The Value Investor

This past Saturday I attended a client review meeting with a money manager we work with. This half day session was an extremely interesting view into the minds of the managers. These managers embrace the theory of value investing - a focus on purchasing stocks of a company when the stock is at a "discount" and selling at a pre-determined point. The stock is a value at the purchase price - like buying something on sale and then selling it again for its normal price. Now, the explanation I just gave is very basic and value investing is more complex than that. Value investing takes patience and discipline.

The founder of this management firm is a dynamic individual and during his portion of the presentation he spoke of a man named Benjamin Graham. Benjamin Graham was an economist and professional investor who is often called the "Dean of Wall Street". He is considered the founder of the value investing theory. Warren Buffett, the mega-billionaire investor, was a student of Benjamin Graham and was so endeared with his teachings that he named one of his children after him. Buffett, who credits Graham as grounding him with a sound intellectual investment framework, described him as the second most influential person in his life after his own father.

Value investing takes emotion out of the process and focuses on business review and sound principles. Graham writes: "An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative."

I have decided to learn more about Mr. Graham so that I can understand his practice of value investing. After all, if it has worked for the extremely successful management firm I heard from on Saturday, and has worked for Warren Buffett, why not? Graham has written several books on the subject, two of which are "The Intelligent Investor" and "Security Analysis".

The USS Kidd DDG100 Tour!

Last Sunday my daughter and I had a probably once in a lifetime experience - we got to tour one of the Navy's newest members of its fleet. Usually when you get to tour a fighting ship, it is one that is no longer in service and is stripped of its gear. Not so with this ship - it was loaded to the gills and ready to go off to war.

Our Galveston getaway weekend just happened to coincide with the USS Kidd's commissioning ceremony.

On Sunday we had our usual lunch at Willie G's on Galveston's Pier 21, and the USS Kidd was docked about 200 yards away. We overheard another table talking about a tour of the ship they had just finished, so I asked them if the tours were still going on. Sure enough, as soon as we had finished lunch my daughter and I walked over to the USS Kid's security checkpoint and ten minutes later we joined a group of about ten people on a tour of the ship led by one of the crew.

We were led onto the stern (brow?) of the ship and entered through one of the helicopter bays. Man, this ship is impressive and I would not want to be on the receiving end of its fury. We walked past one of the fire suppression units as our guide explained how they could battle various kinds of attacks, including nuclear and biological weapon hits. We saw the mess hall where the sailors ate, and walked through the cramped hallways that they work in. I was amazed at how much equipment was crammed in every nook and cranny, all clearly labelled and in its place. The coolest part of the trip for my daughter and I was seeing the "battle room" - a darkend room full of computers, giant screens, communication equipment, and battle stations that the Commanding Officer and crew use to fight their battles. We then walked out on the bow of the ship where we stood next to the main gun and the forward missile tubes. I didn't bring a camera since I didn't expect to be allowed to photograph anything, but we did miss an opportunity to get a photo on deck.

All in all, it was a great tour of a very impressive ship. The crew was extremely professional and obviously had great rapport with, and respect for, each other. Seeing this symbol of our mighty nation and the men and women who crew her made me proud to be an American. May God bless the USS Kidd DDG100 and her crew as they fight to defend our Nation.

The Ultimate Driving Experience!

Last Sunday I got a chance to go drive BMW X5s. Not just drive BMWs, but push them to their limits. BMW invited me to a half-day event at Houston's Reliant Park called "The Ultimate Driving Experience". This event put me in a car with a professional BMW driver on a closed autocross course to see just what these cars could do.


The day started with my getting into a Z4 Roadster convertible and driving a course around Houston to raise funds for the Susan G. Komen Cancer Foundation. For every mile I drove, BMW made a contribution to the cause.

After the Z4 drive, the real fun began. I went into the classroom for a 20 minute presentation on BMW X5 suspension, engine systems, stability control programs, and car set up. The instructor talked about three other cars - a Lexus GX470, a Mercedes ML500, and the Volvo XC90. He discussed the differences in all these cars, so we would have a background for evaluation. After the talk, we met up with our drivers and headed out to the autocross course. My instructor's name was Dave and since retiring from racing he has made his living in California as a test driver for various car companies, and has driven cars in many commercials - he's the guy they refer to in the small print "professional driver, closed course" on commercials.


We were three to a car on the autocross course - pro driver and 2 passengers. The goal for the afternoon was to learn some driving techniques - cornering, quick stops, accident avoidance, and theory. We got 2 laps each in a Lexus GX470 & Mercedes ML500, and 6 laps in the BMW X5. The course had all kinds of turns - switchbacks, slaloms, and sweeping lefts and rights. We took the course fast, with tires squealing and ABS going haywire. During the laps, the pro driver in the passenger seat would tell us when to brake, steer, and accelerate. The mantra for cornering in a car is "slow in, fast out" - way different from my bicycle racing days where we just flowed through turns. The amazing thing was that for all of the hard braking and poor entry/exit points, neither one of us spun the X5. That car was amazing and we could really push it. I was taking corners that would normally be 20 MPH turns, at about 45 MPH. The cars were pushed so hard that new tires had to be put on every 1-2 days. The Lexus got a new front driver's side tire every day.

The real fun was at the very end - the pro driver got behind the wheel and took us on "hot laps" in the BMW X5. We got in the car, and our driver disabled the stability control, traction control, and put the car in manual shift mode. We then proceeded to haul some serious butt around the course. We took most corners at 60 MPH, triple what I was able to do. I wish I had taken photos - all three BMWs were on the course at once and we were inches from the car ahead of us. On one of the sweeping right hand turns, I looked at the cars ahead and the inside front tires on the X5s were about 2 inches in the air! Very fast, very cool, and very fun. All in all a great afternoon and thank you to BMW for a great time.