In Search of the Perfect Investment

Invest in real estate and get rich?

There are only three aspects of a real estate investment you can affect (i.e. change, improve, etc.):

+ The primary one is the price you pay. Bid low and be prepared to walk. Don’t fall in love with it. Everyone falls in love. That’s why they stage property.

+ Fix it. But fix it according to a budget. And stick to the budget. You’re not going to live or work there. Someone else is. So don’t make it the Taj Mahal.

+ Change its use. Take an old office building and make it fancy apartments. Get it re-zoned.

Don’t buy and hold, and expect to get rich. Item:

We bought an apartment in downtown Boston ten years ago for daughter Claire and husband Ted. Several years later, they got fancy and moved out. We secured a tenant.

Take our rent, deduct expenses and we’re presently earning a miserable 2.22% a year on what we paid.

If we sell it for market price, that will add an additional 1.01%, bringing our brilliant total return to 3.23%.

Blind Freddie would have done better with stockmarket index funds. Over those same ten years, the S&P 500 averaged 8.01%.

Our apartment investment was lousy because of one reason: We bought at the top of the market. June 2005 was it. And that was when we bought. Brilliant.

We didn’t buy it as an investment. We bought it so Claire and Ted would have some place nice to live.

But now it’s an investment, it’s a lousy investment. And there’s nothing we can do, except paint it, extol its virtues and sell it.

Why we have a dysfunctional Congress.

In 2014, there were 11,509 registered lobbyists, 22 for every one  member of Congress. This is the tip of the iceberg since there are many lobbyists who aren’t required to register. You have to register only if you’ve spent more than 20 percent of your time lobbying for a particular client in the previous three-month period.

A study done in 2011 found that among Washington lobbyists were 5,400 former employees of Congress, including almost 400 who had been senators or representatives.

In 2013, the nation’s special interest groups reported spending $3.24 billion to lobby Congress. In the 2011-2012 election cycle, the political action committees of special interest groups contributed $947 million to congressional campaigns. That total, of course, does not include the direct individual campaign contributions of individuals who work for special interests.

Morning news of note:

+ Saudi Arabia said its strategy of squeezing high-cost rivals such as U.S. shale producers is succeeding, as the world’s largest crude exporter seeks to reassert itself as the dominant force in the global oil market. (FT)

— Why we continue to buy their oil when they actively finance terrorism beats me. Why we forbid the export of our own oil beats me also.

+ After cutting production for months, U.S. shale producers said they may bring rigs back into service — setting up the first big test of their ability to quickly react to rising crude prices. (WSJ-subscription)

— Shares of EOG and other domestic shale producers have been rising of late with the price of oil. Move your cursor over the time frames of the chart. Interesting how trends look different when you vary the time period, i.e. the y-axis.

Here’s EOG over the last five days.

Thinking of traveling this summer? Time to learn the words:

Six points:

+ You will pay the same for “Business” class seats — no matter how awful the seats.

+ You can only sleep on flatbed seats.You can nap on the others, but not really sleep.

+ Seatguru.com gives semi-good information on which seats are good and which are awful (most of them). Don’t rely on Seatguru, though they are better than the airlines which lie.

+ Many airlines don’t show up prominently on search engines, e.g. when flying between NYC and Paris, look at Open Skies in BizBed (British Airways subsidiary) and La Compagnie (low cost all business start-up).

+ Some airlines give “premium” economy more leg-room. Most don’t. Check. Check. Check.

+ Buying more legroom on airlines like JetBlue is the best investment in the air.

Vienna goes gay. I don’t make this stuff up:

Dozens of traffic lights in the Austrian capital have been changed to show gay couples crossing the road instead of the traditional lone figure.

Vienna has changed the signal images at 120 pedestrian crossings – also showing heterosexual couples – in preparation for the Eurovision Song Contest.

Officials said the signals were a sign of Vienna’s open-mindedness. Toni Mahdalik of the right-wing Freedom Party of Austria called the initiative gender politics “gone mad”.

He said the money would have been better spent on reducing poverty and improving unemployment figures.

It is hoped the signals, which show couples holding hands and with love hearts above them instead of a gender-neutral figure, will also improve safety.

The unusual symbols are attracting the attention of drivers and pedestrians, a spokeswoman for Vienna’s city lighting department said.

Many of the millions who watch Eurovision include a huge gay fan base and last year’s winner, bearded transvestite Conchita Wurst, became a global gay icon with the song Rise like a Phoenix.

About 40 countries are taking part in the 2015 Eurovision contest. The final will be held on May 23.

Thoughts from Will Rogers

+ There are two theories to arguing with a woman, … Neither works.

+  Never miss a good chance to shut up.

+  If you find yourself in a hole, stop digging.

+ The quickest way to double your money is to fold it and put it back into your pocket.

Harry Newton. Some days you got to bite the bullet and sell your junk. Like mortgage REITs and retailers. Don’t look at their prices the following day. They’ll be up. That’s how Mr. Market keeps you on your toes. (I have other less, polite expressions.)

Hayfever season is with us with a vengeance. Wash your face in cold water every hour. Try not to give up breathing, though that works.