How Diversification Works

In previous posts, we discussed how diversification--or investing in different kinds of assets--can reduce risk, and how we can use this strategy to protect ourselves in times of recession or economic crises. By employing diversification and "putting our eggs in different baskets" we can reduce the variability or fluctuations in the returns of our investment portfolio. But how exactly does diversification do this?

Let's take a look at this simple example. The following table shows the yields (in sacks per month) of four types of crops under different rainfall levels.

Crop Type	Rainfall Levels (inches)
	< 20	20 to 30	30 to 50	> 50
Wheat	30	40	30	0
Oats	60	20	10	0
Corn	25	25	25	25
Soybeans	0	30	50	90

In the table, we see that each of the four crops, taken in isolation, produce varying yields in different rainfall levels. For example, since oats thrive in a low rainfall environment, we can produce more sacks when the rainfall level is low than in very wet weather (60 sacks when the rainfall level is under 20 inches compared to zero sack when the rainfall level is more than 50 inches); the variability of oat yields can be described as ranging from zero to 60 sacks. The yield for wheat, in contrast, just ranges from zero to a maximum of 40 sacks. Since the yield for wheat has a narrower range than the yield for oats, we can say that wheat yields are less variable than the yield for oats. But among the four crops, we can see that corn provides the least variable yield, with 25 sacks regardless of the weather; because there is less variability and uncertainty in the yield of corn, and because there is no chance of zero yield whatever the weather is, we can say that corn is the safest or least risky crop.

So does this make corn our best option? Well, not necessarily: remember, we are not limited to planting just one crop since we can always divide our resources among several crops. For example, if we allocate our resources equally among wheat, oats, and soybeans, we can compute for our total yield by getting the average yield of the three crops under each rainfall level:

Rainfall < 20 inches: yield = (30 + 60 + 0)/3 = 30 sacks
Rainfall 20 to 30 inches: yield = (40 + 20 + 30)/3 = 30 sacks
Rainfall 30 to 50 inches: yield = (30 + 10 + 50) = 30 sacks
Rainfall > 50 inches: yield = (0 + 0 + 90))/3 = 30 sacks

We see here that by planting different crops, the variability of the yields is reduced to zero, and that under any rainfall condition, we yield 30 sacks: this is diversification in action. By planting crops that behave differently under the different rainfall scenarios, we were able to minimize risk. If the rainfall level is going to be low, we can rely on wheat and oats since these crops thrive in dry environments; if the weather is going to be wet, we can count on soybeans to deliver for us. So no matter what happens, no matter how the weather turns out, our bases are covered and we are assured of yielding 30 sacks of crops, which is even better than if we plant the equally safe corn.

We can think of these crops as different assets or investment vehicles (e.g., stocks, real estate, bonds, bank deposits, T-bills, etc.), the yields as the returns on our investment, and the variability of the yields as investment risk. Diversification can reduce the risk of our investments--without sacrificing returns--the same way it worked by planting wheat, oats, and soybeans. Using the example above, we can now identify two requirements for diversification to work:

1. Invest in several securities. Adding securities to our investment portfolio (collection of investments) reduces the risk of the portfolio as a whole.

2. Invest in securities that do not move together, or behave differently. Diversification will only work if the assets we invest in do not move in tandem under different scenarios or economic conditions. This relationship between asset returns is referred to as correlation. For diversification to work, we need to invest in assets that have negative or low correlation.

Listing Day Decisions for the Cebu Pacific IPO

DEAR INVESTOR JUAN

Dear Investor Juan,

My dad and I were able to buy 3,000 Cebu Pacific shares at 125 pesos per share. One of my friends suggested that we sell our shares on the first day of trading (October 26, tomorrow) and just decide on a target price. I just want to ask what you think about this: should I sell on opening day, or should I hold on to the shares for the long term? Thanks sir!

Karl


Dear Karl,

First of all, congratulations to you and your dad for being able to get hold of those much-demanded Cebu Pacific shares. Tomorrow's the first day of trading, so you should be eagerly anticipating what will happen, and how this will affect your decision whether to sell or not?

