patrick.net

See, that’s the tough part. With Z anyone can check that out.

I know. I hope they're all going to be in serious denial mode and choose not to look.

Fat chance, I know....

USAYesterday,

Sacramento, CA: 9 NOV 07

Could "bottom feeders" become the new "Real Financial Heros"?

Before you get all bent out of shape about your neighbor paying HALF of what your... dumb@ss did, consider recent buyer SQT! With mortgage payments a fraction of yours they will be able to purchase everything from swing sets to wood chippers down at Home Despot (TM) (and get this!) they're paying CASH! For those of you that haven't seen any for awhile it's green and has dead presidents on it with numbers that correlate to different amounts....

haha so Surfer-X bought in Sacto?

I can hardly wait to hear his euphamism for the place, San Jose became San Hosebag, I'm assuming Sacto will be changed into something even more imaginative than the common "Sack'o'tomatoes".

No no, Surfer didn't buy in Sacto. I just meant that he is among the buying crowd.

I shudder to think what Sacto's euphemism could end up being though...

DinOr

I'm in the too-scared-to-buy-anthing-I-don't-need crowd right now. Home Despot will have to struggle along without me for the time being.

RE: Home Despot

Great name!

Anything you don't... need?! Some "Financial Hero" you turned out to be!

Look, you've got Free Equity! 90K of it! Don't you know the "New Rules for Finance"! Now I have this friend.... great guy. He can get you rock bottom rates...

Peter, why is it that some of the nicest people love cats? What is it with you guys? Do you just have an abundance of love in your life that you want to share it with a creature who thinks its better than you?

I saw a bumper sticker once I may have shared it before but I love it.

"I wish I could be just half the person my dog thinks I am"

“I wish I could be just half the person my dog thinks I am”

I wish I could be just half the person my cat thinks she is.

LOL

good one

Cats and dogs are very different creatures and they attract very different personalities.

My wife is a dog person.

One of our cats is dog-like though.

@Peter P

...your morality is the competitive advantage of others.

My experience has been the opposite, perhaps your experience is industry and market dependent. Moral business ethics when well-marketed (which generally means not touting it in your marketing activities) in my experience acts as a shorthand for trust in many business settings. It is far harder in the beginning, but it leads to compounding results once it gains traction.

The reason it seems to work is because many business dealings are complex enough without having to worry about whether or not someone will screw you over. If you build and maintain an honest reputation as a straight dealer, and that reputation spreads, you will find that it short circuits a lot of activity that distrustful parties usually engage in to build trust. To my atonishment, trust also builds profits; once you build a trust network, a lot of sales gets booked largely on a trust component, and the margins are much higher because trust is intrinsically an opposing force against commoditization, a leading factor in margin erosion in my industry.

I eventually discovered that my clients were fully aware they were paying me a large premium; they simply decided that even after accounting for the premium my offerings still made financial sense to purchase because they knew that once they made the purchasing decision, they just didn't have to worry about it. The first time I was told how pleased a client was because they didn't have to worry about my offerings after purchasing, I didn't realize how signficant it was; after the fifth time a client said that I decided to look into it. Convenience has always been a key sales benefit, but I when I started my business it hadn't occurred to me that trust is a form of convenience which translates into greater profits. Especially when the convenience is linked to reputation (of my clients) and lower overall costs (due to rework for botched jobs), it is very easy to sell when the trust is pre-established.

There is a difference between moral business ethics and acting as a spineless floor mat. For example, unreasonably difficult clients will find we will deliberately bend over backwards and lose money on the account to make them happy...once. They will then find we are unaccountably busy and our rates much, much higher the next time they call us, unless we find out the management structure has been completely replaced.

We had a client who twisted a verbal promise to demo a new product into a full-blown proof of concept and evaluation commitment. We lost loads of money on that, I was no end pissed, but the product vendor's sales force never forgot us falling on our sword for them with nary a complaint (internally in the vendor the client was blacklisted as well), and now we have all the work we can handle as gratitude. Much later we found out the manager responsible for stabbing us in the back did this to other vendors; it was his way of making himself look good to the director by getting far more work out of vendors than his peers, by deliberately miscommunicating and throwing a titanic, red-faced fit over it. He shamelessly did call us back, and because we were so "busy" at the time, we were happy to introduce them to our nearest competitor.

