IDD

Just received the first issue of my trial subscription to Investment Dealer's Digest! Woo hoo!

Madness

Yeah. That's the state of my life currently. Pure, unadulterated madness.

We (my REI partners and I) lost a Baltimore deal due to analysis paralysis. It would be really nice if we could get analysis to run more quickly. I know that people may see different things about a property after multiple views/visits, but we had pretty much determined that we wanted go with this property over another deal in Patterson Park. It even had a full bar in the basement, which is kinda cool (sort of). The place needed a LOT of work though. Thankfully, there are other options available on the same street, and they may be better from a cash flow perspective too.

I'm looking to receive e-mail from another investor this weekend with a list of properties he is willing to sell around the DC metro area, primarily in Silver Spring and close in parts of PG County. (Yes, I have been deliberately vague.) I really want to look at picking up a condo or two, and possibly a multi-unit. I know I can put in more time to resolve the issues these properties have.

My wheat futures options got appropriately murdered. So ends my commodities trading career for the time being. I'll continue following the market sporadically, but this won't be something I concentrate on. There just isn't the time to do it right.

I should be able to post about some other deals I'm working on outside of the DC metro area. I'll keep you posted on those.

As for the software business, we have running code on Nokia and Palm phones. Motorola phones are a biznatch! Damn! Now that school is coming to a close, my partner will have a bit of free time before moving on to her internship. Now if we can only get MOT phones to work correctly. I'll be spending more quality time working on the architecture documents I've been writing, in order to solidfy our hardware and software needs and describe how all the components work together.

I'm going to have to drop some of the consulting work though, I think. I need to free up time to work on my faltering personal life, and even $60 per hour doesn't make it terribly lucrative to continue this stuff. I like my customer (since the others are friends, I don't charge them my full rate). It just requires a bit more involvement than I can justifiably give right now. That move is still under consideration.

As for the rest, its still madness. I'm just trying to hang on now. I swear I'm so inclined to take 2 demerol and some Ketel One and call it a lifetime. But I've made commitments to people, and I'm intent on seeing those through. And I guess some people might miss me too. Otherwise, I don't know if anything is worth it. Life sucks.

Until next time...

What The Markets Know Isn't Worth Knowing

This is part I in a series by Bennet Sedacca running at Minyanville. Reading this made me feel that much better about exiting XLP recently. Now the question becomes where does the next opportunity lie?

This is even more relevant considering some of the other moves I'm looking at in the near future.

Decisions, decisions.

The New Income Reality

As determined by my real estate partners and myself some months ago over dinner during one of our weekly meetings...

"$200,000 is the new $100,000".

I think that says it all.

We're all fairly well compensated, but not at the level we'd like to be. That next jump is a big one. People have been saying that $100,000 doesn't go as far as it used to. Damn skippy! I understand the hedonic treadmill argument as well, but I'd primarily like to make more so that I have more to invest and save. I'm not so much interested in consumption right now, unless its consumption on experiences. Otherwise, let my assets grow. I have a goal to not have to work for anyone by age 35, and I'll be damned if I'll let shiny stuff get in the way of that!

I'm sure the Brits or anyone paid in euros is feeling the same thing. 100,000 of any currency just doesn't have the pull, never mind cachet, that it used to. Sheesh, can you even imagine when those 6 figures might have meant something to someone? Now its a rounding error to the up-and-coming denizens of Mayfair, London. How sick is that!?!

(I like Mayfair. Its a charming area. Spent a few weeks there back in 2000. Now my weekly take home probably wouldn't cover a night in the same hotel, if it even still exists.)

And it looks like the syndrome is spreading!

I'm not going to delve into the economics of this phenomenon here and now. But if it isn't palpable to you, you've got your head up your ass. At some point, something will have to change. For me, all I'm worried about right now is making as much of that paper as quickly as possible, and getting out before the whole system implodes.

$200,000 here I come! And I don't care if you're ready for me or not!

Until next time...

Net Worth Update

Damn!

It really has been 4 days since I last posted. Fugg me!

I've spent a lot of time over the last few days tweaking the sidebar, and I think I've finally achieved 85% of what I want. I basically want this site to be a reference site for me when I have time. Yes, I know, I could turn to good ol' social bookmarking, but I like hacking on HTML (a little). Besides, I don't particularly care for reimporting bookmarks into yet another application - a website no less. Maybe it actually makes things easier, but right now, I prefer how I am doing things. I don't find it to be so much of a hassle.

Anyway, time to update my net worth stats. It has been a while.

My net worth, based on the check I just received (thank you Direct Deposit) comes to $106,177. Most of this has come from both decent investment returns, with a fair amount of international exposure, as well as a strong savings plan. I have some investment real estate, but the bulk of my accountable real estate exposure comes from a REIT inside of my 401(k) - the Phoenix Dodge & Phelps Real Estate Securities Fund. The real estate investments with my partners are still valued at the the level of cash investment made, since there really isn't any audited information to use.

