"Don’t Panic!" Footnote

I’m not the only one saying this.

A quick footnote to my “Don’t Panic!” post earlier today. I was reading the NYTimes online and stumbled upon an article by Alex Berenson titled “Those With a Sense of History May Find It’s Time to Invest.”

Not only does he refer to the tech stock bubble burst of 2000-2001 (as I do), but he claims:

Now investors have again convinced themselves that this time is different, that the credit crisis will push economies worldwide into the deepest recession since the Depression. Fear runs even deeper today than greed did a decade ago.

But in their panic, investors are ignoring 60 years of history. Since the Depression, governments have become far more aggressive about intervening when credit markets seize up or economies struggle. And those interventions have generally succeeded. The recessions since World War II, while hardly easy, have been far less painful than the Depression.

Read the article. It cites experts:

“I think in years to come — I wouldn’t say months to come — we will perceive this as being a great value-buying opportunity,” said David P. Stowell, a finance professor at Northwestern and a former managing director at JPMorgan Chase. “Two and three years from now, it will seem very smart.”

Don’t panic. It might just be the time to go bargain hunting on Wall Street.

Don’t Panic!

Understanding how your investment transactions affect the market.

I really didn’t think a post like this was necessary, but after speaking with two different people about portfolio management in these troubled economic times, I realized that the average investor doesn’t have a clue about what a mutual fund is and how it works.

A Transfer is not Just a Transfer

Conversation One went like this:

Him: I’m thinking about transferring my Fidelity balances to bonds or t-bills.

Me: Don’t sell when the market is low.

Him: I’m not selling. Fidelity has bond and t-bill funds. I’m just transferring. When the market starts coming back, I’ll transfer back.

Conversation Two was remarkably similar:

Her: This week, I transfered all my mutual funds to a money market account.

Me: You sold your mutual funds? Now? When the market is in the toilet?

Her: No, I didn’t sell them. I just transferred them from one Putnam account to another. When the stock market starts going back up, I’ll just transfer the money back.

What followed was my attempt to explain that the “transfer” was, in reality, the sale of one mutual fund for the purchase of another. In both instances, my loved ones — yes, they are both related to me — were selling shares in a mostly stock-based mutual fund that had taken a beating with the Dow’s plunge and using the meager proceeds to invest in a different mutual fund based on less volatile (or more conservative) investment types with the same investment firm.

They didn’t see it this way because they mistakenly think that they are invested in the investment company: Fidelity, Putnam, Janus, Dreyfus, etc. They don’t understand that each mutual fund really consists of huge investments in regular publicly traded companies like GM, Washington Mutual, AIG, and countless other firms that have yet to hit the news. When they sell shares of a mutual fund that includes investments in, for example, GM, they are effectively selling GM stock. If everyone is selling, the price goes down.

Panic Feeding the Decline

Clearly, investors are the ones causing the stock market decline. Their panic sales are what’s driving down the prices, thus feeding the panic. The worse the prices get, the more people panic. Every one who cashes out — even by transferring stock based mutual funds to money market funds — is making the situation worse.

Take, for example, GM. On october 12, 2007, its shares were selling for $42.64 each. Although share prices declined slowly throughout the year, the panic of this past week really hit home. On Friday, GM shares closed at $4.89. You can see the decline in this chart:

GM.jpg

Let’s look at the reality of this. According to market valuation of GM stock, GM lost nearly 89% of its value in a year. What happened? Did a UFO hover over a few GM plants and suck them into the sky, leaving a gaping hole? Did GM inventory get spirited away by pixies in the middle of the night? Were all of GM’s cash reserves shredded for some kid’s hamster cage? Were GMs huge asset investments in equipment scrapped for their recycling value?

Of course not. GM’s company value is not just 11% of what it was this time last year. While the original stock price may have been inflated — I can’t say because I’m not an analyst and have not studied GM’s financial statements — there’s no way in hell that the company can be worth a tenth of what it was twelve months ago.

But do investors believe that GM’s total value has declined by 89% in a year? I don’t think so. I believe they’re just panicking, trying desperately to save their finances by cutting their losses. They’re running — screaming that the sky is falling — away from stocks and the declining mutual funds that are based upon their values. As a result, they’re causing much of the mayhem.

