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Messages - BuddyJ

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Economics / Re: ✊ UNION!
« on: September 16, 2019, 07:03:56 AM »
Go strikers!!! Let's hope they win this one!

Jet setting in to protest CO2 do have to quietly smile about that one.

Most of those people didn't jet set to get to London.  They're local Brits, you can tell by the accent.  Many of them probably didn't even take carz, since London is a nightmare to get around by 4 wheel transport.  They probably took the Underground.

Most, sure. But there was a specific person in the article apologizing and rationalizing exactly the point I mentioned. I understand that most were probably local, the one defending him/herself from jet setting there was not.

Quote from: RE
Besides, we have been over this "hypocrisy" many times

Maybe you have been involved in this "hypocrisy" discussion, if I think about it for even a little bit, I don't use quotes.

Quote from: RE
For as long as BAU is operational and climate conferences are held all over the world, the only way to get there is by plane.

At which, complaints about CO2 emissions are discussed and how to at the very least diminish them. Do you think ANYONE at those conferences know...doing away with conferences to do their part?

Quote from: RE
  The planes will fly anyhow, so better to use them for the purpose of dissemnating the information than just vacationing in Hawaii.


And the internet can't disseminate information? Publishing papers doesn't disseminate information? Are you sure that taking selfies in those picturesque locations doesn't play into this somehow? We are talking about people after all, motivated self interest is what we do.

The planes flying anyhow is just a rationalization as to the why it is okay for people talking about reducing CO2 emissions to themselves create CO2 emissions. In the interest of the greater good of course.

Economics / Re: Subprime Student Loans
« on: April 26, 2019, 08:22:04 PM »
A student loan is an investment in one's self. It follows the same rules as any other it wisely.

I imagine most borrowers don't think about it that way, and even if they do, they aren't objective as to the risk adjusted value of that investment.

Hi Buddy J, pleasure to meet you.

You are correct of course when talking about adults or even young adults but wise investing is not the stuff one can expect of youth.

Nice to meet you as well.

And it depends on the youth I imagine.

Quote from: Golden Oxen
My personal take is that the propaganda being heaved at these kids, the idea that if you don't go to college you will surely grow up to be a zero, poor, and unable to appreciate the good life from your perch on the back of a garbage pick up truck is very persuasive to youngsters who a very impressionable and look to their elders and peers for guidance.

I've seen more a correlation with what the parents do for a living. In families with college educated parents, it does appear to be common. In families without college educated parents, it seems like it isn't as common.

Purely personal observation.

Jet setting in to protest CO2 do have to quietly smile about that one.  Next up, another Climate Change Conference in a faraway, picturesque place to declare definitive social media action is being thought about, with a stretch goal of perhaps "carefully considered" being added to the language, in order to bring a debate about climate justice and equality for anyone who wants it, without making uncomfortable those who do not, and ending with a ringing endorsement of meeting again soon in another picturesque location, to discuss the progress of....whatever...

Economics / Re: Subprime Student Loans
« on: April 25, 2019, 05:10:18 PM »
A student loan is an investment in one's self. It follows the same rules as any other it wisely.

I imagine most borrowers don't think about it that way, and even if they do, they aren't objective as to the risk adjusted value of that investment.

Jealous yet?  :icon_mrgreen:

Here's the Specs:

- Intel Quad Core i7-4770 @ 3.40GHz, High Performance 4th Generation Processor.
- 16 GB DDR3L Ram / 240 GB 2.5 Inch Sata Solid State DrivE (SSD).
- Dual Monitor Support (HDMI + VGA), Newest 4th Generation Processor, DVD-RW, Brand New KeyBoard & Mouse, Wireless WIFI, 6 x USB 2.0, 4 x USB 3.0, 1 x VGA, 2 x Display output Ports, RJ-45.
- Windows 10 Professional (64 Bit). Comes With Dell Genuine Windows 10 Professional Re Installation Disc.

The i7 is Intel's current top of the line processor. 

A 4th generation I7 is top of the line? 4th generation can't be much newer than a 4 year design at this point. Did the salesman forget to mention the 5th, 6th, 7th, 8th and 9th generation I7's? Or i9's?

Maybe this is as good as it gets in the Optiplex series? As opposed to the Precision series?

Quote from: RE
OK, now the Diner Kewpie Doll Contest of the Week:  If you can guess within $200 what I paid for this combo you get a Kewpie Doll to add to your collection.  :icon_sunny:


Not near as much as you should have if top of the line is what you actually wanted?

