Planning for the best

Being in the right place at the right time

I enjoyed reading this story in the Los Angeles Times about the San Francisco Giants 2010 journey to the World Series.  It is a great example of how we should all live our lives & face the hard realities it throws at us.  In a nutshell the story talks about how the Giants acquired all these different players, did PR campaigns when they were signed touting how they were the solution the team needed to become winners and move them toward a pennant and the Series.  Well, as life and circumstance would have it most of the “saviors” were sidelined for one reason or another and the guys who brought the team the pennant we’re not supposed to be there in that role:

The roster reconstruction has not gone entirely according to plan, but the Giants have shrugged off their mistakes and plowed ahead.

The ownership spent $126 million on Barry Zito and introduced him as the face of the Giants for the post-Bonds era. Zito did not make the playoff rotation.

The Giants spent $60 million on center fielder Aaron Rowand and introduced him as a big bat. He was beaten out this season by Andres Torres, signed as a minor league free agent.

“It’s a minefield — with us or any other organization,” Sabean said. “You really can’t be all that upset. There’s so much to live up to with a new contract, or the signing of a contract.

The Giants kept plugging holes, if only because they kept creating them. Of the eight position players to start behind Tim Lincecum on opening day, no more than four will be in the lineup behind him in Game 1 of the Series.

They needed a first baseman last winter, but they were spurned by Nick Johnson and Adam LaRoche. They signed their third choice, Aubrey Huff, who had no other offers, and he emerged as the No. 3 batter in the lineup.

They needed a left fielder, so they signed Mark DeRosa. He got injured, so they signed Pat Burrell to a minor league contract in May, and he emerged as the No. 5 hitter in the lineup.

They needed a right fielder, so they traded for Jose Guillen in August. They did not appear to need another outfielder a week later, but by claiming Cody Ross on waivers, they could keep him away from the San Diego Padres. Guillen got injured, and Ross emerged as the most valuable player of the National League Championship Series.

“We’ve been in the right place at the right time, where you’re able to turn things around,” Sabean said. “You can do that when your pitching is that strong. You can do things that are, quote, gambles, or maybe not your first choice.”

There’s something to be said about being in the right place at the right time.  What a great parable on life.  Planning, taking action, adjusting, adjusting, adjusting and things work out.

Wishing you a life of fullness of experiences and riches beyond your imagination!

Indeed,

Larry

You can read the full story by Bill Shaikin here ~ These are not the Giants of Willie Mays and Barry Bonds

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Why Home Price Reports Are Irrelevant

This is actually a rather frank and honest assessment by a Real Estate Reporter about Real Estate reporting.  You’ve gotta love honesty and the media admission about hype – it is a job after all and we’re all glad when we have one of those!

The report reads:

We are already selling homes at the third worst pace on record, and that was including a 10 percent monthly bump up from August to September.

If sales plunge, inventories rise, and when inventories rise, prices fall.

Do they fall everywhere? No. Is all real estate local? Yes. And that’s especially why I can’t stand these “national” home price reports. And yes, I recognize the contradiction … that I will continue to report these price surveys on TV several times over. It’s a living.

————

Yes, all real estate is local or should that be “relative”

InDeed,

Larry

 

 

Unfair Advantage? – Flash Crash part II

OK. You’ve got the concept of how the system works.  Now let’s do a little math.  If I know that a stock is going to change in value by 1 cent ($.01) and can obtain it a fraction of a second before someone else does and then sell it to them for the 1 cent difference often in less than a second I can make $0.01 (1 cent).  Now I’m not buying just one of each stock, let’s say I do this with 10 stocks for 1 million shares of each that’s 1,000,000 x 10 x $0.01 or $100,000.  Not a bad trade for less than a seconds work.  Certainly it isn’t foolproof and doesn’t result in a profit on every trade but how many seconds in a trading day?  6.5 hrs x 3600 sec/hr =  23,400 opportunities in one trading day.  Not bad odds.  So is the deck stacked?  Do some players have an Unfair Advantage?  Is the game Rigged?  Let’s think about this a little more.

