Holzkirchen Loop Ride

It rained last night, and it rained this morning, but I saw what I thought was a patch of clearing around noon and decided that what the heck, I'd paid for an IsarCard this month, I might as well get my money's worth. I caught the 12:44 train to Solln, and there switched to the fast train to Holzkirchen, getting there in 20 minutes. During the train switch, however, I got caught in a heavy down pour, and started wondering whether I had made the right decision.

By the time I got to Holzkirchen, the weather didn't look nicer, with ominous clouds in the sky, but at least it wasn't raining --- as I rolled out of Holzkirchen, I felt a few drops here and there, but nothing serious. The roads were wet though! I'd picked out what I thought was an interesting loop this time, and sure enough, it was interesting --- in 35 miles I'd climbed about 2500', which is quite reasonable for the area.

The climbing wasn't a big deal, though --- it was the headwind. A strong South West wind blew, so I was getting either a headwind from the South, or a headwind from the East the entire ride. The ride was pretty, but I couldn't see much --- hopefully, tomorrow's ride will yield nice pictures of the alps.

Review: The Munich/Paris Night Train

There's nothing so romantic as the idea of a night train. Get onto one of the night trains at 9:00pm in Munich at night, wake up in Paris the next morning at 6:00am. Coming back from Paris to Munich, it's 11pm to 9am. The cost is about 75 Euros each way per person, which compares unfavorably with the 93 Euros round trip on the plane. One would think that given the cost of fuel, and the carbon footprint of the train versus the plane, the train should be cheaper, but while Airlines in Europe are largely deregulated now, trains are still National Monopolies, and so are still priced that way. Naturally, if you're only on it one way, it's cheaper to take the train, and there are student specials that can get the price down to about 50 Euros each way if you're a student, etc.

Each cabin in second class has 6 bunks, dormitory style, stacked on top of one another. There's barely any room for luggage --- there's a rail on the top, and there's room below. I'm 5' 10", and the beds are just about an inch too short when I stretch out. Fortunately, I sleep in a fetal position anyway, so the roominess is not an issue.

Bring ear plugs --- not only is the train not as quiet as the regular trains, the chances are that you're sharing with 5 other folks on the train, and if any of them are men (or if you're unlucky and end up in a compartment with me), then one of them will snore. Lisa didn't sleep well at all on our trip. I, on the other hand, slept very well and didn't have any issues at all.

The cabin is tight and crowded, so other than reading and sleeping, don't expect to get much done. There does seem to be an unusual number of beautiful young ladies on our trip from Paris back to Munich, so perhaps if you're a single guy there's appeal there.

All in all, the experience isn't particularly romantic, so if I were to be asked to recommend a way to get from Munich to Paris or vice-versa, I'd tell folks to fly. Oh yes, and you have to book in advance. Don't expect the prices I quoted to be available if you're booking last minute.

Commuting

I had the fortune of riding with Grant Petersen back in 1993, after an introduction by Eric House, whom Rivendell sponsored. We met him for one of his commute rides, and I was jealous. He got to ride Pinehurst road, a beauty, take a zig zag through the regional parks near Berkeley, and then emerge into San Leandro for a 20 mile ride, of which 10 miles was off road.

I now have a commute to be jealous of, with even more terrain variety. On my commute I have about 5km of dirt, 30m of cobbles, 3 bridge crossings, 1 long tunnel, and 2km (if that) of city riding. Most of it is along the Isar river, so there are no traffic lights, or any traffic whatsoever. There's even a major descent and climb (of about 50-100m or so), of reasonable steepness to keep me in shape. In the evening on good weather days, the bike path fills with people --- picnics along the river, informal parties, or people just out riding, enjoying the weather. Once in a while, I even get the sound of a clanking clunker being pedaled like a maniac by a strong German woman trying to get somewhere in a hurry, passing me at speed despite her bike's constant protests. It is very funny to watch, and always puts a big grin on my face. You can't make this stuff up!

There is a penalty for this --- my first 2 weeks, I had 4 flat tires. To show that it wasn't just because I run thinner tires than most Germans would, there was one day when 3 mountain bikers and I were by the side of the bike path fixing flats. One even had to beg a couple of patches from me. It turns out that a favored past-time of Germans is sitting under the overhead crossings on the bike paths at night, drinking beer from beer bottles, and then smashing the bottles onto the bike path. One bridge, the Thaikirche bridge, is particularly bad in this regard, and I've learned to either bypass it, or to stop, and carry my bike 10 meters before riding it again (it's faster than fixing a flat tire) --- it's good for cycle-cross training.

But all in all, I'm happy with this commute --- even in the rain, there's not a day when riding next to the river doesn't make me feel like I'm touring, rather than commuting to work. I could take the train to work if it rains, but these memories are going to stay with me long after I leave Munich. Cycling is such an essential part of life here (even the intern at the office who hates cycling cycles to work), I don't know how Americans who live here without participating in the sport can consider that they've experienced the culture.

Is housing a good investment?

I was recently on an email thread where people were talking about housing as an investment.  In response to an assertion that housing has historically returned less than the S&P 500, someone asked, "Are you counting the rent that you aren't paying?"  My answer:

Yes.

House prices nationwide (sorry for the US-bias, but I don't have data for international markets) have very poor inflation-adjusted returns. Shiller (of the Case-Shiller house price indices) showed that house prices appreciated by 0.4% a year after inflation, from 1870-2004.

http://en.wikipedia.org/wiki/United_States_housing_bubble

If you buy a house, you don't pay rent.  But instead, you either pay for your mortgage interest, or you lose out on the return you could have had if your house were invested in stocks.  Assume that you're paying your mortgage interest.  At a 6% mortgage rate, you're paying .5% of your house price a month in mortgage.  People don't call it rent, but that's exactly what you're doing -- renting money to "own" the house so that you can live in it.  Even at the highest tax brackets and the mortgage deduction (call it ~40%) that's still .3% of the house price a month in mortgage costs.  Historically, house prices and rents have moved together (and there's good reason for them to -- if house prices rise relative to rents, people will choose to rent, driving up rents and driving down house prices).  That ratio (house price to yearly rent) has been about 21 or so.  When that ratio goes higher, houses are expensive and renting is cheap.  When it goes lower, renting is expensive.

http://www.frbsf.org/news/speeches/2008/charts.pdf, page 20.

