Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Hedge Funds and Mayhem

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PREFACE FROM TIM: The world is divided neatly into two types of people. Complete Dorks, and SocialTraders. I met the gent below, House of Cards, by way of SocialTrade, and when he saw how much I liked the stuff he was stacking, he wrote and asked if he could write an article for Slope. I told him I'd be delighted for him to do so. It is below, and it's outstanding:

It seems that hedge funds and banks are buying up foreclosed single family homes with the intention of bundling them and securitizing to resell. I think this is a dangerous idea.

Let me start by saying I have always loved real estate and I think owning rental properties is a terrific idea for individual investors in today’s low-yield world.  You can make money four ways:  It provides a steady income stream from rents.  Tenants pay down your mortgage, meaning you can profit further when you sell down the road.  You can use the tax advantages of depreciation and long term capital gains rates.  And it is a great shield against inflation.  I believe you can triple your investment (including after tax and adjusting for inflation) in just ten years (if leveraged: all cash doesn’t work out as well.)  Here’s a real world example from the Pacific Northwest:  A 25 unit, nearly new complex sells for $2,000,000.  Net operating income is $137,000 a year.  With 20% down, a mortgage (10 year term/ 30 year amortization) at 4.5% costs $97,000 a year, leaving an income stream of $40,000/year, tax free due to depreciation write-off.  In 10 years, mortgage will have been paid down $320,000.  If rents follow inflation as they have historically, both income stream and sales price increase, as well.  Show me any other investment that pays the patient investor so well.  A dividend stock paying 3%, on which you have to pay taxes? 


Things Are Seldom What They Seem

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Weren't all you good people – – including some of the most respected voices here – – talking about 1390 on the ES in no time flat?

Not so much.

God has forgiven me for my failure to perform yesterday and gave me the good sense to throw my remaining longs under the bus early this morning, since that's where cancerous tumors belong. Being long this market is being party to fraud. I refuse to be part of the charade, and I was punished yesterday for even dipping my toe in the water. Stupid is as stupid does.

I am a bear. I am punished if I buy in the face of the the obvious lies around us.

I will be doing a post this afternoon about my character failure that led me to such an error.

In the meantime, I have a longstanding obsession with Gilbert & Sullivan light opera (I performed once in the The Mikado, believe it or not). I discovered an amazing voice yesterday – that of David Gould – who plays Captain Corcoran in the video below. Play it and be humbled. What a talent! In the meantime, I'll be busy trading and seeking absolution for my sins.