Monthly Archives: February 2012

Le Petit Prince

Le Petit Prince.

Last summer I visited an exhibition on occasion of the celebration of “2011 Year of Antoine de Saint-Exupéry”. Elsewhere he is mainly known as the author of “The Little Prince” (Le Petit Prince), however I learnt in that exhibition that in Toulouse he is mainly known as an aviation pioneer, flying airmail routes (for the emblematic Aéropostale based in Toulouse) and then for the French Air Force.

I guess that some of you had read Le Petit Prince early in your lives, I didn’t. I received the book as a present from former colleagues when moving to France and only finished it some weeks ago, being the first book I’ve read in French. Not bad for a start, as according to the Wikipedia it is the most read book in French language and was voted as the best book of the 20th century in France.

It has some idealistic messages or fine criticisms, to name a few:

  • “One sees clearly only with the heart. What is essential is invisible to the eye.”
  • A businessman who goes on “owning” stars and counting them not having time for anything else, not knowing what to do with them and having a very serious thought of him.
  • The geographer, proud of his profession, but who lacks any practical knowledge as “that” is the responsibility of someone else, the explorer in this case.
  • The concept of domestication being two-ways. I loved when the prince goes Il y a une fleur… je crois qu’elle m’a apprivoisé… (“There is a flower … I think she domesticated me …”) I believe this could be applicable to many pet owners.

I felt especially caught when the book first said “Les grandes personnes aiment les chiffres” (adults love numbers) and later when it went:

“Si les deux milliards d’habitants qui peuplent la terre se tenaient debout et un peu serrés, comme pour un meeting, ils logeraient aisément sur une place publique de vingt milles de long sur vingt milles de large. On pourrait entasser l’humanité sur le moindre petit îlot du Pacifique.

Les grandes personnes, bien sûr, ne vous croiront pas. Elles s’imaginent tenir beaucoup de place. Elles se voient importantes comme des baobabs. Vous leur conseillerez donc de faire le calcul. Elles adorent les chiffres: ça leur plaira.

(“If the two billion inhabitants who people its surface were all to stand upright and somewhat crowded together, as they do for some big public assembly, they could easily be put into one public square twenty miles long and twenty miles wide. All humanity could be piled up on a small Pacific islet.

The grown-ups, to be sure, will not believe you when you tell them that. They imagine that they fill a great deal of space. They fancy themselves as important as the baobabs. You should advise them, then, to make their own calculations. They adore figures, and that will please them.”)

When I read the first paragraph and before reading the second, I was already writing a remainder note to make the calculation…

In demonstrations, the range of people per square meter is between 2 and 3.5 (4 being “like a rock concert”). A square of 20 miles by 20 miles covers an area of 1,035 millions of square meters. Therefore, in such a square we could pack between 2 and 4 billion people, the population of the Earth at the time, yes.


Filed under Books, France

Monaco GP Walking Tour

This post is about something I missed in Monaco.

There are many cities where walking tours are offered. We have taken some of those and are quite enjoyable. Not only they guide you through the city, but you get to look at the right spots in the right places, you listen to some of the stories that make up the history of the city, etc. We generally regard those walking tours as good value for money.

I missed such a tour in Monaco (and if it exists, we didn’t see it announced in the guide).

Let me share with you how easy it would be to organise it.

I would pick the circuit of the Formula 1 GP of Monaco as a reference. By the way, I found no explicit reference to it in the guide or in the city, you need to make it up yourself from memories of having watched it or check it in the internet (where normally it is not displayed street by street).

"Monaco GP Walking Tour" following the Formula 1 GP circuit.

