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lurtsman

lurtsman
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  • How Big Of A Slice Is In Your Intelligent REIT Portfolio? [View article]
    Quick question for the author. In your scenarios, how frequently are you having the portfolio rebalanced? If you're initial results were without re-balancing, how difficult would it be to model it with monthly or annual re-balancing?
    Jul 24 11:46 AM | Likes Like |Link to Comment
  • Understanding Ethanol Economics: It Will Make Your Eyes Bleed And Blood Boil [View article]
    This was an excellent article. Thank you.
    Jul 24 11:40 AM | Likes Like |Link to Comment
  • High Frequency Insider Trading - And It's Completely Legal [View article]
    They don't analyze it the human way. They use computers set up to look for key words and analyze documents to register all the relevant information. In particular, with economic reports, it can be set to identify the relevant portions of the document and pull that data to update the models they are using to predict the value of stocks. Once the computer updates the model and has the new expected values, it can buy the stocks that are not priced correctly according to the newest information.

    It isn't about starting to read a second ahead, it's about designing the program that read it all in a small fraction of a second, update the models, and enter trades in less time then it takes you or I to open a browser.
    Jul 14 04:41 PM | 2 Likes Like |Link to Comment
  • What Will $2 Million Get You In Retirement? [View article]
    If those were nominal returns, a negative return on bonds when inflation adjusted bonds are available seems a little too conservative to me.
    May 19 01:27 PM | Likes Like |Link to Comment
  • What Will $2 Million Get You In Retirement? [View article]
    This is exactly what we are doing. My wife is a nurse and I'm working on my MBA. While I'm a full time student we are still maxing both IRAs (with only one income) each year and paying off the loans we needed for her degree. It's really a simple matter of buying our cars private party with cash, buying a house we could afford (3.375% and low taxes), and then limiting ourselves to a budget of about 50 bucks a month for entertainment.
    May 17 10:27 PM | 3 Likes Like |Link to Comment
  • What Will $2 Million Get You In Retirement? [View article]
    If the mortgage rate was under 3%, would you want to? I'm planning to hold onto my mortgage as long as I can. If you can reliably find higher yields (adjusted for variance) it seems worth holding it. Granted, if you've owned the house for 15 or 20 years, the principal may be mostly paid off already and the rates may be higher if there has been no refinancing. It seems if you held a 30 year mortgage for 15 years you'd want to refinance to the current 15 year rates and be paid off in the same time with a lower payment.
    May 17 06:33 PM | 1 Like Like |Link to Comment
  • What Will $2 Million Get You In Retirement? [View article]
    70,000/year in retirement and it doesn't cover much of what you want to do? Assuming they paid their house off, the actual annual expenses for living are closer to 25000/year if they live in a lower cost area. If they live in San Fran, they could always move.

    I agree with your basis for coming out ahead on LOC vs yield, but I'd suggest instead buying a new primary residence and mortgaging it then renting the old one out. They could run a 15 year on the new property at 3% or less. The steady interest rate combined with a rental property which would provide income that fluctuated with inflation should reduce the volatility of their total investments so they wouldn't be reverse dollar cost averaging out of stocks.
    May 17 06:26 PM | 1 Like Like |Link to Comment
  • Social Security Changes: A Recipe For A Demographic Disaster [View article]
    The smartest young people are already opting out of social security taxation. It only requires 40 eligible quarters to qualify for social security, and the less you pay in the higher your return on investment. Even though the benefit varies based on your input, the correlation is less than 1. Therefore, young workers who qualified by working as a teen and in their early 20s can remain eligible while switching to government jobs or finance jobs where the rest of their pay will be immune to these taxes. The bulk of the income in the country goes to the rich through various forms of gains that are not touched by social security. The next generation of the wealthy understands and is already avoiding this tax on labor.
    Apr 25 01:40 PM | Likes Like |Link to Comment
  • Social Security Changes: A Recipe For A Demographic Disaster [View article]
    It would appear seeking alpha should have paid you, rather than the original poster, since you have a much better grasp of logical discourse and critical thinking.

    Thank you for making the reply, which was in the minds of so many readers.
    Apr 25 01:35 PM | Likes Like |Link to Comment
  • Recent Strength In Housing Will Reverse Unless Employment Improves [View article]
    I bought a house because it made financial sense to do so. The risk to ownership cost was very clear. I could get far more house while owning for the same monthly amount leaving my checking, and hundreds of that went into equity.

    I also brought in a friend to be a roommate in the new large house I purchased, which helped the economic picture. Ultimately, housing is likely to recover because the number of people needing housing is increasing. Temporarily we may fit more adults into a single house, but there will be a strong desire to have a place of their own.

    As a side note: I made sure to purchase a house for less than it would cost to build the house. So long as that is the case, dips in housing value should be temporary. New houses will not continue to be built at a loss. If prices remain low, I will be able to buy investment properties.

    It's a cash flow situation. Cash flow on rental housing is positive, so there should be a significant resistance to further housing declines so long as the cost of ownership/financing does not rise significantly.
    Feb 28 01:31 PM | 1 Like Like |Link to Comment
  • Home Prices - Is The Boom Back? [View article]
    Great point greenriver.

