Review: Motorola Z9 Cell Phone

March 30, 2009

I’ve had the Motorla Z9 phone with an AT&T plan for about 7 months now, and I’ve had a great chance to see the downfalls and highlights of this Motorola slider phone.   In my seven years of having a cell phone, I’ve been able to have experienced Sprint, Verizon, and now AT&T.  I’m a big believer in not paying hundreds of dollars for a cell phone so I usually just try to get a free one from the store or sign up for a two year plan on Amazon and get it for cheap (or free in this case back in August 2008).

The Motorola Z9 is a sturdy slide phone with a nice mahogany color, easily distinguishable keypad to navigate through menus, great volume control, and good overall functionality.  There are a number of improvements that I would like to see Motorola add on, but even though I wasn’t thoroughly impressed with my first slider phone, it is not a terrible phone either.  At about .6 inches think and 5 ounces heavy, this compact phone can easily fit into your pocket,  and I’ve dropped it numerous times on the concrete ground, but the Motorola Z9 has been able to withstand some of those accidents.

Cellular Service

I’m not sure if this is the service of AT&T or Motorola’s (MOT) wireless technology but I have had more dropped calls with this phone than any of my two previous flip phones.  These dropped calls occur even in normal locations like a home or outside in an open area.   I would rank Verizon (VZ) first with Sprint (S) and AT&T (T) tied for second.

Battery Life

The battery life is terribly disappointing as I notice that it gets to low battery status rather quickly.  Cnet rates the talk time at 240 minutes talk time or 312 hours of standby time.  I would more realistically say that the talk time is more like 180 minutes with a 72 hour standby time.  The battery also seems to get overly warm during normal usage.

Extra Features

The features on the Z9 is everything that someone would like for a phone without a data plan.  Whether you’re talking about a 2 megapixel camera phone with decent quality photos, bluetooth compatibility, mp3 music playing ability, a slot for a micro SD card, and a queued history of the last 120 calls.  You can sort your list of calls by incoming and outgoing calls but not by solely missed calls.

Additional Improvements

The “go online” button above the green “talk button” can easily be accidentally pushed (when trying to make a call) which causes unnecessary data fees.  After a couple months of frustration, I figured out a solution to ensure that the “go online” button will never cause you any distress:

1) Press the Menu key
2)
Scroll down and select Settings
3)
Scroll down and select Security
4)
Scroll down and select Lock Application
5)
Enter access code (default is 1234 I think) & select “WebAccess” to lock and press OK

Overall Grades

Battery Life: D+
Functionality: A-
Durability: A
Photo Quality: B
Cellular Service: C
Overall Cell Phone Rating: B-


What I Learned from David Swensen’s Pioneering Portfolio Management

March 28, 2009

I am not going to write a book review for Pioneering Portfolio Management, because many other qualified individuals have already done so, and this book is clearly a worthwhile read. What I am going to do is highlight the main points of the book that would be most applicable to average individual investors.

David Swensen is Yale’s chief investment officer and manages their endowment fund. An individual investor is not too different from an institutional investor, except that he works on a much smaller scale, isn’t sheltered from taxes, and has a finite lifespan. Both types of investors use the same three tools when making financial decisions: asset allocation, market timing, and security selection.

In allocating assets, diversification is key. Diversification is only meant to control risk, not increase return. Investing in multiple uncorrelated asset classes, each with the same risk factor and expected return, will decrease the collective risk factor while maintaining the same expected return.

This is Swensen’s basic formula for an individual investment portfolio:

  • Domestic Equity 30%
  • Emerging Market Equity 5%
  • Foreign Developed Equity 15%
  • Real Estate Investment Trusts 20%
  • U.S. Treasury Notes and Bonds 15%
  • U.S. Treasury Inflation-Protection Securities 15%

After choosing asset allocations, it is important to constantly rebalance your portfolio to maintain these allocations. Swensen recommends rebalancing more frequently with higher volatility assets. For stocks, rebalance daily (but remember that Swensen does not have to worry about tax liabilities). This emphasizes the contrarian approach to investing. Swensen strongly discourages momentum investing.

Where the market is efficient, there are no mispricings for active managers to exploit. Swensen asserts that in such markets, “Good results stem from luck, not skill.” Index funds historically offer better returns than mutual funds simply because they don’t have the active management costs.

Swensen does advocate some allocation into real estate and private and foreign equity. This is more difficult for an individual to directly access, but there are ETFs that track alternative investments.

Finally, trying to time the market is futile.