More About Mutual Funds

My personal portfolio has declined in value by at least 40% in the past year. I can’t tell you the exact amount. I haven’t looked since Monday. I’m afraid to.

My portfolio includes my retirement funds. And yes, most of them are mutual funds. Most of them were doing very well — one was posting consistent gains of 25% a year and had doubled in value in five years. Like most Americans, I’m a lazy investor. Why do all my homework to handpick investments and then watch them from day to day when an investment firm has experts who can do that for me?

But at least I have an idea of what’s in my mutual funds. Fund names often have a clue. For example an S&P 500 fund is directly tied to the securities that make up the S&P 500. If the S&P 500 goes down 5 points, so does my fund. Pretty simple, right? Another fund name might include the words “Small Market Cap.” That fund is invested in stocks of small market capitalization companies.

Let’s say, for example, that Maria’s Big Cap Fund includes investments in 10 stocks named A – J. (In reality, it would likely include investments in far more securities, but this is a simple example.) Let’s also say that 1 share of Maria’s Big Cap Fund consists of one share each of companies A – J. When I sell a share of Maria’s Big Cap Fund, I’m selling 10 shares of stock — one each in companies A – J. If I have 500 shares of Maria’s Big Cap Fund and I “transfer” my investment to Maria’s Great Money Market Fund, I’m really selling 500 shares each of companies A – J and buying the equivalent dollar value investment in a money market.

Now say that Maria’s Big Cap Fund is really popular and there are 50,000,000 shares of it held with investors. As those investors panic and “transfer” or sell their shares in Maria’s Big Cap Fund, they’re really selling lots and lots of stock. As stock is unloaded in bulk, its value decreases. As value decreases, its price goes down.

This is part of what’s making the stock market so screwed up right now.

No Loss Until Sold

But what’s worse is that many investors are unnecessarily taking losses on their investments. They bought at one price and, as prices drop, they may be selling at a lower (or much lower) price. That’s a loss.

But if they held onto their investments and didn’t sell (or “transfer”), they wouldn’t have a loss — at least not yet. Sure, it would look horrible on their account statements or in Quicken or on whatever online service they might use to track investment value. But until the stock is sold, there is no loss.

I need to say that again, in some different words for those who might not have understood the previous words:

If you do not sell your stock, you do not lose any money.

You can argue this all day long but you will not win. A loss is only on paper until the sale is made. Paper losses aren’t worth the paper they’re printed on. (Pun intended.)

Remember “Black Monday” in 1987? At the time, it was the largest one-day percentage decline in stock market history. Remember when the dot-com bubble burst? Wikipedia even has an exact date for it: March 10, 2000. How about the market right after September 11, 2001? These are just three examples of disaster in the stock market.

But guess what? In each case, the market rebounded. Sure, a bunch of companies were shaken out of existence — primarily after about 50% of the dot-com startups were revealed to be based on ideas that couldn’t generate enough revenue to warrant their market values. But the market that emerged after these disasters was stronger. Values for most “good investments” came back.

I’ve been actively investing in the stock market, through both individual stock purchases via an online brokerage firm and mutual funds. As I mentioned earlier, my entire retirement portfolio is in a variety of diversified mutual funds. I survived as an investor through the dot-com bubble burst — my investments recovered their value within two years. And I fully expect to survive as an investor from the current market madness.

Why? Because I’m not going to sell.

I’m lucky, in a way. Although I’m not a kid, I’m still 15 years away from minimum retirement age. I have time to let my portfolio recover.

Not everyone is that lucky. Some people are just getting ready to retire. Other people — like my mm and stepdad — are already retired and tapping into that investment nest egg to meet their financial needs every day. These people are pretty much screwed — unless the stock market rebounds in a hurry.

And the stock market simply won’t rebound if everyone panics and keeps selling.

The Children of Men

Futuristic social commentary by P.D. James.

The Children of MenI just finished The Children of Men by P.D. James. James, who normally writes mysteries featuring her series detective, Adam Dalgliesh, wrote instead of a futuristic world 25 years after the birth of the last-born child. In the world of this book, there are no children, no babies, and no hope for new human life.

