Blessed by the Potato

For the better part of the last decade high definition TVs were the “it” item, way up there on the list of what people were milking the equity of their houses to get. For the most part, I didn’t really get it: the standards were changing in Internet time: from 480p through 720p to 1080i/p in less than 10 years: and while 1080p looks to just be settling in as a standard that might linger for longer than a goldfish, who knows what the new year might bring. In addition to the standards, we faced a variety of physical connections: from coax and RCAs to component, s-video, VGA, DVI, HDMI, and I’m sure someone out there has an optical connection (even if only for, ironically, audio). I wasn’t really satisfied with that, especially for such an expensive piece of home entertainment that has a history of lasting (my current TV is 15 years old and will likely last at least 5 more; the one it replaced lasted for 20). Some videophiles (Netbug, cough) do seem to get genuine enjoyment from HDTV and can tell the difference, but for me I don’t see standard definition as something that hurts my enjoyment of a movie or game; it’s not immersion-breaking. Once the lack of content (and the lack of uniform content — the few HDTV stations that are out there can’t seem to decide how they want to broadcast, some even letterboxing the widescreen stuff and transmitting at 4:3) is factored in, the investment just didn’t seem to be worth it.

My parents, just over a year ago, bought a beautiful LCD TV at 1080p and a PS3 to go with it (they really only use it for the blu-ray player). And they loved it. They gushed about how beautiful and sharp and bright their picture was. I went over there… and saw that they were watching standard-def cable. Stretched standard-def cable. Once I got the box hooked up properly for them and tuned to an actual high def channel they were even more ecstatic… but the point is that the biggest difference for them was that the picture was big. Even now that they’ve got it all figured out, they still do 99% of their TV viewing in standard definition. Over a year later with the fancy PS3 blu ray player and they own a grand total of 3 blu ray titles.

I’m clearly not Netbug, or I would have long since succumbed to the HD bug. I figure if I want to watch something in high definition, I’ll do it on my 22″ computer monitor, which looks freaking huge when sitting in my desk chair an arm’s length away. In fact, that’s what I do now. I’ve watched my TV for maybe 10 hours in the last year — I’ve spent more time gaming on it with the Wii. I just got so sick of the few shows I tried to keep track of being moved around all the time and having to go catch up on my computer anyway that this year with the new TV season I’m not bothering with the TV and VCR at all — I’m just going straight the computer and/or the DVD boxed sets. Watching TV makes me edgy these days; I spent so much time in my teen years with the TV and the computer in the same room and always multitasking that I feel like something’s wrong if I’m not checking my email on a commercial break. I’d cancel cable entirely if Wayfare wasn’t so attached to it. Of course, I’m not my parents, either: if I do get a new TV, I want to actually get some use of of its abilities (as well as have a bigger picture), and get something that’s going to be somewhat future-proof.

Things are starting to change now: the Xbox360 and PS3 can provide HD gaming, and cable and even over-the-air high definition content is more commonly available. Blu-ray discs can bring high definition movies home, which confuses the hell out of me because as far as I know regular DVDs were already able to store ~3 hours of high definition video (why the need to switch?). The biggest immediate change though is that Wayfare’s parents gave us an extravagant, over-the-top, completely unnecessary wedding present: a framed picture of a HDTV, a card that said “go buy a TV”, and a cheque (and boy were we confused when we unwrapped a picture frame and turned it over not to find a nice printed picture from the wedding… but a picture of a TV!).

Ultimately, Wayfare is going to decide on what to get for our home theatre setup, since she’s the one who actually watches TV. But since I’m the mad scientist technical one, I get to do most of the research and narrow it down for her. Here’s what I’m looking at so far, and I’ve asked Netbug to provide his feedback as well, since he’s the resident expert on these things (and is looking to replace his audio-visual setup as well).

