The Stock Market and Investing

kyfdx · December 2011

Eddie Lampert bought KMart out of bankruptcy as a real estate play (which was his forte)....

He then leveraged the property to finance buying Sears... another "property rich" retailer..

Unfortunately, he isn't a retailer, and every plan they've come up with to fix the company is worse than the last.. And, at least in my area, their real estate locations sort of suck..... so, there's that.... lol

circlew · December 2011

And, at least in my area, their real estate locations sort of suck.....

Interesting, both the local Buick/GMC dealer and Chevy dealer are the same here in central NJ. I can't believe every other automaker upgraded their showrooms except GM. :confuse:

Regards,
OW

robr2 · December 2011

Around here Sears' department stores are typically located within a mall. The K-Marts and Sears Hardware locations are usually stand alone.

Oddly, the mall in my town has a Sears and IIRC they own that portion of the mall - sort of a condo I would assume.

kyfdx · December 2011

Most anchor stores in malls own their own piece of the real estate...

In our area, the Sears stores are all in the 20-35 year old malls.... they never seem to be in the latest and greatest retail spots...

gagrice · December 2011

WASHINGTON (AP) -- A congressional panel has voted to subpoena former Sen. Jon Corzine to testify next Thursday about his role leading MF Global, a brokerage firm that collapsed this fall after a disastrous bet on European debt.

The hearing will be a rare moment in Washington. Congressional historians had to reach back to 1908, when a former senator from North Carolina was called to testify in connection with a corporate lobbying scandal, to find a similar instance of an ex-member of Congress being summoned by his former peers.

houdini1 · December 2011

I guess they had to do something with a couple of billion dollars missing ! :mad:

gagrice · December 2011

Maybe Cozine can share a cell and stories with Madoff. Come up with a Ponzi scheme that works better.

tagman · December 2011

Here's another quick update on my company financial data which has never failed to predict a recession... at least not yet... LOL.

I am glad to report that my latest data further suggests that there is absolutely no recession on the near-term horizon. In fact, we just ended one of the best Novembers in many years.

Also, fwiw, I am now more seriously considering real estate instead of equities.

TM

ljflx · December 2011

Record revenue and profit year for us and 2012 looks real strong and should easily top 2011. Advertising is very much in demand, stronger than a year ago at record rates for TV, a further indication of health. But the market has Europe hanging over its head. If that is resolved the stock market would make a quick run to 13K and then 14K in Q1 IMO. So keep your eye on stocks. Jobs won't really improve until housing makes a comeback.

tagman · December 2011

Jobs won't really improve until housing makes a comeback.

And, importantly...the other way around! Once the larger general employment picture improves, so will then the housing picture result in improvement, which will then in turn further boost construction & home-building related jobs and an improved economy, as equity builds in homes so does wealth, increased lending/borrowing and increased spending... which further grows the economy. And, of course, increased employment provides increased tax revenues and reduced entitlements, which gives Washington a better opportunity to get their house in order.

So, more JOBS here on American soil is the primary key.

TM

gagrice · December 2011

Don't underestimate the negative impact the Frank-Dodd bill has had on lending. The banks went from handing out money to anyone breathing, to it being so tight it is nearly impossible to get a home loan without 20% percent down.

tagman · December 2011

HELOC depends on increasing real estate values, which would increase the lending/borrowing by existing homeowners, resulting in increased spending.

Increased employment will kickstart housing demand and then the market values will inch upward, increasing equity and HELOC activity, and ultimately assisting consumer spending, which is the economy's engine.

It really gets down to more American jobs.

TM

anthonyp · December 2011

That is some good news for you and Jf

I also think we have had the second best year we ever had, but won`t know for a couple of weeks more......

Tag as you know I have been encouraged with the real estate, but only for what I would consider a very desirable house to personally live in....In other words, I do not feel so encouraged I would want to purchase anything that I myself did not want to live in, and it would have to be a great price......I know a number of people who own several properties that they rent.....I just don`t know about that arena, nor do I want to

......Just one speculative house at a time Tony

fintail · December 2011

A lot of that depends on personal credit, too. Homes are still selling, and I doubt even a big minority are putting 20% down, so there is more to it than that.