Extraordinary listing day returns have been well-documented in markets around the world. In the Philippines, University of the Philippines professor Roy C. Ybañez (one of my former finance professors in the MBA program) studied the listing day returns of 43 IPOs from 1989 to 1993. Prof. Ybañez found that these stocks exhibited an average excess return of 40% on listing day, on top of the benchmark return posted by the market index. I'm not aware of any more recent, follow-up study regarding listing day returns for IPOs in the Philippines, but I'm pretty sure that a majority of IPOs since 1993 have reflected comparable excess returns on listing day.

Based on the tremendous demand for Cebu Pacific shares, even way before the subscription period ended, I think it's safe to say that the stock price will rise significantly on the first day of trading tomorrow. But since I don't know enough about the actual level of demand for the stock or the intrinsic worth of the business, I really can't specify the extent to which this will happen. But for the sake of discussion, let's suppose that right in the middle of trading (9:30am to 12:10pm), the stock price rises to 150 pesos. That's a 20% increase in the stock price, which means your 375,000 peso investment will then be worth 450,000, for an easy profit of 75,000 pesos (gross of taxes and fees) if you sell the stock at that exact moment. Not bad for a few days "work", if we count the days between listing day and the day you bought your shares.

So why would you not sell the stock if it reaches 150 pesos per share? Well, maybe you're thinking that if you just wait a couple more minutes, the stock price might reach 160. How about 200 the next day? Heck, it may even reach 300 pesos at the end of the week. Since these are all very real possibilities, any hesitation to sell would not be misplaced. Still, given that the stock price has already risen by 20%, the longer you delay selling and realizing that gain, the higher the chance that you'll lose it, or even part of your investment. So basically your choice is between a sure return of 20% (or 75,000 for your 375,000) on the one hand, and the possibility of a higher return or a loss on the other. The problem with the second option is that it is fraught with uncertainties, like how high or low the stock price will go (return/payoffs), the chance that it will go up or down to a particular level (probabilities), and the exact moment when this price would be reached (timing). Because of this, a lot of people would choose the sure payoff over the gamble, even if the upside potential of the latter is very high, or even theoretically unlimited.

So, what have we learned here? First, that it won't be unreasonable to expect the stock price of Cebu Pacific to significantly increase tomorrow, given how past IPOs have behaved on listing day and the high demand for the Cebu Pacific stock. Second, we've seen how it makes sense to "cash in" on a sure thing, rather than delay the sale and face a lot of uncertainties. If you think both these things make sense, then your friend is right, it would be best if you just sell the stock tomorrow the moment you reach your target price. And that is something you would have to determine for yourself. Is 20% high enough for you, or will you be willing to wait for 30%? Or maybe 10% will do? Whatever that number is, you would do well to relay your sell instructions to your broker early tomorrow morning: you might miss the boat altogether if you just scramble to call your broker at the exact moment your target price is reached.

This is really exciting. I think a lot of us will just spend all of tomorrow morning sitting in front of our computers to watch how things will unfold in real time. Good luck, Karl! We're all rooting for you. :)

Everything You Need to Know About Personal Finance

FINANCIAL TUMBLR-ISM

Seems simple enough, right? RIIIIGHT?

Unfortunately, for many of us it's not as simple as that. There are a lot of reasons why people live beyond--or, fine, maybe most of the time just a tad under--their means. Some simply have gotten so used to a particular lifestyle--condo living, morning grande lattes, daily 500-peso lunches--that when they do decide to cut back on spending, they have a difficult time giving up even the simple, useless stuff. While others have developed this certain sense of entitlement, that for one reason or another, they deserve whatever practical or emotional rewards spending may bestow upon them: "I worked so hard this past month, I think I'm going to treat myself to an LV handbag," or "It's been a long day at work, so I'm going to reward myself with a 1,500 peso dinner at this fancy-schmancy restaurant."

These people find it easier to justify buying stuff than the default option of staying put and not buying anything they don't really need. I have a Filipina friend here in Hong Kong who currently owns an iPod Touch, and iPhone 3Gs, and a Blackberry Torch--and she's been seriously contemplating getting an iPhone 4 or iPad for her birthday (happy birthday! ;)). On top of that, even if she's only been here for 16 months, she has already accumulated 20-plus pairs of shoes (that's like, close to all the pairs of shoes that I've owned in my lifetime), apart from the many more she has back in Manila. I've asked her questions several times about these purchases, just to have a better idea why anyone would want so much stuff. But no matter how she tried to explain that she needed some of these things (like, the Touch was for music, the iPhone was for her Philippine line, and the Blackberry was for her HK line) and she simply wanted the others, I still could not get it.

