up (although I did pay less the $2 per gallon a couple of times in April 2009 in New Jersey where the gas tax is about $.35 less per gallon than in New York).  On July 2, 2014 (having moved to New Jersey) I paid $3.399 per gallon.  But then with growing over supply of crude oil prices began to drop, slowly at first and then more rapidly.  When I bought gas on Friday (January 9, 2015) I once again paid less than $2 ($1.959 per gallon to be exact).  It remains to be seen how low the price will go and how long it will remain below $2.

The lower price is nice in isolation but probably isn't really in my overall best interest at this point.  I purchased about 425 gallons of gas in 2014 paying an average price of about $3.20 per gallon.  So if I buy the same amount in 2015 and pay an average price of $2 per gallon I will save about $510 or just less than $10 per week.  This isn't too impressive and is much less than what I am likely to lose on my oil price sensitive investments if crude oil prices remain depressed.

See here for a graph of national gas average prices over the last 11 years.  When I was living in Ossining I seem to have been paying about $.40 per gallon more than the national average whereas now in New Jersey I am paying about $.10 per gallon less.

Crude Oil Prices

Six months ago the Brent crude oil price was about $110/barrel and the WTI (West Texas Intermediate) price was about $100/barrel.  The current prices are about $60 and $55 respectively.  So the price has fallen dramatically and unexpectedly.  As I have mentioned before I believe oil prices are likely to generally rise over time as the earth's supply is exhausted (peak oil).  The recent price action doesn't totally contradict this as there was no reason to believe the rise would be smooth and monotonic.  Because both oil supply and demand react slowly to price changes small mismatches between production and consumption can cause wild price swings.  Still the recent price action is at least a reminder that in investing being right in the long run doesn't mean you can't lose a lot in the short run.  

Given that one still expects rising crude oil prices in the long run what is an appropriate investment strategy at this point?  It is tempting to look for bargains among the oil stocks which have fallen the most.  But this is in effect a bet that crude oil prices will recover before the highly leveraged companies in question go bankrupt (as a stock which is going to zero is never cheap along the way). So this is not an appropriate way of investing based on a long run view.  It is better to look at those companies that are most likely to be around for the long run.  However such companies are currently only cheap relative to the market as a whole.  I bought some ExxonMobil (XOM)  and some ConocoPhillips (COP) a couple of years ago and while their stock prices have fallen substantially in recent months they are still above my basis (while the market as a whole is up about 50%).  So I don't see a compelling reason to add to my positions.  Perhaps this will change over time if the crude oil price remains depressed.

Fact Checking

Recently New York Magazine published an amazing story about a Stuyvesant High School student who had purportedly  made $72 million in the stock market.  When I read it I was pretty sure it was nonsense as in fact it soon turned out to be.  As the magazine admits its fact checking was obviously inadequate.  I expect this was caused in part by a failure to realize just how unlikely this story was and the implications for the appropriate level of fact checking.   Suppose for example that there are a million false claims like this for every true account.  Then fact checking sufficient to catch 99.9% of the false claims is totally inadequate as 99.9% of the surviving claims will still be false.   As the saying goes "Extraordinary claims require extraordinary evidence".

New York Magazine stated:

... As part of the research process, the magazine sent a fact-checker to Stuyvesant, where Islam produced a document that appeared to be a Chase bank statement attesting to an eight-figure bank account. ...

But this is very ordinary fact checking.  Anybody can fake a bank statement.  The whole point of a bank reference is that you can verify it with the bank.  If New York Magazine had insisted on doing this they would likely have avoided this fiasco.

Rape Fantasies

Last month Rolling Stone published a story about rape on college campuses which began with a lurid account of a University of Virginia coed being gang raped at a frat party.  Doubts were raised almost immediately about whether this account was accurate and as I write this Rolling Stone is not standing behind their reporting.  I didn't read the story before it was discredited but in hindsight it does read like something Stephen Glass (famous for inventing a whole series of stories for the New Republic catering to liberal biases) would have come up with.  Which means Rolling Stone should been wary and extra careful with their fact checking.  Which they do not appear to have been.

Some people find it hard to imagine a woman inventing a story like this.  I don't.  It is fairly common for men who have never been in combat (or in some cases even in the military) to invent stories about their horrific combat experiences (and the post traumatic stress which continues to affect them).   The motive of course being to attract the attention and/or sympathy that such stories naturally elicit (when believed).  I don't find it hard to believe that some women would invent rape stories for similar reasons.  And because rape accusations are fairly rare it doesn't take a large proportion of such women among the general population to make false rape accusations a significant fraction of all rape accusations.

As for Rolling Stone I suspect the problem is that among their staff it is generally believed that only "bad" people would ever question a woman's account of being raped.  This makes it hard for normal journalistic skepticism and fact checking procedures to operate properly.  If actually hiring a more ideologically diverse staff is too horrible for Rolling Stone to contemplate perhaps for each story they should designate a devil's advocate to bring up the objections that people are suppressing for fear of being thought sexist pigs (or whatever depending on the story).  This advice of course applies to any institution where there is a danger of legitimate questions being suppressed because of pressure to conform to a party line. 

Goodell Management

NFL commissioner Roger Goodell's handling of the Ray Rice affair came under scrutiny again last Friday when an arbitrator reversed his indefinite suspension of Ray Rice from the NFL for punching his then girl friend (now wife). While Goodell's various decisions in this matter are certainly questionable the real problem is he shouldn't be making these decisions in the first place. There are two reasons for this. First it is not a good use of his time. Goodell's salary is about $40,000,000 a year. Assuming Goodell works 2000 hours a year this amounts to $20,000 per hour. It is unclear to me why the NFL owners think he is worth such a salary but it is surely not to personally conduct disciplinary hearings. The NFL could instead hire experienced respected professional arbitrators who could be expected to do a better job for a fraction of the cost (probably $1000 per hour or less). Second it exposes Goodell (and by extension the NFL) to needless bad publicity. These decisions will never please everybody but by assuming personal responsibility for them Goodell is providing critics with a ready target and focus for their anger. This is something that could and should be delegated and Goodell's failure to this reflects badly on his management ability.