Been Months

And so I partnered with my friend, CEO/Owner of Nfinite Business for the IT Staffing business PLUS I have also started my Real Estate and Stocks & Bonds Investment Partnership. For all you know, it is really wonderful to start your own business. Be the man of the company or CEO. Here's the kicker, but when the fact that there is no salary every 15 or 30 days comes to light, reality kicks in and the fear of losing sinks unto you. That same reality and 'FEAR' might even make you want to go back to what you were doing.

Is that good or bad?

I have to rewind myself to the day when I was talking to my friend at Buffalo, NY about my business and that I am going on my own. While we were talking, like everybody else he also mentioned that he is glad that I am getting in to business and things. Couple of dialogues later I said this one thing "No matter what, I should NOT give up for what I would've done until then will be undone". Not sure if that sunk in real hard on me, but every time I feel a little negative about things not working out, that echos in my body, mind and soul.

I have NOT earned a penny out of my business but when I do, I will know I was persistent. Assuming, I try harder by the minute and there comes a day I really want to get this over with, am I still going to win after that? Well, I better not try it, 'cause this goes back to my theory and practice of being 3-feet away from the Gold Mine.

It is worth narrating (but crisply) here. During the Gold rush, "he" bought a gold mine and had his neighbors/friend/family pitch in their fair share to buy equipment that can process the gold. The first was a beginner's luck and he made some money to owe his debts. The 2nd time, he was digging 'forever' or so it seemed, that he quit and sold to an 'junk' investor. The 'junk' investor was not really a junk, called upon an engineer to check what's in there. The engineer found there were fault lines (underground) and that the previous owner was EXACTLY THREE FEET AWAY FROM GOLD!!!

What day or time is the last I would want to choose to be the last day to NOT try anymore?

NaviKarana* Enterprise is my business partnered with Nfinite Business.

* => 'Innovation Leader' in Sanskrit

So you Sow, So you Reap!

The Bull just died leaving them all in Misery; The younger ones have nobody to show they Jittery
Cow, A Twin-headed going hither & Thither; 'Cause there is nothing much to do Either
Friends and Family running helter & Skelter; but will give them all No Shelter
Chief lady of the Country let the mom take Job; Twin-headed sign had to work and shut her Gab
Fury grew inside of the Gemini and reached Heights; Day of lives for the kids became the Nights
Another Bull but the daughter was given the Responsibility; Turned out to be the other two kids' Intimidatory
Oldest is a Born Genius but not so in real Life; Youngest is the Lion but not even to a false Wife
The goat joined the sister but to no Avail; Mother Gemini accompanies and for the cesspool to Prevail
Money is the slacker in the Property; while the lousy is taken care by kids in Puberty
Family shuttles from one corner to the other in the City; Kids shuttling from one school to the other is a Pity
Born Genius is of the Aquatic kind but not Fish(y); Brains have slow growth and that made him Messy
Authority is the order of the day for the Daughter; Younger one being the immature lose tongue is the Slaughter
Goat is house tamed to hardly make half of what sister Makes; Mom's mom cares for her son and to bake him Cakes
Surrounded by the three musketeers but the other Sex; Not-So-Manly uncle brings the puppy more Vex
Life goes on for it has To; Years move on to move the goat and bull out Too
Mom's Mom dies to probably realize goat has no Meat; Family is smaller and the house looks Neat
Young grow old to find a job and make Money; The other head of the twin-head now want to eat Honey
Off of the house flying 5 seas across lay the Land; The other head nods and plays the wagon Band
Here comes the money and luxury at 4 and 10 times in Hand; Gemini finds it comfortable to take her Stand
Marriage is the next process in the Plan; off they shall go and almost forget the family Clan
Phone calls always mentioned only the need for Cash; Young grew old to never see the love and affection Mash
Life goes on for it has to as you know it All; The other head does not realize that she lost it All

Now and New India

It's been ages since I had a constructive and insightful discussion with my friends, while screaming at the top of our voice. LOL. Not really the last part happened! ;-) And so we started another last weekend only this time about the country we were born and raised. The country expected to be a great Economic power yet a 'Cat on the Wall' due to its perpetual and annoying politics and corruption => INDIA.

Statistics says that the younger generation (age 20 or less) forms about 47% of the 1 Billion Indian population. While this is BEST strength that a country could get to make phenomenal changes to its nation, the other side of the coin is simply the self-discipline and societal responsibility that is grossly lacking. Politics since Independence in 1947 has been the cesspool run by bureaucrats that needs money and money only. Remember, politics that I am referring is a generic term - that includes but not limited to Government, Government agencies, Administrative agencies and corporation, municipality and the like.

I once read an article - Cover Story in 'India Today' magazine where everything was pointed to the Administrative officers - I.A.S. Officers, that is. Why? 'cause it is said and known that the I.A.S. officers demand huge sum of money from the politicians to approve their election campaigning. The cover story also mentioned that almost 90% of the corrupted I.A.S. officials have not been prosecuted and the few accused on corruption charges were back at work after a few months of the news, updates and rumors flying around. If I remember right, hardly one or two were imprisoned or the judicial system came back with a decision to do whatever - Acquittal or imprisonment. This was back in 2000 and that certainly is NOT far away!!

That being said, the politicians once in power start their cycle of corruption to amass what they lost during their campaign. This deprives the government agencies short of cash and no salary hikes triggering another wave of corruption among the employees of the agencies. Part of which are the Cops or the policemen - Supposedly "To Protect and Serve" => Perhaps, ONLY THEM and their FAMILY; Also falling under this corrupted category, they are bound to look for additional income from the 'Good and Bad' Samaritans. End result is the one that I always worry about and want to do something to Enforce - Traffic Discipline. To me, this exhibits SELF-DISCIPLINE.

Wait a Minute! Who will ENFORCE that? asked my friend.

Who will ENFORCE what? I asked.

The Cop and the Traffic Discipline that you are talkin' about, he replied.

For which honestly, I did not have an answer. The rules or the "Business Plan" that I talked to him about existed in real-life - some of its highlights are:

1. To NOT bribe the cops instead get a receipt for the fines you pay

2. To NOT drive without a License

3. To levy a fine on the driver's for speeding

4. To levy a fine if no Insurance or RC is produced

5. To levy a fine if a driver stops beyond the STOP sign at a traffic light

6. To levy a fine if a driver does not carry a license

7. To EVEN arrest if the driver is drunk

They all exist even today but none of them is enforced. It is done at your will. Even if you want to Enforce, who is going to Enforce the Cops to Enforce the traffic discipline? In essence that was the discussion. Anyways, as an individual everybody wants to get ahead in the game. BTW, there is a 'Chicken-and-Egg' situation here.

Did the citizens of India started to violate the traffic rules because the cops were corrupted
(OR)
Did the cops found the driver's violating the rules an opportunity to vastly augment their bribe income?

I am Confused!!

My take is only this - If I need an Election ID Card, Driver's License, Passport and a Copy of my birth certificate:

A) How easy or hard it is to get them done within 2 Weeks assuming I live in India?

B) How easy or hard it is to get them done within 2 Weeks assuming I live in USA? and THIS as a Non-Resident Alien!!!

Isn't that even justified? Yes, you will get your license outside the RTO (Regional Transport Office) if you complete the application and pay at least twice or three times more than the regular fee that applies to it. Lucky you! Guess what!? With that kind of money you pay, the Driver's license is guaranteed regardless of you flunk the driving test or pass it. Friend of mine did a good job driving on his motorcycle driving test while a person in that same group who applied did not. End-Result? Both got the driver's license. Interesting and Frustrating to my friend!!

That reminds of an incident about making it on time. We were supposed to go on a leisure trip sponsored by our company. It was told 7am and friend of mine said, people would turn up at least by 7:30am IST should you announce 7am. The other friend standing next to the both us asked "What is the value add for the guy who made it @ 7am?"... It was a lull after the Storm.

Yet something does tell me that things will be fine. I erupt sometimes and want to go rebellious against the government employees and agencies. Sometimes I mellow down and decide I should wait for another 15-20 years. Holy Smokes!! Is that what they refer to as "Split Personality"? ;-)

--------------------------- NAH! NO PATRIOTIC MESSAGES ------------------------------

About Sir Ben Graham

I have heard a few ask me "Who is he?" about Sir Benjamin Graham. He was an immigrant during the World War I from Germany to the USA and had to change his last name 'Grossbaum' to 'Graham' as German-sounding last names arised suspicions in USA during that time. Anyways, after moving to this country, eventually his mom after his father's death invested his savings in the Stock market and LOST ALL OF IT!! So it all started, Sir Graham used to cash checks at the Check-Cashing outlets and once a cashier asked him "Is your mom worth a $5?"... He was in his childhood when he heard that from the other side of the check cashing counter.

That was a blessing in disguise for him, he went on to become the LEGENDARY Investor the WORLD HAS NEVER SEEN!! Yes, everybody talks or mentions Warren Buffett and gives him the title LEGENDARY Investor but he is NOT. It is Sir Graham who is!! Of the 100%population in the world, 80% have not heard of Sir Graham, 10% have heard of him and his investing principles but do NOT accept his investing principles and the remaining 10% fortunately for Sir Graham pays respect to him both as a Legendary investor and religiously following his investing principles - If you do not trust me, here are to name a few:

1. Warren Buffett
2. Charlie Munger
3. Jason Zweig
4. Sir Icahn

etc. Point to NOTE, all the 4 and other Sir Graham followers that I have not mentioned or do not know of are SUCCESSFUL TILL DATE!!

The principle that many understood Sir Graham's as "Buy and Hold". Well, that's a very generic term. Yes, if you had bought an index securities back in 1930 during "The Great Depression" and held on to it until now, don't you think you would've made enough to retire as of today - Regardless of how the market is this minute???

Friend of mine started off a conversation and said just like MOST of the today's investors say "Buy and Hold will NOT work in this market". I do not mean any ill-feeling towards that comment but fact remains that those who did not get out of the market at the right time are the fools... Here's some insight about our argument.

There were/are a few invested in the stock market their IRA money that should be cashed out before sometime next year. Failing which, they will pay about 80% taxes on it. Apparently, the money they invested is less than halved or something like that and their principal is not worth considering the 80% tax liability they will have on their neck next year - This is what I heard from my friend. Yes I agree, the stock market was going Topsy-Turvy since 2008 and very badly. According Sir Graham's philosophy, if you want to buy and hold you do not invest in STOCKS - Technically and for all practical purposes STOCKS are SPECULATIONS while BONDS are INVESTMENTS.

Not sure how many would agree to the above definition. Come to think of it, Stocks are nothing but a business that is bought by chunk of people for a particular value that they think is right for the company. Secondly, they also think that the company will make more profits than what it does as of today and will increase their investment value i.e. the Stock price will increase. Whereas a Bond is something a company issues to investors in order to raise money to cover its debt and promise satisfactory returns. Should appropriate profits not be realized in a particular period of time (or before the time of maturity of the Bond), they are STILL mandated to provide the principal back to the Investor.

