American Anti-Immigration Fervor as Old as Benjamin Franklin

Some people view America's immigration scenario with trepidation; others with resigned acceptance; and others with open arms and optimism. While it is easy to write off the Minutemen and others as ignorant rednecks, none other than Benjamin Franklin expressed unease at immigration into America. Mr. Franklin was concerned about Germans. My point in sharing his letter and concern is to show that every single wave of new immigration brings fear, even to educated people, but years later, such fear is always forgotten. America's ability to incorporate all manners of people has been absolutely stunning and most likely the key to our success. 

  "Inconveniences may one day arise among us. Those [immigrants] who come hither are generally of the most ignorant, stupid sort of their own Nation... [F]ew of the English understand the German language; and so cannot address them either from the Press or Pulpit... Few of their children in the country learn English...they will soon so outnumber us, that all the advantages we have, will not, in my opinion, be able to preserve our Language and even our Government will become precarious." 

Mr. Franklin shows some humanity at the end of his letter when he says, "I say I am not against the admission of Germans in general for they have their Virtues; their Industry, and Frugality is exemplary." Do those traits remind anyone of the current crop of immigrants? 

I still say Thomas Jefferson's Louisiana Purchase was the single greatest achievement in American history--for what good is the Constitution without a large canvas for its implementation? America's vast landscape has allowed and will continue to allow more immigration for many more decades. The major issue is not whether America needs more immigrants--it has always had them--but how we can incorporate new immigrants and minimize wage losses in the industries they impact.

© Matthew Rafat (July 2008)

Reading List: Pensions, Global Econ, and Spending

We're approaching the holiday July 4th weekend, so I thought I'd share some book tips on my list:

1. While America Aged, by Roger Lowenstein.

Mr. Lowenstein echoes exactly what I have been saying about the inherent corruption in government, more specifically, how government workers are slowly bankrupting the younger and unborn generations.

http://www.amazon.com/While-America-Aged-Bankrupted-Financial/dp/1594201676

2. When Markets Collide: Investment Strategies for the Age of Global Economic Change, by Mohamed El-Erian.

Mr. El-Erian ran Harvard's multi-billion dollar endowment fund and was lured away by Wall Street.

http://www.amazon.com/When-Markets-Collide-Investment-Strategies/dp/0071592814/ref=pd_sim_b_4

3. Spend 'Til the End: The Revolutionary Guide to Raising Your Living Standard--Today and When You Retire, by Laurence J. Kotlikoff.

This is a recommendation from Laura Rowley, who has a blog on Yahoo Personal Finance.

http://www.amazon.com/Spend-Til-End-Revolutionary-Standard-Today/dp/1416548904/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1214860083&sr=8-1

Letter to SJ Mercury re: Taxation of Services

I had a letter published in the SJ Mercury News re: taxation of services. Here is the link, in case anyone is interested (scroll down):

http://www.mercurynews.com/letters/ci_9750543

In addition to disproportionately falling on minorities, the middle class, and the poor, a service tax would create other problems. If the government starts taxing services, many small businesses might be tempted to go "underground" or not report certain transactions. I am not sure who wins when governments set up taxation systems that are sure to create enforcement problems. Although technically, the tax is passed onto consumers, it causes compliance costs for small businesses. For example, I do my own taxes; however, if I had to collect a sales tax, I would probably have to hire a CPA or accountant to make sure I was following the law properly.

These same arguments--the disproportionate impact on those least able to afford the tax, and potential enforceability issues--have been used against replacing an income tax with an additional sales tax on goods. Perhaps replacing an income tax with a national consumption tax on goods may be choosing the lesser of two evils.

Stocks Update

The WSJ hurt all casino investors today. Pinnacle Entertainment (PNK), the casino operator I recommended earlier, fell over 6% today. The probable cause? The front page of the WSJ had an article about casinos being laden with debt and being poor investments in a recession. Smaller casinos like Boyd Gaming (BYD) as well as larger ones (MGM, LVS) plunged. While I only lost a few hundred dollars (about 300 dollars) on the PNK trade, my percentages decreased significantly. My major holdings are still in GE and PFE. I sold the 1000 shares of General Electric I bought last week and made a few hundred dollars on that trade.

Open Positions
CNB = +3.99
EQ = +0.22 (excluded; movement too limited to be relevant)
EWM = -6.82
GE = -6.64
IF = -8.83
PFE = -7.64

Average of "Open Positions": losing/negative average of 5.19%

Closed Positions:
Held more than seven days but less than one year:
PNK = -16.7%
PPS = -2.8
WYE = +2.4%

Held less than 7 days:
GE (1.0%); ICE (2.0%), MMM (0.5%), MRK (0.1%), PFE (1.3%), SCUR (15%) (Overall record in this category is a 3.31% average gain)

Daytrades:
PFE = +0.5%

Average of "Closed Positions" sub-categories, except for Daytrades: losing/negative 2.39%

Combined Total Averages, excluding Daytrades: losing/negative 3.79%

Compare to S&P 500: losing/negative 7.27%
[from May 30, 2008 (1385.67) to July 1, 2008 (1284.91)]

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.

