Things I Have Learned (Vol. I)

I've been living away from home for a few weeks now. Things I have learned:

1. I am still alive. This is a big plus.

2. GOD DAMN I have a lot of stuff. Where did this all come from??

3. The Roomba is a lot better at vacuuming than I am. It might not be very good either but it sure keeps at it longer than I do.

4. When you leave hot dog buns on the counter for nearly two weeks they turn stale. But when you have A STEAMER, you can turn them back into wonderful almost-new fresh buns. I am not even making this up. It is like magic or some crap.

5. That Funny Smell is the cork thing you put the pans on. Being boiled in the water under the steamer. Because you took the steamer off to check the buns, but then the goddamn cork thing stuck to the bottom of the steamer when you put it back in the pot. Brown water comes out of it too. I think it'll dry out back to normal.

Random Ramblings

The following is a bit of a shotgun blast of thoughts; I am in the midst of a week-long work seminar, and my brain is not functioning well enough to be cohesive.  Garth's post over at Greater Fool is excellent today, as well.


The most frightening moment in my entire life occurred in a Grade 12 Social Studies class, which is now about 8 years ago.

However, I still remember it like it was yesterday.

Our teacher, who's name I no longer recall, posed a question I thought to be rather simple:

"How many of you think people should be able to do whatever they like, as long as it does not harm anyone else?"

I was one of three people, out of a class of over 30, who raised a hand in agreement.  If this doesn't concern you, then you are already beyond help.

Now, one can make the argument that a lot of people in that class were either high or didn't care, which is probably true, but that shouldn't have amounted to the 90+% of them who supposedly disagreed.

That brief moment has helped me understand why everything in our world is the way it is, and why I am the way I am.

It's also one of the many reasons why I am a member of the Ludwig von Mises Institute, and encourage anyone with an open mind to explore what it has to offer.

Just a thought.

In other news, the TSX appears like it may make a run for 13,000 or possibly even beyond.  At this point, it doesn't matter.  We have seen some pretty hefty corporate earnings on essentially zero revenue growth.  This means that margins are peaking, which is not what happens in the middle of a "recovery".

Also, there's a reason my mailbox is inundated with junk from payday loan companies every week, and my bank constantly calls to offer me newer and exciting ways to become enslaved to them.  For the record, I have never had a line of credit, nor have I a use for one.

Growth in Consumer Credit Collapses by 50%

With real estate, it doesn't matter if we avoid the massive decline that has already begun, because even if valuations were to flatline and maintain existing levels for the foreseeable future, the large number of people who have been living beyond their means by sequentially rolling their consumer debt into their mortgage, expecting to continue using the double digit appreciation seen over the last decade (due entirely to one-time modifications of lending practices) to "pay it off" are going to be in serious trouble.

As I have said before, there are only two ways to succeed financially, and only one way that you can control. Luck and hard work.

On a side note, I am not a permabear.  I just call it like I see it.  If you had asked me my opinion in March of 2009, I would have told you to put every single penny you could find into the market.  If you had done so, you'd likely be up 2000% today.

Delay

I haven't been happy with anything I've churned out this evening, so rather then post something sub-par, I'll give it a day.  Check in tomorrow...


In the meantime, check out: http://mises.org/daily/4776

Manual Labour and the Morris Technique

The market is still extremely overbought, as America continues to try and convince its populous that destroying the currency is a good idea, and I will be sitting on the sidelines for the foreseeable future.  A post regarding an amusing event in my personal life will have to suffice, this week (don't worry, there's no mention of Wal-Mart this time).

I very rarely engage in manual labour.  This is primarily due to three separate, yet equally important, reasons:

1) It's one of my greatest phobias.

2) My self-calculated hourly rate for such work is so incredibly high that I wouldn't be able to afford the invoice if I were to hire myself.

3) When engaged in manual labour, I invariably end up applying something called the Morris Technique.

The first two reasons are fairly self-explanatory, but the third deserves some elaboration.

The Morris Technique is an extremely powerful, genetic, evolutionary-perfected method of performing manual labour that has been passed down from generation to generation, over hundreds, perhaps even thousands, of years.  Put simply, whenever a situation of difficulty presents itself during a manual labour event, one immediately casts aside all safe, relevant, and logical paths forward, and, instead, applies higher and higher degrees of rage-filled brute force until either immense, irreparable damage occurs to the object being worked on, or massive personal injury ensues.

