SORRY FOR THE DELAY IN GETTING THIS OUT. I’M SURE YOU HAVE ALL BEEN COMPLETELY LOST WITHOUT MY UPDATES. (JOKING). EITHER WAY, I HAVE A LOT TO SAY ABOUT WHAT HAS HAPPENED, AND WHAT I EXPECT TO HAPPEN WITH OUR ECONOMY BOTH LOCALLY, AND GLOBALLY. WHILE I USUALLY PREFER TO ALLOW MY ACTIONS TO SPEAK FOR ME RATHER THAN WORDS, I REALIZE THAT SOMETIMES YOU MUST DEMONSTRATE CREDIBILITY TO GAIN THE AUDIENCES ATTENTION. PLEASE TAKE A MINUTE TO SCAN THE QUOTES BELOW. I HAVE BEEN NEGATIVE ON OUR ECONOMY FOR A VERY LONG TIME. WHEN THINGS WERE BOOMING IT WAS RARE THAT SOMEONE AGREED WITH ME ON WHERE THINGS WERE HEADED, BUT I CONTINUED TO VOICE MY UNPOPULAR OPINION. THE QUOTES BELOW WERE PULLED FROM MY BLOG, AND ARE DATE STAMPED ACCORDING TO WHEN THEY WERE POSTED. FEEL FREE TO VERIFY THIS AT THE BLOG LINK BELOW. BELOW THIS SECTION, I WILL OUTLINE WHAT I EXPECT TO HAPPEN NEXT, AS WELL AS WHERE I HAVE BEEN WRONG ALONG THE WAY. I ALSO WANT TO POINT OUT THAT EARLY IN MY CAREER I TOOK AN ABNORMALLY STRONG STANCE ON THE ECONOMY, OF COURSE THIS PUT ME AT RISK OF APPEARING TO BE A TOTAL FOOL, SOMETHING FEW OTHER BROKERS WOULD EVER DO. HOWEVER, I AM A STRAIGHT SHOOTER, AND THIS ALONG WITH UNMATCHED WORK ETHIC, AND A FIRM UNDERSTANDING OF NEW TECHNOLOGY HAS SERVED ME WELL IN SPITE OF THIS HORRIFIC DOWNTURN. HTTP://RALPHTHEHOUSE.BLOGSPOT.COM/ TO VERIFY… TUESDAY, JANUARY 29, 2008 As long as a large part of the country is experiencing large numbers of loan defaults, I doubt the stock market is going to be a safe place to invest. TUESDAY, JANUARY 22, 2008 I certainly wouldn't want my money in the stock market right now. WEDNESDAY, APRIL 9, 2008 Commodities, precious metals, etc are demonstrating all the obvious signs of a bubble about to burst. If you get serious about your price and sell now, you may avoid a massive long term catastrophe. MONDAY, MAY 12, 2008 Second, the lease rate decline has yet to be felt much. As leases begin to renew, a lot of home owners will be surprised, and perhaps distressed to find out that there investment will be making them 10% less this year than last. I think we still have some time before we see the absolute bottom. "The difference between death and taxes is death doesn't get worse every time Congress meets." --Will Rogers THURSDAY, MAY 15, 2008 In a declining market, being a seller is like holding a stick of dynamite while the fuse is lit. Could it get worse? It very well could get a lot worse. we are artificially tied up because people have to buy and sell their property elsewhere before making a purchase here. This is a stalemate like no one has ever witnessed in our lifetime, and it won’t clean up over night. A silver lining is that almost every recession in history is followed by a major BOOM! This is why you can’t let fear