Elon is really something isn't he?

As time marches on, history gets written, always by the winning side. Furthermore, it tends to get re-written on an ongoing basis, as prevailing political thought and various social mores change.

As a Southerner, I found my views being labeled by my friend Surly, who threw out a term I wasn't even familiar with, which was "Lost Cause".

Truthfully, I didn't even know what that was, so I set out to educate myself.

So.....Lost Cause Ideology can be viewed as a somewhat benign phenomenon that was part of Reconstruction...or it can be viewed as a modern phenomenon that supports and perpetuates racism. And when SJW's and neo-Marxists use the term to describe guys like me, it's that more extreme POV that's coming into play.

That's what bothers me. Because....IF...if you are white...and if you are from the South....and you have the Southland in your blood and in your bones, there is NO WAY that you don't subscribe to Lost Cause to some degree. You can't indoctrinate that out of a real Southerner. But that does NOT mean that Southerner is racist, necessarily.

Excellent write up.

Inflation is theft and should be illegal, but that is not the way the crooks that run this travesty want it.

How can inflation be illegal in a finite world?  Joe sells widgets built from cattails. Local supply and demand is balanced, but cattails only grow so fast. One day, Joe must send his workers farther afield to collect cattails for the days widget construction, and paying a fixed hourly wage, cattails for the same number of widgets costs him more. So he ups his price. No new supply has been created, demand is the same as always, but because Joe's cost goes up, he inflates his price. Isn't this just a natural result of a finite resource, and it costing more to round it up over time?

Economics / Re: The real economic numbers
« on: June 15, 2018, 07:50:24 PM »
There is such a thing as working poor out there.

Always has been. At some point between then, and now, did someone design a system to cure it? If they did...obviously it didn't work, but to be it a reasonable expectation to think there is one that would?

BuddyJ: Check this video on Venezuela out. :emthup: It is quite revealing. The history covered is accurate.

Debunking John Oliver on Venezuela

June 9, 2018

The week of Venezuela’s presidential election, John Oliver dedicated an ENTIRE episode of his HBO show “Last Week Tonight” to the country—full of distortions and highly misleading to progressive-minded people. Responding to Oliver’s major points, Empire Files producer Mike Prysner walks us through the most glaring omissions and misrepresentations

<a href="" target="_blank" class="new_win"></a>

So...I made it through 5 minutes before the evil of colonial powers in 1499 were deemed the core problem that led to all other problems. And of course we can do better than that by going back to Noah..but perhaps I should just ask, what do you think the most important reason is for the current collapse of Venezuela? And if it is referenced in that video, can you point me at the minute:sec mark so I can review that? Assuming that we don't roll the clock back all the way to Noah of course.

If the government were to redistribute the wealth, thru taxes on the rich and support for the poor, everything would fix itself, but they cannot bring themselves to do it, having argued against that as socialism which is automatically evil due to the brainwashing. 

Maybe they weren't brain washed, perhaps they just looked around and realized that it may not be any better of a solution than any of the other schemes folks have come up with to properly distribute a countries wealth?

Venezuela food shortages cause some to hunt dogs, cats, pigeons

If Venezuela continues to lose production, and price reacts as expected, US shale producers are just going to make a killing. They figured out how to continue to increase oil production at $50/bbl, goodness only knows what happens if they begin getting $100 or $150.

Which is perfectly understandable. How could it not?

That goes to exactly what I'm talking about.

It depresses me that no matter how hard I work that I'm always struggling to come up with my silent partner ( Uncle Sam's ) half of the booty. That I'm always one bad year away from bankruptcy. Why shouldn't I be depressed about half my income going to conduit schemes and grifting elites at the top of the food chain?

Is that really grounds for depression? It isn't as though conduit schemes are the only thing our elected representatives steal our money for, someone has to cover the difference between forced contributions and the largess of unemployment comp and disability for obesity and alcoholism, how will we pay for roads if the government can't steal money from the folks that have more of it, the military needs more guns and bombs to make sure consumers can...consume!

Look how great it has worked out in Venezuela!   /s

Doomsteading / Re: Meanwhile back at the 'stead
« on: May 03, 2018, 01:04:02 PM »
I'd like to make a small addendum to the prior post, to clarify a few issues. Because David brought up a very good point. Real estate investments are cyclical. You can easily lose money in a falling market, just like a host of Americans did in 2008.

