Search for the Best Bike

The Search for the Best Bike

The Great Ourdoors

What to look for if you're riding up a mountain or over to the corner store

A stroll into today's bike shop is not for the faint of heart. The days of banana seats and coaster brakes are long gone, replaced by the likes of titanium steel  frames and shock-absorbing suspension forks. But don't be intimidates - or fooled. Inside that shop, there is a bike that is exactly what you need - and lots more that you don't need.

Here we'll guide you through the maze of bike styles and sizes and help you pick one that best suits your needs (and pocketbook):

How do I know what type of bike I need?

There are three types of bikes: road, mountain and hybrid. Each is built for a certain type of riding. A breakdown:

Road bikes: The lightest and fastest of the three bicycle types, these bikes are primarily for people who will be doing distance riding on smooth pavement. The skinny, smooth tires and low handlebars give riders speed and low wind resistance but also make some cyclists feel vulnerable in traffic. Most road bikes weigh between 20 and 30 pounds, but new high-end models can weigh as little as 18 pounds. The majority of people riding road bikes today are athletes who use them for training purposes.

Mountain bikes: Mountain bikes, created by outdoors enthusiasts in Northern California, are now the most popular bike in the United States. The upright seating, fat knobby tires, and easy gearing make these bikes ideal for off-road riding. But even if you live in the heart of the city and only occasionally hit a trail, mountain bikes offer comfort and stability. If you use your bike only for riding with the kids or short trips around town, a mountain bike is probably better suited to your needs than a road bike.

Hybrid bikes: Hybrids, relative newcomers to the bike market, are rapidly gaining in popularity. Hybrids combine the upright seating and shifting of mountain bikes, but offer the thin, smooth tires of road bikes for speed. Many people like the versatility a hybrid offers: you can ride on some less-challenging trails, and also make better time than you would on a mountain bike. But don't buy a hybrid if you are a serious cyclist: the limitations on both roads and trails will frustrate you. If you want to ride on challenging trails, the hybrid's frame and thin tires can't handle the challenge. And if you want to take it on the open road, you'll be battling wind resistance the whole ride.

How much money should I spend on a bike?

Bikes aren't cheap. You can spend anywhere from several hundred to several thousand dollars for a high-end model. It's hard to purchase a bad bike today, though - you can find a decent bike for $500 or less. So don't worry if your budget is tight, but remember you get what you pay for. Don't expect a less-expensive bike to perform as well or last as long as a high-end model. Your extra money is buying lighter, sturdier frames, and components (like gears and brakes) that can take a beating and last a ling time.

How do I know if my bike fits me?

One of the most common errors is buying a bike that is too large. The best advice is buy the smallest bike that you can comfortably ride. Tests to determine if the size is right for you include: straddling the bike frame and lifting the front tire up by the handlebars. There should be several inches of clearance between your crotch and the bike frame, 1 to 2 inches for a road bike, and at least 3 to 4 inches for a mountain bike. For more precise sizing, measure your inseam and then multiply by .883. The result should equal the distance from the top of the seat saddle to the middle of the bottom bracket spindle.

When riding, you should be able to straighten - but not strain - your leg. Adjusting the seat height can help this. Also, especially on road bikes, be sure that you can comfortably reach the handlebars. And on a road bike, make sure your knees are just barely brushing your elbows as you pedal.

Riding a common bike. Photo by Elena.

There are so many frames to choose from. What's best for me?

Frames vary in price and expense, with the heaviest and least expensive being a steel frame. More expensive and lighter are aluminum, carbon fiber, and titanium steel frames, in that order. One-price, molded composite frames are the lightest of all and are a hot new item, but they also carry a hefty price tag. Some composite-frame bikes cost as much as $5,000 or even more.

If you are planning on racing with your bike, a light frame is a necessity. But for weekend riders, it is merely a luxury that will make your ride somewhat more enjoyable.

Which bikes to you recommend?

Bike models come and go, and what's hot this year be outdated by next year. The surest way to purchase a quality bike is to avoid the hot gimmicks and new names, and stick with companies that produce high-quality bikes year-in and year-out.

For mountain and hybrid bikes try Trek and Cannondale, which are two of the biggest American companies. Also try GT, Specialized, and Schwinn.