James paints a sad picture of that world. Schools are converted into housing for the elderly, colleges now teach courses of interest to adults who don’t have their time occupied by their offspring. Playgrounds are gone. The government is trying to centralize the population in big cities so it’s easier to provide services as the population dwindles and only a handful of elderly people are left.

[This might sound weird, but it reminded me a bit of the retirement town I live in. Of course, there are some children and young people here, but the majority of residents and voters are retired so there isn't much emphasis on things that would benefit young people. The local school board, for example, was unable to pass a school bond in the most recent vote -- people don't want to foot the bill for education when they don't have kids in the system. The local Center for the Arts released its 2007/2008 schedule last month, and for the first time since opening about 5 years ago, there isn't a single family-oriented program on the schedule. Are they giving up on children here in Wickenburg?]

The book has a hero: 50-year-old Theo. Theo is first cousin of the Warden of England, Xan, a self-made dictator first elected as Prime Minister years ago. Xan makes extreme decisions that benefit the apathetic public, by enhancing safety and reducing the cost and bother of supporting the aging population. But a handful of people aren’t happy with his decisions and want to stop him. They go to Theo, hoping he can convince Xan to change things. To say much more would be a spoiler, but I will mention that there appears to be hope for the world when a woman becomes pregnant.

Netflix, Inc.Ad

I enjoyed the book’s fast pace after its initially slow start. A lot of background information was presented in the form of Theo’s personal diary before a third person narrator stepped in and picked up the story. It wasn’t a long book — I read it over a weekend — and the pages turned quickly. Now I’m waiting for the movie based on the book to appear in a Netflix envelope in my mailbox. I have a feeling that the movie will be a lot more exciting than the book, focusing on the events that occur after the pregnancy is discovered, Hollywoodized for maximum visual impact.

Did I like the book? Yes, I did. It made me think. And in today’s world of eye candy entertainment, that’s saying a lot.

Cruising

Life in a moving hotel.

Mike and I ended a week-long Alaska cruise this past Friday. We “sailed” on Royal Caribbean’s Radiance of the Seas from Seward, AK to Vancouver, BC, with stops at Hubbard Glacier, Juneau, Skagway, Icy Straight Point (Hoonah), and Ketchikan. The final day was spent cruising down the inside passage east of Vancouver Island.

This was our second cruise. The first was in the Caribbean about five years ago on — strangely enough — the same ship. We really enjoyed that trip, which we went on with another couple around our age. This trip, while enjoyable, was different.

What’s Good about Cruising

Let me start off by explaining why I like to cruise.

Float PlaneA cruise is the ultimate lazy person’s vacation. You get on board on day one, unpack in your own private room, and go to any number of onboard restaurants for free meals just about any time of the day. In the evening, your moving hotel departs the port and moves gently through the sea, arriving at the next port on the next morning. Once there, you can get off the ship and do all kinds of excursions, ranging in trolley tours of the local town, big production shows (the Great American Lumberjack Show comes to mind), active activities (such as biking or hiking), or “adventure” activities (such as helicopter landings on glaciers or sled dog trips or float plane flights). At the end of the day, you’re back on board in your comfy, maid-serviced room, eating free food, seeing free shows, and/or throwing money away in the casino as the ship moves on to the next port.

Cruise cost is determined, in part, by the type of accommodations you choose. The cheapest accommodations are a windowless cabin on a lower deck that gets really dark with the door closed and has barely enough room for you and your cabin mate(s) to move around. The most expensive accommodations are usually given names like “The Royal Suite,” and include several rooms, large windows, and one or more balconies on an upper deck.

On both of our cruises, we had the same accommodations: a “junior suite,” which is one largish room with a king size bed, sofa, easy chair, desk, coffee table, floor-to-ceiling windows, and small balcony. It was on the top cabin deck, 10 stories above the sea. At some ports, float planes landed right past our window (see above).

Cabin on Radiance Cabin on Radiance

A lot of folks say that getting a cabin with a balcony or even a window is a waste of money since you spend so little time in your cabin. I look at it the other way around. If you had a nice room, you’d spend more time in it. I’m a big fan of privacy and like the idea of having a private, outdoor space to relax in.