I can remember the first house I bought in the late 80's. I was lucky to get owner financing because --- believe it or not--- it was really hard for any young self-employed person to get a mortgage at all in those days. The house had been repossessed by the original owner after the previous buyers defaulted after a year, and I bought the place for 25% less than it had sold for only a year before.  The owners ended up carrying that note for me for a few years...until I bought the canyon house in the early 90's.

At that time, Austin real estate had collapsed big-time, and had I had lots of cash, I could have bought all kinds of valuable properties dirt cheap. But that's water under the bridge. The point is that real estate can and will fall hard in a deflationary collapse, just like equities. But there are differences.

Property is a tangible asset, and it never falls to zero. Most people get in trouble because they use too much leverage. Properties bought with low down payments become an albatross around your neck in a falling market. Lower leverage makes real estate a safer investment.

In my rental portfolio, I basically have a half dozen properties. Five houses and the storage rentals. Three of them are now fully owned outright. No leverage at all. The other three were bought with 30% equity and now sit at maybe 35% (and rising).

If you have decent equity, you won't immediately be upside down when the market goes south. You'll have time to adjust, theoretically. As long as you pay attention. I only have the three that are leveraged to worry about. The others are not likely to fall so far as to not cover the property taxes, even in the mother of all deflationary collapses. I could walk away from the rest if I had to. I also have a few other assets I didn't mention, which are also hedges.

You can't hedge everything, but maybe you can see that I've hedged pretty well.

Rental real estate is extremely sensitive to demographics. Location is key. I'm lucky to live in a fast-growing inland city of the size that's expected to clock record growth into the near-term future. As Houston sinks into the ocean and gets blown away by storms, Austin will likely continue to expand. (Until the water runs out, which it will.)

(Yes, in spite of collapse and blah, blah, yada, yada. It will all collapse, sure, but I give BAU here another 20 years. Guess what? By then I'll be dead or close enough that it won't matter much for me personally. )
In 2008 rents in Austin and surrounding areas didn't fall a single nickel. Not at all.

Demand is key. Property in Detroit is much cheaper than here, but there is no demand for it. Jobs here are plentiful and tied to the information economy. The big risk is a huge credit collapse. It's possible. I get that. That's why I keep my leverage at a very manageable level. I don't use one property's equity for collateral to buy another property. Ever. Never, ever.

Thirdly, the recent artificially low interest rates created an opportunity to lock in 30 year money for 4.5% interest or less. Real estate is a wealth building machine in times of inflation, if the loans are locked in at low interest, and enough equity is in the deal for the properties to flow cash.

 I just checked. My leveraged rentals (all three were financed 2-3 years ago and locked at 30 year fixed interest at 4.25%). I have roughly 250K equity and owe 400K on the notes. That's 62% equity. I know this because I took the time to review the deals, look at comps, and see how I'm doing. You have to keep score. The days of buy-it-and-forget-it are long gone.)

At a time when demand for housing is high, and home ownership is getting harder due to falling real income and rising interest rates and fewer people are buying, affordable rentals are still a decent bet. If the deals are done right, you can even have prices fall substantially in a market correction and still do just fine, because much of the advantage to ownership is on the side of tax abatement. Everyone "gets" capital appreciation. Everyone "gets" rental income. But almost nobody gets how important the liability side of the equation is. You have to have a great property. But you ALSO need a great loan. Low interest. Locked in. No call provision. 30 year money.

For someone in my position, it's also key to make passing the properties to my heirs seamless and easy. That means a will that clearly states who inherits, so the investments don't get caught up in probate court. It means having enough life insurance to pay off  a lot of debt if the banks try to weasel on my wife after I'm dead.

But these investments work especially well for somebody like me, because I pay high income tax. My income from the practice is all "real" income. I don't get the tax perks a hedge fund manager does, or somebody who owns a C corp. I didn't get Trump's big tax gift.

I didn't really talk much about my rental portfolio in the last post. Just the non-cash-flowing stuff, like my house, the farm, and my cottage at the lake. The reason for that is that those are the ones I consider riskier, and I'm trying to figure out how to manage that risk. I do not regard those properties as investments, per se.

Did you get that? My house is not a true investment, because it doesn't meet the criteria to be considered a true financial asset. Assets feed you. My house does not feed me. It doesn't make a dime.

