DIY Mode in Furniture

Put a Little Spring in Your Sofa

If you're in the market for a new sofa, you're probably wondering what makes a $5,000 sofa any different from one that costs a mere $500. The difference lies in the frame, padding, cushions, springs, fabric, and finish.

Padding: Sofas often wear at the arms because the maker has scrimped on padding. The better sofas have a layer of cotton or polyfiber over a layer of foam. Cheaper sofas have fabric right on top of the foam.

Springs: Eight-way hand-tied springs used to be a sign of a top-notch sofa. No more. Many less expensive sofas also have them although they are of interior quality. A better question: How many rows of springs are used in the seat? The best use four rows.

Cushions: Top-Quality foam cushions are made from virgin foam with a density of 2.2 pounds per cubic foot. Accept no less than 1.8. Lower-density foam deteriorates more quickly. If you're looking for a soft down cushion, be sure the cushion has at least 30 percent down feathers in it. Otherwise, you'll be paying for down and getting far less.

Fabric: The grade of a fabric determines the price, but is not a measure of the fabric's durability. Grades are based largely on fiber content and on how much waste results from matching the pattern. For durability, consider spending the extra for treating the sofa with fabric protection.

Frame: Maple and other hard-woods that grip nails well make the best frames. The wood should be skin-dried to prevent shrinkage and warping. The best frames are 1 1/2 inches thick (Experts refer to it as a 6/4 frame). To keep as sofa from sagging, joints and legs must be firmly attached to the frame. The best: joints that are double or trile doweled at the top corners, and firmly attached with reinforcing blocks where the arms meet the seat.

Finish: Attention to detail counts. In high-quality sofas, seams are straight, pleats lie flat, corners fill out, and cushions have metal zippers.

A pilgrimage to America's Furniture Mecca: More than half of all America's furniture is made in a 200-square-mile region of North Carolina. Photo by Elena.

List of some of the most famous outlets dedicated to furniture:

Atrium Furniture Showrooms, High Point, N.C.: One of the largest home furnishings malls in the South. Atrium features four floors with more than 500 furniture and accessory lines represented.

Hickory Furniture Mart, Hickory, N.C.: Sixty galleries and factory outlets carry 500 lines of furniture, bedding, accessories, antiques, and collectibles, all at deep discounts. If you have only a short stay in North Caroline, this is the one store not to miss.

Priba Furniture, Greensboro, N.C.: More than 300 lines of furniture, discounted accessories, lamps, wall coverings, fabrics, carpets. Fliers are sent to customers on their mailing list announcing sales and specials.

Shaw Furniture Gallery, Randleman, N.C.: In business since 1940. Pays for your lodging if you purchase over a certain amount.

Turner Tolson, New Bern, N.C.: In business since 1887. Home and business furniture. Turner Tolson will pay for your lodging if you purchase over a certain amount.

Windsor Furniture Galleries, High Point, N.C.: Expert service and courteous design help.

Young's Furniture And Rug Company, High Point, N.C.: Specializes in upper-end furnishings. The staff includes interior designers, who are helpful and courteous.

Zaki Oriental Rugs, High Point, N.C.: Large showroom packed with more than 5,000 quality rugs, up to 16 by 26 feet, from Pakistan, India, China, Afghanistan, Portugal, and other countries.

Technique of Fundamental Analysis

The Technique of Fundamental Analysis

Fred Schwed, Jr. In his charming and witty exposé of the financial community in the 1930s, Where Are the Customers’ Yachts?, tells a Texas broker who sold some stock to a customer at $760 a share at the moment when it could have been purchased anywhere else at $730. When the outraged customer found out what had happened, he complained bitterly to the broker. The Texan cut him short. “Suh,” he boomed, “you-all don’t appreciate the policy of this firm. This heah firm selects investments for its clients not on the basis of Price, but of Value”.

In a sense, this story illustrates the difference between the technician and the fundamentalist. The technician is interested only in the record of the stock’s price, whereas the fundamentalist’s primary concern is with what a stock is really worth. The fundamentalist shrives to be relatively immune to the optimism and pessimism of the crowd and makes a sharp distinction between a stock’s current price ans its true value.

In estimating the firm-foundation value of a security, the fundamentalist’s most important job is ti estimate the firm’s future stream of earnings and dividends. To do this, he or she must estimate the firm’s sales level, operating costs, corporate tax rates, depreciation policies, and the sources and costs of its capital requirements.

As soon as you trust yourself, you will know how to live (Johann Wolfgang von Goethe). Photo by Elena

Basically, the security analyst must be a prophet without the benefit of divine inspiration. As a poor substitute, the analyst turns to a study of the past record of the company, a review of the company’s investment plans, and a firsthand visit to and appraisal of the company’s management team. This yields a wealth of data. The analyst must then separate the important from the unimportant facts. As Benjamin Graham put it in the Intelligent Investor, “Sometimes he reminds us a bit of the erudite major general in “The Pirates of Penzance,” with his “many cheerful facts about the square of the hypotenuse.”