Hubbard GlacierWe spent much of our two “at sea” days in our cabin on the balcony, reading, talking, and taking photos of the things we passed. In fact, as the ship turned away from the Hubbard Glacier to continue on its way, we came back to the room to relax on the balcony with a bottle of wine and our cameras.

If you don’t care about private space and think you’ll be spending 95% of your waking hours outside your cabin, you should definitely go with one of the less expensive rooms. You see, that’s the only difference in onboard treatment. Once you’re out of your cabin, you’re the same as everyone else. You get the same food, see the same shows, and have access to the same services at the same price. So you can cruise quite affordably — sometimes as little as $600 per person for the week! — if you don’t mind sleeping in a closet-like room.

Cruise Limitations

Every cruise has a major limitation: you only visit the port cities on the cruise itinerary and you only stay in that city as long as the ship is at port. If you pick a cruise with the “wrong” cities, you can’t change your plans. You’re stuck with them.

Of course, since many people plan vacations out to the extreme — reservations every step of the way — this probably isn’t much of a limitation. I, however, like to wing it while on vacation. While this may mean that I don’t get to stay in a place I wanted to (because everyone else had reservations), it does give me the flexibility to stay an extra day at a place I really like or explore a place I learn about while on the road.

The best way to make sure the itinerary limitation doesn’t bite you is to choose your cruise carefully. We didn’t do this on our cruise. We just told the travel agent we wanted a one-way cruise in Alaska that began or ended in Vancouver. We didn’t know what we wanted to see. I have no real complaints about our itinerary, but now I know more about Alaska and where I want to go on my next visit.

“Hidden” Costs

Devils on the Deep Blue Sea : The Dreams, Schemes and Showdowns That Built America's Cruise-Ship EmpiresAlthough you can eat on board for free in most restaurants, there are a few costs that aren’t covered on a cruise. Alcohol is one of them. You pay for all of your drinks — unless you’re gambling in the casino. Drink prices are a bit higher than average, but made with top-shelf liquor. We were paying $8 a piece for our evening martinis (and downing two of them each night), but they were made with Grey Goose and other premium brands. Wine is typical restaurant pricing, but they offer a discount if you buy a 5-, 7-, or 10-bottle plan at the beginning of the cruise. The plan limits you to a shorter wine list, but we chose the 5-bottle plan and had perfectly good wine at most meals, with any leftovers to drink on our balcony later that evening or the next day.

The ship also has premium restaurants that cost $20 per person for a meal. There were two of these: Portofino, serving Italian food, and Chops, serving steaks and chops. We signed up for the Wednesday evening Mystery Dinner Theater at Portofino, which cost $49 per person and included champagne before dinner and wine with dinner, along with entertainment. The meal at Portofino was far better than any other I ate on the ship. (More about food in a moment.)

On our ship, we also had to pay for anything that came in a can or bottle, including Coke and bottled water. It really irked me to pay $2.01 (including a 15% gratuity automatically tacked on) for a can of Coke. The cruise cost us thousands of dollars and I felt that I was being nickeled and dimed. This kind of stuff could have been included for free in the fridge in our room — perhaps as a special perk for those who invested in a nicer cabin — but the fridge doubled as a for-pay servi-bar and it cost the same there.

Tatyana and LorendAnd speaking of gratuities, you’re expected, at the end of your cruise, to tip your lead and assistant waiters in the main dining room, the head waiter in the main dining room, and your cabin attendant. Our dining room service was very good — both waiter and assistant waiter were extremely professional without being stiffs. We joked about things, they gave us advice on wine for when we got home, and they didn’t have any trouble giving Mike and Syd (one of our two table mates) seconds and thirds of lobster tails on Tuesday night, when lobster was the popular choice on the menu. But the head waiter obviously only came around to be friendly and secure his tip, so we didn’t tip him. Many people didn’t show up for dinner on Thursday night, the last night of the cruise, to avoid tipping the dining staff. (More on cheapskates in a moment.) We tipped our cabin attendant the suggested amount, even though we didn’t like her. She did her job, but drew the line there. No special service, as we’d had with our last cabin attendant.

The excursions, however, can be the biggest cost of the cruise. They ranged in price from $12 per person for a trolley ride to more than $500 per person for some of the aviation excursions. Our costliest excursion was a helicopter trip with a landing on two glaciers; it cost $398 each. Anyone interested in saving money would probably not do a lot of excursions.

