focus one third into the scene

Understanding Depth-of-field

By Jim Altengarten, exposure36 Photography

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Classic landscapes such as this onerequire extensive depth of field .

In landscape photography, depth-of-field is a critical component of every image. Some photos require minimum depth-of-field to place more emphasis on a single element of the scene. Classic landscape shots have extensive depth-of-field to provide front-to-back sharpness. Since depth-of-field is so important to landscape images, we’ll address several questions, such as what is it, how do I control it, how do I know if I have enough, and can I estimate depth-of-field when in doubt?

Many photographers labor under the misconception that depth-of-field refers to a specific zone of some size that’s sharp throughout its range. It’s important to understand that the only point in a scene that is tack sharp is the actual point of focus. Everything else in the scene is out of focus to some degree. In that case, what is depth-of-field?

Depth-of-field is the zone of acceptable sharpness in the image. It’s a portion of the image in which all of the elements appear to be in focus. There are no sharp lines indicating the beginning or end of this zone. Instead, there’s a gradual fading in and out of the zone. It’s not centered on the point of focus. Approximately one-third of the size of the zone lies in front of the point of focus; the remainder falls behind. The extent of the zone is determined by several controls available to the photographer.

We can predict that a shutter speed of 1/4^th of a second will provide a blur when you’re photographing a waterfall, and a shutter speed of 1/200^th of a second will freeze the droplets of water. Depth-of-field isn’t that easy. Shutter speed is simple to predict, because there is only one factor involved. Predicting depth-of-field is more difficult because there are three factors. Many people believe that if you use an f-stop such as f16, you will get all the depth-of-field you might need. In some cases, that may be true. In other cases, the depth-of-field provided will either be excessive or insufficient. Let’s work under the concept that we should have only the amount of depth-of-field required to render the scene according to our interpretation. Both more and less depth-of-field than required can have a negative effects.

The photographer has three camera controls to determine the depth-of-field in an image. The most commonly known control is the f-stop. Before discussing this aspect, let’s clarify two terms that are used interchangeably: “f-stop” and “aperture.” “Aperture” refers to the physical opening of the lens. “F-stop” is a relationship between the aperture and the focal length of the lens. If we didn’t have the f-stop relationship, we couldn’t have photography. An f-stop of f8 means that the same amount of light will strike the film plane no matter whether you’re using a 20mm lens or a 600mm lens. Compare the diameter of a 20mm lens with the diameter of a 600mm lens, and you’ll understand why the f-stop relationship is necessary.

Just considering the f-stop, a smaller f-stop number (e.g. f2.8 or f4) provides little depth-of-field in the scene; a larger f-stop number (e.g. f16 or f22) provides a lot of depth-of-field in the scene. Many photographers don’t go further than f-stop when considering depth-of-field. They don’t realize that the depth-of-field provided by the f-stop is either a lot or a little in relationship with the other two controlling factors.

Use of a telephoto lens, as in this photo, results in a shallow depth of field that helps separate the subject from the background.

The second control over depth-of-field is the focal length of the lens. Just considering the focal length of the lens, a smaller focal length provides greater depth-of-field; a longer focal length provides less depth-of-field. If you’re using a 20mm lens, you’ll have more depth-of-field at any given f-stop than you would with a 600mm lens at the same f-stop. This is a “rule” of photography that you should remember. There is only one exception to this rule. If you were very close to your subject with a 20mm lens and filled the frame, you would have the same depth-of-field as with a 600mm lens if you were much farther away and the subject was the same size in the viewfinder.

Please note that the discussion of depth-of-field with f-stop and focal length considered only one of the factors to show how they work independently. However, they’re interdependent when you’re in the field shooting. Let’s use an example of shooting a field of flowers with a 20mm lens. If we just consider f-stop, we might use f16, since we know a high f-stop number provides a lot of depth-of-field. However, we get “extra” depth-of-field because we’re using a 20mm lens. We might find that f8 or f11 provides enough depth-of-field to shoot the scene the way we want it. (We’ll discuss how to determine if you have enough depth-of-field later.) If that’s the case, then we have “excessive” depth-of-field—more than we need. The downside is that the extra stop or two of depth-of-field at f16 versus f8 or f11 means that the shutter speed is a stop or two slower. That might be enough to cause blur in a breeze.

