Double Blind

I have posted on Divestor an article of “What makes Vancouver Real Estate so expensive?“. I’m sure there are some holes in my analysis, but it was interesting to write it up and go through some variables of my mental modeling of the real estate market.

One of the reasons why it is so expensive is that people don’t translate dollars into yearly income – if you gave me a stack of money today, I could translate every dollar into an income stream of 10 cents a year with a reasonable amount of risk. So when looking at your typical Greater Vancouver detached home of $749,808, one is actually giving up a future income stream of $74,981/year to purchase that home. Assuming you don’t make any other money, that would be $58,500 after taxes in 2010. If one were to rent a place for half that amount (about $2,400) and continue investing the rest of it at 10%, there is a high degree of probability that you would be up even after factoring in missed capital gains on a home purchase.

Anthony makes a great post about how entrepreneurs seek to be risk-minimizers. I distinctly recall him making this point to me in person a couple years back, and I still remember his comments to this day. It is good to see it in writing, just in case if I get old and senile.

My two cents on the matter is that most people that (unsuccessfully) get in business for themselves get in trouble with capital assets – they tend to be involved in businesses that are capital intensive (e.g. restaurants) and the ability to convert the fixed asset infrastructure into cash flows is not as easy as it seems on paper, as it requires a lot of operational expertise to be able to do so.

This site is full of cartoon satire, but it is quite believable that there is an embedded truth to it in the real world.

This link has a video that compares Star Trek to Star Wars… and they got it pretty much correct.

Sugarstacks looks at various foods and drinks we eat and displays the quantity of sugar in cube-equivalents. I’m sure they are trying to socially engineer people into selecting lower sugar products, but I found the comparisons interesting without any messaging in terms of what is good to eat.

In particular, one can infer that drinking sugar is a lot easier than eating it directly through foods – although soft drinks are a favorite target of anti-sugar advocates, most fruit juices contain just as much sugar.

The trick, as with many things, is moderation. I am also amazed to see 7-Eleven selling the “Double Gulp” which contains 64 fluid ounces of liquid, or 1.89 litres – might as well buy the two litre pop bottle at this point and stick a huge straw in it.

This analysis of Goldman Sachs’ last quarter, and how “not so great” it was despite the media sensationalizing it as being a great quarter is spot on and I couldn’t have said it better myself.

Goldman subsequently managed to sucker $5 billion of capital into investing in its common stock, at $123 a share. It traded down to about $115. There are two alarming facts here for investors:

1. That Goldman needed to raise $5 billion instead of just “earning it” (they said they needed it to repay TARP loans).
2. Goldman didn’t float a bond or convertible debt; it took the shareholders to the cleaners.

There are multiple instances in the financial world of institutions trying to goose up their first quarter results to give the perception of a recovery (which may or may not be happening); Wells Fargo wrote down Wachovia when they acquired it, only to write-up the assets in the first quarter. I’m not sure how reliable the results from financial companies are going to be, which is why I’ve been avoiding them and sticking to firms that can produce economic profits instead of financial ones.

Here are the 2008 consolidated financial statements for the South Coast British Columbia Transportation Authority – for future reference in case if I want to discuss something related to how much money Translink receives.

This is the beginning of the spammification of Twitter.

Here’s a hint: Trust only people you know, and if they sell themselves out to these spam services, you’ll know not to trust them.

The most effective advertising is that which you don’t know is advertising. Keep your skeptic cap on at all times. It’s tough.

The more you digitize things, the easier the system becomes to hack.

Here is a great example – USA passport RFID cloning.

Cell phone companies already have a huge set of geographical location data on people that they’ve probably already sold off for marketing purposes.

I haven’t logged into their site for quite some time, but it appears that they can’t even figure out how to calculate whether GDP drops 10% correctly, but continue to list economic contracts that imply this. See how they screwed up the calculation?

Another reason why anybody that has over a couple hundred bucks in that site is nuts.