Our final bill for the extras on board (mostly alcohol and excursions) came to more than $1,800. And that doesn’t include the cost of the cruise itself, gratiuties for onboard staff, or the money we spent onshore for meals and other things. This isn’t a complaint; it’s just a note to those who think a cruise includes everything. A cruise only includes everything if you don’t drink or buy any extras on board and you don’t do more than wander around on foot when at port.

Food

If you’re on a diet and succumb easily to temptation, a cruise is not for you. You are guaranteed to eat too much of the wrong food.

Why the wrong food? Well, most of the food is the wrong food. The buffets and dining room menus are filled with fried foods and heavy starches and sweets. And since it’s all you can eat — even in the main dining room with table service! — if you like to eat a lot, there’s nothing to stop you. I gained 10 pounds on my first cruise and (fortunately) only 4 pounds on this one.

And there was certain scarcity to fresh fruits and vegetables. Why? Well, the cruise ship starts its journey in Vancouver, where it stocks up on all supplies for the next 14 days. It takes on passengers for the first 7-day cruise. Those are the lucky ones — they get lots of fresh food to eat. Then those passengers depart in Seward and the ship takes on its passengers for the return trip to Vancouver. Those passengers (which included us) are facing food that’s already been onboard 7 days.

On our Caribbean cruise, we watched them load fresh produce on board almost every single day. The food was good and fresh. But on this cruise, the food was very disappointing. I think that more than half of what we ate was prepared in advance and frozen, then defrosted or heated before serving. (Kind of like eating at some of Wickenburg’s fancy restaurants.)

The skinny (no pun intended) is this: the best food was in the for-pay restaurants, next came the main dining room, and finally, the buffet. But the only difference was the preparation: all of the food came out of Vancouver and was at least a week old.

Other Passengers

The vast majority of this cruise’s passengers were seniors in the 55+ age group. Of them, more than half were likely 65+. With more than 2,000 passengers aboard this full ships, that’s a lot of retirement money being spent.

Those of you who read this blog regularly probably know that the town I live in, Wickenburg, AZ, is a retirement town. I am surrounded by seniors every day at home. To be surrounded by them while on vacation was a bit of a disappointment. Our last cruise to the Caribbean had a better mix of guests, with age groups more evenly spread. I find younger people in the 25 to 50 year old age group more energizing and fun than the 55+ midwesterners we had on board this cruise.

How do I know they were midwesterners? I asked. Each time they sat us down with other people at meals, we’d talk. I’d ask where they came from. I got Michigan, Iowa, and Kansas more than any other state. Our dinner table-mates were from Little Rock, Arkansas. We didn’t meet a single other couple from New York or New Jersey or Arizona (our past and current home states), although we did meet a couple from Pennsylvania and another from San Diego, CA.

The interesting thing about most of these people is that they didn’t do much in the way of high-price excursions or for-pay activities on board. We never saw them in the Champagne Bar, which we visited for our evening martinis before dinner each night. It was easy to get reservations for massage, facial, etc. at the spa. There were lots of empty seats in the main dining room — two of the six seats at our table remained empty for the entire trip. My conclusion: many of these folks were trying to minimize the cost of extras by simply taking advantage of the free or inexpensive options on board and at port. And, by not utilizing the main dining room in the evening, they could avoid tipping the dining room staff. Cheapskates? Well, avoiding the dining room on the last night of the cruise to stiff the waiters is certainly the mark of a cheapskate. But I like to think that some of them were simply afraid of getting a $1,800 extras bill at the end of the trip.

Coupon Crazy!

I should mention here that these people were coupon crazy. Each evening, the cabin attendant put a daily publication for the next day in our cabin. The publication outlined hours for dining and activities and shore excursions. It also included one or more sheets of coupons. Many of the guests clipped these coupons and made it a point to take advantage of them.