Tell me something - WHAT STOCKS PROMISES YOUR PRINCIPAL BACK TO YOU? If you answered NO, you are Wrong 'cause you have still not understood Sir G's investing principles. He said, "despite the fact I say Stocks are speculations. There are some which might not be as speculative as many of the stocks are". The STOCKS that according to Sir Graham would Qualify as INVESTMENTS are:

1. The business (STOCKS) whose TOTAL LIABILITIES MINUS CURRENT ASSETS = Positive Number

2. The POSITIVE NUMBER is less than the Total MARKET CAPITALIZATION (defines whether the stocks is trading @ 90 Cents or 75 Cents or 50 cents or 10 Cents on the Dollar)

3. Also, dividing the Number of outstanding shares with the "Positive Number" you get from #1 will give the Book Value - Nope - NET ASSET VALUE (NAV) of the Company and you can compare with the Stock price to see how low or high the stock is trading at

For e.g. GE is a Wonderful stock but when I last looked at it around 2007 or early 2008 the STOCK Price was about 3.5 Times its Book Value. Just because GE is a power and light company, in to consumer products and in to every possible business in this world, does NOT make ANY STOCK PRICE valid for that business. Correct?

Similarly, just because bunch of investors and/or retirees invested their total cash in such companies but lost almost 80% of the money in the last 2 years does not mean buy and hold does not work. They should have been intelligent to take the money out when everybody was buying. Sir Graham insists that "WE SELL WHEN EVERYBODY's BUYING and BUY WHEN EVERYBODY's SELLING". The IRA stuff argument that my friend and I had, could have been resolved if the investors/retirees cashed out when CNBC was announcing All-Time high every 3 days in a week - AT LEAST one of those weeks or worse could have cashed out when the Stock Market saw its 1st LOW since 2002-2003. Beyond which if they were still looking for a GREAT NEWS, it is their GREED that swallowed their profits, NOT the Stock Market!!

Investment is not buying securities and waiting for things to hit the peak that you RESET after every ALL-TIME HIGH. It is about handsome profits that you will need to survive your retirement (PERIOD). Once you set a REALISTIC TARGET, I do not think there will be a need for such grievances and sad stories.

I am certainly NOT a stock market Guru but I am learning. Happy Investing...

Perpetual 'Housing Bubble CRASH' Topic with some Behind the Scenes

How did the Banks and Investment Banks grew bigger than they should have? Here's some behind the scenes reason for that.

Banks and Investment Banks are required to hold on to some Capital as Reserves should the Assets they invest in lose their value. Yes, the Goldmans, JP Morgans and the Bank of Americas had Capital for the assets they were holding on to. Great!? BUT and that's a BIG BUT(T) ;-). Did they have enough Capital to manage the risk? Need I say more!? You know the drill...

Typically, Banks are REQUIRED to hold on to Assets such as Mortgage Securities, Credit Card Securities, Car loan securities, etc. 10 times their Capital - MAXIMUM. But they were able to own more than 30 TIMES of their Capital. Apparently, holding on to a Mortgage or Credit Card loan or Car loan will NOT make it an asset but packaging them in to Securities and holding them does make it an asset. Like I have mentioned before in one of my prior Blogs, every debt that you and I incur or buy in to are packaged as Securities. Only that, our mortgage or credit card loan or car loan is one of the thousands that is part of the Package.

That is a NORMAL process and it is NOT ILLEGAL to package the consumer debts as Securities. Yet, how on earth did these SMART people manage to leverage their asset portfolio to over 30 TIMES their Capital? Credit Default Swaps. The Credit Default Swaps are written to the Insurance company with a premium paid on each of the asset owned by the Financial Institution. This means that should the packaged have a default and go down in value, the premium paid to the Insurance covers for the loss. AIG does know how EASY it is to cover that debt, don't they? What did go out of control was the CDS... and it was above and beyond anyone's capacity to contract the volume or curb the articulated and manipulative process. Well, money was flowing in by the Billions and why would someone stop that from happening.

The more CDS options were created more consumer debts were the ingredients of the package. More the consumer debts, more BAD DEBTS adulterated the packages by the minute. Once the BAD DEBTS popped up and said "I PLEAD GUILTY", look at them volume of A DEBACLE!! Good Lord, I knew 6 Mortgage lending companies went Bankrupt in one day - I am quite certain there were more between 2006 and 2007 than the 6-in-one-day I knew about...

Just to summarize this topic, here's a video that one of my GOOD RE Negotiator friend sent me. Enjoy!! It is very INSIGHTFUL...

Credit Scores and Credit Reports

My long time back knowledge gained is disseminated in this Blog. I read a VERY interesting book called "Credit Scores and Credit Reports" by EVAN HENDRICKS. Such a wonderful book it increased my credit score by about 80 points within a short span. By short span I mean, 3-6 months. That's pretty short before your next updated score from the subscribing credit monitoring software, ain't it? ;-). For some of you credit monitoring software might be an unknown area, I will deal with it towards the end - Nothing fancy, though

So, the way credit score is calculated by Fair Isaac is convoluted. That being said, I have to remind you that my blog will not discuss the nooks and corners of it. Yet, will try to cover the basics that is more than enough for you to repair your credit without the help of those LOUSY Credit Repair agencies. Remember, they just use the best practices and advice the same to you and/or do it on your behalf for a fee.

I was ready to close this credit card of mine from the Credit Union. Turns out, I shouldn't be doing it. Reason - when you close the credit card it deprives Fair Isaac of the ability to assess your payment history. By that I mean, a credit card opened in your name for 3 years would help FI (Fair Isaac) to assess your living 'below/above/within' your means as opposed a new one you will open in the near-term.

The near-term new credit card, on the other hand, creates a bad remark on you. Reason - you are requesting credit which is not a good thing. Moreover, in cases where your other credit cards have balances, the credit score will be hurt even worse than the former scenario.

Here's the kicker, if you have 2 credit cards with ZERO balance in one and a small or large outstanding amount on the other, it would help you a little bit. Small outstanding will perform better than large, obviously. Assume you close the credit card with ZERO Balance. The system now takes it as:

1. You have only 1 credit card and you carry a BALANCE on it

2. If the total credit limit is $10,000 and you have $5000.00 balance, the system treats it as 50% of the credit used

3. Going back to the scenario where you had 2 cards and the one with ZERO balance has a credit limit of $10,000 also. Now, the FI system treats it as you use 25% used

See the difference? That's another important factor why you wouldn't want to close your credit card when you carry balances on other credit cards you use.

Also, sad fact that has been changed by several banks over a period of time is reporting the credit limit. Still, some Banks do NOT report the credit limit - the last I know about one such bank was Capital One. I do not know if they still do not report the EXACT credit limit of their customer.

They defend their NO-REPORTING policy as the method to hide the true value offered to their customer from competing Banks. Revealing that information to Credit bureau will expose the ACTUALs of their Customer's credit limit thereby encouraging the competition to attract Capital One's customers by offering more credit limit than what they currently have.

NOTE: I AM NOT IN ANYWAY HARPING ON CAPITAL ONE. LIKE I MENTIONED, THAT'S THE ONLY BANK I KNOW OR READ ABOUT NOT REPORTING THE CREDIT LIMIT. I DO NOT KNOW IF THEY HAVE THAT POLICY 'ACTIVE' IN THEIR CREDIT CARDS DIVISION.

For customers whose Bank does not report credit limit, it is assumed you have 100% outstanding balance or 100% using it. Think about a situation where you have only 1 such credit card. FI system is going to reduce your score drastically as you use 100% credit given to you. Whew!!!

The other common fact that we all know about is Debt to Income ratio. Try to stay below 40% on that ratio (MAX is 50% at which the credit score starts to deteriorate depending on how long your D2I continues to be over and above that). It is calculated by adding

(REGULAR MONTHLY EXPENSES / MONTHLY GROSS INCOME) * 100

The REGULAR MONTHLY EXPENSES include Bill Payments + Mortgage and/or Rent + Insurance + Misc + Credit Card Auto billing (other than the ones you pay by mail "Bill Payments") + Car loans + Electronics loan, etc.

Question of how to keep it low is another part. The one thing from my experience, I can quote is, unsubscribe from some of the accessories that you might have subscribed to. For e.g. I unsubscribed from Online newspaper, Legal firm membership, magazine subscription, shopped for a lower payment on car insurance, sold a new car bought a couple years ago and replaced it with a used car, etc. These would save approx. $10-$300 a month, but savings are savings. That would collectively SAVE $3000.00 a year.

Snippet: If you live in a house that has depreciated in value since you bought OR has depreciated since the last 3 years (it CERTAINLY would have), download a re-assessment form from your local county Tax collector website and submit the form with some Comps. This would save you another $1000-$3000 a year.

Other things to repair your own credit is to submit dispute forms where it is genuine. For e.g. I had a identity theft entry and that was declared as a late payment (apparently was not). You should be quick to act upon on such entries and let the bureau know that it was identity theft and not something that you paid late.

One more thing that normally happens is the Banks sometimes do not inform the Bureaus about your closed accounts. Sometimes, one bureau do not inform the other bureau of the closed accounts. It is a known fact that Banks are required to inform the Bureau of the closed accounts but NOT ALL THREE. If one is informed, it is assumed they will inform the other 2 Bureaus.

One more "Others" would be to NOT sign up for ANY Store Credit cards. They are treated as Tertiary (I would like to call it that) as it is beyond your primary checking a/c debit card and secondary money from credit cards. Hurts your credit score miserably as it TO ME, is treated as a consumer not able to afford a seasonal departmental store purchase. Of course, we buy in to those credit cards for that lousy 15% to 20% discount on the total purchase. In addition to that, it increases the number of open accounts in your credit report. This is STRICTLY DISCOURAGED by the book (by Evan Hendricks - Credit Scores and Credit Reports), Fair Isaac formula and ME too... :)

As part of the other things, Add-On cards play a role too. If you had an add-on card through your spouse and that you closed eventually, sometimes Banks do NOT inform the bureaus, let alone one bureau NOT informing the other 2. This is due to the reason that Banks wants you to use the credit card and earn their desirous interest income. Sending a letter to the Bureau and talking to the Bank at the same time will help a lot. Reason - When bureaus call the Banks for the disputed entries they check whether the a/c is open or closed - they do NOT ask for details as they do NOT have time to spend on your ONE Dispute.

No pun intended, but ONE Agent at the Bureau would have about 100 disputes to work on per day. They can hardly spend 5 minutes per dispute in order to complete the 100 Dispute files they have on their desk EVERYDAY.

