Yes. Yes. Yes. You can feel the resurgent economy. Deals are getting done. The banks are lending money. Startups are exploding. Corporate sales (and often earnings) are buoyant. Happy Days are here again — with a BIG BIG caveat. This is not 2005 or 2006. You can’t buy today and sell tomorrow for a 40% profit. This “new” economy rewards hard work and serious, tedious analysis/due diligence.
The deals are weighing my desk. I haven’t had this inflow since 2005/2006. There’s no difference in the promised potential of these deals. They’re all going to make me rich beyond my wildest dreams. The only difference is that I’ve learned to say NO. I’ve also learned that 99% of startups don’t make it, largely because they don’t have decent marketing management.
I’ve learned that deals that pay some sort of dividend are better for my challenged cash flow.
I’ve also learned that the paperwork has exploded (because of all the new regs). the new paperwork is a real pain in the butt. And then there’ s tracking. The more deals you’re in, the more stocks, bonds and funds you own, the more time you’ll spend tracking and managing your “portfolio.”
One of my tenants has a leaky shower door. The door has defied three fix-up attempts. Motivating her to stop showering has not worked. It’s time for another solution. Maybe a plumber. Oiy! In New York, those guys charge more than i-bankers.
To specifics:
1. Real estate is good — if you get it cheap. The price you buy it is the key determinant of your final IRR. A friend is buying a gorgeous mid-western office building for $40 a square foot, less than one-fifth of replacement cost. Second, location makes a huge difference — more so than ever. New York and San Francisco commercial real estate is booming. Chicago sucks. You get the message.
It’s dumb to borrow interest-only money — especially for short-terms, like 5 or 7 years. In 5 or 7 years you’ll have to refinance, sell the building, or give the building back to the bank. What economy we’ll be in then will determine your fate. I don’t like predicting economic cycles. Knowing my luck we ‘ll be in another trough. There are two ways around this: borrow less and buy something with “hair” on it – a deal with vacancies that you can fix, perhaps with more aggressive renting.
2. Bonds will soon suck as interest rates edge up by themselves. The Fed won’t dramatically raise rates because unemployment is high and inflation is low. Inflation will stay low because of the continuing strong productivity gains through ares as an Internet software (e.g. DocuSign) and hence, the lack of big corporation hiring. The big companies are investing big in productivity software.
3. Stocks should continue to do well. Picking them ain’t easy. Recent buys by yours truly include AF, ATK, BMO, BRKA, FSLR, GOOG, Honeywell, IRWD, JCP, JMI, NRF, QCOM, STWD, V and WEN. Almost all are up, some less, some more. The only one I’m losing on is the one I feel most enthusiastic about — Qualcomm. Go figure.
I’ll do more on this on Monday. Yesterday was exhausting. I didn’t get my preparation time last night. I collapsed into bed.
My own laptop is working flawlessly. That means the instant I finish this note, there’ll be calamity. Here’s to tempting the gods. I run Windows 7. Key programs are:
+ Firefox. It’s got some plugins Chrome doesn’t. Chrome is faster.
+ Norton Internet Security. I pay big bucks (for me). It’s worth every penny.
+ I love PDF-Xchange Viewer. It’s free. You can sign PDF docs with it. Your own John Hancock.
+ I run Office 2003 because it works, does what I need, I’m used to how it works and it will read docx and xlsx docs with a free plug-in from Microsoft.
+ Software called “Everything” lets me find files on my hard drive. It’s lightning fast. It does a much better than Microsoft’s miserable search tools.
+ The Semware Editor is an old DOS editor which I write in. It’s fast and flawless. It does things Microsoft word hasn’t yet though of.
+ My favorite web app is Instapaper. It lets me save favorite/useful web pages.
I am using two laptops — a Lenovo X220 and the latest Lenovo X230, each with 8 gigabytes of RAM.I like have backups to everything, including files, operating systems and computers. Hence two laptops.
The biology class.
Students in a biology class were taking their mid-term exam. The last question was, ‘Name eight advantages of mother’s milk.’ One student, in particular, was hard put to think of eight advantages. However, he wrote:
1) It’s a perfect formula for the child.
2) It provides immunity against several diseases.
3) It’s always the right temperature.
4) It’s inexpensive.
5) It bonds the child to mother.