So if your house is $X, and you're paying .3% (after taxes) a month in mortgage "rent", that's .036X a year in mortgage "rent".  The inverse of that, 27.8, is the price to rent ratio.  But remember that that simple calculation ignores costs of ownership -- property taxes (add 1% of X yearly), maintenance (another 1% ish), and so forth.  You get to the point where the cost of home ownership is very similar to the cost of renting.  Add .6% for property taxes (after the tax deduction), 1% for maintenance (no tax deduction there!), and you're paying .052X a year to own the house.  That's a price to rent of about 19.2.  With an historical ratio of about 21, you could have rented an equivalent apartment (or house) for less money.  Suddenly renting looks like the better deal.  The point here is that owning a home, by way of a mortgage, is expensive.

Choose instead to pay cash for the house so there is no mortgage.  (We can all dream.)  Now, instead you're losing out on the possibility of investing that money.  If your house is $X, you lose out on the risk-free rate times X.  Right now, that's the t-bill rate of about 1.52%, or almost 1% after taxes (no state taxes on treasuries).  (I note here for completeness that this is an historically low rate.)  You still have to pay property taxes and maintenance (1.6% after taxes).  Now, you're paying .026X a year to own the house, for a price to rent of about 38.  Wow, ownership looks great!

Of course, you could have taken that money and invested it in something slightly riskier, like a diversified stock+bond portfolio, making something like 7% a year.  (And that's certainly a more liquid asset than a house!)  There will be up and down years, but say long-term you can make 7% a year.  You have to pay taxes, so let's generously (from a "woohoo housing" perspective) assume it's all taxed as income at your marginal tax rate.  That's 4.2% after taxes.  Add in property taxes and maintenance, that's 5.8% after taxes.  Ouch.  Price to rent is just 17.2.

We haven't even considered the transaction costs of home ownership.  For starters, you pay 6% to a realtor just to move, which you have to remember to subtract from your returns.  There's the cost of applying for the mortgage, ...

In short, home ownership isn't a good deal.  There are certainly regions of the US where it *has* been a good deal in the past.  However, the main reason people make money on home ownership is because of their leveraged investment by way of a mortgage.  If you want leverage, start stocking up on S&P 500 futures or something.

If you want a nice place to live in, buy a home.  :)

Breaking News: Vanguard Total International Stock Index Fund just became more tax efficient

One of the reasons why folks like Bernstein recommend holding the components of the Total International Index Fund rather than the fund itself is that the Total International Index Fund is not tax efficient.

Well, that just changed! The fund is now going to carry half its portfolio directly in stocks, rather than as just the components of the other funds. This releases 50% of the foreign tax credit, which should help considerably with tax efficiency. How much does it help? My guess is that the 50% of the portfolio that's going directly to stocks is the largest 50% by market cap, and those tend to be the high dividend ones. But I'm not as familiar as international situations, so I don't know how that will go.

In any case, this is very good news, and reduces my desire to switch to the FTSE-all world Index, for instance, quite considerably.

Review: Tarzan of the Apes

One of the big attractions of the Kindle is the ability to load it up with old goodies for free or a nominal price. An early one was Tarzan (Kindle Edition)

Perhaps the sad thing about reading old books is that you'll never approach the innocence you had when you first read them as a child. For instance, as a child, I never noticed how much a product of his times Edgar Rice Burroughs was. He was racist, convinced of the superiority of the white race in every way. He was sexist, with the women in the stories only concerned about marriage, and constantly either saying that they were glad to have a man around or being told not to worry their pretty heads.

But the main character, of course, is Tarzan, and Tarzan is every bit as much of a super-hero as Batman or Superman is --- intelligent, strong, mobile, and possessed of incredible strength of character (despite his upbringing), Burroughs infused him with every bit of idealism he could find. In many ways, this original Tarzan is primal, skilled, and shy in a way that later renditions never managed.

All in all, I enjoyed the read, but fear reading the sequels, since the overt racism and sexism is quite a bit off-putting. Nevertheless, this is the original Tarzan!

Erding Radmarathon (not quite a century)

I woke up at 5, ate a piece of bread, and hurried out to the S-Bahn to catch the 5:24 train to Erding. This would be my first almost-century in Germany, so I didn't know what to expect from a German century. The first thing was that it's cheap: 8 Euros for the 154km ride. The second thing was that there's no SAG support --- unlike American centuries, the concept of having cars drive the route to help you in case you're in trouble would drive the cost up and be too environmentally unfriendly for a bike ride. Third, Californian centuries put chalk marks on the road to indicate the route, but here in Germany with narrow roads and frequent rains, the chalk would be washed away too quickly. Instead, the markers are arrows placed at intersection at about eye level. Overall, the placement was good --- there was only one marker I saw that was partially behind a bush.

The weather was warm, so much so that at 7:00am, before the start, I put on sunscreen and had taken off my leg warmers and arm warmers and put them in my saddlebag. When I first saw the route it seemed a bit flat, and indeed, I never had to put the bike into the granny the entire ride. However, it was very windy, so much so that when a paceline passed me, I hopped on it to get a bit of shelter. The paceline was going at 45kph, however, so after about 10 km I was forced to drop back. Fortunately, we were but 10km from the first checkpoint. We were all given little cards at the start of the ride, and at the first checkpoint and I found out why at the first checkpoint --- you're supposed to get them stamped. At the first checkpoint, I found the usual cycling food --- bananas, power drink, cakes, bread, but no porta-porties. Instead, cyclists would cross the road to use the bushes. (I didn't see too many women cyclists, so I don't know what they did)

The first checkpoint was at 45km, and it wasn't even 8:15 when I arrived. When I left, 5 minutes later a pack of riders passed me at what I thought was an acceptable speed, so I asked permission to join them and got an "of course." The group soon broke up and I found myself riding with a husband and wife team. The man worked for a pharmaceutical company, and was so strong that whenever we went up hills he wouldn't slow down at all, until his wife dropped back and he had to wait for her. At about 80km, however, I realized that I had made a mistake --- I was suddenly very tired, having burned all my matches for the day. I let them go ahead, and fortunately, the next checkpoint was at 90km. I suffered a painful cramp on the way there, but a sip of power drink and eating all my endurolytes made the problem go away, and it didn't recur.

