patrick.net

nw888 says

How did you make millions since 2009? Flipping homes?

Definitely not bragging about it on Pat.net.

E-man says

Why screw around with stocks when we can build equity at this pace. :)

Well, if you had put $400K in SRS at $20 you would have made $100K in a couple of weeks as it is approaching $25 now, of course before capital gains tax. That seems to beat flipping homes to me. But what makes real estate so interesting (and dangerous for the rest of the world) is that you get that kind of taxpayer-backstopped leverage that you would never get from your brokerage (because it could go broke instantly), plus all kinds of tax gimmicks such as no capital gains up to 250K when selling a house after 2 years or longer. And if things go south you can just walk away or whine to Obama for yet another refinancing scheme paid by the taxpayer, whereas making a huge wrong bet in stocks can definitely cream you. In that respect real estate definitely has a (mildly put) "unfair" edge.

@mell,

I'm totally in agreement with you. Real estate, no doubt, has an edge over other investment when it comes to tax treatment.

Say you buy a $1M apartment building. You depreciate it against your cashflow so you don't pay taxes on your cashflow/gain. You can tap into the equity without paying taxes through out the years by doing cash out refinance. By the time you're about to kick the can, and it's worth $5M. You have financed it with a $4M loan without paying taxes on the $3M cash out. You pass it down to your kids. The kids can turn around and sell it the next day for $5M FMV and not having to pay any taxes on the $1M.

So let's recap. You get to spend $3M without paying taxeson it. That's $100k/year for 30 years. You depreciate the building without paying taxes on your gain against the cashflow income. Your kids get to keep $1M in equity without paying taxes afterward.

Who came up with these loopholes? Ah, it's the 535 members of our country. I guess they're looking out for their own best interest, not ours. Reality is a bitch sometimes isn't it? :)

Zephyr and ptiemann left because people pointed out that they were being dishonest about their stock purchases like you were? Doesn't seem like a big loss if that's the case.

E-man says

Who came up with these loopholes? Ah, it's the 535 members of our country. I guess they're looking out for their own best interest, not ours. Reality is a bitch sometimes isn't it? :)

As I said there is no way denying that edge, but don't blame me, I cannot vote and if I could I'd have voted for Ron Paul ;) Plus, it is mostly an edge for the big players and savvy upper middle class to upper class players who may be able to time the market correctly and have enough liquidity to buy and sell fast or to weather a downturn in prices, rents and tenants and those who get bailed out (as long as the bailouts/debt game can continue). I don't find rent-seeking and flipping very productive as compared to investments in other fields, but it's not my job or prerogative to judge individual investments, plus some landlords are doing a good job (you can find them if you take time to search). Btw. the 250K housing cap-gains exemption I think is a CA law only, so that may explain wider swings here as well. But math doesn't lie and the question is which asset classes (if not all) will crash or become illiquid when the US debt gets out of control and the yields take off.

mell says

But math doesn't lie and the question is which asset classes (if not all) will crash or become illiquid when the US debt gets out of control and the yields take off.

It's basically playing hot potato with a grenade.

"the 250K housing cap-gains exemption I think is a CA law only, so that may explain wider swings here as well."

@mell,

I believe you're mistaken. The $250k exemption for individual and $500k exemption for married couple were signed into law by Bill Clinton in the late 90's. It has nothing to do with the step-up basis as well as cash out refinance.

Anyways, hope to meet you at one of the coffee gathering one of these days.

E-man says

I guess your mom didn't raise you right. When you don't have good things to say, you keep your mouth shut. Anyways, I have no time to waste with you. Good luck to your family.

My mom did raise me well enough that I don't have to lie about my stock picks, and how wealthy I am, to impress people online.

I think you're right, it was something else (withholding) specific about CA as this layer tells us why homeownership in CA is encouraged, incl. the federal cap gains exemption:

http://mosquedalaw.com/RealEstate%2017.htm

"These favorable tax rules on sale of principal residence should encourage, not discourage, home ownership in California." ;)

Yes, I agree. People need to be honest about their gains, and successes.

When people come on here and say I bought "1000 shares or 2000 shares of XY company", they should actually be buying into that company. Because then other people read that and say, "Hey, seems like a good pick, this guy just bought 2k of shares!"

They shouldn't then come back and say "Oh wait, I actually didn't buy" when the stock plunges 10%. That's dishonest, and reeks of a snake oil salesman.

Trolls shouldn't be allowed to be dishonest like that, because it can cost people real money on Pat.net.

Goran_K says

Yes, I agree. People need to be honest about their gains, and successes.

Yes, what's the point in lying? So a stranger can be impressed? Myself I've made a fortune and lost a fortune in mining shares. Mostly, because I didn't think the drop was going to be so horrible. I'm grinding that fortune back, albeit, with more caution, and frankly some earned wisdom.