For example, a coupon might say that if you went to Joe’s Tourist Junk Shop in Ketchikan (an imaginary shop) between 10 AM and 11 AM, you could redeem the coupon for a free gift worth $15 — while supplies last. I overheard people planning their day around this visit to Joe’s. And if we happened to walk by Joe’s at 9:45, they’d already be lining up. And the free gift? Perhaps a link in one of those bracelets they push at ports or a paperweight that said “Joe’s at Ketchikan” or something similarly junky. Joe’s hopes that these people will come in and buy stuff while they’re there. Some of them obviously do. T-Shirts seemed to be a hot item.

What’s B/Sad about Cruising

What’s bad or sad about cruising is what the cruise ship lines have done to the port cities. Sure, they’ve brought the ports lots of tourists and revenue. But what they’ve also done is created port shopping areas with the same stores over and over in every port. What local charm existed in these areas is completely blown away by cruise ship sponsored stores like Diamonds International, Tanzanite International, Del Sol, and too many others to remember. Every port has the same collection of shops and they’re conveniently located close to where the ships dock so all those seniors from the midwest don’t have to walk far to redeem their coupons.

Ketchikan Tourist AreaKetchikan was a good example. The day we were there, three cruise ships were lined up at the dock facing the port shopping area. This was roughly 6 to 9 blocks of solid shopping — mostly for jewelry and t-shirts — with the vast majority of shops owned by cruise ship companies or their affiliates. The Great American Lumberjack Show was on the outskirts of this — this tourist attraction does four or five or more shows a day with people lined up to see them. (We saw highlights of this on television, on a show purportedly about Alaska, so we didn’t need or want to see it in person.) This area was very crowded.

Creek StreetYet less than 1/2 mile away was historic Creek Street, the former red light district of the town, which had been converted into small, mostly locally owned shops. It was nearly deserted. And on the town’s walking tour was an interesting totem pole museum and fish hatchery, both of which were empty.

The excursion transportation — mostly buses and vans — comes right up to the port, making it completely unnecessary to step foot into town. So people who just want the bus tour don’t need to walk past tempting jewelry and t-shirt shops. They get door to door service and, on many excursions, don’t even need to get off the bus to “do” the port town.

Glacier LandingOf course, the beauty of Alaska still lies beyond all this. Sure, we did excursions, but we did the ones that took us away from the cruise ships and shopping cities they’d built. One excursion took us by helicopter to land and hike on two different glaciers. Another was supposed to take us by helicopter to a mountaintop, where we’d do a 4-mile hike with a guide and return to the ship by train. (That one was cancelled when low ceilings prevented us from getting to the mountain top; we later rented a car to see what we’d missed: on that day, fog.) Another excursion took us by float plane up the Misty Fjords, passing mountain lakes, waterfalls, and glacial snow before landing in a mountain-enclosed bay. (You can see now how we managed to spend $1,800 in extras.) And at the end of each excursion, we walked the town, going beyond the shiny gift shops to walk among the historic buildings and, in more than one instance, panhandlers and locals who weren’t fortunate enough to get jobs selling jewelry to tourists at the docks.

As usual, my cynicism is creeping in. I can’t really help it. We came to Alaska to see its beauty and learn more about its history. But at most port cities, we faced the same old tourist crap. I guess that’s because that’s what most other people on the cruise ships want to see. We had to dig to see what lay under all that junk. It was worth the effort.

Not All Ports are Equal

Radiance of the Seas at AnchorAn exception to all this: Icy Straits Point and the indian village of Hoonah. This port had no dock, so our ship anchored offshore and used three tenders (specially configured lifeboats) to ferry passengers back and forth.

There were a few excursions there: fishing, whale watching, bicycling. The main attraction was the old cannery, which had been converted into a fascinating museum with a sprinkling of locally owned gift shops. (Not a single Diamonds International sign in sight.) Hoonah also boasts the world’s longest zip line, which is over a mile long with a drop of more than 1000 feet. (I guess they felt they had to do something to get the tourists in.)

Bald EaglesMike and I did the 1-1/2 mile walk (each way) into town where bald eagles waited in treetops for the local fishermen to clean their fish. We stopped at a local bar, where a man had covered the pool table with old photos of the town and more recent photos of a 25-foot snowfall. Then we went to the Landing Zone restaurant at the bottom of the zip line and had a great lunch of chowder and fried halibut and salmon, prepared fresh and served by locals.

Back on the ship, I overheard one woman boast that she hadn’t even bothered to get off the ship that day.

