Where are the broken areas?

I often like to surf on Google Maps for no other reason than because I have a rather simple mind and I like to look at geography. I happened to be sliding around Dallas when I came across the Highland Park area and decided to go into the street view. The particular street I was on had a mixture of simple modest homes, and newly constructed behemoths. For whatever reason, that got me thinking: Where are the broken areas in the world? My good friend, Father Clint Wilson from St. Davids Church in Denton mentioned to me once that he intentionally moved into a broken area when he was starting a ministry in Denver, Colorado. I knew the “broken area” was a poor neighborhood because 1) There was a drive-by at his house (or close to it), and 2) Young priests often can’t afford to live in anywhere but lower to middle class neighborhoods. But now I am wondering, why do we always associate broken areas with poor, crime filled, neighborhoods? Could a rich, gated community not be just as broken? Christ often says it is very difficult for a rich man to get to heaven. Yet, I have not heard of any ministries targeted at the ultra-rich. Perhaps we assume that the area isn’t broken at all, because if they live in a gated community, there’s a good chance they’re probably giving some money away. But at the point when you’re living in a gated community, the extra surplus of wealth you have does not mean a whole lot to you (diminishing marginal utility). Christ makes this clear in Mark 12:43-44, “Calling his disciples to him, Jesus said, I tell you the truth, this poor widow as put more into the treasury than all the others. They all gave out of their wealth; but she, out of her poverty, put in everything – all she had to live on.” As people of wealth will often tell you, “time is money”, I wonder what a ministry targeted at the rich would look like. Perhaps rich giving more time than money? It’s some food (preferably communion wafers) for thought.

In the Now

I am currently reading Present Perfect by Gregory Boyd. I love Greg Boyd’s writing style, because much like his other book, Myth of a Christian Nation, he never holds back and never beats around the bush. While I’m only about half-way through the book, I just want to write a quick blog post about some of his points.

The book is about “Finding God in the Now”… what does that mean? It means that we’re suppose to be surrendering our life to God right now. Being a Christian does not mean that at one time we surrendered our life, but rather the only life you have to surrender is the one you are living right now.  Gregory Boyd makes the analogy:

Think of it like a marriage. Thirty-one years ago I looked into my wife’s gorgeous eyes and pledged my life to her. But my pledge wasn’t itself the life I pledged to her. My pledge didn’t magically give us a good marriage. Rather, the actual life I pledged to my wife was the life I have lived each and every moment since I made that pledge. The only life I have to give to my wife is the life I live moment-by-moment. The quality of my marriage, therefore, isn’t derived by whether I made a pledge thirty-one years ago. It’s determined by how I live out that pledge now.  The same is true for our relationship with Christ. The important question is not, Did I once surrender my life to Christ? The important question is, Am I surrendered to Christ right now?

In a later chapter, Boyd also makes a great point that I had never thought of before: In life on earth, each passing moment means we are one moment closer to death. Yet, the one who is eternal Life invites us to participate in His life each and every moment. So by submitting your life to His right now are you really closer to death, or to life?

Soon to be graduates know it all; obviously.

For most colleges and universities, graduation ceremonies took place within the past two weeks. However, not all of them had a headline commencement speaker, thanks in part to student protests. Condoleeza Rice, who was scheduled to speak at Rutgers University graduation backed out amid student protests against her connections with the Iraq war. Christine Lagarde, head of the International Monetary Fund, was scheduled to speak at Smith College, but also had to back out amid student protests. These were just the first two in a long list of commencement speakers who have resigned the speech giving duty because they were not wanted.

While some would say good for the students to stand up for what they believe it, I would disagree. If you want to take a stand because you’re against the policies of Ms. Rice, or Ms. Lagarde, and you want to drive social change, putting duct tape over someone’s mouth isn’t going to do it. (At least not for the long-haul.) I would instead suggest actually listening to the speech, and if there is something you disagree with, use your shiny new degree and craft a well thought out, well researched opinion piece that stands in opposition.

