patrick.net

The right way to do it is to get a PhD from a top-notch department when you’re young, get a tenure-track job, get tenure, and then you’re fine as an old-geezer PhD with tenure.

Wow, you've now ventured so far into troll-dom I think there is no return for you. You clearly do not know what the fuck you are talking about. Do you hold a Ph.D? If not, kindly refrain from making comment about topics which you know little or nothing.

Wow, Face Reality knows everything! Let me guess, you are a gray-haired old WASPy fuck of a boomer? Are you aware of how transparently your own personal insecurities come out in your posts on here?

Dude, I think it's time you Face Reality, put the gun in your mouth and pull the trigger. You life is obviously not worth living. Let’s see according to your vast treasure trove of knowledge, housing in Ca has reached a permanently high plateau, all renters should FACE REALITY and never ever even consider home ownership as a goal. Likewise, Ph.D's in industry should likewise put gun in mouth because Universities won't hire them. I know a guy like you, works as a troll for IBM, funny thing about this guy, is that he, like you, is a vast treasure trove of knowledge, all gleaned from some mysterious source, as he rarely ventures far from his monitor, Doritos, and Mt.Dew.

Again, you Sir are a shining bright light on this Blog. Your comments are not only welcomed, but encouraged.

Why the attack on Face Reality?

He makes ill-informed comments on topics he clearly knows nothing about, i.e. the hiring practices of Universities.

"Why the attack on Face Reality?"

His know-it-all take on "how to make it America" really started to piss me off. Everyone's situation is different.

Furthermore, if you're over 40, you are protected by Federal Law.

www.eeoc.gov/types/age.html

I for one fucking hate ill-informed comments. Ok, FR, if you are over 40, you are protected by Federal Law, why would a University risk the Uncle Sam smack down?

He makes ill-informed comments on topics he clearly knows nothing about, i.e. the hiring practices of Universities.

Perhaps different universities have different practices. At UC Davis, I have had many profs who have returned from the industry (usually a researching job at a major lab though). At Stanford, profs appear to be less so.

"Yes, I hold a PhD."

You sure as Hell don't have a PhD in Economics.

His know-it-all take on “how to make it America” really started to piss me off. Everyone’s situation is different.

I thought it would be good if every know-it-all gives his/her opinion. ;)

I work with a guy, has a Ph.D from back in the day, has published ~5 articles a year for the past 30fuckingyears, works in industry, is 60, as is actively courted by Universities, in fact, even Stanford has come calling. All one has to do is look at simple demographics in regards to hiring at Universities, there simply won't be enough young professors to hire in the next 15-20 years. The population distribution simply does not allow it.

Yes, I hold a PhD.

Perhaps you might want to consider applying for a refund. Where and what was your Ph.D. in?

industry research lab

Hasn't existed for over 25 years.

The one thing that I really don’t get about some RE bulls is the argument that RE is always good, and stocks are always bad. That makes no sense to me.

You don't get it? They are RE bulls! Of course they will attack all other competing asset classes. ;)

New thread: “Rummage $ale Chic: Why We’re Going Gaga Over Pinching Pennies”

New thread: Everyone's rich but you, why are you such a loser. :)

I don't speculate. I hedge to reduce risk. My number one investment is FDIC insured CDs yielding around 4%. I am worried about inflation and currency devaluation because of the dollars that I hold. Bernanke will under report inflation by 2-3% over the next decade in order to erode the federal budget deficit and the entitlements by 25-35%. It will also be a less painful way of lowering consumer/mortgage debt than an 80% crash in nominal prices. NOT inflating the currency would encourage systemic collapse. There is no other alternative. The PB of China, Bank of Japan, and other creditors will tolerate this because it is in their interest to do so. If currencies revalued in a dramatic single event, we would have a depression and no one would buy asian goods, causing extreme unemplyment and political unrest. By agreeing to a **slow** devaluation, Asian governments will have time to diversify away from the dollar standard (Bretton Woods II) and to create a domestic consumer class that eases their dependence on the American consumer. Remember, it takes a banker to see the downside in everything. They act to prevent the worst case scenarios, not to maximize upside. They will gladly accept the gradual erosion of the dollar denominated paper that they hold in exchange for avoiding a precipitous collapse. That's how bankers think. I work with lots of them. It's the result of being in a low margin business.