(Bloody friggin' accountant. Should go burn down HIS offices! Now the guy is moving offices, in the middle of tax season! WTF? If you can't do the job, just say that so I can find someone who can!)

Anyway, there are some major caveats to this which I must disclose. I do not own a home of my own, so all of this net worth is cash, investable assets and retirement investments. I do include the $5000 value of my car, which is a guess, but hey, its something. Right now, I'm counting it. I could sell the car and likely get more than $5000. Maybe 1 day I'll feel comfortable valuing it at $1, but not right now.

I've also valued my commodity futures account at $0. I don't expect to see any dollars make it out alive. Oh well. I could be surprised, but I know options expiration is right around the corner. In fact, it may be today! Since I already have carryover losses from last year, this isn't appealing.

(And I'd get my money back from the Feds if the friggin' accountant had the K-1 finished, but who knows when that'll happen.)

My laptops are also included in there. My old PowerBook G4 is estimated to be worth $500. It served well since I bought it in August 2002. If I could get more for it, great, if not...well, maybe I should just mark that down to $1 too. The MacBook Pro on which I am typing this missive is worth roughly $1500 in resale, but thanks to the courtesy of wealthier-than-me friends, I paid $1000. (Thanks G.!)

Finally, I've got a CD ladder for which I have not received (or can't find) the latest statement. It was a horrible financial mistake gone awry in a rising interest rate environment, but hey, you live and learn, right? If there is any easing anytime soon, maybe it'll actually take a turn as a bright spot in my portfolio. However, if a CD ladder is a bright spot, then the world is pretty fuggin' bleak. I've had enough bleak this year.

Once my AmEx bill hits in the next few days, these numbers will adjust downward. Even after that adjustment, I'll still be over $100,000. That's the best part. Onward and upward, baby!

I do see a re-balancing coming in the near future. Many of my investments are WAY over their allocated targets as a percentage of my consolidated investment portfolio. That might be an exercise for the coming week.

Anyway, I think that covers the major points. Still grindin' over here. So until next time, good people...

Seeking Energy Funds

So here I am with a little cash that I'm interested in putting to work, and so far, I find no good ideas in the energy arena. Ugh! I'm going to keep searching, but this clearly could take a while. Sheesh! Does anyone have any good recommendations? I'm looking for drillers and oil services as the top holdings, decent expense ratio, and $100M - $3B in assets. Doesn't have to track and index but if it does, that's fine by me.

Oil, Guns and Money

A quick take over at Minyanville (I don't visit these guys enough) from last Friday on what the future holds, along with a peek inside Michael Moore's investment portfolio. Did someone say Halliburton? Ha ha ha!!! Too funny. Hypocrites abound.

Recent Changes

You'll notice I'm in the process of updating the sidebar. Please feel free to comment on my choices of sites to link to, or recommend others. I've also added a new label - Entertainment. This is not to label posts which I find entertaining but to organize posts that deal with the intersection of finance and the entertainment industry. So let me know what you think.

As I said, coming up soon is a net worth update. I'll admit, I've hedged on that a bit, trying to make sure the numbers are duly impressive (to me anyway). It will be coming soon, I promise! Maybe sooner than even I think. I'll probably find a way to slip in some updates on the business as well. And has anyone been watching the grain futures recently. Maybe I have a chance of getting out with a few bucks after all. We'll soon see.

*shrug*

Until next time...

Hedge Funds go Hollywood

A new piece, by way of Fintag, about Tom Cruise's row with Viacom and hedge fund financing in the movie business. An entertaining read, but I think we've talked about this before.

New York Mag's Hedge Fund Guide

I would imagine most of you have seen this piece at New York Magazine. Interesting stuff, even if breakingviews was a bit critical (subscription required). Yes, its subjective, but no less fascinating, even if only for the speculation value. We have to get our jollies somehow, dammit!

Blame the banks!

I think the only thing this case shows is that most people are investing in vehicles that they shouldn't be investing in. Its not the job of the underwriter to protect you from your own stupidity. If you can't determine the suitability of an investment to you and/or your family, then you should find someone to help you do that. If you can't find someone to help you do that, then you probably shouldn't be investing in that vehicle. I don't see anything difficult about this. Ultimately, at the end of the day, you are personally responsible for your success or failure, because you have the choice to invest or not. Period.

Securitization Fever

I love it!

Anything that throws off free cash can be securitized, I swear! It makes me wonder how smaller enterprises might be able to adapt this securitization model to finance their operations. I mean, at what price (per dollar of funds borrowed) is it economical for a small (< $100M revenue) company to approach an investment bank to put together a securitization of some of their business operations. Clearly, this can be scaled up to a larger firm, but can it also be scaled down to a smaller one? Inquiring minds want to know.