Since the general prospects of a company are strongly influenced by the economic position of its industry, the obvious starting point for the security analyst is a study of industry prospects. Indeed, in almost all professional investment firms, security analysts specialize in particular industry groups. The fundamentalist hopes that a thorough study of industry conditions will produce valuable insights into factors that may be operative in the future but are not yet reflected in market prices.

A brief, but deadly, example will help illustrate the process. It involves a research study undertaken late in 1980 by the investment firm of Smith, Barney & Co. The analysis covered the funeral service industry and the prospectus for Service Corporation International.

The report first gave a broad picture of the funeral service industry. Demand for the industry’s services is governed by an indisputable fact: We all die.

Thanks to the abundance of data gathered by the U.S. Census, it is easy to estimate the industry’s potential market. You just look at the number of people in various age categories and then multiply by the mortality rate for each age group. The Smith, Barney report presented two tables, based on census data, that showed the mortality rate rising until the year 2000. The grim fact is that funeral services is a growth industry. The Smith, Barney report also pointed out that the industry was highly fragmented, consisting of small, family-owned and -operated companies averaging about $150,000 in annual revenues. Because of their small size, most operations could not take advantage of economies of sale and were not well suited to professional management techniques.

The report then turned to an analysis of Service Corporation International, which at the time operated 189 funeral homes. Not only was this the largest organization in the industry, its revenues of $550,000 per unit were more than three times the national average. Management, of course, is key to any firm’s profitability, and in this case the executives had decided to make the company an industry leader through selective acquisitions and the introduction of professional management practices. This decision was not being executed with a sledge-hammer. Rather, generous financial incentives were used to encourage the principals of all acquired firms to remain, and a decentralized management systems was put in effect. Service Corporation International believed its advanced managerial approach was unique within the industry, and the Smith, Barney report did not contradict this assumption.

The report went on to note the particular innovations made by Service Corporation’s management. Its relatively large size permitted it to take advantage of centralized purchasing power for all its supplies from caskets to floral arrangements. The latter aspect of the business was particularly profitable. Service Corp. Opened floral shops in all of its larger funeral homes.

Since almost half of all floral sales are funeral related, these shops gave the company a substantial captive market. In addition, the company pioneered in marketing prearranged funeral services. These “pre-need” sales had two important advantages for Service Corp: 1) They assured continuing volume stability and future revenue growth and 2) they produced interest earnings on the prearranged payments, which became a source of the company’s earnings.

For the preceding decade, Service Corp.’s sales and earnings per share had grown at better than a 15 percent rate. The Smith, Barney report projected that future growth would be at least as large, particularly since Service Corp.’s management had positioned the company to increase its share of the market. This, plus the fact that the company’s stock was selling at a P/E multiple 40 percent below that of the S&P 500, indicated that the stock’s price was below reasonable estimates of its firm foundation of value.

Recall that the first principle of valuation of the firm-foundation theory is that a stock is worth more – should sell at a higher price-earnings multiple – the larger its anticipated rate of growth. In late 1980, Service Corporation International sold at a price-earnings ratio of 5, while the price-earnings multiple for the market as a whole was approximately 9. The expected growth rate of earnings and dividends for the market as a whole in 1980 was less than 10 percent, but Service Corp. Was expected to grow at a rate of better than 15 percent; hence, by the first valuation principle, it deserved to sell at a higher multiple than that of the market as a whole. Since the stock actually sold at a lower multiple than that of the market (5 versus 9), it could be considered undervalued.

Of course, other principles of valuation are also relevant. By the second principle, stocks are worth more to investors, other things being the same, if the company can finance its growth and still pay out a reasonable share of its earnings in dividends. On this score, one could probably justify a bit of a discount for Service Corp., since its dividend yield (based on the estimated dividend for 1980) was only about half of that for the market as a whole. Still, on balance, the extraordinary growth potential of the company had to be the dominant factor for valuation.

The firm-foundation theory also suggest that the riskier a stock, the lower the multiple it should sell at. While it is true that Service Corp. Was a small company and thus riskier than some of the more established blue-chip companies, other aspects of its business actually made it less risky than the general market. Service Corp. Had a great deal of resistance to economic downturns, since people do not stop dying during recessions. Moreover, it dealt in those markets where the parameters of growth could be relatively precisely defined. Hence, on this score, Service Corp. would deserve a premium multiple to the market.

It is also possible to use the empirical relationships to argue that Service Corp. Represented a good value. In 1980, when the analysis was made, stocks for which a 15 percent rate of growth was expected sold, on average, at over 15 times earnings, and Service Corp.’s multiple was only one-third of that. This further enhanced its appeal and made it an excellent candidate for multiple improvement. For all these reasons, Smith, Barney recommended purchase of Service Corporation International.

