HAL and Wall Street

From Timothy Lavin (The Atlantic, August 2010):

By some estimates, algorithms now trigger 70 percent of all trades in U.S. equities. The speed and volume of everyday trading have propelled the market into a new and esoteric dimension, and rendered traders in the pits largely obsolete. Average daily share volume on the New York Stock Exchange increased by 181 percent between 2005 and 2009, while the time required to execute a trade on its electronic systems dropped to 650 microseconds.

Over 2/3 of all trades are made by computers? Who is looking out for the buy-and-hold investor? Seems like all the benefits go to the speculators these days. More here.

To the Anonymous Commenter

To the anonymous person who left a detailed comment regarding a Bay Area judge:

Thank you for reading my blog and taking the time to post your comment. Unfortunately, I cannot publish your comment. I am an attorney, and my license to practice law is a privilege given to me by the state bar. Being a member of the bar requires me to adhere to certain rules, including ethics rules. Some of these rules prevent attorneys from publicly criticizing judges.

You may wonder how someone like me--who favors free speech and disfavors content-based speech restrictions--can reconcile his personal beliefs with his refusal to publish your comment.

First, I am a pragmatic man. As long as I am a lawyer, I exist to serve my clients. If local judges think I will publish negative commentary about them, some of them may do whatever they can to harm my cases. The law gives judges much discretion, so it is unwise to give a judge any incentive to go against you.

Second, in theory, the judicial branch exists as a check on the passions of the people. This special role requires judges to be independent. Judicial independence is difficult to achieve if lawyers are openly criticizing judges to a public that lacks the training to understand difficult legal concepts. As it stands, American judges have, for the most part, remained above the political fray and are viewed as neutral by most Americans. This favorable perception is due in part to maintaining a closed system of criticism, which gives the public fewer opportunities to sensationalize court hearings and rulings. In short, cases are unique, rights are precious, and unsubstantiated public criticism about specific judges makes it more difficult to execute judgments and have faith in the legal process.

I hope you understand my position, and I hope you will continue to read my blog.

Update on March 2017: I've become extremely critical of lawyers as well as judges; however, I no longer have an active caseload, so my primary duties are to the public and to the truth, not to my clients.  

Linkfest: Articles

I've included a link to some wonderful articles HERE. I really enjoyed the one about the classical musician playing in a New York metro station.

Rant: We Live in Amazing Times

I hate the way some people chide developments in technology, as if progress were something to be feared. Multi-player video games? “What about exercise?,” they scold. Email? “Makes things too impersonal,” they say. Facebook? “What about the quality of the relationships?” they shrill. iPhone? “But we’ll be glued to our phones at the expense of real life,” they argue. Each and every one of the naysayers reminds me of Victorian England–a place where people yearned for fixed rules and regulations designed to ostracize newcomers and entrepreneurs.

Every time a new communications invention occurs, we should be ecstatic. Google is apparently working on a phone that will automatically translate languages. Do you realize that within five to ten years, we might be able to call anyone on the planet and have a conversation?

Also, the internet is a godsend for people who are better at writing and reading than speaking and small talk. What’s wrong with a medium that gives an advantage to people who excel at spelling, writing, and grammar? What's wrong with being able to instantly broadcast your ideas to the world for free? Yes, there are some downsides to giving everyone a microphone, but why not focus on the gems we wouldn't have discovered if Big Media (GE, Disney, News Corp, Viacom, CBS) were still in total control of mainstream media?

Overall, the pace of innovation over the last fifteen years has been amazing. We can watch movies and television shows online (Hulu); sell anything directly to millions of people (eBay); talk to people worldwide for free (thank you, Skype); text message anyone (VZ, T); and keep in touch with friends and acquaintances with minimal effort. I realize we're in a recession, and the unemployment picture isn't pretty. But if you ask me, what we've accomplished over the last fifteen years is much more useful to the average person than going to the moon. Yet, almost all Americans loved the idea of space travel and were rightly proud of the Apollo missions. It is sad today to see most Americans not as openly appreciative of our more recent inventions. As far as I'm concerned, what we've done over the last fifteen years is just as good, if not better, than going to the moon. I'm just sayin'.

Sample Letter to Congressperson re: Hearing Aid Tax Credit

If you saw my review of Plantronics recent shareholder meeting, you noticed that Congress is considering a hearing aid tax credit. Unfortunately, the House bill doesn't cover most hearing-impaired working adults. In contrast, Senator Harkin's version of the bill--S. 1019--covers all hearing-impaired persons. If you would like to write your Congressperson and support Senator Harkin's bill, I have included a sample letter below. Just fill in the name of your House Representative, your own name at the bottom, and paste it in an email to your Rep. Your House Representative can be located here.

Dear Honorable NAME OF REPRESENTATIVE:

I am a long-time resident of your congressional district. I am writing you regarding HR 1646 (The Hearing Aid Tax Credit bill.)

I understand you are a co-sponsor of this bill. Unfortunately, this bill limits the tax credit to hearing impaired people who are 55 and older and dependents. The bill completely ignores working people who are under the age of 55.

Without well-functioning hearing aids, hearing-impaired workers will not have full access to the workplace. Thus, they will be unable to compete with other workers.

Expanding the tax credit to all ages will ensure that hearing-impaired workers will be able to compete in the workplace. Accordingly, I ask you to support an amendment to this bill which was ensure that credit would be extended to all regarding of age.

