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  • On 2 Sep 2014 in PG&E faces a chance of a $1.4 Billion fine, SFace said:

    does it matter, the costs passes to the users anyway. lol

    It's gas and electricty so there is absolutely nowhere to go. You are kidding yourself if you don't think the ratepayer don't eat it all. It seems like a good way to increase 1.4B in revenues for the government agency and let the taxpayer eat it in disguise.

  • On 2 Sep 2014 in Patrick wants to open a competitive wine bar, SFace said:

    Patrick says

    David9 says

    Ventura, California has a successful venue similar to as you have described.

    But not actually trying to guess the variety and keeping score.

    Unless it is a chateau lafite or similar, does anyone give a damn?

  • On 1 Sep 2014 in Patrick wants to open a competitive wine bar, SFace said:

    High fixed cost. Heavy capex and inventory commitment makes this a no go. Just how are u going to secure good inventory at favorable price in high ass rent san Francisco. What's your edge. Competitive advantage, industry expereience, insider knowledge?

    There is such a bar, it is located in treasure island in a warehouse type facility.

    You can count in the fingers of your hand the actual amount of people that actually care about variety or that type of knowledge. If they do, the wineries come to them.

  • On 27 Aug 2014 in My first real estate bear thread (ever), SFace said:

    This is the freakin fed, it will choose inflation over deflation.

    The fed is as predictable as the morning sun, you can forget about any deflation scenario.

  • On 25 Aug 2014 in Why your house is a terrible investment, SFace said:

    hanera says

    e-man, sface, icloud15, strategist...

    Buy this scenario or think is BS? Pse don't talk about 2009-2012, we're in Aug 2014. Should buy or rent now? Should we be leveraged or not?

    If you are staying for 10+ years and get prime rates, then there is little risk to buying.

    If you are looking to flip or rent, better make sure the cash flow supports it long term.

    I look at WFB HOI index. locally, we are in the more unaffordable range bewteen 6% and 32%. It is around 12% now. Nationally is more affordable and in the middle range so it is damn if you do and damn if you don't.

    The economy is just starting to heat up as can be discerned from job gains recently. The damn thing is the interest rate is priced like a recession and depending on local, it can be hot or cold. So in the bay area, we have a hot economy but interest rate like a recession. Inflation is starting to pick up and wage increase will be demanded in the next3 years.

    There is an interest rate risk, as q quick prime rate increase will damage housing locally. But this is the fed which is as predictable as the morning sun, it'll be pushed back just as usual.

    housing has been underbuilt since 2010 which works in favor of owning land. In 2004, some 2M homes were consructed, now it is half of that for a medium period. I don't see a slash and burn scenerio like 2006 as none of the elements applicabel then are even remotely visible now. the homebuilders has decided to pursue margins over volume which is disasterous to a prospective buyer and that will not change the rest of this decade.

  • On 22 Aug 2014 in Why your house is a terrible investment, SFace said:

    bubblesitter says

    SFace says

    becuase it is split adjusted. your 4.68M is more like 700K. There was no 26 bagger in Apple in the last 5 years, more like a 5 bagger (with dividends)

    Yo need to revisit your math basics!

    Who cares, Apple is no 26 bagger the last 5 year. It was 180 ish back then, or 25 or so split adjusted + lots of divdends the last 2. don;t need to count the dividends. It is a 4 bagger with cash dividends banked.

  • On 22 Aug 2014 in Why your house is a terrible investment, SFace said:

    bubblesitter says

    SFace says

    500K line of credit.

    SFace says

    you made $3.4M.

    why the longer route? let's see. Stock went 26x to $645 from $25 in 2009. so 180K x 26 = 4.68M? 4.68M > 3.4M. So, you work more but still get less? Does not sound like a deal to me.

    becuase it is split adjusted. your 4.68M is more like 700K. There was no 26 bagger in Apple in the last 5 years, more like a 5 bagger (with dividends)

  • On 22 Aug 2014 in Why your house is a terrible investment, SFace said:

    bubblesitter says

    Now, Imagine if that 25% down was used to buy AAPL stock in 2009 at $25 a share when our famous bull was calling out the bottom loudly? but hey what do I know about money? cuz I am not a housing bull.

    Or imagine if you use 20%or (180K) down buy a house say 800M. The price goes to 1.3M on paper in 2011 and you open a 500K line of credit. You then use it to but Tesla @ $36 bucks or 13,888 shares which is now worth 3.6M.

    So in 2009 - 2014, you made $3.4M.

    Homeowners have all the money to buy stocks and benefit even more from S&P500.

  • On 22 Aug 2014 in Start-ups leaving San Francisco, SFace said:

    let me know how many start-ups go from zero to hero in NC.

