Jon Smirl

Improving Fundamentals Send Sirius XM Radio Higher

It they'd make a music only package for $20/yr I'd activate the receiver in my car. I can't justify $120/yr for background music 45 minutes a day. The alternative is radio and hit the station change button every time a commercial comes on.

Intel: Growth Has Been Formidable

If ARM based netbooks are successful it will be a disaster for Intel and Microsoft. The lure of sub-$300 notebooks is a strong one. Google holds the keys with ChromeOS which also runs on ARM chips.

Note that ARM chips power most cell phones. Which design is a better platform for the netbook? Trying to shrink Wintel or growing the very power efficient cell phone larger? Both can be done but my money is on the ARM CPU.

Intel may lose in both cases. They lose if ARM wins. They also lose if ARM causes the margins on their CPU chips to fall to zero. We won't know the outcome of the netbook war for another five years.

More On the Benefits of Smart Rail Transport Policy

Expand the Amtrak auto train like the one from Washington to Orlando. Everyone likes them and they are profitable. They are sold out continuously. An obvious expansion is another terminal further north near NY/Boston.

What REALLY Caused the Mortgage Crisis - And What to Do Now

Little to nothing down allows you to gamble with "other people's money" (think hedge fund operator). You couldn't lose in this gamble. You captured all of the upside and if a crash occurs foreclosure has little cost (ie hedge fund shuts down). Everyone will always gamble with other people's money if given the chance.

Home owners should not have been given this chance to risklessly play with other people's money. The system broke down when these loans were made available, in a rational system you should not have been able to get zero down loans. Once these loans were available the sudden change in demand caused a feedback loop price spike (aka bubble).

The fraud occurred when these risky loans were obfuscated into AAA paper. It took very smart people to do that. Without this step the bubble could not have happened since there wouldn't have been a large supply of loans.

Did these obfuscators knowingly game the system and count on the "Fed put" to save everything after they had extracted billions in profits and retired?

The (Unhappy) Results of Low Interest Rates

Watch the video, the commenter states that the homes were not finished. I can understand this, the bank concluded that it was not worth investing the money needed to finish the homes. Maybe the land is more valuable for another purpose.

If the houses were in good shape why didn't the city take them for public housing? Cities have to pay for public housing, it would make no sense to turn down free housing.

Housing Chart of the Day

The GDP number is likely to rise. It all won't come out of housing.

When Will Housing Prices Return to Previous Highs?

In a 10 year time frame inflation is going to come into play. How much inflation is $2T in government spending going to cause? George's brother's rent will increase with inflation. George's house is going to inflate and he will be paying that loan off with inflated dollars. 5% compounded over ten years is 62%. 8% is 215%.

Also, a major of those 4M homes for sale are owned by people who will buy another property immediate upon sale.

Smallcaps Flush with Cash

Intellon is a real semiconductor company. They make the chips used in powerline modems. If you need an Ethernet jack in a room that isn't wired, get a pair of these. They act like an Ethernet extension cord.

www.newegg.com/Product...
Available from many other vendors like Linksys, Netgear, etc.

Smallcaps Flush with Cash

I only got a +1 for this tip. Stock is up 340% in two months since I posted. There's still more upside.

On Mar 31 10:58 AM Jon Smirl wrote:

> Intellon (seekingalpha.com/symbo...) - Mkt cap $57M, cash
> $54M

High End Home Market Still Has Further to Fall

Renting has an implicit option contract built into it that is held by the property owner. Property owners will force the renters out when it is in their advantage. Stocks don't have the equivalent option - you can't directly compare.

High End Home Market Still Has Further to Fall

You are making a key assumption that is ignored repeatedly in renter equivalent arguments. The renters are going to get evicted when a buyer comes along. It is guaranteed that Tim is losing money on this rental and he would be a fool to sign a 30 year rental contract on these terms. The renters are getting a temporary deal because supply is high; they'll pay the price when they have to leave. But they know that and it is part of the deal.

There is a core difference between a house being temporarily rented while buyers are being sought vs permanently putting the house into the rental market. Some people I know are paying a house sitter to live in their $10M houses that is on the market. Does that make the house worth a negative amount? If so, I want to buy it.

The floor under high end housing is set by replacement costs. It is impossible to replace Tim's house for under $1,000,000. Don't confuse liquidity with value.

There have been times in history where replacement cost didn't hold, but those times are rare. For example, after the initiation of the US income tax many wealthy people lost their mansions in the Northeast. During the Great Depression these mansions were even abandoned. There has not been sufficient personal wealth again to trigger building houses of the magnitude seen in the Gilded Age. But Tim's house is far from being a Gilded Age mansion.

High End Home Market Still Has Further to Fall

There aren't very many people willing to rent $1.5M+ houses at $7,500+/mth. Most people with $7,500/mth simply buy the house. Since there aren't very many renters in that price range discounting is heavy since the alternative is no renter at all. I have friends that are currently renting a house that was on the market for $2.7M for $7,500/mth. But that's just because the house they own is being remodeled.

His interest rate is much more likely to be at 6.5% or higher for the jumbo and a second. He also had the pay the realtor a month's rent as commission on the rental.

High end rental markets are not liquid. They should not be used as a proxy for value. How many people do you know who with throw away $90,000/yr on rent? I think he did quite well to rent the house at $7,500, it could have easily gone down to $5,000.

The high end housing market is extremely local, I don't think you can draw conclusions from this. Moving a high-end house a half mile can take a million off from it's value.

Smallcaps Flush with Cash

Intellon (ITLN) - Mkt cap $57M, cash $54M

Semis' Downturn - Which Companies Will Survive, Part 2

Nvidia has a long term strategic problem which is going to be fatal unless they can come up with a miracle. The integration of GPU/CPU by Intel and AMD is going to alter the PC graphics market such that Nvidia can't easily access it.

AMD's ATI is also showing a lot of smarts. ATI is licensing their GPU design to ARM chip manufacturers. That will shut off another outlet for Nvidia.

Nvidia may have a couple more profitable years, but it is dead in the long run if it can't come up with a solution for this trend.

This is Moore's law at work. Each year Intel/AMD get more and more transistors to play with. That means that all of the chips around the CPU will get integrated into the CPU sooner or later. Remember the floating point coprocessor? It's pretty much extinct. GPU is on the same path.

Besides, it is way inefficient for GPU memory to be off on the PCIe bus, it belongs over on the main memory bus. Integrated GPUs will be better than the current standalone ones when this process reaches completion.

How About Adjustable Principal Mortgages Instead?

"The cost of these put options could be passed along to the consumer in the form of a slightly higher interest rate"

Yes you could build this. It's not going to be a slightly higher rate. Either you buy a 30 year put (expensive) or multiple short term ones. The price of multiple short term ones is going to spike during a recession. Passing the cost of this on as a variable payment means that your payment will also spike upward in a recession.

You can't make the risk go away, somebody (lender, government, home owner) is paying a premium for it whether they know they are or not.

The perfect form of this is to put your down payment in a savings bond and rent. Now you don't have any capital risk.