For road bikes: Specialized and Trek are always reliable. For sure-fire winners that will put a dent in your wallet, look overseas to the Italian-made bikes. Some bike shops carry Pinarello and De Rosa, which are top-of-the line - and the most expensive. They often cost as much as $7,000 or even more.

The Nuts and Bolts of Mountain Bikes

The shops are dangerous places for those with an itchy wallet finger. There are hundreds of bike accessories you could purchase, but a much smaller number that you actually need. Here are a few of the basics, and some exotic innovations:

• Frame: They come in all shapes and sizes, but the lightest and fastest are titanium and carbon fiber.
• Twist grip shifts: Faster and lighter than traditional rapid-fire gears.
• Bar ends: They give you extra leverage when you're up and out of the saddle when climbing. Also when road riding, they allow a more aerodynamic position and a useful alternate hand position.
• Suspension systems: Similar to shock absorbers on a motorcycle, the pneumatic or hydraulic forks absorb the impact of big bumps and reduce strain on hands and arms. Popular, but not necessary.
• Toe clips: Road cyclists may want to investigate toe clips that shoes lock into, while mountain bikers should invest in a pair of toe clips give better leverage on climbs, but mountain bikers need to easily put their feet down when navigating tricky trail turns.
• Tires: Can be specialized to fit your riding needs. The spacing and pattern of the knobs affect the tire's performance in sand, mud, or hard-packed trails.

Buying a Helmet

Wearing a bike helmet is no longer nerdy. In fact, in many cities it's the law.

• The majority of bike-related deaths are caused by head injuries - injuries that could easily be avoided if cyclists wore helmets. But a helmet won't do you any good if it doesn't fit properly.
• The experts suggest buying a helmet that feels snug, but not uncomfortable.
• The strap under your chin should feel snug, but loose enough to open your mouth wide enough to take a drink or water.
• The helmet should touch the head at the crown, sides, front, and back and should not roll backward or forward on the head when you push up.
• Remember that you can make a tight helmet looser by inserting smaller sizing pads or sanding down existing pads.

A winter bike. Photo by Elena.

Living with the Music Masters

Living with the Music Masters

Building blocks for a classical CD collection, from Bach to Gershwin

Music is about emotions, said once Ted Libbey, commentator on the weekly National public radio show “Performance Today”, “It helps us grow”. And, Libbey says, classical music “has a particular richness because it goes back centuries”. Libbey is the author of the book The NPR Guide to Building a Classical CD Collection (Workman publishing Co, 1994). Following are the composers that Libbey would make the building blocks of any classical music collection and why he thinks so:

Johann Sebastian Bach (1685-1750): Bach had a huge influence on music history, much greater than any of his contemporaries would have guessed. He was known mainly as an astounding keyboard virtuoso and a very prolific composer. What has emerged in more than two and a half centuries since his death, however, is the absolutely amazing spiritual power of his compositions. There is a beauty of construction and a kind of clarity of conception and detail that goes far beyond what any other composer of the baroque period achieved.

Wolfgang Amadeus Mozart (1756-1791): Mozart is one of the favorite, Libbey says, because of the sense of humanity that comes out in the music. People say he was a divine genius, and it's true. But he was also very human. With all the formality of the XVIIIth century he could evoke tragedy in music and make it burn with emotion. He was a virtuoso keyboardist, the greatest of his age. At the same time he played the violin well enough that he could have had a career as Europe's leading violinist. In his operas he conveys to the listener an understanding of an emotional or dramatic state probably more acutely than any other composer of all time.

Joseph Haydn (1732-1809): Haydn was the most powerful innovator of the later XVIIIth century. In the field of symphonies he was the leader. He grew the form from a lightweight suite to a very thoroughly worked-out and highly contrasted musical expression for a large orchestra. For Haydn, music was something of a game, and so there are wonderful jokes in his music. He didn't probe the tragic dimension as much as Mozart did, but he was a pioneer in creating the classical style.

An Orchestra. Photo by Elena

Ludwig Van Beethoven (1770-1827): Beethoven was a classical composer who can also be called the first Romantic. He made things more subjective. His music not only conveyed emotions or imagery, but very precise emotions from his own soul as well. Working on the basis of what Mozart and Haydn had done, Beethoven reinvented the string quartet and symphony and expanded their meaning dramatically. His instrumentals set the standards for the entire XIXth century and Xxth century. Like an undertow in the ocean, they pull you in.