Additionally, silencing those you disagree with reeks of egotism. New college graduates are known to think they know it all, only to be humbled six weeks after graduation when they still don’t have a job. What I’m trying to get at is this: The whole point of higher education is to expand your human, technical, and conceptual skills. Even if there is a teacher or speaker that you disagree with, can you still not learn from that person? How unfortunate for the graduates of these two universities that at the graduate’s last moments of higher education, instead of being filled with powerful words from some of the world’s greatest leaders, were instead regulated to a mediocre and generic speech instead.  One of my most influential professors, Dr. Mark Clark told me on the phone one time, “Don’t think you’re smart; the minute you think you’re smart, you stop learning and fall behind.” It is a common complaint among many businesses that current MBA graduates have a too narrowly focused education, and miss the “big picture”. These recent protests only add to that problem. I sincerely believe that you learn most from those you disagree with.

Economic Background of Christian Teaching

I had to recently write a paper for my history of economics class about either an economist or school of thought. I chose to do the economic background of Christian teaching and focus on the Austrian school of thought. My paper is below.


The aim of this paper is first, to explore the economic conditions at the time of Jesus Christ, then to explore what Christ taught in relation to the economic conditions of the time. Lastly, the paper will discuss current economists that intertwine economics, Christianity, and morality.

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God has a plan for us All…?

If you are a Christian, how many times have you heard that, “God has a plan for us all”? Or perhaps if something you desired didn’t turn out the way you want, “…I guess it was just not in His plan”. Maybe you’ve heard that, “we must trust His plan”, or the non-religious version, “there’s a reason for everything.” These phrases and derivatives of these phrases float about in the Christian world all the time. Simply hang out after a church service and you are likely to hear several forms of them.

For me however, I have always had difficulty accepting this line of thought. If God gave us free will and also has an individual plan for us, how are we suppose to know which one of our free willed choices (in any certain scenario) is following His plan ? Can we screw up His plan by making incorrect choices? If we are simply following His script, do we really have any free will at all? Furthermore, one reason why I hate this thought, is how offensive it sounds in the wake of tragedy. Was 9-11 part of God’s script? If you suddenly lost a loved one in an accident, would you be comforted in knowing that it was part of His plan? Or what if you made a terrible mistake of driving while drunk and killed somebody? I don’t think anyone wants to believe that killing somebody would be part of their creator’s plan for their life. And chances are that you’d actually probably be pretty pissed off at God too. (Why me, God?!) Not to mention I find it difficult for such a loving and merciful God to create a plan in which people are tragically killed for the sole purpose of carrying out said plan.

So – How does one still believe in the Truth of God, while rejecting that we are all on a pre-destined script, ala Calvinism. Enter: Molinism. I first heard of Molinism in my History of Economic Thought class. Molinism was created by Luis de Molina – a theologian/economist that lived in the 1500s. Funny enough, many early economists were also deeply religious and wrote religious books (including Adam Smith, the “father of economics”). Molinism provides a solution that allows for God’s sovereignty while also allowing for human beings to have self-determined freedom.  In a very basic sense, God knows how you would react in any given circumstance. To further break it down, there are three variations in God’s knowledge. I have quoted below, but just Google Molinism, and you’ll get basically the same thing.

“The most famous distinctive in Molinism is its affirmation that God has middle knowledge (scienta media). Molinism holds that God’s knowledge consists of three logical moments. These “moments” of knowledge are not to be thought of as chronological; rather they are to be understood as “logical.” In other words, one moment does not come before another moment in time, rather one moment is logically prior to the other moments. The Molinist differentiates between three different moments of knowledge which are respectively called natural knowledge, middle knowledge and free knowledge.”

  • Natural Knowledge – This is God’s knowledge of all necessary and all possible truths. In this “moment” God knows every possible combination of causes and effects. He also knows all the truths of logic and all moral truths.
  • Middle Knowledge – This is God’s knowledge of what any free creature would do in any given circumstance, also known as counterfactual knowledge. It is also sometimes stated as God’s knowledge of the truth of subjunctive conditionals.
  • Free Knowledge – This is God’s knowledge of what He freely decided to create. God’s free knowledge is His knowledge of the actual world as it is.

God knows how his creatures would react if placed in any circumstance. Think of this as potential “If….then” statements. Jesus talks about this in Matthew 11:23, “And you people of Capernaum, will you be honored in heaven? No, you will go down to the place of the dead. For if the miracles I did for you had been done in wicked Sodom, it would still be here today. (NLT)” This is in line with God’s Middle Knowledge – Jesus is says that if he had performed miracles in Sodom, they would have repented.