Capital appreciation over time is not a given. Fortunately it can be a nice bonus for home ownership if the timing is good and the demographics are good. I think I'll profit off my house, because of luck basically. But....owning any property that does NOT flow cash is a LUXURY. Unless it's your farm and you grow your own food. Investments are a different matter. Money in a completely different box.

My farm doesn't feed me. But its a hedge too. It COULD feed me. That's why I have a tractor and implements I don't use much. Even the lake house has some prep value. Unlimited water and unlimited fishing. But until they start feeding me, they aren't investments. They are luxuries.

Because they are luxuries, there is little advantage to financing them with 30 year money. As I said in the previous post, I have the two homes on 15 year notes. The cottage is at 3.25%. The canyon house is at 2.75%. It's pretty easy to build equity with those kinds of deals. Luck helps but I stacked the deck in my favor. Rates are going up now. The trend is my friend, at least for now.

The riskier loan is the farm at 5.5%, which is why I've worked hard and paid off 63% of the note in less than 8 years, even though it's on a 30 year amortization. When the note rolls over, I'll owe less than 100K on a loan that was over a third of a million.

(I know David knows this, but in case anybody else reads this, let me explain. A 30 year amortization means I pay a minimum payment as if I had a 30 year note. If I made that payment it would take 30 years to pay off the farm. But the note is a balloon, which has to be refinanced after ten years. So I've been paying an extra 900 bucks a month for over seven years to increase my equity. Because it's a slightly riskier loan, it gets retired first. It's my highest priority. Why do have such a loan? It's the best you can get for a farm here, and I didn't want to spend cash. I didn't have 350K in cash.)

I hope you can see my strategy. You have to think about this stuff. I've taken a lot of steps to hedge my risk.

I have one other hedge, and that's a small but not insignificant holding of physical metals. That's not an investment either. It's strictly a currency hedge against fiat dollars. It falls into the same category as life insurance. It's a store of some value, and in one particular circumstance it could be what saves my bacon.

The rentals, on the other hand, are assets and they are investments. They feed me. Right now they feed me about $3500-4000/month, depending on repair bills and taxes, which are always going up. But rents can go up too. I do not set rents on most of my properties. I have professional management for that. I manage the storage and the one house that sits on that property.

I hope you can get the nuances here, because they are not unimportant.


More rant.

The big problem with retirement now is figuring out how to get some return. A million bucks cash savings won't generate enough income (25K.year) from bank interest for most people to live on. People begin to cannibalize their savings after a few years.

My current rental income now from my rentals is more than that (35K or better) and I have way less than 400K of my own cash tied up in the whole portfolio. (Of course, I've been accumulating and doing tax-free property swaps for 25 years or more now to get to this point.) Any capital appreciation over time that I can realize is pure bonus.

I remember just twenty years ago being told by a very successful dentist (who owned an island up in the Thousand Islands, totally cool off-grid place, btw) that I would need 1.5 to 2 million to retire comfortably. Now my tax advisor says 3.5 to 4 million. Because bank interest sucks now.

With higher returns come higher risks. My tax advisor wants me to fund a 401K (in stocks) to the tune of 3.5 million (instead of what I'm doing.). And this is a highly respected firm that manages billions of assets for dentists. The best advice money can buy, supposedly. I pay nearly 10K per year to sit down with him all day, once a year. Really. Tax returns not included. They're extra.

I think he's daft. No way do I want to risk my retirement money in stocks. In the current set of circumstances, I consider that much higher risk than my plan. I pay him because his company knows how to minimize taxes. I smile and listen, but so far I've managed to not put a dime in the 401K. Because I won't sell my real estate to do it. It'd be stupid, in my view.

You have to risk something to make something. Or have a huge nest egg. Or live like RE, which is fine. But most people struggle to live on that level of income.

I agree with David, thank you.

I am forced to notice however that it sounds all so...complicated? Advisers of various sizes and shapes, undoubtedly there are lawyers and papers and $$ exchanging hands at every change point. Avoiding taxes, amounts of debt balanced against changing asset value based on macro level economic events, the vulgarities of location and timing and whatnot.

Without any understanding of any of the processes you have gone through, without any advice from anyone really, all I have ever done was put money into tax deferred accounts, almost exclusively a 401k. Tried not to worry about it much, certainly with less thought over my working life than you might have put into a single transaction.

Is there anything I need to worry about with 401k's, you seem to dismiss them out of hand even when discussing it with experts I could never hope to afford, who sound like they are advocating something similar to my main retirement nest egg.

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