Posted by: Richard | April 19, 2010

Thames Path: Day 2

When spring comes, life feels really good.  Today was my second day of spring, and after yesterday’s incredible bike ride, my wife and I got our runners on and went for the second day of the Thames Path, from Tower Bridge to Putney Bridge.

We dawdled in the morning getting ready, finally leaving the house at 9.30.  Thankfully much of the tube was open, a great change from a few weeks back where it was impossible to get to Putney without several buses.

It was sunny and hot, which meant we needed sunscreen, of which we had none.  Being out rather early on a Sunday morning, Boots was still closed and Tesco hadn’t stocked up for summer yet and had no sunscreen.  We assumed we’d see another Boots en route, so decided to continue on our journey and get to Tower Hill.

This days walk along the Thames is magical, and a recommended day out for tourists to London.  Starting at Tower Bridge, we saw: the Tower, Tower Bridge, The Gherkin (across Thames), Tate Modern, St. Paul’s (across Thames), South Bank Centre, The London Eye, Houses of Parliament, Lambeth Palace, Battersea Power Station, Battersea Park (my favorite park in Central London) and Wandsworth Park.  En route, you pass the beauty of 20 bridges.  I’m sure I’ve missed some of the beautiful sights along this walk.

Alas, without sunscreen, we got a little bit too much sun (though not a burn), which resulted in a 90 minute nap when we got home.

Here is the link to the Thames Path Day 2 route: http://www.livestrong.com/loops/westminster_day_2__thames_path__london_bridge__putney-v1RHvj16ig/

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Posted by: Richard | April 18, 2010

Cycling in the Chilterns: Amersham Circuit

Life is grand when spring arrives.  Up early and on the train for an early ride around the Chilterns.  First time on my bike in 6 months, and I clock up 50 kms on country roads, through farmer fields and up and down hills.

The first 5-10 km had me wanting to scream aloud with pleasure.  At several points, I was giggling to myself as I went between fields with farm animals and birds tweeted overhead.  The smells of the countryside and spring were simply too good.

As the day went on, the joy remained, though truth be told the last 10 km’s had me less energetically joyous, though still remarkably joyous for a body adjusting to a long morning in the saddle.

I just rode my bike in a circle, and named it The Amersham Circuit The route is here: http://www.livestrong.com/loops/amersham_chilterns__amersham_circuit-2Ld1XbKJwV/

It’s a nice ride, with a few bits on busy roads, but a lot on small country lanes.  There are a couple of really steep hills (15%) and the roads have some potholes that are hard to see with the trees and the shade.  The last main stretch up Latimer Road was a really poor road, and I wish I had a mountain bike to get through it.

I am already excited for next weeks ride!

As we prepared to take off on Wednesday evening, I was lamenting that I was on the 19.20 AirCanada service to London, and not the later (21.00) BA service.  I like the later service as I can get a bit more sleep.

Settling into my seat, I realized the flight was full and that they were bumping people to other flights.  I was happy to be heading back to London and was not interested in a free voucher to stay another day.  This was a great decision, I was soon to realize.

At about 19.20, the captain came on the PA and said “The UK has closed all of their airspace because of a volcano eruption in Iceland.  We are going to have to wait a minute while we find a new route into London.  This could be a few minutes or a lot longer”.

At this point, I didn’t know what volcanic ash could do and thought maybe it was due to visibility.  While many others got angry at the airline (which is unfair, they cannot land if they are not allowed to enter UK airspace), I got tucked into a movie and a bag of dill pickle chips.  Not a bad way to spend some time.

About 20.30 our flight finally got approval to head to London, but with a different route that bypassed going over Iceland.

The flight was a bumpy one, with 4 air sickness bag in the seats adjacent to me (my row and directly in front and behind).  Even I felt sick during the flight, and refused the meal when they came out much later to offer food.

I awoke as we came close to London.  As we descended, the pilot said that as of 12 noon, Heathrow was shut down and no connecting flights would be leaving.  As it was, we were lucky to be allowed to land, one of the last flights to land at 12.02.  Later that night I would realize how lucky.

There was chaos in the terminal as people were frantically trying to find how to get home or on vacation.  I lugged my suitcase and my bike box around and made my way home.  I thought everything would be fixed by evening.

