It's a Rigid Air Ship!

I do love live shows, and this was an unusual one: Archer Live! In a brief publicity tour in the run-up to the start of Season Four of Archer, most of the cast is traveling to four cities to put on a... thing!

As you may be able to tell, I had no idea what to expect. It turns out that they really didn't, either. Part of the night was devoted to reading through some classic scripts, giving a live sneak-peek at the Season Four finale, and showing some awesome videos. The bulk of the show, though, and the stuff I'll remember most, was pure riffing: responding to audience questions, chatting amongst themselves, telling stories, drinking prodigious quantities of bourbon.

The evening began in a style reminiscent of a Paul F Tompkins show: an off-stage voice introduced our host, a man who "is handsome, and insanely talented, and, ladies, he's available after the show for smooches and BJs! The one, the only, LUCKY YATES!" It was, of course, Yates doing the voice, and he swiftly trotted onto the stage to raucous applause.

Yates voices my favorite supporting character on the show, Dr. Krieger. Krieger didn't do much in the early episodes of the show, but over time, he's become the kind of guy who will pop up in a couple of scenes, and say the weirdest, most disturbing, funniest stuff of the show. Yates asked if we know why he doesn't appear on the opening credits to the show. "Originally, Krieger wasn't going to be a speaking part," one guy said. "NOPE!" Another voice called out, "Because the producer's an a-hole!" "HEY!" a voice shouted from offstage as the crowd dissolved into laughter. "Yes, exactly!" Yates said, enthusiastically endorsing that line of thought. He then proceeded to record the entire audience chanting "KRIEGER! KRIEGER!" as he slowly panned his camera phone back and forth. "Thanks," he said when done. "Maybe now we'll finally see my name on the credits.... in the eighth season."

I knew already how some cast members look in real life, but I think this was the first time I'd seen Yates. He's far younger than Krieger, of course, and has more of a goatee than a beard. At one point someone yelled out, "WHERE'S YOUR WIFE?" "Didn't you hear me asking for BJs at the beginning?" Yates asked. "I'm not married. Oh, wait... you mean Doctor Krieger's wife. He's a CARTOON CHARACTER. And she's a HOLOGRAM."

Yates then introduced the remainder of the cast. Amber Nash is far more petite than Pam, with a really nice smile; she was less crazy than the rest of the cast this night, but still fully engaged with the show. Chris Parnell looks exactly like Leo Spaceman, of course; he was very wry this night, not speaking as much as the "stars," but dropping in with some perfectly-placed quips throughout the evening.

The biggest acclamation came for Aisha Tyler, who somehow looks even more lovely in person than I'd imagined. She's very tall, and slim, with a casual but assured manner. Before she took a seat, she lifted up her outer shirt to reveal a sports logo. At the time I'd thought it was the Seahawks, but now that I think about it, the Falcons would make more sense? I dunno. She didn't really comment on it.

Aisha is a native of San Francisco, and a stand-up comedian, so she had some great jokes about the city throughout the night. We're the greatest city in the world - and we don't let anyone forget it! Whenever someone graduates from a San Francisco high school, they get a Prius and two gay friends. They might already have some gay friends, of course, but the ones after graduation are complimentary.

After Aisha was seated came Archer! No, not H Jon Benjamin: Archer. This was the first of several kinda bizarre but funny bits of the night: a tall, slim guy with styled black hair and wearing a black turtleneck strode out onto the stage, mugged for the audience, and badly lip-synched to Archer's voice, inviting all assembled to bask in his glorious presence. This was all pretty clearly being done live, as the actor worked frantically to keep up with the monologue. "Check out these abs! Check out these lats!"

He eventually waded into the audience, looking for someone ("girl.... or guy, but he has to be very good-looking") to smooch. Of course, the source of the voice couldn't see who the actor was pointing at, and so the steady stream of invective and slams on body weight hopefully were discounted. At one point, he stood in front of the first row, unloading for a while, before Lucky Yates (who had been on mike the whole time and would periodically guffaw) broke in. "Oh my god, Jon... he's, like, twelve!" Whoops! I don't know if there was actually a minimum age given for the live show, but given the amount of sex and violence on the cartoon, I'm a bit surprised that any parent would bring their kid. And the f-bombs were definitely flying all night, and not about to stop just because of one minor in the house.

Eventually he selected a woman, who graciously (and with some encouragement) came up on the stage. He was leaning in for the kiss, when his voice said "WAIT!" H Jon Benjamin ran in from the wings, carrying a little pedestal. "Archer" left, Benjamin climbed up on the riser, and planted the kiss while the audience erupted in laughter and applause.

Um... this probably takes us about five minutes into a nearly two-hour show. I can't give all the blow-by-blows, so I'll skip ahead to the best part of the night:

Fairly late (after the cast had drained more than half a bottle of B&E [breaking and entering] that had been delivered from the fine folks at St. George Spirits in Alameda), the producer Matt Thompson was reading through some questions that had been submitted from the audience. One of the questions for Jon had been submitted by four people - something like "Brad, Kelly, Brian, and Ox." "OX?!" Jon exclaimed. "Who's named Ox? Where are you, Ox? Stand up!" Ox, seated close to the back, gamely arose. "Whoa," Jon said. "You're a bear, ox?" He then asked Ox to take off his shirt, and proceeded to lead the audience in a thunderous chant of "OX! OX! OX! OX!"

After maybe ten seconds or so, Ox relented, taking off his outer shirt to reveal a black tank top and some sizeable tattooed arms. The crowd went nuts, and Jon handed out the evening's award: an Archer Spy Pen, which comes with the printed warning, "Careful! The cap slips off for no reason." Sure enough, even though they had brought over a dozen pens, only three had caps left, so those were reserved for people like Ox who worked hard to deserve it. (Also: The guy who agreed to get shot in the nuts by Aisha Tyler. Long story.)

Matt proceeded to ask the guy's question again, but Jon interjected. "No, wait. I'm not done yet. Ox! TAKE OFF YOUR OTHER SHIRT!" This led into ANOTHER chant of "OX! OX! OX! OX!", even louder than the first. I thought he wouldn't do it... but he totally did! Ox ripped off his muscle shirt and stood bare-chested, proud or ashamed at the adulation of the crowd. In return for his sacrifice, he received the ultimate reward of a black Archer T-Shirt. That shirt might or might not have been fired out of an air cannon. My memory is a little fuzzy at this point. Jon collapsed in laughter while Ox strode triumphantly back to his seat. "That guy's, like, Seal Team Sixty!"

Throughout the rest of the evening, Jon treated Ox as his personal attack dog. When someone in the front row annoyed him, he would roar, "OX! Attack! Get him!" He even threatened to unleash Ox on Chris Parnell at one point. Late in the show, he got Ox to come up one more time by throwing him a dollar bill. "That's a real dollar! Thanks!" Ox rejoiced.

There was lots of other great stuff from the show, of course. I have no idea if they were taping it or not - I didn't see any camera, so I'm guessing not, but it would be great to see at least one of the shows pop up on a DVD extra or something in the future. In no particular order, here are some highlights of the night. Minor spoilers for Season 4 are sprinkled within there.