paralyze you on the sidelines. ( In this case, I believe the boom itself will be short lived, in fact I believe it is just about to end. 2.25.10) MONDAY, MAY 19, 2008 I would say 90% of foreclosures are happening because sellers fail to account for the sluggishness we are feeling right now, until it is too late. If you are truly motivated, price it accordingly. This is almost definitely a recession, and sales could be down for 2 years easily. Plan for the future. If you set a lowest price, make sure it truly is your lowest price, because you may be holding on for a while. WEDNESDAY, JUNE 18, 2008. I have always liked Ben Bernanke, but I was critical of his bailout of so many irresponsible investors, and corporations. I realize that he may have averted a major economic meltdown, but is that possible, or are you simply delaying the inevitable, especially in the early stages of a true global economy? Slashing bank interest rates, and sending stimulus checks to people to help pay down their debt (which will eventually all end up in China or India) were not my favorite ideas. Had the rate cuts been helpful to distressed homeowners ( Not very helpful if you don’t have the equity to refi), I would have been more in favor despite the fact that millions of elderly Americans pay their bills every month with interest from their life savings, and now they have watched that interest disappear while banks get their finances straight. Did I just say banks get their finances straight? Something about that seems very wrong. One other thing that recently startled me occurred when I was searching around to downsize my boat because of fuel prices. When looking through the boat magazine, I noticed a massive amount of very expensive boats that were purchased between 2005 and 2007. Then I started noticing that dealers were offering similar brand new boats for about 20% less than the used boats. Boats are very easy to get repossessed because we have very little real need for them. I think many people need to come out of the clouds and realize that if they don’t sell now, it may be years before they get back to where they are now. HTTP://RALPHTHEHOUSE.BLOGSPOT.COM/ I’LL BEGIN BY POINTING OUT A FEW THINGS I HAVE BEEN WRONG ABOUT. A YEAR AND A HALF AGO I EXPECTED THE “END OF THE WORLD” MENTALITY FROM OCTOBER 2008 TO PERSIST INTO THE SPRING OF THIS YEAR (2010) WHERE I EXPECTED TO SEE A SOLID SHORT TERM RECOVERY (MAYBE 2 YEARS) BEGIN. MY TIMING WAS OFF AS MARCH OF 2009 MARKED A PRETTY OBVIOUS TURN AROUND. IN MY OPINION, THIS IS GOING TO CREATE AN EVEN GREATER PROBLEM THAN WE WOULD HAVE HAD BECAUSE BUMPING ACROSS THE BOTTOM WOULD HAVE HELPED TO NATURALLY WORK OUT MUCH OF THE OVER INDULGENCE WE HAVE TAKEN PART IN OVER THE LAST DECADE. I BELIEVE WE HAVE SET OURSELVES UP FOR