    Saving money does squat when you have no product. Youtube went from 0 to $50B in 6 years, you think a little salary saving is more important than $50,000,000,000?

  • On 22 Aug 2014 in Why your house is a terrible investment, SFace said:

    Reit returns beat stock returns long term. Just need to look it up. Reit index kicks ass.

    Real estate is the best business in this world and the number one source of millionaires. The index of real estate companies tell you that. The thing is real estate can be as small as 100k or 100b and the smaller business will do better. It does not need to scale which makes it the perfect business for mom and pops.

    And if you are living instead of renting to someone else, you just have a guaranteed tenant, you. Not paying rent is less cash out which acts the same as a dividend. And of course if you borrow the money, the bank have the risk in exchange for interest and you get the benefit of leveraged return.

    Stocks get double taxed, even tripled taxed. Real estate can be zero taxed.

    If stocks tank, you are a bagholder, if real estate tank, the bank is the bagholder with smart planning.

  • On 21 Aug 2014 in Why your house is a terrible investment, SFace said:

    FunTime says

    tatupu70 says

    I wouldn't call that overpriced. It means you can't afford it, but it doesn't mean it's overpriced.

    Right and similarly many people would call it "affordable."

    The market doesn't care about how any one or even many people thinks.

    If 1M is so overpriced, you would think there would be more than 600 or in the market.

    In any case, the whole point of my thesis is expensive and overpriced are completely separate concepts.

  • On 21 Aug 2014 in Why your house is a terrible investment, SFace said:

    Quigley says

    The SFBA seems like one of the most artificial and wierd markets in the country. There are no fundamentals. There's only greed and speculation. Sort of like the stock market. You can win big or lose big, it all depends on where you get on the ride.

    of course there are fundamentals, the most basic one. demand/supply.

    The median price in SF is what 1M, yet there are only 600 in the market for a city of 330K households.

    I never understand the argument that just because it is expensive means its overpriced. Freakin Aulani resort in Oahu is expensive, yet the kids love it and the price is right. That ignores the basic principle of supply and demand.

  • On 20 Aug 2014 in Rising Inventory & Low Rates Hasn't Created More Housing Demand, SFace said:

    I am a Keep it simple stupid (KISS) economist.

    If you want gray hair, do it the Logan way,

    If you want to just get the bottom line answer, all I need to do is look at consumer confidence. It is 100 factors all wrapped up in one little package and all you need to know about where the economy is. yes, that simple.

  • On 20 Aug 2014 in The stock market is not going to crash and will soon make new highs, SFace said:

    PE ratios ignores the balance sheet or book value.

    PE ratios can be impacted by outside factors, what are the alternatives? If 10 year fed bonds are yielding 2.4%, then damn, you are forced to buy equity which raise the ratio everything else being equal.

    and lastly, PE is based on GAAP concepts. It has flaws. The major flaws are things like impairement and writedowns (vs. not) that make looking at a PE ratio stupid. For example, BBRY sold Z10 phones at launch and made a profit in Q1 I think, in Q and Q3, a 3B dollar+ writedown smacked them to extraordinary loss. I'll throw PE ratio out the window and look at it more from totality.

  • On 19 Aug 2014 in Why your house is a terrible investment, SFace said:

    E-man says

    FunTime says



    http://www.nbcnews.com/business/real-estate/nation-renters-fewer-americans-now-own-their-own-homes-n167776


    The reason less Americans owning homes is because they couldn't afford to buy. Wait until they and their kids are renting from the Chinese and Indians and don't understand why.

    The reason is quite simple.

    Homewownership is painful in the first 10 years for everyone who has a mortgage. After the first 10, the home is an asset.

    Some take the approach that you have to scrap, work extra jobs, borrow and do what it takes. If my kids need a house at age 25, I'll write them the downpayment check, not have them wait and save for the DP.

    Some look at it like I don't want to be tied down to this debt, save cash, rent ratio is not good, income % is too low, the Patrick way.

    The US will be more competitive not less, so me thinks there is no choice but to compete or go to South Dakota. Basic demand and supply tells you things people covet will cost more, me thinks people will be even more demanding and pay even more money for things people like. A premium paid today is superpremium tommorow.

  • On 19 Aug 2014 in Why do Americans pay so much more for data plans, SFace said:

    How else do you get a new iPhone for $199 every 20 months and resell it for $500 used.

    You're buying the data as well as the $700 phone.