• Most exciting thing I heard this night: Anthony Bourdain will be a guest star on the show! We saw a clip of his appearance, where he's either called or appears on a show called "Bastard Chef." He appears while smoking a cigarette in chef's whites, of course. Aisha told a great story about meeting him at Comic-Con and introducing him to the rest of the cast ("I didn't meet him," Parnell quietly and sadly reflected. "That's because he's my friend!" she shot back.), and hooking him up with the producers. She also made a crack about a sexual activity Bourdain would engage in, involving oysters, which prompted Jon to go on a long, detailed riff that reduced Tyler to incoherent laughing sobs by the end.
• Also on next season? Timothy Olyphant! He and Archer have a bromance!
• Something big happens with Mallory... but I won't spoil it, even after the spoiler warnings! (Sadly, Jessica Walters didn't make it to the SF show, though I think she's scheduled to appear at some other stops.)
• A great example of how these people work: one of the questions was, "How much of ISIS's budget goes to paying for alcohol?" Aisha tackled this first: "Well... most of it, I would imagine. Sterling and Mallory alone drink insane amounts of alcohol. Nobody could drink that much in real life without destroying their bodies." Jon: "I... I drink about that much." Audience: "*Laughter*" Jon: "Shame on you for going there so quickly." Aisha: "I think... yeah, probably a majority of ISIS's dollars go to booze. I think it probably costs at LEAST a million...... dollars." Amber and Matt then talked about how the real-life actors don't drink as much as their characters, but still a lot. Aisha loves bourbon, but her drink of choice is Jager. Amber calls Jager "Mistake Juice." She'll announce this just before she starts drinking it, so other people know what she's about to do (have sex with strangers). After several minutes of chatting, Chris Parnell, who has been quiet lately, speaks during a lull: "Actually, I just ran some calculations. Sterling and Mallory drink pretty good stuff, so we can estimate about $500 a day for alcohol consumption. Multiply that by five days in a week, and that by fifty weeks in a year, and we come up with $125,000." The audience went nuts, and Parnell/Cyril took a bow.
• They showed us a hilarious/disturbing video that was supposedly created by Krieger. It starts off in a shojo anime style, with him and his lovely girlfriend going for a walk and Krieger declaring his love. It rapidly transforms into a tentacle porn anime. Apparently, this will be a DVD extra in the future.
• We also saw an incredible video that depicts Archer after suffering a horrible accident: the doctors save his life, but he's been turned into, well, H Jon Benjamin. The remainder of the time he desperately tries and fails to hit on beautiful women, reach the gas pedals of his car, and receive any modicum of respect.
• One of the live script reads was for the Season Four finale, during a meeting in Mallory's office. Amber very gamely read Jessica's part, despite some light ribbing from Jon. Matt narrated the major scene events (like, "Mallory presses a button, and the map switches to a view of the world.") The scene involves a B-52 that has crashed near Bermuda, and it's utterly hilarious. It was a great feeling to experience something like this before anyone (well, other than those jerks in LA the night before) had, and the comic timing between all the actors was spot-on. Which is especially incredible, since, as they noted, they always record separately; the timing we hear on the show is purely a function of editing, but it's exactly what they do live. Great stuff!
• They did two classic scenes. One was from my favorite first-season episode, "Skytanic." Even though Chris Parnell was there, they asked for a volunteer from the audience to voice Cyril's lines, with Parnell serving as an acting coach. They auditioned a few audience members to find the right person. Yates: "Let's get that guy." Matt: "Wait, is that the guy who said the producer was an a-hole? No way! Wait. Hey, do you want to do this?" Guy: "Sure!" Matt: "Well then f--- off!" They eventually got one guy, who sounded pretty decent during the audition, but when the scene started, he talked kind of like Kermit the Frog. Jon LOVED this. The scene is the one where Lana is trying to shove a bomb off the blimp (excuse me, rigid air ship), while Cyril is trying to apologize to her for his unfaithfulness, and Archer, who has been shot in the leg, is hopping around on one foot. For a prop, they had a gigantic cardboard box with the word BOMB written in black permanent marker. And I think a drawing of an old 18th-century-style spherical bomb with a sputtering fuze. It was... hilarious. I need a thesaurus to describe this event.
• The other classic scene: the season 3 episode, where "we learn that Pam is actually an awesome drift racer for no reason." For this, they set up the chairs to roughly simulate the four-seater car. Jon sat down in front of the first chair, simulating Archer's position clinging to the roof. Aisha and Yates had awesome toy automatic assault rifles that they shook around during the firefight. Yates was playing George Takei's character of the Yakuza mob boss. Aisha: "The great thing about Lucky playing this character is that you know it will be super-racist." And Yates.... hahaha. It really doesn't communicate well in blog format, but Yates did his part with the most glorious, rich, deep, Russian accent you can imagine. 
• Oh, yeah: we probably heard the Danger Zone song at least six times throughout the night. They would just randomly start playing it, then the actors would scramble around, find the air gun, and start firing t-shirts into the crowd. It was awesome. They also did an audience recreation of what is, by far, the most-requested scene of all time: "Lana. Lana. Lana! LANA! LANAAAAAAAAAAAAAAA!" "WHAT?!" "Heh heh... danger zone!" Meme: satisfied.

There was plenty more, but you get the idea. I loved the loose, free-flowing feel of the night... they were gifted improvisers who obviously liked one another and knew how to push one another's buttons (Jon, in particular, could incapacitate Aisha at his whim), and created an organic show that was full of serendipitous comedy. I feel incredibly lucky to have been able to see it all unfold.

Math.random()

I've finished reading what I think may be the last financial book I ever read: A Random Walk Down Wall Street, by Burton Malkiel. I suspect it may be the last for several reasons. First, it's a phenomenal book - well-written, funny, wise, and practical. It will be hard to find another book that can instruct better than this has. Second, it reinforces the investing principles that I've been following for the last decade and that have served me well during that time (while deepening my understanding of why they work). Finally, since the core advice for intelligently investing is so simple, there just isn't much more to learn after finishing this book. Oh, to be sure, times will change, and markets will be re-evaluated, and my personal allocations will gradually shift, but the basic principles Malkiel lays down should remain dependable.

Part of what's so wonderful about this book is seeing its track record. The book first came out in the early 1970s, a very different economic time than we face today. He has regularly revised the book every few years, and each edition helps explain what has happened in the past, but his core advice hasn't changed in the forty years since the book was first published. And, well, that means you can track the records of people who followed his advice, comparing them with those who didn't. As he makes clear in his book, that's the key component to any financial advice. Anyone can pore through past data and come up with a trading model that would have made money during that time period. The problem is that those models almost never work when you're working with "real money," into an uncertain future.

Malkiel is a wise person, and finds great, memorable ways to communicate important information. For example, he says that it's impossible to get rich quickly: you can only go poor quickly. Getting rich takes patience and time. Very pithy, and very true.

At the start of the book, Malkiel gives an overview of the madness of markets, taking a tour through massive bubbles in our history, all the way from the original Dutch tulip bulb craze through the American housing bubble that popped in 2008. He shows how many fortunes were destroyed in all of these crazes, laying a firm foundation of risk under all future discussions. There's a lot to get from this part of the book, but one of the most important is realizing that bubbles are obvious only in hindsight. When investors are surrounded by a crowd all pulling one way, it's very easy to get pulled along. Finishing this section should convince everyone that they need to take care while investing, or else they could be wiped out.

In the second section, he describes two of the primary approaches people take to stock-picking, and points out their flaws. This is probably the most combative part of the book, and also highly entertaining. He delivers particular scorn to technical analysts, who he calls "chartists." These are the people - he estimates that they represent about 10% of Wall Street investors - who ignore any information about a company's fundamentals (industry, size, dividends, price/earnings ratio, etc.), and instead focus on trends in the stock's price. They convince themselves that, by studying where a stock has been in the past, they can predict where it will go next, and can then profit by buying it or selling short. Malkiel gives example after example of how people have failed at this, and even lost fortunes trying. As he observes, someone will always claim that their method is different, so they will make money where everyone else has failed; but the problem always comes back to realizing that models which perfectly predict the historic movements of prices do a horrible job at predicting future movements.

He treats fundamental analysts with more respect. Fundamental analysts (who I will call "fundamentalists" just because it amuses me) rely on experts who know the company and the business well. They look at the key factors for a company: its dividend, the company's growth rate, its size, its book value, and so on. Based on this, they will try to determine what the value of the company "should" be. They compare this to the stock's market capitalization (the value per share times number of shares) to determine whether a stock is undervalued, and if so, they will purchase it, with the expectation that eventually the market will fix the "mistake" in the price up to its proper value, at which time they can sell it.

He sympathizes with fundamental analysts, but points out that historically, they have under-performed the benchmarks for the market as a whole, particularly when considering the fees charged by the analysts. He offers several reasons for this, some of which are quite amusing. Malkiel started his career in the finance world, and observed that most analysts are, frankly, not more bright than you or me, and the best analysts are quickly promoted to higher-level positions where they don't do much analyzing. Beyond that, though, fundamental analysis has a, well, fundamental problem. One of the key components in fundamental analysis is determining a company's growth rate, and the growth rate is inherently unknowable. Knowing the growth rate requires accurate prophecy of the future. Will the company discover a new mineral mine? Will a terrorist attack destroy their office? Will Congress create a subsidy? Will a drought occur next year? It's no wonder that we don't know what value a stock "should" be, since much of a stock's value is based on the earnings of the company in the future. Secondly, Malkiel contends that, with the modern regulatory regime (especially post-Sarbanes-Oxley) and with instant dissemination of information via the Internet, it's virtually impossible for fundamental analysts to gain access to "new" information that isn't already known by the market as a whole. There are some periods where the price of a stock may lag behind new information - like if a corporation announces better-than-expected earnings - but for the most part, everything that's known about a company is already reflected in its price. Thus, stocks mostly change value based on changes in the real world, and in response to the market as a whole. Fundamentalists may have once been able to give an edge in picking good stocks, but no longer can do so.

At this point in the book, I was feeling pretty bleak about the stock market and investing in general. If nobody knows what's going to happen, then why bother investing at all? He then lays out his hypothesis, the random walk of the title.

A "random walk" is a concept used in mathematics and probability theory which means that the likelihood of an event occurring is independent of the events that have preceded it. The simplest example is flipping a coin. Any time you flip a coin, the odds of it coming up heads will be 50%, regardless of whether the last flip was heads or tails.

Interestingly, our brains rebel against the concept of a random walk. We know that, on average, when you flip a coin a bunch of times, it "should" come up heads 50% of the time. So, if we start flipping a coin, and it comes up tails the first four times, then we'll start to feel like it's "due" to come up heads. Maybe it comes up tails again. "Okay," we'll say. "This time, it's GOT to come up heads." Except, well, it doesn't. The odds of a series of coin flips ending up as TTTTTT is no less likely than the odds of it ending up as TTTTTH or even THTHTH.

With this in mind, it's very easy to see why people so easily convince themselves that they can predict where the market is going to go. Maybe they see a stock going down, down, down. "Aha," they think. "It's due to come back up!" Well... maybe. Or maybe it's Enron. Malkiel's point is that, in the short term, the movement of individual stocks and the market as a whole is essentially random. We can try to explain it, and convince ourselves where it's going, but we're just telling stories to make the world seem more reasonable. We don't actually have any control.

Gosh... that sounds pretty dire, too, doesn't it? If the market moves randomly, then why invest instead of going to Vegas? Well, Malkiel argues, in the short run the market is a voting mechanism: it follows the madness of crowds, mis-values hot stocks, and overlooks mis-priced equities. In the long run, though, the market is a weighing mechanism. Every time that a market is brought too far out of whack, it has eventually swung back to a more realistic level. That process can take years, which is why nobody should get into the stock market unless they can stomach a long downturn. Over the long haul, though, nothing can make you as much money as reliably as the common stock market.