A slight derivative of Molinism (and this is how it was explained to me in economics) is that instead of God knowing exactly how one would react in a given situation, is that God knows the probability of how would would react given the choices present. Given a certain situation, God knows that there is a certain chance you would choose option ‘A’ and a certain chance you would choose option ‘B’. This would be as if all your life actions were laid out on a probability tree. I like the idea of the probability tree the most. Because God is timeless, He still knows the ultimate outcome of every situation, but it seems to line up with how humans with freedom make choices everyday. Given any situation, there are certain probabilities that we choose one path or another. I also think the probabilities line up with how Jesus talks about prayer and faith. Jesus talks a lot about being consistent with prayer (Luke 11:5-13, Luke 18:1-8). I like to think prayer actually makes a difference. If we believe that Molinism is true – praying, but more importantly – being consistent with prayer could increase/decrease the probabilities of what path you go down. Now I cannot think of any scripture where Jesus talks explicitly about probabilities to cite them, however Molinism can be cited in many other verses other than Matthew 11:23 I listed above, and Molinism has the backing of William Lane Craig. I think prayer, free will, and pre-destination are one of the most interesting topics in Christianity. I have a hard time with pre-destination/Calvinism, and Molinism seems to provide a lot of good answers and not create many problems.

Evaluating My Stock Diversification

Two years ago this past August I decided to buy my first stocks. It seemed like a good idea; the market was down, I was an economics major-to-be, and I had just taken a personal finance class. I took about $300 and purchased 5 different stocks. Certainly not a complete portfolio, but enough to get me started I thought. The companies I purchased were: Advanced Micro Devices [AMD], Mistras Group [MG], Nevsun Resources [NSU], Pizza Inn [PZZI], and Aurizon Mines [AZK]. (Aurizon Mines was recently sold in the Spring to Helca Mining [HL].)

I won’t go into detail on what price I purchased these stocks, but if you were to look at the historical prices starting around mid-August of 2011 you can find out about how well I’ve done. The purpose of this blog post is to figure out how well I diversified my “portfolio”. (Hint: not well.) This post will look at three things: what sectors the stocks are in, what the “beta” of my portfolio is, and how correlated my stocks are to each other. In a follow up blog post, I’ll use some mathematics to see if the current market price of the stock is under or over valued, and we’ll see if I should sell any stocks. My prediction is my little “portfolio” will be changing dramatically in the next few weeks.

Let’s start by looking at where my stocks are in the industry. A well balanced portfolio will have stocks spread out in order to minimize risk. The exact order of how your stocks are spread out depends on several factors. For example, younger investors can put more money into stocks in small cap stocks. These are typically more risky stocks, so if the stock turns out to be a bust then the young investor has many years to make up the bad luck. An older investor may not want to be so risky and may have a portfolio balanced more with bonds, as these have a lower return, but also a very low risk. While the exact formula for portfolio balance is subjective, a portfolio should absolutely NOT be built as I am about to show you. Behold:

bad stocks

As you can see, 89.89% of my stocks are all in one category, “Cyclical”, which is further broken down by “Basic Materials” and “Consumer Cyclical”. I have the remaining 10.11% in the “Sensitive” category, which is “Industrials” and “Technology”. As you can see I have absolutely zero “Defensive” stocks, and those that I have in cyclical and sensitive don’t even span the entire category. Ladies and gentlemen, this is exactly how you’re not supposed to do it. In terms of spreading your stocks out over different sectors. The danger here goes without saying: if the cyclical sector is bad, then I am toast. Let’s take a look at the portfolio beta and see if that makes anything any better.

