I had lent out some money to a developer at 24% [2% per month] over the year and a half. Every month around the 7th I'd get my 2% like clockwork. Easiest money I never had to work for! The money was secured by a trust deed on the property.
Sadly those days are coming to an end. I was notified that he was either going to refi and pay us off or put us on some other scheme where we get 12% plus 20% when the project is completed.
Since I'm sending my mom some money to buy an apartment, I opted to get my money back. But it was good while it lasted. But in a few months I'll be selling one of my houses and freeing up some capital and will have to look for more ways to get a good return.
I've also given some money to a developer in Arizona. He doesn't pay any interest but after 18 months starts paying us off at the rate of 80% total ROI. Its been a year already. Hope he doesn't go BK on me!!!!
Anyone else doing private money lending?
D R Horton Offering Massive Incentives In Florida
Remember how Pulte Homes was giving $99k discounts in California? Well it looks like its becoming a common occurance along the coasts. Check out this ad in the Daytona Beach News Journal.
Lennar builders just announced their profits were down 40% and guess what, the stock was actually up on that news! Jim Cramer must have real balls recommending buying home builders right now!
Lennar builders just announced their profits were down 40% and guess what, the stock was actually up on that news! Jim Cramer must have real balls recommending buying home builders right now!
Stock Analysts Smoking Crack Again
Regular readers know I have a short position in WCI, a home builder based out of Florida. Well the analyst thats following the stock at JMP securities definitely doesn't know what the hell is going on.
According to Yahoo Finance's Analyst Opinion page, the JMP analyst downgraded the stock on April 10th, followed by an upgrade on August 15th followed by another downgrade on September 25th.
What is this guy getting paid to do????
I wish I had a job like that!
According to Yahoo Finance's Analyst Opinion page, the JMP analyst downgraded the stock on April 10th, followed by an upgrade on August 15th followed by another downgrade on September 25th.
What is this guy getting paid to do????
I wish I had a job like that!
Tax Arbitrage
Merck has been sued by the IRS for $2.3 Billion for back taxes and penalties. It set up a company in Bermuda which owns its patents and then its pays that company royalties.
It took advantage of what is often called "tax arbitrage." The usual strategy: lower a company's tax bills by structuring transactions so certain types of income or expenses are classified as one thing by the IRS, but something very different by another country's tax regulators.
Apparently Al Capone wasn't kidding when he said "A good lawyer with a briefcase can steal more than ten men with machine guns."
It took advantage of what is often called "tax arbitrage." The usual strategy: lower a company's tax bills by structuring transactions so certain types of income or expenses are classified as one thing by the IRS, but something very different by another country's tax regulators.
Apparently Al Capone wasn't kidding when he said "A good lawyer with a briefcase can steal more than ten men with machine guns."
Insider Trading Tips
CNN's money site has an interesting article on insider trading.
David Pajcin had set up an intricate network of spies to provide him with insider information including Businessweek and Merrill Lynch employees, a grand juror and of course strippers. [Whats a wall street story without exotic dancers?]
To read more about the scam Fortune magazine has a little more coverage.
David Pajcin had set up an intricate network of spies to provide him with insider information including Businessweek and Merrill Lynch employees, a grand juror and of course strippers. [Whats a wall street story without exotic dancers?]
To read more about the scam Fortune magazine has a little more coverage.
San Diego Condo Conversion Craze Cools Off
There's a good article in the local paper on how San Diego is saturated with Condo Conversions that aren't selling. There are nearly 7,000 units in 111 complexes sitting on the market. In fact, in some places the developer has decided not to continue to sell them and just keep them as rentals.
As a comparison, Los Angeles which is 3 times the population of San Diego has only 1,325 units!!!
Thats how bad the market has stalled here.
You can read about it here.
I actually know 1 guy who's been burned by this. He's stuck with tons of inventory that he overpaid for and can't even breakeven if he rents the units out. I guess he didn't have a backup plan.
As a comparison, Los Angeles which is 3 times the population of San Diego has only 1,325 units!!!
Thats how bad the market has stalled here.
You can read about it here.
I actually know 1 guy who's been burned by this. He's stuck with tons of inventory that he overpaid for and can't even breakeven if he rents the units out. I guess he didn't have a backup plan.
Forex Robo-Trader
Interestingly enough there's a company that will take your $10,000 and put it in their "robot forex trader" program. You don't need to know anything about forex trading, the software algorithm takes care of it for you!
According to their data, its been back tested and it should get 81% profit per month. Well, I guess I can retire now and sail away into the sunset!!!!!
http://www.forex-day-trading.com/forex-trading-robot.htm
Sounds a bit like those high-yield investment scams. There were companies based out of the bahamas that were offering a 100% return per week. [They were nothing but a ponzi schemes.]
According to their data, its been back tested and it should get 81% profit per month. Well, I guess I can retire now and sail away into the sunset!!!!!
http://www.forex-day-trading.com/forex-trading-robot.htm
Sounds a bit like those high-yield investment scams. There were companies based out of the bahamas that were offering a 100% return per week. [They were nothing but a ponzi schemes.]
Discounted Shipping Using DHL
DHL is offering a special discounted rate for Costco customers. It seems to be around a 25-30% discount depending on the service. Use this link.
Hedge Fund Profits Go Up In Smoke
They say those that forget history are doomed to repeat it. [They also say history never repeats, it only rhymes].
A hedge fund called Amaranth reportedly lost about 4.5 billion in 2 weeks when a 32 year old trader apparently bet the farm on natural gas futures. When you have a huge position in a shallow market, the rest of the market is bound to know. And just like the billionaire Hunt brothers who tried to corner the silver market and went BK, the market rallied against him and he lost big time. Also like Long Term Capital Management[Read the extremely interesting story here
], Amaranth will likely go under because of this. And also like the Bearings bank, this astounding loss can be attributed to one person.
What are the lessons we can take away?
- never bet against the market.
- never bet the farm.
- don't put all your eggs in one basket.
- don't forget history.
- use leverage with extreme caution
- don't become arrogant just because you got lucky a few times.
A hedge fund called Amaranth reportedly lost about 4.5 billion in 2 weeks when a 32 year old trader apparently bet the farm on natural gas futures. When you have a huge position in a shallow market, the rest of the market is bound to know. And just like the billionaire Hunt brothers who tried to corner the silver market and went BK, the market rallied against him and he lost big time. Also like Long Term Capital Management[Read the extremely interesting story here
], Amaranth will likely go under because of this. And also like the Bearings bank, this astounding loss can be attributed to one person.What are the lessons we can take away?
- never bet against the market.
- never bet the farm.
- don't put all your eggs in one basket.
- don't forget history.
- use leverage with extreme caution
- don't become arrogant just because you got lucky a few times.
Gimme A Break, Its Friday
A city boy, Kenny, moved to the country and bought a donkey from an old farmer for $100. The farmer agreed to deliver the donkey the next day.
The next day the farmer drove up and said, "Sorry son, but I have some bad news, the donkey died."
Kenny replied, "Well then, just give me my money back."
The farmer said, "Can't do that. I went and spent it already."
Kenny said, "OK then, just unload the donkey."
The farmer asked, "What ya gonna do with him?"
Kenny: "I'm going to raffle him off."
Farmer: "You can't raffle off a dead donkey!"
Kenny: "Sure I can. Watch me. I just won't tell anybody he is dead."
A month later the farmer met up with Kenny and asked, "What happened with that dead donkey?"
Kenny: "I raffled him off. I sold 500 tickets at two dollars a piece and made a profit of $898.00."
Farmer: "Didn't anyone complain?"
Kenny: "Just the guy who won. So I gave him his two dollars back."
Kenny grew up and eventually became the chairman of Enron.
The next day the farmer drove up and said, "Sorry son, but I have some bad news, the donkey died."
Kenny replied, "Well then, just give me my money back."
The farmer said, "Can't do that. I went and spent it already."
Kenny said, "OK then, just unload the donkey."
The farmer asked, "What ya gonna do with him?"
Kenny: "I'm going to raffle him off."
Farmer: "You can't raffle off a dead donkey!"
Kenny: "Sure I can. Watch me. I just won't tell anybody he is dead."
A month later the farmer met up with Kenny and asked, "What happened with that dead donkey?"