I took a little longer this time, stretching myself, and drinking lots of power drink. But the feeling of tiredness didn't go away, and so I kept going. I felt really slow now, going around 20kph. I tried to hop on to a few pacelines here and there, but couldn't stay on them for very long at all. The bucolic scenery that had looked so pretty earlier today started to bore me, and the skies had become cloudy. And the wind was a constant annoyance.

Fortunately, the last checkpoint was at 124km. This was the most German of the checkpoints, since it served beer! I rested here for about 15 minutes and then went on, hoping the last 30km wouldn't be too painful. I went up the hills slowly and coasted down them as quickly as I could, but unfortunately, most descents ended with a sharp turn or a road intersection, which gave me no run-out. During the last 10km, the wind had gotten so strong that to add insult to injury, I had to pedal down the hills as well.

I arrived at the start/finish at 2:15, making it the fastest century I had still completed to date, but with about half the climbing I usually do for centuries, and feeling much worse than I usually do at the end of one. Nevertheless, at 96 miles and 1610m, it gave me a baseline for how out of shape I am this year --- too much flat riding has definitely taken its toll on me.

Review: The Last Unicorn

After reading the short story Two Hearts in The Best of the Year 2006, I had to go back and read The Last Unicorn again.

The story, for those who don't know, is that the Unicorn discovers that she's the last of her kind, and wanders of in search of what has happened to the rest of her kind. In between, she meets a hapless magician Schmendrick, a cynical woman who'd given up her dreams to live with outlaws called Molly Grue, and faces the dreaded Red Bull, who'd chased away the others of her kind.

The story is funny, full of songs and poetry (though perhaps not as well written as that famous fantasy trilogy), and filled with anachronisms, jumbling up the world of today, the world of yesterday, and the world of fantasy. Yet Beagle's use of language is so astute, so well controlled that we believe every word and let it guide us to its logical conclusion --- for though the Unicorn does fulfill her quest, it is not without cost, and unlike many other fairy tales, everything does not work out in the end.

A lovely, short read. Highly recommended. Heck, if you've read it before but it had been a while ago, pick it up and read it again!

Cultural Differences III: Messages Society Sends

On the way back from our romantic road trip, we sat in a train car with another pair of cyclists. My Kindle battery had drained, and we were in the mood for conversation anyway.

The husband, Hans, was quite an entrepreneur (unusual for Germany), having started several companies, and despite recent retirement, still sat on the boards of several companies. We got to discussing companies, behavior, and I mentioned how difficult it seemed to be to get people to switch jobs.

With the air of a man who was used to making speeches, Hans smiled and said, "What is the value of a life in society? In American society, the value is very clear --- commercial success is how everything is measured. When you look at German society, the messages are more mixed. For instance, when you look at the young people who are at the heart of the environmental movement here in Germany --- they've effected massive changes in German society. Most of them did not gain commercial success by these endeavors, but they were nevertheless very successful in their own way. Here, your friends are mostly defined outside work, and you don't socialize mostly with co-workers, the way Americans and American companies do. When I ran a company, I made sure that new employees were required to spend time on overseas assignment, perhaps a year or two. Many of them grew to enjoy the autonomy you get from being away from the head office."

Obviously, it would be a mistake to say that Hans is representative of his country, any more than I am a representative of mine (it would be very difficult to say which country I would represent, anyway). Yet many of his observations ring true to me. By and large, American society places a high value on individual success, and especially commercial success. While you do get the Ralph Nader or Julia Butterfly Hill, it is not clear that large enough groups of people are motivated sufficiently to join them in effecting large scale changes in American society, the way the environmental movement has done in Germany. Perhaps American society is too fragmented for such cohesive movements to spread. Perhaps race plays too great a role (as Paul Krugman's latest book points out), retarding any progressive movement's success.

Of course, the flip side is also true --- there's no other country that has managed to replicate Silicon Valley, and people like me wouldn't get to make observations like these without the dynamism of the American economy. But perhaps the price of this dynamism is high, and from an individual point of view, income mobility in the US is lower than that of Scandinavian countries, and the same as that of class-conscious Britain.

I doubt if the coming elections will give us a good debate about what kind of society Americans would like to have --- and that's a pity.

The Spreadsheet Asset Allocation Tool

Every so often, someone asks me to help with their finances. Usually, it has to do with asset allocation. I'm not an expert, but one of the things I know how to do is to use a spreadsheet. I usually open up a spreadsheet, and then perform a copy/paste from Vanguard's home screen, then open a second worksheet in the same file, and use that to compute asset allocation, and to see how far off things are.

I recently switched from a PC-based spreadsheet to one based on Google docs and spreadsheets. There are two reasons for this: first is that I ended up with so many different versions of the spreadsheet that I couldn't keep them straight between all the computers and files floating around. It doesn't help that I decided not to bring my Infrant RAID file system with me when I came to Germany, so I can't retrace some of my thinking from before, easily.

The second reason is the GoogleFinance function. This handy little feature lets me use one spreadsheet (instead of creating one per asset allocation period, which was what I was doing), only update the number of shares I have, and then have the asset allocation spreadsheet automatically recalculate. That way, like the big boys, I can rebalance every day if I wanted to. (NOTE: doing so in a taxable account is a bad idea!)

Unlike other financial bloggers, I don't blog anonymously, so I'm not going to show everyone my spreadsheet. However, I have constructed a hypothetical spreadsheet around a simple $100k portfolio with a 75% equity/25% fixed income allocation. The only unfortunate thing about this sample is that you can't download it or copy it or do anything interesting with it, but it gives you an idea of what I go through every asset re-allocation period. There are a few interesting things about this asset allocation, even so:

1. The portfolio isn't as tax efficient as it could be. For the purposes of capturing the foreign tax credit, it is best to hold the components of the Total International Index Fund rather than the Total fund-of-funds itself. Note that for domestic funds, holding the Total Stock Market Index is the right thing to do tax-wise, since as companies grow or shrink you don't pay the transaction fees for them moving from one market segment size to the next. (Unlike Small/Medium/Large cap categories, stocks don't usually move between countries)
   
2. The only alternative type investments is the REIT. I personally use a more complex mix to gain more diversity. However, for a portfolio of this size, if you break things up too much you lose efficiency --- you don't reach the Admiral shares level as quickly as you otherwise might.
   