When you dispute the entry with the bureau, prefer USPS mail with return receipt and delivery confirmation. When you type out that dispute letter, be polite. If you try to be the dogmatic dispute person, your letter would not even be addressed. It would take ages if you try to dispute that NO-ACTION or NO-RESPONSE on your actual credit report dispute! Look before you leap ;-)

Best Practices Include:

- Avoid Late payments totally
- Automate your bill payment - direct debit from your checking or credit card
- Use debit card for groceries and regular day-to-day expenses
- Have minimum outstanding balance on the credit card ALWAYS
- Use only one for the bill payments and misc. expenses
- Use the other for Travel ONLY
- Have one or more with ZERO Balance for emergency ONLY - NEVER USE IT
- Subscribe to a Credit monitoring software - monthly fee of $12.00 is WORTH INVESTING - it is NOT a liability
- Identity thieves are CLEVER than you can possibly fathom - To stop them, use the software and add your checking and ALL kinds of credit cards and debit cards monitored for Internet surveillance
- Internet Surveillance sniffs the internet to see if your credit/debit card numbers are exchanged between identity thieves
- When you go out of state or even out of city to stay in a different city for more than a day or two, call your Bank and let them know. Let them update that temporary information so you are not stranded with NOT-ACCESSIBLE credit/debit card
- Banks' system triggers a Fraud Alert usually when you access your card on the other coast and/or other country - IF you do NOT inform them of the travel
- With the credit monitoring software you can find out when the Banks inform the bureau about your balances. You can plan to pay off the balance before that date. That way, your credit score will accelerate as they will see ZERO always when the Bank reports it to the Bureau
- Credit monitoring software are offered by the Banks you bank with for $12.00 monthly fee w/ internet surveillance and the like
- If you are shopping for a Car or Mortgage, ensure you do the multiple-shopping within 15 days - that way, several inquiries will be considered as only ONE inquiry on your credit report. This will save some significant SCORE downturn

LEGAL NOTICE: I AM NOT A PROFESSIONAL CREDIT REPAIR PERSONNEL NOR I OWN SUCH A COMPANY. THESE ARE FROM MY PERSONAL EXPERIENCES AS A CONSUMER, MYSELF AND SOME OF THE TECHNIQUES MENTIONED WERE PRACTICALLY TRIED BY ME AND WORKED. THE ONES I TRIED WERE BASED ON MY READINGS AND UNDERSTANDINGS FROM THE BOOK I MENTIONED. YOU MAY WANT TO READ THAT BOOK AND COME TO YOUR OWN CONCLUSIONS. IT DOES NOT MEAN IT WILL WORK FOR YOU TOO. PLEASE DO YOUR DUE DILIGENCE AND ACT ACCORDING TO WHAT YOUR NEEDS ARE. I CANNOT BE HELD RESPONSIBLE IF THINGS DO NOT WORK FOR YOU AS MENTIONED IN THIS BLOG

All the World's A PARENT'S Stage...

"How did it go?" I asked my friend. He had refereed a Soccer match that morning in Concord, CA - for kids (under 13, may be). He goes " Well, I found it easy to manage the players (kids) as opposed to the unbearable kickin' & screamin' of their parents". I said to myself "That is SO TRUE"... What do you know? All the World's THE PARENTS' Stage it is.

If there is a crime, theft, mugging, love, hate, racism, ridicule, honesty, jealousy, cleanliness, idiocy, idiosyncrasy, bureaucracy, openness, professionalism, politics, etc. BLAME/PRAISE the PARENTS!! I would always do that and ONLY that. For some reason, I have this polemical opinion that PARENTS are the reason for everything a kid does and the World is only a (negative/positive) consequence of that.

Years ago, this friend of mine in his 5th or 6th grade failed in Math. He scored ZERO. His dad, technically and physically a quick-to-ignite temperamental personality ordered my friend to stand outside the house with a writing slate showing "I scored ZERO in Math" (it was in my native 'Tamil' language, still...). It did not STOP with just that for a Punishment. He was ORDERED to stand NAKED and use that writing slate to hide his Private Part making sure he isn't exposed!! WOW!! How considerate a Dad, he is?

Eventually, my friend got in to "Other" activities like sneaking out from the School, having fun all-day and went home like a studious guy back from school and Business-as-usual. His "friends" at school led him in to other interesting things like going to the movies on a week-day, forget all that S*** at school and home. Enough said. Once he went to the extent of stealing a gold jewelery from his own house and his (un)lovable dad found out... Oops!!

Dad carries that same attitude and temperament, beats my friend up like filth and it wasn't enough again as a Punishment. Now, Dad threw a Steel folding chair at my friend. Punishment enough, ain't it? That chair cuts pal's lips in two. Pain and agony to him, yells out "You f****** Son of a B*****" at his Dad. Hey, guess what!? I would've done the same thing, probably more - throw that chair back at him, maybe!? Would've been a wonderful World Wrestling Federation Match-Up. Darn it!

Another friend of mine, was the 1st son in the family. He was so important that his dad never wanted him to lose in anything. He was made to win the Carrom board, chess or Ping-Pang, etc. Did that make him a GREAT guy? Not quite... He was so in to winning in games, it made him think that life is just that - He would ALWAYS Win. When he did not find a job but his friends did before he could, he thought life was failing on him. It was being cruel to him and too nice to the rest of the World. Once he skipped an interview 'cause he could not find parking space in the building where the company was. Phew!!

Here's another story: This friend of mine had a great sister passionate about beating him up everyday. May be not like that chairs-flying, slate-naked stuff but slap on his chubby cheek, use the feet to kick his ass and things of that nature. It isn't that Brutal, is it? The kid grew up with so less freedom, as an adult, he was ready to tread that path that once he feared to. He started to go against his sister. Well, one might wonder why this Sister story while I am talking about Parents, all the while!? That's cause, he lost his dad when he was 5 yrs old and his mom had to go to work. His sister was the mom he knew about... As for his mom, she wanted to enjoy those (lost) years that she could not, NOW!! My friend needs to provide her with enough money to manage her expenses and provide emergency funds when she wants a new TV and things like that. Mom worth a salt, would want the TRUE Love from their kids not their money.

That sister of his got married and had kids. As a grown-up brother he opposed her way of raising those 2 cute kids. Precisely!! You guessed it right!! She beats them too. It has become a ritual for her more than anything else. It has gotten in to her "Beating Kids is the way to discipline them. It worked for my Brother!". Unfortunately, it did not. He was a rebel in his family. Did what he wanted to do, was always on the defensive if his friends opposed him or wanted him to change certain things. He thought people were trying to curb his freedom rather than trying to help. The physical aggressive and harmful expressions of his sister made him think that he should stand and defend with aggression against anything and everything, if not, someone's gonna get one-up on him.

Of all the things, the response he gets from his sister for beating her own kids is "You will see when you have kids. Its easier said than done". My friend goes "Agreed, Totally! It is difficult to raise kids but the fact I understand and accept it makes me a better (future) parent than you are, doesn't it?" Oddly enough, his sister's response is NOT the solution either. That's escaping the problem than resolving it.

A law that virtually exists and in reality a Totalitarian non-existent rule/law/practice is "Teachers at school should NOT beat the kids (In India)". Teachers still mess with the kids. Then it struck me like a bolt of lightning, not that I wouldn't have figured this out, either way! ;-). Teachers are parents to someone too, esp. a mom of one/two or more kids at HOME! Do they beat their kids? May be not, but I am quite certain they beat their students. Why? Because they are not as good as their kids are. On the other hand, the fact that one of the students is a replica of her own kid, makes them want to beat the heck out of that student.

And you (Teacher) complain that your kid is not doing OK at school because his/her friends are not well-behaved!? GROW UP, TEACHER. It is a mom like you who is beating your kids' friends. Let me not restrict this fact about PARENTS to only beating them up. It also matters on the other side - Pampering. That also leads to the liberty given to them taken undue advantage of. Strike a balance on both ends. You do not have to beat your kids nor Pamper to make them learn something good.

It is not required to pamper them so that they feel your love and affection. That makes them too proud of themselves and like I mentioned earlier, brings the haunting factor of life failing on them just because they did NOT get/achieve/win/buy something they wanted. This goes back to my example where the Dad made his 1st Son Win-Win-Win and ALWAYS WIN!!

Like my football (Soccer) incident goes, parents treat their kids as themselves and not a person/human-being that they gave birth too. They do not want to see them as a different person and the right to have different choices. That reminds me to quote this one about a friend of mine who wanted his kid to be an awesome car-racer when he/she grew up. Why did you NOT do it?, I asked. Without missing a beat, "Well, I did not have the environment and opportunity to do so." came the response.

Jeez!! Why would you want your dreams to be fulfilled by SOMEONE ELSE??? I just DON'T get it... If you had dreams you either fulfill it to the fullest or just shut up. Unless/until the kid himself/herself wants to do something, I would not impose my rules/regulations/laws/habits/dreams and the like. Well, traffic rules and civil laws, I can only teach my kids not yell at them to follow it. That's their choice, although I have the responsibility to let them know the consequences of not following it. That's it!

Fortunately, the friends I mentioned above are doing WELL, at present. They have a nice job or are on their own. They I am sure are making decent money and going through their life-cycle.

Before I sum it up, there is this one unfortunate event. I will be short and sweet - Mom and Dad divorced with daughter and son living with the mom - Mom with her married daughter and about 16 yrs old Son were living in the next street from where I used to live. Mom and Dad were so bitterly divorced that they used their Son to continue to fight against each other remotely. ART OF WAR, eh!? Do not know how but by law or from their mutual understanding or bitterness, dad also got to meet with his son once in a while. Dad got his son in to drinking and the like and the son eventually lost his respect for mom and Dad. Anyways, one nice night, Son gets piss drunk and was having fun gazing at the stars from the apartment terrace / roof. In India, you can access the roof in almost all the apartments. He had comfortably seated himself on the edge of the 3" (feet) wall for a while. By now, you might have already conceived the climax in your mind. He fell off the roof and DIED!!! What's it to the Mom and Dad? I do not know if they are still fighting. For all you know, they might!! And you certainly know over what they would be fighting now if they were... The guy I used to talk to once in a while, had Very good command of the English Language and always frowned at by many people for his mischief and sometimes annoying behavior. I know who passed all "THOSE" qualities on to him... ;-)

NOTE: Some (Actually, Many) might be upset over my viewpoint - I DON'T KNOW, I DON'T CARE. But "A HANDFUL" will understand what I am saying. This was not a made-up story to justify my views/opinions, instead real-life examples that I can go to the extent of having them meet us in person.

Let's make this World a better place. Everything starts at HOME!!!

Short Sale - Process / Tips and Techniques

With the amount of knowledge I have, here are some highlights of how the Short Sale process works. I am writing this not so explain the Foreclosure process as such but some Tips and Techniques that you can use for your 'lost-equity' house you own.

First off, please do NOT believe the fact that Foreclosures are decreasing. That is NOT true. Foreclosures are low since Jan '09 as the Government requested the Banks / Financial Institutions to agree on a Moratorium and stop "Temporarily" the NODs that were supposed to be sent to the HomeOwners who have defaulted.

There are 4 different processes in Foreclosure (as you might know):

1. Pre-Foreclosure - NOD
2. Foreclosure - NOT
3. Auction
4. REO

I am sure most of you know how the NOD or Pre-Foreclosure process begins and also rest of it. My goal here is to highlight the tips and techniques of Short Sale rather than explain when each of the (above) process happens.