Let’s go to the other extreme of using a 600mm lens to isolate a portion of the field of flowers. Again, we might select f16, because a high f-stop number should provide a lot of depth-of-field. However, the term “high” is relational. A 600mm lens might have an f-stop range of f5.6 to f45. In that case, f16 is not a “high” f-stop number. Since it’s not at the high range of the available f-stops and you “lose” depth-of-field with a telephoto lens, a choice of f16 would probably not provide the results (sharp front to back) that you desire.

The final control available to the photographer, and the one most commonly missed, is camera-subject distance. Just considering camera-subject distance, you’ll have less depth-of-field when you’re close to your subject than when your subject is farther away. This is apparent to macro photographers. As you move closer to your subject and the magnification increases, depth-of-field falls off rapidly. At very high magnifications, depth-of-field might be 1/16^th of an inch. When you’re shooting star trails, you can use any f-stop and get sharp images, because all the stars are far way at the same plane of focus (infinity). In this case, you select the f-stop only to determine how long to have your exposure. A longer exposure gives a more complete star trail circle if you’re shooting directly north or south.

In the image on the left, I used a 400mm lens set at f16. My subject was on a hill just off the highway. I was able to move very close and fill the frame. My f16 setting allowed me to achieve good focus on my subject and still blow out the background grasses and trees. All of my depth-of-field controls indicated shallow depth-of-field. My f-stop number was not a high number for the lens; a 400mm lens gives shallow depth-of-field; I was close to my subject. Having a shallow depth-of-field enabled me to hand-hold the shot (with image stabilization) since I was standing on the edge of a roadway (please note that I had a companion on guard farther along the road to warn me about on-coming traffic).

During one of my workshops, a photographer wanted to shoot a 4-inch Indian paintbrush flower as a foreground subject with a lake and mountain in the background. He was lying on the ground with a 15mm lens. What f-stop did he need? He was using an ultra wide-angle lens (lots of depth-of-field), but the flower was close to the camera. We decided that f11 was the best choice due to the proximity of the flower. It also provided a shutter speed fast enough to freeze any movement. In this particular example, the photographer focused just behind the flower so that the one-third of the depth-of-field that falls in front of the point of focus would cover the flower. If the photographer focused on the flower, about one-third of the depth-of-field would be “wasted,” because it would fall in front of the flower.

How did we know that f11 was the correct selection? There are several methods of determining if you have enough depth-of-field for your image. The most common method is using the camera’s depth-of-field preview. (For an explanation of this feature, see my article “Depth-of-field Preview-Friend or Foe?” Apogee, January 2005). Most cameras manufactured in the last five years have a depth-of-field preview. However, if your camera doesn’t have this feature, you have other methods at your disposal.

1) Manual cameras have excellent distance scales built into the outside of the lens. They indicate the range of acceptable focus for a selected f-stop. As long as the elements are within that range, they’ll appear in focus in the final image.

2) Canon has two depth-of-field modes, Dep and A-Dep, for their cameras. They help ensure that the elements of your scene are in focus.

3) Another way of gaining maximum depth-of-field is by using hyperfocal distance. The hyperfocal distance is a point of focus in which everything will be in focus from halfway between that point and the camera and infinity. The exact size of the range of focus depends upon the f-stop and focal length of the lens. (The use of hyperfocal distance will be the topic of another article.)

What should you do if you don’t have a depth-of-field preview or any of the other methods listed above? There is one technique for estimating front-to-back sharpness for your image that is based on the one-third / two-thirds rule for the range of the depth-of-field in the image. It’s an easy two-step process:

First, set your camera to an f-stop that’s one stop open from the minimum available f-stop. If the f-stop range for your lens is f2.8 to f22, then select f16. If the range is f2.8 to f32, then select f22. We aren’t selecting the actual minimum f-stop in order to reduce the effects of diffraction at very small f-stops. Diffraction is the perceived loss of sharpness due to the rapid spread of light after it passes through a small opening.

Next, focus on some subject approximately one-third of the way into the scene. By focusing at that point, the depth-of-field area before the point of focus will keep the foreground sharp, while the two-thirds of the depth-of-field that falls behind the subject should keep the background in focus. Using a wide-angle lens and having a significant camera subject (point of focus) distance would help even more. This technique, however, is still effective with longer lenses.