Franz Schubert (1797-1828): Schubert was the great song writer in music history; his melodies pin down a state of emotion so effectively. His music is more concerned with contemplation than drama. He puts a very high value on the beauty of sound. Indeed, what you hear in Schubert's music is the beginning of a Romantic concept of sound as color. His music inhabits regions. It's not in a hurry to go from one place to another in a straight line. It's like seeing a strange landscape.

Frederic Chopin (1810-1849): There has never been a closer connection between a composer and an instrument than with Chopin and the piano. There is an Italian quality to some of his works: he treated the piano as a human voice. There is an undertone of darkness in much of what he wrote, but also a surreal beauty and lightness to it all – an imaginative release from life.

Piotr Ilyich Tchaikovsky (1840-1893): Tchaikovsky has been diminished by the musicologists as a little bit too hysterical and trite in his music. But when you listen to his music, it's not surprising that it's among the most popular. It's music of immediate emotional impact. His ballets – Sleeping Beauty, Swan Lake, the Nuttracker – are among the greatest ever written. His symphonic music has a richness and translucency to it, like a simple scale, but he clothed them so gloriously that they come out as very powerful expressions.

Claude Debussy ((1862-1918): Debussy was one of the most profound thinkers in the history of music. He did so much to create modernity. He had an ear for sonority that was completely original. He was influenced by the orchestra of cymbals and gongs from Indonesia that he heard at the World's Fair in Paris. He revolutionized his thinking about sound and resulted in some of the most extraordinary writing for the piano ever. The essential Debussy is in the quite floating pieces like “Prelude to the Afternoon of the Faun”. People tend to compare Debussy to the impressionist painters, but it's more accurate to compare him to the symbolist poets. Most of his work takes a literary point of departure.

George Gershwin (1898-1937): Gershwin was a lot like Schubert. He was a wonderful melodist. His tunes are all over our musical consciousness. He wrote “Rhapsody in Blue” when he was 25. As he got older, he got more of a sense of organization and structure without losing that freshness he always possessed. His opera “Porgy and Bess” is probably the great American opera. It's a tragedy his life ended so early. He still conveys something of the American spirit, especially of the “roaring “20th, that no one else has captured in quite the same way.

Using Fundamental and Technical Analysis Together

Using Fundamental and Technical Analysis Together

Many analysis use a combination of techniques to judge whether individual stocks are attractive for purchase. One of the most sensible procedures can easily be summarized by the following three rules. The persistent, patient reader will recognize that the rules are based on principles of stock pricing:

Rule 1: Buy only companies that are expected to have above-average earnings growth for five or more years. An extraordinary long-run earnings growth rate is the single most important element contributing to the success of most stock investments. Merck, Dun & Bradstreet, MCI, Service Corporation International, and practically all the other really outstanding common stocks of the past were growth stocks. As difficult as the job may be, picking stocks whose earnings grow is the name of the game. Consistent growth not only increases the earnings and dividends of the company but may also increase the multiple that the market is willing to pay for those earnings. Thus the purchaser of a stock whose earnings begin to grow rapidly has a chance at a potential double benefit – both the earnings and the multiple may increase.

Rule 2: Never pay more for a stock than its firm foundation of value. While I have argued, and I hope persuasively, that you can never judge the exact intrinsic value of a stock, many analysts feel that you can roughly gauge when a stock seems to be reasonably priced. Generally, the earning multiple for the market as a whole is a helpful benchmark. Growth stocks selling at multiples in line with or not very much above this multiple often represent good value. Service Corp. In the study just described is a good example.. Its multiple was actually below the market’s.

There are important advantages to buying growth stocks at very reasonable earnings multiples. If your growth estimate turns out to be correct you may get the double bonus: the price will tend to go up simply because the earnings went up, but also the multiple is likely to expand in recognition of the growth rate that is established. Hence the double bonus. Suppose, for example, you buy a stock earning $1 per share and selling at $7.50. If the earnings grow to $2 per share and if the price-earnings multiple increases from 7,5 to 15 (in recognition that the company now can be considered a growth stock) you don’t just double your money – you quadruple it. That’s because your $7.50 stock will be worth $30 (15, the multiple, times $2, the earnings).