It's always nice to hear other people's experiences too, so that hopefully you won't make the same mistakes they did along the way.

It's expected, anyone who claims they never lost, never actually played

Interesting thread on FB - one year ago, almost to a tee

/?p=1215483

Cast of Characters is somewhat similar, (Goran - Eman), but the difference was, at the time everyone was resoundingly negative, convinced anyone who bought FB @ $20 would regret it, and anyone shorting it will make out like "highway robbery".

Irony of course being, all those negative comments & sentiment about FB came at or near the absolute bottom. Will these comments, and this thread mark the top? Tune in next year to find out!

CDon says

Interesting thread on FB - one year ago, almost to a tee

/?p=1215483

Cast of Characters is somewhat similar, (Goran - Eman), but the difference was, at the time everyone was resoundingly negative, convinced anyone who bought FB @ $20 would regret it, and anyone shorting it will make out like "highway robbery".

Irony of course being, all those negative comments & sentiment about FB came at or near the absolute bottom. Will these comments, and this thread mark the top? Tune in next year to find out!

Great find. I hope you're wrong this time though. :)

When FB broke its downtrend and started moving back up, I was eyeing it in the low to mid $20, but I don't know anything about this company. The potential for FB to make money from ads is there. I bought FB based on technical analysis. I should have bought it on the day of the break out, but I wasn't around a computer.

We only have a couple hundred in our IRA. We stopped contributing to it because we found better way to invest our money since 2008.

E-man says

Great find. I hope you're wrong this time though. :)

We shall see. Honestly, I don't follow it at all, but I do sometimes think there is a kharmic element to this blog.

Out of curiosity, did anyone end up taking you up on that bet?

CDon says

E-man says

Great find. I hope you're wrong this time though. :)

We shall see. Honestly, I don't follow it at all, but I do sometimes think there is a kharmic element to this blog.

Out of curiosity, did anyone end up taking you up on that bet?

Nope.

E-man says

At the end of the day, you just hope you have more winning trades than losing ones.

Yeah that's the spirit of it. As long as you're eating good, and have a roof over your head that you can afford, all the other stuff is just icing.

E-man,

Thank you for sharing your flipping story.

E-man says

At the end of the day, you just hope you have more winning trades than losing ones.

Thanks so much for sharing your story. I appreciate it immensely. I'm going to check into the things you mentioned further. Real estate seems so much harder than buying and selling stocks, and less liquid, which makes me apprehensive. I've always been a renter, mainly because I was in my mid twenties and broke during the bubble, and once I wanted to buy a home for my family, and had enough money, the homes in desirable places in LA barely dropped. I waited and waited, and now it appears I'll be waiting for a long time, and need to save even more for a down payment due to prices rising.

SInce I haven't the foggiest idea about how a housing transaction occurs, or how to do a remodel, what would you recommend for someone just starting out? Meaning, buy a rental first or do a flip first? I'll begin searching for a local mentor for sure. Just want to figure out the best way to get my feet wet in real estate.

E-man says

He introduced me to another forum where I found several flippers who do this for a living.

Also, would you mind sharing the forum you found information on?

nw888 says

E-man says

He introduced me to another forum where I found several flippers who do this for a living.

Also, would you mind sharing the forum you found information on?

Please send me an email. I'll have to share it with you off line.

E-Man, your comments about westerners being willing to share knowledge for free highlights some interesting points. I think that that is a big part of why America rose to where it is (aside from the rest of the developed world being reduced to rubble in the 1940's). The free exchange of ideas and human collaboration is very powerful. My travel experiences in Asia are pretty limited, mainly to industrial China, but it is readily apparent that even there things are different. There is sort of an attitude of, "Why would you give someone anything unless you get something out of it? Are you stupid?" And over there, it probably is stupid to give away anything, particularly knowledge, because the recipient may well turn around and take everything you worked for. From what I have observed in talking to coworkers from there and my own observations, even being blood-related to someone isn't enough to keep you safe from being ruined by a family member for their financial gain.

Perhaps it is a symptom of most people having barely enough to get by (or the memory of living that way only being one generation back), but it is definitely a case of kill-or-be-killed in many parts of Asia as far as I can tell. If you take a moral stand and pass up any opportunity, you may as well go lay down and die in a ditch. Americans have had more than enough to get by and live lives of leisure for the better part of a century, so maybe people don't feel as threatened by sharing knowledge or something. Complacency? I am not sure if I would call it that. It seems like it sort of harkens back to America's roots when people came here and had to work together to survive in the new, unknown land (unknown to the European settlers that slaughtered the natives anyway). Maybe as America matures it will become more like the much more established nations and lose its spirit of innovation and become ruled by social dogma. Hopefully not, but it seems to be the way we are headed.

