Author Archives: David Bookstaber

Ammunition Prices

Via The Firearm Blog, spot prices for the metals used in ammunition (primarily copper, lead, and zinc) are approaching their 2008 records and the Economist reports that they are projected to stay high.

Granted, the price of ammunition over the last few years initially shot up not because of inflation in the cost of raw materials but rather because of a massive increase in demand: U.S. military operations were already straining production capacity when political panic following the 2008 election prompted civilian stockpiling. Manufacturers are only now beginning to catch up to the demand.

I had hoped that at this point prices would begin to fall back towards the levels we saw in the middle of the decade. But now it looks like raw material prices may keep the floor close to where we are right now.

Robinson Armament XCR Short-barreled Rifle

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The Robinson Armament XCR is a “modular weapon system” that was originally developed as a candidate for the USSOCOM SCAR program. Of course, FN Herstel won that government contract and just last year began marketing civilian variants of its SCAR rifle. Robinson, meanwhile, shifted its attention to the civilian market where it began selling the XCR in 2006. Even with the recent introduction of the Remington (formerly Bushmaster) ACR the XCR is still the most widely available and, at around $1600, reasonably priced SCAR-type civilian rifle. It sports the following features common to this type of firearm:

Adjustable gas piston operating system
Foldable stock
Quick-change barrel
Multiple-caliber conversion
Monolithic upper receiver and rail system
Ambidextrous, short-throw safety

An excellent comparison with other “third generation carbines” is maintained on this chart.

Features unique to the XCR include:

Clever (and now patented) ambidextrous bolt catch, positioned just in front of the trigger guard.
Excellent 3.5-pound trigger. This “enhanced trigger” was introduced in 2009, about the same time as their ambidextrous safety, and replaces the 6 pound trigger found in earlier versions.
AR-15 compatible grip (the one shown here is the MagPul MIAD)
Non-reciprocating charging handle
3-lug bolt (easier to clean)

Features currently lacking on the XCR include:

Stock with adjustable length-of-pull and cheek height — although an “enhanced stock” is supposedly in development, and an optional adaptor allows any AR-15 stock to be installed.
Ambidextrous magazine release (“in development”)
Ambidextrous charging handle
1/9″ twist barrels are standard; 1/7″ to this point have been promised but hard to get.

A good critical review here summarizes common complaints about the XCR, most of which center on the fact that a lot of its hardware is screwed down instead of pinned. The XCR manual comes with a number of recommended points for applying red and blue loctite to keep screws in place.

In my opinion the XCR lower receiver is the ideal item to register as a Short-Barreled Rifle (SBR): The same XCR-L lower can then be fitted with uppers and barrels as short as 7.5″ as well as at least 3 caliber conversion kits (currently available: 5.56, 6.8SPC, and 7.62×39). The photos here show a standard 5.56mm upper with an 11″ barrel, which makes it 30.5″ long overall, and only 22.5″ with the stock folded.

A few other noteworthy details:

The gas system has six positions: Off, suppressor, and standard settings numbered 1-4.
The folding stock includes a quick-detach sling swivel slot for a single-point sling.
Company representatives frequent the official online forum.
The company has been responsive to my problems and requests via both phone and Email.

Residential Power Factor Correction (Scam)

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At a recent home trade show I was intrigued by a company (KVAR) pushing a $400 capacitor that, when wired into a residential electric service panel, promises to reduce energy consumption by 6-10%. They even had a neat demonstration consisting of a large fan motor and multimeter wired through their capacitor. Sure enough, when the capacitor was enabled the amperage shown on the multimeter declined.

I was a little suspicious because I happened to own an air handler that used the exact fan motor they were demonstrating, and I know that it is always installed with a large start capacitor of its own that was conspicuously absent in their circuit.

They claim their savings are due to their capacitor increasing the “power factor” of a home’s inductive electrical load. Well I didn’t know anything about power factor, but I thought it would be unusual in the age of Energy-Star appliances for manufacturers to be omitting capacitors that could increase their energy efficiency.

Having studied up on power factor correction it seems clear that a fixed-size capacitor is not going to consistently improve the power factor of a residence. And even if it could that wouldn’t result in any savings on the electric bill.

Energy Star confirms that the promises of KVAR’s residential product (and knock-offs) are a scam. Michael Bluejay gives a more detailed explanation. My favorite explanation was found here:

Residential customers are not billed for kVA, they are billed for kWh. These devices, when they are working properly, have almost their entire impact on reducing kVA, not kWh. Some commercial customers can save on their electric bills by improving their power factor, but residential customers can’t. In residential, the devices can in theory achieve a very small savings by reducing losses in the wiring, but that impact depends on the PFC device being properly applied to the specific load, not a generic whole house device.

If such devices worked as advertised, then energy efficiency research and advocacy groups would be promoting them throughout the country and many electric utilities would be giving rebates for their purchase.