How can a high-frequency trader get in and out of security before someone else completes their trade?  They have very fast supercomputers and excellent programmers, the best money can buy.  Yes Larry but so do many of the big players.  Remember those telephone lines and fiber optic cables we mentioned.  This information travels between computers in the form of bits of information at the speed of light.  These electrons that carry the data don’t always take the most direct path and often may run into congestion – think of a freeway at rush hour.  So if you can route your electrons between computers faster than the other guy you win that race.  Guess what.  As part of its modernization efforts the NYSE has a brand new state-of-the-art data center.  The exchange is a business in business to make money so if you have this incredible computing center and you can lease space to your customers for a fee in the same location, a practice known as co-locating, you can make some money.  Now if my electrons only have to travel around a room or even a mile outside and back inside the building and the other guys electrons carrying his order leaves his computer runs into traffic and gets rerouted through a couple different intersections even at the speed of light we can easily grab a few fractions of a seconds.  So here lies the opportunity – an algorithm that’s just a little faster, a computer processor with a little more speed, a network cable that can transmit just a little cleaner than another and a shorter more direct route to the destination computer all become some of the factors providing that little edge you need.  Get the picture?

We live in very interesting times.  Technology is wonderful and I’m sure you can tell I’m a bit of a geek.  I like to call myself a technology enthusiast.  I know just enough to be dangerous.  My opinion is the stock market has always been skewed more favorably to an inside elite.  Heck, have you ever tried to get a share of a stock at an IPO?  Unless you’ve already got lots of them (stocks, money, assets) and hold them with a large brokerage, preferably the one underwriting the IPO, you haven’t got much of a prayer.  You just have to wait until they hit the street and purchase from those favored few who are now selling them on the open market at a profit.  This is not unique to stock markets and investment banking.  It’s an issue that’s been around since the beginning of time.  What salesman who earns his living selling wouldn’t favor a customer who’s already earned him a bunch of money and/or will bring him more in the future.  Yes.  Truth is hard but so is life.   You just have to know the rules of the game.  Then you can play knowing what to expect and use that to your advantage/profit.  Or you can choose not to play in that game because through your careful analysis you determine that you start out at too great a disadvantage to make it a profitable endeavor.

That’s why I like real estate.  The stock market is a tough game to play.  Real estate has its rough spots and pitfalls to but with fewer barriers to entry and much less volatility.   You can choose to be directly involved or more passively as a supporter of specialists in the industry.  Let’s face it; the stock market today is pretty scary.  Technology has gotten way ahead of regulation and will likely stay that way for some time.  The regulators are still in disagreement as to who/what actually caused the Flash Crash (and possibly politically motivated to be very non-specific) and at best they’ll put a band aid on it today in the form of programmed (computerized) trading stops in the event of huge market moves.  They’re treating the symptoms not the illness.  And how about those banks.  What are your CD’s and savings accounts earning today?  If it’s over 1% you’re doing good and if over 2% you obviously know someone who wants your business, congratulations.  I am a real estate investor.  If you would like to learn how you can earn greater returns on your hard earned money of 10% or more backed by real estate please contact me.  I would love to talk to anyone who’s interested in finding good deals and securing their future.  I firmly believe the best way to get what you want is to help others get what they want!

To your success,

Larry

213 nine 7 three – twenty-two forty

Unfair Advatage? Is the Game Rigged?

Part 1

I’m not sure but I would hazard a guess that since there have been opportunities to invest in something [exploration/research (i.e. Chris Columbus – West Indies expedition, Oil & mineral exploration), land, railroads, governments (i.e. deeds/trusts, stocks, bonds)] there have been instances where someone has figured out a way to or been accused of exploiting the opportunity unfairly to their advantage.  I’m probably not going out on a limb here.  Given the advance of technology it was only a matter of time before the automation of the stock market ala NASDAQ and eventually the rest of the exchanges (NYSE, AMEX, CBOE, etc.) led to the same opportunities.

I recently watched a news report on High-frequency trading.  What’s that you say?  Let me explain.

On May 6, 2010 the DJIA dropped nearly 1000 points in just a few minutes in reaction to a large sell order placed (accidentally or not doesn’t really matter if you think about it) by a trading firm causing a daisy chain reaction by other firms pre-programmed responses to market moves.  This then caused the initiating firms computer to accelerate its sell orders as it saw the volume of that security’s trades increasing  (without regard to its price) to relieve itself of the falling security faster than a  fund manager would traditionally do “manually” say over a few hours, days or weeks.  This slower procedure they practice routinely to prevent large fluctuations in price of the security they’re trying to unload specifically to a lower price than they could get if they did it slowly and preferably under the radar.  But I’m getting ahead of myself; let me set the stage.