This leads into the third part of the book, where he discusses modern schools of thought on investing. First up is a strategy for investing dubbed modern portfolio theory, or MPT. Previous generations of investors saw investment as a matter of picking the right stocks at the right time and holding them for the right duration of time. MPT, which has been significantly influenced by Malkiel's own theories on efficient markets, and is championed by many today, provides a practical way to achieve fairly high returns on investment with fairly low risk by diversifying your holdings. This means both diversifying across different asset classes (stocks and bonds) as well as diversifying within an asset class (holding at least twenty different assets that are not strongly correlated).  The goal is not to make sure your portfolio will always go up - in bad markets, nearly every portfolio will decline, reflecting the real loss in economic activity. Rather, the goal is to help a portfolio weather the downturns, while continuing to take advantage of the long-term superior earnings available from the stock market. Interestingly, MPT has demonstrated that, by mixing together assets from two different risky investments, your combined investment can both perform better and have less risk than either investment alone.

Malkiel includes a lot of graphs and charts in this book, and they do wonders at communicating his points. One of my favorites shows the returns that you could get by purchasing a stock market index fund and holding it for a certain number of years. For each period, he shows the most it could earn, the least it could earn, and the average it would have earned. For example, if you purchased the market in 2007 and held it for one year, it would fall enormously; if you purchased in 2009 and held for one year, it would gain enormously. If you purchased in 2007 and held for three years, you would fall a little; if you purchased in 2009 and held for three years, it would rise a lot. What's remarkable is that, for every holding period, from one year to thirty years, the average expected profit remains consistent. However, as the holding period grows longer, the best- and worst-case outcomes retreat, with the worst-case shrinking most dramatically. Beyond ten years, no time period has ever lost money (assuming dividends are re-invested); at twenty-five years, even the worst-case return looks quite good. That's the magic of compound interest: the dividends keep working for you, even in down markets, and accumulating over time, eventually working the alchemy of lowering risk without lowering profit. One can get rich. It just takes time and patience.

(Note: that image is from the 2007 edition of the book. The averages have all slipped down slightly since then, thanks to the latest bear market, but the overall shape is the same.)

This section of the book also includes a fair discussion of several modern schools of thought that seem to challenge Malkiel's random walk hypothesis and accompanying theory about efficient markets. The most interesting of these is a chapter devoted to the insights of behavioral psychologists. Malkiel is, at heart, clearly an academic, and he certainly respects the scholarship behind behavioral economics. He concedes the point that traditional economic theories tend to assume that investors are rational, when clearly they are not. Behavioral economists posit that, because investors aren't rational, markets can't be truly efficient. Malkiel engages with this concept, pointing out that while this is true during a bubble (even if a canny investor does figure out that assets are overvalued, it can be extremely risky to conduct arbitrage and profit if the bubble continues for years), over long runs of time there's a consistent reversion to normalcy. Movements are chaotic and unpredictable in the short term, and have upward momentum over the long run, and have been ever since we started keeping records hundreds of years ago. Now, as to whether that upward momentum is the result of market efficiency, or behavioral psychology, really doesn't matter much in practice: the demonstrated safest and best way to invest is to buy a broad, diversified portfolio, and hold it forever.

The last section of the book is devoted to application: practical advice on how an individual should construct their portfolio. This was the part that felt most familiar to me, thanks to the way Malkiel's teachings have seeped into mainstream personal finance education. He shows several pie charts showing different hypothetical allocations for different people at different ages: a young businesswoman in her mid-20's; a parent in their late 30's; an adult in their mid 50's after putting children through college; and someone approaching or in retirement. As expected, the earlier allocations focus more on stocks, while still holding respectably portions in bonds and other holdings like real estate investment trusts (REITs); the later allocations shift to more conservative allocations, although it's interesting to note that in his view, stock equities should still stay at around 40% even in retirement, and the allocation for cash doesn't grow past 10%.

Throughout the book, he gives good guidance on the importance of recognizing one's own temperament and capacity for risk, repeatedly returning to the mantra of not investing past your "sleeping point" - the level of risk that would make it difficult for you to sleep at night in a bear market. So, with this as with all things, an individual might do well to forego his suggestions and invest in a more conservative allocation. In that case, one would probably want to save even more to help make up for what will likely be a lower return over the long haul (but a much higher quality of life thanks to lower stress!).

The book closes out with some very pointed and specific suggestions: particular funds to consider buying, the ideal allocations between US, international, and emerging markets. This is probably the part that will get dated most quickly, but for now it remains very useful, since it's just a few years since the book came out. (Though I think the Vanguard international fund options, at least, have changed a little since publication.)

For me, personally, I'm considering three tweaks to my investments. Two were largely inspired by this book, and the third is something I've been mulling for a while.

First, Malkiel is pretty explicit about the importance of giving large exposure to international markets: he recommends an even split between US and international equities, and within international, a strong exposure to emerging markets (basically, countries other than Europe, Australia, and Japan). When I first started investing back in 2004, the general consensus seemed to be around 20% exposure to international markets: enough to offer some diversification from problems in the US market, while leaving the bulk of your holdings in US companies. There were several good-sounding arguments for this approach: the US stock markets tend to be better regulated and more investor-friendly than foreign markets; many US-traded companies (like Coca-Cola) are global companies, and thus you get international exposure anyways from your US stocks; and investing in shares that are not priced in dollars exposes you to currency risk, so even if an investment does well your gains could be wiped out if the dollar fell in value.

Since then, though, the pendulum has definitely shifted, and most guidance I read now is pushing international stocks into a higher position. Malkiel's 50/50 split is the most I've seen recommended, but 20% is now the floor instead of the average. I'm currently sticking to making international stocks 20% of my total portfolio, which equates to just 25% of my stock holdings.

There are many good reasons to consider making this higher. The big one that Malkiel emphasizes is that most growth, not just now but that's likely in the future, will be in emerging countries. He thinks that the long run of roughly 10% growth in America is likely coming to an end, and we'll be seeing returns closer to 8% in the decades to come. Other countries, though, have much more potential to grow their economies, and investing in them will help raise one's portfolio. Beyond Malkiel's predictions, there are some other arguments to be made as well. For example, the global economy is so strongly interconnected now that it may not be useful to view international funds as really protecting against risk in the US market any more; after all, in 2008 the US housing market collapsed, and took the world economy down with it. So, it makes more sense to view international stocks as a means to help your portfolio grow at a rate similar to the whole world's economy, rather than as a counterweight to the US markets.

Honestly, a big part of my reluctance to increase exposure is tied to my reluctance to mess with my allocation. One piece of advice I absorbed early in my investing career is to be as inactive as possible: don't chase the hot sectors, don't get scared and dump stocks when the market takes a dive. I felt comfortable with my 60/20/20 plan when I first created it, and doubling the amount of international stocks in it feels like a big shift. Knowing that today I would make a 40/40/20 portfolio doesn't make it much easier to make a major change in my existing portfolio.

Malkiel has some detailed explanations for what he does in his own portfolio, including a slightly unusual step he takes to increase his exposure to the Chinese stock market. I don't think I'll go that far, and I won't change my 25% to 50% overnight. But, I think it might be prudent to start working my international exposure higher. I won't be selling any of my US total stock market index fund; I think I'll set a goal to direct new investments so they're weighted a bit more towards international markets, with the objective of reaching 30% by the end of 2013. If that feels good, I'll keep moving in 5% increments over the coming years until I reach a point that feels comfortable to me.

The second major idea this book has made me consider is holding an REIT for more exposure to real estate. This plays a fairly modest role in his portfolio of just around 10%; nonetheless, he demonstrates how, in most markets (not the 2008 recession), real estate has shown a very low correlation with the stock market; furthermore, it also tends to do well in inflationary periods. Keeping an REIT would allow a portfolio to weather a bear market more easily. And, since we seem to be past the worst years of the housing crash, they aren't likely to be overvalued.

I've avoided REITs up until now for a couple of reasons. First, as a homeowner, a decent chunk of my wealth is already invested in real estate (albeit a highly undiversified investment!). Second, it's hard to get excited about the long-term returns of REITs, which lag noticeably behind those of stock funds. (Granted, though, that's also the reason I resisted investing in bonds for years, which I now realize was shooting myself in the foot - in small amounts, diversifying from an all-stock portfolio both reduces risk AND increases yields.) REITs are also more complicated than equity mutual funds, which adds some small hassles to tax planning and preparation. Finally, I'm attracted to simple portfolios, and am tempted to just eliminate something which would only hold a sliver of my total assets.

The book has made me seriously consider REITs for the first time. I still don't think I'll necessarily rush to buy an REIT, but it's on my radar now. Once I pass a certain threshold where a small 10% investment in an REIT wouldn't feel like chump change, I might dip my toes in those waters.

The third change I'm considering making to my portfolio isn't something that Malkiel directly addresses, but is a thought that's been percolating in my head for a while, and that his discussions of tax-efficient planning have triggered yet again. I'm lucky enough to be able to max out my tax-advantaged retirement accounts, and have some left over to hold in taxable accounts. Which is awesome, but I increasingly feel like I'm not taking the best advantage of my retirement accounts.

Currently, all of my retirement accounts (401(k)s and Roth IRA) are in Target Retirement Date funds. I love these funds - they are super-simple, and largely match the allocations I would want anyways. Internally, the Target Retirement fund holds its money in a Total Stock Market, a Total International Stock Market, and a Total Bond Market index fund.

