Friday, March 21, 2008

House Values

An example of the relative cost of living versus places outside of California:

In Ohio, you can buy a house for $150K.

In California, the average cost of a house is around $600K.

The rule of thumb for total wages in California in comparison to
places outside of state is that you earn twice as much in California. So, if you make $100K/yr. in California, the rule of thumb is that you would make $50K/yr. out of state.

So, even though you would only make half as much outside of California, houses only cost a quarter as much. So, in a sense, only making $50K/yr. out of state is virtually the same as making $100K/yr within California.

Just think of what the difference would be if you were able to buy the house outright out of state. The amount needed for a 20% downpayment for a house in California would do that for many places outside of California.

Thursday, March 20, 2008

Taking Stock

Consensus is that we are at the beginning of the next economic cycle. That is good to know, and it makes me smile. I'm glad to see the speculators bail out of commodities the way they did, and especially crude oil. With a little luck, gasoline prices will take a break between now and the end of summer.

Wednesday, March 19, 2008

An Article To Share

I read an interesting article recently in the March 2008 issue of Scientific American, which started on page 54. The focus of my interest in the article was myelination, and it being a correlation between things such as ADD/ADHD, Depression, and Schizophrenia. A brain cell consists of dendrites, a cell body, a nucleus, an axon, and axon terminals. The myelin sheath surrounds the axon and acts as an insulator, to help prevent the electro-chemical pulses from shorting out from one adjacent cell to another. The outer gray matter of a brain is said to be the cell body and dendrites of brain cells, and the white matter within is said to be myelin and axons.

I saw a TV show on a PBS channel by the author of the book, "Change Your Brain, Change Your Life". One of the things that he mentioned was the use of fish oil supplements for the health of your brain. He said that brain matter is essentially a lump of fatty tissues. I had already read from another source that fish oil (an omega-3 fatty acid) can be used as an aid to treat ADD/ADHD. Does the omega-3 fatty acid contribute to myelination?

I'm interested in as to if there is a possibility of brain cells and/or myelin being degraded from the prolonged release of adrenal cortisol (stress).

Taking Stock

I should have put in some stop limit orders last night. Nuts. I still have quite a bit of cash left, and most of my buy points are decent, except for Pan American Silver Corp. (PAAS). We are having a modest slide in commodities prices, which isn't necessarily all bad, especially for oil. Some power companies are switching to natural gas, which is one of the catalysts for the price of the commodity.

Tuesday, March 18, 2008

Taking Stock

Very nice day today, but the overall market has yet to bottom. The consensus is that the market indexes have to crash before we get a true bottom. I think some trimming is in order with the nice short-term gains I got today. The one thing that I can say for tomorrow is the Visa IPO.

Wednesday, March 12, 2008

An Indicator for Percentage of Income

I wonder if it would be possible to create a fairly accurate number or percentage, based on the average income and house prices, to indicate the amount of income that would be required to live in a given area. I haven't given it much thought, but I think it is a good idea. It also might be a relatively simple indicator to show if it would be cheaper to rent an apartment or to own a house.

Tuesday, March 11, 2008

Q: Margin Calls?

What are Margin Calls, and how do they work? Who uses them, and why?

Monday, March 10, 2008

The Anti-Recession Movement

One of the things that I have made it a point to do over the past year or two has been to focus on what I could invest in to help avoid an impending recession. Those beings things that are not dependent on consumers spending money in order to maintain their earnings growth. Unfortunately, those stocks also get hit in a broad-based selloff like the ones that we have had lately. On a more positive note, they are also the ones that seem to go up the fastest in a rally.

I'm also aware of momentum stocks, but I'll point out Google (GOOG) and Apple (AAPL) in regards to those. When they go wrong, they REALLY go wrong. I'm not a fan of momentum stocks.

Friday, March 7, 2008

Taking Stock

DryShips (DRYS) now has EPS of over $13 and a P/E of 5, along with institutional ownership at around 30%. If you ask me, that is absolutely incredible, especially considering the demand coming from China for dry goods like iron ore. The Baltic Dry Index has also been rising back toward where it was before the iron ore price negotiations with BaoSteel. Those fundamentals are incredible. It is a potential double from these levels.

It looks as though I might get my limit order for more MEMC Electronics Materials (WFR) filled. They are increasing capacity of their solar wafer production, and the demand for solar wafers will be good for quite some time.

I bought more Ultra Petroleum (UPL) recently, partially because they have been increasing production and the price of natural gas has been going up.

I'm cursing Boeing's name today, because it seems as though they might yet again delay the production of the 787. It is partially the cause of the drop of B/E Aerospace (BEAV). They will produce the jet sooner or later though.

I'll probobly get my limit order for Crystallex (KRY) filled before Hugo Chavez approves the mining permit.

I, along with others, would like to see the GDP stay in positive territory at the end of this month. It will be the final report for
the first quarter of the year, and would probobly ease fears of an immediate recession. The fact that the unemployment rate and the UICs both decreased is a good sign. Consumers are not losing their jobs. Inflation is on the rise, which it will be interesting to see what the Fed does with interest rates once the mortgage folly is worked off.

This is one of thos time periods that I don't like to go and look at my portfolio. ick.

Thursday, March 6, 2008

Taking Stock

I'll also add that the GDP growth rate has yet to go into negative
territory. Granted, it has been less than 1% this quarter, but it is still not negative. Although, in contrast to that, it was a little over 4% last quarter. It is my understanding, fom watching numerous economists and other market professionals (I like watching to see what the consensus is) that it takes time for all of the fed funds rate cuts and capital infusions to take effect and work their way through the economy. So, that being the case, there should be some growth in the domestic economy in the later half of this year. After that, I'm not taking my chances, unless the long-term outlook changes.

One of the things that I learned from reading numerous business and finance related articles is that the FOMC can only have one of two things happen in a recession, either house prices decrease or equity prices contract. They cannot and/or will not let both occur simultaneously. American consumers need to have an alternative source of income, which is usually one of those two things. The domestic economy is in a deflationary period, because house values are decreasing as much as they have (I have been looking for something that says how house values equate into the gross GDP).

I just noticed that there is buying action going on in the after-hours today. I'm not sure if that is short sellers covering, or if it is bargain hunters taking advantage of the sell-off today.

Taking Stock

I figured this week was going to be a bad one for the market, unless you are a short seller. It would be nice if Ambac and MBIA could get their issues sorted out, because I think it would help remove quite a bit of the volatility and downside from the market. On the surface, it appears as though the economy is on the mend, because the ISM Services indicator was not as bad as predicted and the UIC (Unemployment Insurance Claims) were a little higher this time. That, to my understanding, is a large portion of the economy. UICs being low is important because it says that consumers have jobs. Tomorrow will be a big day with the unemployment rate being announced. I still think we are in a "soft" recession. The thing that is keeping us afloat and out of a "hard" recession is the global growth.

As the infamous Jim Cramer indicated not long ago, some of the banks have to fail and have some consolidation in the banking sector. It is on some of the business news now, so that appears to be in the works.

I'm still betting on the FOMC lowering the fed funds rate on the 18th of March, which could be a turn in the market.

Monday, March 3, 2008

A Thought

No matter how bad you have it or have had it, there is someone out there that has it or has had it worse than you.