A MASSIVE CORRECTION SOMETIME WITHIN THE NEXT COUPLE OF YEARS. I BELIEVE THIS WILL BE AS BAD, OR WORSE THAN WHAT WAS EXPERIENCED AROUND THE SAME TIME LAST YEAR. THE TWO THINGS THAT MAY PROVE ME WRONG ABOUT A SUDDEN DECLINE IS UNPRECEDENTED GOVERNMENT INTERVENTION, AND EMERGING MARKET GROWTH. WHETHER SUDDEN, OR LONG AND DRAWN OUT, THIS TOO WILL EVENTUALLY COMPOUND THE PROBLEM AS PUMPING MASSIVE AMOUNTS OF WORTHLESS CASH INTO THE SYSTEM BRINGS IT’S OWN SET OF SERIOUS ISSUES. I REALLY DON’T BLAME BERNANKE, AS THE AMOUNT OF STRESS HE IS UNDER IS UNTHINKABLE AND WE ALL KNOW HOW HE WOULD HAVE BEEN VIEWED IF HE DIDN’T AT LEAST TRY. ONE GOOD POINT FOR REAL ESTATE OWNERS IS THAT THIS RUNUP HASN’T EFFECTED HOUSING NEARLY AS MUCH AS THE STOCK MARKET. I STILL FEEL THAT REAL ESTATE ACROSS THE GROWING AREAS IN AMERICA HAS LOST MOST OF ITS VALUE. NOT TO SAY MORE WON’T BE LOST, BUT I DON’T EXPECT TO SEE ANOTHER HUGE LONG LASTING DIVE LIKE WE EXPERIENCED FOR THE LAST YEAR AND A HALF. I THINK WE WILL HAVE A MORE GRADUAL PROLONGED STILL PAINFUL BUMP ALONG THE BOTTOM. THIS MEANS WHILE I EVERYONE KNOWS HOW ANTIBIOTICS WORK. BASICALLY, YOU CAN START TREATING A PATIENT AND ALMOST ALWAYS SEE A QUICK RECOVERY BEGIN TO TAKE PLACE. ( POURING MASSIVE AMOUNTS OF MONEY INTO OUR BANKING SYSTEM AND ARTIFICIALLY LOWERING INTEREST RATES) HOWEVER, WHAT HAPPENS IF YOU DON’T COMPLETE THE TREATMENT. USUALLY THE ILLNESS COMES IMMEDIATELY BACK, AND SOMETIMES IT MUTATES INTO SOMETHING THAT IS RESISTANT TO TREATMENT. THE TREATMENT IS WORKING GREAT NOW, BUT IT’S MORE THAN OBVIOUS THAT GLOBAL GOVERNMENTS CANNOT SUSTAIN THEIR CURRENT SPENDING, SO THE NEXT QUESTION HAS TO BE WILL THE ILLNESS BE GONE BY THE TIME THE ANTIBIOTICS RUN OUT? LET’S ANALYZE WHAT IS HAPPENING FROM A DEMOGRAPHIC POINT OF VIEW. BABY BOOMERS, THE DRIVING FORCE OF THE WORLD FOR THE PAST 30 YEARS ARE REACHING THEIR PEAK WORK, AND SPENDING VIABILITY. THIS MEANS THAT IN THE NEAR FUTURE OUR COUNTRIES COMPANIES WILL BE LOSING THEIR BEST, AND MOST INNOVATIVE MINDS TO RETIREMENT. TECHNOLOGY IS HELPING TO RELIEVE THIS PROBLEM, BUT IT CANNOT KEEP UP WITH THE PRODUCTIVITY LOSS WE WILL BE EXPERIENCING SOON. ADDITONALLY, THOSE HOLDING THE MAJORITY OF WEALTH IN THE WORLD WILL BE LEAVING THE WORK FORCE, AND RELYING ON THEIR INVESTMENTS / CASH TO SUSTAIN THEM THROUGHOUT THEIR RETIREMENT. NOT GENUINE INCOME, BUT THE CONCEPT OF THE VALUE OF MONEY, AND THE STRENGTH OF THEIR INVESTMENTS. THERE IS NO WAY AROUND THIS, IF YOU AREN’T PRODUCING, YOUR WEALTH IS BASED SOLEY ON THE CONFIDENCE IN WHAT YOU HAVE ACCUMULATED. WE ARE TRULY IN A TRANSITION PERIOD WHERE OUR ENTIRE ECONOMY IS BUILT ON IDEAS AND CONFIDENCE, NOT PRODUCTIVITY. THIS MAKES FOR A VERY VOLATILE ENVIRONMENT AT THE VERY LEAST. FURTHERMORE WITH THE RATE AT WHICH INFORMATION