As I said, I would give the tourist a map of the circuit and off we would go:

  • Departure at the starting line of the GP at Boulevard Albert I: from there you could easily venture to the left to see the centre of La Condamine, Rue Princesse Caroline, maybe walking up to the Place d’Armes to see the market.
  • Back to the circuit you would just go ahead till the first curve and visit the church Sainte Dévote, which gives the name to the curve in the race.
  • Taking the avenue d’Ostende up, you could venture to the Carré d’Or gallery, which is actually recommended in the guides. There you can see all kinds of luxury items’ shops (most of those brands don’t even ring a bell to me).
  • Leaving Av. d’Ostende you would continue to the Av. Monte-Carlo where you could visit the Casino, take some pictures in the gardens, admire the cars at the front (that spot is one that apparently every Porsche, Ferrari, Jaguar, Maserati or the like has to pass by no matter where they go :-)) and take a drink at the Cafe Paris (all activities that are recommended in the guides).
  • Leaving Av. Monte-Carlo you would take the Av. des Spélugues where you would admire its curves, steep slope down and F1-like road borders.
  • Down at the Boulevard Louis II and prior to entering the tunnel, you could have a walk by the beach and see The Champions Promenade.
  • You would then go through the tunnel to appear again at the harbour, where you could admire the yachts.
  • Turn left at the Route de la Piscine (which last weekend was used for ice-skating) and end by having a final drink at the bar of the last curve, La Rascasse.

With this simple walk, of no much more than the 3.3km of the official Formula 1 circuit, you would have visited most of the highlights except for the Rocher, where the cathedral, the aquarium and the Palace are located.

If the walking tour was guided, someone knowledgeable of the city could tell you about the prices of houses, VIP residences, sums played at the casino, owners of biggest yachts, firms selling at the Carré d’Or, famous stunts and overtakes at F1 races history, etc, etc.

As far as I know, there is no such guided tour, above you have my two cents.

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Filed under Travelling

The Champions Promenade

While walking around in Monaco last weekend we discovered by chance “The Champions Promenade”, a walk by the seaside in Monaco with the footprints of some of the best football players in the History of the sport.

There, I discovered the “Golden Foot” award, different from the Ballon d’Or and the Golden Shoe. While the last two are awarded to the best player and top scorer of the year, the former is awarded only to active players older than 29 years old and can only be won once. Each new winner adds his footprint to The Champions Promenade, being the last one to do so Ryan Giggs.

I was happy to see nine former Real Madrid players in the promenade: Luis Figo, Hugo Sánchez, Roberto Carlos, Zidane, Ronaldo, Kopa, Puskás, Gento and Di Stefano.

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Boeing commercial aircraft discounts (update for 2011)

Some weeks ago, Boeing released 2011 results [PDF, 252KB]. The company reported revenues of almost 69bn$477 commercial deliveries and 805 net orders for its commercial aircraft. All these were widely reported by the media and mean a good year for Boeing.

Last years I wrote in some posts what was my estimate of Boeing discounts: the relation between what is announced by the press, what appears in its list prices and sometimes as backlogs and what it is indeed computed into the profit and loss account. In this post I wanted to update, if necessary, the figure I calculated for the average discount of Boeing.

Most of the necessary information can be found in its website. Boeing list prices can be found here.

The number of gross and net orders (after cancellations) year by year can be found here.

Last year deliveries can be found in the report of financial results. From there we can also deduct the figure of Boeing Commercial’s sales of services. That is not directly reported but can be deducted (all Boeing services-related sales are reported as well as Boeing Capital Corporation division and Boeing Defense’s “Global Services & Support” unit)

As in the post of last year:

  • I needed to make one assumption: new orders come with a 3% down payment in the year of the booking, while the remaining cost I assumed that was paid on the year of delivery (for simplicity I didn’t consider more intermediate revenue recognition milestones linked to payments, the 3% figure was taken from the AIAA paper “A Hierarchical Aircraft Life Cycle Cost Analysis Model” by William J. Marx et al.). [1]

Having put all the figures together, the calculation is immediate. Boeing Commercial Aircraft revenues in 2011 (36,2bn$) are the sum of:

  • the discounted prices times the delivered aircraft in the year (including possible penalties from delays),
  • less the down payment of the current year delivered aircraft, as the down payment was included in previous years results,
  • plus the down payment of current year net orders (this year’s this calculation was a bit trickier as it included 737NG deliveries BUT 737 MAX orders),
  • plus services revenues.