How can we determine where one-third of the scene is located? Is it determined by physical measurement, or is there some relative way to determine the answer? The answer is fairly simple. Remember our old composition friend the Rule of Thirds? It divides the viewfinder into thirds, both vertically and horizontally. The diagram (shown on the right) is an approximation of the Rule of Thirds. I’ve made the bottom horizontal line red in color to make it stand out. By focusing on an element in the scene that lies on the red horizontal line, you’re focusing one-third of the way into the scene. Note that your desired subject(s) may not fall on that line and will appear out-of-focus in the viewfinder. That is because you’re viewing the scene at your maximum (smallest) f-stop number, not the high f-stop number you selected for the image. Use your viewfinder to approximate where that line falls in the scene you’re photographing, and you can apply this technique successfully.

The image at the top of this article is a good example of this technique. The rock formation in the foreground lies approximately on the lower horizontal line of the Rule of Thirds (the red line in my diagram). Focusing on that point in the image allowed the one-third of my depth-of-field in front of the point of focus to keep the lower foreground in focus. The mountain in the background is still in focus due to the two-thirds of the depth-of-field that falls behind the point of focus.

The goals of this article are to show the interrelationships between the components of depth-of-field in a photograph and to remove some misconceptions about depth-of-field. It’s easy to simply select your minimum opening (largest f-stop number) and shoot. However, you’ve seen that such a simplistic approach may have negative consequences in terms of shutter speed or diffraction. Obtain the depth-of-field you need for the image--no more, no less.

_________________

Jim Altengarten is the owner of exposure36 Photography. He specializes in photographic education through workshops, classes, private lessons, and classes on CDs. Information about these products is available at the exposure36 website ( www.exposure36.com ) or via telephone at 1-866-FOTOS36 (toll-free). He specializes in Canon EOS cameras (digital and film) and teaches several classes and workshops each year that enable EOS users to understand all of the functions of their cameras.

source: http://www.apogeephoto.com/feb2005/jaltengarten2_2005.shtml

When To Sell A Stock

source : http://www.gurufocus.com/news/136542/philip-fishers-investment-series-when-to-sell-a-stock

Philip Fisher's Investment Series: When To Sell A Stock

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Jun. 15, 2011 | Filed Under: APPL, MFST, HSOA, X, BRK.A

John Emerson

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"I made my money by selling too soon." ~ Bernard Baruch

The above quotation makes perfect sense so long as you did not sell Berkshire A-shares (BRK.A) when they reached $10,000 around 20 years ago or Apple (APPL) shares when they doubled to $20 around a decade ago. Those "pigs" certainly did not get slaughtered.

The most difficult task a value investor faces is deciding when it is time to sell a stock. In theory, the process of liquidating a position should not be any more difficult than deciding when to purchase an equity. However, in reality, most successful value investors are much better at picking entry points than exit points.

Part of the problem is psychological in nature. Relatively few value investors are discouraged if the market price of a stock drops after they purchase shares; most anticipate that will be the case. However, when they liquidate a position most investors continue to monitor the share price for a period of time after they sell and lament the fact that they have sold too early.

The subject of today's article is a discussion of the factors to consider when making an intelligent sell decision. I will borrow Philip Fisher's ideas about when to sell growth stocks and then discuss my own opinions on the best time to cash in on cyclical stocks.

Philip Fisher's Three Rules for Buy and Hold Selling

In Chapter six of "Common Stocks and Uncommon Profits," Philip Fisher discusses three general conditions which suggest that a stock should be sold; they can be summarized as the following:

1) The investor has made an error in his/her assessment of the company.

2) The company has deteriorated in some way and no longer meets Fisher's 15 points for purchasing a stock.

3) The investor finds a better company which promises higher long term results after factoring in capital gains.

For typical investors, point number one would be the most common reason for selling a stock. Most of us are not a Buffett or a Fisher — we simply do not perform the extensive diligence nor possess the intellectual faculties to completely understand the extensive long-term dynamics of a business. Numerous times I have perceived moats that do not exist or I have become overly ambitious in regard to the prospects of a turnaround in a business. Almost invariably the anticipated turnaround never takes place or the misperceived moat is exposed. When that is the case, the prudent thing to do is acknowledge one's mistake and sell the company.

Accounting embellishments or outright fraud also fall under this category. Monitoring the veracity of financial statements as an ongoing process is imperative in deciding when to hold or sell.

Take the case of Home Services of America (HSOA), a stock that Scott Black once recommended to the Barron's Roundtable in early 2007. Black clearly did not conduct sufficient diligence in researching the company. Rather, he accepted the fraudulent accounting provided by the company resulting in one of the worst Roundtable picks imaginable.