It's clear that the biggest challenge in "spending less money than you make" is finding ways to control or altogether avoid unnecessary and impulsive spending. Fortunately for my friend and the rest of us who easily succumb to the lure of everything shiny and new (that new MacBook Air looks mighty fine, by the way), researchers from the National University of Singapore and the University of Chicago's Booth School of Business found a simple way of improving a person's defenses against temptation. It seems that it may take something as simple as firming up your muscles--any muscle--to avoid immediate but temporary pleasures that run counter to the attainment of long-term goals. In simpler terms, the next time you come across an expensive gadget or trinket that you badly want but don't need and cannot afford, just clench your fist or firm up your bicep and you'll find it easier to walk away.

Jollibee Acquires Mang Inasal for 3 Billion Pesos

IN THE NEWS from ABS-CBNnews.com

JFC's one week stock price and volume levels (number of shares traded). 

Notice the huge one-day jump in price and volume on October 18.

Weren't we just talking about this a few days ago? So it turns out that all those rumors were not complete fabrications, after all.

In a disclosure to the PSE, Jollibee Foods Corporation (JFC) said it is acquiring 70% of Mang Inasal. Of the estimated 3 billion peso transaction price, Jollibee has paid 200 million pesos to parent firm Injap Investments Inc., which will continue to hold 30% of Mang Inasal. Ninety-percent of the balance will be paid when the two parties sign a share purchase agreement, which is subject to a 30-day due diligence conducted by PriceWaterhouse Coopers-Isla Lipana & Co. auditing firm and Romulo Mabanta Sayoc De los Angeles law firm, and. The remaining 10% will be paid over 3 years.

Mang Inasal’s network will add about 5% to Jollibee’s worldwide systemwide sales, 5% to its revenues, and 7% to its operating income. Once completed, the deal will also increase Jollibee’s current 1,578 stores in the Philippines and 375 abroad by 16%.

Jollibee has recently sold its stake in Delifrance, a French pastry store that it acquired in 2006 and divested from two businesses in Taiwan and China in line with its thrust to concentrate on larger quick-service restaurant businesses.

At yesterday's trading, JFC's stock price jumped 8% to 97 pesos per share, raking in handsome profits to those who were "in the know" at least a day sooner than everyone else. I only found out about this late last night (thanks to Ange for the heads up), and the online press releases were only published late yesterday afternoon, way past trading hours. When did you guys find out about it in the Philippines? I smell some insider action going on. Do you?

The acquisition values Mang Inasal at roughly 4.3 billion pesos (at 3 billion pesos for 70% of the company, go do the math), just a tad short of Injap Sia's rumored counter offer of 5 billion pesos. Kudos to Mr. Sia for a job well done, with that IPO press release more than adequately stirring interest about everything Mang Inasal, and seemingly forcing Jollibee's hand into action. 3 billion pesos is a very handsome pay off, on top of the remaining 30% stake which provides Sia with a huge upside potential in case Mang Inasal continues its aggressive growth. Jollibee also looks to have profited nicely from the transaction, with the acquisition having increased the fast food giant's market capitalization by a whopping 7.4 billion pesos, overnight.

I will try to closely follow how things will go over the next several weeks. I'm particularly interested if the positive sentiments of investors regarding the purchase will continue and how the acquisition will affect Mang Inasal's operations, specifically in terms of product quality and overall customer experience. Since I was not able to patronize Mang Inasal before the takeover, maybe you guys can help me out with the latter. :)

Local Portion of CebuPac IPO All Sold

IN THE NEWS from Inquirer.net

With close to 9 million views on YouTube and counting, 

this is probably why Cebu Pacific's IPO is so hot right now

If you're just finding out now about what's seen to be the biggest IPO in the history of the Philippine stock market, then you're already too late.

The domestic lead underwriter of the issue, ATR KimEng Capital Partners Inc., announced late last week that the Philippine portion of the IPO was oversubscribed prior to the end of the domestic offering period. This means that the 7 billion pesos worth of shares reserved for local investors already have buyers. This news follows last week's announcement that the international tranche of the IPO worth 16.4 billion pesos was fully subscribed by foreign fund managers.