I agree 100% jobs need to come before housing, and any talk of recovery can only come when jobs recover, and wages at least pace living costs.

circlew · December 2011

The economy will grow but we must never forget the corporate crime that until this day has not been brought to justice.

Someday, perhaps....

Countrywide protected fraudsters by silencing whistleblowers, say former employees

Regards,
OW

houdini1 · December 2011

Until we get a completely NEW D.O.J., not one of these crooks will ever go to jail.

gagrice · December 2011

Homes are still selling, and I doubt even a big minority are putting 20% down, so there is more to it than that.

I think you will find that the bulk of home sales are bank owned. They are much more lenient when they are unloading an empty home they hold paper on. I don't think you would buy from a home owner and get a great mortgage. Most Realtors around here are looking for buyers with 20% down.

imidazol97 · December 2011

I listened to an interesting discussion this morning about what happened in the market last week. The big runup on the market because the central banks intervened to pass dollars to Europe is wrongheaded.

The move was to shore up Goldman, JP Morgan, Citi, and BankofAmerica, who collectively have 200 trillion $ of exposure to the Eurozone. Those banks who have already been bailed out by the US have once again received intervention. Too big to fail and they have kept on with risky bets.

robr2 · December 2011

I think you will find that the bulk of home sales are bank owned. They are much more lenient when they are unloading an empty home they hold paper on. I don't think you would buy from a home owner and get a great mortgage. Most Realtors around here are looking for buyers with 20% down.

I guess it would depend on where you are. Here in New England, we don't have the huge glut of bank owned home and half empty developments. That's because we don't have much empty land available for development around here in the first place.

Where land is cheap and plentiful, there are more issues with that. Not to say there aren't any bank owned here, but it's not the bulk of home sales.

fintail · December 2011

Yeah, same thing here. Although foreclosures are still at record rates, it's nowhere near areas like the southwest and southeast where some entire developments are half empty. Although there is a new "luxury" high rise a few blocks from me that appears to be about 75% vacant when viewed at night - finished in 2008. But I think their pricing was/is too ambitious.

I still see ads advertising "3% down" and similar. But this doesn't sell things either, I think the job market is still a downer for a huge amount of people.

gagrice · December 2011

Most of the foreclosures are in CA, AZ, NV and FL. In the case of all but CA, it was probably the retirement homes that were given back to the bank when he market went in the toilet. CA is mostly way over priced homes being upside down. When we looked at places in KY and Indiana, the selling prices were maybe 10% lower than in the early 2000s. I am going to look at a 3300 sq ft home this morning that just came back on the market. Sold in June 2007 for $815K. It is listed by the bank at $374,900. Has a 1BR 1 Bath apt over the garage. And a separate art type studio. Should be able to rent all for about $3000 per month. Which is a decent return on investment. Plus it is within a mile of my home. Easy to keep tabs on.

robr2 · December 2011

Most of the foreclosures are in CA, AZ, NV and FL. In the case of all but CA, it was probably the retirement homes that were given back to the bank when he market went in the toilet.

IMHO, it wasn't retirees that gave back homes but more first time and over stretched home buyers.

I am going to look at a 3300 sq ft home this morning that just came back on the market. Sold in June 2007 for $815K. It is listed by the bank at $374,900. Has a 1BR 1 Bath apt over the garage. And a separate art type studio. Should be able to rent all for about $3000 per month. Which is a decent return on investment. Plus it is within a mile of my home. Easy to keep tabs on.

If you aren't planning on paying cash for that, note that banks aren't too keen on lending for income properties unless you have the personal cashflow or assets to cover the mortgage. Banks don't like to hear that an apartment is empty so you can't pay your mortgage on it.

robr2 · December 2011

Although there is a new "luxury" high rise a few blocks from me that appears to be about 75% vacant when viewed at night - finished in 2008. But I think their pricing was/is too ambitious.

fin - you're in Seattle, is that correct?