What a Difference an Alignment Makes!

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I have enjoyed my Mazda 6 Sport wagon, but early on one thing that bothered me was its tendency to understeer — to scrub and squeal in tight turns. Recently I mentioned this to a friend who does amateur racing and after an extended discussion of suspension geometry I concluded that I needed a custom wheel alignment.

Cars with low-profile tires are even more sensitive to alignment, because there’s less sidewall to flex and compensate for suboptimal orientations between the tire’s tread and the car’s track. Factory specifications for alignment are quite loose, and even those broad ranges are often exceeded once a car is broken in. What surprised me most, given Mazda’s sporting orientation, is that their 6 series suspension does not allow for adjustments in front wheel camber, which is the most important alignment factor in cornering performance.

Fortunately there is enough demand to correct this shortcoming that SPC has produced after-market upper ball joints (SKU 67115 — $165 per pair from IAPdirect.com) that allow several degrees of camber adjustment on each wheel.

Serious drivers and mechanics emphasize that it’s worth paying extra for this sort of work to be done by competent technicians. My expert directed me to a local shop that caters to racers that he knew would correctly install the ball joints and perform a precision alignment, and he said it was well worth the $470 they wanted for the work.

I requested the following specs:

Front: Camber -1.1 degree, Total Toe-in at tire: 0mm
Rear:Camber -1.1 degree, Total Toe-in at tire: 1mm
Caster: Match both sides (or left < right if not exact so that any pulling is towards left)

My goal with these specs was three-fold:

Neutralize oversteer and improve cornering grip, using the most negative camber possible without inducing significant inside tire wear.
Lighten the front and steering responsiveness by eliminating front toe-in and leaving just enough in back toe-in to provide a measure of straight-line stability.
Ensure no pulling, drift, or excessive tire wear, by ensuring caster is balanced and by minimizing toe-in.

They test-drove and measured my alignment before doing the work and noted that the alignment was indeed quite bad overall. For example, my rear tires were actually toed out by 1mm! They didn’t put it on their alignment rack until after they installed the ball joints, so we’ll never know how bad the front measurements were before, but by the time they were done they had almost exactly matched my alignment specs, as shown in the chart below.

Driving away from the shop it was almost like a different car: It tracks straight, the steering is lighter, and it corners like it’s on rails.

Realtor Leeches

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Since I think the residential real estate market is bottoming out, and my family will soon need more space anyway, I recently began shopping for houses. Based on my reference post on this subject it won’t surprise people to learn that I have a low opinion of the real estate marketing cartel (a.k.a. “Realtors”).

Following my own advice I did not enlist a “buyer’s agent.” Instead I did my own searches through listings and, when I wanted to see a house, I contacted the seller’s agent directly and drove myself to the appointment.

Overall my experience with these “Realtors” continues to be dismal. Of the dozen or so licensed listing agents with whom I have interacted in the last few weeks at best only three struck me as professional and ethical. Many were incompetent, lacking basic knowledge of the houses they were contractually and ethically obligated to sell. Some were more interested in selling themselves to me than in selling the particular property they listed and in which I had expressed interest. And of course many, on learning I wasn’t being “represented” as a buyer, tried to convince me that I should let them be my “buyer’s agent.” After all, they explained, their “services” as my representative wouldn’t cost me a penny.

This argument, by licensed professionals, is not only unethical but should also be illegal: Traditional buyer’s agents are not free. They collect a substantial fee from the sellers of any house purchased by their client — usually 2.5%-3.5% of the selling price. This is known as a “co-op commission.” On a $1MM house a buyer’s agent expects to walk away with about $30k. As I asked some of these Realtors, “What could you possibly do as my representative that would be worth $30k?” It became a rhetorical question.

At best they run the same computer searches I do and contact the same listing agents I do. If I didn’t have a car I could probably get the listing agents to drive me to their showings. In fact, I consider it detrimental to have a house shown by someone other than the owner or listing agent. After all, a buyer’s agent typically doesn’t know any more about the house than I do from reading the listing, requesting copies of the floor plan, or walking through it. At least when the listing agent is showing it there is a presumption that they have studied the property and are prepared to answer questions that might be asked by a buyer. And when they don’t know the answer (as happens ridiculously often) at least I’m one person closer to the answer.

As I mentioned in my previous post, a buyer’s agent doesn’t even fully represent the interests of the buyer. I want to find a house that most closely matches my objectives at the best possible price. A buyer’s agent wants me to buy a house with as little work on their part as possible. Their interest is in getting me to make a purchase producing the biggest buyer’s co-op, so not only would they prefer I pay as much as possible, but they would also prefer I didn’t see houses with reduced commissions.