It did not take an accounting genius to surmise that investors who purchased HSOA had made a serious mistake. Cash flow from operations did not resemble accrual earnings, account receivables were mounting and a related party transaction surfaced that clearly indicated that the company was exchanging cash from one hand to the other. Investors had a period of many months to escape the stock before in was de-listed. However, many still refused to abandon the company in the face of blatant fraud.

I recall writing an article which was titled "The Jig Is up at HSOA;" it was met with vehement protests by supporters of the company who refused to acknowledge the fraud. Here is a synopsis of the HSOA's problems written in the fall of 2006:http://seekingalpha.com/article/18714-home-solutions-of-america-story-gone-from-bad-to-worse

Fisher's second point is generally a much tougher call than his first point. One has to determine whether the growth company is merely suffering from a temporary trough in revenues and profits or whether the nature of their business has changed permanently.

Very few businesses encounter regular sequential growth which perfectly matches the estimations entered on a spread sheet. In fact, one should become suspicious if a company always seems to exhibit symmetrical growth patterns, never missing a beat and always bettering analyst estimates. If the symmetrical patterns last for an extended period, it is likely that the company is managing their earnings to meet the expectations of Wall Street analysts, in an attempt to maintain a high price per share. If managers receive large bonuses as a function of operating profits or returns on equity, or stand to profit from cashing in on stock options, the financials should be scrutinized all the more.

Fisher specifically points out that if the company's growth slows to a rate similar to that of the economy, the stock should probably be sold. Peter Lynch would concur; he referred to such stocks as slow-growers and they represented his least favor type of stock.

In today's world Microsoft (MFST) would probably fall into that category, although at its current price it is quite debatable whether the company should be sold, held or purchased. Such mature companies frequently turn into the dividend darlings of Wall Street, offering secure returns for conservative investors or retired investors who seek steady income. Certainly, these slow growers are excellent purchases during times of economic turmoil so long as they can be purchased at the right price and they are capable of sustaining their dividend.

Growth is not paramount to long term value in certain circumstances. Consider Berkshire-owned See's Candy. See's has exhibited very low growth for a number of years. However, they have consistently maintained their unit sales while being able to steadily raise prices. See's has become the gift that keeps on giving, sending capital back to its parent year after year which exceeds the total price which was paid for the company. In such a case, continuing to hold a low-growth entity merely for it continual flow of dividends makes considerable sense. After all, the capital can always be redeployed elsewhere.

Fisher's third point is largely irrelevant when trading in a tax-deferred account or a Roth IRA. Without having to factor in capital gains, the decision to switch out to a better value which holds more upside potential is a relatively easy decision.

Another point which has become largely moot over the years is the cost of switching stocks, specifically sales commissions. In Fisher's day it was an expensive proposition to pay round trip fees. When I first started trading, switching stocks could run into hundreds or thousands of dollars by the time the commission was paid to enter one and exit another. Today, huge lots of stock can be exchange with virtually no switching fees incurred.

Of course, capital gains still factor into decisions and state capital gains rates can make the switch an expensive proposition. In my state no distinction is made between short-term or long-term capital gains — they are taxed at a 7% rate. If we add in the top federal capital gains rate of 15% for long-term holds, one is left with a switching fee of about 22%. Many times the decision is easy if a stock runs much too high and another falls precipitously. However, if one is purchasing and holding extremely conservative large-cap stocks the decision is not nearly as easy.

Consider the example of switching Apple Computer (APPL) to Microsoft (MSFT) if one holds a large long term capital gain in Apple. Is the switching fee of 22% worth the move? That is a very difficult question that does not hold an easy answer.

Fisher would first consider the management of both companies. Certainly since Bill Gateshas retired, Microsoft has not regained the edge it once had. Although it is unclear if Gates could have performed significantly better than Steve Ballmer has in the last decade. How about the long term impact to Apple should Steve Jobs become unable to continue as its CEO? The same question is asked on regular basis in regard to Berkshire. What will happen in the long term when Buffett steps down?

I cannot answer the question about Apple and Microsoft but if I owned Berkshire, I certainly would not pay the switching fee. In fact, I will be inclined to buy Berkshire stock after Buffett steps down so long as the market overacts significantly to the announcement.