Since computers have come to make mundane manual processes inefficient and obsolete they now have become the backbone of our modern stock exchanges.  Today very few “trades” are actually handled by the traditional “trader” working on the floor of an exchange.  Instead computers do all the heavy lifting and the career of being a “trader” has almost become extinct.  Computers have shrunk from the size of buildings to where they now fit in our pockets.  The speed of processors (CPU’s) continually eclipses previous models.  Memory capacity and speed (both RAM & hard disk drives) continually grows while shrinking in size and price.  The network infrastructure (aka: telecomm network, grid, world wide web) has advanced from copper wires strung on poles across the country to global fiber optic networks which currently bring a 15MBPS down and 5MBPS upload speed to my home (remember that 28.8k modem?).  This has created an incredible opportunity for “innovation” and manipulation of today’s trading systems.  Quants or quantitative analysts crunch algorithms (intricate math formulas) which are able to analyze just about any metric you desire from how often a stock trades, how it reacts to rally’s or declines, in election years, on rainy or sunny days, in leap years and on and on.  As a result they can pretty accurately predict the short term action (reaction) to a market event by a security or index they are monitoring.  Of course given the efficiency of computers they do this for many stocks simultaneously and by “short term” I don’t mean a trading week or day or even hour we’re talking fractions of a second.  Yes, I said second you know 1/60th of a minute.

So if you have this information and you can not only identify an “event” but predict the most likely response of a particular stock (or even better multiple stocks) and then get in and out of that stock (or option) at a fraction of that fraction of a second quicker than the next guy you could make a pretty nice little profit.  Imagine this.  Picture yourself walking towards the bakery counter to pick up your favorite pie.  The baker sees you coming so he’s standing there with your pie in his hands ready to give it to you for 99 cents.  As you near the counter and reach out your hands I come flying in, push the baker out of the way (which is no small feat for a skinny guy like me if you’ve seen most good Bakers – as a rule don’t buy from a skinny baker) putting 99 cents into his pocket and grabbing the pie with my other hand I put it in yours and now take $1 from you because I know I can get it and more people have come in and are walking towards the counter to buy pies.  That is a simplified explanation but captures the essence of the practice.

— Check back soon for part two.

America is on sale

Apparently someone forgot to tell these guys the economy is terrible and now is not the right time to be buying real estate.  They also forgot to tell them banks aren’t lending…  Goes to show you there are good deals to be found in any market and that good deals can always find financing.  Who doesn’t want to have a part of a good deal?

Chinese High Rollers Invest in US Real Estate
A small group of wealthy Hong Kong families and businesses, plus one from Singapore, have bought a foreclosed parcel on the corner of Wilshire and Santa Monica in Beverly Hills, 90210. The group, Joint Treasure International, paid $148.3 million, 70 percent less than the previous owners paid.

You have to love (and follow) Mr. Yiu’s investing advice/philosophy – don’t get emotionally attached to real estate.  It’s just a thing, an investment.  To philosophize a bit of my own seems we should use this approach to many of our possessions.  I have a feeling those 33 miners in Chile weren’t worrying about their homes while they were trapped underground for those 10 weeks.  What a healthy dose of reality which hopefully we never have to experience ourselves.  They had some time to evaluate their priorities and think about what’s really important in life.  Whew, I’m starting to feel claustrophobic.  None the less you’ve gotta love stories with happy endings which by the way are also new beginnings!

To your health, happiness and welfare!

Larry

the full story can be read at CNBC  –  http://www.cnbc.com/id/39654990/

Pressure on Banks to fix Foreclosure Mess

What a Quagmire of corner cutting shenanigans (how do you spell that?)

Shares of U.S. banks slid for a third day as lenders and government officials faced mounting pressure to answer claims that home lending and foreclosures have been marred by illegal shortcuts.

read the complete Bloomberg story here

Banks seize 288K homes in Q3

Well, here is a very interesting statistic: over 800k YTD and on track for 1.2M in 2010.  Smells like opportunity.  Can anyone say motivated seller.  We’ll have to see what shakes out with all the MERs fiasco and “robosigning” deed transfers.  Interesting times indeed!

Here’s the link to the AP video report

In case the link doesn’t work copy and past the address below into your browser:

http://finance.yahoo.com/video/marketnews-19148628/banks-seize-288k-homes-in-q3-challenges-ahead-22443554

 

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