Later that night, while reading the news I read that the later BA flight from Calgary to London had been forced to turn back.  It was scheduled to leave 30 or so minutes after we actually departed.  I felt very lucky.

Now here I am 3+ days later, and I am really happy and lucky I was on the Air Canada flight.  There is chaos in London and many colleagues are on holiday and unable to make it back to London for Monday.

Posted by: Richard | March 22, 2010

Thames Path: Day 1

After a gruelling semester at LBS, my wife and I were eager to get outside and get a nice walk in.  Although many people think that London is a giant urban city, it is actually one of the greatest cities for a walk, with abundant trails and parks in the city.  Adding to the nice walking in London, smart planners limited development on a ring of farmland surrounding London, meaning that a 30 minute train ride has a walker in the idyllic countryside with country pubs, farms and friendly locals.

With the countryside still a bit muddy, we started the Thames Path, a path I have walked parts of, but never completely.  The Thames Path is a 180 mile walk from the Thames Barrier to the source of the Thames, far inland.

Due to the work being done on the Tube and DLR, we added about 5 miles to the first day of walking, starting in Limehouse!  We picked up our friend Eric at his flat near Limehouse and proceeded to Canary Wharf, where we got really good coffee in an Italian coffee shop staffed by Italians.  A good start.  We walked through Canary Wharf, with Eric (a former Calgarian) comparing it to Calgary.  An apt description for a bit of a surreal place.

We walked down the Isle of Dogs, through Millwall, home to what I have been told are the most rabid football hooligans in England.  We didn’t see any hooligans, but we were surprised by the number of 20-somethings still dressed in their finest from the night before smoking on street corners and on patios (it was 10am).  As we passed one young lady in a short mini-skirt, she was yelling into her cell phone about how boring the guys she was with were.  A more expletive-laden outburst I haven’t often heard.  It was a bit strange as the guys were right beside her, smoking to beat the bands and unconcerned with the woman’s constructive criticism of their personalities…..We moved quickly and I decided to keep my camera in my satchel.

We finally got to the tip of the Isle of Dogs, and walked under the Thames through the Greenwich tunnel.  Nothing special.  Coming up the other side, I had forgotten that The Cutty Sark had burned a few years previously.  I had toured it in 2000 and enjoyed the tour.  Hopefully the restoration goes well.  As the rest of the walk to the Thames Barrier is through industrial estates, we hopped on the 180 and had a 10 minute bus-ride to get us near the start of the walk.  We once again experienced the ingratiating friendliness of East London on our bus ride, as expletives cascaded down from a heavy-set old man who was dissatisfied with how long it was taken a woman to get on the bus.  The fat old man calmed down once the bus started moving, but I was getting a distinct impression of East London not being the gentile community I had read about in Dickens.

Arriving at the Thames Barrier, I was happy.  I have long loved the barrier, as it is truly beautiful to see first-hand.  After snapping 20 or so photos, we continued on the proper Thames Path.  This section of the walk is along the river and through an assortment of junk yards, industrial estates and vacant land.  My wife (much more observant than I) noticed the number of shopping carts in the mudflats on the Thames.  We wondered how many we would see on the walk, but gave up counting after counting 15 in our immediate eye-sight.

As we approached the Millenium Dome (a £500 million boondoggle for the government), the path begin a series of diversions that would keep us from the Thames.  There is a lot of work going on in this part of the Thames, and it seemed every one section on the Thames was contrasted with two or three diversions onto major roadways or other streets nearby.  An interesting view of a different part of London, but definitely not the Thames path we expected.

Coasting into the midway point of Greenwich, we decided to have lunch at the Trafalgar, a fine old pub with lovely views over the Thames.  A colleague of mine had his wedding here in 2001 and it is still an excellent place to relax after 4 hours of walking.  We ate very average pub food (unexpected) and didn’t dawdle as we were eager to get back en route.

The next 90 minutes of the walk were in and out of walkways on the Thames and frequent diversions onto residential streets.  This is not a highlight of the walk, and thankfully we were blessed witty repartee and were not bored by the lack of excitement in the walk.  One notable bit of excitement came out of the blue when we stumbled on a hobby  farm en route.  We stopped to look at the piglets and wave to the turkeys (an uglier bird I haven’t seen).  We quickly resumed our walk, as we were eager to get home to a nice dinner.