In my non-retirement account, I have pretty much exactly the same holdings (total stock market, total international, total bond, and some CDs), albeit in slightly different allocations. The "problem", such as it is, is that the interest I earn from bonds and from CDs gets taxed at my regular income tax rate. It would be better if I held those investments inside my Roth or my 401(k), since that way I wouldn't have to pay tax on the earnings each year. I also pay tax on dividends and (theoretically) capital gains on my stock funds, but those tend to be really small and don't add much to my bill.

To give a contrived example: suppose I had $1000 in my 401(k) and $1000 in my non-retirement account. Suppose each was divided up with $600 in US stocks, $200 in international stocks, and $200 in bonds. Every year, I would pay tax on the interest I earned from the $200 of bonds in my non-retirement account. However, suppose I decided to shift around my investments. Instead, I would have the $1000 in my 401(k) divided up with $400 in US stocks, $200 in international stocks, and $400 in bonds. In my non-retirement account, I could then have $800 in US stocks, $200 in international stocks, and nothing in bonds. Then, I wouldn't need to pay any taxes at all on the money earned from my bond funds, and I would still own exactly as much of each fund as I did in the first example.

So, I'm a bit tempted to start shifting more of my less tax-efficient investments into my tax-sheltered account; but doing this would require getting rid of my beloved Target Retirement fund, and paying more attention to my overall investment picture. Frankly, I'd rather not do this: while you would never know it from this blog post, I like to forget that I have any money invested at all and actively ignore how each investment is doing. (I have annual automatic rebalancing enabled in my retirement funds; for non-retirement, I use a Google Docs spreadsheet I created to direct future contributions to maintain a balanced portfolio without ever needing to sell any funds. In both cases, I never need to learn how much a fund has won or lost over any time period.) Also, while I definitely won't be tapping my retirement accounts before age 65, it's certainly possible that I might want to use my non-retirement funds for something else, and I'd like to have some sort of mix of funds available there so, if I need to make any withdrawals, I can do so without being forced to sell stocks, possibly at a significant loss.

I'll probably revisit this question after filing this year's taxes. If my investment income is fairly minor, then I'll maintain the status quo for at least another year. If I start feeling the pain of interest taxes, though, I might bite the bullet and start shifting my funds to be more tax-efficient.

Moving on from my personal response to the book: I think this book would be a perfect read for anyone who is interested in investing. Note that I didn't say "anyone who invests" or "anyone who wants to invest." Rather, I'd recommend this book to people who actually enjoy the topic of investing, and want to learn more about how it works and different strategies that have been tried over the years.

For people who are looking for more of a basic financial primer, I'd still recommend one of Jane Bryant Quinn's books: either Smart and Simple Financial Strategies for Busy People or Making the Most of Your Money Now. When it comes to investing, her recommendations are very much in keeping with Malkiel's suggestions and those of modern portfolio theory. However, Quinn takes more of a holistic view towards finances, spending time on the subjects that most consumers will face: budgeting, credit card debt, direct deposit, student loans, 401(k) plans. S&SFS4BP gives good advice on investing for retirement without diving too deeply into the details about how markets work. MtMoYMN gives really good and lucid explanations of the mechanics of different investments - that book did more than anything else to help me really "get" bonds - and, somewhat similar to Malkiel's final chapter, has some sections that operate along the lines of, "I don't think you should buy individual stocks, but if you do, here's how." Malkiel's book, while very practical, is ultimately a more academic work, that's more concerned with the how and the why of market behaviors, whereas Quinn's is more focused on what you should do about the market.

In other words, A Random Walk Down Wall Street is primarily a tome for investment nerds like myself. (It may also be of interest to math and statistics nerds.) It's one of the only proven investing books that has withstood the test of time, through markets both good and bad, and remains at least as vital today as when it was first written.

EDIT 1/19/13: Man, I love Vanguard.  This post gives a really thoughtful perspective on the use of REITs. The immediate effect is to cool my enthusiasm for buying into an REIT - it could still have some use as a portfolio diversifier, but looking at that graph definitely cools any sense of urgency I had about adding one.

ICO nic

My awesome brother gave me an awesome game for Christmas. Actually, two awesome games: Ico and Shadow of the Colossus, both of which have been upgraded for the PS3 and modern HDTVs. Ico is one of my all-time favorite games; if I made a Top Ten list, it would probably wind up somewhere on there. I haven't played it in ages, though, and I've wanted to play Shadow of the Colossus for years, so I'm very excited about that.

I've been interested in the upgraded Ico for a while, but it wasn't until I got the disc and started playing that I made a crucial discovery: not only has this game been redone with higher-resolution textures and other visual upgrades, but it's also been redesigned in 3D! That's huge. I've played demos of 3D games before, and watched a handful of 3D movies on my TV, but this is the first full-length 3D game I've ever played. It's been great, and also illuminating, since I can mentally contrast this experience to my original playthrough.

I think I've mentioned this before, but at least on my home screen, 3D doesn't "pop" for me too much; I do get a sense of depth and emergence, but it tends to be fairly subdued. That was mostly the case for Ico as well: most rooms had extra richness due to the 3D, but it didn't feel transformative. There were a handful of scenes, generally when the corners of buildings were near the edge of the screen, where it did sort of feel like the structures were floating out of the screen towards me.

Eventually, I started sitting much closer to the TV than I typically do when gaming or watching, and I think that helps the immersion a bit. Since it is an HDTV, I can sit just a few feet away and not see individual pixels; plus that way the screen fills more of my field of vision. I do wear regular glasses under my 3D glasses, and while the fit is fine (the 3D glasses easily slide over my regular ones without touching), in some lighting situations I would get a weird small internal glare, where I think my normal glasses were reflecting some light back that struck the 3D glasses. I could ignore it after a couple of minutes, though.

At least with Ico, I can really only play at night after the sun goes does. During the day, even if there isn't any direct light on the screen, it gets washed out and muddied. In the darker rooms in Ico, it gets impossible to see the environment, even though the same room will look crystal-clear at night. The darkness caused by 3D is actually a really interesting effect - if you slip your glasses off while playing, you'll notice that the screen seems to suddenly double in brightness. This is likely because of how the 3D active shutters work: at any given instant, only one of the two glasses are letting light through, so you only receive half as much brightness as you would if both were clear. There's also a really interesting effect that may or may not be related: if you tilt your head, say, 20 degrees in either direction, the screen starts noticeably brightening.

Ico has several sections with platforming-style gameplay. Interestingly enough, I didn't feel like the 3D made this any more or less easy than normal; I missed as many jumps as I ordinarily would have. So, while 3D feels more immersive, it doesn't provide a more "accurate" mode of play.

On the whole, I love playing in 3D, but I find it hard to do for much more than an hour at a time. I think that's mostly due to the physical weight of the glasses - they definitely aren't painful, but I do feel their weight on the bridge of my nose after a while. One limitation of 3D TVs is that you have a relatively narrow field of vision that gets the 3D effect. If you're at too severe an angle to the screen, then items start blurring a bit. So, I can't revert to my typical late-night posture on the couch, and instead need to sit upright (UGH!) for as long as I want to play or watch.

Ico itself is wonderful. It's been years since I've played, and while I vividly remember the setting and the characters, I've been pleasantly surprised at how much I've managed to forget about the puzzles. So, I could once again experience the fun of figuring them out, instead of just running through the game. (Not that one runs - one of the most wonderful things about this game is the way it subtly primes your emotions to be gentle, and patient, rather than rush through levels like one ordinarily does.) I would often have vague recollections of a puzzle - "Oh, yeah, I think I need to somehow get that box down to the floor so I can reach that ladder" - but still need some time to figure out how to accomplish it.

MINI SPOILERS

Yorda is such an incredibly affecting game character. She's graceful, and ethereal, mysterious and vulnerable all at once. When we aren't walking somewhere she will stand calmly and look around; sometimes, she likes to walk into the sun, her bare feet on the grass, and look at the birds flying around. Sometimes she holds a graceful arm up and examines her elbow. It breaks my heart a little to think that I may have tugged too hard on our way there, and I resolve to be more careful with her in the future.

There are a few changes from the original version that I had played; apparently this edition of Ico is based on the European version, which adds a little bit of content and changes some parts of the game. I'm not sure if this is a new addition, or just something I'd forgotten, but a pretty adorable part of the game is when you're in a large environment and stuck on a puzzle. Ico and Yorda will glance around their environments naturalistically, and if you don't seem to be making progress, Yorda will try to figure out the puzzle. She will eventually point at something and make exclamations in her strange language. It's utterly sweet, even if not terribly useful - in the aforementioned example, she would be pointing at the box, instead of where I need to go to reach the box.

In one case, though, the change made it much more frustrating. When you're in the tower near the waterfall top, the original version of the game had you shimmy along a pipe to reach an objective. In the "improved" version, the pipe is broken. Instead, you need to flip a switch, which starts a mechanical platform jerking up and down. I spent almost half an hour trying to figure out what to do here, only to eventually give up and had to admit defeat by looking up the solution online. It turned out that I was supposed to do what I'd been trying to do - time my jumps so it would launch me high up into the tower - but the positioning and timing of the jumps are very tricky to get right. That was frustrating, as was another timing-and-jumping puzzle shortly after around the waterwheel. Puzzle games are fun when they make you figure out the solution to a challenge; they are not fun when you know what you have to do but the mechanics make it difficult to accomplish.