From a small seed a mighty trunk may grow (Aeschylus). Photo by Elena

Now consider the other side of the coin. There are special risks involved in buying “growth stocks” wheere the market has already recognized the growth and has bid up the price-earnings multiple to a hefty premium over the accorded more run-of-the-mill stocks. Stocks like International Flavors and Fragrances, Avon Products, and other recognized growth companies had earnings multiples well above 50 in the 1950s. The warning was made very clear that the risks with very-high-multiple stocks were enormously high.

The problem is that the very high multiples may already fully reflect the growth that is anticipated, and if the growth does not materialize and earnings in fact go down (or even grow more slowly than expected), you will take a very unpleasant bath. The double benefits that are possible if the earnings of low-multiple stocks grow can become double damages if the earnings of high-multiple stocks decline. When earnings fall the multiple is likely to crash as well. But the crash won’t be so loud if the multiple wasn’t that high in the first place. Reread the grim stories of National Student Marketing or Home Shopping Network or the Nifty Fifty growth stocks, if you want more evidence of the enormous risks involved with very-high-multiple stocks.

What is proposed, then, is a strategy of buying unrecognized growth stocks whose earnings multiples are not at any substantial premium over the market. Of course, it is very hard to predict growth. But even if the growth does not materialize and earnings decline, the damage is likely to be only single if the multiple is low to begin with, while the benefits may double if things do turn out as you expected. This is an extra way to put the odds in your favor.

We can summarize the discussion thus far by restating the first two rules: Look for growth situations with low price-earnings multiples. If the growth takes place there’s often a double bonus – both the earnings and the multiple rise, producing large gains. Beware of very-high-multiple stocks where future growth is already discounted. If growth doesn’t materialize, losses are doubly heavy – both the earnings and the multiple drop.

Rule 3: Look for stocks whose stories of anticipated growth are of the kind on which investors can build castles in the air. I have stressed the importance of psychological elements in stock price determination. Individual and institutional investors are not computers that calculate warranted price-earnings multiples and print out buy and sell decisions. They are emotional human beings – driven by greed, gambling instincts, hope, and fear in their stock-market decisions. This is why successful investing demands both intellectual and psychological acuteness.

Stocks that produce “good feelings” in the minds of investors can sell at premium multiples for long periods even if the growth rate is only average. Those not so blessed may sell at low multiples for long periods even if their growth rate is above average. To be sure, if a growth rate appears to be established, the stock is almost certain to attract some type of following. The market is not irrational. But stocks are like people – what stimulates one may leave another cold, and the multiple improvement may be smaller and slower to be realized if the story never catches on.

So Rule 3 says to ask yourself whether the story about your stock is one that is likely to catch the fancy of the crowd. Is it a story from which contagious dreams can be generated? Is it a story on which investors can build castles in the air – but castles in the air that really rest on a firm foundation?

You don’t have to be a technician to follow Rule 3. You might simply use your intuition or speculative sense to judge whether the “story” on your stock is likely to catch the fancy of the crowd – particularly the notice of institutional investors. Technical analysts, however, would look for some tangible evidence before they could be convinced that the investment idea was, in fact, catching on. This tangible evidence is, of course, the beginning of an uptrend or a technical signal that could “reliably” predict that an uptrend would develop.

While the rules outlined here seem sensible, the important question is whether they really work. After all, lots of other people are playing the game, and it is by no means obvious that anyone can win consistently.

Burton G. Malkiel. A Random Walk Down Wall Street, including a life-cycle guide to personal investing. First edition, 1973, by W.W. Norton and company, Inc

Lemon Law

Lemon Law

Lemon owners get a reprieve

If the car you buy is a dud, you may qualify for a refund or replacement, that’s what the lemon law says!

Your car is only a year old but it won’t start on rainy days. It stalls if you drive it for over an hour and has windshield wipers that swing into action with no human intervention. What is a lemon-owner to do about such luck?

All states now have passed “lemon law”, and although each state’s law varies, most agree on one point: If a car has to be taken to the shop for the same repair four times, it’s a lemon.