Side Bar: RealtyTrac.com has tons of houses listed that are Foreclosed. Some of them might be VERY Attractive priced @ $15,000 in CA. Well, I wish that happens - but that for the most part is the outstanding default amount and not the house price. It is better to sign-up or take the set of addresses to the County Courthouse and find out for yourself.

NOTE: I am writing this for responsible homeowners who have never defaulted, paying the mortgage on time TILL DATE, their property taxes, HOA, No Liens AT ALL, have NEVER re-financed since you bought the house and it is your Principal residences (i.e. you live in that house).

LEGAL NOTICE: This is only a Guidance. I am neither a negotiator, NOR a professional with Real Estate Short sale, Foreclosure process, Attorney, Agent, Appraiser experience, etc. I am NOT responsible for your actions if you do NOT do your Due Diligence.

There is a process before Foreclosure - Short Sale. Do NOT STOP paying the loan just because you want to get rid of the house. Defaulting only gets it to Foreclosure and a call from the Lender. Other than that, you will have to go through a LONG WAIT in this process. Even while you are paying your mortgage call the lender for a chance to Short Sale the house. 100% they will allow you to try that option. Obviously, lender is not running Real Estate business, the house is NOT an asset to them and if you can deal with it, they are HAPPIER!!

The way you invite BUYERS to your house is simple - go to the rock-bottom price right away in that neighborhood instead of starting from a high-value and reducing $50,000 every month. People around you are NOT dumb to buy the house the 1st time you reduce by $50,000 and unfortunately, I have heard my RE Agent friend tell me that most of the RE agents themselves are not shrewd enough to handle such sales. If you go on a 'Price-Reduced' spree, the neighborhood will continue to wait because their mind-set will now be 'They will reduce more. Let's wait some more time'. The second thought is 'Well, if they reduced by $50,000, even the current list price may also be not the right price for this house. Lets pass on it'. The more these thoughts the more days your property will sit on MLS. More the number of days, more your property is forgotten or not recognized as a decent or OK or GOOD property. The newer houses always take priority in ones mind because we always tend to think the new listings will also LOOK NEW! ;-)

On the other hand, this is my philosophy - don't try to do everything by yourself. Find a good negotiator through a friend or referred by a colleague who they know for sure has some success stories and have them negotiate the short sale on your behalf. There are two options:

1. To negotiate the price before you list your house on MLS
2. List the property for short sale and send the best offer to your negotiator to negotiate with the lender with that price

The negotiator normally will NOT share more than 1 offer to the lender but you ensure that you have a handful of offers as a backup. Reason being, by the time the 1st offer came in and the lender negotiation is done, it would take a few months to get things done. At that point, you might not even have that 1st offer buyer available in the market to buy the property. The backup offers will come to the rescue at that point and it is only the paperwork that changes and a minor re-negotiation as the buyer is not the one the negotiator mentioned to the lender.

You can choose to do it all by yourself but remember,the prime-time for the lenders is between 9am and 5pm. If you have a day-job or a home-maker your time on this short sale would take hours together. I mentioned 'home-maker' as you will be unable to do the stuff you will do on a daily basis. This is not easy. The negotiators up-front fee is VERY low for the amount of relief you will get at the end of the day. Your short sale should not incur any out-of-pocket expense from you other than (maybe) HOA Docs to be prepared or your gasoline charges to go the Title company!! ;-). Closing cost will be part of your short sale price negotiations which the negotiator will mention to your lender. You owe nothing as you already have enough losses because of that property, if you know what I mean! ;-)

Remember, the one thing you will have to do is paper-work. Lenders ask for numerous papers to be sent to them through your negotiator. Have them ready and FAX them any number of times the negotiator says the lender needs it. This is the truth - Lender will ask for the same paperwork over and over again. Sometimes, they just lose them... Also, once you assign a negotiator do not talk to the lender directly unless absolutely necessary and/or you have confirmed with your negotiator that the question you had can be discussed with the lender. For the most part, your negotiator will give you the answer and worst case, he will find out for you from the lender.

Your professionalism in inviting buyers to see your house is important. There will be several people coming over the week and weekends. It is important for you to not be frustrated with the show ups/no-shows you will have. Make sure that you ask their Agent for the business card and keep it displayed in a place visible (place in the kitchen counter-top is ideal) to other agents and buyers.

1. It helps your agent the negotiator will assign to handle the MLS listing, lock box and other relevant logistics, etc.

Side Bar: unless you have a RE Agent friend who can work with the Negotiator and also one who has an investor mind-set - Negotiators should not insist on the RE Agent they will work with - It should be a Win-win.

2. Gives the buyers and buyer agents an idea as to how many have looked at the house and motivates them to put an offer on the house!

Use Lock boxes so that the buyers and their agents do not have to depend on you unless you work from home where they shall call and confirm (whether to use the lock box or come over so you will be around).

10-99 at the End of the Year: Your lender will send you a 10-99 saying you made some income on the house. This is technically NOT true while logically might be! :). Take the help of your CPA when you file your taxes and they will know the process to submit it to the IRS as a LOSS.

Over and above all these, you might get repeated letters from the lenders (sometimes) saying they were unsuccessful in getting this home retention or short sale completed and are closing the file, etc. A good negotiator knows what to do and will find out for you. He/She will request the lender to re-open the file and start over again. The important thing you shall consider during this 'Negotiation' phase are:

1. Focus
2. NEVER GIVE UP!!
3. Trust your negotiator
4. Do NOT be Frustrated - This is NOT easy - Do NOT lose your temper in a day for a freedom from the property, worth Years!!
5. Learn a Lesson - Think about what you can do moving forward and avoid such Blunders
6. Keep a positive thought - ALWAYS
7. Do NOT worry about the Credit Score - All Said and Done, we also did a mistake, make sure that you accept this Credit Score dent with a Smile! :)
8. NEVER EVER GIVE UP!!

P.S: If you need help with a Negotiator, I have a friend who can help. Leave a Comment and I will get back to you

Random Thoughts - Economy / Politics / Auto Makers / Banks / Whole NINE Yards

As the title indicates, there are some random thoughts in my mind to share. My previous blog talked about Religion and personality - apparently, two different things that is perceived as the same, by some people. On the other hand, I thought that "Race" or "Religion" or "Ethnicity" when it comes to the Rich and Famous... hmmm... I cannot find one that quite possibly distinguishes that population. They are part of every Red Carpet, Black Tie, Academy Award, Oscar Award, Fashion Show, Gucci get-together or the congress hosted dinner for businessmen/businesswomen. In summary, Business-Magnates know NO difference! They are the same in terms of their personality but in terms of competition is where they become jealous / competitive / aggressive / frustrated / focused, etc. For those who do segregate or see other people as different by race, religion, caste, creed, etc. can NEVER be business-magnates that I am talking about. The ones I am talking about are REALLY RICH and they do not tell everyone that they are - We find out...

The recent day politics is strange to me. For one reason, I appreciate the President for being aggressive and he wants to do something. Fact remains, some of his CHANGE is not for the good. For e.g. the Stimulus Package worth $700 Billion and now close to $2.5 Trillion is a little too much DEBT on a country to come back up in good shape. US President has come forward to help the Auto industry, he has already pumped in money in to the Banks and let them open up their lending practices (but I guess the Government has INSISTED the Banks to scrutinize). Yeah, right! Like the Banks were ready to start lending again with their nervous, shivering and burnt fingers!? While this was going on, the wanna-be RICH wanted a piece of the pie and they were ready with alms stretched right inside President's Desk @ the White House. What did they want? Bail-out money!! And for what!? for running a Stupid business with no strategy for a Debacle of their industry, no plans to re-organize their practices, no plans to compete with their FAST-GROWING competitors!! Yep, I meant the auto-industry.

What did GM and Chrysler do? Manufacture SUVs till those Gas-Guzzlers could choke their throat... Toyota / Nissan / Honda - ALL Japanese cars manufactured and shipped SUVs to the USA too. Are they having a problem? Yes they do. Is it necessary for them to file Bankruptcy? NO WAY! Why? Because, they also had PERFORMING, ECONOMY CARS!! Shop for a Mid-Size car that is similar to a Toyota Camry or Honda Accord or Nissan Altima - Prove me wrong on my take that these 3 infinitely BEAT the Chevrolet Malibu / Ford Fusion / I really do NOT remember what equivalent car Chrysler has for these Mid-Size competitions...

The ECONOMY concept was adapted by the Detroit Auto-Makers about TWO-THREE YEARS after Toyota and HONDA came up with their HYBRID cars. They even have HYBRID SUVs, if I remember right!! Lexus has a HYBRID SUV - I am sure - The luxury segment of Toyota. What did the American Car-Makers CREATE? They created a lousy, widely admired, gas-guzzling, air polluting, macho-looking, manly BUT the MEANEST vehicle on Earth - HUMMER!! Chrysler hired the former VP of Toyota to hear his comments about Chrysler Coupe - It was a CHEAP manufacturing with Plastic interiors and it appeared to be equal to a Economical, not-so-pricey but still a good middle-class car Toyota Camry - Apparently, it was a luxury Coupe from Chrysler.

UAW gets $51.00 per hour + Health Insurance + Extended Contracts, etc. for this DEMEANING and DEFAMING American Cars? (I might be a little off on the hourly rate). You work for what you are paid. A similar manufacturing industry Union member in China or Japan gets probably 5% of the $51.00 + Benefits UAW gets. I am not saying UAW should not be paid $51 per hour, all I am saying is, they should work a LOT more for the money they get and NOT manufacture SUVs and think there's NO END to this World for Gas-Guzzling stupid Engines. Well, I own a SUV too, it is handy, comfortable, spacious and helps me transport my household stuff and NO I am not in to Real Estate Contractor business or any business that will transport lot of stuff around. When you earn so much money, can you as a UNION think about manufacturing ECONOMY SUVs like a Toyota RAV-4 - Mileage of 26 MPG on Highway and 20 MPG on City roads. GMC Envoy / Chevrolet Tahoe / Ford Escape are not even close to what Toyota's or Honda's or Nissan's are. I am talking on an overall perspective not ONLY Mileage. I am quite certain people are not thinking to buy 4 tires and a Engine if that gives 45 MPG on City and 55 MPG on highway. They want everything and still in their BUDGET-Vicinity!!

Ron Gettelfinger once cried foul at Former Vice-President Al Gore for owning Lexus Hybrids and NOT owning an American SUV or Car. He also vowed not to support him in the Elections should he continue to own them. LMAO!! While he was spending his 'Precious' time crying foul at Al Gore, he could have manufactured an American SUV that was AS GOOD AS Lexus Hybrid. Talk about Unions!!! Also, The American Auto-Industry CEOs SHOULD have suggested different directions while Toyota was MOVING FORWARD. NOW? They are learning the lesson the HARD WAY!! GM / Chrysler - You simply DESERVE IT... At least, I am glad to hear of ALL the BAD NEWS from Detroit, Ford is not having a Bankruptcy problem and they needed the Bail-Out money to cover for the future. Yes, they also were able to come to a consensus with the UAW and reduce costs unlike GM / Chrysler.

