Saturday, November 24, 2007

Personal Round-Up: November Edition Part II

Ahhh! Where were we?

Yes, I believe I was going to talk about real estate. Things have been markedly slow on the REI front, although I just got a lead on a nice deal around Baltimore that I have replied to. The price works, and I know I can get the financing even if I can't put any money down. Again, the importance of that clean credit cannot be stressed enough!

Anyway, the deal is a duplex which is being rented out for a decent (not great) amount. It should cash flow however, which is most critical. Both units are 1 bedroom/1 bathroom. I'm still gathering information since this just slid across my inbox earlier today, but so far, I'm such a "YES!" on this deal. I've e-mailed my contact with some questions and we'll see what the owner comes back with. I do like this deal a lot, but like any other deal, I'm not in love with it and I won't allow myself to fall in love with it.

Its funny though because the real estate partnership I am part of has been more active in the weeks since we agreed to turn down the LLC than in the months prior. WTF??? Isn't it supposed to be the other way around? Had this much energy and effort gone into things before, we probably wouldn't have decided to shut the operation down in the first place.


I've also had some interest in some of the domain names I have available for sale. Its slight, so I won't go into a huge amount of detail, but it looks like I may have found a potential partner to help me get some of these either sold or leased. We'll see what comes of that next week. This is the reason I don't like holidays -- it slows down the flow of business.

My modeling efforts have come to a bit of standstill over the last few days, but I'll get back to work on them starting tonight. I borrowed a model from RedBrick Partners for rental real estate cash flows, and that's my primary model right now. The model I have been developing takes a lot of cues from RedBrick's model, but adds some personal twists. I'd go so far as to say that it is far more conservative than RedBrick's model. That only makes sense, because the numbers should expose a deal as being a win or a loss. I really don't want to have to visit a property to make that determination, and so far, I think the RedBrick model is the best I have seen. Once I mix their methodology with my personal experience, I think I'll be able to achieve the kind of reliable value estimates that will give me a real advantage.

As for my equity valuation model, I am seriously behind on constructing that. Right now, it has a deep value bent to it, but I want to add some growth factors. I really have to do some digging at this point, some hardcore research, because CAN SLIM and other well known factors are only going to yield alternative betas at this point. I'm hunting for real alpha, not beta in alpha clothing. So this will be a bit of a back burner issue for now, while I sort out some other things. I guess I'll finally get a chance to play with Trade Strategist now though, as I start backtesting some proprietary factors. Woo hoo!! (Aside: I REALLY should have gone to the AlgoTrading conference last month! Damn! That's what I get for being reasonable.)

So the recent market action has been pretty painful. We've seen a lot of "buy the dips" days after the swoons, but I really think those BTD folks are setting themselves up to get hurt. I think Bonddad has pretty much summed that up perfectly. As I said in part I of this missive, unless you've found some hidden store of value somewhere, its probably best to just accumulate cash right now. You really have to wonder how brainwashed people are to continue buying in the current environment. More power to 'em. God bless 'em. I just don't have the same conviction about US equities right now. Since I do have a few international bond funds in my sights, I think I'll spend some time tonight and tomorrow reviewing their holdings to see which ones look to benefit from rate lowering by foreign central banks.

As for me, I have to admit I had a pretty good day today. (Saturday, 24 November.) I was able to clean up the whole apartment pretty much, get out and buy some necessities, update this blog, and a whole bunch of other little things that were waiting to get completed. Now, I'm going to bed. I've got to be at work in a few hours.

Until next time, gentle readers...

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