ERICOPOLY

Home ownership in the US feels more like a long term lease. It's not really your property if you have it taken away when you refuse to pay the annual "lease". I'm heavily anchored to my (very nearly) migration to Sydney where you don't pay any property tax whatsoever -- no matter how expensive your home is. They have a land tax on assessments in excess of 400k, but that's only for your second home or investment properties. Primary home has an exemption. They do have something called "rates" but it doesn't scale with the value of your home -- it's a regressive tax that helps pay for your fair share of basic services. That's pretty significant. Property taxes are something that you pay even when you stop working. It takes away much of your security. At least in California the real property tax payment has gone down over the years -- because they cap the rate of growth for your assessed value at something like 2% annually. My father for example purchased his Los Altos Hills home for roughly $50k in 1970 and today he pays less than a few hundred a month in property tax. The home is worth about $2m. You almost want inflation in California -- bring it on. Drives down the real cost of your tax bill.

By all means live comfortably but don't make the mistake I made in buying a big trophy home, they are way overrated! Yes, there was some satisfaction in announcing to the community that "I have arrived!" and having guests ohh and ahh at the the size of the kitchen and property, but that wears off fast. What you are left with is more space that you need and lots of money gone every year to maintain the place. 10% of the cost of the home is a good rule of thumb. Taxes and utilities are high enough, but the repairs were the worst! Whenever any plumber, electrician, HVAC, landscaper or painter gave an estimate, I could can see the joy in their eyes as they pull out their "special rate" sheet just for me. :o Big home are like boats. The happiest day of your life is when you buy it, the second happiest day is the day you sell! I don't follow at all. First off I have never in my life heard of carrying expenses for a luxury property being anywhere near 10% a year. On a 5-10 million dollar property you are looking at $100-150k all in at the worst case reflecting 1-2% which you will easily make back with appreciation over time and which would have to be spend anyways as you have to live somewhere. Moreover I don't think people should be buying multi million dollar homes that are still worrying about utility bills or repairs... When reaching a certain point in life where there is significant liquidity I find luxury real estate to provide a good balance of inflation protection as well as have a grounding effect believe it or not. It reminds you every day in my case of what only a small portion of my net worth looks like in tangible form. This is important as often when moving around the kind of numbers we deal with we tend to forget that. The only argument against owning a large luxury property for someone with significant multi million liquidity would be in a rising interest rate environment and if they are under 40 and still focused on building their wealth. Recently I have had some debates abotu this with my friends and we have all agreed that the day of a fellow with $50 million net worth living in a $500k house are over. It simply doesn't exist anymore. The number I've been given by a local realtor is 5% a year -- and by that number he was including the opportunity costs of having the money in relatively low risk investments. But anyways, I agree that the space is unnecessary. I rent a 1 acre property, and I like that size. More interior living space probably wouldn't make much difference. We're sort of quiet though and don't entertain large numbers of guests. 2,300 sqft is on the small size -- I could go up to 4,000 but beyond that I think we wouldn't really use it.

That sounds about right. Besides, when it's 65 degrees outside average in December/January, why would you want to sit indoors? That's the difference -- in Seattle when it was raining and 40 degrees, I didn't want to spend my day sitting outside with a book. Same size house here as compared to there, but I got serious cabin fever there.

Having spent 15 years in the Seattle area, I'm if somebody gave me a waterfront mansion in Seattle for free, I still wouldn't want to live there again -- well, I'd use it as a summer home only (nice in August/September). I don't find Seattle or Vancouver dreary. I like the four seasons...and you get that here, and I would suppose in London as well. The rain keeps the streets spotless, the grass and trees green, and plenty of snow on the local ski hills during winter. You haughty, toty California guys don't know what you are missing...even though you lived here for 15 years! ;D Cheers! I joke that Seattle doesn't have four seasons either. They have: Spring Fall and Winter Hey c'mon...July and August are pretty close to what most people would call summer...but that's about it. Cheers! But July is preceeded by a month affectionately termed "June-uary". The end of that month is what I officially celebrated as the last day of winter.