Warren Buffett invested in Constellation Energy, Goldman Sachs, BNSF (Burlington Northern Santa Fe), General Electric, etc. He lost Billions in an early investing (i.e. before a huge slide of share prices in the last 6 months) and he ADMITTED his mistakes. Contrastingly, TILL DATE, NONE of the Detroit auto-makers or the UAW is willing to accept their MISTAKES!! Therefore, "REALLY RICH" don't say they are RICH, WE KNOW/HEAR/SEE THEM.

Hence, Proved!! :)

Religion and Personality

I had this opportunity to visit our new building of our customer with the "State-Of-The-Art" outlook and the inside in Chicago, Illinois. It was a couple days meeting and I had to fly in early morning and be there at the meeting by 8am CT. Took a Cab and on the way called the Hotel where I was going to stay as I learned from the Cab driver that he does not know where the city is. Turns out, its a new city!! in the process of development. Oh well...

I was told I-94 and I did mention it to the driver. After a few miles, when we reached the intersection to take I-94 or I-90, he squeezed himself in to I-90. Well, I was stupid enough to trust his instincts despite his initial claim that he does not know the place. I thought he probably knew a different and faster route to take me through to the destination. Nope. I was infinitely WRONG! I called the hotel again and they said I-90 will only take me to nowhere!! :-)). JK. I told him to drive that 30 miles we traveled back and take me to the destination through I-94. He was back, I-94 intersection did come but the driver chose to go back to the airport!! For what!? I asked...

He wanted to punish himself for not listening to what I said and that he was stupid to assume it to be I-90 instead of I-94 which is what I told him. OK, so? The driver goes, "I am taking you back to the airport. You may want to take a different Cab to go to your destination". Ah! Come on...No kidding - This really HAPPENED!! I convinced him for a few minutes, had to tell him its OK a 1000 times and also mentioned that I am going to be all the more late for my morning 8 o'clock meeting and the time is already 9:20am CT! And that finding another cab and transferring my stuff to that, telling the cab drive to take I-94 if he has not heard about the city and things like that would delay it even more!! Well, I know, you (reader) did get what I was trying to say!! :)) Sorry!

Finally, I was at the destination and I offered that guy $80.00 while the meter was just about $55.00. He initially refused and complained about the mistake he had committed. I insisted and he all of a sudden asked if I follow Islam religion and I was like. NO. Why!? He said something similar to this in his broken English "To convince someone after a mistake and to offer extra cash and make things even" is a character Muslims exhibit. WHAT!? How did EVER religion come in to the picture now? I know Muslims, Christians, Jews, Jains, Buddhists, Sikhs, etc. and I have friends in each of that category and how did their personality determined their religion OR Vice-Versa???

He ended his 2-3 minute "Ardent" belief that Personality determines Religion by saying "I acted just like a Muslim". Well, that's just a strange but true incident I wanted to rant about. Moral of the Story is: If religion determines personality everybody would have chosen that religion regardless of whether it is Hinduism, Buddhism or the YOU NAME IT religions!!

LET US STOP RACISM!!!

OSCAR - Is that a BIG Award?

A.R. Rehman is a great musician, Agreed! He is Intelligent! He is Smart and Talented! I will nod my head for those too. Is he a Genius? NOPE. Is Maestro Ilayaraja a Genius? YES. But who won the Oscars - A.R. Rehman and for a NOT-SO-GOOD song. I am a fan of A.R.R and I used to argue with my friends that he is as good as Ilayaraja but NOT a genius, still. I am not saying the Oscar shouldn't be awarded to ARR but may be for a song that was REALLY valued across the world.

Just to quickly highlight about Maestro's creation of Thiruvasagam with a symphony Orchestra that impressed the Hungarians so much, they wanted Thiruvasagam to be translated so they can also enjoy the Music that Maestro created out of ThiruVasagam. That's Genius.

Once upon a time, OSCAR for an Indian movie or India related movie is a BIG deal. People talk about other Oscar winning movies that are mostly English, French and I remember 'The Lost Emperor' - A Chinese movie. Is Indian movie that bad!? or is Oscar given to promote your Country more than anything else? Come to think of it, I have started believing in the latter - "To promote your Country" and not the movie.

Slum Dog Millionaire was a movie that was showcased in the Oscar with ARR the music director for the movie (one of the) nominated for best Music director. He also won the award and the movie got the Best Movie award.

Imagine a situation where a Standards Agency walks in to your corporate office and asks you to showcase a (ANY) project that you have done JUST to give you that "Best Corporate of the Year Award"!! That's exactly how the Movie 'Slum Dog Millionaire' was/IS!! JUST to promote India as a Country JUST because it is going to be the next country of concentration for Economical advancements.

JUST isn't Appealing to me... Is OSCAR anymore a BIG Award that you would YEARN to win anytime of the Year???

An OutLook for 2009

HAPPY NEW YEAR comes kinda late from me... after 26 days of New Year Bonanza from the Markets worldwide. Anyways, HOT NEWS is about the Sanskrit Word 'Satyam' means 'Promise' in English. Turns out that company fooled almost everyone but their CEO. Well, I have nothing much to say about this company as people already named it the 'India's ENRON'. ;-)

Anyways, Hope everyone had a wonderful New Year's Eve and followed by it were some disaster news and more disaster news and more and more and more... Well, Journals now know what to talk about. When Economy booms they give the public ALL KINDS of GOOD NEWS, when the boom goes bust, they give you BAD NEWS and BAD NEWS ONLY!!! Not once, I have noticed journals publish things that make sense regardless of whether people pay heed to that. Some will pay attention to the bad news when things "appear" to be good.

That means, journals are going to continue to give you multitudes of BAD NEWS this year and next year. Oh BTW, there will still be some "Economist" or "Ghost" claiming things are going to be better SOON such as next quarter, 3rd quarter 2009 and 5th quarter 2010 - See, there's no 5th quarter in ANY YEAR!! Bad Joke, eh!?

Outlook for 2009 is Bleak for the Pessimists and the BEST Year for the Optimists. BEST of the BEST would be 2010 and 2011 for NEW LEADERS! But to answer whether it will prove BEST or WORST for any Human Being is 'Patience'. Wait and Watch, but don't wait TOO LONG!!!

Outlook 2009 for the stores right behind the street, in downtown of your city, etc. is going to be horrific. You will start to see more and more businesses posting "Going Out OF Business Sale" signs... Those sign boards are the sign of bottoming out of the economy. It also indicates, pretty soon there is going to be a boom but NOT right away. Well, like I said 'Patience is a Virtue'...

HAPPY NEW YEAR 2009 once again!!

Greed & Corporate = Corruption & Terrorism?

Here comes an interesting Topic that I wanted to take a Shot at. Greed VS Corruption. Debating between the two, I was wondering which one is Worse. To put this in perspective, ENRON, WORLD COM, etc. was 'Greed' as opposed to the Mumbai Attack being 'Corruption'.

What is Freedom? To ME - Enabling me to enjoy the Basic Rights like walking down the street, live in my house, Buy groceries and Sleep in my Bed. Wouldn't that be the basic necessity AND if someone deprives me of that right, can I term it as 'Greed' or 'Corruption'.

Let me cut to the chase...

Because of 'Greed' some managers in ENRON and WORLDCOM ran away with lots of Ransom, settled in Hawaii (or so they say) spending the Millions. This deprived a full-time employee working in a small energy company of ALL his 401K, millions lost their millions of dollars by investing their retirement funds in ENRON and WORLDCOM. They were 'Deprived' of their right to live in an affordable home that they used to, buy those groceries they used to, walk down the street with pride as before and you name it. Some committed suicide owing to such losses and many are depressed and have lost all they had. Senior Citizens were fooled by the investment bankers who had NO REMORSE of leveraging other (OLD) People's Money. Many Senior Citizens WOULD NOT have been able to afford a Doctor's visit for their 'Old Age Issues' after this Corporate Pandemonium, I am sure...

The Mumbai attack happened because some 'Corrupted' Officials/Politicians and Underworld Dons let the Terrorists enter the Country. 'Corruption' enabled the Terrorists to take control of an entire Territory. That 'Corruption' deprived hundreds the basic right to live in this world, have fun with their loved ones, talk to their clients and enjoy their Dinner. I can GO ON and ON and ON!

'Greed' and 'Corruption' - Both deprives you of the basic rights, both makes you lose your pride, both creates fear, both torments people, both creates hate, both create Depression in you and me and BOTH KILL PEOPLE! 'Greed' / 'Corporate' and 'Corruption' / Terrorism' - Are they different anymore?

This is what I would Call Ripple Effect

As you might know, the JP Morgan is planning an across the board Loan modification for the loans that they are servicing. It is a good Value-Added service from JP Morgan, in my opinion. However, how would the loan modification help the homeowners who are out of job now. I am not being cynical. JP Morgan has carried over good Values from their founder and are trying to do as much as they can. Fact remains, that the construction jobs are disappearing left and right.

NPR - National Public Radio recent news was on a City near San Jose where the Latino and/or Hispanic population is moving and foreclosing on their houses due to a significant % of the population job losses in the construction industry. If someone says, AMEX is laying off 7000 Jobs, to me, it means, we are losing over 15,000 Jobs in reality...

Here's an example: I have a business and cut 1000 Jobs who live in that city where my Business is. The 1000 will not go to Starbucks anymore, so Starbucks will cut about 300 jobs, the Jiffy Lube about 100 jobs, Autopia Car wash will cut about 50, Hollywood Videos - 50, Restaurants - 200, Handymen jobs - 25, Grocery stores and departmental stores - 100, etc. In reality, we have lost about 1825 jobs Grand Total - Only an Example. This 'Ripple Effect' will trigger more foreclosures and defaults.

Wondering why I am duplicating my explanations??? ……… because, I want to reiterate that we should NOT depend ONLY on the Fed Bailouts, JP Morgan's help/support, Stimulus package, etc. and prepare for the worst. One of the most important back up we should all follow is to live below our means rather than within or more than our means. Try using Debit cards more than Credit. Last but not least Save, Save, Save, Save all we can!!!!

PEACE, PROSPERITY and ENLIGHTENMENT to ALL

Global Recession Explained

Well, based on my friend's request I have the responsibility and motivation to post this continuation of ‘Depression 2.0’. Lets start with latest updates

1. $700 Billion is yet to be distributed to the Banks
2. Citibank turned down Goldman Sach's offer for an acquisition
3. Warren Buffett invested in Goldman Sachs and Constellation Energy
4. BofA cut their dividends by 50% (from $0.64 to $0.32 - FYI) ;-)
5. Detroit biggies GM and Chrysler talk about a Merger
6. Home-Sale has increased while the Median prices decreased
7. Gas prices are at an all-time low since the last 17 months
8. Consumer confidence is decreasing - An all-time since the last 4-5 years (if I am not wrong)
9. Retail sales are down
10. Car sales are down
11. Global markets are panicking and their GDP is plunging in the wink of an eye
12. Europe is bailing out Banks and they are having a downturn too
13. You Name IT!!! :-)

GOLD VS Paper Money

As you might know, from the previous article the collapse of Bretton Woods System (trading with Gold) kicked off the trading with currencies and esp. USD. Let me try to explain in a few words. If Country ‘A’ runs out of GOLD by spending too much in buying resources from Country ‘B’, recession kicks in right away. IOW, there is a finite set of GOLD available in this world. As for the paper money, if you run out of currencies the Fed can ‘literally’ PRINT them and leverage it to the maximum extent possible.