Kenny: "I raffled him off. I sold 500 tickets at two dollars a piece and made a profit of $898.00."
Farmer: "Didn't anyone complain?"
Kenny: "Just the guy who won. So I gave him his two dollars back."
Kenny grew up and eventually became the chairman of Enron.
Comprehending a Billion
A billion is a difficult number to comprehend, but someone did a good job of putting that figure into perspective:
A billion seconds ago it was 1959.
A billion minutes ago Jesus was alive.
A billion hours ago our ancestors were living in the Stone Age.
A billion dollars ago was only 8 hours and 20 minutes, at the rate Washington spends it.
A billion seconds ago it was 1959.
A billion minutes ago Jesus was alive.
A billion hours ago our ancestors were living in the Stone Age.
A billion dollars ago was only 8 hours and 20 minutes, at the rate Washington spends it.
Midwest Housing Due For a Correction?
According to the WSJ, parts of the Midwest might experience a drop in house prices even though they didn't have any appreciation. Its mainly due to job losses.
Remember to do you due diligence before investing anywhere! Always look for job growth and inward migration.
Midwest May See a Sharper Housing Slowdown
By LINGLING WEI
September 21, 2006; Page D3
Homeowners in the Midwest -- the nation's industrial heartland -- are starting to see a housing bust without ever experiencing a housing boom as more job losses trigger mortgage delinquencies and foreclosures.
For months, the biggest worries over the slowing housing market in the U.S. have mainly focused on parts of the country that have seen exceptional price increases from 2000 to 2005, places with growing populations and strong economies such as California, Florida and Nevada. But recent data from the federal government and private-sector researchers point to areas in the Midwest that are witnessing a more dramatic slowdown in home prices and, in some cases, higher borrower defaults than the rest of the country.
Home prices in the region have hardly budged over the past few years because of its weaker economy as compared with other regions. Michigan, for example, has lost nearly 300,000 jobs since 2000, and its jobless rate has been consistently higher than the national average.
A recent report by the Office of Federal Housing Enterprise Oversight looked at housing prices in 275 metropolitan areas across the country. Six of the seven metropolitan areas that showed housing-price declines for the 12 months ended June 30 were in Indiana and Michigan. The study also stated that housing prices in states like Indiana, Ohio and Michigan were fairly flat over the past year but actually declined in the second quarter.
An analysis conducted by First American LoanPerformance, a research firm in San Francisco, based on the latest information available, found that the percentage of loans in foreclosure in the Midwest states of Michigan, Ohio, Illinois and Wisconsin reached 0.93% in June, while foreclosures across the country averaged 0.5% -- still historically low. Michigan, hurt by job losses in the automobile industry, booked a 26.8% jump in foreclosure rates -- to 0.69% in June from a year earlier, the largest year-on-year increase within the Midwest. Meanwhile, the percentage of loans delinquent for more than 90 days in the hard-hit area was 15% higher than the national average.
Rising foreclosures as a result of job losses are likely to depress local markets even more. According to a residential real-estate risk-scoring system maintained by analysts at Credit Suisse, which ranks the likelihood of home-price declines within a year, the most troubled metropolitan areas are mainly in Michigan -- cities including Detroit, Saginaw, Holland, Ann Arbor, Monroe and Jackson -- and New England areas such as Boston. The least troubled metropolitan areas are in the Northwest.
Remember to do you due diligence before investing anywhere! Always look for job growth and inward migration.
Home Depot Muscles In On The Plasma-TV Business
Home Depot, Kolh's and RadioShack have announced plans to start selling High-Def flat screen TVs soon. Since they're not doing well in their regular businesses, it makes sense to start selling TVs. Of course, this will cut into the profits of Best Buy and Circuit City, both of whom are relying on flat-screens as a large part of their profit growth.
Should be interesting to see how this affects their stock prices in the short & long term.
But when I finally decide to upgrade my 8 year old 19" TV, I think I'll stick to Costco!
Should be interesting to see how this affects their stock prices in the short & long term.
But when I finally decide to upgrade my 8 year old 19" TV, I think I'll stick to Costco!
Ben Stein Loves Real Estate
I'm a big fan of Ben Stein's books
.I also read his column, How Not To Ruin Your Life. This weeks issue is about letting the non-financially savy spouse in on what to do after you pass away. But best of all, he professes his love for real estate!
We're currently somewhat overweighted in real estate -- not because I bought it with a view toward investing in real estate, but because I love houses. So my wife should know how much we owe, if anything, on various properties; which ones I would advise her to keep and which ones to sell; and whether she should refinance if rates fall.
You can read the whole thing here.
Ben Stein's Day in the Sun
Ben Stein explains how to enjoy retirement, by making sure you have one!
A Day in the Sun
by Ben Stein
It was a perfect sunny summer day in Malibu. I spent a large part of it gardening (which I'm very bad at but enjoy), some of it filing financial statements, and about two hours of it lying in the sun with my dog while listening to Mozart on my headphones.
If I had to, I could, at 61, retire and live quietly for the rest of my life at my little home in Malibu doing what I did today. I don't want to, because I travel around preaching retirement readiness, and I love doing that. But I could if I wanted to.
Why can I? Because my parents were thrifty, and good planners. And because they bought low-cost variable annuities that paid off like winning the lottery, and bequeathed them to my sister and me.
Also because I've been a saver (although not as good of one as I should've been) all my life; because I took the trouble to learn at least the basics of investing and then some; because I have two great financial advisers named Phil DeMuth and Kevin Hanley; and because I'm lucky enough to have had a career that paid the bills.
All of that -- and, most of all, the greatest of gifts: being an American -- allowed me to enjoy this glorious summer's day.
Plan, Invest, and Save
Here's how you can get to a similar place in your life (if you're not already there):
* See a financial planner that you've chosen with a microscope. Tell him or her everything.
* Make a plan, and make sure you understand every word of it.
* Have widely diversified investments.
I recommend devoting one-third to a very diversified international fund; one-third to a total stock market index for the U.S.; and one-third to a highly diversified bond fund that tracks the Lehman bond index.
* Put at least 15 percent of your wages into these investments every month, before you buy a plasma-screen TV or a cruise or even your child's education.
Keep doing it even when the commentators are telling you that the markets are collapsing and the sky is falling.
* Make and keep habits of thrift. Unless you have an income of $1 million or more a year, don't spend any money you don't have to.
* Keep in mind that you're your future, older self's only dependable and indispensable friend. You're your own indispensable counselor, too. So you're the pillar on which your old self will rest -- behave respectfully to that older self.
* Carefully consider variable annuities in addition to your investment portfolio, but only when you understand them and know what each fee is for. In your really advanced years, when you no longer have the strength to keep track of things, that automatic check will be a lifesaver.
Book Review - How to Retire Early and Live Well With Less Than a Million Dollars
Gillette Edmunds quit his job as a tax attorney at the age of 29 and lived the "retired" life, living off his investments. His book,How to Retire Early and Live Well With Less Than a Million Dollars![]()
is one of the better ones of I've read on the subject.
He makes a good argument for investing in the entire market, or an index fund. Although he doesn't recomend the usual asset allocation divided between US small cap, US large cap and US bonds because he says they all follow the same basic economy cycle.
Instead he suggest having no more than 30% of your retirement portfolio in the US market. He suggests dividing the rest between
* Foreign stocks
* Emerging market stocks
* Foreign bonds
* US real estate
* US oil and gas
and having atleast 3 non-correlated asset classes and preferrably 5.
Since most people aren't too savy regarding real estate, he suggests holding REITs. He also thinks that oil and gas investments are a good class thats not correlated to the US stock market and will go up in the future. [the book was written in 1999 and he asually mentions that the stock market may be overvalued!]
Really good advice from someone who's retired and been living off a $500,000 nest egg for 20 years.
He makes a good argument for investing in the entire market, or an index fund. Although he doesn't recomend the usual asset allocation divided between US small cap, US large cap and US bonds because he says they all follow the same basic economy cycle.
Instead he suggest having no more than 30% of your retirement portfolio in the US market. He suggests dividing the rest between
* Foreign stocks
* Emerging market stocks
* Foreign bonds
* US real estate
* US oil and gas
and having atleast 3 non-correlated asset classes and preferrably 5.