Having spent 15 years in the Seattle area, I'm if somebody gave me a waterfront mansion in Seattle for free, I still wouldn't want to live there again -- well, I'd use it as a summer home only (nice in August/September). I don't find Seattle or Vancouver dreary. I like the four seasons...and you get that here, and I would suppose in London as well. The rain keeps the streets spotless, the grass and trees green, and plenty of snow on the local ski hills during winter. You haughty, toty California guys don't know what you are missing...even though you lived here for 15 years! ;D Cheers! I joke that Seattle doesn't have four seasons either. They have: Spring Fall and Winter

Last year the Euro was going to collapse and there was to be a daisy chain domino effect on global banking. So now if the "Euro is here to stay" it might mean that BAC and AIG will be spared this year. http://www.bloomberg.com/news/2013-01-24/soros-says-euro-is-here-to-stay-with-two-tense-years-ahead-2-.html Very likely - thus why I would love to buy more at 30 and 9 again, versus 25 and 7. I get from $7 to $9 over twelve months just from the passage of time. A year of earnings power burning through the fog of legal settlements and LAS expenses. And one year closer to getting to the end of the tunnel (the end with light at it). This time last year people were still sweating over the Fannie Mae putbacks. Then the collapse of the Euro being taken off the table has got to be worth something.

Having spent 15 years in the Seattle area, I'm enjoying the weather here. We've had a few days in the 75 degree range in January. Mostly sunny and in the 60s. Have you ever lived in a dreary climate before? I hear London and Seattle are similar climates. Even if somebody gave me a waterfront mansion in Seattle for free, I still wouldn't want to live there again -- well, I'd use it as a summer home only (nice in August/September).

In Montecito it's impressive just to be able to buy a 2,000 sqft "Mansion". I need to scrape together nearly $2.5m just to buy the house I'm renting, which is 2,300 sqft. Keep in mind that this is post-collapse pricing :-[

Last year the Euro was going to collapse and there was to be a daisy chain domino effect on global banking. So now if the "Euro is here to stay" it might mean that BAC and AIG will be spared this year. http://www.bloomberg.com/news/2013-01-24/soros-says-euro-is-here-to-stay-with-two-tense-years-ahead-2-.html

I'm guessing he needs a heavy cash allocation to heat his 8,000 sqft Hoggs Hollow mansion.

It would make it easier to earn 10% ROE if the E goes down.

I really don't have any qualifications. I would pay attention to what Sanjeev said about private investment records.

ERIC, I doubt you would ever like to add further on any of these funds, the rate at which you are currently compound it doesn't makesense! Might be BB wish you open a fund and he invest in yours! I wish that as well!

Today I bought the bare minimums of each fund. Now my foot is in the door and I can add to them after the funds close.

Eric,.. I myself also took a little advantage of the AIG warrant prices in the earlier part of January and increased my already significant position a little ... even despite my earlier purchases had been made at much, much lower prices,... anyway.... I guess it didn't move the needle and my average price much upward. Anyway,... I still have a slight overhang on my major BAC portfolio weightings. I guess you got yours probably at the same prices as mine recently. ... do you still keep your focused portfolio weightings in BAC & AIG uneven, thus the same as before. I thought you always kept some big, big BAC overhang with being "all in" with your portfolio and only nibbling at AIG as a distraction,... or do you occasionally switch them around, adapting,... and take advantage, if one has run up further ahead relative to the other one (i.e.: switching horses back and forth). Consists your AIG position currently only of the warrants or do you also main common and leaps. As of tonight it is a 7% (of my net worth) AIG position -- dollar value, not notional. 2/3 of it is warrants and 1/3 is options. In October when I sold out of AIG warrants it was a larger position -- I think about 20% of net worth. I bought back in at pretty much the same price, but took more than 40% gain on the BAC warrants. So it was a good little trade (the BAC warrants were bought in October after selling AIG warrants). Sure, I have to pay short-term capital gains taxes, but those BAC warrants have the dividend adjustment feature, and that's a taxable dividend. So the taxes I'll pay on this capital gain is just money I was going to have to pay for that dividend adjustment. That's how I rationalized the tax hit.

