Housing Slump Saga Continues

On the topic of buying my own place, it has always been my thought to wait until half way through next year to make a decision on buying. This MSN Money article, House prices expected to fall until 2009, reaffirms it for me.

“It’s going to be a long time before we see it bottom out and recover,” said David Lowman, chief executive of JPMorgan Chase’s Global Mortgage unit. “There’s too much inventory already in the marketplace.”

Lowman and the three other participants in a round-table session before most of the convention’s 4,000 participants differed slightly on the size of price declines still upcoming, but they agreed no price recovery is likely until at least 2009.

“I think this year we will see a 2% decline in national home prices, and we’re projecting about a 4% decline next year,” said Thomas Lund, an executive vice president at Fannie Mae.

Prices likely will flatten in 2009, Lund said, before gradually rising.

Lowman said it might be 2010 before the price decline ends.

This is not hard to imagine, because it is only since last year 2006 that the rate has begun to reset for many home buyers with ARM. Those ARMs are borrowed on a fixed rate for either 3-year or 5-year for many people spreaded over time. Hence, it is not difficult to imagine that as many more of those ARMs’ rates get reset in the coming years, there will be more defaults and foreclosures following. Together with an already over-supplied market, housing price is bound to drop further

So honestly speaking, who knows when the housing market is going to bottom out? Nonetheless, that is my vision and what I believe. That is the reason why I am waiting until next year to get a better perspective before making a decision to jump into home-ownership.

There is no hurry because while I wait,I will continue to put my money to work in some high-yield saving accounts and stocks/funds investment.

Originally posted 2007-10-27 13:08:41. Republished by Blog Post Promoter

The Law of Relativity Applied to the Dollar

The theory of relativity is one of Albert Einstein’s greatest achievement. Today, I apply it to our perspective on money to explain the pay for being directors and CEOs. And don’t miss out the wonders of CEO perks.

From $21,000 an hour, at your expense:

In 2006, the latest year for which numbers are available, 85 corporate directors took home more than $1 million.

From Is a CEO worth 364 times the average Joe?:

Top execs at Fortune 500 companies averaged $10.8 million in total compensation in 2006.

In terms of relativity, the passage of time is drastically different from someone sitting on an Herman Miller chair to someone sitting on a porcupine. Likewise, the value of money is different for owner of an Enzo Ferrari vs. owner of a 20-year-old rusty beat-up Corolla. In literal terms, for commoners and middle class folks, including myself, a dollar is just a dollar, but for the people who peer down on earth from Mount Olympus, they speak in terms of thousands. Base on the said theory base on relativity…

Directors who earn $21,000 on an hourly basis, that is a whooping $21 dollars. That’s a couple happy meals there.

For CEOs who make millions each year, their salaries are reduced to a couple thousands dollars. Ah, poor bunch living in poverty. No wonder they needed company-sponsored social security. With high inflation and increasing energy cost, I see them needing help from their companies more than ever.

Now that we have applied relativity to the dollar, those people no longer sound so impressive. That should bring us some solace and comfort knowing that they feel as poor as we do. Yeah! It has also become clear why they strive so hard to become billionaires because it’s no different from us trying to become millionaires!

And guess what, today’s Dilbert comic ironically is on the same topic!
dilbert20080146685118.gif

Below are some notable(laughable) perks mentioned in The worst CEO perks, though I beg the difference and would title it best instead of worst. And if you apply relativity to all the numbers by removing the last 3 decimals, then all the perks will make perfect sense. In fact, they are of the same value as the perks the white collars get – unlimited supply of paper, staples, post-its, and what not. More fortunate ones may get international long distance phone calls, like CEOs with their private jets.

  • Chairman and former Chief Executive Vincent Gierer Jr. [of UST Inc.] got $6,500 for his wine allowance, despite making more than $6 million.
  • At Anheuser-Busch, execs enjoy unlimited free beer “for personal use and entertaining.”
  • Shareholders of Nuance Communications footed the $25,911 bill for a personal assistant used by Chairman and Chief Executive Paul Ricci. [And his] $3,896 tax bill.
  • Motorola executives get personal health coaches.
  • i2 Technologies paid $942,000 to shuttle CEO Michael McGrath back and forth from his home in Maine and his office in Dallas during the year.
  • United Technologies CEO George David wasn’t far behind. His shareholders forked out $612,000 in 2006 for his personal use of the corporate jet.
  • Even CEO Martin Glynn was paid $13.8 million in salary, stock incentive grants and other pay in 2006, HSBC paid him a $177,600 rent allowance, plus an additional $150,000 to cover the tax on the value of the rent.
  • Liberty Media shareholders last year chipped in $319,278 to help Chairman John Malone pay his taxes.

After reading all that, let’s begin singing what I learned in singing class, “Oh what a wonderful day~~~”.

Originally posted 2008-01-18 15:48:13. Republished by Blog Post Promoter

Market in Chaos, Rate is Falling, Invest or Save?

It sounds like the world is ending out there these days. And people are not happy if they do not freak out like chicken without head for a day. It’s a party out there. Actually, it’s the crashing of a long lasted party out there.