This amendment would be similar to the S. 1019, which covers all ages.

In closing, thank you for your time and consideration.

Sincerely,

YOUR NAME

Plantronics Annual Shareholder Meeting (2010)

Plantronics (PLT) held its 2010 annual shareholder meeting on July 27, 2010. About ten shareholders were treated to tea, Peet's coffee, and bottled water. When entering Plantronics' headquarters, you will see a small (about 50 yards) museum on your right-hand side. This museum chronicles Plantronics' accomplishments since 1960, including its work with NASA and the Apollo shuttle launches. One of the most interesting museum pieces is an autographed picture from Buzz Aldrin to Plantronics' salesperson Steve Spragens. This space-age theme seems to heavily influence Plantronics ambiance--its building sections have names like Apollo, Cosmos, and Quasar.

The first thing I noticed when I walked into Plantronics, other than the mini-museum, was the pleasant vibe. The employees seemed happy and productive, and Investor Relations personnel made me feel very welcome. I was surprised, because the previous day, when the company reported what seemed like good earnings, Wall Street still punished the stock by 10%. (Note: over the past two years, PLT stock has soundly beat the S&P 500.)

Plantronics' CEO Kenneth Kannappan delivered most of the formal and informal presentation using a slideshow. Plantronics seeks to deliver unified communications ("UC") to corporations, positioning itself as the primary communications integrator for a company. The goal of UC is to integrate a company's voice, data, and video-based communications systems. Although Plantronics creates the majority of its software internally, Plantronics works with Cisco (CSCO), Microsoft (MSFT), and IBM (IBM) to implement UC programs (10K, page 3).

CEO Kannappan said he wanted to make communicating "simple and enticing" so that the return on investing in Plantronics' products would be justified. He also discussed Plantronics' focus on improving the "fidelity of the conversation."

Speaking of improving conversations, Plantronics owns Clarity, which makes phones and devices for the hearing impaired. I happen to be hearing impaired, and I use a Plantronics' Ameriphone XL-50 telephone. It is a big, clunky device, but it has served me well for the past decade. Without it, I'm not sure I'd be able to run my own business as a solo practitioner. The Clarity division doesn't significantly add to Plantronics' bottom line, but it still helps--in the first quarter of fiscal 2010, Clarity contributed $4.1 million to Plantronics' overall $141.2 million. More recently, in 1Q fiscal 2011, Clarity revenue was $5.1 million out of a total corporate revenue of $170.7 million.

Perhaps Clarity isn't doing as well as it should. As Americans get older, more and more them are losing their hearing, so it's surprising not to see a larger demand for Clarity products. I believe the low sales comes from a lack of attention and marketing of the Clarity brand. For example, when I was writing this post, I tried to log on to Clarity's website to view more products. The website was down. Earlier, when I had a chance to view an ad for the Clarity amplified C4220 telephone on Clarity's own website, the word "intelligent"--a word most elementary schoolchildren can write--was mis-spelled. (Note: I bought the C4200 and hope to use it soon. It is apparently a significant upgrade over the much older XL-50.)

Also, how many people would be happier with a higher maximum volume of their cell phones? I own a Palm Pre Plus (HPQ), and although I am happy with it overall, I rarely use it to talk, because its amplification isn't very high. When I was shopping for cell phones, I assumed I had no options for a good conversation and focused on comparing text messaging features. It turns out that Plantronics offers a cell phone--the ClarityLife C900--for senior citizens (a code word generally used in corporate-speak to refer to people who are hearing and/or visually impaired). It would have been nice to be able to walk into a store and try the C900 before buying a smartphone.

Anyway, I'm not surprised at the lack of attention given to hearing impaired professionals--society is used to children and senior citizens being hearing impaired, but not anyone in between. How else can we explain why the recent House bill (HR 1646) on a hearing aid tax credit only covers children and senior citizens? Boo to Reps. Carolyn McCarthy (D-NY) and Vern Ehlers (R-MI). My family had to spend thousands of dollars for hearing aids when I was growing up with no government support. Now that a bill might be passed to help ease the burden of spending 3,500 to 10,000 dollars on hearing aids, the House wants to exclude hearing impaired adult professionals like me?

(Kudos to Sen. Thomas Harkin (D-IA) for sponsoring S. 1019, which covers all age groups. It's hard not to love Iowans--the state has a low unemployment rate, moderate politics, and basketball star Ali Farokhmanesh.)

Anyway, back to the meeting. The Q&A session was brief. Another shareholder asked, "Are you hiring?" CEO Kannappan said the company was hiring in UC, firmware/software, software support, tech support, and field sales agents, and the increase in hiring would be "gradual."

I asked about Plantronics' decision to shut down and sell a 200,000+ square foot building in Suzhou, China. Plantronics had decided to move its Bluetooth headset manufacturing operations from Suzhou to Weifang, China. (See 10K, page 14.) CEO Kannappan said the new supplier in Weifang, China is in a better position to offer Plantronics "cost-savings."

Disclosure: I own an insignificant number of Plantronics (PLT) shares.

Criminals, by the Numbers

The American justice system, by the numbers:

1.7 million criminals behind bars.
4.3 million people on probation.
700,000 people on parole.

From Wilson Quarterly, Summer 2010, page 74, citing, American Interest, March/April 2010.

Bonus: "California's prison guards have become the state's largest personnel expense, creating a situation in which the government's cost to house each prisoner is an astounding $45,000 per year." More HERE and HERE.