Buffett has set up Berkshire to thrive long after his retirement. At some point the huge cash flow will be returned in the form of steady dividends as the mounting capital can no longer be strategically allocated. I suspect as the years pass, at worst Berkshire will become a sort of "Widows and Orphans Fund." More likely, its "handpicked" management will continue to purchase some of the best businesses the world has to offer and steadily outperform both the general economy and the major indices.

Selling Cyclicals

You will probably never again hear me cite Jim Cramer in regard to value investing but I will acknowledge that his advice on buying and selling cyclicals makes perfect sense. Cramer advises buying cyclicals when they appear expensive and selling them when they appear cheap.

Holding cyclical stocks when they still appeared to be cheap ranks as one of my biggest investing blunders. At least I can consider myself to be in good company when it comes to making that mistake.

Readers may recall Jeffrey Gendell who managed Tontine Capital. Gendell was a theme-based value investor who made a fortune in the early and mid-2000s by loading his portfolio with cyclical companies. In 2003 and 2005 his hedge fund recorded gains in excess of 100% in each year.

However, in 2008, several of Gendell's funds were wiped out shortly after the financial crisis ensued. One of the funds was down over 90% in 2008. His funds were loaded with highly concentrated positions in steel companies, engineering firms related to the energy sector, various construction companies, and numerous small companies which were tied to the housing industry. Gendell lamented in a shareholder letter in the Fall of 2008 how he was ambushed by the financial crisis but still believed that the companies he owned were cheap on a current and forward earnings basis. http://michaelcovel.com/pdfs/tontine.pdf

Gendell bought US Steel (X) long before it turned around in the early 2000s and he made a fortune, at least temporarily. His major error was that he did not sell the company when it still appeared to be inexpensive prior to the financial crash. US Steel proved to be a metaphor for his entire cyclical-based portfolio; ascending like the beginning of a ride on roller coaster then crashing on the first big dip. The 10 year chart of X tells the story:http://moneycentral.msn.com/investor/charts/chartdl.aspx?symbol=x&&CP=0&PT=10

Certainly Gendell's losses were magnified by extraordinary circumstances, however stocking one's portfolio strictly with companies whose earnings are a direct function of worldwide demand for such things as steel, homebuilding, commodities, and other construction related areas is a risky endeavor. So is attempting to sell a cyclical precisely at its earnings peak, without regard to a "black swan" event such as the financial crisis. It has been my experience that the price per share of a cyclical stock is generally in decline well before its earnings begin to descend. US home builders were a perfect example in the mid 2000s; Gendell was invested in the home builders in addition to his other cyclical companies.

D. R. Horton (DHI)

The following is a 10-year summary of DHI, one the largest US home builders:

Income Statement - 10-Year Summary (in Millions)

	Sales	EBIT	Depreciation	Total Net Income	EPS	Tax Rate (%)
09/10	4,400.2	99.5	17.2	245.1	0.77	-146.33
09/09	3,657.6	-556.8	25.7	-549.8	-1.73	0.0
09/08	6,646.1	-2,631.8	53.2	-2,633.6	-8.34	0.0
09/07	11,296.5	-951.2	64.3	-712.5	-2.27	0.0
09/06	15,051.3	1,987.1	56.5	1,233.3	3.9	37.93
09/05	13,863.7	2,378.6	54.0	1,470.5	4.62	38.18
09/04	10,840.8	1,582.9	47.4	975.1	3.09	38.4
09/03	8,728.1	1,008.16	31.6	625.96	2.05	37.91
09/02	6,738.83	647.51	22.5	404.69	1.44	37.5
09/01	4,455.51	407.8	40.75	254.87	1.1	37.5

Note the accompanying chart:

http://moneycentral.msn.com/investor/charts/chartdl.aspx?symbol=US%3aDHI&CP=0&PT=10

D.R. Horton started dropping in mid-2005 well before its earnings had peaked. If an investor had waited to sell until mid-2006, a year where they recorded their second best earnings, investors would have seen the value of their holding drop by nearly 50%. Holding the company though the financial crisis until today would have resulted in nearly a 75% drop, even considering the current recovery in the share price.

Conclusion

1) Making correct sell calls is an extremely difficult process for investors.

2) A different set of rules apply when determining whether to sell high-grade companies or lower-grade cyclical companies.

3) Philip Fisher's three conditions for selling a stock should be evaluated before selling a growth stock.

4) Cramer is right about something — specifically, cyclical stocks should be sold when they still appear to be fundamentally cheap.

5) A stock should be sold immediately if impropriety or fraud is indicated.