One advantage of getting stuck, though, is that I stumbled across information on how to get the game's "secret weapon". It's in that same tower: there's a secret passage you can open by pushing a wall, and a secret ball you can get by whacking a tree outside. If you launch the ball into a basket (and, yes, it does kind of bounce and ricochet like a basket ball), then a spiked mace comes magically flying in through the window. I wonder now if maybe that's why they made the tower puzzle so much harder and more frustrating: maybe they were hoping that people would get annoyed and run around and smash into walls and thus find the secret room on their own.

END SPOILERS

Ico is as haunting and beautiful as always. I'm cherishing my time re-experiencing this game, and can definitely see this as the sort of game I want to re-visit every five years or so. I also can't wait to plunge into Shadow of the Colossus and see what I've been missing all these years. As my brother wrote on the gift tag, "If killing gigantic statues is wrong, I don't want to be right!"

Legate

Well... that was quick! Once I finally buckled down to finish the main quest in Skyrim, I did so with such swiftness that I started to doubt that it actually was the main quest. To make sure, I did another major quest line as well out of curiosity to see if it was actually the main. It wasn't, but both were quite fun.

MEGA SPOILERS

I had kind of "parked" the main quest partway through the process of training under the Greybeards. After I was done with the Thieves Guild, Dark Brotherhood, and Dawnguard quests, I returned to the mountain and saw what there was to see.

The first surprise: Blades! Blades have been an important faction in all of the other Elder Scrolls games that I've played; they're kind of an elite Imperial force that handles sensitive jobs, a bit like a fantasy mixture between the Secret Service and Navy SEALs. Based on the information within the game thus far, I'd thought that the Blades had all been wiped out during the war against the Dominion. Well, most were, but a couple remain, and they are pursuing one of the ancient duties of the Blades: defending against dragons.

Responding to a note left at the end of my quest to retrieve the Horn of Jurgen Windcaller, I met with Delphine in Riverwood. Riverwood was the first village I ever visited in this game, and Delphine was one of the first NPCs I'd met, so it felt interesting and a little odd to be revisiting so late in the game. Delphine revealed herself and her mission: she had learned that dragons were being awakened, returning from the graves where they had been interred. She was getting good at predicting the order in which they would arrive. We investigated some ourselves.

Delphine had thought that she was the only surviving Blade, but we learned of another, Esbern, who was hiding in the Ratway in Riften, and happened to be the most acclaimed scholar of dragon lore in Tamriel. We rescued him; he was initially filled with despair, convinced that the world would shortly end, but was enheartened once he learned that I was a Dragonborn.

We visited some ancient sites to learn more about the first wave of dragons far in the past. Their leader, Alduin, is prophesied to destroy the world. The ancient Nords were thought to have killed him, but in actuality, they used a spell that removed him from their time and cast him far into the future... which is now our present. Alduin had never died, he was simply gone for a time. Now he's back, and may destroy the world.

In order to defeat Alduin, I learned that I would need to master a new Shout. The Blades reluctantly asked me to consult "that cult," the Graybeards, and get the knowledge I'd need. Well, the Graybeards were none too happy, for reasons that still seem obscure. They don't deny that the world may be destroyed by Alduin, but don't want to struggle against it. Anyways. They eventually allow me to see their leader, who is - surprise reveal! - a giant and ancient dragon named Paarthurnax, who lives on top of the mountain and is the one who taught Men to Shout. He admits that he once served Alduin, but eventually betrayed him by teaching the ancient heroes their Shout as a weapon against the other dragon. He'll do the same for me.

The fight against Alduin is a little confusing, but not too hard. He and Paarthurnax are both fighting aerially, and it was hard for me to visually differentiate the two, so I would need to track the red dot on my compass to figure out which one was him. For this fight, I learned a Shout that is exactly what I've wanted for all of my dragon fights: it forces the dragon to land, where it will be vulnerable to my melee attacks. At least, it's supposed to - in practice, he seemed to ignore it much of the time. Once he did land, though, I just needed to slap on some Lingering Damage Health poison (-24 health per second) and whack him a few times.

Alduin was defeated, but not really dead... he had retreated to a place to recover his strength. This was a perfect opportunity to destroy him once and for all. One catch: I wasn't sure where he had gone or how to follow him. This led to a fairly convoluted but interesting set of goals:

• Get one of Alduin's dragon thralls to show me the way to his hideout.
• To make the dragon talk, I'd need to capture him/it.
• Dragonsreach in Whiterun was built as a trap for dragons. Huh, interesting factoid!
• I'll need Jarl Balgruuf of Whiterun's cooperation to lure a dragon inside his castle.
• The Jarl is sympathetic to my mission, but doesn't want to risk the damage a dragon can cause while the civil war is raging between Stormcloaks and the Legion (remember those guys?)
• So, I'll need to negotiate a temporary truce between the factions.
• The Graybeards reluctantly agree to host the summit. (Heh, get it? Summit?)
• Ulfric of the Stormcloaks agrees to attend.
• I'm supposed to get General Tullius to attend, but this quest gets semi-broken since I've already accepted and not completed the quest to join the Imperial Legion. So, he just snarls at me to talk to Legate Rikke.
• Meh. I was hoping to put off declaring my allegiance for as long as possible, but by this point I've made the difficult-but-firm decision to side with the Empire. (My previous post has my rationale; I'm very sympathetic to the Stormcloaks' grievances and desire for freedom, but ultimately more attracted by the Empire's diverse society and better long-term prospects as a counterweight to the Dominion. The Thalmor dossiers I'd acquired made it clear that they saw Ulfric's rebellion as beneficial to their cause.)
• Fine. I clear out the fort she wants me to, join the legion, and then Tullius deigns to speak to me, and agrees to come to the summit as well.
• Hey, Tullius's voice sounds really familiar. Is he the same guy who plays Saul Tigh on Battlestar Galactica? I check the credits online. He is!
• I attend the summit, and basically lead it, making crucial decisions about the course of the war. I really like this part. It isn't as cool as the kingsmoot in Dragon Age: Origins, but it's a somewhat similar situation where passionately opposed forces are brought together at a high-tension conference. Ulfric is being a big jerk, demanding large concessions from the Empire in exchange for a cease-fire. I try to negotiate as fairly as I can: he wants Markarth, which is a major and wealthy city, so I order him to surrender Riften, a similarly sized city, in return. He also wants Falkreath, apparently just because he wants it; I say no. At several points he seems like he'll walk out, and he accuses me of harboring well-known Imperial sympathies. (Sigh... I wish I could have waited to join the Legion.) He ultimately agrees to the terms and storms (hah! get it?) out. The Imperial side is subdued, and I can sense some interesting tensions - Tullius is no fan of the Thalmor, who have sent an emissary; Jarl Elisif is understandably furious at Ulfric, while Tullius seems more measured.
• I lure a dragon into the Dragonsreach balcony, defeat him, and capture him. He swiftly agrees to betray Alduin: he won't just tell me where Alduin is hiding, but will take me there himself.
• I get to ride a dragon! This cut scene just lasts for about five seconds, but still, it's pretty cool.
• A portal takes me to Sovngarde, a pretty clear parallel to Valhalla, where warriors who die in battle are eternally rewarded with feasts and other good stuff.
• Oh, no! Alduin is busily corrupting Sovngarde, laying down mists and false paths that cause warriors to lose their way and not reach their reward.
• I'm awesome, though, and make it through easily.
• Inside, I meet the three ancient heroes I'd seen before: they're the ones who originally "defeated" alduin. They're actually really cool, especially the valkyrie-ish woman; I'd have enjoyed doing more with them. We unite our voices together, Shout away the fog, and force Alduin to fight us.
• This time, the "hey you, stop flying around and land down here on the ground where I can whack you!" Shout seems to work much better. It's an intense fight, but a pretty fast and fun one. Soon, Alduin is dead! Sovngarde is restored to its original state, and all the spirits of dead warriors talk about how awesome I am.

Hooray! Now that I write it all out, I guess it is a longer plot than I had originally thought... it probably felt shorter because I could just jam on it and go from task to task, unlike my faction quests, where I typically was doing a bunch of quests more or less at the same time.

There's still the little matter of the civil war left, though. I started to wonder if THAT was the main quest; after all, I hadn't needed to resolve it before defeating Alduin, so maybe my stature as not just Dragon-born but Dragon-bane would be necessary for wrapping up the conflict?

I reported back to Castle Dour to take my instructions. One mission fairly early on was to convince Jarl Balgruuf of Whiterun to side with the Empire; up until now he had tried to remain independent, but Tullius had learned that Ulfric was planning to make a move. I asked Balgruuf to accept the Legion's help; he sent me to Windhelm to gauge Ulfric's intentions. Ulfric may be a jerk, but he's an honest and honorable one, so he made clear that he intended to start a war. Back in Whiterun, I helped defend the city from an invasion. This was a REALLY fun sequence, one of my favorites in the game: you initially defend the barricades, then eventually fight a running battle, trying to keep the Stormcloaks from reaching the drawbridge. We eventually slew all the attackers and carried the day.

There are quite a few missions on this quest line that involve you fighting alongside the Legion in defeating the Stormcloaks, and while I generally liked them, one thing really bothered me: I had an extremely hard time telling the two sides apart. I'm pretty sure that they have different uniforms, but they're all basically the same color and the same size, so unless I'm paying close attention to the compass radar or the target indicator, I can easily end up hitting an Imperial; and since I tend to one-shot enemies, I often felt bad realizing that I'd struck down a comrade. There was one mission where each enemy had a little quest arrow over their heads; that made it MUCH better, and I wish all of the civil war fights had used this.