Regardless, I guess everyone’s wondering what to do with their money these days, if they have any left over that is. I hope that you have been nice with yourself and saved money and avoided debt like my blog and many PF blogs talk about out there. Yeah, I know it’s boring, but you gotta do what you gotta do.

I don’t usually talk about investing much because I am no expert. I simply have some experience from the last 2-3 years of participating in the market. At the same time, there are many more resources and blogs written by people with expertise. Though let me share a little bit today…

Despite all the chaos and bawling out there, I will simply continue doing what I have been doing – putting some money in saving and investing the rest. In fact, I will put what I can afford into stocks and index funds as they keep falling and into bargain price, given that I am in it for the long haul. Plus, the banks’ savings rate will soon follow the massive rate cut by the Fed.

Simply put, long term is the simplest way to go. Trying to time the market is more or less gambling (been there, done that). It takes time and effort and is not even worth it, especially for my lazy behind.

If you don’t trust me, listen to the great “Sage of Omaha” Warren Buffet:

I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.

If a business does well, the stock eventually follows.

Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.

Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.

Never invest in a business you cannot understand.

Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.

Our favorite holding period is forever.

So invest in stocks(companies) that have solid foundations and hold. Personally, I like to find them with dividends. Or to make things easier, you can put your money in various index funds and just wait.

But before you go diving in (now or ever), there are prerequisites:

  • You can feed and put a roof over yourself and your family. You may think this is silly, but if you think about what a silly gambler husband/wife/father/mother/sibling can do to a family, it’s not so funny anymore.
  • You have a certain amount of saving. They call it emergency fund out there, and it should include 3-months or 6-months living expense. To plan for the worst, save enough so you feel comfortable even if you lose all the investing money.
  • You have minimal bad debt. This includes the ones without tax deduction and with high interest rate.
  • You are not emotionally attached to the money you invest. This is why I said you need to have a comfortable amount of saving. Also in other words, don’t gamble with your shirt, or you most likely end up…naked. This will prevent you from freaking out like others and moving money around to “unintentionally” time the market.
  • For the sake of long term, invest money that you won’t need in the next 5-10 years.

Yes, it’s not a good feeling to see BOLD RED across the portfolio, but once you learn to look 5-10 years down the road, it’s not so bad. Okay, I’m done with my investment talk and probably for the last time :P

One last word, investing is supposed to be simple.

Originally posted 2008-01-23 01:13:57. Republished by Blog Post Promoter

To Give is to Receive

Thanksgiving is just around the corner. So let me take the chance to touch on the subject of giving today.

People always say “giving is receiving”, “it’s better to give than to receive”, “to give is to receive”. But why? Don’t you hate it when people say it, and you just have to agree, even though it may not make too much sense to you. You don’t understand why, but you have to nod your head anyways. Well, I hate that, and seriously, I don’t know if it makes sense to them when they said it either. Perhaps they say it… just to say it. So annoying. So despicable. So stupid. I’m just kidding.

Now following, I will share what I think about “giving” and how exactly is “to give is to receive”.

First, I declare that a prerequisite to achieve the concept of “to give is to receive”. The prerequisite is the ability to accept complete responsibility for your own action.

All of you out there, all of us, the entirety of human beings need to come to the realization that of accepting full responsibility of actions and so, whatever you do is your own choice and you must be responsible for the consequences. Now translating that, every time you give, it needs to be a direct result of your choice and your choice only, not because of obligation, not because of guilt, not because of expected return, etc.

By making your own decision to give, you can reap the full benefits of giving. You give because you are free and able to do so. You give because you have compassion for your fellow human beings, be it family, friends, or complete strangers whom you give to. You can then feel fully satisfied of yourself because you made your own choice to give, to help others, and that sense of satisfaction and joy is NOT a selfish result. You are giving because you WANT to.

Selfish is what? Selfish is when you give to expect to be given in return. How often you see people around you who give love and expect love in return, and how many of those are healthy relationships? You give because you love that person and if that person loves you in return, that’s great. If they don’t, it’s unfortunate, but if you continue to give to further expect something in return, that is not only selfish, it is also a self-destructing behavior. This is why people who truly love are the independent ones who are capable to make each choice in their life while accepting full responsibility for their own actions.

Nor shall you give as a result of guilt or obligation because that will also lead to similar result, where you feel that you have been taken advantage of, or that the other person owes you. That will become burden, which can easily cause you to feel like a victim in the future.

“I help him this time, he should help me in return next time I ask for favor.” We probably have all thought that. We’re only humans. Well… don’t. Stop it. You helped your friend because you chose to and that you will be happy to have done it. That’s receiving right there.

It is okay to accept gift, free meal, or help later if the other person chooses to do so in return. Just don’t expect so, or you are setting yourself up for disappointment, and disappointment is definitely not a form of “receiving”.

In short, to give to rececive, you must make your own decision to give.

Give to be helpful for others.
Give base on a sense of genuine gratitude. (Thanksgiving!)
Give because of compassion.
Give because you want and choose to.

Originally posted 2007-11-08 01:08:13. Republished by Blog Post Promoter

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