Valentine day's gift - wearable technology

It comes from my struggle about valentine day's gift for my wife.

I think about wearable technology a lot. Before apple watch comes out, Fitbit is the market leader, and it just released two new bands. One Charge HR, the other Surge. Charge HR is more of traditional activity tracker with heart rate monitor included and Surge tried to take some elements of smart watch.

Some random thoughts about wearable technology.

1. The revolution path: Mainframe to PC (extended users) to laptop (Compact and mobility) to smart phone (Compact and mobility and multiple functions) to wearable technology (Compact and mobility and additional functions)
• Hardware. Compact depends on critical technology advance, chips become more powerful, smaller in size and require less power (battery size). Small size sensor with less energy consumption. But GPS is a big energy eater.
• Mobility. More easier to carry then smart phone in certain cases. such as exercises and sleep.
• Functions. Functions will tip on activity tracker and reminder/notification/alert. Another useful function is input/output portal. Input can be activity data, voice command, touch command. Output can be voice, vibrate and display (light, OLED, full screen). Another new function in the new era is internet of things. 
2. Functions and users

• Activity tracker. Health conscious consumers.
• Sleep analysis. Health conscious consumers.
• Hints from Apple watch: Display and remote control for iphone
• Calendar. - Display
• Weather - Display
• Map - Display
• Music - Remote contr
• Video player
• Dictionary  - Display
• Camera 
• Picture  - Display
• Email  - Display
• Message  - Display
• Call notification  - Display
3. Fitbit vs Apple watch and other wearable technology
• Conceptually, Apple watch is in the right direction.
• Ecosystem with support from wide selection of apps
• Functionally, wearable device is more than data collection, but also response and feedback. more than activity focused for health conscious consumers, but also multiple functions for casual consumers
• Practically, Fitbit leads this market for some time. it understands the product design and consumer habit better. But the technology is not mature one. And Apple is good to be late adopter. 
• Quibble on Healthkit. It's about ecosystem and data control.
• Healthkit is not a good platform. not yet.
4. Trending of wearable technology
• Timing is essential. We roughly know what the ideal watch will be in future. Energy efficient chips, multi-purpose, voice command, connect with other devices and last long. But some of the technologies are not there yet. So, current product design has to comprise between functions and hardware
• Energy efficient chips for GPS and wireless cellular might not be ready, then it depends on its ability to communicate with other devices. And without these two, wearable device can't live without cell phone.
• Multi-purpose. The key question is why in wearable device, not in cell phone.
• Calendar with one line of title and schedul
• Weather with a few words description or one picture
• Map with voice focused
• Music and video player. remote control
• Dictionary/Knowledge center with voice
• Call and message notification
• Voice command. Need Siri to be better
• Internet of things. Communication has be to cheap
5. Decision. Not yet. I can foresee apple watch will be future, and fitbit will dominate the market (or niche market of activity market) for a while. But not sure about if it's a good time.

Oil price drops, the reason, the impact and the future - Part3

This blog will focus on crude oil production, especially variant impact on different countries and different extraction technology

Cost of producing crude oil from EIA

Reading from this table,

1. Middle East, Canada and Central&South America has advantage on production cost over US
• Middle East has biggest advantage in production. So, Saudi Arabia can stand low price
• It makes economic sense to build keystone pipeline from Canada to US
2. Total extraction cost comes from two parts, lifting and finding.
3. Off-shore cost is much higher than on-shore, but lifting cost might be similar
• Finding costs are sunk cost in short term. So, when crude oil price drops suddenly, most countries to continue to lift crude oil, but might hold on drilling

Another interesting chart by Morgan Stanley half a year ago.

Cost in this chart might not be consistent with table above, but we still read relative cost between different technology.

Reading from this chart,

1. When crude oil price drops, the first three technology will be stopped are,
• Arctic
• Oil sand
• North American Shell
2. Average production cost of Russia is higher
3. Cost variance of one technology is high.

Oil price drops, the reason, the impact and the future - Part2

This blog will focus on downstream impact.
Economist focus on its impact/little impact to renewable energy, but covers little on transportation and industry use.