    I'd like to make a small counter point on the argument for purchases though. I'm one of the people that bought a first house in 2012. I knew that it was possible for prices to decline further, but I thought it unlikely that the product of prices and interest rates would fall significantly. As long as the owners are either long term home owners or investors planning to hold for the long term (10 years plus) even a drop in prices of 10% over the span of 4-5 years wouldn't be enough to make the decision to purchase worse than the decision to rent. The financing is attractive enough to offset potential losses so long as the house is actually being used to either acquire rent or protect the owner from having to pay rent. If there is no stream of cash flow in, or the investment is for a short time, then the risks of price change and costs of transactions would out weigh the benefits of financing.

    Had I been renting a similar house, after buying my monthly costs would have been reduced by around $400/month. No taxes advantages are being considered in this scenario, and to account for the potential decrease in prices I have ignored the build of equity as the value of the loan decreases. If that were included, the benefit of buying over renting would have been equal to about $750/month + the long term appreciation - the fees from the transaction. Therefore, to have my personal networth decline on a month over month basis as a result of owning instead of renting the property would have to decline at a rate of 3.9% per year. Of course, a month over month scenario ignores the fees associated with purchase because I can not reliably state the holding period.
    Feb 6 03:07 PM | 1 Like Like |Link to Comment
  • Fundamental Analysis Isn't Just About Financial Statements: A Look At Cloud And Solar Stocks [View article]
    For the sector capacity exceeds demand. We can tell this because the cost of the final product is less than the cost of production. Either demand must increase significantly, or production must decrease. I would be considered about the management that is choosing to ramp up manufacturing capacity unless they are doing it by purchasing equipment at steep discounts.
    Jun 6 03:47 PM | Likes Like |Link to Comment
  • Fundamental Analysis Isn't Just About Financial Statements: A Look At Cloud And Solar Stocks [View article]
    Gumby,

    I'm concerned by your grasp of macroeconomics. If someone is going to be paying rent in twenty years while living on social security, they are not going to represent a significant share of the reading population on this website.

    Further, dumping panels at significantly below the cost of production is making for a viable investment here that otherwise would not exist. Most of the jobs are in installation. We had a booming sector in installation allowing the Chinese to use tax dollars to subsidize (supposedly) the makers of panels. Those makers bought several of their raw materials from us, used Chinese taxes to pay part of their cost, and then returned the product to us. That was a transfer of wealth to us, not away from us.

    The greater opportunity for the individuals in America comes with the invention of panels that we can simply take home and plug in. They can carry them at lowes, home depot, etc. When customers don't have to pay for the sector that does the installation, they will take up the panels in massive numbers. Why? Because solar panels make financial sense IF you are using a small set up to augment power generation. The panels are expensive, but the electricity is generated at the time when it would be the most expensive to buy. The goal isn't to go entirely off the grid, but to reduce consumption during peak hours.

    We aren't there yet, but the advantages are coming. Keep in mind that energy prices go up (historically), and that energy bills are not tax deductions for individuals. Therefore, any energy saved represents an after tax gain. Once they mass produce small systems in the 1-2 thousand dollar range, they will have an enormous market. The products will serve like a long term bond. The effectiveness of the panel goes down over time, but the price of electricity goes up. I don't pretend to know which one will outpace the other, but we are looking at some serious potential for future growth when we can manufacture the entire thing in a factory and take it home in a box rather than pay contractors to come out and do the work. I'm long on a few Chinese solar stocks because I believe they will figure out the necessary system. The tariff doesn't seem too hard to circumvent, though it was certainly an astounding display of ineptitude in regulation. Should anything inept in terms of regulations be classified as astounding? Perhaps not.

    I am confident that China will keep the sector alive. I consider the biggest risk to be that China will design a restructuring that wipes out (steals) all shareholder equity. The irony then is that they would reward the very fund managers that they denounced for shorting the stocks.

    Finally. Social security checks come in the mail in 20 years? Checks will be abolished in less than 2 years. Social security won't last much longer in the current form. Inflation (not the CPI, but real inflation--you can't eat an Ipad) is already dramatically reducing the value of the pay outs from SS.
    Jun 6 03:45 PM | 1 Like Like |Link to Comment
  • First Solar: Don't Get Caught In This Mess [View article]
    Given the issues FS panels have had in the heat, why would Saudi give them the contract over a major chinese player that can provide a higher quality product that takes less place and requires less repair work?
    May 31 11:20 AM | Likes Like |Link to Comment
  • How 7 REITs Could See A Buying Frenzy Soon [View article]
    I'd be interested to know the life of the securities that AGNC is holding. If the mortgages they hold are prepaid they would face a decrease in spread, but if they correctly predicted which ones would not be pre-paid they would not be impacted by the move. When rates go up the long term rates will go up as well--the question will be how well AGNC can unload the low interest bearing debt so it can load up higher interest debt and how much of that high interest debt will be available relative to the amount of mReits clamoring to purchase it.

    Recognizing those risks, I remain long AGNC. I have some faith in their ability to judge which investments to take and faith that neither party would approve a higher short term interest rate while their president is at the helm because of the impact short term rates have on domestic spending through investment levels and multipliers. Those rates won't go up until the inflation starts hitting, and when it does hit hard it will be demand pull inflation. That means we'll have leading indicators from the employment numbers going and the macroeconomic behavior submitting to Okun's law.
    May 27 06:32 PM | Likes Like |Link to Comment
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