That's how it seems to me, anyway. I was fortunate enough to be born in the US to educated parents, so I'm well aware that I might be off-base in what I think I know about life elsewhere. Feel free to correct me. In my opinion, understanding life in tougher parts of the world is vital because people from those parts are the main demographic that is coming to the SFBA right now, and if the demographic is going to shift to eat-or-be-eaten then it's probably a good thing to be aware of! It worries me more that it is the wealthy people from those places that are moving here because you don't get rich in tough places by being a nice person. If it was hard working people that wanted to come here and build a better life for their family, I'd not be worried, but it seems like are a lot of people coming here to whom RE is an accessory and they believe America to be culturally inferior. Americans did just that to much of the rest of the world for decades...not so fun when the tables turn though.

The last lines in your story sound like a compelling argument for not raising kids in a place like this.

Gotta keep a finger on the area's pulse. If it goes full-tilt toward dog-eat-dog, I am outta here. When my wife and I have a kid, it stops being about what we want (aside from our kid being a well adjusted adult someday). I bet I could convince my parents to retire somewhere else.....

Seattle and the east side of the lake are a little too pricey for me if I was actually going to leave CA to somewhere cheaper, and I'd lean more towards the area north of Denver and just east of Boulder. Lots of growth there, clean air, people with common sense. I love it when my work sends me out there. A guy that I work with out there got a 2000SF new house on 20 acres with a 5000SF workshop/barn for $300k and a 25 minute drive to work. Nice summers, the winters are cold but nothing like the northeast, and people actually know how to drive. He complains that all the Californians are moving there and turning it into a welfare state lol.

SFace, sorry to thread-jack you. FB popped a bit today amid news that mobile is getting stronger for them. It'll be a very interesting couple of years to come as we see whether or not they can keep executing on their strategy to monetize human interaction.

bmwman91 says

Gotta keep a finger on the area's pulse. If it goes full-tilt toward
dog-eat-dog, I am outta here. When my wife and I have a kid, it stops being
about what we want (aside from our kid being a well adjusted adult someday). I
bet I could convince my parents to retire somewhere else.....

Don't kid yourself, your lovely spouse is not going to Denver. In several years, when your salary is 50% higher and in the prime of your career, you're not going to Denver as well.

See bmwman, I could not say it better than our Amex PLATINUM friend; -that's what the SFBA is become.

It's all about the prestige, and the money, and being "landed" in a place that your relatives "back home" covet. Oh yeah and the money. But not the kids.

Don't "kid yourself".

Silly bmwman.

B.A.C.A.H. says

It's all about the prestige, and the money, and being "landed" in a place that your relatives "back home" covet. Oh yeah and the money. But not the kids.

How we lost Paradise...

Facebook current price earning ratio stands at 179...
there is a reason why we look at PE ratios..
but the meaning has been lost.

thomaswong.1986 says

Facebook current price earning ratio stands at 179...

there is a reason why we look at PE ratios..

but the meaning has been lost.

But you also have to look at the company's growth. Looking at the current PE without evaluating its potential growth and next year's PE is a mistake. Some stocks sell at a single digit PE for a reason. GOOG went public 10 years ago at $85/share and had a PE over 100. It's a 10 baggers 10 years later with a much lower PE. It's all about earning growth potential.

thomaswong.1986 says

Facebook current price earning ratio stands at 179...
there is a reason why we look at PE ratios..
but the meaning has been lost.

It has not been lost, just need to sync up with the rest.

50% yoy growth rate (and amazingly accelerating again)
75% gross margins
31% pre tax operating margins.

operating cash flow less cap -ex for the last 12 months was $2B. The PE will go way down once the next quarter rolls off (approximatelt in the 40's)

based on the latest SEC report.

In any case, FB have the type of business that every extra dollar goes straight to the cash vault. That is why the PE is lofty. And it's about 40X-50X multiple not 180 anyway.

and as eman said, if you discount PE, you would have missed out on BIDU which had a PE of 100+ (trailing PE of approx 125) when it went public and went on for a 23 bagger in 9 years. Google came in as the biggest IPO ever so it's not like it was a small company at IPO.

@SFace,

You will have to sell me on RENN. I'm looking at its balance sheet and not too crazy about it. Yes, it has a ton of cash and no debt. At this burning rate, the cash should last for another 9 years or so. Do you know when it's projecting to be profitable? Is this one of those stocks that's speculative with huge upside potential? :)

bmwman91 says

In my opinion, understanding life in tougher parts of the world is vital because people from those parts are the main demographic that is coming to the SFBA right now, and if the demographic is going to shift to eat-or-be-eaten then it's probably a good thing to be aware of! It worries me more that it is the wealthy people from those places that are moving here because you don't get rich in tough places by being a nice person. If it was hard working people that wanted to come here and build a better life for their family, I'd not be worried, but it seems like are a lot of people coming here to whom RE is an accessory and they believe America to be culturally inferior.