Since most people aren't too savy regarding real estate, he suggests holding REITs. He also thinks that oil and gas investments are a good class thats not correlated to the US stock market and will go up in the future. [the book was written in 1999 and he asually mentions that the stock market may be overvalued!]
Really good advice from someone who's retired and been living off a $500,000 nest egg for 20 years.
Book Review - Rich Dad, Poor Dad
This is a good summary of the book. It isn't mine, but its pretty darn good, so I thought I'd share. If this is your summary, let me know so I can credit you.
Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money--That the Poor and Middle Class Do Not!
By Robert T. Kiyosaki, Sharon L. Lechter
1. The poor and the middle class work for money. The rich have money work for them.
2. Rich people acquire assets. The poor and the middle class acquire liabilities, but they think they are assets. An asset is something that puts money in your pocket, a liability is something that takes money out of your pocket. The rich buy assets and the poor only have expenses.
3. Poor people buy liabilities to look rich. Rich people buy assets to get richer.
4. The rich get richer because they continue to do things that make them richer. The poor get poorer because they continue to do things that make them poorer.
5. Rich people learn how to manage risk. Poor people are afraid of risk.
6. An intelligent person surrounds himself with people who are more intelligent than he is.
7. Wealth is accurately measured by a person's ability to survive so many number of days forward without working. Or stated another way: If you stopped working today, how long could you survive? Wealth is determined by Net Worth, NOT by income. You can have a huge income, but still be poor.
8. You can never be too rich.
9. Rich people buy luxuries last, while the poor and middle class buy them first. Assets buy luxuries.
10. Once a dollar goes into your asset column, never let it out. It becomes your employee. The best thing about money is that it works 24 hours a day.
11. A house is not an asset - it is a liability. It produces no income, only expenses. (Mortgage, Interest, Taxes, Insurance, Maintenance, Utilities, Furnishings). Don't be "House Rich and Cash Poor".
12. Building wealth is like planting a tree. You water it for years and then its roots grow deep enough that it takes care of itself. Then it provides you a nice shade to rest under and it takes care of you.
13. A true luxury is a reward for investing in and developing a real asset. Buy yourself nice luxuries but make sure you have earned them and can pay for them first.
14. Rich people invent money.
15. Great opportunities are not seen with your eyes but with your mind.
16. Many people are one skill away from great wealth.
17. Rich people talk about money and learn from other rich people. The poor do not.
18. Don't let life or people push you around. Don't quit. Fight!
19. Don't blindy follow the "conventional wisdom". Have the courage to "go against the flow".
20. It's not what you make that counts, but what you save and invest.
21. Don't listen to poor or frightened people.
22. Master a formula and learn a new one.
23. Rich people take advantage of economic downturns. Rich people take advantage of opportunities.
24. Rich people don't make excuses for their financial success or failure.
25. Mind your own business. Think of your household as your own business. Profit vs. Loss and Assets vs. Liabilities. It's "You, Inc.".
26. Advice for those of you in debt: If you find that you have dug yourself into a hole, STOP DIGGING!
27. He who has the gold makes the rules. The rich make the rules.
28. Money comes and goes, but if you have the education about how money works, you gain power over it and can begin building wealth. The reason positive thinking alone does not work is because most people went to school but never learned how money works, so they spend their lives working for money instead of having money work for them.
29. Don't turn yourself into a slave to money and liabilities. Choose power and freedom.
30. You always want to make sure you'll be cash-flow positive in any prospective real estate investment. Your rents collected should always, at minimum, cover your mortgage and expenses even while you're building equity.
I also strongly recommend Rich Dad's Retire Young, Retire Rich by Robert Kyosaki.
Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money--That the Poor and Middle Class Do Not!
By Robert T. Kiyosaki, Sharon L. Lechter
1. The poor and the middle class work for money. The rich have money work for them.
2. Rich people acquire assets. The poor and the middle class acquire liabilities, but they think they are assets. An asset is something that puts money in your pocket, a liability is something that takes money out of your pocket. The rich buy assets and the poor only have expenses.
3. Poor people buy liabilities to look rich. Rich people buy assets to get richer.
4. The rich get richer because they continue to do things that make them richer. The poor get poorer because they continue to do things that make them poorer.
5. Rich people learn how to manage risk. Poor people are afraid of risk.
6. An intelligent person surrounds himself with people who are more intelligent than he is.
7. Wealth is accurately measured by a person's ability to survive so many number of days forward without working. Or stated another way: If you stopped working today, how long could you survive? Wealth is determined by Net Worth, NOT by income. You can have a huge income, but still be poor.
8. You can never be too rich.
9. Rich people buy luxuries last, while the poor and middle class buy them first. Assets buy luxuries.
10. Once a dollar goes into your asset column, never let it out. It becomes your employee. The best thing about money is that it works 24 hours a day.
11. A house is not an asset - it is a liability. It produces no income, only expenses. (Mortgage, Interest, Taxes, Insurance, Maintenance, Utilities, Furnishings). Don't be "House Rich and Cash Poor".
12. Building wealth is like planting a tree. You water it for years and then its roots grow deep enough that it takes care of itself. Then it provides you a nice shade to rest under and it takes care of you.
13. A true luxury is a reward for investing in and developing a real asset. Buy yourself nice luxuries but make sure you have earned them and can pay for them first.
14. Rich people invent money.
15. Great opportunities are not seen with your eyes but with your mind.
16. Many people are one skill away from great wealth.
17. Rich people talk about money and learn from other rich people. The poor do not.
18. Don't let life or people push you around. Don't quit. Fight!
19. Don't blindy follow the "conventional wisdom". Have the courage to "go against the flow".
20. It's not what you make that counts, but what you save and invest.
21. Don't listen to poor or frightened people.
22. Master a formula and learn a new one.
23. Rich people take advantage of economic downturns. Rich people take advantage of opportunities.
24. Rich people don't make excuses for their financial success or failure.
25. Mind your own business. Think of your household as your own business. Profit vs. Loss and Assets vs. Liabilities. It's "You, Inc.".
26. Advice for those of you in debt: If you find that you have dug yourself into a hole, STOP DIGGING!
27. He who has the gold makes the rules. The rich make the rules.
28. Money comes and goes, but if you have the education about how money works, you gain power over it and can begin building wealth. The reason positive thinking alone does not work is because most people went to school but never learned how money works, so they spend their lives working for money instead of having money work for them.
29. Don't turn yourself into a slave to money and liabilities. Choose power and freedom.
30. You always want to make sure you'll be cash-flow positive in any prospective real estate investment. Your rents collected should always, at minimum, cover your mortgage and expenses even while you're building equity.
I also strongly recommend Rich Dad's Retire Young, Retire Rich
by Robert Kyosaki.
Decline in Housing Good For Pharma?
According to same bizzare coincidence there seems to be a negative correlation between housing starts and the stocks of pharmaceutical companies.
He only goes back 10 years which isn't enough to draw any reasonable conclusion.
Regardless I just happened to buy some pfiezer in my Roth IRA yesterday. So I hope Albin's theory is correct! Pfiezer also happens to have a 3.4% dividend which isn't half bad.
Could Decline in Housing Help Pharma?
Tuesday September 19, 11:36 am ET
Lower Housing Starts Could Boost Pharmaceutical Stocks, Harris Private Bank Says
NEW YORK (AP) -- Here's a group of stocks you may never have thought could benefit from a housing slowdown: Pharmaceutical companies.
Stocks such as Pfizer Inc., Johnson & Johnson and Merck & Co., are positioned to benefit by a decline in housing starts, Jack A. Ablin, chief investment officer of Harris Private Bank wrote in a research note Tuesday.
He found that over the last 10 years, the relative performance of pharmaceutical companies has had a negative 79 percent correlation to housing starts. The trend of sharply declining housing starts should mean rising pharmaceutical stocks, he wrote.
"Perhaps it's the defensive nature of the group," he wrote. "As if on cue, pharmaceutical stocks have already begun their outperformance."
Calling the pharmaceutical stocks "cheap," Ablin said Harris expects health care and accelerating pharma stocks to outpace the Standard & Poor's 500 over the next 12 months.
The pharmaceutical sector has been dragged down over the past year by a series of scandals, lawsuits and management upheaval.
He only goes back 10 years which isn't enough to draw any reasonable conclusion.