3. Adding a value tilt is as easy as adding an appropriate value fund and adjusting the numbers in the asset allocation worksheet. I consider this superior to holding each of the components separately because you reach the Admiral shares faster (get lower costs), and it's simpler to track. Note that Bernstein recommends holding the components, but he normally deals with such large sums of money that getting the lowest cost share class is a given. The rest of us just aren't that lucky.

Disclaimer: The example spreadsheets and asset allocation are meant for informational purposes only. They are not meant as an endorsement of a particular fund, or to suggest that a particular asset allocation is the right one for you. Please do your own research before embarking on an investment program.

Review: Guardians of the Flame - Legacy

Legacy (DRM-free Kindle-compatible edition) covers 2 more novels in the series, about the next generation of "other-siders", most of which is Jason Cuilliane, son of the emperor and heir apparent. There's been a ton of fore-shadowing involving a sword in prior novels, but these two novels don't do anything related to that.

Instead, the first novel (The Heir Apparent) focuses on Jason panicking during a raid and running away. The rest of the party, of course, feels obliged to draw attention to themselves to that the Culliane heir doesn't get captured (this includes Karl abandoning the empire he built and turning it over to Barons). The net result is a series of big fights, and an conclusion that's perhaps no conclusion.

The second novel (The Warrior Lives) seems to me to be merely a wild goose chase. The only unexpected bit happens right at the end, but the pay-off is not worth the journey. Easy reading if you need a distraction, but I cannot really recommend it.

Chronicles of The Black Company (Books 1 - 3) Kindle Edition

This is going to be a different sort of review. It'll talk very little about the book itself, and a lot more about the Kindle edition of the book. Usually we don't do that sort of thing, but in this case, I feel that its quite warranted.

The Black Company is probably one of the most amazing fantasy series out there. It started with 3 books, and then later on expanded to 9. But not in a bad way (see Robert Jordan with his Eye of the World series). In fact, its so far away from Robert Jordan's style that a case can be made that these two series are diametrically opposed. Cook's writing style in The Black Company doesn't lend itself to long exposes of what his characters do with their hair, or skirts, or whatever, its pretty much just action, dialogue, and the bare minimum of descriptions to set the scenes.

And that's because there's a real story to tell. The Black Company tells the tale of a mercenary unit that is the very best at what it does, whether that is killing people, defending a city, or what not. Along the way, they get involved with high powered sorcerers and its a page turner to find out how they deal or don't deal with the various threats they encounter, along the twists and turns of the fortunes of the company. This isn't a high-fantasy novel in the sense that the only races in the world are humans, no elves, no dwarves, no halfings, but there IS magic, and magical monsters, though present, are uncommon. The powerful mages in the world are demi-gods and nigh-near unkillable.

The real meat of the story is that you do care for the fate of the company. The dialogue is witty, the characters seem real, and the adversaries are never as black or white as you'd like them to be. Its a fantasy novel for the mature audience, in short.

Now, onto the Kindle portion of the review.

The Kindle edition of this novel sucks, in a word. I've read many a kindle edition of books and this was the first one that I've found numerous typo's, type-set errors (where you see a word displayed twice in a row, or missing a word in the beginning of the chapter).

Having read the original paperback releases of the books, the beginning of each chapter that starts with a calligraphed word is accurate, but someone didn't do the conversion correct as the calligraphed word covers up part of that first word. So often you're left guessing what the word is. Its not hard, but it IS annoying. It becomes more of a problem in books 2 and 3 because Cook decided to make his chapters shorter, and so you get more missing words.

Still, for 9.99 and for what I think is one of the best fantasy series that exists, its still quite worth the money. If you haven't read the series yet, run and buy the dead tree version or the kindle version if you've got a kindle!

Salzkammergut Bike Route

Salburg Lakes

Radina's Photos

Ever since my last Salzburg Trip, I've wanted to explore more of the Salzburg Lakes area. There's not a lot of steep climbing there, so it's ideal for tandem cycling, so when the forecast gave me only a 30% chance of rain this weekend, I dragged Lisa out of bed and onto the train with the big bike on Saturday morning.

Joining us was Radina, a Bulgarian Physics graduate student finishing up at the University in Garching, near Munich. We met through Toy Town Germany, the web-site for English language speakers.

The train trip was uneventful, taking us into Salzburg's main train station right on schedule at 9:42am. The day started out beautiful, with high clouds but plenty of sun. We quickly found the Salzach river path out of Salzburg heading North. I had originally planned to take the same route I had taken before to get to the Seehamer See (minus a bit of climbing), but noted that the map I had indicated that the Salzkammer Bike Route started a bit further North from where I had departed the Salzach bike path. Radina had a high opinion of the bike routes, so we decided to explore.

Past the turn off I took, the bike path becomes dirt, and after about 15 minutes I saw a sign pointing off to the Salzkammergut trail. It was guarded by a gate with a ramp, however, so I took the time to ask some other cyclists in my halting German whether this was indeed the Salzkammergut trail. They told me yes, and that it was hard. Well, it couldn't possibly be tougher than the route I'd already found, so we gave it a go.

As dirt paths go, this part of the Salzkammergut trail wasn't bad, but fresh gravel had been laid all over the trail recently, which made it a bit sketchy here and there, even with the 700x32 tires I was running. The ramps were also a bit painful to negotiated on the tandem, but since we only had 2 of those to contend with, it wasn't too bad. We were rather grateful when pavement reappeared, however, since if it got steep, the dirt and gravel would make for tough going.