A stock’s beta is overly simplified as how risky the stock is. A beta of 1 means that the stock moves exactly with the market. So for example, if the stock market (as a whole) went up 3%, then a stock with a beta of 1 would go up 3%. Stocks with a higher beta than 1 are more risky and would go up more than 3% (and if the market would go down 3%, the stock would go down by more than 3%), and stocks with a lower beta than 1 would go up less than 3% (if the stock market went down by 3% this stock with a beta smaller than 1 would go down by less than 3%). Here I have a list of my stocks, and the percentage that they take up in my portfolio.

stock beta


The yellow highlighted “Sum” is how risky my “portfolio” is. 1.24 means of course that my portfolio (as a whole) has more risk than the overall market. Now the beta of stocks can change, and can be calculated differently depending on your “starting point” of measurement. I simply used the beta given to me by my broker, TradeKing.

The last thing I want to check is how my stocks are correlated with each other. The idea of building a portfolio is of course to minimize your risk. However, if you had a portfolio full of stocks that all moved with each other, than you would not be minimizing your risk at all. A good portfolio will have some stocks that go up while others go down. If two stocks are selected and one stock moves up the other moves down by the same amount these stocks are perfectly negatively correlated, and will have a value of -1 (this off-sets the risk). Two stocks that have no correlation will have a value of 0, and two stocks that move in sync with each other will have a correlation of 1. I won’t get into the math behind it all, but here’s a few examples of correlation between different stocks in my portfolio:


Now, ideally you would look at correlation between all your stocks you are purchasing as a whole (multiplying each stock by its weight in your portfolio). I simply just wanted to compare a few here, and especially make note of the dangers of stacking your portfolio with stocks that are positively correlated. Take a look at NSU and HL. They make up way too much of my portfolio AND are have correlation (which of course makes sense since they are part of the same industry). If you have stocks that correlate you better be pretty confident that they will do well, otherwise they will cancel out any other negative correlation you have (in my case because NSU and HL make up such a large percentage of my portfolio, it hurts even more if they don’t do well.)


Anyway, that’s the blog post for tonight. I hope you’ve found it interesting and have learned a thing or two. I know I have. Be on the look-out for a few more blog posts soon! I have drafts of minimum wage written and will be working on a post on faith.

Looking at Genco Shipping

The past few days in finance we have been learning about capital structure and how there is an optimal ratio of debt to equity that maximizes stock price. The debt to equity ratio is a fascination subject that I promise to get to in a blog post very soon, but first I want to cover a company, Genco Shipping (GNK) and talk about their operating leverage.

If you’re unfamiliar with the term operating leverage, don’t let it scare you. Operating leverage can be defined as what percentage of the company’s costs are fixed. If a company’s costs are mostly fixed (for example, a lease on a building would be a fixed cost. A company must pay the lease every month.) the company is said to have a high degree of operating leverage. I bring this up because today in my finance class we talked about the company Genco Shipping. You have probably never heard of Genco Shipping. Genco is in the industry of shipping dry goods and heavy metals across the various oceans of the world. Their website is nothing special, and they don’t do home deliveries like UPS or FedEx. Although you have never heard of them, Genco was at one time (very recently) at the top of the world with a stock price around $85 dollars per share. This high market value only lasted until the recession and now Genco sells for about $2.50 per share. But why? Did the financial crisis impact Genco that badly? How Genco is leveraged will help explain their dramatic drop in stock price, and could also provide valuable insight for a good stock buy.


We’ll start by taking a look at Genco’s income statement for the past four quarters. Below you can view Genco’s income statement. Take a look at what I’ve circled in red. These are the company’s costs over the past four quarters. Notice how they are all relatively the same and don’t change much from time period to time period. This means that the costs are fixed. If these were variable costs than the company would scale back whatever is costing so much in order to save money. However, Genco does not have this option.You’ll notice too that the sales of the company have been increasing the past three quarters, from 40 to 46 to 59. More on this a little further down; let’s continue to look into the company.



I have made a little Excel spreadsheet to take this data and make it a little bit more usable. What we see here are rounded numbers of the performance of the company in Quarter 1 and Quarter 3. I have averaged the fixed costs these so that we can use the same amount in each quarter just to make life easier, and we can carry these numbers through our theoretical quarters we’ll get to in a second. Right now you can see I have Quarter 1 and Quarter 3 plotted. Think of these as “Really Bad” and “Bad” quarters. We have noticed that there has been an upward trend in sales the past few quarters, so this should naturally make us curious about “what if” the company broke even or even posted a profit. What would be the stock price? Further more, if the company had a “Good” and “Really Good” quarter, where would that leave the stock price?