Regardless I just happened to buy some pfiezer in my Roth IRA yesterday. So I hope Albin's theory is correct! Pfiezer also happens to have a 3.4% dividend which isn't half bad.
Dividend Posting Discrepancies
I just noticed a discrepancy between TDAmeritrade and Schwab regarding the posting of dividends. I have the same Canadian stock in both of them. The dividend showed up in the Schwab account on the 15th, which was date of issuance. However in the TDA account, it still hasn't shown up as of the 18th. According to TDA customer support, "it can take upto 10 days" for the money to show up in my account, because "thats how long the company takes to send it".
Looks like TDAmeritrade is just enjoying a free 10 day ride on my money!
Looks like TDAmeritrade is just enjoying a free 10 day ride on my money!
TDAmeritrade Offers 45 Days of Free Trades
TDAmeritrade offers free trades for 45 days if you open a new account with $2,000 minimum deposit. What better way to start a Roth IRA!
I already have a Roth with Schwab but TDAmeritrade is cheaper to trade and with 45 days of free trading, I can buy my opening stocks for free!
I already have a Roth with Schwab but TDAmeritrade is cheaper to trade and with 45 days of free trading, I can buy my opening stocks for free!
Using Ebay to Buy or Sell Cars
Congrats to Making Our Way for selling his car on Ebay.
Of course, the first thing I did was check whether anyone was selling a Mercedes Benz SLR McLaren on Ebay. Turns it they were!! There are currently 8 for sale.
The cheapest one is only $349,000.
Of course, the first thing I did was check whether anyone was selling a Mercedes Benz SLR McLaren on Ebay. Turns it they were!! There are currently 8 for sale.
The cheapest one is only $349,000.
Paris Hilton's New Car!
Mercedes Benz has come out with a really sweet roadster. Its a 600 hp, V8 2 seater that cost about $400,000. This car is worth more than my condo!! Here's a picture of Paris Hilton getting out of it. Note the fancy gull-wing doors. Sweet!
Trust But Verify
I got email from a real estate agent yesterday outlining the numbers for a 4-plex in Texas. He did a great job of putting the numbers in a spreadsheet and then creating an image, which he then embedded into the email itself. This saved a lot of time and I'm sure resulted in a lot more of his investors actually looking at it right then, as opposed to filing it away for a later viewing only to forget it.
The only problem was the numbers were off. Instead of calculating a 2.5 or 2.75% tax rate, he calculated 1.35% tax rate. There was also no vacancy factored it. When using property management, there is usually a leasing fee, which can range from 50%-100% of the frist months rent. This is above the 8-10% property management fee, which was also conveniently set to 0%. I don't know if this was deliberate but when you're running the numbers these sort of errors will throw you off.
After fixing these errors, the $997/mo cashflow became $52/mo and the Cash-on-cash dropped from 37% to 1.97%!!! This kind of mistake will KILL your investment strategy.
If you don't know how to do this kind of simple calculation, your real estate career will be sort lived!!! [I strongly recommend What Every Real Estate Investor Needs to Know about Cash Flow... And 36 Other Key Financial Measures if you don't know how to do this]
Trust but verify!
The only problem was the numbers were off. Instead of calculating a 2.5 or 2.75% tax rate, he calculated 1.35% tax rate. There was also no vacancy factored it. When using property management, there is usually a leasing fee, which can range from 50%-100% of the frist months rent. This is above the 8-10% property management fee, which was also conveniently set to 0%. I don't know if this was deliberate but when you're running the numbers these sort of errors will throw you off.
After fixing these errors, the $997/mo cashflow became $52/mo and the Cash-on-cash dropped from 37% to 1.97%!!! This kind of mistake will KILL your investment strategy.
If you don't know how to do this kind of simple calculation, your real estate career will be sort lived!!! [I strongly recommend What Every Real Estate Investor Needs to Know about Cash Flow... And 36 Other Key Financial Measures
if you don't know how to do this]Trust but verify!
How To Short A Stock
From my previous posts, you can tell I'm losing money being short on a stock that is defying all expectations and has gone up 20% since the day I jumped in. I'll admit, I'm not too bright and always forget to follow advice which I know to be true. Here's a strategy that I should try and remember well.
WCI failed all three tests, its already dropped signficantly and there's a tremendous amount of pessimism surrounding the stock. I should've stayed away! I'm not cut out to trade, which is why I got into real estate in the first place. Like my friend who's a financial planner says, "Stick with what you know!".
My Strategy for Successful Short Selling
by Jeff Clark
When I first started trading stocks, I did so almost exclusively from the long side… only buying stocks.
Through a series of trials and errors, I developed a three-pronged approach for what constituted a good stock to buy:
1. Ridiculously cheap valuation.
2. High degree of pessimism surrounding the shares.
3. Price action that had just turned up following a long decline.
As simple as this buying strategy might seem, it has produced superior returns… and it's the strategy we follow in the Big Trend Report .
Logically, then, it makes sense to use a similar three-pronged approach to betting on a stock falling – called shorting.
1. Ridiculously high valuation.
2. High degree of optimism surrounding the shares.
3. Price action that has just turned down following a steady incline or parabolic rise.
Let's look at each element individually…
1. Ridiculously high valuation.
We all understand that, ultimately, earnings drive stock prices. Consequently, the P/E (price/earnings) ratio is the best gauge with which to measure the ridiculousness of a stock's valuation.
If you've found stock with a P/E ratio 50% higher than the industry average, or more than 50% higher than the company's historic P/E ratio, then you might have a good short sale on your hands.
2. High degree of optimism surrounding the shares.
If every analyst on Wall Street loves the stock… If the anchors on CNBC seem to be mentioning the stock every hour… If all of your friends are talking about the fortunes to be made by owning the stock… Then it's probably on my list of short sale candidates.
This concept is easy to understand. If the whole world is in love with a stock, and if everyone who wants to own the stock already does, then who is left to push the price higher? If there's no one left to buy and to push the stock higher, then it only takes one seller to shift the momentum in the other direction.
3. Price action that has just turned down following a period of steady incline or parabolic rise.
Just as it doesn't make much sense to jump in front of a moving train, it doesn't make much sense to short a stock as it's moving higher.
Rather than trying to pick a top in a stock, it makes far more sense to wait until the price action has turned lower - and in the early stages of a downtrend. For me, that confirmation occurs when the stock trades below its 50-day moving average.
Stocks in which the upside momentum is strong will hold above their 50-day moving average lines. Failing to hold above that line is an excellent early indication the momentum is shifting to the bearish camp.
You see, all of the Wall Street hype, all of the CNBC promotion, and all of the persuasive opinions of friends at cocktail parties creates big opportunities for us to bet against over-hyped stocks.
If you stick with these three guidelines, you'll have all the tools you need to make money on the short side of the stock market.
Best Regards & Good Trading,
Jeff
WCI failed all three tests, its already dropped signficantly and there's a tremendous amount of pessimism surrounding the stock. I should've stayed away! I'm not cut out to trade, which is why I got into real estate in the first place. Like my friend who's a financial planner says, "Stick with what you know!".
Pulte Homes Offers A $99,000 Giveaway
I guess times are tough in the Bay Area. Atleast for Pulte Homes who's giving away $99,000 incentives if you purchase a home and can close before December 24th, 2006.
Some of the incentives include
* Rolled back pricing
* 100% financing
* Free pool
* No payments for 6 months
* No closing costs
* Free backyard landscaping
* Free window coverings
* Below market interest rates
* No HOA dues for 2 years
* Free Upgrades
& a Free vacation [includes airfair and & 7 night stay] for 2!
Someone sounds desperate to me.
Pity WCI isn't showing similar weakness. The stock is up 20% from when I bought the puts. Just like I said, all the negative information pushed the stock up. Their cash is 94% less than it was last year and they've announced a share buy-back program! Sounds bogus to me. Anyway I bought more puts today.
Here's a very interesting article on the builders at Rebalancing.blogspot.com
Some of the incentives include
* Rolled back pricing
* 100% financing
* Free pool
* No payments for 6 months
* No closing costs
* Free backyard landscaping
* Free window coverings
* Below market interest rates
* No HOA dues for 2 years
* Free Upgrades
& a Free vacation [includes airfair and & 7 night stay] for 2!