IS EXCHANGED, AND NEW PRODUCTS SPRING FORTH EVERY DAY, I PREDICT BUBBLES WILL BE THE DOMINATING FORCE FOR THE NEXT DECADE. (MORE ON THAT LATER)WHAT OTHER EFFECTS WILL RETIREMENT HAVE ON PRODUCTION? PEOPLE ARE LIVING LONGER THESE DAYS, AND IF THEIR WEALTH IS BASED ON CONFIDENCE, THEN YOU CAN IMAGINE THERE WILL BE SOME CONCERN ABOUT THEIR FUTURES RIGHT? YOU HAD BETTER BELIEVE IT, EVEN THE WEALTHIEST ARE CONCERNED, AND SPENDING PATTERNS HAVE CHANGED FOREVER. WHILE NOT ALWAYS EXCERCISED, IT’S COMMON KNOWLEDGE THAT AS YOU GET OLDER YOU WANT TO REDUCE YOUR RISK OF LOSS, AND TAKE A MORE DEFENSIVE POSITION. WHO HONESTLY THINKS BABY BOOMERS HAVE ALREADY TAKEN THIS APPROACH TO THE DEGREE THAT IS NECESSARY? THE RECENT MASSIVE STOCK RUNUP IS IN MY OPINION PROOF THAT REALITY HAS YET TO SET IN. AGING BABY BOOMERS AREN’T DELEVERING AS GOOD ADVICE WOULD HAVE, RATHER THEY ARE JUMPING BACK IN FULL FORCE. ANOTHER ISSUE IS THAT PEOPLE FAIL TO REALIZE THAT EMERGING MARKETS ARE THE MAIN DRIVER BEHIND THE STOCK RUNUP. THESE SO CALLED AMERICAN COMPANIES ARE SO FAR FROM DOMESTIC, AND VERY FEW REALIZE IT. THEY PERCEIVE THE STOCK RECOVERY AS AN AMERICAN RECOVERY AND MANY WILL PAY A PAINFUL PRICE FOR THE MISCALCULATION. I AM VERY CONCERNED WITH WHAT WILL HAPPEN WHEN THE ARTIFICIAL EFFECTS BEGIN TO DISSAPEAR. MAINLY, RISING INTEREST RATES AND UNBELIEVABLE OIL PRICES. AM I THE ONLY ONE THAT THINKS IT’S TERRIFYING THAT WE ARE STILL PAYING ALMOST $3 A GALLON DURING THE SHARPEST RECESSION SINCE THE 30’S? THE ENTIRE GLOBAL DEMAND HAS CONTRACTED CONSIDERABLY AND OIL BARELY FLINCHED. I FEEL STRONGLY THAT WHILE AMERICA SUFFERS, EMERGING MARKET STRENGTH WILL SOMETIME IN THE NEXT 5 YEARS FUEL ( PUN INTENDED) GAS PRICES TO RISE TO $8 A GALLON OR MORE, AND IT WILL BE TOO SWIFT TO ENACT AND EFFECTIVE PLAN B. INTEREST RATES WILL ALSO MOST LIKELY CLIMB VERY QUICKLY ONCE THE GOVT IS NO LONGER ABLE TO PUMP MONEY INTO THE SYSTEM TO KEEP THEM DOWN. THIS WILL OCCUR TO VARYING DEGREES WHETHER WE ARE EXPERIENCING MASSIVE INFLATION, OR DEFLATION. THERE ARE A LARGE NUMBER OF HOMEOWNERS / DEVELOPERS HOLDING OUT FOR A BETTER MARKET TO SELL, MANY CALL THIS SHADOW INVENTORY. WHILE HOUSING SEEMS TO BE MODERATING, A SUBSTANTIAL RUNUP IN INTEREST RATES WILL HAVE A DEVASTATING EFFECT ON ANY RECOVERY. THIS WILL CERTAINLY BE VERY LONG TERM, AND MUCH OF THE SHADOW INVENTORY WILL BE FORCED INTO THE DISTRESSED MARKET. OF THE PROPERTIES I MANAGE, AT LEAST 75% OF MY CLIENTS WOULD SELL TODAY IF THEY COULD BREAK EVEN. NOT TO SAY MAKING A HOUSING PURCHASE SHOULD BE OUT OF THE PICTURE, IF YOU HAVE A LOT OF CASH, A VERY SMART LONG TERM HOUSING INVESTMENT WILL STILL WORK WELL IN THE RIGHT MARKET. IF YOU DON’T HAVE A LOT OF CASH, I WOULD WAIT AND SEE. LAST YEAR I SPECIFICALLY NAMED SEPTEMBER AS THE TIME WHEN