The last 500m of todays walk was incredible.  Approaching Tower Bridge, life springs to the path with restaurants, shops and tourists snapping photos of Tower Bridge, with the Tower and Gherkin behind.  This is a grand finale of the walk, and a good end to the day.  We had sunburned faces and tired bodies from our first outing of the year!  Though the walk was average, it was so nice to get out for a walk, have some sun and see a new part of London that we were pleased and tired on the bus ride home.

Here is the route we took: Thames Path Day 1 Route

Posted by: Richard | March 18, 2010

The first semester

Wow!  What a wild run this has been.  Coming back to school in London, I assumed that I would have time out for dinner and drinks with friends, weekends at galleries and maybe a couple of cheeky trips to Europe to sample a different culture.

How wrong I was.  In coming back to school, I have had to make significant monetary sacrifices: paying tuition, living in central London, foregoing my salary.  These all result in this being a very expensive year of education (though one I still ardently believe will pay off 10 to 1).  Based on my  investment, I’m not here to waste my time, and work hard to complete all the readings, case work, group work and projects.  Thankfully, the rest of my class is the same, which makes the program very engaging.

My focus on getting the most out of this year has resulted in a life that sees me either at school or in my office at home.   While I try to take a couple of breaks each week, these usually end up with me choosing a supermarket 30+ minutes away as a means of ensuring I get some fitness and a break from class.  I have worked hard to have a dinner out with my wife and beers with classmates, but I know I haven’t had anywhere near what I expected.

As spring descends upon London it is nice to finish this  first semester and feel comfortable with what I have learned and how I have applied my knowledge.   Going forward, my course load will be reduced by one course a semester.  This may not seem like much, but that one course is 3 hours in class + 5 to 8 hours out of course a week.  I am going to relish time spent with my wife, my friends and my classmates in the pubs, at restaurants, at galleries and in the hills, walking and enjoying the English spring weather!

Posted by: Richard | February 20, 2010

Diversifying Alberta’s Economy – Update

I had a couple of comments that I missed one giant idea in my previous post on what to do to make Alberta better: Education

I agree, I have been negligent in that omission.  While the University of Alberta is a good school, it is not even a national leader, let alone a global leader.  Alberta’s other main school, The University of Calgary should be an international leader in some disciplines of engineering, geology and business.  It is not, and it is worrying that it isn’t.

I look at The Haskayne School of Business at the U of C and I see a start to make it a leading business school.    Dean Leonard Waverman (from LBS – where I am currently studying) had am ambitious start in 2008, with ‘Commodities, the economy and money‘ conference, which was an inspiring event with true global thinkers.  Bringing leading energy economist Phil Verleger was another stroke of genius (though I’m not sure how much he is actually teaching).  While these are hopeful green shoots, I don’t know if more is coming.  Looking at the faculty, I don’t see a lot of thought leadership that can change the U of C quickly.

I don’t expect the government to solve this, but there need to be some big thinkers at Alberta’s Universities who are committed to building great organizations that bring the world’s best and brightest to Alberta and fill our future labour needs.  It won’t happen overnight, but we need to start.

Posted by: Richard | February 15, 2010

Diversifying Alberta’s Economy

A recent Globe and Mail article entitled “Can Alberta Redesign Their Own Economy” by ATB Senior Economist Todd Hirsch asked a very important question: How can we eliminate the boom and bust cycle of the Alberta economy?  Alberta is a province that has been blessed with tremendous natural resources and needs all hands on deck when commodity prices are high.  Unfortunately this means that there are few secondary industries for workers to turn to when the commodity prices drop.

Hirsch makes a key point that government probably can’t help solve this problem.  They have tried in the past, however the results have been less than inspiring.  The market demand for labour means that secondary businesses either have it very good in commodity downturns or cannot find workers during a commodity upturn.  No amount of government incentive can change this fundamental fact.

Hirsch believes the key is to encourage entrepreneurship in the province.  This makes sense, however ignores that many, if not most, of the recent entrepreneurs have commodity focused small businesses.  These entrepreneurs are not diversifying the economy, they are merely changing the employment structure.

In my view, there is a different solution for Alberta, and that is to get more people to move here.   Why do we need more people?  Without more people we cannot maintain a diversified economy.  Other industries and businesses need to know that their talent will not be hoovered up in each economic upswing.  To do this, we need to have a bigger economy with more people.