Depending on where you live, that may entitle you to ask the manufacturer for a refund or replacement, In some cases you may have to pay a fee for using the car, but that fee should only apply to the mileage driven until the first repair attempts, according to the Center for Auto Safety, a consumer watchdog organization in Washington, D.C.

To make sure you cant take advantage of the lemon law in your state, it is crucial that you keep good records of car repairs and can show that you have tried to fix the same problem at least four times unsuccessfully.

You’ll need records documenting when the car was taken in to the repair shop, the mechanical problems involved, and the repairs made, including which parts were replaced and how much labor was required. When writing a car maker, enclose copies of your shop repair orders, which should provide much of the necessary information.

If the manufacturer refuses to give you a refund or a replacement car even though you qualify under your state lemon law, you may have to consider legal action. You can get a lemon lawyer referral by writing to Lemon Lawyers of your state.

Halicarnassus Pyramide. New York. Photo by Elena

When Leasing Makes Sense

Auto leasing is a cheap way to drive an expensive vehicle

Leasing a car can be a smooth ride if you map out your route in advance.

What is the difference between buying and leasing a car? – When you lease a car, you have no obligation for the car when you reach the end of the lease term on the closed-end lease (if you have observed the mileage and wear-and-tear restrictions). You have a guaranteed trade-in value equal to the end-of-term lease balance, and if you want to keep the car, you can exercise your purchase option. When you buy a car, there is no guaranteed trade-in-value any time you want to terminate the loan and trade in the car.

What are the advantages to leasing a car? – Leasing has become attractive to people who understand the benefits of cash conservation and guaranteed trade-in value. Leasing traditionally requires no down payment, though some special manufacturer-lease programs require 5 to 10 percent down to get the financial terms being offered. Leasing has much lower payments than financing because the consumer only pays for depreciation, or the portion of the vehicle expected to be used up, rather than for the total price of the vehicle. The higher the down payment on the lease, the lower the monthly payment. The guaranteed value means the customer can walk away from the vehicle when the lease is up without obligation even if the vehicle is worth less than projected.

Another benefit of leasing is deferring the purchase decision until after you’ve driven the vehicle for a while. Even consumers who think they want to keep the vehicle for 10 years are better off leasing it for three to five years first, then deciding whether or not they want to keep it for the full ten years.

Why are people hesitant to lease a car? – Leasing can be very confusing. Unfamiliar words, lengthy technical contracts, and manipulative sales techniques can make shopping for a lease more difficult than shopping for a car. With no capitalized cost disclosure (which is analogous to the selling price in a purchase) and no annual percentage rate (APR) disclosure, it’s difficult to be comfortable that you’ve gotten a good deal. Also, some consumers have misunderstood or ignored their responsibilities or the economic reality of the lease.

What are some of those responsibilities and economic realities?

For example, if consumers put down $1,000 less and pay $50 to $75 a month less on a five-year lease than a five year-loan, they can’t expect to have the same lease balance after three years as they would have had on the loan.

Some lessees plan to terminate early when the structure of the lease is intended to avoid building equity. If lessees pay for 15,000 miles per year and drive 25,000, they can’t expect to drop the car off with no obligation – if they had purchased the car, its trade-in value would certainly be lower because of the extra mileage. The same is true in cases of excess wear and tear.

Finally, as in any business there are some unscrupulous lessors who try to take advantage of customers.Excessive charges for early termination and wear and tear are the two biggest areas of abuse. One or two bad apples can create a lot of negative publicity.

How can I make sure that I’m getting a good deal? Negotiate the purchase price first. Get it in writing. Then negotiate the lease and get a statement of the capitalized cost in writing. If the dealer of independent leasing company says they don’t know what the capitalized cost is or that there isn’t one, take your business elsewhere. Shop around and talk to a number of lessors. Compare rates and terms before making a decision. When you’re ready to lease, don’t agree to a longer term than you reasonably expect to keep the vehicle. Don’t choose a car so expensive that you won’t be able to pay for the early termination if you need to.

And make sure you’re comfortable with the vehicle. A great lease on a car you don’t really want is not a good deal.

Technical Analysis and the Random-Walk Theory

Technical Analysis and the Random-Walk Theory

Does technical analysis work?