At the town of Anthering, the road started headed steeply uphill, not as steep as before, but since it was in the open instead of shaded, we all started sweating profusely. At one point, Radina had to stop because she had put sunscreen over her forehead, and the sweat washing that down into her eyes, must have been quite painful. It took less than 30 minutes, however, before we reached the hamlet of Modlham, and there the grade gave way to gentle rolling hills that were a joy to descend and climb. Radina was quite impressed that she had to pedal to keep up with us downhill since she had no trouble keeping up with us uphill.

Soon, we started a moderate descent into Obertrum am See, which was the lake I had visited before. We rolled along a bit on the familiar road, and when I saw the bakery in Seeham, we stopped, bought some lunch, and got permission to eat it at the swimming beach in town, which charged admission if you actually wanted to swim.

After lunch, we headed North again towards the Mattsee, and there in town, took a wrong turn and got off the bike route. Well, I stared at the map and couldn't quite figure out what was going on. Radina took the map and provided a second opinion --- that we needed to make a left somewhere before starting the descent. So we climbed back up to the top of the hill and there made a right turn before being reassured that we were on the bike route.

The signs were quite sparse, however, and soon we were lost again, heading into Neumarkt instead of heading directly to Strasswalchen. At this point, I started remembering that I had a GPS unit, and put it to good use. The detour to Neumarkt, however, got us to a supermarket that was opened all Saturday, so we bought a bunch of fruits, some drinks, stuffed it into our bags, and kept going.

In Strasswalchen, the bike route became well signed again, and we were taken past the Irsee, which was quite pretty, despite the overcast skies. We felt a few rain drops here and there, but it wasn't bad. Lisa started getting tired, and asked about lodging, so we stopped at every hotel along the way, but found that every place was booked. We were quite dismayed (especially when one of the places we checked had rooms but the man owning it told us he was too lazy to clean up the rooms enough to rent it) until about 1km from Mondsee, I spotted out of the corner of my eye a sign with beds pointing to the right, followed the driveway down to the end and found someone with rooms willing to rent it out for 25 Euros per person. With the beautiful view of the mountains (though we could not see the Lake), we took the rooms, took showers, had a nap, and then went to a local restaurant for a surprisingly inexpensive but filling meal.

I woke up at 6am on Sunday, feeling very good and ready to go. We ate almost all the food we had bought the day before, and then left around 8am to head into the Mondsee. Of all the lakes on this trip, the Mondsee is my favorite. We rolled along the lake, taking in the gorgeous morning --- the road was wet from rain the night before, but the sky was clear, granting us glorious views of the low clouds hanging around the surrounding mountains. We rolled along the single track road, and literally flew along it --- it felt so good and fast that at the top of a rise, I said to Lisa, that was so good, let's go back and do that stretch again. And so we did! Of all the touring I've done in the last few years, I've never immediately repeated a stretch of road, but this stretch was gorgeous and worth repeating right away while the conditions were good.

At the little village of Au, we made the decision to ride to Unterach to see the Attersee. Once there, we cut through a campground and walked to the water's edge to see another beautiful lake in front of us. Then we backtracked and headed onto the South side of the Mondsee. I had noticed markings on the map for a tunnel, and was quite nervous about it, but it turned out that the bike route included routings around the tunnel! First, we wound around a slide protection gallery (granting us a far better view of the lake than a car driver would get), then we weaved between a road under rock overhangs and the lake before plunging into a bikes-only tunnel. I remember being impressed by Austrian bike paths before, but this must have cost an enormous amount of money, and to see it first hand still impressed me.

Too quickly, we left the beautiful Mondsee behind, and headed over to Wolfgangersee, which Radina had built up as being quite the jewel of the area. Well, with all the hype, there was no way it could live up to it, but as we descended down into St. Gilgen, the views simply took my breath away! It was still early, so we took the opportunity to have a quick snack, and then rode through the tourist trap that was St. Gilgen, but did not make it all the way to the Abersee. We decided at this point that we should ride back towards Salzburg, since Lisa had a plane to catch the next morning and Radina was also saddle-sore, it being her first multi-day tour.

Back in St. Gilgen, Lisa ordered an omelette, I had a soup. We then headed out towards Salzburg on the big climb out of the lakes area. The climb wasn't as strenous as yesterday's, but it was quite a bit longer, though the views behind us were pretty. Nevertheless, there was quite a bit of traffic and we were annoyed by it until the bike path showed up. Once on the bike path, we climbed for a bit before descending and seeing the Fuschlsee from a distance. At this point, it got so warm that I swore that I would have ice cream in Salzburg, no matter what. A bypass route took us away from the main road towards Salzburg, but to our surprise once we were within 10km of Salzburg it was just down hill all the way in town.

Once in town, the GPS unit came into play again and we found the train station soon enough (though not without finding the wrong one as Lisa confused my instructions for "Hauptbahnof" with "Bahnof"). There, we bought train tickets, ate ice cream (I had 2!), and then got onto the train back home.

I've heard people talk a lot about terrain perfect for tandems --- if there's a tour made for tandems, it is this one. The climbs aren't long, and aren't particularly steep, and the rollers are a delight --- there are many hills you can just stomp up on your middle chain-ring (or big one if you're in shape --- we're not), and lots of gorgeous rollers. But most of all, the facilities are impressive --- you don't need reservations, and the route is mostly well signed (do carry a map, though!). This is an excellent first tour for anyone (there are more lakes we hadn't explored yet), and highly recommended for beginning cycle tourists or tandemists. If you are out of shape or just nervous about touring, there are luggage services that will do baggage transfer for you, as well as make reservations, provide support, maps, etc. But why give up your freedom? Pack your panniers, fill up your bottles, and ride!

Cultural Differences II: Appliances

Another interesting difference between Germans (and I'm guessing this applies to most of Europe) and Americans are the household appliances. For one thing, German appliances are small and cute. Our dish-washer, for instance, can do at most one dinner's worth of dishes, pots, and pans. This does mean you get to use the dishwasher every night, and also since the tablets hold the same amount of detergent as the US ones, the dishes get much cleaner.