@bmwman,

I don't want to get too much into these issues on-line, but I have a totally different take than you. We can meet and discuss these issues once of these days. Long story short, I have a more optimistic view than you, and I believe I'm 51% right :)

E-man says

But you also have to look at the company's growth. Looking at the current PE without evaluating its potential growth and next year's PE is a mistake. Some stocks sell at a single digit PE for a reason. GOOG went public 10 years ago at $85/share and had a PE over 100. It's a 10 baggers 10 years later with a much lower PE. It's all about earning growth potential.

Sorry, but that kind of thinking is rather more "bubble thinking" and very risky. Perhaps you should compare PE ratios for past growth companies during their hayday.. such as Intel to Cisco, you wouldnt find outrageous valuations back then. It was more of "Show Me" the earnings before any appreciation occurs.. Today, you are paying and not earning any future potential gains., leaving you exposed to losses. We truly have a bubble mentality to stock and housing prices these days.

Cisco price was fueled by more rational thinking than todays Facebook

http://money.cnn.com/magazines/fortune/fortune_archive/1993/03/08/77601/

WEIGHING GROWTH VS. VALUE THE SMALL-CAP WAY
By Shelley Neumeier
March 8, 1993

DiCarlo also favors Cisco Systems, a producer of software for computer networks. At $88 a share, the stock trades for 35 times his 1993 earnings estimate. Profits will rise 32% next year,

SFace says

In any case, FB have the type of business that every extra dollar goes straight to the cash vault. That is why the PE is lofty. And it's about 40X-50X multiple not 180 anyway.

and as eman said, if you discount PE, you would have missed out on BIDU which had a PE of 100+ (trailing PE of approx 125) when it went public and went on for a 23 bagger in 9 years. Google came in as the biggest IPO ever so it's not like it was a small company at IPO.

How high is too high and too expensive only to find a loss ?

and in hindsight we can see the overvaluations even with the likes of apple and yahoo in late 90s... many suffered 90% decline in prices.

Apple stock hits eight-year all-time high
Trading peaks at best price since 1991 ever
By Tony Smith, 3rd September 1999

http://www.theregister.co.uk/1999/09/03/apple_stock_hits_eightyear_alltime/

Shares in Apple yesterday hit their highest price point for eight years, peaking at $71.44 before sliding slightly to close at $70.56. An today, the rise continued, leaving the stock at the end of trading at $73.5, up $2.94, the highest price the shares have ever commanded.

Qualcomm PE 356x next years earning...

http://www.forbes.com/2000/04/06/feat.html

Now the San Diego, Calif., company can focus on selling chipsets, which represented half of its $4 billion in 1999 sales, and expanding its royalty mill, which accounts for 25% of its revenue. But in order to grow quickly enough to justify its stratospheric price/earnings ratio (356 at the end of March)

This was actually the easist call I have made. When you beat by that much and in mobile, there was a transformative change. I knew institutions would be buying.

And boy did it ever, they have been buying for 3 months.

I never really thought much of Facebook, they obviously have ingenuity. I still don't have any advertising on my mobile phone yet but I know the first time I click yes to anything I'll start getting bombarded.

I'm not sure if FB will be there few years from now. But why would I pay $52.00 per share to a company only earning $0.22 per share that pays no dividents?

Maybe I'm too old to understand Facebook.

On 10:35pm Tue 13 Aug 2013 mell says

Aside from SRS as mostly a day-trading vehicle for which I don't see much downside in a sideways-to-down market (tapering looming) and rising inters rates, I can offer MSTX: crappy management with questionable history including reverse splits and name changes, therefore trading near all time lows around cash value per share with one particular interesting drug in the pipeline (funded through commercialization on successful phase 3 trial) which is MST-188. Downside: wherever your stop loss is below 42 cents, upside, 2x-3x, but with a first target sell at around 65 cents (where recent investors' warrants are priced) or below. No investment advice here ;)

http://finance.yahoo.com/echarts?s=MSTX+Interactive#symbol=mstx;range=3m;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

Who da Oracle now, bitchez? ;)

FortWayne says

Maybe I'm too old to understand Facebook.

LOOK AT ME! LOOK AT ME!

Facebook is for insecure schoolchildren, both chronological and mental age. Also, nipples are bad but decapitation is A-OK.

http://gizmodo.com/facebook-is-lifting-its-ban-on-decapitation-videos-1449606221

Vicente says

FortWayne says

Maybe I'm too old to understand Facebook.

LOOK AT ME! LOOK AT ME!

Facebook is for insecure schoolchildren, both chronological and mental age. Also, nipples are bad but decapitation is A-OK.

http://gizmodo.com/facebook-is-lifting-its-ban-on-decapitation-videos-1449606221

What is wrong with our society, sometimes I get to think that we have way too much freedom.