The only "development" that I recall in greater Boston failing was west of the city when a developer built a 12 story luxury building with over 200 units. It was attached to a large mall and had prices ranging from $430K (studio) to $1.7 million (penthouse). Only 35 or so sold before the developer began to sell the rest at auction for about half the asking price in late 2009.

Why anyone would want to live at a mall is beyond me.

At one time there was discussion of building a luxury tower connected to the TD Garden in Boston (and the commuter rail and subway station). The condo fee would've included season tickets to the Bruins as their owner was to be the developer.

gagrice · December 2011

I am almost sure that would be a cash price. My appointment is set for tomorrow morning. It also has inside storage for 12 vehicles. Or shop rental space. You are right about banks lending on rental property. A friend is trying to borrow against her rental units and the bank is not interested in even talking to her.

fintail · December 2011

I'm in a neighboring boomburb, yes. In the city of Seattle it is even worse, lots of vacant lots and stillborn projects. The city itself pretty much eliminated its planning department - no reason to have it with nothing being developed.

The place near me had pricing like that, you could get in for 500K if you like spending 1K/sq ft, and the penthouses were 7 figures. With HOAs and taxes/insurance, this would be just stupid IMO. I think they haven't adjusted their pricing much, so at night the place is pretty dark - I guess whoever owns the place can afford to wait, but they are going to be sitting for awhile.

gagrice · December 2011

Clinton Collected $50K Per Month From MF Global
Former president's new firm Teneo Strategy was hired to boost Corzine.

A former MF Global employee accused former president William J. Clinton of collecting $50,000 per month through his Teneo advisory firm in the months before the brokerage careened towards its Halloween filing for Chapter 11 bankruptcy.

Teneo was hired by MF Globals former CEO Jon S. Corzine to improve his image and to enhance his connections with Clintons political family, said the employee, who asked that his name be withheld because he feared retribution.

They were supposed to be helping Corzine improve his image as a CEOI guess you can tell how that went, he said. Corzine resigned as CEO and chairman November 4.

Before Corzine joined MF Global in May 2010, the firm was a smart and well-run commodities broker, a culture that was turned upside-down by his leadership style, he said.

The traders would be shaking their heads, he said. They would come back to their desk and say, Well, I thought we were going to do thisbut Corzine would come by and do something else all by himself, he said.

The Teneo contract with MF Global lasted at least five months, he said. The board cancelled it after Corzine resigned.

http://www.humanevents.com/article.php?id=47938

kyfdx · December 2011

I think it depends on where you are... I'm working on an apartment complex deal, right now.... the local bank seems more than willing to do a mortgage with 25% equity...

Will let you know how it goes..

robr2 · December 2011

I think it depends on where you are... I'm working on an apartment complex deal, right now.... the local bank seems more than willing to do a mortgage with 25% equity...

Different animals. In the OP's case, if one unit were empty, that would represent a 33% vacancy rate - potentially a disaster. In your case, you could absorb one unit being empty. A 33% vacancy rate would probably never happen.

gagrice · December 2011

Went through the place today. It is actually about 4200 sq ft of living space. Only 2700 permitted. The county is after the place for code violations. The bank will not lend on it. It is currently bank owned. The realtor knows the builder who is local. It was originally listed at $1 million. Finally sold in 2007 for $800,000. The contractor that sold it carried about 50%. So the bank is into it for about the current selling price. It does have an offer. The listing agent was taking backup offers. So probably sold. Maybe the best bargain I have seen around here. The barn shop is huge with enough room in the loft for a 3 BR apt. That was the contractors office. There is an apartment at one end of the home that would easily rent for $1200, while the home itself would be an easy $2800-$3200 per month. It is the kind of property I could like. Do I want to spend that much cash on it? The realtor will let me know if the pending sale falls through.

http://www.zillow.com/homedetails/2390-Willits-Rd-Alpine-CA-91901/16905634_zpid/- -

kyfdx · December 2011

I've had my fill of being a landlord.... Investor only, for me....

gagrice · December 2011

My experience has not been great either. For example, I would never as long as I live rent to a Section8 person. I am rental free right now and would not even think of it if there was any decent investment opportunities. I am not cut out for the stock market trading. I have enough in the market right now. I would hate to lose that much, but it would not kill me.

fintail · December 2011

$1200 a month for a suite in a house some distance from employment centers? Must be a crazy market down there.

