For those of you who’ve been following my blog, you know I’ve been working on some secretive deal regarding some oil deal. Well now its that time in the process when the rubber hits the road. The bank we’ve been dealing with has agreed to lend us $20 million. However, we need to show up in person in Connecticut pretty soon and deposit $200,000 with their attorney. The deposit is to make sure we don’t waste their time and money and then decide to go with a cheaper lender. Anyway, we’re going to be borrowing the money from private investors at a generous rate. Here’s the official spiel.

20% Return in 90 Days – Principal Guaranteed

We are in the process of closing on a $20M loan for a large oil and natural gas investment opportunity. We need $200,000 to be used as deposit to ensure that we will not go with another lender. This is a no-risk loan as the funds will never be used and will only sit in an escrow account during the entire closing process (this is the reason we can guarantee the principal back in case the project does not fund).

The full principal will be paid back within 45 days in case the loan does not get funded. For all purposes, we are 99% certain the loan will fund as all of the documentation and due diligence work has been provided and completed. The only remaining steps before closing are a face-to-face meeting with the lender and a site inspection visit of the mineral lease location. We are offering a 20% return over 90 days (80% annualized return) with full payout when the project gets funded. The minimum investment amount is $25,000.

If you’re interested, shoot me an email but more importantly wish us luck!

Incidentally, several people asked me how I came across this deal and what due diligence I did.
The short version is that it included being in the right place in the right time, asking a lot people a lot of stupid questions, flying out to the middle of freaking nowhere to look at a stupid oil pump & recognising that when commodity brokers and lenders are salivating at the prospect of giving a $20 million non-recourse loan, its probably a good deal.

Picked up Safe Strategies for Financial Freedom over the weekend. Really good book. I wish I had read it a few years ago. Its been on my book list for ages but I never got around to buying it.

One of the things I believe might happen is the devaluation of the dollar. This book has also voiced similar concerns[even though it was written in 2003] and it has some strategies to hedge against this. One is to buy gold. Another is to invest in foriegn currencies. And unlike other books which leave you hanging, you tells you how to invest in foreign currencies. It recommends looking in to EverBank for this purpose. This company allows you to buy CDs in different currencies. The 3 month Australian CD offers over 4%, the 3 month New Zealand CD offers 6% and the Icelandic CD offers a whopping 8%.

Another thing the book mentions is that Australia is a gold producing country and we can expect its currency to strengthen against the dollar because of this. It mentions why the dollar is likely to devalue and its pretty interesting. If you invest in the Australian CD through everbank and it strengthen’s against the dollar, not only do you get a 4% return, you also get some capital appreciation.

Also has some good debt reduction tips and offers encouragement to the readers to gain financial freedom.

The authors suggest that you always want to invest in the stock market when interest rates are dropping and get out or short the market while interest rates are climbing. Ok, its slightly more complex than that, but thats the gist. In inflationary times they recommend investing in real estate, gold and collectibles[like rare coins and stamps]. Since I don’t currently invest much in the stock market I skimmed through the section on stock investing. Sounds pretty basic, and they wants you to sign up for some advanced training offered through their websites:www.investmentu.com and www.iitm.com.

On the whole I thoght it was a very good book on general strategies and when to implement them. But don’t be taken in by the simplicity of the strategies. If it was that easy, everyone would be rich!

February 28th edition of the Wall Street Journal had an article called “Meathead Economics”.

The said that 240,000 people left the state of California in 2005 because of high taxes. What BS! Just another example of reporters looking at data and drawing the wrong conclusion.

They left because of unaffordable housing. Would you pay $400k for an 800 sq ft condo with 1 parking spot when you can move to a neighboring state, get a job that pays the same and get a new house for $200k thats atleast twice the size?

Previously I posted an article about this being an issue and I believe it will only get worse. In 2006 I wouldn’t be surprized if that number doubled. Since 2001, 50% of jobs in CA have been real estate related. Once the housing market falters, a lot of people who’ve been used to making 6 figure incomes will find themselves without any source of revenue and no real skills. These people will be forced to move to other booming states, which will only add to the housing woes.

Got mentioned in this week’s Festival of Frugality.

The sheer number of options for tomato products defies comprehension!!! But Adventures in Money Making, against all odds, perseveres, and lives to purée another day.

Another Blogger, James L had some incredibly flattering things to say about me. I don’t like to brag but….what am I saying, of course I do! Here’s what he says

On friday, Empty Spaces, Inc. dropped by and left me a bunch of comments. Of course, I had to visit his blog to see who he was all about. This 31 yr old is truly something. He’s done extremely well in real estate buying, selling, flipping, and cash-flowing and has ventured into partnerships to buy businesses and even looked into buying an oil field. His talents doesn’t only lie in his investing acumen, but also in asset protection and tax savings strategies. On top of that, he also holds a full time job as a programmer and is married!! I can learn a lot from this guy.