I EXPECTED TO SEE THINGS TURN VERY BAD. I WAS OFF BY ONE MONTH. WHILE GOVT INTERVENTION MAKES IT NEARLY IMPOSSIBLE TO TIME, I EXPECT THE NEXT FEW YEARS TO MARK A DIRE TIME IN AMERICAN HISTORY. IN MY OPINION THE BENEFITS OF A HUGE RUNUP ARE FAR OUTWEIGHED BY THE POTENTIAL BOMB THAT COULD DROP. I THINK WE WILL HAVE A ROUGH TIME FOR THE NEXT YEAR, BUT GOV’T SPENDING IS JUST NOW BEGINNING TO TAKE EFFECT, SO WE MAY REMAIN RELATIVELY STABLE UNTIL THEY BEGIN THEIR EXIT STRATEGY. ON THE ECONOMY AS A WHOLE, I’M DEFENSIVE TO SAY THE LEAST, PERHAPS MORESO THAN THIS TIME LAST YEAR. I’VE SAID IT AT LEAST 1000 TIMES, IF YOU THINK YOU MAY NEED TO SELL ANY ASSETS TO MAKE STANDARD LIVING PAYMENTS IN THE NEXT COUPLE OF YEARS, GET SERIOUS NOW!!! NOW FOR THE GOOD NEWS PERTAINING TO REAL ESTATE. ( THERE IS LITTLE GOOD NEWS FOR STOCKS EXCEPT “MAYBE” EMERGING MARKETS SUCHAS CHINA AND INDIA. I ONCE THOUGHT THESE MARKETS WERE TOO DEPENDENT ON AMERICA TO RECOVER WITHOUT US, BUT THEY SEE WHAT AMERICAN BUSINESS HAS IN STORE AND HAVE TAKEN UNPRECENDENTED AND EFFECTIVE STEPS TO DECOUPLE.) AMERICAS POPULATION IS GROWING RAPIDLY. BY THE WAY, IT’S INTERESTING THAT THE ENTIRE IMMIGRATION DEBATE HAS COMPLETELY DISAPPEARED NOW THAT WE ARE IN RECESSION. (GREED TRUMPS EVERYTHING HUH?) THIS PREMISE IS AS BASIC AS IT GETS, DEMAND OVER THE LONG TERM IS UNDENIABLE SO SUPPLY WILL EVENTUALLY BE SOAKED UP. EVEN THOUGH BABY BOOMERS ARE PEAKING IN ECONOMIC PRODUCTIVITY, THEY WILL STILL NEED HOUSING FOR QUITE SOME TIME. THE FUTURE FOR SMART REAL ESTATE BUYERS IS QUITE BRIGHT, IT’S THE SELLERS WHO WILL SUFFER FOR QUITE SOME TIME. IF YOU HAVE FAILED TO REALIZE THAT THE WORLD AS WE KNOW IT IS IN THE EARLY STAGES OF A COMPLETE PARDIGM SHIFT, LET THIS BE YOUR NOTICE. JUST AS IMPORTANT AS THE INDUSTRIAL REVOLUTION, WE ARE IN AN INFORMATION/TECHNOLOGY REVOLUTION. THINGS ARE CHANGING FASTER NOW THAN EVER, BUT THIS IS JUST THE BEGINNING. SOON CHANGES WILL OCCUR EXPONENTIALLY. WHEN I PICTURE THE WORLD IN 30 YEARS IT LOOKS MORE LIKE THE JETSONS THAN TODAY (ONLY SLIGHTLY EXAGGERATED). BABY BOOMERS BLAZED NEW TRAILS IN TECHNOLOGY, BUT WHEN THE MILLENNIALS TAKE THE STAGE PREPARE TO BE BLOWN AWAY. SOMETHING THAT CAN’T BE IGNORED IS THE EFFECT SUCH RAPID CHANGE AND FREEDOM OF INFORMATION WILL HAVE ON OUR ENTIRE GLOBE. BUBBLES WILL BECOME A WAY OF LIFE FOR SOMETIME. TAKE FOR INSTANCE DOUBLE LEVERAGED ETF’S. IF YOU AREN’T FAMILIAR WITH THEM TAKE A QUICK LOOK INTO THE POWER THIS ONE NEW STOCK PURCHASE OFFERS TO EVEN THE MOST AMATEUR OF INVESTORS. MY BIGGEST CONCERN FOR MY LATER LIFE IS THE REGULATION THAT WILL HAVE TO BE ENACTED TO OFFSET THIS BUBBLE PHENOMENA. NORTH CAROLINA IN PARTICULAR IS IN A GREAT POSITION TO TAKE ADVANTAGE OF A RECOVERY ONCE IT BEGINS. AS ONE OF THE FASTEST GROWING STATES, ONCE