Someone sounds desperate to me.
Pity WCI isn't showing similar weakness. The stock is up 20% from when I bought the puts. Just like I said, all the negative information pushed the stock up. Their cash is 94% less than it was last year and they've announced a share buy-back program! Sounds bogus to me. Anyway I bought more puts today.
Here's a very interesting article on the builders at Rebalancing.blogspot.com
On the worst end you have WCI, with a rapid deterioration of their cash position (93% lower than a year ago), a 461% increase in Q2 borrowings (to $217.8 million) and $43,580,000 spent on share repurchases last quarter. They face huge problems with about half of their revenues historically coming from Florida condo sales and the story is being told in their cash flow statements. Perhaps they are repurchasing shares because they are dumb enough to think their stock is a bargain right now. Perhaps they just want to prop up the share price long enough for insiders to cash out before the collapse.
Home Owners Getting Shafted With Nightmare Loans
Here's a must read article from BusinessWeek on Nightmare Loans.
No one will care for your finances like you do. If you don't understand the loan process and how ARMs work, you owe it to yourself to find out. Ignorance is a sure path to finacial distress.
Jennifer and Eric Hinz of Somerset, Wis., are feeling the squeeze. They refinanced out of a 5.25% fixed-rate, 30-year loan in June, 2005, and into an option ARM with a 1% teaser rate from Indymac Bank. The $1,483 payment for their original mortgage dropped to as low as $747 with the new option ARM. They say they had no idea when they signed up, however, that the low payment adds $600 in deferred interest to their balance every month. Worse, they thought the 1% would last three years, but they're already paying 7.68%. "What reasonable human being would ever knowingly give up a 5.25% fixed-rate for what we're getting now?" says Eric, 36, who works in commercial construction. Refinancing is out because they can't afford the $15,000 or so in fees. "I'm paying more, and the interest is just going up and up and up," says Jennifer, 34, a stay-at-home mom. "I feel like we got totally screwed." They say their mortgage broker has stopped returning their phone calls. Indymac declined to comment on the loan's specifics.
The problem, of course, is that many brokers care more about commissions than customers. They use aggressive sales tactics, harping on the minimum payment on an option ARM and neglecting to mention the future implications. Some even imply verbally that temporary teaser rates of 1% to 2% are permanent, even though the fine print says otherwise. It's easy to confuse borrowers with option ARM numbers. A recent Federal Reserve study showed that one in four homeowners is mystified by basic adjustable-rate loans. Add multiple payment options into the mix, and the mortgage game can be utterly baffling.
Billy and Carolyn Shaw are among the growing ranks of borrowers who have taken out loans they say they didn't understand. The retired couple from the Salinas (Calif.) area needed to tap about $50,000 in equity from their $385,000 home to cover mounting expenses. Billy, 66, a retired mechanic, has diabetes. Carolyn, 61, has been caring for her grandchildren, 10-year-old twins, since her daughter's death in 2000. The Shaws have a fixed income of $3,000 a month that will fall by about $1,000 in November after Billy's disability benefits run out. Their new loan's minimum payment of about $1,413 is manageable so far, but the fully amortized amount of about $3,329 is out of the question. In a little over a year, they've added some $8,500 to their loan balance and now face a big reset if they continue to pay only the minimum. "We didn't totally understand what was taking place," says Carolyn. "You have to pay attention. We didn't, and we're really stuck here." The Shaws' lender, Golden West, says it routinely calls customers to ask them if they are happy and understand their mortgage loan.
No one will care for your finances like you do. If you don't understand the loan process and how ARMs work, you owe it to yourself to find out. Ignorance is a sure path to finacial distress.
Forecasting Tools
Came across this website called Forecast.org.
They have a 6 month forecast[into the future] for all financial data including stock market indices, currency conversion rates, interest rates, commodity prices, etc.
I don't expect them to be very accurate [coz if they were they'd trade their data on the futures option market and make billions, instead of selling the data].
Here's their prediction of the AUD vs the USD.
Looks like I'm going to be losing money as the USD suddenly strengthens right after I buy the AUD!!!
They have a 6 month forecast[into the future] for all financial data including stock market indices, currency conversion rates, interest rates, commodity prices, etc.
I don't expect them to be very accurate [coz if they were they'd trade their data on the futures option market and make billions, instead of selling the data].
Here's their prediction of the AUD vs the USD.
Looks like I'm going to be losing money as the USD suddenly strengthens right after I buy the AUD!!!
Yet Another Reason to Bail on the Dollar
Like I've mentioned before, I don't have much faith in the US dollar. Here's an article I read today that supports the theory. Enjoy...
If you'd like to check out the facts for yourself, go to the CIA Factbook. [The CIA can't be wrong about this. After all, didn't they provide irrefutable evidence that Saddam had weapons of mass destruction! ;-) ]
Nothing fails like success.
As recently as a half-century ago, the American stood like a colossus in a New World...young, free, healthy; and a creditor to the rest of the world, which owed him not only money...but liberty, for he had lent his muscle, his oil, his manufacturers - and even risked his life to win World War II for the Allies.
"What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?" asked Adam Smith.
Here at The Daily Reckoning headquarters, we too are occasionally beset with bouts of debt-free happiness. But we count on our natural gloominess to get us through.
But...what about people who have more debt than any one else...whose health suffers from too much sustenance...and whose conscience is encumbered with a bloody war made on people they didn't even know, for a purpose no one knows? Can they expect happiness?
As to their conscience and health, we have no opinion. But as to their debt we have many.
Fallen into our hands is a report from the CIA, ranking nations in order of their current account balance. The current account, we remind readers, is like the operating statement of a business or an individual. Income must exceed outflow or your upkeep is your downfall. The difference between what comes in and what goes out, if it is positive, accumulates as though it were a profit. If it is negative, it builds up - but not necessarily, in the form of debt.
So what do we see? The country with the best position is Japan - with a current account balance of plus $165 billion. China is in the number two position, with almost as much. And here we pause to give readers a chance to gasp. China - a country run by communists - has the second best current account balance in the world. Figure that. In other words, Marxism...at least as practiced in the Middle Kingdom...has proven no bar whatever to capitalist success.
But we will move on...
Germany is the third most 'profitable' country in the world - with a positive current account balance of $115 billion. Then the list goes into various oil producers, watchmakers, and assorted national curiosities...such as Algeria...with - would you believe it - has an $18 billion surplus! Even tiny Hong Kong ended last year nearly $20 billion to the good.
But between Swaziland and the Comoros (which, we believe is an island nation somewhere off the coast of Africa) the figures make the kind of transformation that can only be likened, in the material world, to going from light to darkness, or in the sentient world, from life to death. That is, they go from positive to negative. The numbers which were such a comfort to Germany and such a delight to Japan become an embarrassment.
Poor Burkina Faso, perhaps the most God-forsaken hole on the surface of the whole planet, suffers a $438 million deficit and still manages to hold its head up in public.
"Hey, wait a minute," said a friend at a dinner party recently, "Burkina Faso is not so bad. My wife and I love to go there for desert trekking. There is nothing there...no restaurants...no hotels you'd want to go to...no theatres...not much of anything. But out there in the natural world... in the desert, there is a quality that is sublime. I wish I could describe it to you...but you have to see it for yourself."
That said, at least Burkina Faso is far from the worst on the CIA's list. The rest of Africa follows...and then come the Banana Republics of Latin America...and finally, guess who makes the end of the line-up? Guess who has the worst current account deficits in the entire world? Guess which countries spend more than they earn - regularly and spectacularly?
Last in line are the nations of the Anglo-Saxon, English-speaking debt-based empire! New Zealand has a deficit of nearly $10 billion. Then, South Africa...and India...and Australia all have deficits too. Among the major former colonies of the British Empire, only Canada seems to have any sense. It runs a surplus. The others are all debtors. The UK itself is third from the bottom with a $57 billion negative current account balance.
For no reason we can think of, the penultimate on the list is Spain. And then comes the worst of all...the United States of America, with a current account balance of a minus $829 billion.
Add up all the deficits of the entire world and you get a figure barely half of the U.S. total.
The U.S. economy makes up a quarter of the world total...that it should have more than half of the world's current account deficits is a spectacular success - only made possible by its great wealth and status.
