Blessed by the Potato

Peanut butter is a truly magical substance. Like many people I have at one time or another tried to make it myself by blenderizing peanuts (and once tried to smoosh honey roasted peanuts in a failed attempt to create the world’s most delicious spread) and it is just not the same. This is reflected in the fact that there is peanut-butter-flavoured ice cream, but not peanut-flavoured ice cream: somehow the process of turning peanuts into peanut butter creates an all-new taste that is just that much better.

Yes, there’s sugar in there, but it’s not just that it’s sweeter. It goes with everything, a kind of universal compatibility that doesn’t just come from a little bit of sweetening. There’s the classic peanut butter and chocolate pairing, but as good as that is it doesn’t really demonstrate peanut butter’s intrinsic cooperative nature, since chocolate-covered peanuts are also good. Consider instead apples, jam, bacon (or so I am told), bananas, crackers, rice krispies, soy beans, and that mass of cellulose fibre that spans the border between food and building material: celery. Nothing made of mere matter could be so universally compatible, so delicious, and yet still contain nutrients.

I asked the question recently of some friends: what doesn’t go with peanut butter? And really all we came up with was laundry (indeed, I got some peanut butter on my shirt while eating apples writing this, and that’s going to need to be pre-treated).

In my head, the Kraft factory consists of large cauldrons of bubbling peanut mush, overseen by teams of witches who imbue it with that magical essence, channelling the vital incantations that transmute a mere collection of ground peanuts into something that is not of this realm. A magical substance composed more of the essence cooperation and taste than it is of sugar, protein, and fat.

I will leave you with one last combination that I thought was common-sense, but my sister (who learned it from me) says blew the mind of some of her friends: peanut butter and pop tarts. Just get yourself a frosted (or plain, though that defeats the point) pop-tart — I’m partial to raspberry but strawberry is every bit as good — toast as usual, and cover with peanut butter before eating. Breakfast is served!

Well, scam is way too harsh, but the hyperbole may be needed to counteract all the “OMG, Shoppers Optimum is the best rewards system!” that’s out there.

I used to love Shoppers; though they’ve long been a terrible pharmacy (high dispensing fees, and we’ve experienced many frustrations with for example filling prescriptions weirdly to generate even more filling fees), I used to think that they were a pretty terrific all-night convenience store: well-lit, well-stocked, with competitive prices. And hey, Optimum.

Then that all started going away: they jacked their prices through the roof, and stopped being well-stocked on sale items. Optimum points were devalued. Customer service took a hit, and many coupons, bonus points, and sale prices were not going through at the register. The one by our house sells out of flyer items sometime before noon on the first day of the sale. I’ve almost entirely stopped shopping there (even though it’s between the bus and my house, so super convenient). To say that it’s one of the best (or to take out the qualifier entirely) because it has the highest percentage return of any loyalty program misses the catch: it’s only good at over-priced Shoppers.

There have been a few times in the recent past when Wayfare has been induced to spend $50-$100 at Shoppers due to a bonus Optimum points event. As Wayfare puts it, she only shops there on 20X the points events, and redeems her points on bonus redemption days. “It’s like 30% off!” On the surface, that looks approximately correct: you normally earn 10 points per dollar spent (truncated — so $17.40 pre-tax gets you 170 points), and points are “worth” $0.00179 each if you save up to the top tier. That works out to about 1.79% return on normal days, and as much as 42% if you only buy on 20X the points days and only redeem on bonus redemption days, and then spend exactly $200 (and not pick up a bunch of overpriced crap that you pay for at the regular rate once you’re past $200). Compare that to the ~1% you get with PC points (and only then if you qualify for the special card) or the 0.5% from Air Miles (though it may be even less than that now with the constant devaluing of points).

Here’s my thinking: yes, you get “money” back, but you can only use it at Shoppers, which is ludicrously over-priced. So you get your 30-42% back in points (including the bonus redemption at the high end), but then you have to spend those points on stuff that’s 30-42% over-priced.

I had in my head that Shoppers was roughly 30% over-priced, but I hadn’t checked it explicitly in a while. So tonight when I went shopping, I did a price comparison on a basket of 11 items at Shoppers and Real Canadian Super Store (RCSS — basically Loblaws), chosen quasirandomly (I wandered around the store and wrote down the price of stuff I might find on my shopping list, and stuck to name brands so I could compare across stores). The average was actually that Shoppers was 42% more expensive than RCSS (data at the end).