Things are seldom what they seem. Skim milk masquerades as cream (Gilbert and Sullivan, H.M.S. Pinafore)

Not earnings, nor dividends, nor risk, nor gloom of high interest rates stay the chartists from their assigned task : studying the price movements of stocks. Such single-minded devotion to numbers has somehow yielded the most colorful theories and has produced much of the folk language of Wall Street:

• “Hold the winners, sell the losers.”
• “Switch into the strong stocks.”
• “Sell this issue, it’s acting poorly.”
• “Don’t fight the tape.”

All are popular prescriptions of technical analysts as they cheerfully collect their brokerage fees for churning your account.

Technical analysts build their strategies upon dreams of castles in the air and expect their tools to tell them which castle is being built and how to get in on the ground floor. The question is: Do they work?

Holes in Their Shoes and Ambiguity in Their Forecasts

University professors are sometimes asked by their students, “If you’re so smart, why aren’t you rich?” The question usually rankles professors, who think of themselves as passing up worldly riches to engage in such an obviously socially useful occupation as teaching. The same question might more appropriately be addressed to technicians. For, after all, the whole point of technical analysis is to make money, and one would reasonably expect that those who preach it should practice it successfully in their own investments.

Toronto CN Tower. Photo by Elena

On close examination, technicians are often seen with holes in their shoes and frayed shirt collars. I, personally, have never known a successful technician, but I have seen the wrecks of several unsuccessful ones (this os, of course, in terms of following their own technical advice. Commissions from urging customers to act on their recommendations are very lucrative.) Curiously, however, the broke technician is never apologetic about his method. If anything, he is more enthusiastic than ever. If you commit the social error of asking him why he is broke, he will tell you quite ingeniously that he made the all-too-human error of not believing his own charts. To my great embarrassment, I once chocked conspicuously at the dinner table of a chartist friend of mine when he made such a comment. I have since made it a rule never to eat with a chartist. It’s bad for digestion.

When Joseph Granville, probably the best known and most followed chartist of the early 1980s, was asked how his “foolproof” system had led him to make some egregious errors during the 1970s, he answered calmly that he was “on drugs” during that period and simply had not paid proper attention to his charts. The “drug” in his case was golf and Granville was convinced that his joining “golfers anonymous” had made him a born-again savior. He believed that he would never again, for the rest of his life, “make a serious mistake on the stock market.” When asked why he didn’t simply use his system to play the market himself and thereby make a fortune, he exclaimed that his mission in life was to enrich others, not himself: “Everyone I touch I make rich.” (Granville predicted not only stock tremors, but earth tremors as well. In 1980, he predicted that Los Angeles would be destroyed in May 1981 by an earthquake measuring 8.3 or more on the Richter scale).

While technicians might not get rich following their own advice, their store of words is precious indeed. Consider this advice offered by one technical service:

The market’s rise after a period of reaccumulation is a bullish sign. Nevertheless, fulcrum characteristics are not yet clearly present and a resistance area exists 40 points higher in the Dow, so it is clearly premature to say the next leg of the bull market is up. If, in the coming weeks, a test of the lows holds and the market beaks out of its flag, a further rise would be indicated. Should the lows be violated, a continuation of the intermediate term downtrend is called for. In view of the current situation, it is a distinct possibility that traders will sit in the wings awaiting a clearer delineation of the trend and the market will move in a narrow trading range.

If you ask me exactly what all this means, I’m afraid I cannot tell you, but I think the technician probably had the following in mind: “If the market does not go up or go down, it will remain unchanged.” Even the weather forecaster can do better than that.

Obviously, I’m biased against the chartist. This is not only a personal predilection but a professional one as well. Technical analysis is anathema to the academic world. We love to pick on it. Our bullying tactics are prompted by two considerations: 1) The method is patently false and 2) it’s easy to pick on. And while it may seem a bit unfair to pick on such a sorry target, just remember: It’s your money we are trying to save.

While the advent of the large-scale electronic computer may have enhanced the standing of the technician for a time, it has ultimately proved to be his undoing. Jus as fast as the technician creates charts to show where the market is going, the academic gets busy constructing charts showing where the technician has been. Since it’s so easy to test all the technical trading rules on the computer, it has become a favorite pastime for academics to see if they really work.

Burton G. Malkiel. A Random Walk Down Wall Street, including a life-cycle guide to personal investing. First edition, 1973, by W.W. Norton and company, Inc.