Would I Do It Again?

With two cruises under my belt now, I have a good idea of what to expect on a cruise. (After reading this, you might, too.) With all the pros and cons, would I do it again?

I’m really not sure. The moving hotel aspect is very attractive. But the cost and limitations are a drawback. And the cruise ship line development of port cities is a real turn-off.

I’d consider it. But I’ll certainly do my homework before signing up next time.

Reach Out and Meet Someone

I remember what online community is all about.

I got my start in the online world back in 1984, when I bought my first computer. It was an Apple //c and I quickly began visiting bulletin board systems (BBSes) using my 300 baud modem. You could get away with 300 bps in those days — there were no graphics, no big downloads, no Flash or PDF or QuickTime files.

Back in those days I visited BBSes to participate in online discussions on what were called message boards: the precursor to today’s forums and blog comment features. Later, in 1989, when I bought my first Mac, I was quick to start my own BBS, The Electronic Pen. I kept it up and running for years, until the Web made BBSes archaic. Then I hopped on board Web 1.0 with a Web site — back in 1995 or so? — and have been a Web publisher ever since.

It Was about Meeting People

In exchanging comments and ideas on BBSes, I met a lot of people:

  • There was Tim, who ran a BBS out of the same office where he sold tombstones. (Really!) Tim was my age and a Mac user and he’s part of what made me so enthusiastic about Macs. He introduced me to Mark, a legally blind albino guy who worked as a graphic designer. (Really!) Mark couldn’t drive, so we’d take him out to dinner once in a while. He had all this high-tech computer equipment that he’d show off to us: things like CD-ROM writers, 20″ monitors, and high-end graphic software. (Remember, this was in the early 90s.) Although I lost touch with Mark, I still exchange e-mail with Tim, who married his high school sweetheart, fathered three boys, and got a job as an IT guy for some medical information company.
  • There was May, who ran a BBS for writers. She wanted to become a writer, but she couldn’t seem to get her foot in the door with any publisher. She even quit her day job to devote all her energy to writing. She wound up broke and depressed. She went back to work. Years later, she finally got some stories published. I don’t know what she’s doing now. She once called me an “overachiever,” which is something I’ll never forget. It made me feel as if I should be ashamed of my success.
  • There was Art, a computer programmer who knew everything — or thought he did. At thirty-something, he still lived at home with his parents. When I met him in person, I was very surprised to see that he was only about 4’10″ tall. He bitched a lot about his employer and I wasn’t too surprised when he got canned. When he got 18 months pay in his severance package, I encouraged him to travel around a bit before getting back to work. He visited his brother in Seattle. “There’s snow on the Rockies,” he told me after his trip. “Art,” I replied, “there’s always snow on the Rockies.” Some people really need to get out more. We lost touch just a few years ago.
  • There was Bill, a copywriter. Here was a middle-aged man who wrote for a living. And he made a good living. He offered me advice (when I asked for it) and was amazed when I told him that I thought something I’d written “sounded good.” “That’s the point,” he said, obviously excited that I’d made the comment. “Good writing should sound good when it’s read out loud.” I learned a lot from him, but ironically, we lost touch soon after my first book was published.
  • There was Martin, a computer geek like me, but with an arty streak. He did design work and computer training for a local computer store. If my memory serves me right, he helped me get my foot in the door there and I worked for them for some time. I went to his wedding and, when I moved out to Arizona, he, his wife, and their new baby spent a day with us. When he set up his own consulting firm, he sent me a full complement of his high-class giveaways. I still use the logo-embroidered throw blanket when I sit on the sofa to watch television some evenings. I haven’t seen him in years, but he’s one of my LinkedIn contacts.

These are just some of the people who entered my world through the world of online communication. (And no, these aren’t their real names.) They were friends, despite our mutual shortcomings, and we socialized both online and off. In fact, I was better friends with these people than my college classmates.

What Changed

Somewhere along the line, things changed. I think it had something to do with switching from the two-way communication of BBSes to the one-sided Web sites of Web 1.0. Although I remained friends with this handful of people for some time, I didn’t meet anyone new.

And I didn’t miss meeting people.