Emerging Markets and their Investments

Now, export increases the surplus of the country and Banks get more money while industries are profitable. Government can print currencies equal to the Bank Deposits and invest them in dollar de-nominated assets like Treasury Bonds, Corporate Bonds, Asset-Backed Securities, etc. The foreign direct investments also contribute to additional liquid cash in Banks (leveraged by the Government or Fed)

Side Note: BTW, I came across a PowerPoint that said CDOs were something created out of thin air, which is not the case. Credit Default Swaps, CDOs, etc. come under the Asset-Backed Securities roof. Our credit card combined with several other credit cards can be packaged in to securities just like they do the Home mortgages. This is NOT something Investment Banks pulled out of thin air. Yes, it is well within the policies of the SEC! Those are Smart men in Wall Street, BUT they are AVARICIOUS! :)

Other countries investing in USofA assets also allow their banks to lend more money to their own countrymen (as the ROI is GREAT not just GOOD). It increased the corporate profits and enabled the government to re-invest in dollar de-nominated assets. When 90% of the assets they had/have are USD, their native currency depreciated and yielded higher profits to Export industries. To name a few, China, India, Philippines, Indonesia, Malaysia, Singapore, Taiwan, Thailand, etc.

Homeland Issue

The country (USofA) that had been the BEST customer EVER in history for the whole world started turning out to be the worst. Here is what happened in the homeland…. The Fed authorized banks to lend money left, right and center. This enabled investment banks, Corporate, etc. to invest globally. When the economy slow down showed its ugly face in 2001 followed by the 9/11 attack, the bank to bank funds interest rate was reduced to an all-time low of 1%. Well, if I am getting $1 million @ 1% while I used to get it @ 6% or 8%, who wouldn’t want to take it!! That’s a no-brainer... :)

Further to the reduced interest rates, it enabled the smaller banks and lenders to lend to the consumers. It fueled the sub-prime lending practices and the rest is history. The countries around the world were convinced of the fact that Sub-Prime (Asset-Backed Securities) is the Order of the Day. Their fund concentration decreased in Treasury Bonds and TIPS because the returns were only ‘Satisfactory’ and we human beings always ask for MORE.

The housing foreclosures had a ripple effect on the asset-backed securities that other countries and investors bought. A $100 value asset-backed security was selling for $0.10 at some point. Investment banks had to write off major losses, Lousy Lenders went bankrupt and wannabe investors either were prosecuted or filed for Bankruptcy. Countries around the world started to lose their confidence on USofA.

Back to Emerging Markets

Foreign Direct Investments in Emerging markets created a surge in infrastructure projects. Eventually, the supply surpassed demand in the emerging markets like Eastern Europe, India, China, etc. Obviously, it had to stop at some point. Meanwhile, the Supply/Demand imbalance already had heightened in the USofA after Credit crisis, sub-prime, etc.

The recent emerging markets boom that created high demand in food, oil and commodities plunged deeply due to a similar supply/demand imbalance. In addition to losses in USofA, investors had to take losses in emerging markets too. As you can see the supply spree disappeared to make the $147 a barrel Oil cost only $63... YAHOO!! Also, the investment banks of USA had to hold off on their Infrastructure projects in emerging markets that are worth millions of dollars. Welcome to disinflation...

In the process, IT Industry started feeling the pain, as their biggest revenue generating customers are financial services and insurance. The insurance industries are also losing their profits due to losses taken on Asset-Backed Securities (bonds that they gave AAA rating). Do I really have to talk about AIG? ;-)

What’s Next?

Unemployment will increase and consumer spending will significantly decrease. The corporate in emerging markets will begin to cut costs and lay-off employees in the years to come. Corporate, Banks and Investment Banks will be bankrupt fueling a ripple Credit-Crisis. Emerging markets and other countries around the world will find ways to invest in their own country or countries that promise good returns. This will trigger a devaluation of Dollar across the globe.

Now, on that note, Japan has already started to take some of their investments from USofA. They are investing in their country or another that promises ‘SATISFACTORY' return. The same might happen to China, India, etc. decreasing the Dollar value further. Export oriented countries will try to out-sell each other and give away goods at rock bottom prices. Deflation kicks in. Consumers will lose confidence by the day and Depression will prevail for at least 1-2 years from now.

Moral of the Story: After all this, if somebody is going to say the Fed has learnt from the past mistakes they are WRONG!!! These junkies tried to pump in more money in to the Banks thinking that the Banks will start lending again. NO WAY!!! The banks are going to keep that money as their reserves for losses, they do not want to trust a consumer and finally see the consumer default on the loan. Would you want to try burning your fingers again, if you are bitten once BIG TIME?

Conclusion: Trust me, I do not want the world to ruin itself... At the same time, it is reaping what it sowed. If you ask me for a Solution, well, the world will transform from serving ONE MAJOR customer and export oriented businesses will undergo a transformation along with this change.

Be happy, for when there is Depression, the World is looking for 'NEW' Leaders. I mentioned Warren Buffett in this article because you see him Buying when everybody else is Selling. That’s all I am saying! :) Make Hay while the Sun shines.

Global Recession - Here it Comes

All of us are following the news very closely these days and for obvious reasons. Now, some might be happy about the $700 Billion Dollar bailout which is necessary but can it sustain the Debacle of the financial services industry? In my opinion, NO WAY!! The total losses expected out of the credit crisis, sub-prime mortgages, CDOs and similar financial instruments is at least $10-15 Trillion Dollars and I wouldn't be surprised if someone comes back with a higher number... The market has already lost 3.2 Trillion Dollars and this is ONLY the Beginning!! Oddly enough, we have all but 2 Investment banks staying strong in this Tsunami of Credit Crisis - Goldman Sachs and Morgan Stanley of which one has already started to find a buyer (Morgan Stanley). Goldman Sachs with its unarguably 'best investment banking strategy' has been backed by $4 billion dollars of Warren Buffett's money! :).

Too many things are coming to my mind and I trying not to digress from what I wanted to say here. Is Depression 2.0 really coming? YES from me... If not, may be I did not understand the economy and market that well. Dollar crisis - Causes, Consequences and Cures is my bible for the Economy of the World - Authored by Richard Duncan. The book taught me several things that led me to believe and confirm that Depression 2.0 is right around the corner. Reasons:

- The dollar leveraging has increased exponentially and the system is choking with extraordinary leverage globally
- Export oriented business is going down because spending is decreasing in USA
- China's most wanted customers are not buying as much goods as they used to before
- You lose your house, you find a cheap rental to live in, get rid of your car and your other accessories. You start to live below your means and dont buy goods that you normally used to spend on
- Walmart stopped a shipment worth some billion dollars from China as their current inventory did not move
- I visited Walmart in our neighboring city to find out that they closed down on their low revenue generating departments!
- Dealers are offering 0.9% interest rate to get rid of their inventory
- SUVs are having a bad time due to high gasoline prices
- Foreclosures and houses for Sale are at an all-time high
- Labor department reported highest number of unemployment claims in month of Sep '08
- Banks in Europe and Asia are beginning to raise their ugly heads and looking for their government to bail them out
- DJIA has lost ~ 4000 points in the last 1 1/2 years
- S&P 500 has lost ~ 300 points in the last 1 1/2 years
- USA is becoming the NOT so trusted customers for the export countries
- China, India, Indonesia, Philippines, Hong Kong, etc. and more countries will not buy dollar denominated assets anymore
- Their currency exchange rate will increase and decrease USD leading to a recession in their country and thereby a Global recession will kick off
- Export oriented business will cease to operate. Things will start to change and the world will look for innovative global businesses and not just US or Europe or Asia EXPORT oriented business

Why did all this happen? Was it the current president of the USA? or Is it terrorism?

None of the above...

The problem started when Dollar currency replaced Gold as the medium for Global economy. In the 1970s, when the Bretton Woods system collapsed - Trading with Gold in the global economy was the Bretton Woods system, USA decided to replace it with USD paper money and leverage from it.

That increased the leverage exponentially compared to the Bretton Woods System and we have been sitting on a pile of Dollar denominated assets since then... The system is unable to endure too much leveraging using fancy financial instruments and it is going to burst pretty soon. We are looking at losing over 10 - 15 trillion dollars in the next 2 years (2009-2010) and kindle Depression 2.0. Its coming! Be prepared... The world needs new leaders and think of this Depression as a chance to learn from other's mistakes! :)

I will write about the USD trading in my next blog as this is getting more convoluted and I am struggling to keep my thoughts intact with this vicious Topic!! LOL

Cheers!

Washington Mutual - A Recap

I have to recap the status on Washington Mutual Bank stock. In the process of learning more about the Stock Market and Real Estate I understood that Washington Mutual has got a long way to go. By that I mean, they are about to take huge losses this year and next year too. While that is true, they realized how the meltdown has/is going to affect them. Recently, they have reduced their dividends (which was one of their biggest attractive offers to buy their stocks). Well, thats one of the ways they had to raise capital. The sub-prime meltdown has given several lenders like WaMu a hard time, Literally!!

On the other hand, current status of WaMu is like this:

- Stock Price is 0.4 times the Book value of the Bank
- PE Ratio is Negative. What can I expect? ;-)
- Income is negative for the Trailing Twelve Months - Obviously

That being said, I have the responsibility to highlight the positive side about WaMu.

- They are the #1 in S&L Banks (Savings and Loans)
- Everyone else was affected by the Real Estate bust and so they are not unique in that sense

When the economy gets healthier this bank will grow. This can go Bankrupt, Maybe! But, what is the feasibility of that happening or let me put it this way. Would an investor let it go to Bankruptcy? I doubt it. By investors, I meant organizations like JP Morgan, Bank of America, Citigroup, etc. They would love to add this "Asset" in their portfolio and have lots to gain. In short, this is a VERY GOOD acquisition candidate that will certainly give the acquiring organization a niche in S&L.

Million dollar question: When is the best time to buy? As for me, the market has not bottomed out yet. Losses might decrease over the next 2 years. However, I am waiting for the 3rd quarter to end (probably 2-3 more quarters from now) and buy this stock. Well, my previous blog did say that I was planning to buy it around 2nd quarter of '08 but I learned that it is still not the right time while I was researching more about Sub-Prime mortgages. Anyways, the reason for me rooting for this stock is, even if I lose assuming WaMu files for Bankruptcy at some point, my losses are limited. Is it risky? Yes it is, but you are your best judge. More the risk (I am NOT saying we should Gamble on this stock, NEVER!), more the returns. Patience is a virtue, expect profits (if things go well) in another 5 years...

My House - Pride or Punishment?