Use of petroleum

• Fuel (74% based on EIA) for transportation
• Petrol - for cars (46%)
• Diesel - for heavy machines (20%)
• Kerosene - for jets (8%)
• Non Fuel
• Petroleum jelly
• Lubricating oils
• Plastics
• Solvent

Use for transportation

1. Auto industry
• Electricity car - Less popular
• Fuel efficiency car - Less popular
• SUV more popular
• Auto maker needs to be flexible to adjust to consumer and market
2. Logistic industry
• Fedex/UPS - Cheaper
• Free shipping provided by Amazon - More
3. Airline and airplane
• Air ticket price - lower
• More flight to new routes
• Airplane to promote fuel efficiency - less poppular
• Airplane buying - fewer/delayed
4. Taxi
• More savings for taxi drivers
5. Agriculture
• Production - cheaper
• Shipping - cheaper
6. Global trading
7. Processed food
• less shipping fees
• cheaper plastic
8. Customers
• More money to spend from saving on gas

Use for industry

1. Chemistry industry
• Lower cost
2. Manufacturing
• Lower cost of chemistry
• Lower cost of shipping
• If not related to energy capital investment
3. House building
• PVC pipe, asphalt, shingles, paint and etc
• interest rate will be low (from low inflation)

Oil price drops, the reason, the impact and the future - Part1

Crude oil/gas price drops almost half in recent two months.
So, most people can't help wondering about the reason, the impact to other industry and future price.

After I put down some thoughts on this, and then I found one article in Economist explains better than mine.
http://www.economist.com/blogs/economist-explains/2014/12/economist-explains-4

If i may summarize their points, the reason comes from four.

1. Global demand is low
2. Turmoil keeps on pumping crude oil stably
3. US increase oil production due to fracking
4. OPEC failed to reach agreement to reduce production

The impact to upstream will be,

1. US fracking
2. Weston oil company with projects to drill expansively
3. Countries export a lot

Then Economist explores some downstream impact in later issues.

If i may summarize these. The impact to downstream will be,

1. Countries get the opportunities to restructure their economy
• Reduce subsidy for gas with less resistance from voters
• Add carbon taxes with less resistance from voters.
2. Trend of renewable energy will not be hindered
• most renewable energy go to electricity generation, while crude oil goes to transportation and industry
• Biofuel will be impacted
3. Consumers get some relief
4. Trend of energy efficiency will not be reversed
• Consumers' mindset has changed

One interesting I found during research is the oil price trend since 1946. Considering inflation, real price exclude inflation impact makes more sense.

Reading from the chart,

1. historically, when global economy increases stably, crude oil price is low.
2. Mideast war (early 80's) bumps oil price
3. Speculation (late 00's) bumps oil price
4. Stimulation (early 10's) support oil price in higher level

So, the future crude oil price might stay in a relative low level considering the following

1. There is seldom wars between mideast countries.
2. There is less speculation due to finance regulation.
3. Stimulation runs out of steam

IMF forecast it will be around 65 at the end of 2015.

Time planning when work from home and job hunting

In these days, I work from home remotely, and in the meanwhile looking for next job opportunities. And I am lucky to have in-laws to take care of the little one. Theoretically, it's not a bad arrangement for transition between two jobs. But there are also challenges.

1. Sometimes I don't know what to do. whether working for current employer or job searching
2. When job searching, I don't know what to do. application in indeed, change website of a few companies. review resume and cover letter or reading to recharge
3. when working for current employer, don't know how much efforts to put on

The solution on my mind at this moment will be a better time planning. Here are the rules.

1. Separate working from job hunting if possible. Half day for working and half day for job hunting
2. Activities for next job should include all three. Short term: job application, resume review and interview prep. Mid term: self reflection on current/previous job and exiting skill set. Long term: self reflection on career path and recharge through reading
3. Combine the approaches for job searching: cast net wide and keep close watch on a few companies
4. Activities for current employer should be limited to bare bone. 

Reflection after book "The signal and the noise"

First reflection is on my daily job of financial forecast of the company.

The financial forecast focus on profitability of the next 12 months. EBITDA (Earning Before Interest, Tax and Depreciation) is considered the most important output. The forecast is based on sales forecast from customers or sales. And operation team builds the plan according to foretasted revenue and cost is calculated based on that.