A third outcome, which more or less compliments the previous two much like an aged cheese with a fine wine, occurs when one or more Morris' work on the same project together, and apply the technique in unison.  This outcome, naturally, is monumental physical violence between all parties present.

So, with all this firmly in mind, I awoke early Saturday morning with the spirited intention of changing the summer wheels and tires on our 2009 Toyota Matrix to their winter counterparts.

I began the task with a brisk trip to Canadian Tire at around 9am.  Once there, I located a reasonably priced 2-ton hydraulic jack, and also picked up a flashlight because, well, one can never have too many flashlights. Returning home triumphantly, I found the rear jacking point on the car, as indicated in the manual, and began raising the Matrix with the utmost of certainty.  When a thunderous crack echoed through the garage, I knew something had gone horribly, horribly wrong.

It appears that for no reason that I can comprehend other than to save costs, the rear jacking point is a hollow structure made out of 1/4 inch thick sheet metal instead of solid steel.  Thus, the relatively small diameter head of the jack I had just proudly purchased managed to gently destroy its way through to the mysterious environment on the other side.

Pausing momentarily for several minutes of loud and creative profanity, I grabbed the Toyota-provided spare tire jack out of the trunk -- the kind you crank with both hands -- so that I could use the four individual jack points on the side of the car to do each wheel.  I began with the driver's side rear, which went well, and subsequently proceeded to the driver's side front.

After removing the front summer tire and mounting the winter one in its place, I began to notice something was amiss when the torque wrench refused to hit its limit on any of the lug nuts, after several minutes of tightening.  It was then that I saw that the hub centric on the summer wheel had not come off with the wheel and had instead fused itself onto the original hub, and stood tauntingly between me and victory like King Leonidas and his 300 Spartans at the Hot Gates stood against Xerxes. Following the rapid completion of more profane outbursts, I applied a derivative of the Morris Technique to the hub centric using the back of a cheap blade screwdriver and the lug wrench.  This failed to work.

I pulled the winter tire off, remounted the summer one, lowered the car, moved the jack to the rear, raised the back again, started removing the single tire I had managed to get on the rear driver's side, all while waiting on hold with Kal Tire.  After the store manager finished laughing when I had asked if I could get the car in that day, I inquired whether I could get the hub centric off the front hub myself, and he pointed out that I could try pouring boiling water on it.

So, after several additional and exciting verbal blasphemies, I re-tightened the winter tire on the rear driver's side, lowered the car, moved the jack back to the front, raised the front, removed the summer rim for the second time, and start pouring a volume of boiling water equivalent to the Red Sea on the hub.  Many minutes of Morris Technique-ing later, I managed to pry off the hub centric, and angrily smashed the winter tire on and worked violently to complete the remainder of the task as quickly and unsafely as possible.

The passenger's side went quite smoothly, and after raising and lowering the car a total of 7 times with Toyota's Fisher Price jack, I spent the remainder of the weekend in unbearable pain.

A job well done.

DENIED!

This just in: Gran Turismo 5 has been delayed AGAIN!

I think at this rate Duke Nukem Forever may come out first (hur hurr).

That is all. I'm going to go play more Forza 3.

Good news, everyone! I've taught the toaster to feel love!

Hello there. You may note I am not a.) Jason or b.) Terry. I am, in fact, named "Erik" and will occasionally contribute to this compendium of universal knowledge. I am not going to try to write with any regularity or consistency in subject, but I figured I'd share a few things that have happened to me lately.

I have moved away from home (a gradual, molasses-like process over the last month or so) and have found that it isn't nearly as big a deal as it seems on the box. Setting up is quite expensive and I'm grateful I was able to combine stuff with my girlfriend, who had an entire collection of kitchen things. Most of my stuff belongs in the living room and den and either takes batteries or has a cord sticking out of it.

Speaking of which, my laptop decided to go into death throes while watching some TV before work. When your hard drive starts going "bzzzzt-CLICK" you are pretty much boned and the hourly backups that Mac OS does through Time Machine have saved me once again. I'm not sure if it's something I'm doing or if this computer just likes eating hard drives but when I replace this dead one it'll be the fourth hard drive transplant in my Macbook Pro.

It's a pre-unibody variant, which means instead of taking the battery cover off sliding the drive out, you get to take about 40 tiny horrible screws, remove the keyboard, undo ribbon connectors, etc. to get at the guts. I can almost do this in my sleep now (I don't need directions) - I just can't decide what drive to replace it with. Seagate laptop drives have been treating me badly, but they sell a 7200 RPM drive with 32 MB cache and a 4 GB onboard SSD compared to Western Digital's best, which is a 5200 RPM unit with 8 MB cache and no SSD whatsoever. I'll probably just get the fast one and inevitably have it break again, but by then I'll likely be replacing the laptop so ptthhbhht.