The huge demand for CebuPac shares looks to be a sure sign of big payoffs for those who acted fast enough and managed to get a piece of the action. I hope those of you who indicated interest in the IPO when I announced it a month ago were able to secure some shares (I'm looking at you, Tin). The only thing left to do now is hold our breaths and see what happens on listing day on October 26. Just remember the magic number: 125 pesos per share.

6 Reasons Why an MBA is Good for You (Part 2)

The University of the Philippines has one of the strongest MBA programs in the country (image from Butch Dalisay's Pinoy Penman)

4. You feel like what you pick up from experience is not enough.

The MBA is the only academic program in the universe where work experience is an explicit requirement. Credible (read: "not diploma-mill") programs in the Philippines and around the world require anywhere from 1 to 3 years of experience, with a higher experience requirement for part-time or "executive" MBA's. This rule reflects the accepted wisdom that hands-on experience is critical to effective business management.

At the top of your head, I'm sure you'll have no problem coming up with names of successful entrepreneurs and business persons who didn't even go to college, much less business school. Still, many of those who've already had several years of corporate work under their belts continue to feel the need for formal training and further education to complement what they learned through experience. MBA education can only either confirm and strengthen what you think you already know, or challenge and disprove what you initially believed as truth; either way, you end up a better informed and equipped manager because of it.

5. An MBA provides opportunities for you to interact and solve problems with other people--just like in the real world.

Unlike in college, in the MBA program focus does not solely rest on theory and problems with black and white answers and pen and paper solutions; in many of the courses, students are immersed in real-world situations and problems that require practical and implementable solutions. While theory is still a very important part of the program, the process goes beyond learning and understanding these theories and delves into the realm of practical application. While the use of traditional evaluation methods like homeworks and exams still pervade the classroom (much to the disappointment of "seasoned" students), these are supplemented by group reports, presentations, and case studies where students are required to make business decisions from the point of view of a key corporate personality--the finance officer, the production manager, or even the CEO--in an environment that simulates actual corporate conditions. Most of these activities are done in groups, so students are trained to work with other people just like in actual corporate settings. So we see how, with these activities, students are provided with sufficient opportunities to develop important management skills like leadership, effective communication, public speaking, and others.

6. You're very interested in how businesses work, but you had a completely different kind of training in college.

Six years ago, I found myself wanting to know more about the ins and outs of businesses. My training and background was in engineering, and I had zero exposure to accounting, economics, and statistics, so back then, joining the MBA program was practically like starting from scratch, in terms of theory. Fortunately, that "weakness" later on turned out to be a major advantage: starting from a clean slate somehow provided more motivation to learn completely new and novel ideas. Plus, my "better than usual" background in mathematics helped me better understand and appreciate technical concepts in finance and operations management.

But it's not just me. From anecdotal evidence that I've gathered over the years, it turns out that the ones who get the most out of MBA's are those who had unrelated undergraduate degrees: the engineers and architects, the doctors, the physicists, the computer scientists, and the journalists, just to name a few. On the one hand, business management/administration undergrads would, of course, have a natural advantage because they have already studied a lot of the topics they encounter in the MBA program, but somehow this becomes not that important in the course of the program. On the other hand, students coming from unrelated backgrounds benefit from the fact that they can look at things from multiple perspectives, and this advantage, in my opinion, is more persistent: the combination of the two kinds of training (engineering and business, in my case) results in some kind of synergy or additional, intangible value that is manifested even after graduation.


Click here for Part 1.

Mang Inasal Plans to Go Public

IN THE NEWS from Inquirer.net

One of the things I wanted to try for the first time before I left for Hong Kong was eat at Mang Inasal. Yes, for some reason, I hadn't had a chance to try the fare of this highly talked about fast food chain. Maybe it's because my constant struggle against weight gain has rendered the "all you can rice" promo not as effective for me as it is for the millions who regularly dine in the restaurant's (now) 300 branches.

Mang Inasal's story will always be an interesting topic to discuss over a few drinks; I distinctly remember how, just a few days before I left, my friends and I talked about Jollibee's rumored offer to acquire the business for 1 billion pesos, and how Edgar "Injap" Sia, II nonchalantly turned down the offer. But the story did not end there: from the unreliable accounts of faceless sources, Sia made a counteroffer of 5 billion pesos (or was it 10 billion?) which, we can safely presume, Jollibee promptly rejected. (It was right around this time when I realized that the most plausible reason why Jollibee has been very aggressively promoting its chicken barbecue line was that the competition posed by the rapidly-expanding Mang Inasal has been mounting just as quickly.)