Heck, I'd be happy with that garage/living quarters setup, to heck with the house :shades:

gagrice · December 2011

I did not measure the shop but guessed it at 30x60. That would make a real nice apartment. It is set up as a contractors office with two lavatories. A lavatory with shower is down stairs in the shop. The previous owner was a contractor. It still had plans from the original owners business laying around on the floor. Something strange about the whole deal. The realtor is a friend and told me the former owner has his new house on the market not far away. He is probably hurting as all contractors are about now. They had it all hung out when the market was going crazy. Got cut off short. My house is worth about $150k less than I paid. I still like it so that does not matter much. It will be our heirs selling it. Which could be a long time or who knows. Here are a few shots my wife took of the place. As you can see it has been added onto. Which the county somehow got wind of and now it has to be addressed. Great place for parties as the neighbors are a good ways off. Folks here don't think much of driving 35 miles to work. It rarely rains and never really snows. We are about 4 miles from Interstate 8 on roads posted 50 MPH. Which is really too fast for them.

slorenzen · December 2011

Well, the house is OK(dated), but i'm COVETING that SHOP!!!

I wonder if I can convince my wife to move where the sun shines... :shades:

I'm really amazed at the prices there now!

gagrice · December 2011

The prices in San Diego are all over the board. Some beach locations are still very expensive. Visiting with my realtor friend yesterday he said homes are moving. About a third are Bank owned, a third short sales and a third conventional sales. There is virtually No single family homes being built. All of the big apartment projects in the East San Diego County are HUD Section8. Stimulus money building ghettos for the future. Many of the bank owned are being sold for cash to investors. Well below the market even today. They fix them up and rent or put back on the market. It is a buyers market if you have cash. 20% down is considered minimum. Appraisers are running scared as some are in jail over the housing bubble burst. Along with shady mortgage brokers.

This place down the hill from me was given to the realtor by BofA 9 months ago. They finally came up with a price 2 weeks ago. It was trashed when we looked in the windows after the people moved out. Looks like the bank cleaned it up to maximize the price. I will be surprised if they get what they are asking. Great views if you go outside. 30 years ago homes were not designed to take advantage of the views like today.

http://www.zillow.com/homedetails/1707-Panettah-Dr-Alpine-CA-91901/16905521_zpid- - /

PS
I love that shop myself. I figured I could put in a cabinet shop. Then I remembered I am comfortably retired and do not want to work hard anymore.

fintail · December 2011

Yeah, I could live in that shop....to heck with the house, looks big enough upstairs, and I could put a lot of junk downstairs.

I'd have hoped a contractor would know about getting permits for additions - hopefully for whoever buys it, the work was done right. That would make me leery.

About the heirs...the best retirement plan is the one that ends with the check to the undertaker bouncing :shades: :shades:

gagrice · December 2011

I have the county inspection sitting here on my desk. There is a 12x16 studio that has to go. They also say the pool has to go. Not sure if it could be done right for the county. Once they get their tentacles into a place, it is hard to win. Could be why it is selling well below market. I would make the pool into a fish pond and raise Tilapia. Cover it with a big green house and raise lots of veggies. Just too much hassle for me. I wish I had that shop on my place. Being a contractor, does not mean they get the proper permits on their own places. That was a big part of the open lending before the bubble burst. The appraisers were including square footage not shown on the county records. If I was the person that lost money on that place I would be suing the appraiser, bank, realtor and previous owner. That is exactly how my brother in law ended up losing big time. He bought that 9000 sq foot B&B that only showed 2400 sq ft dwelling. The owner contractor had built everything except the original home without permits. We warned him, but they were sure it was a money maker. It has set empty since they left it. Bank lost $1.4 million, BIL lost $600k. The Owner/contractor/Realtor/mortgage broker/appraiser, all the same couple, left the country. Went home to Italy with $2 million. Not everyone lost money in the housing debacle.