This is something that I should have blogged about sometime last year. I knew it was a problem but only recently did I realize this is one of the biggest blow in my life. Never mind, I gotta start somewhere and here I am...

Ignorance is Bliss or is it? We were looking for a bigger rental property in Jun '05 and was geared up to find a 3-bed rental. There came the real estate boom talks and that things are looking good, etc. All of a sudden we changed our plans to buy a house while it was really hard for us to afford it with me barely saving. By the time we bought this house we live in, it was "Height of the Bubble". Imagine that!? ;-). The price of the house we bought was 70% more than the price the previous owners bought it for in 2003 and about 350% more than the price it was in 1998. Over and above that, we had a IO (Interest Only) loan on the 1st and it was 100% financing. Talk about Ignorance!? ;-)

Until recently, I was thinking the house can be rented out so we can move. But to no avail. Our interest rates for the 1st loan will reset in 2010. However, we cannot address it to the loss mitigation right away as they are not keen about issues that might be a "problem 2 years down the line", if you know what I mean! :). In summary, nothing seems to be working other than letting this dead investment go on for the next 10-12 years and break even at that point. Agreed, the mortgage and taxes I pay would be enormous by the time I break-even, but that's how things work if you make a Big mistake.

My point is not to say that I was shielded from the facts or truth or whatsoever. There are other things that I am unwilling to discuss here while we bought the house. But again, the homeowners who are in foreclosure also have to realize that we all (including ME) bought the house based on emotions and CERTAINLY NOT a rationale buying. We were ignorant of the fact that the real estate boom is ABNORMAL. Had I read couple of books before I bought the house, this would not have happened. Had I asked around people about the market this would not have happened. Agreed, lenders were greedy and they exploited us. Technically speaking, even they had no knowledge of how bad the sub-prime meltdown was going to be. They thought the hangover will be over in a day or two! They made Billions with a "B"... :) No wonder most of the well-known lenders have already filed for Bankruptcy Protection!!!

When we bought the house we took PRIDE in owning it but when we see the bigger picture and how scary it is, we see it is a PUNISHMENT for no fault of ours. There was one fault - Ignorance. To conclude this story, rather than saying someone did something wrong, I am trying to set things right. To me that was the most important real-life experience to learn more about Real Estate and Stock Market. Indeed, it was learning the hard way, well...

Media Sucks!!!

I am very interested to hear "North East West South" (NEWS) but when it is mostly rumors and not the truth, it frustrates me. Well, I could only do so much - Constant bickering!! LOL. Recently, the media has supposedly said that the Real Estate market is coming back up. That being said, I remember reading an article in WSJ where one of the investors (do not remember his name) said about the Real Estate "coming back up". This is what he said - "You have been drinking for 365 days and on a Saturday night you want the hangover to be gone on Sunday afternoon. That is simply not possible".

Precisely, how do you think a 5 year real estate boom can correct itself in 2 years!? Just to elaborate on this one. The real estate appreciation started to boom (when I say boom it was going, going and going) in 2001. This might be surprising to some, but the real estate was actually rising irrationally since 2001. It peaked between 2003 and 2005. In 2006 1st quarter we encountered the debacle of real estate which everyone was thinking had a long way to go. Oh yeah! It does have a long way to go, the debacle I mentioned above is going to take about 8-10 years to correct itself. We will be out of the hangover by then. That sounds reasonable, doesn't it? ;-)

Yes, the real estate seemingly is better and I will tell you why. The government's bail out programs, the Fed reducing funds interest rate, FHA refinancing, etc. will indeed make it look like the real estate market is going to be back to Normal. Behind the scenes, you have 1.5 million mortgages having their interest rates reset to ARM rates this year (if I remember right, this month - Jun '08). Given that scenario and considering (and assuming) 10% of that number goes to foreclosure, we are talking about 150,000 houses between Oct and Dec '08 show their faces in the foreclosure listing.

Here's why: The Notice of Default comes in after 60 days of default (when you do not pay your mortgage). You are given a chance of a Short sale and 60-90 days from then it goes to Foreclosure and another 60 days to go to the auction and then to REO. Technically, it is about 90 days before you can see them in various stages of Foreclosure (pre-foreclosure, foreclosure, auction, REO). In the process, the banks or the mortgage institution is losing money regardless of whether a house is sold in short sale, foreclosure or auction or REO. They are going to have to write down billions of losses which is NOT over yet!

Media wants to make-believe that we are doing well even if we are not. Unfortunately, media is sometimes biased than being helpful. Yet, I listen to the good and bad in the media and decide rather than going by someone's impressive choice of words that might possibly make me feel comfortable about the Market!

Oil - CHINDIA or Inflation or Supply/Demand?

What else would I be willing to write about? OIL!! The media sometimes drive me crazy, you know why? Because they are far away from the truth and try to make-believe that what they say is true. Believe it or not, thats one reason I do not want to watch news channels on TV. You said it! You are darn right about me not checking out news websites despite that being accessible way faster than the TV Remote Control ;-).

There are couple of things here... and I am here to talk about Oil and why it is continuing to go up. You can attribute a number of reasons to that.

1. Supply and Demand ratio
2. World's average gas price VS USA's subsidized rates (in the past)
3. CHINDIA - China and India undergoing enormous economical growth
4. Oil industry wants more profits so they still win even if their profits are inflation-adjusted - I made this up!!
5. More Hybrid and gasoline-run economical vehicles coming up
6. Consumers using less number of cars at home than they used to - Hey! I have only one and we are two of us and we both WORK... Well, I work from home - Still!? ;-)

Part of the problem, in my opinion it is China and India's need for energy to keep up with their growth in infrastructure, need for commodities and the like. However, is that the only problem? Oh! Meanwhile, the above point addresses my supply/demand ratio too. The oil reserves are going down in the middle east due to the fact that the rate at which the daily needs increases is not proportional to the rate at which the oil is pumped out of the ground! You got to understand this tricky situation... It is not they do not have oil right now but will run out of oil in the years to come and we are talking 50, 100! God knows when...

Long time back (I am talking 10 years back, at least) we were paying hardly a $1.00 per Gallon, if I remember right. Yep, I was not here in the USA at that time and was living in India. A gallon equals 3.3 litres and in India, I "remember" I paid INR30.00 per liter and that translates to INR92.00 per gallon and in turn about $2 per gallon. Eventually in the next 3-5 years from then I paid about $3 per gallon (in Indian rupees). When I was here in the USA in 2001, 02 and 03, I know it was about $1.5 per gallon and in that boundary. Hope it was not that confusing. Long story short, what I am trying to say is - other countries were paying twice the dollars that USA paid for gasoline per gallon. Right now, USA is on par with the world gasoline price average (per gallon).

India and China are not using subsidized gasoline. The government is selling them at a subsidized rate. Read my Lips - the government is giving some subsidy and that means they are taking a loss on that and making up for that in something else. The subsidy was due to inflationary risks!

On to something that is important too - US dollar has been devalued for a while now. I work with simple math and here's my theory. I was able to buy 1 gallon of gasoline for $1 when my $1 was worth $10 Riyals. But right now, the same $1 is worth only $5 Riyals. How many gallons of gasoline can you buy now? 1/2 gallon. So you ideally will spend $2 to buy the same 1 gallon of gasoline.

Adding all this together, I see $4.00 a gallon is NOT a Surprise! Lets travel less and look out for the disinflation and deflation period in the next 2 years. You will be back to $2 a gallon, may be! And hey! do not trust the media all the time!! ;-)

BiggerPockets.Com - My Gold Rush story

Well, did you visit www.biggerpockets.com today? If you have not yet, please do!! If you had read this book "Think and Grow Rich", you would know what "3-Feet Away from the Gold" mean... I am more than happy to let you know what that means too! After all, Knowledge IS Power, aint it? I started this website www.investorbuilders.com buying a starter package website for $5.00 per year (that sure was a good deal!). I started this around June 2007 and I started writing the business plan, I was looking for a developer and found one through my contacts, etc.

About 1 1/2 months back, I was all set to talk to my attorney and file a trademark, start a LLC online and the like. That night was a surprise to me. For some reason, I ran in to www.biggerpockets.com and it had the exact same idea I had on www.investorbuilders.com just that it was founded by Joshua Dorkin from Denver, CO about 3 years back. I will reiterate "THREE YEARS BACK". No regrets and I was happy that it was listed as one of the "Killer Startups". I said to myself, if I had started 3 years before, www.investorbuilders.com would've been the "Killer Startup". LOL

I will conclude with the "Three Feet Away from Gold" story but right now I gotta tell you these interesting things that happened in the last 2-3 weeks. I happened to connect with a great guy living in Pleasanton, CA (about 30 mins drive from where I live - concord, CA) and not only that he in turn got me connected to one of his pals. Point is, Biggerpockets.com helped me with some initiatives that is making me move forward with my investment goals. The person I am connected to right now, I am FORTUNATE to have met HIM!! I am NOT kidding when I say that...

The Gold Rush Story - 3 Feet Away from the Gold:
During the Gold Rush, there was this guy who went on a spree to find some gold. He did find some gold and in order to dig down and to process that raw gold he had a buy a plant that can do that work for him. He requested his neighbors, friends and relatives to pitch in to procure the machinery. He did make a profit off of the processed Gold in a few months. He was genuine enough to share the profit with his friends, relatives and neighbors. Now, he was break even on the investments. He went back to dig some more, for several months he could not find the gold and GAVE UP at some point. He sold the machinery to a "Junk investor" (as the author called him) and went on his way. The investor called upon an Miner and the engineer said to him "Well, the guy would've found gold had he gotten rid of the Fault lines. Just because he did not know that, he missed the Gold. Oh yeah! The Gold was THREE FEET AWAY from where I was digging".

The guy who sold the machinery to the investor heard of it and went on to get in to the insurance selling business. He is one of the few agents who is selling more than a million dollars worth of insurance EVERY YEAR. Everytime someone says NO to his Insurance, he starts to think that he was only "THREE FEET AWAY from the GOLD" and he is NOT going to GIVE UP just because the customer X said NO to his insurance policy!