Oh, that brings up another point: these fights seemed to be greatly under-leveled. Granted, I would be fighting up to fifty enemies at a time, so it's good that they aren't each as strong as a Draugr Overlord or something, but still... I was fighting in melee, and can't use stealth, so everyone had ample time to hit me, and still, my natural health regeneration always kept my health above 95% throughout the entire fight. A dual-wielded power attack would invariably kill anyone, even through a block, and when my Stamina ran out, it would just take three normal hits to kill an enemy. I tore through them like nothing. Which, granted, is fun, but still, a little more challenge would have been nice. The quest rewards also didn't seem to be leveled: the very first reward I got from Tullius was something like a Daedric Sword with a powerful enchantment, but each of the later rewards were more like, well, Plate Armor (?!) or an Orcish Mace (?!!!!!).

Other than defending Whiterun, most of the Legion quests involved meeting up with a group of Legionnaires, then assaulting a Stormcloak fort and killing everyone outside. In this way, we gradually extended Imperial control over the various regions of Skryim: the Pale in the north, the Reach in the west, and the Eastmarch on Ulfric's doorstep. This leads the way to the finale: a thrilling assault on the city of Windhelm itself. You travel over familiar streets, which are now filled with unfamiliar flames and towering barricades, as catapults rain fiery death down on the city. I summoned my Spectral Assassin and we ran through the city, leaving the Legion in our wake as we rushed to the Hall of Kings.

Once inside, the final fight was very anti-climactic; for some reason, I summoned Durnehviir, who was too big to fit inside and was generally clipped out of the drawing plane. Ulfric and his right-hand man Galmar were pushovers, without any special abilities, and were defeated in something like six seconds. It might have been an interesting fight with just me, but with my summons and Tullius and Rikke, it was just too easy.

The finale is pretty interesting, though. Tullius offered me the privilege of a summary execution of Ulfric; I demurred, and Tullius did it himself. He then emerged and, despite claiming to hate speeches, delivered a rousing barnstormer to the Legion, praising them for what they've done and doubling their pay. (The soldiers audibly cheer more loudly at the financial rewards than at the abstract geopolitical gains they have accomplished. I suspect this to be historically accurate.) Tullius strides off. I chatted with Rikke, who confessed that she isn't comfortable in a political role, but will be assuming more administrative duties as the Empire consolidates its strength in Skyrim.

And... that's it! I traveled to the Blue Palace in Solitude to see if Elisif would be crowned Queen (perhaps with that nice Jagged Crown I had recovered), but she didn't acknowledge the defeat of Ulfric. As far as I can tell, that's the end of the line. I think there will still be at least one more expansion, so perhaps there will be some final action on the civil war plot, but otherwise, that seems to end it.

END SPOILERS

Phew! What a fun game! The blessing and curse of open-world western RPGs like Skyrim is that there's always more than enough available to do. Sometimes this can make them drag a little, since you don't have urgent narrative momentum like what's offered in games like Mass Effect 2; but on the plus side, if you're ever bored by your current plot or mission, you can just switch over to doing something else.

Now that I'm at a good place to evaluate the game as a whole: Skyrim is good! It scratches my itch for open-ended gameplay, while stoking my appetite for more focused narrative.

Improvements over previous Elder Scrolls games:

• Voice acting in general is much better. In particular, you no longer get the extremely disconcerting accent shifts when one character uses recycled dialog for some conversation options and bespoke dialog for others.
• The economy is much better. In particular, once you finish the Thieves Guild quests, you'll have a good chunk of merchants who can afford to buy the most expensive items in the game.
• Skills. As previously noted, stuff like Smithing is now a more fun, positive skill that lets you do and make new stuff, instead of a rote maintenance chore.
• Stealth. As previously noted, this is the first Elder Scrolls game where I've felt like I'm able to play a pure-stealth character without being crazily handicapped. (If you're a power-gamer, you'll still want to mix in magic and other skills, but if you're playing for fun, this is a nice way to go.)
• Graphics are better. They were good in Oblivion too - anything to get away from Morrowind's ugly palette - but characters now look better as well. I particularly enjoyed the idle animations: smiths pounding away at their forges or tempering and sharpening their weapons; alchemists mixing potions; shoppers strolling around; even guards shifting their weight from foot to foot looked pretty good and natural. I should mention that I did install the "no more blocky faces" mod which may have helped this category.
• Followers. Dawnguard, at least, had one great companion. I didn't have too much experience with the others, but on the rare occasions where I needed to bring someone else for a plot purpose, they... they weren't GREAT, but comported themselves reasonably well, and certainly did far better than those in earlier Elder Scrolls games.
• Horses. They can be slain, which sucks, but they're much more reliable than Oblivion's. My first horse, Frost, lasted me about halfway through the game before he was unfairly killed; my second, Shadowmere, is still alive, and even participated directly in a bunch of fights, including some against dragons and against entire armies. And they're still very useful for getting around, especially when trying to reach new locations.
• Personalities. Oddly, I can recall the characters in Morrowind much better than I remember those in Oblivion, even though I played that game longer ago. I still remember Vivec, and the various House Hlaalu folks, and most faction heads. In contrast, for Oblivion I can barely remember Martin (though I do recall Sheogorath quite well... though it would be hard to forget him after a whole expansion where he's practically in your face the entire time). We'll see in a few years how well Skyrim's personalities retain an impression, but at the moment I feel like Elisif, Ulfric, Rikke, Tullius, Alduin, Delphine, Maven Blackbriar, Karliah, Delvin, Vex, Astrid, Babette, Isran, Harkon, and Serana are all interesting, memorable characters. (Granted, still not memorable to the same degree as characters like Minsc, Morrigan, or Moridin, but for Bethesda they're quite good.)
• Combat feels a bit better than Oblivion, and much better than Morrowind. I suspect it would have been even more dynamic if I played as more of a warrior character and used blocks and bashes. Still, as a melee stealth fighter, I had a lot of fun and a bit of challenge.

Strengths of the franchise:

• Factions. The more I think about it, this may be the single best innovation of the series. It's just so much fun to be able to choose an affiliation, climb up through the ranks, and improve not just your own standing but also the stature of the group.  
• Environments. A bit better than Oblivion, but both were wonderful. Mountains, streams, forests, rolling hills, ancient ruined forts, snowy fields... every once in a while I just had to stop and stare at all the beauty around me.
• Lore. This game has just as many books as earlier ones. I wasn't as thorough this time around in reading entire libraries, but whenever I decided to pick up a book, I was rewarded with a well-written peek into Tamriel's history, culture, or mythos.
• Stability. Quests can occasionally get broken, but it's rare, and at least on PC can quickly and easily be fixed with a Google search and a couple of console commands. I had almost no crashes throughout the entire game.
• Equipment. There's a huge range of craftable materials to make your own, and an endless variety of enchanted gear lying around. (Two requests: I'd love to have a "hide helmet" option similar to that in Mass Effect so I can see my character's head if she's in a powerful-but-ugly helm, and I'd like to have a match-hue option so you can mix-and-match bonuses from different sets but still look visually coordinated.)
• Music and sound. It's not incredible, but the music feels thematically appropriate; best of all, it's subtle enough to not get repetitive and annoying over the hundreds of hours you may play. The foley is quite good.
• Total freedom. This also has its downsides - I'm sure many newcomers to these games are permanently frightened away the first time that they walk into town, innocently pick up a basket, then quickly find themselves hacked to death by a squadron of guards. Still, I love the fact that this game lets you do anything you want to. Murder people in their sleep? Fill a room with sweetrolls? Swim around the entire continent? Get naked and sit on the High King's throne? You don't need to do any of these things; just knowing that you can makes it awesome.

I enjoy complaining about:

• While the voicing is better, they still recycle scripts between characters. Throughout the world, you will hear many different people say "Ah, so you're an alchemist, then?" and "Got a pretty full stock of potions and alchemy reagents" and "Just what you see here." 
• And, they could still use some better quality control on the voice acting. My teeth grate whenever I hear the assistant at the White Phial in Windhelm say "Got a pretty full stock of potions and alchemy regents." Oh, really? You have a full stock of kings and queens that you've chopped up into pieces, burned down into salts, ground up in a mortar and pestle, and are now selling in your store? Or did someone just forget to tell you how to pronounce "reagent"?
• Money is still pretty useless. There's just so much stuff out there to pick up that you'll almost never need to buy anything, except for raw materials if you're leveling up a skill like alchemy or smithing. Houses are a pretty good money sink, but still not enough to dent the cash you'll have by the end of the game (in my case, just a little under a million gold pieces).
• While humans looked pretty good, the dogs were terrifying. This might be the most uncanny-valley-ish thing I've ever encountered. They're supposed to be furry and friendly, but they just look like demonically possessed hellbeasts, with weird heads that move wrong, and eyes that blink unnaturally, and a tail that seems to move independently of their bodies. The dogs were so disturbing, they made me retroactively realize that Bioware may have been brilliant in designing the Mabari like they did. At the time, I'd been bummed that Mabari look sort of ugly; but by making them something dog-like-yet-not-dogs, they may have avoided the creepiness of making a wrong dog.
• The default interface. It's awesome that the game can be modded to fix it, but it's a little absurd that PC gamers need to rely on volunteers to fix problems from a major game studio.
• Lack of agency in the plot. I complained about this at great length in an earlier post. Basically, you very rarely get to make any meaningful decisions (the major exception being the one in this post, the side of the civil war you choose to back). Most "conversations" just consist of you selecting a single "choice" in a dialog.
• The world of Skyrim actually felt a bit more static to me than the earlier games. In Morrowind, you could buy your own land and gradually transform it into a grand estate. In Oblivion, an early incident permanently changes the topology of Cyrodil. In Skyrim, certain interiors are changed - you can upgrade your house and faction headquarters - but it would have been really cool if, say, a village would burn to the ground, or someone built a new watchtower, or some other lasting change occurred to the landscape.