Commodities and currencies may sound **Exotic**, but they are in fact an alternative asset class that can increase diversification and act as portfolio insurance--a risk reducing strategy, not a speculative one. As far as it goes, excess returns are generated by getting into investments ahead of the herd, and bailing once the herd has discovered them and widened the PE to unsustainable levels. Time and time again, behavioral finance experts have proven that "investors" chase performance. They buy when a stock has peaked, and sell at a loss when it crashes. A half-trained monkey could have made money from 1982-2000 by buying an index on the S&P. Much of that gain was from PE expansion, ie investors believed that stocks would out perform bonds, so they were willing to pay more, and thereby eliminated any potential for future profit. Past performance does not guaranteel future profits. In fact, it prevents them. The herd piles in. What is contra-cyclical to equities? Commodities. We are in year 5 of a secular bear market for stocks that will last 15-18 years, and year 5 of a secular bull market for commodities. Remember the above thesis that the dollar will be worth(less) due to currency revaluation and inflation while at the same time the world loses its reserve currency? Central Banks have to find an alternative store of value, and for 10,000 years, that has been gold, hence the bullish long term fundamentals. What will happen? The herd will eventtually catch wind, pile into the 'Safe haven', and over value gold into a speculative bubble. That has not happened yet, making it a far safer investment than the over valued S&P. If you price gold in terms of the number of barrels of oil that gold shoud buy, it is still cheap. As for energy, remember the law of diminishing returns: you go after the low-hanging fruit first because it makes the best returns. The easy oil is gone. Does that mean that we will run out? No. It means that we will pay ever higher prices for our oil because it is more expensive to recover. As billions of people in Asia become consumers, we will not be able to adequately increase capacity, and prices will further increase. These price increases will spill over into other forms of energy, i.e. coal, nat gas, and nuclear. That is our best case scenario. what's the worst case scenario? Massive energy shortages that result in hyperinflation. Again, I don't speculate, I evaluate the risk and hedge so that I win no matter what. I want to prevent the worst possible outcomes (bankruptcy, lower standard of living, low liquidity) while still making above average returns.

I am gen x, not a baby boomer. I learned that losing money and taking excessive risk is a bad idea during the dot com boom. I learned it the hard way. what is the riskiest thing that you could do right now with a 401K? Buy an index on the S&P, a long dated bond fund, and the "closet" indexes called growth or value funds in a "Set and forget" style. Dangerous as hell. BTW, I love investing. If I was retired, I would be worrying about my net worth on a daily basis, because I think that it is fun to compete against the smart guy on the other end of the trade. Fun as hell. Yippeee! Apart from that, I have a family, and I want to make sure that will be taken care of.

I would encourage anyone out there NOT TO TAKE MY INVESTMENT ADVICE. Do your own homework, and learn your own style. Just don't be lulled into thinking that an employer 401k is a safe way to get a guaranteed 12% for retirement as you pick all the same funds that your co-workers pick. It wont. There is no safety in numbers when investing for the long term. The herd always gets it wrong. Period.

Sorry for the rant,
Deo Vindice

I'm sorry FR, I just checked and the Brothers Grimm University (BGU) does indeed offer a Doctorate in Troll. Apologies on the refund comment.

BTW, BGU went 10-6 in the big game Vs HCAU (Hans Christian Andersen U) this past weekend.

Just don’t be lulled into thinking that an employer 401k is a safe way to get a guaranteed 12% for retirement as you pick all the same funds that your co-workers pick.

Exactly. :)

DeoVindice, how do you trade currencies and commodities? Do you trend-follow or do you implement other strategies?

Deo (won't make the Ronny James Dio comment I swear), what is a good hypothetical mix for a 401k, my company is using Fidelity and they offer about 45 different funds.

Face Reality, now I know why you are so bullish about Bay Area real estates. People tend to generalize according to his surroundings and experience. Since you are an entrepreneur and deal with innovations on a daily basis, it is easy for you to think that the entire Bay Area is full of opportunities.

You are more successful than me at this point and I admire you. However, using your own experience to judge the economic outlook of a region is not necessarily fruitful.