The big difference, however, is that American machines (like the washing machine and the dishwasher) are optimized for speed and volume, while German machines are optimized for energy and water savings. (250 Euros a month for a 2 bedroom apartment is not considered out of line, even though German apartments are better insulated than American houses by and large)

The result of this is that the appliances are first of all expensive, and they are slow. A typical washing machine in the US will do a load of laundry in about 45 minutes. It would not be unusual for a German machine to take 3 entire hours to do the same load, with the same settings. The process by which it does so is entertaining --- turn on an American laundry machine and you will hear water immediately start pouring in and soaking the laundry. The machine will then burst into action, agitating and making a host of impressive sounds.

The German machine, on the other hand, will first run the water as well, but the process is gentle and slow. You can then, if you are patient enough, watch the water seep slowly down into your clothing. The machine will then spin for about half a spin, and then stop. If you didn't know better, at this point you would think that the power had cut off. But a patient man is rewarded by the machine spinning for about half a spin in the other direction and then pausing. My only guess is that the machines are modeling the fluid dynamics of the laundry system it's got loaded, and all that number crunching means that it can only run the motors that much before it has to pause to compute the next cycle.

Nevertheless, what comes out of a German machine is very clean --- so much so that many machines come with a "short wash" option --- meaning that instead of taking 4 hours for the computation to finish, it only takes 2. Our dish washer is similarly slow, and can take 3 hours to do an entire cycle.

As one might guess, as a result of the high energy costs (which are driven by environmentalism more than by necessity), most people don't use drying machines, but instead hang their laundry to dry.

The Perils of Ordering from Amazon.de (when you own a Kindle)

As many folks know, all it takes for you to be able to order Kindle books on-line even if you're overseas is a U.S. credit card with a U.S. billing address. That's what I've been doing all year, and it's worked very well. However, last Tuesday, when I tried to buy Hungry from Paris, I got the following dreaded message:
We could not process your order because of geographical restrictions
on the product which you were attempting to purchase. Please refer to
the terms of use for this product to determine the geographical
restrictions.

We apologize for any inconvenience this may have caused you.
This terrified me. Had I lost my Amazon.com privileges? Thinking that this was some nefarious IP geo-location at work, I asked my brother to try buying the book through his Kindle. (Since he's tied to my account, once he bought the book I should be able to download it) No luck. I IM'd a friend of mine who worked at Amazon US, and we walked through the problem. It turned out that I had recently bought a Rice Cooker from Amazon.de and had it shipped to a German address. This was a bad thing, because it also set my default one-click buy address to a German address for my Amazon US account. (I only have one-click buy turned on for the Kindle, since there's no way to turn that off on the Kindle)

This caused Amazon to think I was now in Germany (which I was), but once I deleted the German address, I could buy Kindle books again. Phew! I asked my friend why all this effort to link the German and U.S. accounts --- he said that there are people like me who buy books from foreign Amazon sites when they can't find them in the U.S. (I've done that once or twice, come to think of it) Nevertheless, this is something to watch out for if you bought a Kindle and are using it overseas.

Hotel Recommendation: Hotel De La Paix Montparnasse

I first visited Paris 10 years ago. Together with a friend, we explored many many hotels --- all of them were expensive, most of them were too noisy to sleep in, and my Lonely Planet guide was of no help. Until my friend picked up a brochure for Hotel De La Paix Montparnasse. This is a cozy little hotel in the Montparnasse area, right on the Raspail metro stop.

It's not very luxurious. However, it has one major feature --- rooms facing away from the main boulevard, with blinds that completely block out the light, and windows thick enough to eliminate the street noise. You can really sleep well in this hotel. I returned recently after 10 years, and the place hasn't changed. The staff is still courteous and friendly, and the rooms are as nice as I remember. The breakfast is kinda expensive (but this is Paris), but unlike many hotels, it's optional --- so if you're a late sleeper and are likely to have brunch anyway, skip it. Or just buy a couple of croissants from a bakery and eat it in your room for breakfast.

Since moderately priced hotels with rooms that are quiet are quite tough to find in Paris, I heartily give this hotel a recommendation. (For instance, we paid 97 Euros a night, while a friend who's staying at youth hostel is paying 44 Euros a night)

Review: The Guardians of the Flame

I first read about The Guardians of the Flame series in Dragon Magazine. That's because the premise of the series is that of a bunch of D&D players (I'm using D&D in the generic sense) who were transported into the world by their DM, ostensibly to find a gate back into our world so that their DM (who's certain that he'd be a powerful wizard in that world) could translate himself back.

When I saw that Baen had put up almost the entire series in E-book format for $5 each, I told my brother about the series, and it didn't take long before we had them in our hot little Kindles. Each volume is actually a collection of 2-3 novels in the series (the series started in the 1980s, back when a fantasy novel could be 200-300 pages without being seen as being too embarrassingly thin on the shelf).

The first novel dealt with the plight of D&D players who'd been translated into their player characters. They very quickly realize that these faux dark-ages worlds aren't all that fun to be in, and proceed quickly on their quest. The characters have quite a bit of tension between them, and not everybody co-operates (at least, at the beginning). As with almost every PC party that's ever existed, they get into trouble at nearly every town they visit, and have to run for their lives.

The first novel is quite good, and the ending of it, unsurprising enough, sets up the rest of the series, pitting our heroes against the slave-trade culture of the world they're in. The second novel deals with the idea that if you have a bunch of modern college students, including an engineer, in a faux middle-ages world, you can actually do a great job building a kingdom --- if enough of you know enough to make gunpowder, for instance, you could have a pretty good racket going. The implications aren't fully explored, however, in favor of more action adventure for the protagonist of the story, Karl, who's an impulsive Barbarian-type character.

The last novel of the first volume covers Karl becoming an emperor, after an former enemy's son tries to assassinate him. This is a typical sword and sorcery novel, with guns to complicate matters, but nothing that interesting. It's unfortunate that the characters show very development at all. All in all, decent enough entertainment, and worth $5, but fails to live up to the promise of what could be a very interesting premise.

The Paris Bicycle Transport System

 I first read about the Velib bike transport system on the New York Times website. Since we were there this past weekend on vacation anyway, we decided to try it out.