Corporate Debt

March 23, 2009

With the economic recession rippling through the economy, everyone is still looking for safe havens to park their money. While this may mean cash or gold or Treasuries, there are still some decent ways to get a modest return with your money in the current market. One of the most often overlooked segment by the average investor is the corporate debt arena. With the ‘Bond’ moniker, images of low risk and low return dance off to the side while the appeal of potential higher returns in stocks take center stage.  But the looming threat of bankruptcy has beaten down a lot of corporate bonds that now trade anywhere from as low as 10 cent on the dollar.

Now one might argue that this discount on a corporate bond is due to the lack of faith in seeing these bonds last until their maturity.  While this is a large part of the reason certain bonds are available for cheap, the discount is also due in part to major bondholders (i.e.- investment banks) being forced to sell early to raise capital.  Because of the credit crisis, waiting for a semi-annual dividend interest payment doesn’t help enough with short-term cash flow issues experienced by companies bleeding money.  So who can benefit from these cheap bonds?

In the normal bond market, you would need a few thousand dollars to buy most of these bond certificates.  The major risk factor affecting corporate bonds is the risk of bankruptcy.  While a bond holder would not get completely wiped out like a common stockholder, there is a restructuring of debt provisions in a Chapter 11 bankruptcy and a totem pole of who gets paid with the leftover assests in a Chapter 7 bankruptcy.  And in the short-term, there is also the potential for a prolonged devaluation of the market price of the bond.

On the upside is the set dividend interest payment of the bond.  For corporate debt with a less than stellar rating, these could be anywhere from 6% to 15% on an annual basis.  And unlike common stock, which dispenses a dividend at the discretion of their board of directors, bonds will never cut their dividend unless the company is forced into bankruptcy.  An extra bonus if you are able to buy a corporate bond at a discount is the gain realized upon the maturation of the security.  So if you buy a bond at 80 cents on the dollar, you get an additional 20% gain when the bond is paid back in full in addition to interest earned while you held the bond.

The additional benefit of the current situation is that corporations are working to retire their debt early, while their bonds are selling cheaply.  This could provide short-term benefits to the price of the bonds as companies seek to increase cash flow by reducing their short-term interest payment on these bonds.  Just like the recent Ford announcement, companies are making offers on their bonds at a premium of their current value, which is far below their full redemption value.  If you were an original bondholder you could still hold on to the bond to eventually recoup your investment, but this present a nice opportunity to those that are able to get in close to the bottom.  An added bonus is that bonds stay with a company even after it mergers with another company, so if you do stick with a bond it will provide a fairly safe investment vehicle.

Since bonds can be rather troublesome to purchase through most retail discount brokers, there’s another investment security that acts just like a bond.  Structured Products Corporate Trusts trade exactly like stock, but have no earnings and an eventual redemption date.  They’re pretty much like a simpler version of the maligned Collateralized Debt Obligations because instead of a pool of securities they’re made up of a single corporate bond issue and pay a semi-annual dividend equal to their interest payment.  Most are issued at $25 a share with the initial total market value equal to the original size of the bond issue.  Ideally they would trade flat until their eventual redemption.  At the moment, quite a few like Dow Pharmaceuticals bonds (KVT), Ford bonds (KSK & KVU), Sherwin Williams bonds (KOS & KOB) are trading at anywhere between a 10 and 80 percent discount.

Hopefully this has provided some insight into another potential investment vehicle.  Be aware of the potential risks that are still inherent in these securitized products even if they are considered less risky that stocks alone.

Disclosure: I have current ownership in shares of Ford (F) and Ford debt (KSK).


Technology Trends: Augemented Reality

March 14, 2009

Here’s a quick post.

Augmented reality is mainstream and people are finding creative uses for it.

The ingredients for augment reality are a sensor, like a camera, and a way of displaying information such as a projector. I foresee an increase in demand for compact camera/projector systems.


Beating the Market?

March 6, 2009

Today I read an article by William Sharpe, titled “The Arithmetic of Active Management” [1]. It presents an intuitive concept that for some reason is frequently overlooked: The average invested dollar must equal the market return.

Then, after fees and commissions, the average invested dollar must underperform the market. That’s why the majority of mutual funds do worse than a random portfolio of stocks.

Tools such as derivatives and short-selling add overhead cost and also, on average, don’t beat the market. While you think you are hedging your investments by buying options contracts, another investor is thinking the same thing when he sells you those contracts.

So, unless you have compelling stock information that others don’t have, active trading will rarely help you beat the market. Mutual funds will rarely help you beat the market. Diversification, long-term investing, and choosing companies with strong fundamentals, are what beat the market.

The market has fallen over 50% since October 2007, so if you still have more than half your portfolio value from back then, Congratulations – you beat the market.

1. The Financial Analysts’ Journal Vol. 47, No. 1, January/February 1991. pp. 7-9

William Sharpe was awarded the 1990 Nobel Prize Laureate in Economics. I don’t think this is what he won it for, though.