Bought the first DJ Hero game for the Xbox 360. Got it for $50 with the controller, hooray. It's actually quite fun. Must work out the "sweating profusely" and "table jiggling all over the place" issues though.

My condo comes with a year of free Telus service - phone, TV, and internet. This is the only way they got me to try their new Optik thingummy after years of bad dealings with them (through friends). I believe they've run fibre to the building- neato. The $60-ish a month Shaw connection at my parents produced a pretty solid 18 Mbit/sec download and 1 Mbit/sec upload, but Speedtest tells me my new connection is 25 Mbit/sec down and 1.75 Mbit/sec up - not bad for free. (Don't get me started on asymmetric internet connections though. I'd trade 10 Mbit/sec down for another 1 or 2 Mbit/sec up.) The only caveat is watching TV through a set-top box will consume some of this bandwidth.

I was completely NOT SURPISED AT ALL when the installer left without getting phone or TV working - par for the course with telecom companies.

Now to work on that weird feeling of "having to go home" when I am home.

Foreclosure Fraud and Relative Wealth

Earlier in the day, I was considering simply posting a note stating that I would get around to this week's entry tomorrow, given the stat holiday. However, I have now changed my mind, as I am completely paralysed from the gargantuan feast of epic that we had for Thanksgiving.

On the investment side this week, I bailed out of a small position (around $10k) that I was holding in the materials sector last Monday, realizing a respectable 20% profit that only took 3 months.

The rapidly developing foreclosure fraud issue in the US, and a rally that appears to represent a complete separation of the market from any semblance of fundamentals has caused me to pause. After all, I am not interested in speculation, I am interested only in value investing. I no longer see any opportunities in the latter, though there are plenty of bandwagons to jump on for those interested in the former. Discouragingly, I see some very strong similarities in the market right now to late 2007.

On another note, I find it rather interesting to consider the concept of relative costs. For the sake of argument, let's say you have a net worth of $100,000 (makes the math easy). You take your wife (and, lol)/or girlfriend out for a fancy dinner – that is, you skip the Red Robin and head to the essence of middle-class luxury: Earl's. You both have a couple of cocktails, share some calamari, both have steak, and share a dessert. You get the cheque, add the tip, and it comes to $100. You have just spent 0.1% of your net worth on one meal.

Now, let's say that Bill Gates (net worth: $54B US) takes his wife out to dinner. Let's also say that he takes her to one of the most expensive restaurants in the world, where, after I did some Googling, it seems it costs about $700 for two to dine, excluding tip and alcohol. To make the math easy, let's round this up to $1,000. This works out to 0.0000019% of his net worth.

To put this into perspective, for Bill Gates to spend the equivalent amount on dinner that we have just spent at Earl's, he would have to relieve himself of $54,000,000. This means he could buy a new Gulfstream G550 private jet ($50 million), use it once JUST to go to dinner -- and then crumple it up and toss it out -- and then buy a new single-use Bugatti Veyron to drive back home. He would still have about a million dollars in change.

My point is, there becomes a point where one attains an amount of wealth beyond which it is pointless to compare any expense to the average person. If we take the $1,000 cost of the most expensive restaurant meal to determine what this value is, it works out to a million dollars.

When you look at it in terms like that, becoming 'wealthy' doesn't seem that far out of reach.

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Tidbits I

There are a few wonderful little stories I've picked up off the interwebs over the last few days.  Nothing worthy of a full write up, but definitely enough for a mention.



Slashdot has spread the word about an ABC News story on the new DEATH RAY in Las Vegas.  Sadly, this isn't some sort of crazy stunt by the latest super-villain-themed hotel on the strip.  Vdara, one of the latest hotels to open on Las Vegas' famed strip, was built in a c-shape.  As a result, at certain times of the day/year, the entire hotel acts like a giant parabolic mirror which amplifies the already powerful desert sun to a small portion of the hotel's pool area.  ABC reports that some hotel guests are suffering from "severe burns."  I love engineering errors that are completely unintended side effects.  I guarantee if someone designing the building had asked "Will this glass facade focus the sun's rays and cause burns?", they would have been laughed out of the office.