AGAIN, THE DEMAND IS HERE. IN FACT, WE ARE BEING HELD DOWN BY A GLOBAL CATASTROPHY, SO WE WILL BE POISED FOR A STRONGER RECOVERY THAN MOST. NC HAS A LOT TO OFFER WITH BEAUTIFUL BEACHES, AND GORGEOUS MOUNTAINS JUST 6 HOURS APART! FOR YEARS NC HAS BEEN NAMED BY SEVERAL SOURCES INCLUDING FORBES AS ONE OF THE TOP STATES IN AMERICA FOR BUSINESS. LATELY WE HAVE SUFFERED DUE TO CHARLOTTES EXPOSURE TO THE FINACIAL MARKET, BUT BANKING IS ONE INDUSTRY THAT WILL NEVER GO AWAY. MOST OF THE MOST POWERFUL COMPANIES IN HISTORY WERE BANKS, AND ENERGY. THINGS MAY CHANGE DRASTICALLY FOR ENERGY, BUT BANKING WILL REMAIN BASICALLY THE SAME. WHILE OVERALL I AM VERY BEARISH ON THE ECONOMY, THERE ARE CERTAINLY SOME GREAT DEALS OUT THERE NOW. A YEAR AGO I WOULDN’T HAVE BOUGHT ANY REAL ESTATE IN AMERICA. NOW, I CERTAINLY SEE THINGS THAT PEAK MY INTEREST. HOWEVER, THEY ARE FEW AND FAR BETWEEN, AND THE GAINS WILL NOT BE WHAT PEOPLE HAVE GOTTEN USED TO IN THE LAST DECADE. FROM A LONG TERM POINT OF VIEW IT WOULD BE VERY HARD TO GO WRONG WITH A REAL ESTATE PURCHASE IN THE CURRENT CLIMATE AS LONG AS YOU DO YOUR HOMEWORK, AND USE GREAT CAUTION WHEN FIGURING POTENTIAL APPRECIATION, TAXES, INSURANCE, AND RENTAL INCOME. I CAN’T STRESS THAT ENOUGH, CHOOSE REALISTIC NUMBERS, THEN REDUCE / INCREASE THEM BY 15%. ONE THING I WANT TO MENTION IS, DON’T EVER FORGET WHAT MAKES REAL ESTATE GREAT. ITS NOT THE POTENTIAL TO GET RICH, IT’S THE FACT THAT IF YOU CAN AVOID GETTING DRUNK WITH GREED, IT’S RELATIVELY SAFE. REAL ESTATE OFFERS MAJOR TAX ADVANTAGES OVER MOST OTHER INVESTMENTS AS WELL. ALSO, YOU CAN OFTEN USE IT FOR PLEASURE, YOU CAN TOUCH IT, FEEL IT, AND PERSONALLY OVERSEE IT. WITH STOCKS AND OTHER INVESTMENT VEHICLES YOU REALLY HAVE NO CONTROL OVER WHAT HAPPENS WITH YOUR MONEY. TO TAKE IT ONE STEP FURTHER, YOU HAVE NO IDEA IT IS BEING PUT TO GOOD USE. WHEN I WAS 18 I TOOK A STOCK TIP FROM A FRIEND. IT WAS A CUTTING EDGE INGENIUS IDEA CENTERED COMPLETELY AROUND HIGH SPEED INTERNET FINALLY, I WATCH CNBC A LOT, AND THE AMOUNT OF INTELLIGENT PEOPLE THAT GET CAUGHT UP IN THEIR OWN PROPOGANDA IS ASTONISHING. IN MY OPINION THOUGH, THREE MEN OFFER THE GREATEST WISDOM I HAVE EVER HEARD. WARREN BUFFET, AND THE TWO TOP MEN AT PIMCO, BILL GROSS, AND MOHAMED A EL-ERIAN. FOLLOW THEIR ADVICE AND IT’S HARD TO GO WRONG. KEEP ONE THING IN MIND WITH WARREN BUFFET THOUGH, HE REALLY IS IN A LEAGUE OF HIS OWN SO HIS ADVICE MUST BE TEMPERED BY HIS LARGER THAN LIFE INFLUENCE.