The discount figure that minimized errors last year was 41%. Using this figure, the error obtained this year in relation to Boeing Commercial Aircraft reported revenues is 0.1%. That is a little higher discount than previous years (39% for 2010 and 38% for 2009). The only explanation for that would be the built-in penalties for 787 and 747 delays into revenues plus the launch of a new aircraft, 737 MAX.

Thus, the updated discount for Boeing commercial aircraft is 41% (!).

[1] Last year, I received a comment from the analyst Scott Hamilton on the level of downpayments. He mentioned they could reach up to 30%. I tried this time to compute the calculation using that input, but the figures of discounts to be applied each year to minimize errors are not consistent, thus I stayed with the 3% used in the above-mentioned published paper.


Filed under Aerospace & Defence

Start-up Nation

Coming back from a trip to the USA, my brother gave me the book “Start-up Nation: The Story of Israel’s Economic Miracle”, by D. Senor and S. Singer [242 pages].

Start-up Nation, by D. Senor and S. Singer

The authors try to offer some hindsight and plausible explanations behind the fact of Israel being such an enterprising nation, which can be measured by the number of technological companies it has, the proportion of Israeli companies listed in NASDAQ as compared to other larger countries, its tremendous GDP growth since its creation, the VC investment per capita (above 250$, x2 times than second country in the list, USA) or the civilian R&D expenditure (4.5% of GDP).

They analyze different issues throughout the chapters of the book: questioning of hierarchical orders, assertiveness (what they call chutzpah), responsibilities handled while in military service, technical training at the military, creation of clusters, etc. Some of these aspects could be learnt and applied to other countries and that it’s why I would recommend the book. Some others may lie behind Israel’s special situation and politics, and thus not easily transferable.

What struck me the most is the large influence awarded in the book to the role of the military. Let me summarize some of the ideas:

  • There are several elite corps in the Isreal Defense force. Not only military service is compulsory (except for the haredim or the ultra-orthodox), but apparently the military does a long-term forward screening of next waves of recruits. They have interviews with them, they have access to their academic merits in high school, so they get to select the best qualified for certain corps, this in turn is also a recognition for the “candidates”.
  • These elite corps offer a highly valued training and experience (see the Talpiot program). Training in a broad variety of subjects from technology to logistics, very valuable for a future career. The Israeli Defense Force also counts with a very low ratio of high officers, thus delegating much of the responsibility for decisions (sometimes life or death ones) to young officers.
  • Once finished with the military service and university studies (45% of Israelis attended university), companies recruiting future candidates give not so much weight to academic merits in the university but to the military unit of precedence and the experience the candidate obtained during those years of service.
  • Democratization offered by military: since the service is compulsory it continuous to offer Israelis exposure to people from different backgrounds.
  • Life-long reserve service: once they have finished the service and go to pursue a civilian life they are still part of the reserve. In Israel, this means gathering every year for up to a month to train or perform active duty if the country is at war. This creates strong bonds between people from the same units (imagine having not a diner of ’81 class every second year, but 4 weeks every year). As they grow older, they do have a close contact with people in every rank of society. They’re truly no more than 2 or 3 degrees of separation to one another in the whole of Israel.

It is definitely an interesting book to reflect on many issues and take some ideas that can be transferable to other situations than that of Israel.


Filed under Books

Stocks & media hype

Last Friday after US stock markets closed I went to check the performance of the portfolio and meanwhile saw some headlines for business and general online papers: “Worst day of 2012“.

I didn’t feel that the day had been especially bad regarding stock markets. Both the Dow Jones and S&P 500 fell -0.69%, which indeed had been the worst day so far in 2012, but so far both indices had returned over 7.5% and 5.5% in the first 5 weeks of the year. So, I guess that what wasn’t the norm was the positive trend with only about 3-4 bad days so far.