  • On 19 Aug 2014 in Why your house is a terrible investment, SFace said:

    Fell in love with the calculator that raped you dry. Lol

  • On 19 Aug 2014 in Why your house is a terrible investment, SFace said:

    retire59 says

    We did not buy based on Patrick's website advice as our jobs kept us in the SFBA. Rent was much less than buying as the houses are way overpriced in SFBA. So we saved and lived in small apartment and no debt. Then we retired before 60, moved to an area where home mortgage is the same as rent, again using Patricks rent vs own calculator, and are very happy owning. It is not an investment, but we all need a place to live. In this case we are getting the best for our money and able to retire and enjoy whatever time we have left. And we hated renting, but our jobs were in SF and renting was smart...I agree and thank you Patrick!!

    I don't understand. had you bought in SF during your saving days, you would have still retired and have three houses now instead of one.

  • On 19 Aug 2014 in Rising Inventory & Low Rates Hasn't Created More Housing Demand, SFace said:

    The economy is fine in spite of housing construction.

    "KISS" principles (Keep in Simple Stupid)

    When new home construction are below normal for a long period of time, it is bullish for home price. less new homes means less supply long term available more people. It's that simple.

    and there is nothing wrong with builders, their margins are higher than ever. They just make more money with less, pretty brilliant.

    KBH gross margin went from 6% to 11% to 14% to 17% in 2010-2103. It's not isolated, Pulti margin went from 11% - 20% last Q was 23.6%
    2014 is annulizing at 19% YTD. Why build more homes when you can focus making more on each one. I love home buidlers cautious approach to not hit and run like it was in 2003-2008.

  • On 19 Aug 2014 in Only the boats of the rich are rising, SFace said:

    John Bailo says

    Where are the Big Raises?!

    If you have 10M in assets and it goes up 10%, your net worth increased by 1M without lifting a finger.

    A $5 raise or 10K a year, 7K net of tax does jack squat in comparision. Wealth is never made from working.

  • On 17 Aug 2014 in Rising Inventory & Low Rates Hasn't Created More Housing Demand, SFace said:

    Using normal as a pivot obviously means whether your pivot is in fact normal.

    And when people talk about going back to the way it was, or whatever factors existed in the past, you better think about transformative changes. If you talk grapg, there better be thoughts on changes that are permanent/transformative or temporary.

    A baseball ticket was 20 bucks for lower bowl near first base in 1994. That same ticket is 100 bucks now. That's a permanent change as basegame stadium don't need that segment anymore. The clippers was sold for 2b bucks which was what a 10,000% return in 30 years.

  • On 17 Aug 2014 in Myths about buying a house, SFace said:

    15x annual rent goes against location, location, location. Or factors that people are willing to pay for on the demand side and factors sellers are willing to sell on the supply side.

    I pretty much know location wins anytime in history in every corner of the world. Lets burn the 15x rule to sleep as it fails the real life results.

    And in my opinion, if location location and location are the first three things that creates demand and little supply, I believe it is location, location, location, location, location in the future.

  • On 16 Aug 2014 in Why California is Awesome, SFace said:

    swebb says

    People from Texas will tell you Texas is the best state for
    scenery/variety/outdoors activity. You know, mountains and desert in the west,
    beaches in the southeast, forests in the east. (let's just agree to not talk
    about the pan handle)


    People from the Appalachians, Ozarks, Rockies and Adirondacks will tell you
    they have the most beautiful wilderness They lack a coastline, though.

    I use to go the Dallas for client work. Basically flat ass land north, south, east and west. unless you mean driving across the damn state which may take eight hours.

    With respect to the weather, let's put it this way if I want warm and sunny, I drive half hour east or south and it is sunny and warm all the time. If it is 100 degree oven weather in Livermore, I am 80 degree degree in San Francisco. If I still feel hot, I head to ocean beach and it is 65 degree. It won't be 105 in Phoenix and 101 in Sedona and 103 in Scottsdale.

    What is more comfortable than biking across golden gate bridge in 65 degree weather in the dead of summer? If you want 20 degrees more, drive half an hour out and get on your shorts and sandals.

    If you drive 101 through Marin, it is tree lined hillside home on one side and the bay on the other side, one mile across from mountain to Bay. Across the mountain is the ocean, beach and Mt Tam park.

  • On 12 Aug 2014 in We're very close to an inflection point in the stock market, SFace said:

    mell says

    I could go for that.

    The government will be broke from a 10% flat tax on individual income and Corporate income.

    If you lower tax from one source, it will have to increase somewhere else to compensate.

  • On 12 Aug 2014 in adios., SFace said:

    That's the Patrick conundrum, people talk about politics, sports, problems and money to drive traffic. It drowns the core message of housing.

    The way I see it 51% agree on something and the 49% the other way or some combination in between. It is a waste of time.

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