Internally, our CRM system has that manager marked down; we will never deal with him, ever again, no matter how big the potential deal, no matter who the company is. Finally, for an extra sweet ending, for all the money I lost on that deal, I have made back to date 9 times as much in follow-on sales from the vendor's sales force who knew us from that incident, up from zero referral sales preceding the incident (even though we knew that sales force beforehand). When I started out, I shared your exact same concerns over the moral business being its' competitors' competitive advantage. This is only one of many such stories I have that convinced me that as long as there is effective and long-term accountability, the moral business actually has the edge over the long-haul.

I'm so happy for SQT. Especially on a Friday, what a great way to go into the weekend. This is what this blog is all about. Research, discussion, research, execution, entry point and Pay Off!

Not to mention her taxes should be about 2/3rds of what her neighbor pays (or soon will be). It's great to know this hasn't all just been polite (and sometimes not so polite) chatter. There ARE rewards!

Hell, $135 a s/f!? That's huge! The daughter and son-in-law are supposed to stop by this evening and I was thinking... Coors? Oh HELL NO! Now I'm thinking... Corona's at least! I'm open to suggestions, and don't just limit it to beer. I want your very best Bubble Bustin' Booze suggestions!

apostasy Says:
@Peter P

My experience has been the opposite, perhaps your experience is industry and market dependent.

I agree with you apostasy. But Peter P is our resident philosopher. He likes to pose questions in form of cryptic / discomforting / challenging / witty etc on liners.

When he philosophizes, it just means he is hungry and is craving sushi.

Congrats SQT. And not just because you got a great deal.

Thank you apostasy for making concrete my ramplings for the need for business and social morality. It actually reminds me on another industry that heavily depends on this: housing contractors.

The guys who underbid on prupose to win the bid, then carefully show how everything is slightly out of the initial contract only to have massive run-ups will get business from any given client once. Once. Thus they have to spend all of their time underbidding to keep wining new clients since the have no return clients.

However, the bidder that comes with a solid reputation for being fair and reasonable can even charge a healthy premium as the down-side risk is known to not exist.

In strict terms: Contractor A bid $1k knowing he will run the job up to $2k. Contractor 2 bids $1.5k but is known to never go over his bid. Most would choose bidder 2 unless you just love the acramony of fighting the first guy to hold to his $1k bid.

Coors? Oh HELL NO! Now I’m thinking… Corona’s at least! I’m open to suggestions, and don’t just limit it to beer. I want your very best Bubble Bustin’ Booze suggestions!

San Miguel's. I can't believe you ignored that fine product!

When he philosophizes, it just means he is hungry and is craving sushi.

I am hungry. :(

Peter P Says:
which forex broker

I now go through a full-service management firm that helps me with the rest of my asset management. Their fees are a little high if you just use a specific service, but all my trades get thrown in for "free" into their basic management fee. It is a lazy solution, so may not be the best deal around.

In the past, I used an agent who used Dukascopy via Deutsche Bank's DBFX.

(Not FX advice)

SQT Says:
we’re buying this place at $135sqft.

Congrats. Just for scientific reasons, when was the last time in the 1997-2005 timeframe was it at $135/s.f.? Curious to know how far Sacto has unwound.

Yen 110.

I think Yen will move drastically up very soon. Time to short US indices further.

I think Yen will move drastically up very soon. Time to short US indices further.

If Yen goes up, all those carry trades will begin to unwind. Watch out for positions in GBP and AUD!

Not investment advice!

San Miguel! Now why didn't "I" think of that!

SP,

Me too. I took a "swag" and said... 2002? Anyway you slice it, she got a pretty good deal.

Anyway you slice it, she got a pretty good deal.

Anyone who can buy a long-term home with comfortable financing has a good deal.

@SQT,

You did very well and should feel proud, not the least bit ashamed. Sorry if any "falling knife-catcher" comments made you feel otherwise --they don't apply to the "Posse", who know a real "bargain" when they see one.