S&P 500 in 2012 through February 10.

I went further and compared the -0.69% to 2011 numbers, in this case only with S&P 500.

How many days did the index go below -0.69% in 2011?

64 days out of 252 trading days, that is 25% of the time. The index went up more than +0.69% for other 67 days (27% of the time). It went down but less than -0.69%, 51 days and up but less than +0.69%, 70 days. Quite an even distribution.

So, compared to 2011, a market move of 0.69%, up or down, was rather the average. During the whole year the S&P 500 returned barely 0%, so it’s true that 2011 wasn’t a particular good year, and it was as well especially volatile, indeed the average move along the year was ~1.04% and the median was 0.74%, either positive or negative.

S&P 500 in 2011.

This is just to point something not new: Mr. Market’s moves coupled with media hype aren’t good companions for taking investing decisions.

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A reflection on Stonehenge & Machu Picchu

I remember that during our trip to Peru in 2009, we used to hear a great many positive things from tourist guides about the Incas, or better the people of the Tawantinsuyu Empire (the Inca being just the king of the empire).

The guides used to praise their mastery in agriculture, astronomy, architecture, engineering and many other disciplines. While that civilization reached certain degree of advancement and the wonder in Machu Picchu site gives account of that, I had the parallel thought while being there that at the same time in Europe big cathedrals were being built full of arcs, domes, Leonardo da Vinci was diving into all kind of sciences, etc. The roofs in buildings at Machu Picchu were made of wood, there were not stone arcs or domes, and that is why today you cannot see trace of them.

During our last trip to England, I had a similar experience while visiting Stonehenge. The guides praised this site as being the most important prehistoric construction in Europe, which may be true, but then again I couldn’t avoid thinking of the pyramids at Giza, which we visited about a year ago.

I am no historian, thus take my next reflection as what it is: a reflection of a tourist :-).

I guess this can be seen as positive outcome of globalization understood as “global relationships of culture, people and economic activity”. I guess that by the year 2,500 B.C. the trade between different regions was much smaller than today and less exchanges of cultural and architecture best practices took place: thus you could have about at the same time the pyramids being built in Egypt while the stones at Stonehenge being put up, both being the state of the art in each place.

About 4,000 years later, the state of the art in construction building we can say that was harmonized between Middle East, Northern Africa and the whole of Europe, including the islands, and you had for example the Cathedral of Salisbury just few miles from Stonehenge being built around 1,250 A.D. , two centuries before Machu Picchu was built in a continent not yet affected by such globalization.

This reflection just related to architecture. Think of all other types of exchanges that take place from agriculture to medicine, sciences and arts… so much for the goodness of globalization.

Some pictures taken in those four sites:

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Filed under Travelling

The march toward fiat money

Fiat money is “money that derives its value from government regulation or law. The term derives from the Latin fiat, meaning “let it be done” or “it shall be [money]”, as such money is established by government decree”.

The different types of money along history can be seen in this entry from the Wikipedia:

“Currently, most modern monetary systems are based on fiat money. However, for most of history, almost all money was commodity money, such as gold and silver coins. As economies developed, commodity money was eventually replaced by representative money, such as the gold standard, as traders found the physical transportation of gold and silver burdensome. Fiat currencies gradually took over in the last hundred years, especially since the breakup of the Bretton Woods system in the early 1970s.”

I found an interesting graphic in the book “This Time is Different” (C. Reinhart & K. Rogoff) where you can see how during several centuries governments debased or decreased the content of silver of its currency in order to get over heavy debts. The trend in the graphic seems to point at the “inevitability” of fiat money.

The march towards fiat money.

These debasements of course created inflation, which is nothing new, only the means have changed, as Carmen Reinhart and Kenneth Rogoff say in their book:

“[…] the shift from metallic to paper currency provides an important example of the fact that technological innovation does not necessarily create entirely new kinds of financial crises but can exacerbate their effects, much as technology has constantly made warfare more deadly over the course of history.”

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