The Smith, Barney report represents the technique of fundamental analysis at its finest. People who followed its “buy” advice found that Service Corp. enjoyed much better performance than the market during the 1980s despite suffering some business reverses late in the decade which necessitated the company taking some large write-offs

Benches. Loneliness

Benches. Loneliness

A bench's function is not just to provide a place to sit; it is to provide a medium for self-expression. Benches are not about status. They are signalling something about oneself. That's why the word bench means something ethereal. Well, as Napoleon said once, a throne is only a bench covered with velvet.

All the pictures have been taken by Elena.

A lot of people ask, “What power is that telescope? Actually, magnification is irrelevant. (John Shibley, editor, Astronomy magazine).

People often say that motivation doesn’t last. Well, neither does bathing, that’s why we recommend it daily - Zig Ziglar

“In a right triangle, the square of the hypotenuse is equal to the sum of the squares of the other two sides (Pythagoras, Greek philosopher and mathematician).

Motivation will almost always beat mere talent - Norman Ralph Augustine

A person who never made a mistake never tried anything new (Albert Einstein)

The difference between stupidity and genius is that genius has its limits (Albert Einstein)

In order to succeed, we must first believe that we can (Nikos Kazantzakis)

If you can dream it, you can do it (Walt Disney)

Don’t watch the clock; do what it does. Keep going (Sam Levenson)

You can be investor and successful participant of the market. How successful, we cannot say. But all you need is the interest and the desire to have your investments work for you.

Science fiction and fantasy sceneries raise so many questions... If I cannot build it, I do not understand it - Richard Feynman, Nobel prize in physics.

I can’t change the direction of the wind, but I can adjust my sails to always reach my destination (Jimmy Dean (1928-2010)

Whenever you find yourself on the side of the majority, it is time to pause and reflect (Mark Twain)

Bancs and solitude humaine dans l'unviers solitaire

Why Might Fundamental Analysis Fail to Work?

Why Might Fundamental Analysis Fail to Work?

Despite its plausibility and scientific appearance, there are three potential flaws in this type of analysis. First, the information and analysis may be incorrect. Second, the security analyst’s estimate of “value” may be faulty. Third, the market may not correct its “mistake” and the stock price might not converge to its value estimate.

The security analyst traveling from company to company and consulting with industry specialists will receive a great deal of fundamental information. Some critics have suggested that, taken as a whole, this information will be worthless. What investors make on the valid news (assuming it is not yet recognized by the market) they lose on the bad information. Moreover, the analyst wastes considerable effort in collecting the information and investors pay heavy brokerage fees in trying to act on it. To make matters even worse, the security analyst may be unable to translate correct facts into accurate estimates of earnings for several years into the future. A faulty analysis of valid information could throw estimates of the rate of growth of earnings and dividens far wide of the mark.

The second problem is that even if the information is correct and its implications for future growth are properly assessed, the analyst might make a faulty value estimate. It is very difficult to translate specific estimates of growth and other valuation factors into a single estimate of intrinsic value. Recall the widely different estimates of the value for IBM in the 1980s. The attempt to obtain a precise measure of intrinsic value may be an unrewarding search for a will-o’-the-wisp. Thus, even if the security analyst’s estimates of growth are correct, this information may already be reflected accurately by the market, and any difference between a security’s price and value may result simply from an incorrect estimate of value.

Being brilliant is no great feat if you respect nothing (Johann Wolfgang von Goethe)

The final problem is that even with correct information and value estimates, the stock you buy might still go down. For example, suppose that Biodegradable Bottling Company is selling at 20 times earnings, and the analyst estimates that it can sustain a long-term growth rate of 25 percent. If, on average, stocks with 25 percent anticipated growth rates are selling at 30 times earnings, the fundamentalists might conclude that Biodegradable was a “cheap stock” and recommend purchase.

But suppose, a few months later, stocks with 25 percent growth rates are selling in the market at only 20 times earnings. Even if the analyst was absolutely correct in his growth-rate estimate, his customers might suffer badly because the market revalued its estimates of what growth stocks in general were worth. The market might correct its “mistake” by revaluing all stocks downward, rather than raising the price for Biodgradable Bottling.

Such changes in valuation are not extraordinary – these are the routing fluctuations in market sentiment that have been experienced in the past. Not only can the average multiple change rapidly for stocks in general but the market can also dramatically change the premium assigned to growth. Both these phenomena were important during the early 1970s. It became apparent that accurately forecasting future earnings and dividend growth companies of the early 1970s turned in miserable price performances from 1972 on because of the devastating fall in earnings multiples, especially for rapidly growing companies. Clearly, then, one should not take the success of fundamental analysis for granted.

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

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.