As for me, I am ONLY THREE FEET AWAY from that GOLD - My Real Estate Investment!! :-)

Leo and Scorpio - Zodiac Signs

I have read quite a few (actually, a lot!) of articles about Leo and Scorpio getting along. Well, they are two of the top 'Fixed' Zodiac signs (followed by Taurus and Aquarius). Well, in other words, there is a 'Fixed' sign in each of the element - Leo (Element - Fire), Scorpio (Element - Water), Taurus (Element - Earth) and Aquarius (Element - Air). However, for some reason, the Leo and Scorpio discussion has been overwhelming, seriously! ;-). Literally, people have posted several articles that explains who will win in the end. WOW! That looked to me like a war between two countries escalating to unimaginable heights... What do you know? It was mind-boggling to read those articles.
On that note, there was this one important point that almost every article highlighted and that is "If Leo and Scorpio (IF) work together and work with each other" it appears that they will be the most powerful friends or couples or whatsoever it may be. I tend to lean toward what Linda Goodman (the legendary Zodiac Sign GURU) says and apparently she had said the same thing. She wrote, normally Leo and Scorpio have some compatibility issues yet a younger Leo and an older Scorpio and vice-versa gets along as far as she has noticed!
Now comes the question, have you ever seen that combination work for the benefit of the two (Leo and Scorpio). Yes I have! You have and everyone else. Bill Clinton - Leo and Hillary Clinton - Scorpio! I have nothing more to say. Presidential Elections of 2008? Lets not go there, please... ;-)

Think and Grow Rich

I happened to meet an interesting friend of mine who is in to Real Estate and a 'Rising Star' I should say. I am glad to met this bubbling with enthusiasm guy in one of the investment club meetings. Turns out he is so positive that you would want to be him. Well, he is an extrovert and his way of living is different than many of us. Reason, he is 'Positive' about 'everything', yes! I said 'Everything'. Recently, he shared his 'Positive Thinking' experience with me and turns out that he was driving to the Fest in South Bay (around San Jose, CA) with his wife and kids. The fest started @ 11am but they were there only around 12:30pm driving down the street, rather crawling looking for parking. My friend says to his wife that he is going to find a parking space right outside Macy's which apparently is next to impossible at this time of the day, esp. when they are late by hour and a half.
Yet my friend adheres to his 'Positive Thinking' principles and continued to insist his take on the parking spot. His wife gave up already and tried to teach him some reality. As he was getting closer to the place where he wanted to be, his confidence tilted a bit but he got back on track to continue to believe that he will find a parking spot right outside Macy's. There is a guy there waving hands which my friend and his wife initially thought was to instruct them to move away was actually to tell them to park right there (Right Outside Macy's). My friend asks the guy, 'but this is a Handicapped Parking'. The guy says 'Yes Indeed. But not for today. You are the first one to occupy this space. Go right ahead'.
I presented this example (real-life example) to actually realize how 'Positive Thinking' can change our lives. It really sinked in when I heard his story and no wonder I am blogging about it now. Last but not the least, his recommendation was to buy 'Think and Grow Rich' by Napoleon Hill. I won a bid on eBay for this book. Its on the way! :-)

Housing Slump

I wanted to expand or give more insight on what the housing slump exactly is. A recent WSJ (Wall Street Journal) article mentioned that even buyers eligible for Prime Mortgage (with credit score more than 720) opted for Sub-prime because the qualification was very fast. Some loans were approved with 'No-Docs'. On the other hand, there were sub-prime buyers who also qualified for loans which they technically will not! The 'No-Docs', 'forged docs', etc. helped the lenders get it approved and the buyers buy the house. Believe it or not, some are illegal immigrants and some are legal but in a low-paying job. They were buying houses worth $600,000 (and more)!! With 100% financing and an attractive 5% interest-only loan I would still pay close to $3000.00 a month on a $600,000 loan.

Many lenders did not reveal the fact that those loans are ARM (Adjustable rate Mortgage) and an increased interest rate will trigger after 2 years. The appraiser were coerced by the lenders and real estate agents to appraise houses for more than they were valued in the 'Actual Market'. Oh! I forgot to mention this, Lenders, Buyers and Real Estate Agents were living in 'Superficial Market' between 2004 and 2006. This is from the selling-point.

While there were many houses bought and constructed because demand was higher, the CDOs or Collateralized Debt Obligations were bought by the Investment Banks. CDOs are those that pack mortgage (1st mortgage, 2nd mortgage, home equity loan, home equity line of credit, etc.) in to securities and sell them in the market. The sub-prime mortgages were increasing in number and those CDOs were selling like hot-cakes in the market.

All of a sudden, when the ARM kicked in for some hundreds of thousands of houses foreclosures begin and then came REOs. Well, the buyers are in tangles so are the lenders and real estate agents were unable to sell houses anymore and their greed for money disappeared. Buyers went down so did construction of houses. While this happened from the consumer side of it, the CDOs were losing value. Well, a CDO on 1st mortgage of $400,000 was bought by an investment bank for a security price of $400.00 (say for e.g.), the same due to a foreclosure on that particular entity was valued at $0.40 (Thats right! 40 Cents). Can you say 'Debacle'?

Now, the investment banks (as we speak) are writing-off billions of dollars and struggling to get back on track to announce a profitable quarter. The lenders who counted on sub-prime interest income lost their investments, banks are having REO inventory, real estate agents are going out of business, home-owners are thrown out of their homes, construction has stalled. Now, having said that, would you buy a car or a jewelry after losing your house. If they dont buy one, where is the 8 hour workload for your employees at Starbucks, Ford dealership, Toyota Motors, Target, Macy's, Denny's, Ace hardware and Best buy!? Do we still want to believe another recession is not lurking in the dark?

Never say NO

In continuation to my previous blog about Indians (citizens of India) being Introverts this is a follow-up or an addendum, should I say!? Our families are hospitable and at the same time too hospitable that they want to please almost everyone who visit, meet or hand-shake with them. We are conscious about formalities and commit certain things out of compulsion. By that I mean, our families always feel obligated to someone.

Let me explain that using an example. My dad and mom meets someone at the stores and who they have already met before in the temple corner of the street where we live. This time they talk to that stranger and enquire about their whereabouts. Finally, they feel obligated (and as a formality) to invite that person home which is unnecessary and irrelevant in the western culture. Apparently, I came to find out that not all are invited home (unless they are good friends) to an American's residence. The most important part is, they do not feel obligated to that person who they meet.

If you had noticed, lot of us invite the Americans home without even thinking. It has more of a casual, obligatory and formality stuff than being necessary or important. Applying the same methodology in the corporate world, teleconferences with Indians often end with a smiling note, 'cause we never say NO.

A request made to the Indian software professional is considered an obligation from his/her point of view and they end up saying YES for every request made by the person in the USA, UK or anywhere around the world. We are in the process of detaching ourselves from the obligations in the recent past and I hope we will "Learn" to say "NO" and not just say YES or NO with no rationale! ;-)

Introvert Indians

Why are the professionals of India found and/or proving to be introverts? We go to school and are not taught to ask questions. However, even if some students do, they are answered for a couple of questions and the teacher insists that they better 'Shut Up' because they are not letting the teacher move on. Talk about "Teacher"? Schools set targets for the teachers to finish all the lessons in the book so that students feel that the teacher is good and parents dont complain (just in case).

Isnt there a different way to complete the knowledge sharing rather than going through each and every lesson? Students or children needs only the high-level understanding of a lesson through trivial examples. That will motivate them to read the book, find out more and come up with their own questions and answers.

On the other hand, the teachers answer questions only to those they 'like'. The 'liked' group will be the top 2 or 3 rank holders. What happens to the one who wants to ask a question and had apparently failed in the last test? Go figure! He/she is ignored or if the student asks a question either his/her fellow students stop him short or the teacher says 'Dont ask stupid questions!' or point him to the top 3 rank holders (GPAs) in the class to ask them for details. The teacher forgets that he/she is paid to answer questions from students and not humiliate them.

Teachers come to work and are 'not' supposed to think about their personal problems (if any). Even if they do, they are 'not' supposed to take the anger out on the students. Yet, this is an invariable quality of most teachers and they take out their anger by either yelling and/or resorting to beatings. Well, guess who's the scape-goat - The students who are notorious, fail in tests and whom the teacher hate due to past bad encounters with that kid.

The student gets in to a job when he/she is about 22 years old. Only this time, they are persuaded or requested to ask questions. Fearing that the Manager might not answer his/her question (just like his/her teacher), it always ends with 'No questions'!!!

Sub-Prime Mortgage

For some time, I was also under the impression that it is only Sub-Prime that is haunting the Economy and especially the Mortgage Lenders, Banks, etc. Finally, after some research, I understood how they work. Remember, it is not only Sub-Prime that is creating the housing downfall, it is the prime loans as well.

Here's some explanation for that. Let us assume that I buy a house with 100% financing (there are defaults on even 90% or 80% financing and the concept is the same). I am required to take 2 different loans - One as a primary loan and the other to act as a 'Logical Down-Payment' Loan. The house cost is $200,000 and my primary loan is at $150,000 and the second loan for $50,000. The primary loan is at a good interest rate - say 5.5% and the 2nd loan is at 8.5%. Just because I did not put any down payment the second loan normally peaks to a bigger percentage as that is the cushion lenders would want from you and get as much money as possible to cover the losses (which is before they probably go in to foreclosing my house). ;-). Although, that is not realistic, I know!

The primary loan is given at a monthly installment of $800.00 (lets say) but the tricky part is, this installment is valid only for 5 years and after which it becomes "Variable" Interest rate that
could go up to 11% interest rate. Apply that to our scenario it makes our monthly payment on the primary loan as $1600.00. Having said that, it doesnt matter if it is prime or sub-prime because it is not possible for prime or a sub-prime mortgage payee to pay almost double the mortgage payment every month from what he used to pay. It is a liability of $800.00 every month. This is only an example for a $200,000 home. Imagine how much it would be for a $400,000 or $600,000 home.

The mortgage (simply put) will increase from approx. $1300.00 a month to $2600.00 a month for a $400,000 home and from approx. $1900.00 a month to $3800.00 a month for a $600,000 home. The only option (probably) the prime loans will have is re-finance if only the loan-to-value ratio is atleast 80%. In other words, the loan should be only 80% to the value in which case, you should've paid off 20% of the $150,000 (about $30,000) before you can even re-finance. If it is 100% financing (as in our example) you should've paid $30,000 in principal as you repay every month your primary home mortgage (for 5 years) which is like $6,000 a year and $500.00 (additional in principal along with your $800.00 interest-only mortgage).

The sub-prime mortgage which is given to people with credit score less than 720 (or 680 in most places) thought it was easy to buy home with a monthly installment of only $800.00 but they never foresaw the problem of changing interest rates after 5 years. At the same time, lenders greedy for more business never mentioned to people who never bothered to investigate (as to how homes became so CHEAP!!). Even the prime loans which are given to people with very good credit scores have little or no chance of avoiding defaults if they were in a 100% financing or have their LTV more than 80%.

On the other side of this ramifications are the real-estate investors who wanted to flip houses like it was done before in "Good Times". The investors went on with the same kind of loans with 5-Year fixed and Adjustable rates (they call the "Variable interest rate" as ARM "Adjustable Rate Mortgage") from then on. The investors who were novice (predominantly) burnt their fingers and let it go to foreclosure, because they couldnt afford the mortgage and their rent did not even come close to the mortgage payment after the ARM kicked-in. These are the kind of people who are given ALT-A loans (without verifying their credit scores) and thats another trouble maker for the banks and lenders who processed such loans.

I hope that sort of clarifies how the housing is beginning to create havoc to the economy. It is not as tiny as it seems. Is it? ;-)

Introduction Blog

This is my first blog and on my own blog site। Thanks to Google! ;-)। Well, I wanted to create this Blog Site in order to discuss several aspects of investments and some general stuff - Lets say, Relationships for starters. I would like to learn lot of things from the discussions and/or comments in this Blog. Happy Blogging!