So for Mang Inasal fanboys and fangirls out there, here's your chance to take part in the action as the barbecue chain pursues an initial public offering in the first quarter of 2011. According to Sia, the public listing would serve as a means to raise more capital and share profits with employees and other investors. Personally, I'm not really sure how much further Mang Inasal can expand, given the already saturated market for fast food restaurants in the country; in other words, I highly doubt that the chain's next 100 restaurants will experience the same kind of success and profitability as its last 100, which means continued aggressive expansion makes little sense, and so is the need for additional capital. Still, it would be very interesting how this will play out and how the public will value the company. Wouldn't you also want to know who the greater fool is? Sia for rejecting 1 billion pesos, or Jollibee for rejecting the 5 billion-peso counteroffer?

6 Reasons Why an MBA is Good for You (Part 1)

1. The guy who's telling you you don't need it is trying to sell you something else.

Yeah, I'm talking about Josh Kaufman. I mean, how can anyone take this guy seriously? He's telling you to skip an MBA education while he's trying to sell you his book and "coaching program" at the same time. And he justifies this foolishness by comparing the cost of an MBA (from a school like Harvard, $350,000 plus foregone earnings) to the cost of his "12-week online crash course" (around $1,000), and by implying that one is worth just about the same as the other.

Who is he kidding? Sit two persons, one with an MBA from any reputable (read: "not fly-by-night") school and one who has had "training" from this douche AND who has read his book, with both persons having the same IQ, background, college GPA, and communication skills, in front of any employer: guess who the employer hires?

I can't stress this enough: never trust the opinion of anyone who's trying to sell you something.

2. Unless you have a Will Hunting-level comprehension, all those business books will eat you alive.

This Kaufman guy is really something. So it seems, one time he finds himself in a situation at work with MBA-types just as he doesn't know jack-shit about MBA stuff. So he does what any self-respecting guy does: catch up on his reading list. The Fortune article cites three books--a generic accounting text, Porter's "Competitive Strategy," and Drucker's "The Effective Executive"--that Kaufman read and which had enabled him to--this is just TOO funny, it's almost believable--"walk into a boardroom and hold my own with people who had graduated from Stanford and Wharton." Three books--one in accounting, one in strategy, and one in leadership--makes someone at par with an MBA-holder? Seriously, this guy has gotta be the biggest hack alive today, and to complete the coup, he's being promoted by "reputable" media like Fortune, for goodness sake. What is the world coming to?

But seriously, it takes way more than those three books to even barely cover the breadth (we're not even talking about depth, here) of an MBA education (and these self-help books are not the answer, either). There are five recognized functional areas of business: finance (how to raise needed capital), operations (how to make stuff), marketing (how to sell stuff), strategy (how to win), and accounting (how to make sure all your finances are in order), on top of support topics like human resources, economics, and information technology and innovation. Let's say one book adequately covers each topic (although believe me, that's more than a bit of a stretch), do you think you have what it takes to go through and understand a masters' level textbook without any help? MBA math isn't really calculus-level, but people have been known to have a hard time with finance math and even accounting arithmetic.

3. MBA professors provide milestones and feedback to your learning process.

Learning doesn't end with just reading the chapters of your textbook: you have to solve end-of-chapter questions and problems to find out if you really understood the material. Let's say you're brave enough to answer one or two problems, you check the answers at the back of the book, and you find out that one of your answers is wrong. Maybe you missed something, or you interpreted something incorrectly, you don't know. Which is precisely the point, how are you going to find out what went wrong? How are you even going to find the correct solution on your own? Remember why it's good to have teachers, and even classmates, when you're trying to learn something: to find out how far you've gone, how successfully (or unsuccessfully) you've understood the subject matter, and to be provided with objectives and milestones that will guide you through the learning process.


Click here for Part 2.

10 Exercises: A Fitness Manual for Random Walkers (Part 2)

STUFF I LEARNED FROM Burton G. Malkiel's "A Random Walk Down Wall Street"

6. Begin Your Walk at Your Own Home; Renting Leads to Flabby Investment Muscles

"A good house on good land keeps its value no matter what happens to money. As long as the world's population continues to grow, the demand for real estate will be among the most dependable inflation hedges available."