NVIDIA Corporation Annual Shareholder Meeting (2015)

Jen-Hsun Huang reminds me of James Dean, if James Dean was a Silicon Valley tech founder and CEO.  As Nvidia’s President and CEO, Mr. Huang’s leather jacket, jeans, and cool demeanor are refreshing to see.  Whereas most CEOs and board members crumble when presented with a question requiring some thought, Mr. Huang not only relishes the questions, he enjoys displaying his prodigious intellect.  Perhaps that’s only natural when he’s led Nvidia for 20+ years and battled Intel (INTC) successfully. 

Nvidia’s 2015 annual meeting took place at the company's HQ in Santa Clara, CA.  About 50 people attended.  Unlike in past years, there was no “annual yearbook” or product displays, and sadly, the food options have dwindled to just a few pastries, a plate of fruit, and coffee and water.  If you come to the meeting, you’re coming to see Mr. Huang, who clearly takes deserved pride in the company he’s built.

He opened the meeting by talking up Nvidia and how it’s the “best in the world in our field.” He mentioned that Nvidia early on recognized video games would be tech-driven, a prediction which turned out to be “absolutely right.”  Looking forward, visual computing and game simulations will drive technological innovation for a few more decades as video games become even more complex. 

Despite being the leader in video game technology, Nvidia no longer wants to be known as a mere video game company.  It has branched out into virtual reality (the future of video gaming), self-driving cars, and deep learning (AI, image recognition, pattern recognition, etc.).  Nvidia’s sales to the auto industry are booming, with 85% growth from FY14 to FY15.  That’s more than cloud and HPC growth—53%—during the same time period.  Mr. Huang said that future cars are going to be “computers on wheels,” and “safer and easier to drive.”  Overall, “simulation work” is largely done on Nvidia technology, which allows people to “see the world around you in real time.” 

Nvidia has two women on its board, Dawn Hudson (CMO, NFL) and Persis Drell (Dean, School of Engineering, Stanford University).  I asked how Nvidia could become more diverse, as all the board members except for Mr. Huang appeared to be white, which is an unusual composition in the very diverse Silicon Valley, where about 40% of Santa Clara County residents are immigrants. 

Mr. Huang delivered a great response, unlike many other companies, which become defensive under the same line of questioning (I’m looking at you, San Jose Water Company (SJW), with your one female board member and not a single person of color in the front of the room at your 2015 shareholder meeting).  Mr. Huang responded that “through diversity, we get better answers,” and explained that it was difficult to attract board members when Nvidia was known only as a video game tech company.  Now, as Nvidia successfully branches out into several different areas, it is getting more and more attention and interest. 

I then asked what advice he had for a new entrepreneur starting out in Silicon Valley.  That’s when he delivered the line of the night—“Don’t go into video graphics,” which caused the entire room to laugh.  When the noise settled down, Mr. Huang said that success requires serendipity, and it’s never just one person—it’s the people you’re surrounded by.  As for how he’s managed to remain CEO for so long, Mr. Huang showed a bit of a Mark Cuban streak when he remarked that he and the company (have not been and) should not be complacent.  Today, in part because of his leadership and willingness to take calculated risks, Nvidia is succeeding on multiple platforms—PC, cloud, and mobile, while some other companies struggle with the shift to mobile, such as Intel (INTC). 

When the meeting ended, I wanted to talk to some board members.  I wasn’t impressed with board member Dawn Thomas—she seems standoffish and plastic—but I was honored to talk to Stanford’s Persis Drell.  I asked her how to increase diversity on the board and in Silicon Valley.  She said it would take time, but talking about the issue was the first step.  Also, diversity of experience matters, not just race or gender—she remarked that one of the best people she had on her team was a white gentleman who was ex-military, and because of his military experience, he was comfortable pushing to get things done when others might sometimes dither. 

As for why persons of color in America are underrepresented in the science and engineering fields, she said some of it has to do with resources.  Many kids have access to computers and other resources at an early age, but this access is not universal.  I couldn’t help but think of where Bill Gates might be had his parents not enrolled him in a school where a computer company provided computer time for the students.  In the 1970’s, having access to computers was not common, and Gates’ privileged access allowed him to become who he is today.  It was a pleasure speaking to Dr. Drell. 

Let’s start talking about diversity, complacency, and other difficult topics, folks.  The world ain’t gonna fix itself, but as long as there are people like Dr. Drell and Mr. Huang—intrepid pioneers who aren’t afraid to meet challenges head-on—I have a feeling things are going to be just fine.

(Originally published May 21, 2015, referring to NVIDIA's May 20, 2015 annual shareholder meeting.) 

NVIDIA Shareholder Meeting 2008

I attended NVIDIA's (NVDA) shareholder meeting on June 19, 2008. NVIDIA has an Asian CEO, Jen-Hsun Huang, who comes across as knowledgable and enthusiastic. In San Jose, where so many Southeast Asians, Middle Easterners and Asians drive innovation, most companies still have no diversity in upper management ranks. While NVIDIA appears to be diverse, it's not helping the company's share price, which is down significantly this year.