There's still a ton left in Skyrim, but I think I've finished the major story quests, so I'll probably leave it here for at least a while. The remaining quests that interest me most are probably the Bards College quests; I do love that the Bards are a joinable faction, and I have a well-documented affinity for playing as a Bard, but at this point all they're offering is a bunch of fetch quests, and I've had my fill of those for a while.

I'll probably peek online just to make sure that I'm not missing anything major, then set this aside for now. I'll likely eventually return and play through Dragonborn, the latest expansion. I hear that you get to ride a dragon! That sounds really cool.

EDIT 1/1/13: I've uploaded an album of screenshots from the game. As is becoming usual for me, the images start from about 2/3 of my way through the game, though they encompass the bulk of the main quest as well as most of the Dawnguard expansion. Consider these images to be mega spoilers.

Dah Dahn Gahn

Elder Scrolls games are games of detours. I'm constantly putting off doing something fun and important because I'm too busy doing something more fun and less important. My most recent excursion was the Dawnguard expansion. Since this is a fairly stand-alone set of quests, and available for separate purchase, I figured it might be worth devoting a post specifically to that experience.

MINI SPOILERS for The Elder Scrolls: Skyrim: Dawnguard

I know I just called Dawnguard relatively stand-alone, but actually, it permeates the entire game in various ways both obvious and subtle. One important effect of simply installing the expansion is a significant increase in the incidence of vampire attacks. Lone vampires will periodically attack inside peaceful areas, including the major cities. As you progress through the expansion, the attackers will grow more powerful. I liked the sense of danger and unease that this added; even the strong walls of Whiterun can't protect you from enemies. However, be aware that, while the guards can generally take care of the threat (and, therefore, you don't need to be too involved in the fight unless you really want to), other NPCs are likely to be swept up in the conflict as well, and they are less likely to emerge intact. Some fairly-significant named NPCs, including a couple of shop-owners, were killed in my game. Actually, the thing that impressed me most about this was how resilient Skyrim's AI and scheduling system is. In many cases, when a shop-owner was killed, their assistant or another local would take over their role. So, while it feels like there was a (random) story impact from the attacks, it didn't permanently break anything important. (The one time I did re-load was when an attack in Whiterun killed Niranye, one of my reliable fences and thus one of the few people with enough gold for me to bother visiting.)

The quest kicks off when random conversations you have reference the re-forming of the Dawnguard. You travel to the far southeast of the map, east of Riften, to Stendarr's Beacon. You keep going farther than this, eventually finding your way into a new valley where the ruins of the old Fort Dawnguard lie. For some reason, you can't take your horse here, and the trek to the fort is fairly time consuming (albeit pretty). Later on, as the Dawnguard strengthens and expands, the fort grows bigger and better-looking, and eventually you can fast-travel right to the front door.

The Dawnguard is lead by Isran, a former Vigilant of Stendarr who was kicked out of the order for being too extreme. And he is quite extreme indeed: he hates vampires with every fiber of his being, and will stop at nothing to eradicate them.

Before I plunge into more plot details, here are some overall impressions on the expansion:

My favorite aspect of the expansion is a new companion you get, who is the only companion who I've actually enjoyed enough to keep as a follower for a long period of time. I don't think that you're required to always have her with you - you can ask her to wait somewhere, and I suspect that she'll just pop up when her participation is required for the story. But, she is actually fairly good at remaining undetected, has good magic, and can survive pretty well once you equip her. She can even raise the dead to follow, increasing your numbers even further.

The expansion adds a variety of items. The new areas include some new reagents. It also adds crossbows; I never used these (melee for life!), but from what I've heard, they're more powerful than bows and slower to reload. You can get enhanced schematics for crossbows and some other items. One enhancement was particularly helpful to me: Dragonbone weapons. In vanilla Skyrim, the most powerful weapons you can forge are Daedric weapons, which require going through the Heavy Armor path of the Smithing tree; Light Armor smiths can't forge anything stronger than Glass. Now, the existing Dragon Armor perk has been upgraded to let you also forge weapons that are slightly more powerful than Daedric, finally bringing light armor wearers (like me!) up to parity offensively.

You can become a vampire in the main game (which I accidentally did once; it's a kind of annoying process to cure), but in the expansion, you can choose to become a Vampire Lord. I didn't do this, but from reading the text on loading screens, it sounds pretty cool... you can fly, and cast spells, and reanimate corpses.

The expansion adds a bunch of new areas, some of which are HUGE! There's a single cavern which is larger than any other level I've seen yet in the game, and also some cool, creative new places, both indoors, outdoors, and otherworldly. One downside: the new areas seem a bit more crash-prone than the main game. I've had a grand total of three crashes in my months of playing the game, and all of them happened when I was in one of the new environments.

Okay, I think that's all I can say without going into some

MEGA SPOILERS

Like I said before, Isran is a hard-core vampire-hater. I had actually wondered early on if they might really push this idea into some strong, morally-ambiguous directions. Like, if the story would indicate that his hatred of vampires had turned himself into a sort of monster, or overpowered his love of humanity. It never really does that, though... he's just a very tough man, but the end of the expansion makes it clear that he's a good guy.

That said, the story might change depending on the decisions you make. That is by far my favorite aspect of Dawnguard: unlike nearly all other quests I've played so far in the game, there's actually a meaningful choice you get to make in this quest, which can have an effect both on the gameplay and on the plot. After helping Isran by investigating an ancient vampire lair, you rescue Serana, a very old (but, of course, still young and beautiful) vampire who possesses an Elder Scroll. I agreed to take her home to her father, a powerful vampire lord who leads a large but secretive clan of vampires on an island to the west of Skyrim. Once there, he asked me if I would like to be rewarded for my rescue of his daughter by receiving the gift of vampirism. As noted above, this form of vampire sounds way more fun and useful than standard vampirism; unfortunately, as noted in a previous post, it also would have required me to become incredibly ugly, unlike the somewhat fashionable form taken by normal vampires.

I assume that, if you accept his gift, you would probably still do most of the remaining quests, but would then be operating out of the Volkihar castle instead of Fort Dawnguard, and working for Lord Harkon instead of Isran. As it went, though, I left Volkihar, and continued working for the Dawnguard. Several quests that I think are optional allow you to recruit new members to the Dawnguard, and further quests you do for them seem like they may upgrade their arsenal. If so, then that may help with the final battle at the end.

Eventually, you are reunited with Serana, who returned to Fort Dawnguard in secret and is trying to win over a highly reluctant Isran. Unlike almost every other NPC in the game who I've encountered so far, Serana is fun and interesting to interact with. She's voiced very well, knows interesting things, is unsure how she feels about certain issues, and can be influenced to some degree based on your actions. I was very friendly and kind to her, and while she can be a little stand-offish she did seem to value our bond. (I don't think she's marriageable, though that may be because I was already spoken for.)

Most of the remaining quests are the standard Elder Scrolls fetch-and-return type of quest, but they're set in interesting environments and have some interesting lore around them that make them more bearable than they would be otherwise. Over time, you learn that Valerica, who is Serana's mother (and Harkon's wife) had deliberately imprisoned Serana and her scroll in order to keep her away from Harkon. Serana gradually fills you in on her family history. At the beginning, she, her dad and mom all seemed to get along well, whatever that means for a vampire family. However, her dad came across a prophecy that turned into an obsession for him: a ritual that could be performed to blot out the sun and allow vampires to freely roam throughout the world at all times. His wife disapproved of the attempt to fulfill the prophecy. Vampires had existed securely if secretively alongside humans for all of history. Coming out into the open, she believed, would only inspire humans to unite and launch a total war against the vampires, a war that the vampires could very well lose.

Serana has been out of commission for millennia, but decides to re-unite with her mother in order to figure out the next steps. Together, you infiltrate the castle, and discover a secret wing that Serana's mother had created. Inside, you find journals that show what she was up to: she intended to thwart Harkon's plans by placing the pure-blooded vampires he needed beyond his reach. Serana had already been ensconced in an ancient temple, and now the mother would retreat into the Soul Chamber.

Remember how one of my favorite parts of Dragon Age: Origins is the trip to the Fade? Well, the next part of Skyrim is a little like this, but instead of being populated by the spirits of the dreaming, it's populated with the spirits of the dead. Actually, I really liked this section since it finally provided some lore around the opaque "soul gem" mechanic that's been present in every Elder Scrolls game that I've played. Basically, whenever you want to enchant an item, you first need to get a special type of gem. Next, you must cast "soul trap" on a living creature. Then, you must slay the creature, and their soul will be trapped within your gem. Finally, you use the filled soul gem to enchant your item, destroying the gem (and presumably the soul) in the process. More powerful enchantments, such as a long-lasting levitation effect, would require a more powerful soul, such as that of a human; weaker enchantments, like a small fire effect, can be obtained from smaller souls, like those of peaceful animals.

Well, this part of Dawnguard finally describes what's really going on here. Enchantments are done by powerful entities who live in or beyond the Soul Chamber, and enchanting is a form of bargaining: the enchanter offers a soul, and the beings reward them with an enchantment. They have similar offerings for necromancy as well: if you agree to a bargain with them, they will let you raise beings back to a temporary form of life.