Jaunted reported last week on a story from the UK about a couple who were rather suddenly kicked out of a Blackpool hotel for giving a bad review on Trip Advisor.  Apparently, they were half-way through their stay when the hotel manager stormed into their room demanding that they leave.  The police were even called to evict the couple.  It gets better: the evicted man was a cancer patient on his first vacation after finishing chemotherapy. Talk about a publicity nightmare...



The Chicago Blackhawks revealed their new Stanley Cup rings last week.  After looking at the new design, it's pretty obvious that Chicago has been waiting a long time for the cup to return.  The ring weighs 91 grams (3.2 ounces) and contains 404 gemstones totaling approximately 8.0 carats.  I'm not sure if it's impressive or just gaudy.



According to Jaunted, Ferrari World in Dubai will be opening by the end of this year.  For around $60 USD (and a plane ticket to Dubai) you can experience the following Ferrari-related rides:

• Formula Rossa
• The world's fastest roller coaster (apparently somewhere between 125 and 150 mph)
• Acceleration to maximum speed in 4 seconds using an aircraft carrier launch system
• G-Force
• Designed to simulate G-forces by taking you 100 feet up and then propelling you vertically straight back down.
• Fiorano GT Challenge
• Duelling coasters
• Cars look EXACTLY like an F430 Spider
• Speed of Magic
• A slower flume ride
• Simulates being shrunk and travelling through a Ferrari engine

Nothing more interesting from me for now.  Hopefully I'll manage to find something new to rant about soon...

Pop goes the bubble, James Cameron, and Netflix

A shift in mainstream sentiment is underway in Canada right now. In Victoria and Vancouver, the most delirious of Canada's real estate markets, people are starting to realize that, in fact, human nature isn't all that different, no matter what side of our southern border one happens to be on.

Some wonderful articles this week that both illustrate this -- and make me wish I had put in a larger order for my “I told you so” t-shirt series -- can be witnessed below:

Greater Victoria real estate sales hit 20-year low in September

Olympic village buyers trying to back out

Did you see the sales numbers for new R/E units?

Alexandre Pestov has also made another excellent update to his original paper on the housing situation: http://www.scribd.com/doc/38509625/The-Elusive-Canadian-Housing-Bubble-Fall-2010-Musings

After a decade of unprecedented credit expansion, culminating in the lowest interest rates of all time and no need for a down payment to obtain 35 year financing (in fact, you can get PAID!), the party is now over. As the herd mentality takes hold and spreads from west to east, the difference between money and credit will show its head once again, and those who hold the former will find themselves in a very pleasant position.

I don't want to talk real estate much further; first, because so many others listed on the right hand side of this blog do a better job than I can, and second, because I find it bothersome. Thanks to the knowledge I've gained from the Austrian School of Economics, I generally find it more frustrating to know exactly what's going to happen and then watch it play out, than interesting.

My wife and I have never understood the obsession the majority of our peers have with open houses and HGTV 'house porn', as Garth Turner calls it. To us, if a portion of our portfolio dividends can cover our entire rent and utilities, while simultaneously eliminating the risk of being trapped in an immobile, illiquid, depreciating asset as jobs migrate elsewhere, great!  Don't get me wrong, there will be a time to own real estate in Canada again -- much like 1992-2004 -- but that will be sometime between now and 2015, depending on how quickly the herd of buffalo impacts the cliff bottom.

In other fun news this week, world-renowned environmental scientist James Cameron was up in northern Alberta, advising the locals on the benefits of filling the world's energy needs with campfire Kumbaya instead of synthetic crude oil. While I highly doubt the people of this country are truly that stupid, I have increased my supply of ammo and canned goods accordingly, as any good hedge fund manager would.

In addition, I signed up for Netflix earlier this week. Now, there are some complaints about some of the content, and they are probably warranted, but I have found it to be a wonderful replacement for the horrendously expensive waste that cable television is. I just need to find a way to get hockey...

Honestly, for a monthly cost less than one McDonald's meal, Netflix is a pretty good deal. Best to get on board soon, though, I imagine the gods over at Canada's OPEC of telecommunications aren't too happy, and will find a way to rape us the way we deserve. Much like Rogers is doing to Wind Mobile (another favorite company of mine) 

See, when the government grants you an oligopoly over an entire industry, and then years later allows small competitors to gain some foothold in the name of 'competition', you can simply subsidize a money-losing subsidiary to destroy the competition. All you have to do is outlast the funds of the competitor, which is easy when the majority of the country is surgically attached to your 3-year-contract teat.

Look at that, I just got home from Wal-Mart prior to spewing this onto the page and I didn't even mention it until the very end!