NVIDIA designs graphics chips and cards. NVIDIA has partner fabs that actually make the chips which are then sent to partner factories to be mounted on video cards for PCs. NVIDIA graphics cards that bear NVIDIA as the manufacturer are referred to as reference cards.

NVDA's most touted product is its GeForce, a video graphics chip (NVDA likes to brag that the "graphics chip was given a soul" by its company). GeForce revenue increased 28%, and overall revenue increased 34%. Revenue numbers looked great, so it is quite possible the stock price is undervalued.

NVDA specializes in the high growth area of gaming, which requires high-end video graphics. It has even partnered with Hollywood movie companies to make films--the higher the graphics requirements, the more NVDA's products will be in demand.

As for competition, I asked my engineering friends why Intel wouldn't muscle in on NVDA's territory if NVDA is basically a fabless semiconductor company. Here is what one engineer said:

Intel did try to make a top-of-line video card at one time to compete with NVIDIA and ATI (AMD) but they failed. Modern day top-of-line video cards that NVIDIA and ATI (AMD) produce are very complex devices that take years of R&D. Video card drivers are notoriously complex pieces of software that also take years to fine-tune. Video card drivers support many if not all of the features of OpenGL and DirectX.

This anti-Intel piece brought some indignation from an Intel engineer, who referred everyone to "Larrabee." The Larrabee will not be available until Q1 2009, so until then, NVDA will be king of the graphics processing unit (GPU).

The highlight of the shareholder meeting was the "annual yearbook" video. It showed several fun pictures of the company and its worldwide employees, including a great Fortune cover with the CEO. It became apparent that NVDA's decision to open up its architecture through CUDA (a set of development tools) is something that should be analyzed in more depth. Like Linux, opening up a technology company's architecture allows hardcore geeks to improve your products for free, but this "free" work comes at a cost, namely less control over the product. Last time I checked, Microsoft's operating system is still king, despite the programming community's swearing that Linux's OS is superior. In any case, several images of "CUDA Everywhere" flashed on the screen.

The employee tidbits in the video yearbook were the most amusing--the video alternated between employees who had been there a few weeks to some who had been there for fifteen years.

After the video yearbook, which was impressively done, the presentation mentioned Quadro (Creativity), Tesla (Discover), and other NVDA products. The CEO stated his goal of making the 2-D into 3-D. Mr. Huang talked about four areas of innovation: photorealism; parallell processing; dimensionalization; and imaging and sensing, all tools to make the 2-D into beautiful 3-D. Mr. Huang compared his company with Nike several times, meaning that he wanted NVDA to be partners with the best video gaming companies and the best gamers, similar to Nike and Jordan, for example.

One slide showed the insides of a GeForce chip, more specifically the GTX 200 chip. It has 1.4 billion transistors, 933 GigaFLOPS of processing power, 240 processing core, and more than 20,000 threads. I have no idea what that means, but it sounds damn impressive.

Mr. Huang mentioned that the world's leading physics simulator used his products, and then took us into a John Madden NFL video game, where a player named "Gibbs" (Washington Redskins fans in the house?), showed how NVDA technology is used in more everyday applications.

Mr. Huang clearly wanted to show that NVDA was more than just a gaming company--he showed that his products help speed up iPod movie downloads (from conversion to finish) through the BadaBoom application, and talked about a new project, Folding@home, a Stanford-NVDA project. Other NVDA chip/card uses involved film, and we saw a clip of Curse of the Golden Flower, which apparently used the NVDA Tegra chip to create its visual effects.

There were only two questions. One person asked about the criteria NVDA uses to give back to the community. Mr. Huang said that the NVIDIA Foundation was independent and involved in diverse areas with no set criteria. NVDA has assisted battered women, schools, and other causes.

I asked the second question, about some specific items in the 10K, focusing on a section on competition from Intel, and who NVDA's major customers were. Mr. Huang talked about "having the courage to take the risk" of innovating into novel areas, and "imagining 'there' five years before going there." He said that NVDA's top customers were Dell and HP.

All in all, a very interesting presentation, but one that could have been done in less time. Some shareholders were getting antsy after more than an hour. The food, by the way, was good--I had some juice and a breakfast burrito.

With respect to the overal market, last week's stock markets swooned, and the Dow fell more than 300 points on one day. Is this the bottom? For long term investors, it may make some sense to wade back into the market and pick up shares of financially sound companies, such as Intel, GE, and perhaps even Pfizer. But short term investors willing to take on some risk may benefit also. I bought 1000 shares of GE on Friday and plan on selling it before Thursday. I predict GE will hit 27.50 at some point next week. Some brave souls willing to wait may want to consider NVDA as well.

Update on June 30, 2008: I picked up another 100 shares of PNK.

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.

Clarence Thomas Gives UGA Commencement Speech

Justice Thomas coined an interesting phrase: "telescopic philanthropy," to refer to someone who cares more about people far away than issues at home. Here is the link to the speech:

http://www.uga.edu/news/artman/publish/printer_080529Thomas_commencement.shtml

I always like quoting Justice Thomas directly because of the criticism he receives from the media. When the media paints a man as polarizing, it's important to look at what he says, rather than what is said about him.