And here, in yesterday's news, comes the latest: "Record $68 billion trade deficit in July," reports Bloomberg.
Nothing fails like success.
If you'd like to check out the facts for yourself, go to the CIA Factbook. [The CIA can't be wrong about this. After all, didn't they provide irrefutable evidence that Saddam had weapons of mass destruction! ;-) ]
Book Review - Getting Rich In America
Just got my hands on
Getting Rich In America: Eight Simple Rules for Building a Fortune--And a Satisfying Life by Dwight R. Lee and Richard B. McKenzie.
It picks up where The Millionaire Next Door left off.
The books is broken down into 8 steps that are easy to read and follow. You know, work hard, learn compound interest, get an education, get married and stay married etc. Nothing you already didn't know. However, the authors do a great job explaining the math behind each decision you make in life. Every little expense you make today can have a tremendous ripple effect in the future.
The first chapter is essentially motivational and says that if you work hard, take personal responsibility for your wealth[or lack thereof] and quit complaining, you can become rich.
The authors go into considerable detail giving examples of how someone who makes minimum wage can retire in style. Various salary, returns and durations are calculated and the answers are quite eye-opening. Effects of excessive consumption are also calculated. Not buying a new car every 3 years and instead buying a used car can make your retirement $840,000 richer!!!! Similarly the costs of buying regular coffee instead of a fancy latte can help you be $74,000 richer in retirement. Not only do they provide the examples, but they also explain how to get the answers in excel or on a financial calculator. Pretty Neat!
All in all, I like it. It didn't change my life, but its good to read these books once in a while. I strongly recommend it as a gift to your young kids,neices or nephews in high schools, or people about to get married or divorced or mid-way through life.....ok, basically its for everyone!
I give it 2 thumbs up.
Getting Rich In America: Eight Simple Rules for Building a Fortune--And a Satisfying Life by Dwight R. Lee and Richard B. McKenzie.
It picks up where The Millionaire Next Door left off.
The books is broken down into 8 steps that are easy to read and follow. You know, work hard, learn compound interest, get an education, get married and stay married etc. Nothing you already didn't know. However, the authors do a great job explaining the math behind each decision you make in life. Every little expense you make today can have a tremendous ripple effect in the future.
The first chapter is essentially motivational and says that if you work hard, take personal responsibility for your wealth[or lack thereof] and quit complaining, you can become rich.
The authors go into considerable detail giving examples of how someone who makes minimum wage can retire in style. Various salary, returns and durations are calculated and the answers are quite eye-opening. Effects of excessive consumption are also calculated. Not buying a new car every 3 years and instead buying a used car can make your retirement $840,000 richer!!!! Similarly the costs of buying regular coffee instead of a fancy latte can help you be $74,000 richer in retirement. Not only do they provide the examples, but they also explain how to get the answers in excel or on a financial calculator. Pretty Neat!
All in all, I like it. It didn't change my life, but its good to read these books once in a while. I strongly recommend it as a gift to your young kids,neices or nephews in high schools, or people about to get married or divorced or mid-way through life.....ok, basically its for everyone!
I give it 2 thumbs up.
Know Your Property Taxes Before You Invest
Since I own investment property in Indiana, it makes sense to follow whats happening there.
The Indy Star just had an article on ballooning property taxes.
Basically the assessors office is changing the way property is being assessed which is likely raise the average tax bill by 15%. That sucks! Taxes on my property are already at 2.2%. I'm not keen on paying any more than that.
Yet another reason I prefer SLC over other regions in the country. Its tax rate is only 0.7%, a lot lower than Texas's 2.8% and definitely a lot lower than New York and New Jersey where its over 5%.
To the unsuspecting Californian who assumes that its 1.2% all over the country, that can turn into a nasty shock. As always, do you homework before you invest anywhere.
The Indy Star just had an article on ballooning property taxes.
Basically the assessors office is changing the way property is being assessed which is likely raise the average tax bill by 15%. That sucks! Taxes on my property are already at 2.2%. I'm not keen on paying any more than that.
Yet another reason I prefer SLC over other regions in the country. Its tax rate is only 0.7%, a lot lower than Texas's 2.8% and definitely a lot lower than New York and New Jersey where its over 5%.
To the unsuspecting Californian who assumes that its 1.2% all over the country, that can turn into a nasty shock. As always, do you homework before you invest anywhere.
Boosting Traffic
MakingOurWay over at Makingourway.blogspot.com reported a surge in traffic that was a due to mistaken search engine results looking for a craigslist experiment regarding its effectiveness in helping people get laid! Apparently sex does sell.
Whenever I've posted anything to do with Paris Hilton, I've seen a spike in traffic too. Although this is from people looking for the dirt on her and the traffic isn't sticky, and thus not useful. However if you're just looking to boost hits to your site regardless of their use, you can check out the most popular searched keywords and incorporate them into your posts.
You can get Top keywords online from various sources. Today's top 30 list at Wordtracker includes
Steve Irwin
Anna Nicole Smith
Paris Hilton
Jenna Jameson
September 11
World Trade Center
dogs
ringtones
girls
Panic at the Disco
games cheat
jokes
dictionary
myspace.com
among others. Of course, unless you have these terms in your title and also relevant content in the post, search engines will ignore them[which is why I won't see any extra traffic from this post!] However a few people have figured out how to stuff their posts with keywords and use the traffic to generate income via Adsense! Now thats genius!
Whenever I've posted anything to do with Paris Hilton, I've seen a spike in traffic too. Although this is from people looking for the dirt on her and the traffic isn't sticky, and thus not useful. However if you're just looking to boost hits to your site regardless of their use, you can check out the most popular searched keywords and incorporate them into your posts.
You can get Top keywords online from various sources. Today's top 30 list at Wordtracker includes
Steve Irwin
Anna Nicole Smith
Paris Hilton
Jenna Jameson
September 11
World Trade Center
dogs
ringtones
girls
Panic at the Disco
games cheat
jokes
dictionary
myspace.com
among others. Of course, unless you have these terms in your title and also relevant content in the post, search engines will ignore them[which is why I won't see any extra traffic from this post!] However a few people have figured out how to stuff their posts with keywords and use the traffic to generate income via Adsense! Now thats genius!
Foreign Currency Conversion
I finally got my account open at Interactive Brokers. It was a lot easier than at Everbank and I didn't have to provide them with blood samples or fingerprints!! [yeah thanks George W, this is what I get for being pro-Republican!]
My base currency is Aussie Dollars and I get paid a whopping 5.4% interest. And unlike Everbank, the money is liquid and isn't tied up for 3 months.[plus I get a tad higher interest].
On top of that, the USD has been showing a little strength this week so I might get more bang for my buck in terms of appreciation too.
The only drawbacks are that you have to have atleast $15,000 AUD to get paid interest[thats about $11,250 USD] and the customer service isn't as easy as picking up the phone, but they respond well to email. Also withdrawals cost $4 via check and $1 via ACH. [But its still liquid for a buck.]
My base currency is Aussie Dollars and I get paid a whopping 5.4% interest. And unlike Everbank, the money is liquid and isn't tied up for 3 months.[plus I get a tad higher interest].
On top of that, the USD has been showing a little strength this week so I might get more bang for my buck in terms of appreciation too.
The only drawbacks are that you have to have atleast $15,000 AUD to get paid interest[thats about $11,250 USD] and the customer service isn't as easy as picking up the phone, but they respond well to email. Also withdrawals cost $4 via check and $1 via ACH. [But its still liquid for a buck.]
WSJ Says Spain Housing Overpriced!
Spain's Housing Boom Faces a Test
Economists Worry About a Hard Landing
And a Resulting Ripple Effect
By KEITH JOHNSON
September 11, 2006; Page A6
MADRID -- A decade of red-hot growth in the Spanish housing market fueled a jump in such things as jobs and consumer spending, turning Spain into one of the fastest-growing countries in the euro zone. But now, economists say the real-estate boom is coming unmoored from the economic fundamentals that once drove it, and they worry the market is headed for a hard landing that could have repercussions for the rest of the economy.
Incomes are no longer rising, but home prices continue to soar. Meanwhile, interest rates have started to head higher, making mortgages more expensive. Housing starts jumped 15% in the first half, while more than 3.5 million homes remain empty as owners wait for the value of the house to appreciate
"Spain is headed for a first-class beating, and the only question now is when it will come," says Lorenzo Bernaldo de Quirós, an economist and head of Freemarket International Consulting in Madrid.
