Can't think of a title

I had posted a detailed, negative cash flow, real estate investing example for a half hour or so yesterday, but I became unhappy with it and took it back down. 


It will suffice to say that I am extremely bearish on the Canadian housing market, and have been for the last several years (ask anyone who talks to me on a regular basis...).  I expect a decline in nationwide average prices to pre-2005 levels.  There are a variety of reasons to expect such a downturn, and a great amount of information on the matter can be had at various other sources (see the blog roll on the right of my site for some of the best ones).  I am also increasingly beginning to think that the tide has already turned, given both the shift in the mainstream media's treatment of the issue over the last couple of weeks, and the high number of acquaintances I have that have bought houses in the last 6 months (the majority of which I would never lend money to), but we shall see.

This is a good time to bring up Bob Farrell's 10 Rules of Investing (I get a kick out of the fact that the article I link to below is from the summer of 2008).

As I learned on my Hawaiian vacation last week, all it takes is an hour or two in the airport to witness every flaw in human behavior and learn how one can profit from the ignorance of the herd.

Additionally, I strongly believe that there are only two ways to make money.

Hard work and good fortune.

Only one of these methods is sustainable and it is extremely important not to confuse the two.

What do you think is a better way to grow wealth?

Borrowing a massive quantity of money to acquire a historically and fundamentally overvalued, incredibly illiquid asset, with the hope that your sheer ability to stare boldly at your stainless steel appliances and granite counter-tops will result in a repeat of the price increase of 2006/2007 (which only occurred due to an unprecedented change in lending standards)?

Or, consistently living below your means and investing your savings in a liquid, diversified portfolio of financial assets yielding a rate of return commensurate with the risk taken?

I thought so; though it's amazing how many people shy away from equities but do not even think twice about financing 95% of a real estate purchase over 35 years.

My wife and I happily rent a 1700 square foot, 4 year old townhouse, with an attached double garage, in a great neighborhood, with a crew that clears the snow/mows the lawn several times a week.  Our monthly housing cost is less than 17% of our net monthly income, and we have the ability to move at any time for any reason with just 30 days notice.  We tend to move often to spread the money around different landlords, and to add a degree of excitement to their lives.

While I often get the impression that some people view us as second-class citizens for renting, all it takes is a look at our bank account balance (and maybe a trip to Hawaii a couple of times a year with some of our investment income) to get the warm and fuzzies back. 

I highly suggest reading the following.

Vatican Fashion Police?

The Vatican City has been generating more interest than usual lately with last week's public discussions of how the Sistine Chapel's high volume of human traffic is damaging the building's famous frescoes.  However, the Vatican has already easily topped themselves.  This week, Jaunted picked up a story that the Italian wire service ANSA reported on the dress code inside the Vatican City this summer.

For anyone who has never visited a major church in Europe, there are usually some loose rules on what clothing is and isn't allowed.  In general, midriffs, shoulders, and knees must be covered.  Shorts are generally allowed but must be at least knee length.  Similar rules apply for skirts/dresses.  For (mostly) women with bare shoulders (it's hot in Europe in the summer!), a shawl wrapped around them is almost always acceptable.  In fact, some churches provide free paper ones for this reason.  In other places, small vendors can often be found within a short distance from the entrance of the church that will be very glad to sell a cheap shawl for a few Euros.  This is all very normal in Europe.  You'll see it at the Basilicas of Notre Dame in Paris, St. Mark's in Venice, and St. Peter's in the Vatican.

I have never had a problem with these type of rules.  You are entering (usually) an ancient and (always) sacred site.  A certain modicum of decorum and respect is fair to be expected.  However, the Swiss Guard have been reportedly stopping "unsuitably dressed" people from even entering St. Peter's Square or any other part of the Vatican City.  ANSA reports of the Swiss Guard hassling a 70-year-old Roman woman attempting to enter the Vatican who was stopped because of her sleeveless dress.  After eventually being let in, she quipped "Given all the scandals the Church has been involved in, what possible right can it have to be preaching about the morality of sleeveless dresses?"

Although there aren't exactly strict requirements on crossing the border between Italy and the Holy See, it is definitely its own independent nation.  Other than St Peter's Basilica, the Papal residences, and other church buildings, the Vatican City also contains a post office, pharmacy, and a small store.  The pharmacy offers a wider range of medication often at lower prices than the pharmacies in Rome.  As a result, many Romans frequent the Vatican just to fill their prescriptions.

Although St. Peter's Square often serves as an amphitheatre for Papal addresses and other official ceremonies in the Vatican, it is not itself a holy site.  I'm not sure I understand the need to prevent people who are "unsuitably dressed" from entering the country and just enjoying the magnificent architecture.  If they choose to enter St. Peter's Basilica, the Vatican museum, the Sistine Chapel, or any of the other holy buildings contained inside the Vatican, then that is a completely different story.  I foresee a booming business in small vendors selling their cheap shawls in the area around the Vatican if these rules continue to be strictly enforced.

Flying Machines

I haven't posted in a while, but I think it's time for my first real nerdgasm in this blog.

For the last few months I've been watching the progress of the AR.Drone by France's Parrot wireless engineering company.  The AR.Drone is a revolution in remote controlled helicopters.  Usually RC helicopters are nefariously difficult to control and take a lot of time and dedication to actually be able to use them effectively.  Parrot has tried (and apparently succeeded) to fix this with their quadricopter design.

Image from Wikipedia

Using a combination of four evenly spaced blades, 6 MEMS DOF sensors, an ultrasound telemeter, and a moderate amount of processing power, the AR.Drone is capable of hovering by itself.

But that isn't the really cool part.  The AR.Drone is not controlled by a standard RC controller.  It is controlled via WiFi using an app running on an iPhone/iPod Touch/iPad.  This is further enhanced by an on-board  camera which is streamed to the Apple device.  Parrot has used this to create what they call "augmented reality games".  Using the camera, the display on the Apple device, and a few real-world reflectors, the AR.Drone software creates targets and virtual opponents which you can fly your real AR.Drone against.  This is probably better explained in a video.

After a very lengthy development cycle, the AR.Drone is finally being released around the world this week.  However, there are two downsides.  First, the $300 price tag really does take the AR.Drone out of the "just a toy" category and more into the land of "only rich people with money to burn" category.  Secondly, the fact that you only get 12 minutes of use out of a single charge really bursts the bubble for me.  It looks like a really cool device to play with, but only getting 12 minutes of play-time and then having to wait 90 minutes to 2 hours to charge is just not worth the price tag.

Still, it's nifty...

Delay 'til next Sunday

The only form of computer I elected to bring on this trip is an iPod Touch. Therefore, my next post will be next Sunday the 12th. I'll make sure it's a good one.