Today I bought back a lot of the warrants that I sold for roughly this price in October. Thanks to whomever is selling these.

Alledgedly Tom Brown wrote the following when the Countrywide acquisition was announced: There's still a awful lot of meat on the bones at Countrywide, and Ken is getting it at a great price. It's been at least a decade since I liked any of B of A's deals. But this one may make sense.

The vivid recreation of his death in theaters is a bit like a public hanging isn't it? I can see why they were popular.

Eric, I don’t understand your point here. Savings = Investments, provided, of course, that you actually invest them! If people deposit money in the banks and the banks don’t lend, that money is not put to work… Isn’t that a problem? Another story is “how much” money people deposit in the banks, and therefore how much they save. I would like to see people saving 10% of their income, and banks putting those savings prudently to work. Sorry, surely I missed your point… giofranchi Your desire to boost savings would be working against Fisher's desire to stimulate aggregate demand from credit growth. Begin with income, add to it new credit, and take away savings. That gives you aggregate demand. Eric, I am not so sure I understood what you mean. Let me explain what I mean: whenever a client pays my firm for a service it has provided him/her, I immediately take 20% of the money coming in and I invest it in other productive businesses, which I believe have good future prospects. I don’t use that 20% to give parties, or to buy a fancier office space. Now, I don’t see any difference with an individual or a family. Ok, 20% maybe is too much, so let’s say I would like to see each family save 10% of its income. Then, because not everybody is able to spend much time evaluating the best way to put to work their savings, there are banks. Which collect savings and should in theory be smart enough to use them properly. And, of course, to use them properly means to facilitate credit to those businesses which really deserve it. There is a whole world of difference between lending to good businesses on their way to be highly profitable, and letting homeowners borrow because they want a new, bigger “palace” they cannot afford, or letting the government borrow and squander people’s money on its largesse or on silly projects. I think Mr. Fisher is deploring the fact that big banks, to misleadingly strengthen their balance sheets, have ceased to lend to trustworthy businesses, the only ones truly capable of creating employment and wealth. giofranchi I misunderstood you then. By increasing savings to 10%, what you really mean is you want everyone to take 10% of their incomes and invest it in expansion of their businesses. I had in mind the kind of "savings" where people make fewer trips to the malls, instead using their incomes to pay down their mortgage or car loans. Therefore final demand falls, and businesses no longer feel confident to invest in further expansion of their operations. Therefore, they don't want loans from banks. Thus you would be at odds with what Mr. Fisher wants.

Is it sick to admit that the best part was watching Bin Laden shot? I saw it last night.

I was watching Roubini interviewed today. Last night I saw Zero Dark Thirty. There was the point where all of the senior CIA people were putting 60% odds on Bin Laden's presence at the compound. The female analyst put it at 100%, then said "okay, I know you people hate certainty so 95%". The CIA director walked out of the meeting saying "they're all cowed".

Do I need to start a separate thread for optimistic macro musings? http://www.bloomberg.com/news/2013-01-25/bridgewater-s-dalio-sees-game-changer-as-money-shifts.html

Eric, I don’t understand your point here. Savings = Investments, provided, of course, that you actually invest them! If people deposit money in the banks and the banks don’t lend, that money is not put to work… Isn’t that a problem? Another story is “how much” money people deposit in the banks, and therefore how much they save. I would like to see people saving 10% of their income, and banks putting those savings prudently to work. Sorry, surely I missed your point… giofranchi Your desire to boost savings would be working against Fisher's desire to stimulate aggregate demand from credit growth. Begin with income, add to it new credit, and take away savings. That gives you aggregate demand.

I'm with you there, but Fisher isn't. So what's up with him? Is he campaigning for political office?

giofranchi, I think earlier you posted that you are worried the savings rate had gone down again. I notice in Fisher's document he is concerned that the big banks aren't lending enough. Are you guys worried about different things? The road to prosperity might be paved with more debt after all, if you follow Fisher's line of reasoning.