As an anecdote, I know many people who were employed in completely non-related industries to energy in the late 1990’s and early 2000’s.  These were rare people working for organizations that had no sales in Alberta and were completely exporting their knowledge and products.  Alberta was a great place to be in the 1990’s, as companies were able to find talented people that were paid competitively.  With the boom in oil and gas, these companies have now found it very hard to compete for labour.  As the boom started, energy related companies could offer 15% – 25% raises for the same role.  Our company has routinely recruited from industry stalwarts such as: banks, insurance companies and global software companies to name a few.

It has gotten so bad that I cannot think of anybody not employed in a job that isn’t related to the energy industry right now.  These jobs have been transferred out of Calgary to places such as Toronto, America and overseas.  While the boom has made Alberta richer, it has also made our future riskier.  We are only an energy economy, and while that is a great place to be in a boom, it is devastating in a bust.

It’s great to say “we need people!”, but what are we doing about it?  In my view, only a little bit.  Alberta competes in the global race for talent on high wages and ease of purchasing a home.  We are doing OK, but Calgary is a bit like St. Louis or Denver.  A nice place to live, but not a premier destination to go and work, such as San Francisco, New York City, Toronto or Vancouver.

I think for Alberta to move from a good place to live and make a buck into a place that routinely recruits the best people in the world we need to look at what makes a great city, and steal some of their ideas.  Specifically I think we need diversity.  Alberta has some of this, with a wide range of nationalities and a very tolerant culture.  But diversity doesn’t just mean languages and nationalities, it also means having people doing different jobs, having different backgrounds, education, values and goals.  Looking at Calgary, I actually think that despite the different nationalities in the city, we are a city with a homogeneous background.  Calgary is full of people who work in the energy industry with similar training either through technical colleges, business schools or engineering programs in Western Canada.

I think diversity manifests itself with an artistic community, local shops, great independent restaurants, entrepreneurs and big community events (like Montreal does in summer).  If we could add these characteristics to what Alberta already has, I think we can become a leading global city full of engaged people with a fantastic overall quality of life.  This will bring more and more people to Alberta, thereby strengthening our economy and making us one of the select winners in the war for talent.

Posted by: Richard | February 10, 2010

Regionalism and investments

A great thing about being at London Business School is the diversity of intelligent people.  Sloan Fellows mimic this diversity, with over 20 nations represented bymy 52 colleagues.  This means that instead of wondering “what do they do in Asia, Africa, Latin America, Europe”, I can ask business leaders from those countries, who just happen to sit beside me in class for 6 hours a day!

I’m interested in globalization, and I have wondered whether it was affecting how we invest our money, specifically equity investment.

My starting assumption was that people around the world were investing in global companies on global exchanges (Tokyo, London, New York, Hong Kong) with investment on regional exchanges being less than half (except where mandated by law).  What I found out was very surprising:

1. Every single person I talked to was primarily invested in their local stock market (in many case 100% of the equities they owned were on their national stock exchange).  This surprised me, as I assumed that there are a range of companies that every person would want to own.

2. People used mutual funds / iShares to diversify risk, though even on iShares they were largely local (+/- 50% were based on national exchanges where an iShare option existed).  These large investment vehicles (and pension funds) were the primary investor in foreign markets.

3. People in developed countries were worried about investments in developing countries / markets due to risk (both in return, growth projections and future currency fluctuations).  As a result, they were much more  comfortable investing in developed countries and were very limited to where they wanted to invest in developing countries (India and China).

4. People in developing countries were not that interested in purchasing developed world stocks.  The returns were just not that attractive by comparison to what was happening on their national exchanges.  Risk was not a significant issue, with a roller-coaster ride expected.

5. It is very hard to buy foreign equities everywhere.  In Canada, I can buy US shares, but I need to talk to a specialist to purchase an Aussie mining company or a British Aviation firm.  This is the same everywhere, with mutual funds or iShares the only way to get international exposure.

Before talking to my colleagues, I thought that our investment world was going to converge on a few super-regional exchanges (NY, London, Shanghai) and investors around the world would hold a similar basic basket of shares.  As countries developed and became wealthier, this basic basket idea would drive demand for a core of 100 – 250 global shares as everybody holds a bit of these companies.  This would obviously produce a price premium relative to other shares.  This doesn’t fit with what others have told me.