After all, I was busy with work — writing books and articles, teaching computer courses for two different companies, writing course material. And then we moved to Arizona and I was busy with my new home, learning to fly, and exploring my surroundings. As my old BBS friendships faded away, new ones didn’t replace them. But I didn’t even notice the gap in my life.

Social Networking

Until yesterday, I never realized the value of social networking sites like LinkedIn, MyBlogLog, and Twitter. You see, I wasn’t in the market for new friends. I didn’t need any. I have friends around here, I have friends elsewhere.

The trouble is, our friends around here are either 20 to 30 years older than we are (remember, Wickenburg is a retirement community) or, if they’re younger, they’re transient, passing through Wickenburg on their way to someplace where they’re not always the youngest person in a restaurant or supermarket. (Okay, so that’s an exaggeration. There are usually a few people younger than me in the supermarket, and some of them are even customers.) We lost two friends our age just last month when he got a better job in Michigan and they just packed up and left. Other friends have been bailing out regularly: one couple to Colorado, one to San Diego, one to New Mexico.

Mike and I aren’t movers. We like to stay in one place a good, long time. But with the way things in Wickenburg are going, I’m ready to bail out. We’ve been here 10 years — that’s longer than most of our friends (in any age group).

So I’m starting to think about new friends who live someplace other than Wickenburg.

Yesterday, I read “How to Use MyBlogLog to Succesfully Build Massive Blog or Website Traffic.” I’d signed up for MyBlogLog back in January, but never did anything with my membership. I had some time, so I went through the instructions in the article. And I started finding blogs for people who write about the same kinds of things I write about. People with similar thoughts and ideas and concerns. And I began to realize that I could make friends online again. Perhaps even good friends.

Now if you’re reading this and actively participate in social networking sites, you’re probably thinking that I must be some kind of moron. Of course that’s what social networking sites are for.

Hoof PickWell, have you ever seen a hoof pick? There’s a picture of one right here. You use it to scrape horse poop and mud and rocks from the bottom of a horse’s foot. It’s standard equipment for everyone who rides a horse — a responsible rider wouldn’t even consider getting into the saddle unless the horse’s feet had been checked and scraped. But if I didn’t tell you this and you’d never needed one and someone handed one to you, would you know what it was for?

That was me with social networking Web sites. I couldn’t understand the purpose.

Now I do.

(Duh.)

Build Community Through Participation

Yesterday, I also realized that what’s holding back my blog from reaching the next level (whatever that is) is the sporadic participation of visitors.

Sometimes I’ll write a post, hundreds of people will read it, and a bunch of people will post comments with other viewpoints about what I’ve said. This adds substance to the blog and makes it more valuable not only to visitors, but to me. I learn by starting a conversation and reading what others add to it. (I love to learn.)

Most times, however, I’ll write a post and even though many people will read it, no one will post comments to it. Which makes me wonder whether I “got it right” or if anyone cared about what I said. Are these posts a waste of time? Are they useless bandwidth suckers? Why did Post A get a lot of response while Post B, with a similar topic, generate “dead air”?

I may never know.

But the one thing I do know is that I want more participation here. And since I want it here, I’m sure other bloggers want it on their sites. So I’m actively trying to add something to a comment string — sometimes even starting a comment string — when I have something to add. Even if what I have to say is just a quick note to thank the blogger or give him/her my support on that issue. (Whatever that’s worth.)

Twitter Really Is More than Just a Waste of Time

Yesterday was also the day that I realized that Twitter is a lot more interesting if you’re monitoring the tweets of people you know and/or care about. I realized this as I started adding “friends” to my Twitter account — the same people whose blogs I was beginning to monitor. When you follow the tweets of a select group of people, you learn more about them and the things they do. Like me, some of these people publish tweets about the major work-related things they do throughout the day. Or about ideas that have just gone through their heads. Or about life’s frustrations.

And I think that Twitter can be a great way to help decide whether I want to take another step toward a real friendship with someone. A person’s tweets reveal not only what he/she is doing or thinking, but his/her personality. I could never pursue a friendship with someone who composed tweets like AOL chat room IMs. Or a person who took him/herself too seriously. Or someone who used Twitter solely to market a product or service.

So I’m going to be more active in the blogging world, both in my blog and on other people’s it will be interesting to see what new friends I can make.