So, even on the most fortuitous bonus points days at Shoppers (20X) you spend $1.42 to get $1 worth of stuff, and also pick up $.60 in Optimum points, which you later spend to get $.42 worth of stuff. In the end, you spent $1.42 to get $1.42 worth of stuff — but paid tax on $2.02. That tax hit would mean that you’d be behind by $0.078, or just over 5%. You go to all the trouble of shopping on the 20X the points days, then saving up your points for the top tier and a bonus redemption day, and then run around the store with a notepad and calculator so you’re sure to spend as close to $200 as humanly possible… and you end up 5% behind the ball. Could have just gone to RCSS and bought on any old day (and received a bonus 1% in PC points).

To be fair, Shoppers does put stuff on sale on top of the Optimum offers… but RCSS puts stuff on sale, too, so again it’s one less variable to worry about. You could do better if the Shoppers sale price is down to the RCSS sale price and you get some kind of bonus points event (either on the collection or redemption side), but will that be true of everything you put in your cart? Sometimes, yes: when I do stoop to shopping at Shoppers, it’s to scoop up the loss leaders that are actually cheaper than other stores, and that is usually all I’ll buy. Coke and facial tissues are perennial loss leader favourites at Shoppers — though as I said above, I can’t actually do that at the store near my house since they sell out (or, as far as I can tell, never carried any inventory in the first place).

The high percentage return of Optimum really masks what a mediocre deal it is, since everything is marked up to account for that Optimum payback (which means you’re doubly screwed if you ever shop there when you’re not getting bonus points, or if you forget your card).

* – the box of Huggies in Shoppers was a 72-pack, but RCSS didn’t sell that size. The closest was a 90-pack for $23.43, so I took the price per diaper, multiplied that by 72, and put it in to get a fair comparison to Shoppers.

This is a monthly update from the Blueberry Portfolio. The events I mention below happened approx 8 months ago.

In my last report I didn’t have much to say, and the market as a whole has been pretty boring since then too.

It’s been a touch more exciting in our investment portfolio the last two weeks. We now stand at over a 15% return since inception, vs. the TSX at just over 1%.

Generally, things are working out quite well (with of course a few exceptions). In particular, Whiterock REIT was climbing up above the $14 mark in the month, which raises the eternal debate with these kinds of stocks: should we take the quick capital gain, or continue to hold for the distribution?

There is always some measure of uncertainty when valuing a stock, and transaction fees are a drag, so the strategy in general is to buy when undervalued, and hold until you think the risk starts to outweigh the opportunity — ideally forever otherwise. But I thought that I had a pretty good handle on Whiterock: I was happy to buy lots of it at any price below $12, considered it fairly valued in the $12-14 range, and much above $14 it started to look a little pricey. That is, in my opinion, an extraordinarily narrow range for valuations, and I was perhaps being a little too precise. To put it in terms of expected future returns, the difference between the high and low points would be the difference in earning 9.3% or 8.0% — quite a narrow range indeed. Nonetheless, once the price hit $14 the “maybe it’s time to sell” gears started turning in my head.

Considering we had almost a 20% gain on it in just 4 months, I gave serious consideration to taking the quick capital gain, and ended up putting in an order to sell one night. Fortunately we got lucky, because rather than selling for $14.50 Dundee came along with a takeover offer that very morning, and we ended up getting $16.05 for the shares — a 10% extra gain just by pure dumb luck.

Once again though I find myself without many good ideas. The market has recovered a lot from the October lows, and isn’t presenting a lot of opportunities. Last time around I increased the position sizes of the ideas I did have, but I can’t keep pushing that strategy or we’ll end up with just 4 or 5 concentrated names, and I’m not comfortable with that. As it is, Chemtrade has continued to perform well, giving us another 6% return in the last 2 weeks. If this continues I *will* be trimming back: as much as I like the stock, as high as my “price target” or the upper range of my fair valuation estimate is, and as much as we’re “playing with the winnings” here, I simply don’t like the idea of having more than 20% of the portfolio in any one position. I have a large reading list ahead of me which may prove fruitful, but in the meantime we will deviate from the plan to remain nearly totally invested.

The just noticeable difference (JND) is the smallest difference in something that can be perceived. For instance, if you show me two pieces of string that are very nearly the same length, and then another similar pair, and another, there’s a certain length difference that I will just be able to perceive, and any that are closer together than that I won’t be able to tell apart. Similarly for other senses: two audio tones have to have a certain amount of difference in their volume or frequency in order for me to tell that they were different rather than the same tone repeated. The size of the JND is dependent on methods: you can notice a smaller difference in lengths if you look at two pieces of string side-by-side rather than one on one day, and one on the other. It can also help if there’s a point of reference, such as a grid in the background. But nevertheless, there will be some small difference below which you will be unable to tell two things apart.