anthonyp · December 2011

That`s incredible-----Seems like they would be brought back if this is considered fraud....Tony

gagrice · December 2011

I don't know what that would entail. I know they filed a lawsuit and quickly ran out of money to pursue it. I think that kind of thing was rampant here during the peak of the housing bubble. The real sad part is they met this couple at their church. My sister in law just thought they were the most honest people. We tried to tell them a B&B that is not licensed will be problematic. It is a cool place up on a hill with views from the living room all the way to the ocean. We tried to get them to find another appraiser. It is no wonder we crashed with banks accepting those kinds of loans. Here is the place on the market 400 days now. It shows where my BIL bought it in 2004 at $2 million.

http://www.zillow.com/homedetails/16001-Skyline-Truck-Trl-Jamul-CA-91935/1706038- 1_zpid/

houdini1 · December 2011

If my wife ever saw that we would probably be headed for California right now !!

What is the downside now at the current price ?

fintail · December 2011

I'd be leery of the construction quality if it was just randomly built, even if a contractor did it for himself. Seems this place was kind of built up for value above all else. A good inspector would be nice to have.

Many who cashed out and ran away as the bubble burst fled for a reason, IMO. Maybe not entirely different from the corrupt Chinese officials who have been running away and buy their way into western nations.

robr2 · December 2011

Well I got out just in time IMHO - I think. AMR hit $1.20 today and then the bottom dropped out again before closing at $1.06. In the end, it rose 44% today.

It's not a lot of money but it's nice to have tripled my investment in about a week.

gagrice · December 2011

The downside would be making CA your primary residence. We currently have 9.3% income tax. Property tax is not bad if you buy low enough. We still have prop 13 which limits the amount the taxable value can be raised each year. Our sales tax depending on where you shop goes from 8.75% and up. No tax on food purchased in grocery stores. High gas prices and license fees. Easy to keep your home plates if you are retired. No one every bothers you. I drove several vehicles here for years with Alaska plates and Alaska Drivers license. Never a problem. So if you can afford to keep your primary residence in another state and buy here as a second home, it is quite good. You get the benefits without the major costs.

cyclone4 · December 2011

Well done! Nice job! It's always nice to make a profit.

houdini1 · December 2011

Those are the deals, that in retrospect, you always wish you had bet the farm. A good win though. We will have to start calling you ol' Brass Balls !!

anthonyp · December 2011

That`s a bit of cheerful news

Tony

robr2 · December 2011

I just got lucky - then again, any stock purchase involves luck. It wasn't huge dollars and I was prepared to kiss that money goodbye.

I only sold enough shares to take most of the profit - my initial investment is still there so if it spikes up again, I'll bail 100%.

kyfdx · December 2011

Nice play...

One thing I'd like to reiterate.... when you see a reverse split, it's time to dump that dog....

Citi is a prime lesson.... Stock was trading in April for around $4.45, then did a reverse 1:10 split... now trading for $29.83.. and, that's after a big run up over the last three weeks... ($2.98 split-adjusted)

gagrice · December 2011

Don't remind me. I keep thinking I should dump my shares of C. I hate taking that much loss. I suppose I can sell a profitable stock and wash out the loss for the year. We have a few more days to do that.

houdini1 · December 2011

We lived north of San Francisco, Sonoma County, in '78 and '79. Our overall expenses were less than in Oklahoma, where we lived before. We found the food costs were less, and utilities way, way, less.

Here in Kansas, my monthly utility bills are around $600. on average. State sales tax in 8% range, State income tax around 8% and my property tax is around $9,000 a year. California doesn't sound so bad.

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