Japanese REIT goes for IPO.
According to the WSJ,
Sounds like a good play in the Japanese RE market which was flat for 15 years and has just started to rise. Also a good hedge against the US dollar. A lot of people think the Yen will also rise against the USD in the near future.
Nomura Real Estate IPO
Could Raise $1.12 Billion
By KAZUHIRO SHIMAMURA
September 12, 2006
TOKYO -- Nomura Real Estate Holdings Inc. set a tentative price range of 3,200 yen to 3,500 yen ($27.37 to $29.94) a share for its coming initial public offering of stock.
The real-estate arm of Nomura Holdings Inc. could raise at least 131.2 billion yen ($1.12 billion). The shares are scheduled to start trading on the Tokyo Stock Exchange Oct. 3.
Based on the tentative price range, the IPO of 41 million shares would be the largest by far in Japan this year, exceeding the 52 billion yen offering in March by Alpen Co. At that price range, the newly offered shares would trade at 19.9 to 21.8 times the company's projected earnings for the fiscal year ending in March.
The company will take orders from institutional investors for a week starting tomorrow. The offering price will be announced Sept. 21.
Write to Kazuhiro Shimamura at kazuhiro.shimamura@dowjones.com
Sounds like a good play in the Japanese RE market which was flat for 15 years and has just started to rise. Also a good hedge against the US dollar. A lot of people think the Yen will also rise against the USD in the near future.
Buffet is short the US Dollar
I got this email from someone. It was adapted from someone else's article. I don't know who, so I can't provide a citation.
It is widely assumed that rising stock and house prices will keep American consumers both willing and able to spend, spend, spend their way to wealth - indefinitely. But the transfer of U.S. net worth to interests overseas is alarming, and it endangers U.S. economic and political health. Warren Buffett, who kept his vast fortune invested at home for more than 70 years, decided in 2002 to invest in foreign currencies for the first time. Buffett and management of Berkshire Hathaway believe the dollar is going to continue its decline. We should not need confirmation such as this to recognize the inevitable; but it bolsters the argument that the dollar is, in fact, in serious trouble, and that this trouble is likely to continue.
In addition to debt problems at home, Buffett made his decision based at least partially on the ever-growing trade deficit. He warned:
"We were taught in Economics 101 that countries could not for long sustain large, ever-growing trade deficits. At a point, so it was claimed, the spree of the consumption-happy nation would be braked by currency-rate adjustments and by the unwillingness of creditor countries to accept an endless flow of IOUs from the big spenders. And that's the way it has indeed worked for the rest of the world, as we can see by the abrupt shutoffs of credit that many profligate nations have suffered in recent decades. The U.S., however, enjoys special status. In effect, we can behave today as we wish because our past financial behavior was so exemplary - and because we are so rich.
Buffett is especially concerned about the transfer of wealth to outside interests. He notes:
"Foreign ownership of our assets will grow at about $500 billion per year at the present trade-deficit level, which means that the deficit will be adding about one percentage point annually to foreigners' net ownership of our national wealth. As that ownership grows, so will the annual net investment income flowing out of this country. That will leave us paying ever-increasing dividends and interest to the world rather than being a net receiver of them, as in the past. We have entered the world of negative compounding - goodbye pleasure, hello pain."
Utah Housing still booming
According to the Salt Lake Tribune Utah housing is still doing well.
Utah's home price appreciation, the worst in the country just three years ago, is now the 10th best nationwide.
Home prices statewide rose 15.2 percent in the year that ended in June, according to a report released Tuesday by the Office of Federal Housing Enterprise Oversight, a government agency that tracks housing values nationally. Utah moved into the top 10 from No. 15 in the agency's last report three months ago.
Nationally, home prices rose only 10.1 percent in the year that ended in June, reflecting a downturn seen in markets throughout the country that experienced a rapid run-up in prices in the past several years.
Salt Lake City economist Jeff Thredgold, a Zions Bank consultant, believes Utah may be ranked sixth or seventh in home price appreciation by the end of the year.
He attributes that rosy outlook to Utah's strong economy, which continues to outperform much of the rest of the country.
In addition, "Home prices are still reasonably cheap here, compared with neighboring states," he said, which tends to fuel investment in the area.
That said, he expects appreciation along the Wasatch Front to kick down into the 8 percent to 12 percent range next year.
Salt Lake City Still Booming
According to the Desert Times, Salt Lake City housing is likely to keep booming!
Plunging housing sales and sagging values may mean the end to one of the nation's biggest housing booms, but Salt Lake City's hot housing market will likely continue to show double-digit price gains for at least another year, according to industry experts.
The Commerce Department reported that U.S. home sales in July fell 22 percent compared to July 2005. And new-home prices decreased 1.7 percent in July compared to June.
"We're going the other direction," said James Wood, director of the University of Utah's Bureau of Economic and Business Research. "We've had one year of really strong price increases. I think we have a ways to go. I think we have another year of double-digit growth."
At 14.68 percent in the first quarter, Utah ranked 15th among all states in highest house-price appreciation rates, according to the U.S. Office of Federal Housing Enterprise Oversight. Second-quarter rankings are set to be released Tuesday.
However, while home values and sales in nearly all Wasatch Front communities are soaring, Utah's real estate market is not immune from a national slowdown.
New construction in the state in the first seven months of 2006 is down about 1 percent compared to the same period in 2005. And in the greater Salt Lake region, finished unsold vacant home inventory, which includes single-family and multifamily units, rose to 1,492 units in the second quarter, a 29 percent increase from 1,156 units in the first quarter, according to Metrostudy, a Houston-based real estate research firm with offices in West Jordan.
A June report by National City Corp. revealed that 71 of 317 metro areas across the country were considered "extremely overvalued" in this year's first quarter, having appreciation rates in excess of 34 percent.
St. George ranked among those areas considered extremely overvalued. The Salt Lake metro region, while considered overvalued by the report, only carried an 8 percent housing premium. Just 18 months ago, Salt Lake was considered one of the most undervalued real estate markets in the country.
St George House Complete
Finally closed on my St George house. Its really quite nice. Unfortunately, the market has gotten a bit saturated [despite the tremendous influx of people]. Seeing as I have too many things going on, I've decided to sell it and take my cash out of it. I'm heavily invested in Salt Lake City and I don't think it makes sense to spread myself thin in different geographic areas.
Here's the virtual tour. Let me know if you're interested!
Here's the virtual tour. Let me know if you're interested!
Very Interesting Documentary
There's a very interesting documentary on Google Video - The Money Masters.
It traces the history of money in America and how the Fed is screwing the American people. Incredibly interesting. Its 2 hours long but worth it.
It explains how the standard of living has decreased in the past 25 years and how rampant inflation is caused by the fact that the US Government doesn't own the money, but rather borrows it from the Feds, who charge interest for this.
The Fed is not a government entity but a group of private banks whose sole motivation is to make the highest return on their money.
Also the banks are able to lend money using "Fractional Reserve Banking". Basically the same dollar is lent out 10 times at 8% giving them a total return of 80%. Essentially, they use our money to push us deeper into debt. And since good old Bush passed a law making it almost impossible to file bankrupcy, we're destined to a life of slavery!
Yet another reason to invest in foreign currencies and gold!
To hear a great conspiracy theory by well-known director Aaron Russo listen to his interview about his new movie, Freedom to Facism.
I tried to open an account with an online bank called Everbank. Apparently they want color photos of my passport, a notarized letter from my bank and a filled out W-8 form. This is too much work!!! All I wanted to do was open a CD which invests in foriegn currencies like the Canadian, Australian and New Zealand Dollar.
Instead I decided to open an account with Interactive Brokers. They even have better interest rates and the money is much more liquid.
It traces the history of money in America and how the Fed is screwing the American people. Incredibly interesting. Its 2 hours long but worth it.
It explains how the standard of living has decreased in the past 25 years and how rampant inflation is caused by the fact that the US Government doesn't own the money, but rather borrows it from the Feds, who charge interest for this.
The Fed is not a government entity but a group of private banks whose sole motivation is to make the highest return on their money.