You offer opinion as fact. Bell Labs? Give me a fucking break, Bell Labs hasn't truly existed for 20+ years. Research in the US is done solely at research Universities and guberment labs. Decent research in limited areas, blow me. Your odd statements are wonderful, research comes in two flavors, applied or fundamental. Now research in itself is concerned with the discovery of knowledge, primarily for knowledges sake, applied research is concerned with making more money, therefore, it isn't really research at all. I have found your comments offer no value whatsoever, they are based on your biased outlook and for the large part do not pass any rigor. At least I've got humor value, what the fuck exactly do you bring to the table again? Oh, that's right, encouraging people to face reality, which in your world essentially equates to being a fucking slave.

Sorry to keep ranting, given that I've never posted b4 today. I guess this has just been too cathartic for me. Or maybe it's just all that ex-lax I took. What was it that they called it when Francisco Franco died, el gran destape?

SQT: Right on! All asset classes become over valued, and then they become undervalued. No one investment system works all the time. If people come to believe that have a guaranteed path to riches, they pile in like sheep. Once the bubble pops, they run like hell and abandon the asset to the vultures. Doesn't matter if it is stocks, bonds, real estate, tulip bulbs, or beannie babies. It's as old as dirt. It's never different. The only way to make money in anything long term is to evaluate the fundamentals of an asset class and particular investment opportunity in that asset class. If the numbers don't work, don't buy it. If they do work, jump for joy, but don't bet more than you can afford to lose. RE is a bubble, the bond market is a bubble, and the broad equity market is a bubble.

I personally never rant.

Deo Vindice: excellent post.

Model of Restraints? While the BDSM scene intrigues me, I've never actually modeled restraints.

Note: not investment advice.

No, in my world it means taking some initiative and becoming part of what makes this area unique. Living a passive life waiting for some big crash is “being a fucking slave” (not to mention lazy).

I guess it is good to be optimistic all the time...

There is nothing wrong with passivity. One should attack (be active) only when the conditions are prime.

You have to play the game - be entrepreneurial, invest, take risks, send the wife to work, etc. Sure, luck helps, but it doesn’t tend to favor people who aren’t in the game. Just sitting there collecting even a $100K salary doesn’t cut it here anymore. That’s reality, and you have to face it. How? Either move or work on making more money.

A troll is a troll is a troll, what makes the Bay Area intollerable is money above all else, something you subscribe wholeheartedly to. As far as pearls of wisdom go, how about this one, Universities are very allergic to old PhDs trying to get in - not much hope there. The right way to do it is to get a PhD from a top-notch department when you’re young, get a tenure-track job, get tenure, and then you’re fine as an old-geezer PhD with tenure.

What exactly do Trolls code in again? Let me guess, Bridge++?

FR, if you aren't just some fatty at home swilling MtDew and hoovering doritios, I'd watch the fuck out, because based on your comments which indicate your attitudes, your employee's likely want to kill you.

Money above all else, right? If you aren't willing to work 80+ hrs a week, or can't seem to make 500K a year, Face Reality and move on. Reality is what you make of it asshole and you seem to have a rather bleak one. As far as praying for a crash, I don't believe in a God, as far as "belief" in a crash, doesn't take belief, it's already happening. This area did in fact used to be great, before assholes like you moved in and made it so everyone has to either face reality and make more and more money or move away.

http://tinyurl.com/72j5s

“applied research is concerned with making more money, therefore, it isn’t really research at all.”

I won’t even touch these pearls of wisdom.

Evidently the NSF disagrees with you. Again, kindly shut the fuck up about topics you clearly know nothing about.

Wow, I didn’t realize I was such a mover and shaker. Still, I’m sure “assholes like me” aren’t everywhere, so you should be able to find a place to build your surfing utopia where no one works too hard and there’s a house for everyone (if it is indeed a viable model in today’s global economy).

FR, looks like you really care what people say about you.

Again, why is real estate investing the only way to “take action?” Why are other types of investments considered passive?

Yes. I consider real estate very passive. If you want action, you will be looking at 3-min charts. ;)

"Wow, I didn’t realize I was such a mover and shaker."

Sure you did, or at least that's how you think of yourself. The only reason you've come to this blog is to piss on the little people, because in your world only the peasantry would ever be so silly as to "complain" about this housing situation. After all, they're just jealous because they're not so smart and ingenious as you were to buy real estate before the boom. You're a PhD holding, small business owing elitist cocksucker who thinks the rest of the world needs to "face reality" and be more like you. You have no clue how the real world works outside of your insulated little "reality" of other elitist old boomers.