So the JND can vary quite a bit depending on the experimental procedures, but given a particular method, the JND scales with the starting size of what you’re looking at: JND ∝ dl/L. If you have double the length of string, the difference in length between two comparison pieces also has to double before you’ll notice that there has been a change. If you’re in a dark room with one candle lit, lighting a 2nd is very noticeable addition to the brightness. If you’re in a bright room with a thousand candle power light on, lighting a candle may not noticeably increase the brightness — and if you can just notice adding (or subtracting) one candle against a background of say 200, then you should be able to just notice a change of 1/200^th of a candle against a background of one candle.

Let’s consider the case of hair. I cut mine every 50 days or so. It goes from about 0.3″ when freshly cut to about 1″ in that time, for a rate of growth of 0.014″ per day. After I cut my hair it takes about a week before I notice that it’s gotten longer. So the constant for the JND is:
0.014*7/0.3 = 0.33

If the starting length for hair was instead say, 12″, then the scaling indicates the JND would be 3.9″. That is, a girl with shoulder-length hair would have to cut off about 4″ in order to have a good expectation that — with a one day to the next observation — a boy would notice that indeed her hair had been cut. Getting a 2″ trim would fall well below the JND, and psychophysically, it would be highly unlikely for such a difference to be spontaneously noticed. Nay, nearly physiologically impossible for such a difference to be detected under such conditions.

Everyone’s JND constant will be different, and circumstances can vary (e.g., someone may consistently wear shirts with horizontal markings on them to serve as a guidepost, or an observer may have superhuman vision discrimination, or the hair may be pulled into a ponytail, making the judgment even more difficult).

But whatever the individual circumstances, don’t forget the pioneering psychophysics work of Weber when someone doesn’t notice your haircut — they may not have been able to!

I’m going off to a writer’s conference soon, where I will attend a few workshops. There’s some preparatory homework for each, which consist of some readings and assignment questions. Plus, there are some little surveys for the instructors to get to know us and our writing level: what’s your job, what’s your experience, what do you hope to learn, etc. One question though I just simply can’t take seriously. I turn it over in my head and I can’t seem to make sense of it — surely it must be there as bait for ridicule. Right?

Are you involved with paragraphs? What is the nature of your involvement?

Paragraphs and I are on speaking terms, to be sure. Work colleagues who get together to accomplish the task, nod respectfully to each other on our way out the door at 5 o’clock, and spare not another thought for the other once home. Nothing like the decades-long love affair I’ve had with punctuation – that is a relationship where the passion has never run low. We have our routine, our commas and periods, but punctuation is always ready to spice things up with something from the back of the cupboard – em-dashes are a particularly naughty twist – in ways that surprise and titillate. The sentences flow, with direction for effective oral recitation; logical demarcation is a happy side effect.

My companionship with punctuation aside, paragraphs are important in my writing and editing. Paragraphs work with me to organize information contained across several sentences into a consumable quantum for the reader. Mostly I throw a pile of sentences on the desktop, and paragraphs will pile them up on the page. More often than not I take a quick glance at paragraphs’ work, declare it to be “good enough for government work” and we move along with the day’s proceedings. On rare occasions, we will put our heads together to work more closely and carefully on a tricky project.

Grants in particular require that paragraphs and I maintain constant vigilance on the efforts of the scientists to fill every last square millimeter of page space with information. Left to their own devices they would remove paragraph breaks entirely, simply to avoid wasting the whitespace that accumulates at the foreshortened end of each terminating line.

Yet that is itself a waste of paragraph’s potential.

To demarcate points and – sparingly – add emphasis (emotional or otherwise) when used in such foreshortened forms are powerful abilities. More importantly, effective paragraphing makes a large block of text skimmable. The impact of that point is not to be overlooked when grant reviewers will be going through a large stack of applications, searching quickly to determine whether the evaluation criteria have been met.

Further to the emotional power of solitary lines is the poetry of paragraphs. Alliteration and rhyme can be suggestive; metaphor and nonsense confirmatory. Paragraphs, however, are the true bridge between poetry and prose. Though I respect the weekend dalliances along those lines – and certainly appreciate the displays of mastery when I happen to catch a sample in the papers – paragraphs and I do share in those sorts of proclivities. No matter the curiosity that may from time to time seep into my dreams, or the rare, furtive glances I cast at paragraphs’ perfect silhouette.

It is all business between us, you see.