Co-investing with Private Equity

This is a very interesting way (WSJ sub req'd) to juice returns. I just wonder if individuals, family offices, and the like (not professional investment firms or typical PE fund investors) could get access to these types of deals. What is the entry point? I'm not saying that I'm ready to sign up yet, although I wish I could. I just see this as being a very useful lever to add incremental positive risk-adjusted returns. Very cool, if you can get in on it.

Until next post...

Heads Up

You might notice some small changes on the right sidebar. (Like there is a left one! Sorry, it has been a long week.) I plan to eventually add an entry to the More Sites section for each blog which appears as a recommendation here. I'm looking at some other minor changes as well, but there won't (shouldn't?) be anything to be alarmed by. Just doing a bit of pruning. I want to make this a blog I would visit all the time, because that's why I originally started doing this.

In the near future, look for a new net worth update, and some other hopefully tasty morsels.

Until next time...

Grain Market Bounce

I found a pair of articles at Bloomberg and the WSJ (here and here [sub req'd]) dealing with corn. The WSJ bit is about rising food prices worldwide due to the demand for biofuels (mostly corn based in the US) as a result of rising oil prices. The Bloomberg piece is talking about the recent price declines in the corn market.

Whom to believe.

All I can say at this point that there is still no saving my wheat options. Unless we continue seeing price action like this daily through the end of the week, its a lost cause. This is the price of being too early. As all that farmland gets converted to corn growing, its going to squeeze out wheat and eventually you'll start seeing prices on other grains heading higher (again) too. Unfortunately, I won't be riding that move. I'll just close out my account and call it a learning experience. Once I have some time in the future, I can come back to the commodities markets and really learn how to trade in them. But not now.

There's always the software business. Right?

Until next time...

AHM Cuts Quarterly and Annual Forecasts

A funny thing happened on the way to buy some shares in American Home Mortgage - they reduced their quarterly and annual earnings forecasts AND cut their quarterly dividend to $0.70 from $1.12. See here and here (WSJ sub req'd).

AHM is the company that most of the financing for my real estate ventures has been with. They are the company I am looking at structuring my first independent deal with. Along with my partners, we plan to use one of their programs for another house in Baltimore. Now, this may not necessarily be a problem in and of itself, from the RE investor perspective, but it is worth keeping an eye on. As for picking up some shares with the proceeds of my XLP sale, we'll have to see how that goes. Looks like gold may be moving back to the top of the list after all.

The dividend is the really upsetting part, only because of the yield. The yield on AHM has been sick. I'm glad I didn't go rushing into the stock the other day. I see a better entry point on this stock in the future. The entire situation is made even funnier by the fact that XLP has been going up fairly consistently since I sold. Guess I was bit early on that one, but I'd rather have the cash now, as I expect opportunities to deploy that cash in the not-too-distant future.

Until next time...

Ken Griffin profile at the NY Times

Today's NY Times has a nice piece about Ken Griffin of Citadel Investment Group. A quick yet awesome read! Just the wake up I needed.

Latest News

I'm not sure I brought this up, since so much has happened recently, but I finally filed the papers for my personal LLC. This will be the vehicle for my personal real estate investments, as some things just don't fit within the partnership. Right now I'm working on acquiring a portfolio, or pieces of a portfolio, of properties in the Prince George's and Montgomery counties in Maryland. We'll see how that works out. I'm just taking it slowly right now, so there hasn't been any movement to speak of. Hopefully tonight I'll be able to work on the EIN application so I can get the first bank account opened by week's end. There's an out of state project coming up that I want to be prepared to move on. Even if that rehab doesn't work out, I anticipate that there will be others very shortly.

I just called my commodity futures broker today and found that my guy, who initially solicited me, has left the INDUSTRY! Fugg me! Guess all those bogus wheat trades finally got to him, never mind what they did to his clients. Well, there will be more losses to push forward for tax time in the future, then I'll close that account. It just takes too much time to manage that with all the stuff I have going on. That will just be one less area I need to devote attention too, so I'm not too mad. It won't have extensive impact on my overall financial situation. It was an interesting experiment with money I would have preferred not to lose but that isn't hurting me for being gone.

I liquidated my XLP holdings on Monday. I wanted to have some cash on hand for other things, either some options or small stock plays. Right now, I'll just sit and wait until something interesting comes along. The consumer staples weren't doing a whole lot, mostly because of Wal-Mart I imagine. It was good for a small gain, taxable at 15% for long term capital gains. Maybe I'll add some gold to the portfolio. Now I just have to complete the equity options application already.

I don't think I have any more expenses which I can cut back on. My USENIX+SAGE membership expires in August and I don't see a renewal in my future. I'm going to simplify my financial life to its barest essence. I keep poring over my spreadsheet looking for every expendable expense, or areas in which I can reduce my committed capital. My net worth is on the cusp of 6 figures; now I just need to drag it over the line and keep it there.

In the middle of all of this, I had the realization (again) that the biggest impediment to getting rich is my J.O.B. Dammit!

Until next time, gentle readers...