Video: We are certainly going to go with a TV of some sort — as much as I’ve thought about taking a digital projector home from the lab and using the wall, that’s just not going to fly. Beyond that though, I really don’t have too much of a clue. Like my parents, I think I would prefer screen size over resolution — a 40″ 720p screen would probably be better for us than a 1080p at 32″ (though we might be able to get both size and resolution for not much more and avoid the decision entirely). We should size the TV to the room and all, but since we’re only going to be in that room for another two years or so it’s probably better to err on the side of too big. Right now I’m thinking 40 or 42″ just because that seems to be a fairly common size, in the “big” but not “uniquely monstrous” zone. I’m also not sure about plasma vs LCD: plasma seems to mostly come in 720p from what I see, at about the same prices as the same-sized 1080p LCD. I don’t really know what we’d want from inputs: I know that when gaming/hooking up a laptop having the inputs accessible from the side and/or front is handy, but I doubt that would be a dealbreaker for us (especially with our current setup). I think we do want a tuner though, so we can grab OTA (over the air — rabbit ears) HD signals, since I don’t really see us getting blu-rays or paying through the nose for HD digital cable. I know that there is a hefty price premium to the Sony name, and we probably would never notice a difference; beyond that I don’t really know anything about the other brands. Samsung also seems to have a name for itself in LCD, and Panasonic for plasma; Costco sells Westinghouse, which I’ve never heard of.

Netbug says [paraphrased]:

Don’t worry too much about resolution, side by side you could tell, maybe. Yes, I do GREATLY prefer HDTV over standard, but that fact is escalated because SDTV looks like utter crap on an HDTV set. There will never be a standard like there was for CRT (I don’t think). There’s always new techs coming out. You gotta bite the bullet and buy something.

So that all meshes with other stuff I’ve been reading. In particular, we’ll be more happy with a screen that’s a lower resolution (720p, for example) but better contrast and colour ranges, and better hardware for interpolating images that aren’t in the native resolution than we will be with a set that has a higher resolution at the same price but cheaper everything else.

I think though the most pressing question for us at the moment is: should we buy now, or wait to see what boxing day brings (or continue to suffer with our 27″ tube, earn interest, ponder, and wait for some kind of standard to emerge along with the death of analog and the finalization of our living room size).

Audio: There are advantages to X.1 surround sound, but I just don’t see how we can work it in our living room. Our setup is geared more towards socializing than TV watching, so the couch is at a 45 degree angle to the TV, rather than straight-on, and there are really only two usable walls to run wires around/hang speakers on, so I just can’t see how we could make surround work. We might get a 2.1 speaker setup with a receiver/amp that has some futureproofing… or we might just use the speakers that come with the TV (like my parents).

Accessories: We have a Wii, but Netbug and Ryan keep bugging me to get an XBox360 so I can game with them (though we all have PCs, it just doesn’t seem to work out that multiplayer games come out on that platform these days), and that might be a better system for Tversity to run off. I have no idea if our current DVD player is “progressive scan” or not, nor how much of a difference that might make. We’ll also need a new stand in all likelihood, especially if we need to house a receiver/amp.

Wayfare says: “Most of our TV watching is with regular shows. I want a bigger, clearer, thinner TV, but if standard definition looks worse then what’s the point? And I don’t want to pay for screen space that’s just wasted on grey bars for most of our watching. Let’s see what boxing day brings, but I’m not against waiting longer; I’m just not sure right now. Can I go to sleep now?”

A big thanks to the Vampire Librarian for pointing me to this unique crime/mystery/steampunk/vampire movie “Perfect Creature“. It’s not a perfect movie; as with many vampire movies there are some strange plot holes, mythologies, and love triangles, but it’s certainly a fair bit better than many other vampire movies, and certainly the best steampunk vampire movie I’ve ever seen. Though there are “vampires”, and the “brothers” refer to themselves as such at one or two points in the film, it’s not really true to the theme of most vampire movies since there is no spreading plague of the undead — vampires are born that way, freaks of nature, and don’t turn anyone.

All that aside, it does explore some really neat ideas. First up, we’re presented with a brother gone bad, off feeding on humans like a real vampire, and the cover-up that ensues. In the film, vampires are the clergy of this alternate world, the immortal overseers of humanity, and it would be a devastating thing to have it be known that one of them went totally batshit fucking loco. So they handle the cover-up and the shaken confidence fairly well alongside the main story of hunting the bugger down.

It starts to get a little muddled towards the end when the action picks up and the sense goes down, but it’s still worth a watch, IMHO.