So there are already plenty of principled reasons to avoid buyer agents. But the money is the biggest: When I submit an offer on a house and make it clear that I am waiving the “buyer co-op,” it’s like adding 3% to my bid. Some Realtors may quibble that they contract with sellers for a fixed commission rate, and if the buyer doesn’t present a licensed agent to claim it then they get to keep the full commission for themselves. Hopefully neither sellers nor courts will countenance such an anticompetitive gambit. Though if push comes to shove, I can confirm that there is no shortage of licensed Realtors eager to list my old house. It won’t be hard to find one who will agree to be my buyer’s representative at settlement and refund their commission to me.

[Update: How to access MLS if you’re not a Realtor. Several comments note that only Realtors have access to the MLS, and without that you can’t effectively do your own searches. The reality is that you can get full access to listings with one more step: In addition to trulia.com and homefinder.com, most real estate agency web sites allow you to run searches against the entire MLS. None of them reliably come back with the complete MLS listing, but they will tell you which agency has the listing. I have found that if you then go to that agency’s web site and search for the property they will provide the complete listing information, including contact info for the listing agent and often other details.]

Products I’m looking for in 2010

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Consumer High Speed Video Cameras

It has been more than a year since Casio began shipping the EX-F1, and it is still the fastest consumer video camera on the market. However, at its top speed of 1200 frames per second it only captures a very coarse 336 x 96 resolution.

Memory bandwidth and data buffering have previously been the bottleneck of high-speed video. Pros pay tens of thousands of dollars for specialty camera systems capable of capturing high-resolution video up to 10,000fps. (Higher frame rates require lighting power that would be beyond the means of amateurs.) But now that high-capacity solid-state data drives with write speeds over 500MB/sec are shipping for just a few hundred dollars the technology exists to produce a sub-$1000 consumer video camera that can capture full-resolution video at thousands of frames per second. I can’t wait to get my hands on one.

Better Console Gaming Controllers

Ten years ago Microsoft introduced a radical new gaming controller under its Sidewinder line called the Dual Strike. Apparently nine years ago they took it out of production. I used it to play several PC versions of Grand Theft Auto and liked the controller so much that when I discovered it was discontinued I scooped up a few more boxes at clearance. The Dual Strike is the best first-person shooter (“FPS”) controller I have ever used: It combines the precision and speed of a mouse with the convenience of a single hand-held gamepad that doesn’t tie you to a flat surface.

I recently picked up a PS3 and was excited to check out the state-of-the-art in FPS games. What I can’t believe is how bad the standard console controllers are for this purpose. Apparently people who are serious about these games buy split controllers like the FragFX which basically put you back at a desk with a mouse. Not exactly the setup one is looking for when plugging a console into a home theater system and sitting back on a sofa.

Though stockpiles of Dual Strike controllers are still available they are not compatible with the current crop of gaming consoles. I hope it’s not long before the console gaming complex rolls out a FPS controller to meet this need.

Computerized Ballistic Optics

Given how cheap and compact computer power is I can’t understand why the $1500 Barrett BORS is the only integrated ballistic computer on the market. Of course a professional shooter can do ballistics in his head for any shot one could take with a man-portable firearm (i.e., up to .50BMG shooting up to 1.5 miles). And serious amateurs cobble together their own ballistic computers, typically using a combination of smart-phone ballistics applications, Kestrel weather meters, laser rangefinders, and perhaps some angle gauges. Hopefully this is the year that scope or laser rangefinder manufacturers begin to integrate atmosphere and angle sensors along with ballistic data to provide precise firing solutions, perhaps even automatically adjusting the scope’s reticle for a particular shot. Before long I also hope to see laser rangefinders that integrate laser doppler anemometers to determine average windspeed and direction over the ballistic trajectory, making first-shot hits as precise as the rifle and the shooter’s trigger finger.

Bullpup Single and Double Rifles

As a fan of bullpup firearms I was excited by Steinkamp’s SW1 double rifle. But since their pricing is over the top I’m hoping that this year some domestic manufacturers will pick up on the concept to produce single or double bullpup rifles and shotguns.

Subsonic .22LR Ammunition and Barrels

As I wrote late last year, there are significant benefits to be had with heavier subsonic .22LR ammunition. I hope ammunition manufacturers step up their offerings of .22LR over 40 grains, and that .22LR barrel manufacturers switch to the higher twist-rates needed to shoot the stuff well.

Recommended Speakers: Aperion Audio

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After I bought a PS3, primarily to serve as a Bluray player, I decided it was time to put rear speakers on my home theater system. I last tried this at least five years ago with several pairs of speakers priced around $100 each. None of them could keep up with the old premium Fosgate Audionics speakers I have on my front three channels, so I gave up.

This time I asked a friend who’s an A/V fanatic what to get and without hesitation he sent me to Aperion Audio, where I ordered two 6-IW in-wall speakers for $150 each. My initial impression was that they are actually superior to my Fosgate speakers. Having put them through my Pioneer receiver’s autocalibration they are a seamless part of my surround sound system.