I am left with the feeling that demographics may remain the most important feature to consider for the next 20 years.  As it stands, developed countries are getting older and we will soon start to see net outflows from Western stock markets as retirees start living on their savings.  This will translate to a reduction in demand and increased supply.  This is not a good place to be.  The flip side is that developing countries with young populations just now starting to save will be looking for investment vehicles for their savings.  Based on my classmates, people will likely use their national stock exchanges to purchase assets.  There will be limited supply of shares and rapidly increasing demand for those shares.  This is a great place to be.

I have long assumed that markets were global and the demographics issues for investors in developed countries would be solved by a whole bunch of new investors from developing countries.  This does not seem as likely a I thought and it might be time to increase my exposure to emerging economies.

Posted by: Richard | February 1, 2010

On inflation

When I left London in 2002,  I could buy 9p beans at Sainsbury, 28p was the cost for a packet of crisps, a chocolate bar or a pack of gum at a corner shop.  In the pubs, £2.20 would get you a good pint, and many places would sell a lager at £1.85 or so.

Coming back in 2010, there has been a massive change in prices.  My cheapest pint (and also one of the best) was a pint of Sussex Best Bitter at £3.05.  Most regular pints run around £3.40.  Gum, crisps and chocolate are all around 55p.  My favorite music magazine (Uncut) has gone from £3.10 to £4.50.  Beans are now 45p at best.  Bus tickets have gone from 65p to £1.20 using an Oyster card or £2.00 paying cash.  I am not even going to go into the increased rental rates of property or petrol prices.

What is going on here?  We are repeatedly told that inflation is minor and remote, however there is overwhelming evidence that prices are in fact going up much faster than 2%-3% per year.  I think that inflation is not uniform, and we are seeing significant inflation in most goods except goods where the manufacturing has been moved to more competitive markets.  This means that CPI is not a good indicator of inflation, as it is being misled by a huge drop in labour costs and is this making us ignore what is right before our eyes. In effect, CPI is hte balance between “stuff”, which is dropping in price and commodities that are rising in value.

I think we may be in a situation where everything is actually inflating (food, minerals, oil, gas, water, land, equities and everything associated with the above) but this is being obscured by the fact that our “stuff” is being manufactured by people making $1/hour versus $15/hour?  If this is the case, at some point we will have moved all production to low-cost countries and we will start seeing regular inflation from the people making $1/hour wanting $1.10/hour next year.  If and when that day comes we may have to deal with 12% inflation of both “stuff” we want and the commodities that are core to our lives?

If we are living in a hidden inflationary age right now, what types of assets should I be holding to capitalize on future inflation?

Posted by: Richard | January 29, 2010

The Current State of Television

We were fortunate enough to have the former CFO of one of the largest UK television channels in class yesterday to discuss the media revolution that has happened in the last decade.

He described the challenges of the television industry right now, with increased competition (through internet, satellite, dvd’s, TIVO, other channels) and declining revenues from television advertising.  He painted a bleak picture as free, on-demand, no commercial easily beats typical television services that require viewers to pay a subscription, watch commercials and be limited to what is scheduled.

However in this bleakness there are some surprising bright spots.  People will endure commercials for live events (specifically the talent shows and sports).  In addition, for long-running sitcoms, people will also endure commercials.

The motivations behind these two groups of people are very different though.  For live events, people don’t want to miss out on what happens, especially as their friends are texting them in real-time to discuss the event.  It is a very collaborative and interactive viewing experience that cannot be replicated watching it on TIVO or online after the fact.  In contrast, long-running soaps maintain healthy audiences watching on television, even though the plot is the same over and over again and online viewing options are easily found.  These viewers are using television almost as a distraction to their life and a way to easily fill up empty time.  Viewers don’t begrudge the commercials, as they have nothing else to do.

Where does this leave the future of television?  It strikes me that the future of television is going to become more interactive, specifically as the only advantage TV has is the wide-scale interaction amongst people due to the scheduled nature of the product.  I can watch any show I want online on my schedule, however what television offers is the ability to interact with a mass market.  In some cases, this interaction will be with friends based on a dynamic event like an ice hockey game or a talent show.  For those watching TV to kill time, I think there is a tremendous opportunity to connect the audience together to greatly improve the quality of the viewing event, make it more social and instead of just killing time, transform it into spending time with friends.

It is clear to me that the future of television has to change rapidly with a new business model being required moving into the future.

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