So the Financial Post StockStar game is on, and it’s kind of fun to make all the trades that come into my head but which I would be afraid to try in real life, or even just don’t have the money to carry out. You can play with $100k of fantasy money (up to $200k including fantasy leverage) to invest in the shadow stock market between now and January — best return wins. If you’d like to play, let me know and I can send you an invite through the game. It can be a good way to get some practice and education in how trading works, and to get used to looking at the rollercoaster ride your portfolio value will take.

Right now I’ve built up a portfolio that’s concentrated heavily in financials and energy, hoping — like I’m sure many players are — for a rebound that will take me to the top of the charts. I’m “only” leveraged about 40%, which in a game like this might hurt my chances. I’m also at a crossroads: the game is divided into two classes of players. Investors, who make 25 trades or less, and traders, who make more than that. I’ve just made my 25th trade. I’m pretty happy with my portfolio, and now have to decide if I want to face off against the active traders or the other buy-and-hold investors. Since it’s only the first week and I’ve already racked up those trades it’s very likely I’m going to end up as a trader: one more puts me over the edge. However, my gut instinct tells me that the “good” players will end up being traders, and I might have better odds in the game by just switching off now and competing against the <25 trades investors, even if it means I can’t use the rest of my margin between now and the end of the game. At the moment, just from pure odds being a trader looks better: there are 4000-some investors to 400-some traders. However, as the trades rack up through the months I anticipate most players will end up as traders.

The top guys are just making a killing: 80+% return in 4 days. I’m at about +3.5% [Update: I ended up sitting on this post for a few days; I’m now up 6%, after being up 14% last week. The top player is up over 138%]. One thing I noticed this week is that the trades now seem to be delayed 15 minutes. I think it’s because the quotes are 15 minutes delayed, and it appeared possible to use a service with real-time quotes to make “psychic” trades in the game. This happened once to my advantage last week, when I saw a stock was going up and went in to buy, and actually got it for cheaper than my real-time quote was giving me; this week that doesn’t appear to be happening any more.

I’ve had a number of only vaguely related thoughts on real estate lately, so let’s see if I can string them together into a coherent post:

A report recently came out from UBC asking the question “Are Canadian Housing Markets Over-priced?” The answer was not quite what I expected: the paper figured that Toronto was at equilibrium, Vancouver was 11% overpriced, and Ottawa 25% overpriced. If I were to rearranged those numbers based on my current understanding of the housing market, I would say that Toronto was 11% over, Vancouver 25% over, and Ottawa at equilibrium.

Some people have, naturally, been tearing the paper apart, especially since they rely on ads on Craigslist and in the newspaper to determine the market rent. While this will tend to give a higher rent than might perhaps be the true market rent (since those are the asks and not the actual agreed-upon market rent), I’m ok with using that as a tool to get an estimate. Others complained about how they figured the average (SFH, detached) home price.

My big issue with the paper is how they get to their equilibrium. It understates what the equilibrium yield should be. They include the cost of the capital (mortgage costs), maintenance, taxes, insurance, and then takes out the anticipated capital gains. They say that the market would be in equilibrium when the rental rates equal that net cost of owning. However, that leaves zero profit for taking on the risk and effort of owning/landlording. IMHO, there can’t really be an equilibrium until there’s at least some kind of profit/risk premium margin. If we were to put in even a 2% premium to where equilibrium should be, then the Toronto market for example goes from being balanced at ~$420k for the typical house to being over-valued, with a target of ~$308k to get to equilibrium, a drop of over 25%. Heck, just adding in the amortized transfer costs for owning real estate vs renting (taxes, closing costs, commissions) would up the equilibrium by a percent or two, again indicating that house prices should fall and are not at equilibrium.

That would also bring it more in line with the rules of thumb I’ve read about: for instance, that a house is overvalued when the price is more than 200X monthly rent; a 5% yield (as for the balanced Toronto market in the paper) translates to about 240X, whereas using my arbitrary 7% is a more reasonable 171X. ~125X should be the buy range, which is a gross yield in this sense of 9.6%.

Of course, the more pressing issue is perhaps how they managed to figure in anticipated appreciation into their return. Leaving aside the validity of attempting that at what they admit might be the top of a cycle, it leads to positive feedback and chasing performance: the markets that have gone up a lot then have more anticipated appreciation, so they’re not considered overvalued, whereas the markets that might be in equilibrium are considered overvalued because they didn’t have the price run-up, and so don’t have the same amount of anticipated appreciation to offset high house-to-rent values.