The book "The signal and the noise" mentioned about three basic rules of good forecast

• Rule 1: Provide forecast and range
• Rule 2: Always validate forecast and results and adjust model accordingly
• Rule 3: Look for consensus

If we use these rules to examine my forecast work.

Rule 1:

Yes. we do provide a range of EBITDA or risks & opportunities after providing EBITDA forecast

But, 

1 .the range is not based on statistics, but on risks & opportunities (scenario analysis)

2. scenario considered is very limited. Most of time, it focuses on revenue only. not on operation side.

Rule 2:

Yes. we do compare forecast and actual monthly. And we look in details about where the variance comes from.

But, 

1. the range of EBITDA is never validated

2. error of the forecast might be understood in P&L detail level, but model is not adjusted

-  For material, no purchase is foretasted, so, PPV is hardly predictable. And inventory adjustment is seldom forecast.

-  For labor, no labor schedule is foretasted. so, labor usage is forecast poorly

-  For direct cost, no procurement policy on factory supplies and no validation of efficiency

-  For OH/SGA labor, it's hard to tell when new hire will join and the turnover rate is high

-  For OH/SGA expense, a big error comes from repair and maintenance. no real tracking on repair and maintenance.

Rule 3:

Sort of. The consensus comes from if the forecast are aligned with historical trend.

But, we never/seldom look outside of the company to see performance of other companies.

Book reading - "The signal and the noise - why so many predictions fail and some don't" by Nate Silver

I bought this book in hard copy around 3 weeks. I felt really happy when I finished the book. The last time I finished a book in hard copy might be 4-5 years ago.

The interest of the book comes from my phone interview with Discover Financial in Nov 2014. I didn't handle the questions well on assumptions of regression. Then I realized I have produced so many "accurate" financial reports in my daily work and almost lose the healthy suspicion on the model. I think this book does answer part of the question.

This books covers different topics of forecast and explains the common issues in some of the forecast. I spend some time to summary them.

In the next blogs, I will examine the forecast I've done in my work or life, and find why they fail and if possible find a way to improve it in the future.

Forecast	Existing forecast	Why Fail (Challenging)	Why Succeed	How to improve
Recession	Most economists failed	1. Fail to forecast house bubble - Limit data in US history 2. Fail to forecast impact of house bubble to whole economics - Limit data in US history - Large leverage 3. Rating agency provided wrong rating from their incentives - Wrong assumption of independant events
Political forecast	TV show forecast bad Some tools are good	1. Bias because of party position
Baseball	Some tools are good	1. Difficult to bring quality attributes into model	1. Lots of input data 2. Only a few output variable
Weather	Some tools are good	1. Nonlinear behavior 2. Simplification of linear requires lots of calculation	1. Lots of input data 2. Lots of validation 3. Simple physics rules
Earthquake	Almost impossible to predict time and location	1. Very little sample data 2. Overfitting 3. Variables (like stress) in physics model can't be measured
GDP growth	Most economists failed	1. Weak mechanism 2. Both input and output macro economic data not accurate 3. Policy impact
Epidemic		1. Extrapolation with big prediction interval 2. When data is brought from one country to another, the underline condition has changed 3. Accurate simulation requires lots of input for human behavior
Basketball game				1. Using Bayes rule to update propensity with new facts
Chess				1. human vs machine. each has its own advantage human good at pattern identification and imagination machine good at in-depth thinking
Poker game				1. Using Bayes rule to update propensity with new facts 2. Validation of forecast and differentiate skill with luck
Stock price
Global warming				1. Combine mechanisms with statistics
Terrorist attack				1. Focus on frequency instead of when and where 2. For forecast of rare events, need imagination on scenarios

Day1 to start the blog

Cycle of life.
Search for job, find one, work hard, leave the city, search for the job again.

For me, finding a job is never an easy thing. Lots of pressure. And luckily, I found the therapy of writing a blog to release the pressure. So, I decided to continue the practice as 4 years ago, and name this blog chapter 2 of previous blog.

The post in this blog will be similar to Days to be employed. It covers from different topics with sources from reading, web searching, investigation and reflection.

Two difference from 4 years ago,

• I am not totally unemployed yet. Currently, I work remotely for current employer. But it's a temporary arrangement. Need to find the next job soon.
• Little Max was born 2 years ago. And I just feel so refreshed after playing with him for a little while.