Paris Bicycle Rental System

The system is stream-lined for Paris residents and not visitors, so the visitor experience is quite cumbersome. Whereas a Paris resident would just get a membership card and swipe the card to check out a bike, the visitor has to buy a pass. 1 day passes are 1 Euro, and 7 day passes are 5 Euro. Since we used walking and the metro exclusively our first day, we bought the 1 day pass. And yes, you have to sign up for each of you. The big downer for most American tourists is that you pretty much need a European credit card to register for the system.

On to the process: you first buy a day pass (it's good for a complete 24 hours, so it makes sense to wait until you really need them). You sign up by going through both the touch screen and the key pad systems, choosing a 1 day pass, and keying in your PIN (yes, chip and pin systems are prevalent throughout Europe). You then select a 4-digit pin so even if you lose your ticket someone else can't just check out a bike in your name. You're then given a ticket --- you must keep this ticket or you won't be able to use it. I've seen at least one case where there was a ticket in the machine slot, because some hapless tourist signed up for it and left his ticket in frustration because he couldn't figure out the system.

Then you go to the other side of the vending machine and use the LCD menu there to pick a bike. But first, pick out a bike and note the post position. This is important because with the cheapness of the rentals, the bikes get abused and aren't all in the same condition. So check the tires for air, test the cranks to make sure they'll rotate, and check to make sure the bike has a chain and the brakes work. Then select "Other Language" on the menu, "Day Pass", key in your ticket number and pin, select your bike, and off you go!

When we were first in Paris, we looked around for a map of where all the bike racks and stations were. This turned out to be superfluous. Anywhere a tourist is likely to want to be, there's a rack. There was one across the street from our hotel, another one 2 blocks away, and 2 entire racks 4 blocks away. Anywhere we wanted to eat or visit, there was a rack on the way there, or right around the corner from there. Since the bike rentals are free for 30 minutes, you really have an incentive to pick up the bike at the last minute, ride it to your destination, check it in, and then check it out again when you need it. This keeps the bikes circulating, and the automated check in and check out system is a pleasure to use, if a little cumbersome for those of us with day passes.

The bike themselves are surprisingly nice riding machines, rather than the clunker bikes that I see on Google campus, for instance. That's because there's actually a 150 Euro penalty for stealing the bike (or for having your bike stolen), so there's an incentive to actually get decent bikes. The bikes are all 3 speed, hub-geared bikes with baskets and generator head and tail lights. In a city as well lit as Paris, that's all you need. Nobody seems to wear helmets in Paris, and I'll confess than neither did I. Paris is really flat, so 3 gears are all you really need, and I could crank as fast as I want on them. The bikes are heavy, tires and all, but it's all you would need for urban transportation and utility cycling.

There are bugs in the system --- for instance, at some bike stations even though there are bikes parked, the system doesn't acknowledge them and let you check them out. Some stations seem perpetually short of bikes. We did see a few trucks driving around with racks of those bikes, and those trucks presumably try to resupply bikes stations that have shortages, but they're obviously inadequate. A small number of bikes do have defects (missing basket, missing chain, flat tire, and lights that have been wrecked are the ones I saw), but by and large I could always find a working bike when I needed one. I would very much love to see this system adopted in American cities or Silicon Valley.

In any case, this is the cheapest way to travel in Paris (the metro system is perpetually overly warm, and costs 1.1 Euro per trip), so if you're in Paris and have a European credit card (or can arrange for a pre-paid card), please try it!

Review: Hungry for Paris

It was two days before my trip to Paris for a food-oriented visit. I had my hotel booked, I had my train tickets, but no restaurant reservations, and other than the memory of a street in Paris 10 years ago, no idea as to where to go. I went over to the Kindle store, typed "Paris" into the search box, and it came up with 2 results. A Rick Steve's guide (which I turned up my nose at), and Hungry for Paris (Kindle edition), which I bought (though not without some interesting complications which I'll write about later).

Normally, I try to write a review only after I've read a book cover to cover. But restaurant guides aren't intended to be used that way, so I'll cover how we used it.

Parisian Restuarant Trip

Lunch on Friday: we had lunch at a random Brasserie chosen by one of Lisa's co-workers. It had a decent chicken dish (with rice), but the Creme Brulee wasn't up to par. In any case, we didn't use the book for this selection, so it's irrelevant to this review.

Dinner: Au Pied de Fouet @ 3 Rue Saint Benoit. This is where having the Kindle version of the book shines. I searched for "Confit du Canard" and this was one of the restaurants that turned up. Reading the description, I was glad to find that it was a hole in the wall, which is the kind of restaurant I like the most. (I didn't bring a suit and tie, and refuse to dine in restaurants that require that I dress up --- I'm the customer, not the restaurant) We followed the recommendations of the book, and they were excellent. For starters we had the lentil salad and the soup of the day. Then, I had the Duck Confit (just to show how spoiled I am --- good as this was, I don't think it's as good as Cafe 5IVE at the Google Mountain View campus), Lisa had the Sauteed Chicken Livers, and both were quite good. Then I had the Creme Caramel, while Lisa had a fascinating cake that was also excellent. The cost: 32 Euros. What made our day was that the place being such a hole in the wall, we were seated at the same 4 person table as a French mother-son pair who were out to dinner, and the conversation was fun --- they let us sample some of their food, and even taught us French words and helped us translate --- this is not the kind of experience you will have at any old restaurant. Highly recommended. The staff also provided incredible service. We walked back to our hotel in euphoria, impressed with the entire experience.

Saturday Lunch: Lisa wanted to go to the Musee D'Orsay. And after a whole morning of culture, I knew I had to get some decent food. We went to L'Ami Jean, 27 Rue Malar at 1:00pm for a late lunch and this was the best meal of the entire trip! For starters, we ordered some sardines with salad, and it was excellent --- very delicate, but very flavorful. For lunch, I ordered the book-recommended Pentocles in a clay-pot. OK, the portion size was small, but the flavor was just outstanding --- I could not believe how good it tasted --- the sauce was intense, and I mopped it all up with bread. Lisa had an excellent Sea-Bass with the best crispy bacon I'd ever seen --- so thin you could see almost right through it! Cost: 70 Euros, and worth every penny. Heck, order more food and spend more and you won't regret it.