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The days of bidding wars seem to be coming to an end, but I’ve always wondered about that mispricing. It’s often newsworthy when a house sells for significantly over asking price (sometimes 20% or more). My question/revelation is: how could the house have been so mispriced to begin with? Shouldn’t the selling agent take a drubbing for that one for being so off on setting the asking price? Shouldn’t the buyer’s agent take a drubbing for letting things get so out of hand that a bidding war sent things up that far above the asking/market price? I never see any such issues for the realesnake agents…

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A recent New York Times op-ed says that the subprime mess wasn’t all bad. After all, “only” ~15% of subprime borrowers defaulted, so those subprime loans helped 85% of people who took them buy their own home, and that’s a good thing… right?

I don’t necessarily see it as good that some of these sub-prime borrowers got to become home owners. Everyone needs an (affordable) place to live, but not everyone needs to be a homeowner. Should young single people be homeowners? It was never really something I thought of single people doing, but there are a lot of condo projects out there with a lot of bachelor/1bedroom units, and a lot of young people jumping into the market earlier in their lives thanks to loose lending. Especially when they’re buying on zero-down — home ownership carries risks and potentially costly maintenance, so these people should have been showing that they could save and budget by coming up with a down payment.

Plus the rampant home inflation/bubble prices caused by suddenly opening the floodgates and letting everyone get credit to buy meant that people who would have been traditional prime buyers suddenly found that housing costs were going up faster than their downpayments were growing, and that they needed to become subprime borrowers themselves in order to “get in before they were priced out forever”.

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By its illiquid nature and the way the data is kept and tracked, it’s difficult to say what the health of the real estate market is until months after the fact. The anecdotal evidence is not looking too good: it may not be a subprime wasteland in Ontario, but things definitely look to have slowed down. Of course, anecdotal evidence is so unreliable it almost isn’t evidence at all… but that said, I saw my first set of houses up for auction here in London today. They were all student rentals near the university that had been on the market for a while (I think — hard to say if it’s the same houses when I only bike by every couple of weeks). I can’t tell if it’s a bank/foreclosure auction, or if the seller is auctioning themselves just to get things moving.

I don’t really get it — there is a lot of fear and doubt out there about hybrid cars, a lot of people saying things to detract from the new technology. Some of it is pure bullshit, like the CNW study or the crap about the Sudbury moonscape. Some of it is selective accounting looking at the purely financial side of things, such as comparing a nicely equipped mid-sized car like a Prius to a bare-bones compact, or assuming that the price of gas won’t go up over the next 15 years, or that you’ll only own your car for 7 years at which point it will be worthless.

I can understand why some companies (cough, GM, cough) who are losing out on sales to hybrids might have an interest in sowing FUD, but I’m surprised that so many people out there seem to take it up without a second thought (how many times have I heard “oh, but the batteries will have to be replaced every 5 years”?!). Hybrids are a very promising technology and a vital step on our path to electric cars, and while rare until very recently on the ordinary streets of Canada, aren’t really all that new.

One of the latest rounds of fear-mongering focuses on the electromagnetic fields (EMFs) produced by hybrid cars, getting international attention in a recent New York Times article “Fear but few Facts on Hybrid Risk” which was linked to by the Consumerist. To quote from the article:

Kent Shadwick, controller of purchasing services for the York Catholic District School Board in York, Ontario, evaluated the Toyota Prius for fleet use. Mr. Shadwick said it was tested at various speeds, and under hard braking and rapid acceleration, using a professional-quality gauss meter.

“The results that we saw were quite concerning,” he said. “We saw high levels in the vehicle for both the driver and left rear passenger, which has prompted us to explore shielding options and to consider advocating testing of different makes and models of hybrid vehicles.”

I sent a message to Kent Shadwick, asking if he’d share his data so I could see what he considered “high” and whether that was a static (DC) field or a time-varying field measured. He did respond, and promptly, but only to say that he hasn’t shared the results anywhere, and that they hired an outside company to take the measurements using a rigourous procedure. He also said that he was looking into shielding solutions.