In the Excel above we see the stock price if the company breaks even. Now I do know that an earnings per share of >$0 is technically doing better than breaking even, however a revenue of $100 was selected since it’s a nice round number. After all, even with a revenue of $100 the company just barely manages to do better than break even. What we see now is after breaking even, the company has a stock price of about $5.60.


Above we now have some numbers plugged in for a “Good” quarter (which has revenue just over 10% greater than the break even point). Because the company’s costs are all fixed, they do not change even though the company is creating more sales. This leads to a much greater profit margin. For the good quarter the company has a price to earnings ratio of 15 (the market average) which yields the stock price to be just under $18.00. If we take this further and the company has a “really good” quarter than we see the stock price soar to over $60.00. With most companies cost of sales increase as sales increase, keeping the profit margin relatively the same. However with a highly leveraged company, the cost of sales is always going to be relatively the same, so as sales increase, profit margin increases as well.


Let’s conclude this lengthy post by looking again at the sales revenue the past three quarters. Sales revenue has been rising: $40, $46, and $59. Above I have an index chart for the BDIY. The BDIY is a benchmark for dry shipping rates, exactly the industry that Genco is a part of. We could say that this graph shows how much Genco gets paid to ship items. As you can see, the shipping rate has been increasing for most of the year, and it correlates with Genco’s increased revenue each quarter this year. The shipping rate has taken a slight dive recently, but all indexes are vulnerable to some volatility. If the BDIY continues to increase you could see Genco make a comeback, along with their stock price. I do however, also want to mention that this company is a big risk. Interest on debt is almost 40% of their sales for this past quarter. Even though Genco has made better revenues the past three quarters, they have had such a large interest payment compared to sales for such a long time that if shipping rates don’t continue to increase, the company may go bankrupt. The stock closed today at $2.70, if you have some insights to trans-oceanic shipping and feel good about it, it may be worth spending a small sum of money on a few shares and seeing where it takes you in a few quarters.


Hello and welcome to my blog! This site isn’t much yet, but it will be growing as I write and expand my mind. Many topics to discuss here, and hopefully soon I’ll have a portfolio section of the site as I did on the last version of Some topics to look forward to in the future…

  • A post on minimum wage.
  • Posts on finance.
  • Portfolio risk and balance.
  • Public economics.
  • How in the world faith is suppose to work.
  • Christianity and economics.
  • General thoughts as they come to my little brain.

More to come….

Go Facebook Go!

This was originally posted on 2/13/2010 on an earlier version of It has been reposted because it has been referenced in a newer blog post.
If you have used Facebook the past year or two like I have, there’s no doubt that you’ve noticed changes to the site’s layout multiple times. It seems like every time Facebook changes their layout out it’s met promptly with criticism. “Why’d they change it”, “If it’s not broke, don’t fix it”, “I hate this new layout”. Those are just some of the comments I hear about the style of Facebook whenever they change. All of them are valid points, Facebook has never really had any show stoppers with their UI (user interface), so why do they always change it? I can say I’ve been a critic myself, while I’ve never seen the layout change so dramatically that I can’t use Facebook, I’ve never really seen the reason to change it in the first place. And that’s exactly why they should continue to change their layout.

Yes, that may sound absurd, but that’s what they need to continue to do. Do we all remember when Myspace reigned king of the social networking websites? And do we all remember the vast UI changes that Myspace went through? Oh, you don’t? Well that’s exactly why Myspace isn’t a social networking dominance anymore. Yeah, some could argue that it’s for other reasons like it’s slow, it has too much ads, etc. and they’re right, but if it’s made well enough, users will put up through those ads – I mean they did, for the 4-some odd years that Myspace was king of the hill, right? Here’s the issue with Myspace… they never changed their UI- whether they needed to or not. This caused a huge lack of innovation. It was always the same with no change and people got tired of that. I can guarantee you that if Myspace would have made changes to their UI, they would have stumbled upon some of the things that people flocked over to Facebook for. But they didn’t.


Anyway, the point I’m trying to make here is that Facebook changing their UI is a good thing. With their changes they will continue to innovate and create a better user experience in the long run.

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