$135/sft anywhere (populated) in CA? We should all be so lucky. "Fortress L.A." (Pasadena, San Marino, South Pasadena, Palos Verdes, Beverly Hills, Westwood, Brentwood, Marina Del Rey, Santa Monica, etc.) is starting showing a few chinks in the armor, but is still far away from full-blown capitulation. I doubt I'll see anything in those areas below $250/sft for at least a couple of years, probably more.

People face morality versus competitve advantage decisions every day. And as more and more people feel they have to head towards to the side of competitve advantage we get the mess we are in. A system must collapse, by definition, once more and more people migrate towards the gaming brinksmanship that undermines the rules of the game.

Well said (and Google "Zimbabwe, recent history" for a real-world example).

SQT,
Congratulations!
The last time I saw $135.00 sq/ft. in that region was 2001. Given cost of living since then, things would have to get pretty bad for you to lose money. And with a ten year time frame, you got it made.
And as for your neighbors, oh well - sucks to be them.

Well said (and Google “Zimbabwe, recent history” for a real-world example).

My favorite golfer is a Zimbabwean. :)

Perhaps we can never legislate or regulate human behavior into a form of "morality" that we can all agree on 100%. However, we can most certainly design laws and regulate business in such a way as to incentivize /reward behaviors that most of us deem to be socially and economically desirable, such as: transparency, fair playing-field competition, economic productivity, promoting sane/fair compensation (that reflects individual work and achievements, not just birth lottery status), and protecting the commons (environment, air, water, etc.).

We can also regulate to dis-incentivize/punish those behaviors that we deem to be anti-social and anti-free market: monopolies/oligopolies, nepotism/cronyism, corruption, bribery, coercion, excessive pollution, artificial barriers to entry, perma-subsidies, tax loopholes, etc.

We'll never reach perfection, but we really ought to be able to do a whole lot better than we are today. I recall a somewhat more level playing field, more even distribution of wealth, more opportunities to reach a middle-class lifestyle, a somewhat less debt-addicted public & government, and a little less legislation-by-lobbyist when I was growing up. But perhaps I remember wrong. Any old-timers out there care to comment?

However, we can most certainly design laws and regulate business in such a way as to incentivize /reward behaviors that most of us deem to be socially and economically desirable

The market can do all that... can't it?

Awww, thanks everyone.

SP

I saw a chart that showed the Sacto region at $135 between 2001-2002. I still think we got especially lucky because most homes around here aren't really that low yet.

HARM :

I doubt I’ll see anything in those areas below $250/sft for at least a couple of years, probably more.

I would buy one at 250 right now ! But I cannot get anything at that rate even in Mountain House. In the divine land of Cupertino the rate is around 600, while many good parts of East Bay still go for 400. :-( The BA is still insanely out of whack. The only comforting sign is, I see many houses in East Bay listed at 2004 prices. And almost every single one sells way below the listing price - from 25 to 50K below asking.

I still think we got especially lucky because most homes around here aren’t really that low yet.

If you flip it now perhaps you can have that 300%. :twisted:

San Miguel! Now why didn’t “I” think of that!

If I drink beer, I always prefer German over any other. Those guys know a thing or two about making beer.

Wow. What happened to Yen ? If you look at the chart it has broken through all supports and 110 is very critical.

Congrats SQT.

Just make sure that you lock in a FRM and drag out the repayment for as long as possible, then you will be all set. ARM will have to head up some point, so you don't want to be exposed to that risk.

I said a couple of months ago that Yen was a good bet.

I think it is about time to increase exposure to Yen (not Nikkei, but Yen), because once it moves, it will move up pretty violently, because all the hedge funds will need to rush to Yen repayment to lock in the rates, pushing it up further.

Or alternatively, another way of betting on the Yen rise is to short US indices further, particularly that of the financial sector.

Just a schadenfreude question, has the Wall Street started the layoff yet? How big will it be? How many senior people will get axed?

HARM - legislating morality is the last resort of an utterly broken down society. Humans have a hard time screwing over people they know. So, if you want to design a minimally moral society, you make sure people have few friends and social connections, and you make most interactions not person-to-person but the individual against impersonal entities like corporations, gov't agencies etc.