You have no clue how the real world works outside of your insulated little “reality” of other elitist old boomers.

I love it. Too funny. Won't it be great when every baby boomer who loses his/her ass buying insanely over valued real estate ends up flipping burgers until they're in their late seventies? won't it be great when the baby boomers in the alpha cities like SF, LA, SD, Boston, DC, and Chicago find out that there aren't enough multi-millionaire 35 year olds to buy their McMansions? Won't it be great when the communist states find out that raising taxes to pay for baby boomer rertirement only sends young workers to low tax red states. Oh yeah, Stocks return 12% over the long haul. Yeah, the baby boomers are going to reinvent retirement all right.

LMFAO

I believe in taking the initiative to improve your situation by being more active and working harder IF YOU CAN.

What initiative can I take to lower the housing P/E ratio? Even if I make more money, buying will still be relative unaffordable compared to renting.

Initiative? Try patience. You're going to get the best buying opportunity for Bay Area real estate EVER in 5-7 years. Don't forget to low ball and go after funky properties that the market can't price efficiently. Don't be emotional. It's not a home, it's a house. And make the seller bake YOU cookies.

But whatever you do, please, please, please, do not make the same mistake that I did with home ownership and "Try to make it happen". A wise friend of mine once told me, "Don't pursue wealth. Attract it." The vaginal strategy is definitely the lowest risk and most fun.

SQT,

I have a buddy with a great house in Marin and a Ferrari who made over 700k flipping ocean front houses. I'm sure he'll flip the Marin house too. How did he do it? He low balled on a dozen properties per buy. He found an exploitable market inefficiency. I call it "The rich man's wife is picky" inefficiency. If an owner bought CA ocean front real estate in the '70s or 80's, his cost basis is low. The property was never built with the high end finishes (Brazilian walnut floors, high-end kitchens, marble master suites, etc.). Often times, they did not bother to build the decks that take advantage of the views (like off the Master Suite, for example). Most long time owners don't want to put a penny in it to sell it, much less go through the hassel and delay. So it goes on the market either with decay and blight, or even just the modest trim and finishes that you would find in an apartment complex. Cheap finishes are especially common if the house was built on spec in the 80s. Construction margins are razor thin, so builders can be outrageously cheap and have every incentive to put in the cheapest carpets and trim. If the rich man's wife walks in as sees rot or it looks like her daughter's college apartment, she's out of there. You can forget about the rich man's wife saying, "wow this my oppty to redo the whole thing". The rich man's wife won't, and certainly not for the sake of saving money. Such women burn money as needed. If you were to put in every bit of high end finish you could, she might say, "Wow, you've done such a nice job. It gives me great ideas for when I gut and start over". That I've seen. But people who are truly willing and able to buy high end real estate will flee if the property doesn't live up to their expectations. This is not a theory; my buddy has gotten rich doing it. I plan to do it myself. I even did it once, just not intentionally. HOWEVER: Do not try and catch a falling knife. This market is dangerous. Your time will come, just not for several years. If you jump in, the risk is just too high. Remember Warren Buffet's number one rule of investing, "Don't lose money!"

Deo Vindice

Deo, Deo, Deo,

401K's were, and still are designed for "working" people. Please not the emphasis on working. I'm running a business let's just say for instance, we make cardboard boxes. I don't need my employees trading options, hedging currency bets, doing strips, straddles, butterflies, shorting stocks, covering margin calls and telling me how they are smarter than Ben Bernanke. I want them making and shipping cardboard boxes. If you still don't get it, then we'll call it a "Savings Plan" not a "Git Rich and Git Gone Plan". Every Man a King! We make boxes here people!

401K’s were, and still are designed for “working” people. Please not the emphasis on working. I’m running a business let’s just say for instance, we make cardboard boxes. I don’t need my employees trading options, hedging currency bets, doing strips, straddles, butterflies, shorting stocks, covering margin calls and telling me how they are smarter than Ben Bernanke.

There are IRAs for Futures though. Personally, I have no faith in such retirement accounts. Money that cannot be easily moved overseas and/or converted to another hard foreign currency is not real money.

ppp

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