On Spending While Learning, & on Paying for Education

A quick summary of my opinion on the topic. Education is one of the most important things to spend time on; and definitely worth strategic money investment.

Education should not be overpriced. So I can’t say that to spend hundreds of thousands on a piece of paper is worth it. It may be, or it may not.

Real education is often worth it. In the modern competitive world, highschool education is required. College education is required. There are exceptions, where college dropouts are successful, however such strategy is not generally recommended. College teaches you how to pursue a single objective (graduation) for 4 years. College teaches you social skills.

Statistically, PhD’s don’t pay for themselves: the opportunity cost and overall cost of a phd is *not* recovered throughout the lifetime of the individual, so it is not recommended. Same probably applies to Masters degrees. However, masters in business, statistics, or economics sounds generally worth it.

MBA pays for itself, and is recommended.

I generally recommend spending small amounts of money ($10’s or $100’s) on single (non-degree) classes. Examples are: salsa classes, language classes, udemy.com classes on using excel, accounting, reading financial statements, css tutorials, etc. Spending a small amount is motivation to learn, to get something out of that class. Spending also means that you hope the learning resource is of higher value than a free resource.

South Africa’s murder statistics in face of Covid-19

Have you seen South Africa’s statistics on covid-19? They are brutally enforcing the lockdown – arresting people for not wearing masks – and not only reporting “no excess deaths”, but it looks like they are reducing deaths from all causes. Am I crazy, or does it look like their lockdown is reducing violent crime, reducing people’s opportunity to kill each other for petty reasons? South Africa is second-worst in the world for murder statistics. They may consider going on a permanent lockdown to save some more lives.

On naming (in software)

This is a piece of a conversation that took place elsewhere, a commentary that I think people might find generally useful – therefore, I’m posting it here.

Just for the record, the reason `withassets` is one word (I understand it’s not very English) is because (1) “with” is one syllable, and (2) it’s a single token.

On counting syllables: I prefer names that are short, while still being descriptive. Previously, I named something “more notes” when some reviewers favored “additional notes”. Generally, I think 2-3 syllables is a good length for a name. Good examples: facebook, instagram, google, sprokets. Bad examples: wikipedia, asset pipeline.

On lack of underscores: an underscore is safer than a dash (which is a mathematical operation), but it’s still a special character that separates tokens. I saw a client database where table names were just a-z letters, no capitalization, no other chars. While other readers ridiculed that choice, I found it interesting. `withassets` is a sub-environment so to say, and it’s one thing. It’s not separable into “with” and “assets”. If there is ever a need to have `development_withcache`, `development_withssl`, splitting environment name by underscore clearly gives you the major and minor parts. Introducing an underscore in the middle of a token may require more complex parsing.

Useful Financial Ratios

For a class, I was given the task of putting together and analyzing some financial ratios for a company of my choosing. This assignment proved more useful than I anticipated, and I’d like to share the idea with you.

This is perhaps the first time fundamental analysis made sense to me. Compiling all of the following financial ratios, for a publicly traded company, for the last 4 years (because such data is freely available on Yahoo Finance) or quarters, gives the observer a pretty good view of where the company is going.

More as a reminder to myself than anyone, I’d like to list some useful financial ratios here, and come back to them the next time I perform fundamental valuation of a company.

Profitability ratios

Profit margin (net profit as percent of revenue)

return on assets: net income / average total assets

price-to-sales ratio: price per share / annual sales per share

price-to-book ratio: rice per Share / Book Value per Share\

Dividend yield: Dividend per Share / Price per Share

Dividend payout ratioDividend / Net Income

Return on equity: Net Income / Average Stockholder Equity

Liquidity ratios

current ratio: current assets / current liabilities

quick ratio: (Current Assets – Inventory) / Current Liabilities

Account Receivables turnover ratio

Liquidity vs solvency: liquidity is the short-term concept, solvency is long-term. Liquidity means ability to meet short-term cash needs, such as payroll. Solvency means being long-term commercially viable.

Solvency ratios

average collection period

inventory turnover ratio

average sales period

The solvency ratio (a company’s after-tax net income divided by its total debt obligations)

Market valuation ratios

debt to equity ratio: I believe, debt / equity

Interest coverage ratio: EBIT / Interest Expense

Earnings per share. This info is often pre-computed for you, per fiscal quarter

Market valuation. Cost per share times shares outstanding. This tells you the type of company: large, mid or small? The company plays by different rules based on its size.

Profits without prosperity

Currently reading: https://hbr.org/2014/09/profits-without-prosperity

It’s interesting how the argument is that share buybacks allows executives to collect handsome profits, without distributing the same with the working people. The article, and the video, explain the idea nicely.

I can’t help but wonder, what are the larger social, political and economic implications that will materialize because of the ongoing crisis? It seems likely that some changes – favorable or unfavorable to the general public – will attempt to be implemented during this tremulous time.

We already have the request to suspend constitutional rights due to the coronavirus:  https://www.rollingstone.com/politics/politics-news/doj-suspend-constitutional-rights-coronavirus-970935/  One can only wonder, what is coming next.