WOULDN’T RUSH INTO A HOME PURCHASE, I’M STILL RELATIVELY OPTOMISTIC ABOUT THE LONG TERM BENEFITS OF A REALLY SMART PURCHASE. THE TWO MAIN ENEMIES OF HOUSING NOW WILL BE INCREASING INTEREST RATES, AND NONEXISTENT CREDIT. WE HAVE ACTUALLY WORKED THROUGH A GOOD BIT OF THE INVENTORY IN MOST HEALTHY MARKETS. WHAT IS A HEALTHY MARKET? FOLLOW THE RELOCATIONS. MOST OF THE NORTHEAST WILL EXPERIENCE A REAL ESTATE DOWNTURN THAT WILL LAST MOST OF OUR LIFETIME IN MY OPINION. NOW THAT THE INDUSTRIAL AGE IS BECOMING A DISTANT MEMORY, PEOPLE ARE SCRAMBLING FOR MORE COMFORTABLE LIVING CONDITIONS. NC HAS CONSISTENTLY BEEN ONE OF THE FASTEST GROWING STATES IN THE UNION FOR SOME TIME NOW, AND GROWTH WILL EVENTUALLY TRUMP ALL PROBLEMS. MY NUMBER ONE PIECE OF ADVICE FOR INVESTMENT REAL ESTATE, CHEAPER IS BETTER. 2 $250K CONDOS WILL ALMOST ALWAYS OUTPERFORM A $500K CONDO, AND A MULT UNIT BUILDING FOR $500K WITH 5 UNITS WILL ALMOST ALWAYS OUTPEFORM THE 2, ALL OTHER THINGS BEING EQUAL. IF WE EXPERIENCE INFLATION ANYTIME SOON, THAT POSES A COUPLE OF INTERESTING POINTS FOR HOMEOWNERS. IF YOU HAVE A LOAN YOUR CASH WILL PAY DOWN YOUR BALANCE FASTER, BUT FOR NEW BUYERS AND CONSEQUENTLY EFFECTING SELLERS, CASH WILL BE WORTH LESS WHEN BUYING.
CONNECTIVITY. OBVIOUSLY THIS WAS, AND STILL IS AN IMPORTANT FUNCTION IN THIS TECHNOLOGY AGE. IN FACT, WITH THIS IDEA IT SEEMED IMPOSSIBLE TO GO WRONG CONSIDERING THE GROWTH RATE IN THE INDUSTRY. HOWEVER FOR A YEAR THE STOCK HOVERED RIGHT AROUND $5 AND RARELY CHANGED EVEN AS THEY LANDED HUGE MILITARY CONTRACTS WHICH EVERYONE KNOWS PAY PRETTY WELL. THE BOARD WAS A WHO’S WHO OF WEALTHY, SUCCESFUL BUSINESS GENUIUSES. THEY WERE HIGHLY RESPECTED, AND MOST EXPECTED HUGE THINGS FROM THEM. THE COMPANY HAD SEVERAL LOCAL TIES TO WILMINGTON, AND ONE DAY I FOUND OUT THAT THEY FLEW THE COMPANY JET TO TOWN, DROPPED OVER $1000 OF COMPANY MONEY ON DINNER FOR A FEW BOARD MEMBERS, THEN FLEW BACK TO THE CORPORATE OFFICE. THEY DIDN’T MEET WITH ANYONE HERE, NOR WAS BUSINESS EVER DISCUSSED. MY FRIEND THAT GAVE ME THE STOCK TIP WORKED AT THE RESTAURANT IN CASE YOU ARE WONDERING WHAT I BASE THIS ON. THE NEXT DAY I SOLD THE STOCK FOR $4.50 AND BOUGHT A HOUSE WHICH I SOLD BEFORE AUGUST OF LAST YEAR JUST AS I HAD BEEN ADVISING MY CLIENTS. JUST OUT OF CURIOUSITY I TOOK ANOTHER LOOK AT THEIR STOCK TODAY, AND IT WAS A SWEET REVELATION, .26 CENTS A SHARE. I HAVE BEEN DEEPLY DISGUSTED WITH CORPORATE AMERICA FOR ALMOST A DECADE, LONG BEFORE THIS RECENT POPULIST OUTCRY. I NEVER GET INVOLVED IN POLITICS, I CONSIDER IT A PHILOSOPHICAL DEBATE MORE ALONG THE LINES OF ABSTRACT IDEAS THAN CONCRETE SOLUTIONS, I REACT RATHER THAN WHINE. HOWEVER, DEMOCRAT OR REPUBLICAN, I CHALLENGE YOU TO QUESTION MY REASONING ON CORPORATE WASTE. TAKE GE FOR INSTANCE, THIS IS A COMPANY I HAVE A TON OF RESPECT FOR. ESPECIALLY THEIR FORMER CEO JACK WELCH (HIS BOOK “WINNING” IS AMAZING). HOWEVER, WHEN I THINK ABOUT THE NUMBER OF PEOPLE IN AN ORGANIZATION OF THAT SIZE THAT HAVE THE OPPORTUNITY TO BLOW MONEY, OFFER FAVORS, AND GENERALY ACT DISHONESTLY, IT’S TERRIFYING.
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