Land is a scarce resource whose supply is limited; demand for land goes up as the population grows. We all know from Economics 101 that this interplay between supply and demand could only lead to higher prices in the future; it's hard to argue with the soundness of this reasoning.

But as they say, the devil is in the details. Important issues continuously face the would-be real estate investor. For example, we all know that investing in real estate entails significant capital, usually upwards of 1 million pesos for any decent piece of property. As most investors don't have that kind of investable cash at hand, the only available recourse is debt. But borrowing at, say, 7% per year (roughly Pag-ibig's interest rate per annum for a 1 million peso housing loan) will only make sense if you anticipate that the value of your property will grow at least 7% per year, or if you think investments of comparable risk (like say, stocks) will yield higher annual returns in the long run. The point is that investing in real estate is not an automatic investment win, and is not always the best alternative under particular circumstances.

Second, as in all investment situations, the investor makes financial decisions in an uncertain environment. The housing bubble in the US which led to the financial crisis in 2008, and the devastating blow dealt by typhoon Ondoy on the Marikina and Pasig real estate markets last year, will make any investor think twice before making any real estate purhcase. But we have to remember that these things are part and parcel of investment dynamics, and that instead of ineffectively trying to preempt what can happen, maybe the best thing to do is protect ourselves with things like insurance and diversification.

7. Beef Up with Real Estate Investment Trusts

"If you want to move your portfolio toward terra firma, I strongly suggest you invest some of your assets in REITs."

A real estate trust fund or REIT (pronounced as reet) is a corporation that invests in real estate, and whose earnings are distributed to investors at a lower tax rate. Basically, a REIT is to real estate as mutual funds or UITFs are to stocks and other financial assets.

REITs may be public or private; shares of public REITs may be traded on public exchanges, like the Philippine Stock Exchange. REITs make investing in real estate easier for individual investors as real estate portfolios are divided into a number of shares, resulting in more affordable minimum required participation.

In July 2007, Senate Bill number 63 or the Real Estate Investment Trust Act was passed in congress. Big players in the real estate market are just starting to capitalize on this new way to attract investor funds, with Ayala Land recently setting up a REIT that will be offered to the public in the near future.

8. Tiptoe through the Investment Fields of Gold and Collectibles

"The Honda Accord in your backyard can rust, and the three-year-old TV dinner in your freezer may not taste very good. I tend to prefer the kinds of assets that produce a return while they are giving inflation protection."

Some people mistakenly believe that the best way to fight inflation is to buy stuff now, while prices are presumably lower, rather than later. The problem with this "strategy" is that not everything can be consumed all at once, and most "stuff" that remain lose a portion, and eventually all, of their value over time.

Investing, by definition, involves buying something that can either provide a stream of future income, or whose price can appreciate in the future, or both. Unfortunately, just buying any kind of good does not meet either of these criteria. One might argue that a valuable commodity like gold is not like other "stuff": while it does not generate periodic income, its price can definitely appreciate considerably at any given time. But because the price of gold is mostly determined by investor speculation, and thus can be very volatile, Malkiel recommends holding just a small portion (around 5%) in your portfolio by buying shares of funds that invest in gold.

9. Remember that Commission Costs Are Not Random; Some Are Cheaper than Others

"With the advent of competitive commission rates, it has now become possible to buy your brokerage services at wholesale prices."

As we've seen with UITFs in the Philippines, the fees fund managers charge can vary greatly and can even result in considerable differences in annual returns. Unfortunately, the same can also be said of mutual funds, stock brokers, and other entities that provide financial services for a fee. In availing of these services, then, be sure to do your homework and shop around for the lowest rates to maximize the fruits of your investment.

10. Diversify Your Investment Steps

"A biblical proverb states that 'in the multitude of counselors there is safety.' The same can be said of investments. Diversification reduces risk and makes it far more likely that you will achieve the kind of good average long-run return that meets your investment objective."

Diversification remains to be one of the most effective ways of managing investment risk. By investing in different asset classes -- stocks, bonds, real estate, etc. -- you lessen the chance of being wiped out in case something catastrophic happens. While this strategy may provide lower potential returns compared to, say, picking individual stocks, theoretical and empirical evidence continue to show that the trade off is well worth it.