Dinner: Lisa loves crepes, so we looked in the book and found Breizh Cafe, 109 Rue Vieille du Temple. The savory crepes were excellent, with the Buckwheat done just right and the dry cider that came with it put the taste right into perspective. I thoroughly enjoyed it. The dessert, a chocolate crepe with chocolate ice cream, was delightful. The staff was also extremely friendly, and our waitress (a charming young lady) spent a lot of time trying to persuade us to visit her home in Brittany. Cost: 42 Euros.

Sunday Brunch: Lisa wanted to see Chinatown, and I had found Le Bambou at 70 Rue Baudricourt. We ordered Vietnamese crepe, some Dim Sum (called Vietnamese Ravioli in the book) and Pho. This was quite disappointing, and the only miss we found in the book. Lesson: don't trust recommendations of white guys for Asian food, even a white guy who's lived in Paris. Cost: 45 Euros.

Sunday Dinner: Le Petite Pontoise. I hadn't had Foie Gras yet, so I had to take this opportunity to order it. It was excellent. I had the Poulet Roti (Rotisserie Chicken) while Lisa had the Salt-Encrusted fish. The mashed potatoes that came with my dish was wonderful, and the chicken was well above average. Lisa didn't think much of her fish. The Creme Brulee, however, blew us away. (Yes, better than Google food --- which makes it outstanding) Cost: 70 Euros.

As you can see, 5 outings, 4 hits and 1 miss. And the costs weren't completely out of line either. In fact, the dining experience Lobrano recommends are really outstanding, and I doubt if we could have found them by ourselves. You can read the regular guidebooks and find all the expensive restaurants, but anyone can eat well for a lot of money. Eating well on the cheap is very difficult, and if all you have is a few days in Paris, this book is well worth the $8 Kindle price, or even the $16 dead tree edition. Highly recommended.

One more thing: the book also comes with lots of interesting essays about eating in France, and the author's experience dining in various places. So it's good entertaining reading, but seriously, I don't buy restaurant guides for entertaining reading, so even without this, it would have been worth the money. The fact that the author is actually a good writer who can tell a great story is a bonus.

Addendum: Note that there are few vegetarian and vegan options in the book. Look, if you're going to Europe to eat the local food, neither option is really part of the traditional cuisine, so don't bother trying to go vegetarian. So if you want good vegan/vegetarian food, go to China, Japan, and India. The Shaolin theory of vegetarianism still applies, five years after I first coined it on my first tandem tour of Europe.

Misunderstandings of the Efficient Market Hypothesis can be a serious threat to your financial health

Recently, someone on a financial planning mailing list I was on tried to sell active investing again, citing this post. He essentially bragged that he was beating the S&P 500, and repeated the tired old claims that the S&P 500 was essentially actively managed anyway, since companies shifted in and out of the index. I felt compelled to reply, and here's an abridged version of it:

1. Performance benchmarking --- As mentioned before, the S&P 500 shouldn't be your benchmark if your portfolio doesn't have the risk characteristics that are similar. The efficient market hypothesis doesn't say it's impossible for you to beat S&P 500 --- what it says is that you can't beat the S&P 500 without taking more risk in your portfolio! The important thing to remember is that firstly, investment performance is measured in decades, not years, and that over the same period, a brain-dead simple asset allocation (say, Vanguard Target Retirement 2045) can also beat the S&P 500 by 2-3 percentage points over the same period just by taking more risk --- say, by investing in international stocks. One of my favorite examples is the financial blogger http://pfblog.com. Early on, he claimed that he was doing so much better than the S&P 500, which meant that he was a genius. Then someone pointed out that he had to benchmark against a similar-risk portfolio, and it turned out that his out- performance wasn't there after all, and definitely in recent quarters it had been non-existent.
   
2. Investment Strategy. I'm going to do research and beat the benchmark. I actually know one person who succeeded in doing this --- he quit his day job and invested full time. But that out-performance came at the expense of his job performance as a software engineer --- after 3-4 years of doing this, he was no longer able to survive a typical software engineering interview in Silicon Valley. If you already have a multi-million dollar portfolio it might be worth while to do this. If you're still dependent on your day job, don't do it! Getting that next promotion is likely to be worth more from a long term career point of view!
   
3. Over multi-decade periods, I've seen more portfolio disasters from active management than from passive management. One extreme example was described in an earlier blog post.
   
4. As William Bernstein said during his visit to Google: Just because you believe in the efficient market does not absolve you of the responsibility to do the math and look at what makes sense." But when the math points you in a certain direction, it is sufficient to make small adjustments to capture some additional return ---there's no need to bet your entire nest-egg. Several years ago, I saw that the way Americans guzzled oil was unlikely to be sustainable --- my way of dealing with it was to add something like 5% Energy to my portfolio during an asset re-allocation (through Vanguard's Energy Fund --- I didn't bother trying to find a good active fund --- my office mate bought Brazilian oil stocks with much better returns --- he's satisfied with his return and won't stop bragging about them, and I'm happy that I did something --- it did give me a slight performance bump --- but I'm not that proud of it because I did so by taking more risk)
   
5. History. It is hard for most modern investors to imagine the world in the 1970s when Vanguard was founded. Back then, there was not a single index fund. John Bogle did an amazing two things: first, he introduced the index fund (as imperfect as the S&P 500 was, it's still very good, especially compared to the typically managed active index fund). Secondly, he setup Vanguard's corporate structure in such a way that there's no conflict of interest between the interests of the customer, and the way Vanguard was run. If he had set up Vanguard's structure the way Fidelity's structure was, he'd be worth vastly more money today --- at the expense of Vanguard's customers. It is this reason that John Bogle is a hero. Understanding this history (and why Vanguard is much less likely to screw you over in the long multi-decade time frame which is when investment success is determined) is the key to understanding why people speak of him in such reverential terms.

In any case, it's no coincidence that one of the most successful investors of all time (20% growth over 20 years) when he had to write an investment book for individual investors, still ended up recommending the tired old index funds. And to a large extent, I agree with Swensen --- in the world where there is every incentive on wall street to sell you the active story (none of the under-performing real life examples I used above were stupid people --- yet they made more money for their advisors than for themselves), going the passive, asset-allocation route is truly unconventional and is more likely to lead to success.