I have to say that this is really disappointing, and I think it shows the real lack of a decent science education in the general public that the New York Times ran this piece without even being able to say what the fields are or how that compares to the geomagnetic field, let alone whether there’s any risk from that. The field, if you will forgive the pun, of bioelectromagnetics is so controversial and so lacking in standards that it means virtually nothing to have one person say that something is “concerning” without knowing what their threshold for concern is. Some people are concerned by static fields that are weaker than the Earth’s magnetic field; some aren’t concerned about static fields at all until we get beyond the MRI level. Likewise with time varying fields: some people think that virtually any exposure should be eliminated, others think nothing of using microwaves up to the point where they cause protein denaturation or other fields up to the point where they start to heat the tissue. I have no idea what Kent Shadwick might find concerning, so even if he does have a respectable position with the school board (not some random nut falling asleep at the wheel) and even if he did hire qualified people to take good measurements with the proper equipment… his “concern” is not really newsworthy to me unless I know how his threshold of concern compares to mine.

Plus all this concern about magnetic fields in hybrids is really only part of the issue.

The question asked is always about the risks — we know, for instance, that ionizing radiation is something that can cause cancer and other health issues. However, if you have a broken arm or get a nasty bump on the head, you can be sure you’re popping in for an x-ray/CT no questions asked because there is a big benefit to those diagnostic tests that far outweighs the small inherent exposure. It’s really all about risk-benefit ratios.

So for the hybrid car issue, we have the question “what are the fields?” and we don’t even have a good answer to that, from which point some people fall into hysterics (up to selling their car). The real issue is then several steps removed: the Prius may have higher magnetic field exposures than other cars, and those fields have an unknown but probably small effect on human health, and that might outweigh the positive aspects of the technology.

One example used to show that pulsed magnetic fields can effect biology is the FDA-approved bone growth stimulator. I had the pleasure last week of listening to Arthur Pilla’s (one of the inventors of the electromagnetic bone stimulator) plenary talk in San Diego. He talked about the first use of the bone stimulator on a woman who had a fractured tibia just below the knee that hadn’t healed for 9 years, despite multiple bone grafts, etc. They had this theory that an electromagnetic stimulator might be able to stimulate bone growth, but they also knew that the fields would not be restricted to just the break, and that the knee itself would also be exposed. There was a real concern that the bone might grow wildly out of control and completely fuse the knee, but since this woman’s only other option was amputation, they gave it a try. The stimulator only caused bone growth where there was a break. My point is that it’s not quite so simple to say that induced currents will have an effect on tissue; they may have an effect on some tissue some of the time.

So ok, there might be some small risk with hybrids (though probably not). On top of that the benefits have to considered (fuel efficiency, emissions, safety…) One colleague off-handedly said that even if magnetic fields cause cancer, you’d probably be better off with a Prius because you’d be exposed to less gasoline from the gas stations and escaped vapours in your garage… another possible carcinogen. To save less fuel than switching to a hybrid would net, some people will tailgate (draft) semi trucks in their blind spot. That’s a behaviour with a definite and immediate risk — not of possibly getting cancer 20 years down the road, but of getting instantly killed by a tire blowout or sudden stop with zero space for reaction time. Of course, the risk of being turned into a red smear on the pavement is not a new type of risk to drivers.

The benefits of a Prius vs. a comparable conventional car are real and material. The risks are unknown, but probably negligible. Unfortunately people have such a fear of the unknown that they can blow it out of proportion in their decision making, and focus on their fears rather than the overall picture. Back to the York Catholic District School Board: as a scientist, I was a little disappointed that he wouldn’t share his results so that I could come to my own conclusions; however, I understand why he went to the effort of measuring the fields and looking into solutions — for an individual driver, the risk-benefit ratio is pretty clear: just buy the hybrid. For a school board fleet however, there are unions to consider, and a union will fuck up a school board over a perceived threat to its drivers, whether or not that’s a real concern or a valid trade-off (after all, it’s not the union members who are saving on gas in a fleet purchase situation, so in their minds the risk-benefit works a little differently).

The title of the article was spot-on: Fear, But Few Facts.

I don’t know why there is so much misinformation and so much fear being spread about hybrids out there. I wrote Hybrid Cars: The Benefit of My Research (the 2nd link down in the static pages on the bar to the right) to try to distill some of my research over a year ago. Some of that information is starting to get out of date, but I don’t think that anyone has ever read it anyway, so I’m not sure if I should bother updating it with things like this.