Also the banks are able to lend money using "Fractional Reserve Banking". Basically the same dollar is lent out 10 times at 8% giving them a total return of 80%. Essentially, they use our money to push us deeper into debt. And since good old Bush passed a law making it almost impossible to file bankrupcy, we're destined to a life of slavery!
Yet another reason to invest in foreign currencies and gold!
To hear a great conspiracy theory by well-known director Aaron Russo listen to his interview about his new movie, Freedom to Facism.
I tried to open an account with an online bank called Everbank. Apparently they want color photos of my passport, a notarized letter from my bank and a filled out W-8 form. This is too much work!!! All I wanted to do was open a CD which invests in foriegn currencies like the Canadian, Australian and New Zealand Dollar.
Instead I decided to open an account with Interactive Brokers. They even have better interest rates and the money is much more liquid.
Proof that Southern California's housing market is dropping
check out this site. http://www.forsakencraft.com/proof.htm.
The condo I sold last year is already down 15%. I'm renting it back from the buyer. She bought it as an investment on a 3/1 ARM with 10% down. I glad I got out. Some one of my friends weren't so lucky.
Check out this cry for help.
The condo I sold last year is already down 15%. I'm renting it back from the buyer. She bought it as an investment on a 3/1 ARM with 10% down. I glad I got out. Some one of my friends weren't so lucky.
Check out this cry for help.
Good Tips On Setting Up A Business
British Expat is a pretty good site about British Expats living in diferent parts of the world. They have a really good article about setting up a biz in Australia, but even if you're not down under, its still a pretty good read.
After practising in Perth as a business broker for a few years, assisting migrants (I was a migrant from Zimbabwe myself six years ago), I am very aware that only the hard-working, informed, alert and "hands on" business owners are making money. The rest have bought themselves a job, together with all the responsibilities and stress of running a small business.
I appraise many businesses which new owners have been running for only 6-18 months and they wish to sell. Many of these businesses that you will find advertised on the market are there because, for some reason, the profit margins are in decline, or the owners have worked themselves to a standstill to make the business work, and have ruined their health along the way.
A new migrant must be careful not to fall into the same trap!
Having seen so many of the mistakes that other people have made (and made some myself, when I arrived), here are a few tips which may help you to choose the correct business to buy:
· Never put all your savings into a business so that if it fails, you have nothing left to fall back on. Only risk what you can afford to risk.
· Try to buy a business which you know about. Trying new, unfamiliar things increases your risk.
· A vendor offering vendor finance is often doing it because it is the only way he can sell the business. This is not always a bad sign, but it can be.
· Imagine yourself in the business doing the same thing every day for the next 5 years!
· Check everything that you are told. The owner wants to sell and the agent is rewarded by the owner to sell. You will have to look for the negatives as probably only the positives will be pointed out to you.
· Always look for a business which you can add something to or improve on, otherwise leave it. If the profit has not been improving, it is most probably on the decline.
· If the business has only one or two customers, check if there are contracts in place. If not, imagine what will happen if these customers are lost. You may be paying goodwill for business which may disappear after a few months.
· Examine many similar businesses until you start to feel that you know what you are looking at and can see the differences from one business to another. Then you can pick out the good ones.
· After you have signed a confidentiality document, the vendor should be up-front and open about the business - and the figures. If not, this is a warning sign. The best businesses that I have sold have been the ones where the vendors have to sell for a very good reason and they are quite happy to show all their figures.
· Never pay for "potential". If the last owner did not follow up all this potential, you probably will find that there is none.
· If plant or property are involved, have your own independent valuations done and do not hesitate to ask questions to business owners in a similar trade. NB Be careful not to break your confidentiality agreement when you are doing this.
· Try to discreetly check on the vendor by asking your accountant to do a credit investigation for you. The vendor will have to approve this but if there is resistance - wonder why! Try to carefully find out who knows the vendor and listen to what they have to say about him or her. The more you know about the vendor and why the business is for sale, the better.
· Insurance premiums have soared recently in Australia and many small businesses are selling because they cannot afford the premium. Always check on the future insurance costs before signing any documents.
· Make sure that the business is being sold as a going concern (or GST will apply to the sale)
· Think cautiously about any start-up business invitations (unless there are signed contracts for the sales in place) and very carefully about venture capital projects. These can be good to go into for only those with spare funds to gamble with.
· If you are worried about your visa requirements, you will get different opinions and advice from all quarters. It costs nothing to visit the Immigration department for advice. Always follow up the meeting with your understanding of it, in a letter to the head of the immigration department, so that it is on record in your file. Keep a copy of everything you write or receive from anyone.
Take your time and do not allow anyone to rush you. There is always another business out there!
If you are considering migrating to Perth, Western Australia, I suggest you contact the Small Business Development Corporation in Perth www.sbdc.com.au for free advice and even possible sponsored business migration. This organisation can supply you with most of the information and assistance you require. They will post you an information package on application.
Once you have found a business which you can afford and which you feel comfortable with, show it to their experienced staff. It is always good to let an unbiased person look at what you are doing. You may be driven by the passion or financial need to buy a business, or both, and may need some logical facts pointed out to you by an experienced person. A vendor or business broker will be driven by the desire to sell and may not have your interests at heart.
The SBDC will also be able to give you an idea of what return on investment you should look for in the industry which you have chosen to buy into. All business agents should have examples of recent sales in every industry and what the estimated return on investment is. Speaking very generally, if you buy a business in Perth, you should be able to earn your money back in two to three years.
Try to find an accountant who has bought and sold businesses himself. You usually need a very good one at this stage. Accountants can check that figures balance and do tax returns, but many of them do not have an instinct for business. It is essential that you have the right person to advise you at this stage.
It is worth spending the money on a lawyer for the agreement, when you buy a business. Again try to find one who specialises in business agreements (a divorce lawyer may not have had much practice!).
Well run, profitable businesses are not easy to find but if you search constructively and widely and put in the essential research and necessary hard work, you will be successful and end up buying a good one.
Written by Rosalind Baker, Business Broker in Perth rozzie@space.net.au
Another Housing Article
As if there wasn't enough bad news floating around about the housing market, BusinessWeek had another article on it.
The option adjustable rate mortgage (ARM) might be the riskiest and most
complicated home loan product ever created. With its temptingly low
minimum payments, the option ARM brought a whole new group of buyers into
the housing market, extending the boom longer than it could have otherwise
lasted, especially in the hottest markets. Suddenly, almost anyone could
afford a home - or so they thought. The option ARM's low payments are only
temporary. And the less a borrower chooses to pay now, the more is tacked
onto the balance.
The bill is coming due. Many of the option ARMs taken out in 2004 and
2005 are resetting at much higher payment schedules - often to the
astonishment of people who thought the low installments were fixed for at
least five years. And because home prices have leveled off, borrowers
can't count on rising equity to bail them out. What's more, steep
penalties prevent them from refinancing. The most diligent home buyers
asked enough questions to know that option ARMs can be fraught with risk.
But others, caught up in real estate mania, ignored or failed to
appreciate the risk.
There was plenty more going on behind the scenes they didn't know about,
either: that their broker was paid more to sell option ARMs than other
mortgages; that their lender is allowed to claim the full monthly payment
as revenue on its books even when borrowers choose to pay much less; that
the loan's interest rates and up-front fees might not have been set by
their bank but rather by a hedge fund; and that they'll soon be confronted
with the choice of coughing up higher payments or coughing up their home.
The option ARM is 'like the neutron bomb,' says George McCarthy, a housing
economist at New York's Ford Foundation. 'It's going to kill all the
people but leave the houses standing.'
What are we missing? We squint. We look around. We scratch our heads. And
then, we look under the cushions and behind the chairs. How can a consumer
economy keep consuming when the consumers have no more money? Or, is there
a source of revenue we have overlooked?
"With soaring stock portfolios now ancient history and leaping house
prices about to be," writes Gary Shilling, "no other sources, such as
inheritance or pension fund withdrawals, are likely to fill the gap
between robust consumer spending and weak income growth. Consumer
retrenchment and the saving spree I've been expecting may finally be about
to commence. And the effects on consumer behavior, especially on borrowing
and discretionary spending, will be broad and deep."
Shilling expects house prices to drop by at least 20%, which will cause a
"major recession."
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