Top Investment Priority: Beating Inflation

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Nominal investment performance numbers give us a false sense of how hard our money is working for us. Real returns, which are adjusted for inflation, look much worse over the long term.

One analyst also factors in the effects of taxes and fees to produce “real-real returns,” which are even more pathetic:

Garrett Thornburg, founder of Thornburg Investment Management in Santa Fe, N.M., calculates what he calls “real-real” returns, adjusting stock performance not only for inflation but also for real-world drags such as taxes and fees. Nominally, a dollar invested in the stocks of the Standard & Poor’s 500-stock index at the end of 1978 had blossomed to $22.88 at the end of 2008, including dividends, a sweet gain even after the 2008 meltdown. But once estimates of inflation, taxes and costs are removed, he figures, the investment was worth $3.76.

All of this might be enough to put investors off stocks entirely, until they consider the long-term alternatives. Measured over the 1978-2008 period, rather than over just one decade, stock performance in real-real terms actually is better than that of just about any other major investment class, Mr. Thornburg found: 4.5% a year. Stocks’ ability to keep up with inflation over the very long haul may be their best selling point.

In real-real terms, stocks did better over that period than municipal bonds (2.5% a year), long-term government bonds (2% a year) and corporate bonds (0.2% a year). Real-real home prices were unchanged over those 30 years. Both short-term government bonds and commodities suffered losses.

Investing for Inflation Protection

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Last year I recommended TIPS funds as particularly attractive for tax-exempt investment accounts.

TIPS have gained substantially since then, but from a historical perspective the current 10-year TIPS break-even rate of 2.1% is still low. (“Break-even” is the realized inflation rate above which an inflation-protected security will pay more than its non-inflation-protected equivalent. In the case of TIPS that would be regular treasury bonds. A break-even rate of 2.1% means that ). Since inflation protection is valuable insurance in a market like this, with low current inflation but exploding money supply (which could easily lead to surprisingly high inflation in the next few years), one might expect TIPS break-even rates to run above the long-run expected inflation rate, which is around 2% per year. Indeed, it is still cheaper to buy TIPS than to buy treasuries and hedge against inflation with options.

However, as I noted earlier, TIPS aren’t a perfect inflation hedge. Bill Tedford, a successful treasury bond portfolio manager and inflation bug, has other ideas on investing for protection against inflation:

In his own portfolio, Mr. Tedford has begun shorting 30-year Treasurys, expecting the prices to fall as interest rates begin to rise. For clients, however, Stephens is encouraging the use of exchange-traded funds to own exposure to real assets. Mr. Tedford says a 5% or 10% position overall “is big enough to protect a larger portfolio.”

Among ETFs, Stephens likes the U.S. Gasoline Fund, the iShares Dow Jones U.S. Oil & Gas Exploration & Production Index, SPDR Gold Trust, PowerShares DB Base Metals Fund and the PowerShares DB Agriculture Fund. The firm also likes Plum Creek Timber Co.

Though Treasury inflation-protected securities, or TIPS bonds, would seem a natural bet, Mr. Tedford says his group just this month sold off its TIPS investments. Real yields on TIPS are barely above 1% now and Mr. Tedford expects those yields will increase as inflation mounts, hurting prices, which move in the opposite direction.

The likely result: “The return on your TIPS could fall 10% or 15%,” basically wiping out the bond’s inflation protection.

I would personally steer clear of gold as an inflation hedge because it is particularly prone to speculative bubbles, and has less intrinsic value than most other commodities. But diversified investments in energy, industrial metals, and the agricultural sector should also serve as good long-term inflation hedges.

Avoid “Hedge Fund Clones”

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I suppose you can’t fault Wall Street for catering to demand, but as I explained a few years ago hedge fund clones are ridiculous investments. Nevertheless, the WSJ reports investors are still lining up for these offerings and banks are still rolling out new ones.

While most clones have so far generally kept pace with broad hedge-fund indexes, their performance has been all over the map. Between March 2008 and Sept. 30 of this year, clones studied by researchers at Haute Ecole de Gestion in Geneva and Bank Julius Baer & Co. delivered annualized returns ranging from -21% to 6%. And some clones this year have sharply underperformed broad hedge indexes. State Street’s Premia Fund was up less than 2% in the first 10 months of this year, compared with a 10% gain for the HFRI Fund of Funds Composite Index.

Even Andrew Lo, one of the originators of the “clone” concept, and current manager of a replication fund, has to admit that this concept is missing a big piece of the game:

Being restricted to easily traded holdings, replicators may not capture a big chunk of hedge-fund performance. Anywhere from 10% to 60% of hedge-fund returns may come from a premium earned by holding illiquid assets….