Serana's mother was a necromancer (and, evidently, Serana is one as well), and so she was acquainted with these sorts of bargains, and secured a place for herself in the Soul Chamber. Most of the beings there, though, are the souls of the dead, who presumably were used in some ritual or other.

After reacquainting with the mother (and, in my case, restoring my soul), I acquired her Elder Scroll. Next, we found a Moth Priest to help us translate them. I'm pretty sure that the moth priests were in Oblivion as well, since the term sounds very familiar, but I remember practically nothing about what they did in that game. Here, the priest offers some initial help, but then goes blind, leaving you to complete the translation yourself. Along the way, you learn the secrets of the priesthood (turns out that there are actual, physical Ancestor Moths flapping around), and visit a surprisingly beautiful hidden glen where the moths congregate.

With the scrolls translated, you finally understand the prophecy. It's tied up with Auriel's Bow, an ancient artifact; it is dedicated to the Sun-God, but if it were corrupted and turned against the sun, it could destroy it. Harkon is pursuing the bow, so you need to find it first.

Entering the endgame now, I initially needed to run through a series of quests that felt annoying, but then was swept away by their grandeur. Throughout the game, you've encountered Falmer, twisted and blind Gollum-like creatures that live in the deep abandoned places below the earth. [Etymological note: in the Elder Scrolls universe, the suffix "mer" is used to denote elves. You'll occasionally hear the phrase "men and mer", meaning "humans and elves." Most of the elves are self-evident: Altmer are high elves (roughly analogous to Tolkien's Noldor elves), Bosmer are wood elves (akin to Tolkien's Sylvan elves, like those of Mirkwood), Dunmer are dark elves (kind of like D&D's Drow, though they look nothing alike and don't live underground). More interesting, though, are the other races ending in "-mer". The most obvious is the Dwemer, the mysterious ancient race that dwelt underground and built technological marvels before vanishing. Dwemer are dwarves, and Dwemer are elves, so in this universe, dwarves and elves are the same thing.] Falmer are the corrupted descendants of the once-proud race of Snow Elves. Snow Elves used to live on the surface of Skyrim, but steady conflict with the Nords gradually pushed them underground, where over generations they turned into the Falmer.

Aaaaanyways... late in the game, you actually get to meet one of the two remaining Snow Elves in the world. He's the keeper of the Bow, and sends you off on a quest before he'll give it to you. The quest is to visit all 5 cisterns to draw sacred water for a sacred urn. I groaned. That's exactly the kind of busy-work quest I hate. And, indeed, the first cistern was a pain to reach, through a tedious (though, granted, great-looking) cave. But! After that, it opened up, into an absolutely massive new outdoor environment. I wandered around, absolutely stunned at the towering mountains, crashing frozen waterfalls, massive sheets of ice (with dragons bursting through!), and more. There were relatively few enemies in this area, other than an exciting two-teamed fight against dragons. There were also almost no quick-travel points, and no horses, so I was glad for all the Stamina I'd invested in throughout the game.

A couple of these cisterns were hard to reach, and required navigating through caves that weren't indicated on the maps, but that made it all the more rewarding once I finally completed the sequence. I had the water, then confronted the other remaining Snow Elf and learned the truth: he had invented the prophecy in the first place, in order to lure a pure-blooded vampire into his lair. Unbeknownst to his former compatriot, he had been infected with vampirism, and abandoned by their god. His revenge would be to use the pure blood of the vampire to kill his god.

This fight was pretty fun. It went through a couple of stages in a frozen throne room, against several waves of enemies, and then led to a climactic battle against the vampiric Snow Elf on a high parapet overlooking the hidden vale. He was pretty tough, but fortunately I have Mehrunes' Razor, so even the toughest enemy will fall if I'm sufficiently determined with my blades.

We checked back in with the good snow elf, and he rewarded us with Auriel's Bow. Serana said that it was time to finish it and kill her father. I was all, like, "Really, babe? You sure you want to do this?" And she was all, "Yeah, man, whatever, it's cool. Just... just leave me alone for a little bit, kay?" So we skedaddled back to Fort Dawnguard. Isran flipped OUT when he saw the bow - I guess it's now a famous vampire-killing artifact or something? - and announced the immediate assault on Harkon's castle.

The finale was a lot of fun. Everyone shows up at the gates and charges in, yelling and shooting and killing. There's a running battle through a couple of rooms; most of the vampires are using magic, while the Dawnguard primarily relies on weaponry. The Dawnguard cleaned UP - granted, I'm a powerful person and I was on their side, but still, I was pretty surprised to emerge from the fight without a single casualty on our side (unless you count a war troll, which I don't). Again, I'd like to think that the strength of our side was due in part to the side-quests I'd done for them, but I can't say for sure whether that's the case.

Isran was all pumped up on testosterone after slaughtering a complex full of vampires, but for some reason he and the others didn't want to help me with Harkon, so Serana and I entered his throne room by ourselves. This led to some more juicy plot-related stuff, with Harkon making it quite clear that he'd willingly sacrifice his daughter to achieve his dream of a dark world. I also got to declare my affection for Serana, leading Harkon to denounce her. He gave me a final chance to hand over Auriel's bow - which seems really weird, since we hadn't said two civil words to one another since I had first returned Serana home - and then the fight began.

This actually ended up being probably the most interesting fight I've had in the game so far. Harkon is very powerful: he has both melee and ranged attacks, can summon a large number of undead, has a large health pool, is apparently able to regenerate health throughout the fight, AND, in the most innovative twist, can transform himself into a cloud of bats to teleport between locations. At the start of the fight, I focused on taking down his skeleton summons and letting Serana focus on him. Then I heard her shout "Use the bow!" Huh. I was carrying Auriel's Bow, which appeared to have some vampire-slaying capabilities, and I had invested in some Sunhallowed Arrows. As I've previously noted, I have entirely focused on one-handed melee weaponry in the game; but thanks to the Elder Scrolls design, I CAN use any weapon, I just don't have special perks for the others. I figured, "Eh, why not?", switched to the bow, and started firing away.

The fight was very long, but quite satisfying. My Skyrim fights typically either end instantly (if I can attack someone from stealth... a 30x backstab multiplier with a dual-wielded power attack of Legendary Mehrunes Razor and Blade of Woe can one-shot even a boss), or very quickly (if I am repeatedly doing that power attack to their face). Well, with this fight, Harkon flits around so quickly that I wouldn't have been able to melee him successfully. As it was, I still missed a good chunk of my shots, but each one that landed took a small yet noticeable chunk out of his health. When he was near the chapel window, I was able to fire through the window into the sun, which did an even more powerful sun-based attack. Whenever Serana seemed to be getting swarmed by the skeletons, I would shoot them to get her out of it; the Sunhallowed Arrows seem to do area-of-effect damage, with both a fire effect and extra damage to undead, so a few shots would eventually take the beasties down, and I could then re-focus on Harkon.

Eventually, he fell, and I won! Isran finally deigned to enter the battlefield and praised us for our work. He begrudgingly acknowledged all the aid Serana had provided, and invited her to join the Dawnguard. She said she would be happy to, unless... unless I wanted her around? Well. Turns out that I did! I don't know how long it will last, but I've been pleased with her as a companion; she can hold her own in a fight, and doesn't bring me into too many unnecessary fights, and has a nice, soft-spoken but insightful approach to the world. (We'll see how long this continues - I think she's marked as "essential" during the main Dawnguard quests, so she merely falls unconscious if her health falls to zero. Presumably, she is now a standard follower, and can die for real. I may send her back to Fort Dawnguard to stay safe if she seems too vulnerable.) She's also just a kind of interesting follower to have around; she'll tinker with nearby alchemy labs, sharpen her weapon on a grindstone, and do other random but visually engaging things.

Oh, yeah: for the record, I've equipped her with my best random castoffs. I've kept her default vampire armor, since it seems pretty powerful, but have added legendary enchanted glass boots and gloves. I had her in a legendary elven helmet for a while, but eventually took it away since I didn't like the goofy look; I replaced it with a Circlet of Destruction, which should make her offensive magic cheaper to cast. I also give her every Staff I come across. She SEEMS to use these; I check her inventory every once in a while, and see the charges gradually dropping. I've also tried giving her soul gems, both filled and empty, but it doesn't look like she will recharge her own equipment, which is too bad; instead, I'll grab her staves once they completely expire and sell them off.

I was chatting with Serana shortly after, and was surprised to see that a new conversation option had opened up to chat with her about being cured of vampirism. We discussed it, and she's going to give it a try! I'm curious to see what happens - whether her appearance will change, whether she will lose any powers, if her personality and dialog will shift to something new. She is thousands of years old, so I do wonder if she'll simply crumble into dust. We will see!

END SPOILERS

On the whole, the Dawnguard expansion has been possibly my favorite major quest line in Skyrim thus far, right up there with the Dark Brotherhood story and the Thieves Guild. It gets at some interesting lore that helps shed a bit of light on mysteries that run through the entire Elder Scrolls series; it provides some nice item upgrades that apply to the entire game; it introduces some absolutely vast and gorgeous, huge new areas; and it has some very interesting new NPCs, including someone who is BY FAR the best companion I've had in any Elder Scrolls game. (Still not as good as a Bioware companion, but hey, we can't have everything!) It's definitely worth picking up. Now, as I FINALLY turn to the main quest line in Skyrim, I just hope it doesn't feel anti-climactic after Dawnguard...