6) It’s always available as needed.
7) It comes in two attractive containers.
The student was stuck. Finally, in desperation, just before the bell rang, he wrote:
8) It’s high enough off the ground where the cat can’t get it.
He got an A.
Harry Newton, whose California friends are leaving California for no-income-tax Nevada. Anyone — and I mean anyone — can be a Nevada resident. You don’t need to live or work there, though they hope you visit. California (or New York) might chase you. You’d better keep good evidence of where you’ve been and you’d better not stay overnight too many times in those high-tax states. I’m hearing of more and more corporate executives who live away from their California or New York headquarters and do all their work by video and email over the Internet. Many of them also travel extensively to tie up distant distributorships and sales deals.
There’s a Grand Canyon sized gap between what you are seeing and what the GDP and job numbers are showing, Harry.
Those that went beyond the end of extended unemployment went onto getting maintenance/support through social security (if near retirement), disability, and student loans but they still have the debt keeping them from spending.
Another shout out to the Semware folks. Although I remember QEdit, the precursor.
Nice call on QCOM…trading up $4 in aftermarket….
Oh yeah, Cali, NY, etc., will definitely come after you if you move. It’s not good enough just to move your residence. You need to move the office, and even then, I’ve heard of the states coming after people.
Here’s a link to a case:
http://www.nysdta.org/Determinations/819457.det.htm
Some nice quotes:
The regulation set forth at 20 NYCRR 132.18(a) states, in pertinent part, as follows:
If a nonresident employee . . . performs services for his employer both within and without New York State, his income derived from New York State sources includes that proportion of his total compensation for services rendered as an employee which the total number of working days employed within New York State bears to the total number of working days employed both within and without New York State. The items of gain, loss and deduction . . . of the employee attributable to his employment, derived from or connected with New York State sources, are similarly determined. However, any allowance claimed for days worked outside New York State must be based upon the performance of services which of necessity, as distinguished from convenience, obligate the employee to out-of-state duties in the service of his employer. . . . (Emphasis added.)
B. It is well settled that an employee’s out-of-state services are not performed for an employer’s necessity where the services could have been performed at his employer’s office (see, e.g., Matter of Phillips v. New York State Department of Taxation and Finance, 267 AD2d 927, 700 NYS2d 566, lv denied 94 NY2d 763, 708 NYS2d 52). Further, the courts have held that where there was no evidence that services performed at the taxpayer’s out-of-state home could not have been undertaken at the employer’s office in New York, the services were performed out of state for the employee’s convenience, not the employee’s necessity (Matter of Page v. State Tax Commission, 46 AD2d 341, 362 NYS2d 599; Matter of Simms v. Procaccino, 47 AD2d 149, 365 NYS2d 73). The courts have generally upheld a strict standard of employer necessity where the residence is the workplace in question “because of the obvious potential for abuse” (Matter of Kitman v. State Tax Commn., 92 AD2d 1018, 461 NYS2d 448, 449).
in the most recent barron’s round table there is good discussion about qcom, check it out
HOPEFULLY, when those Californicators get to a state with a decent tax structure they learn their lesson and don’t vote for Liberals. But, as we know from Vermont and so many other places, they tend to take their Progressive Putrification with them. Wish they would stay home and reap the crop of their votes.
Say what? A world without Liberals would be like Day without Night, Tails without Heads… Male without Female… Harsh without Compassionate. The world Would fall apart but that’s not the worst part: the worst would be- whom would Conservatives have to blame??
…and, actually taking the comment seriously, the thought of the U.S. without Liberal California is unthinkable; Liberal California is inseparable from a coherent, successful nation, now and historically.
Calif. has been unbelievably lucky. It’s the hugh breadbasket of the World and home of Silicon Valley, along with Hollywood. And these were created by self-driven men and women, and excepting our movie friends, largely conservative and entrepreneurial in nature. That is changing…and not for the good. As an economist once asked me, “How much of this heavy and growing burden can we carry before it collapses?” We’re getting there.
All too true. It’s infuriating that the rich leaving Calif. take their destructive “feel good” liberal policies with them. Who else do you think elects Harry Reid year after year in Nev.? Plus, he’s at the top of the heap when it comes to bringing home the “goodies”, from your hard earned taxes. And then naming buildings and universities after himself.