He’s on his way to FIRE at the ripe young age of 34, by 2009. I just want to wish him luck and hope to learn more about his adventures in his quest to FIRE.

He earns a link to his blog. Who says flattery doesn’t work? [Bribery works too!] We wish him luck in his investing endevors and his quest to become Financially Independent by 2018 at the age of 41.

Ever go to the store to pick up 5 items and spend an hour because you had spent 10 minutes per item comparing the prices?

I have this compulsion to get the best price on the shelf for the item I’m buying. Of course stores recognise this and try to confuse you. One brand will list price per ounce and another will list price per serving. Even in brands where the price per serving is listed, both will have different serving sizes.

For example, the wife sent me to get some tomato puree. Great! There are about 8 different brands. On top of that theres canned tomato sauce and tomato paste on the same isle. So now I have to pick up all the different cans and read all the ingredients to figure out what the difference is. Some of the cheaper brands list corn syrup and either fructose/dextrose/maltose as ingredients. That just means they put 2 or 3 different types of sugar in to avoid having to list Sugar first as the major ingredient. Of course these need to be discarded. But then there’s still the problem of finding the cheapest per ounce from the remaining contestants. Of course at that point the difference in price is probably marginal but I still would like to see which product is truly cheaper than its competitors.

Does anyone else have these sort of “issues” or am I the only one who gets upset over buying tomato puree?

And what the hell is catsup?

According to a research paper by Brad Barber and Terrance Odean, women make better stock investors than men.

Psychological research has established that men are more prone to overconfidence than women. Thus, models of investor overconfidence predict that men will trade more and perform worse than women. Consistent with the predictions of the overconfidence models, we document that men trade 45 percent more than women and earn annual risk-adjusted net returns that are 1.4 percent less than those earned by women. These differences are more pronounced between single men and single women; single men trade 67 percent more than single women and earn annual risk-adjusted net returns that are 2.3 percent less than those earned by single women.

Atleast men are better cooks! [and now I’m running for cover.]

I was putting together a personal financial statement for a bank and I realized I have over $1.8 million of debt against my credit. [I’ve partnered with investors on some deals, so there’s actually another $800,000 that I’ve agreed to share 50% of the burden without it being on my credit]. On top of that I have open credit card balances worth nearly 100k.

Competition time?? My debtload’s bigger than your debtload! [Of you need a positive networth to qualify].

Political Calculations has a classic Cow Model theory, which I’ve shameless reproduced below.[in my defence, he stole it off the internet].

The Classic Cow Model….

Let no one say that economists don’t have a sense of humor, although it’s true that you may be hard pressed to identify the cheerful human characteristic among that most dismal of groups. Here are excerpts from an e-mail I recently received that define economic theory and practices around the world according the the “classic cow model,” which also abuses some stereotypes (and yes, I realize that it has probably circulated around the WWW several hundred thousand million times):

Socialism

* You have two cows.
* The government takes one and gives it to your neighbor.
* You form a cooperative to tell him how to manage his cow.

Communism

* You have two cows.
* The government seizes both and provides you with milk.
* You wait in line for hours to get it.
* It is expensive and sour.

Capitalism: American Style

* You have two cows.
* You sell one, buy a bull, and build a herd of cows.

Bureaucracy: American Style

* You have two cows.
* Under the new farm program the government pays you to shoot one, milk the other, and then pours the milk down the drain.

American Corporation

* You have two cows.
* You sell one, lease it back to yourself and do an IPO on the 2nd one.
* You force the two cows to produce the milk of four cows. You are surprised when one cow drops dead. You spin an announcement to the analysts stating you have downsized and are reducing expenses.
* Your stock goes up.

French Corporation

* You have two cows.
* You go on strike because you want three cows.
* You go to lunch and drink wine.
* Life is good.

Japanese Corporation

* You have two cows.
* You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk.
* They learn to travel on unbelievably crowded trains.
* Most are at the top of their class at cow school.

German Corporation

* You have two cows.
* You engineer them so they are all blond, drink lots of beer, give excellent quality milk, and run a hundred miles an hour.
* Unfortunately they also demand 13 weeks of vacation per year.

Italian Corporation

* You have two cows but you don’t know where they are.
* While ambling around, you see a beautiful woman.
* You break for lunch.
* Life is good.

Russian Corporation

* You have two cows.
* You have some vodka.
* You count them and learn you have five cows.
* You have some more vodka.
* You count them again and learn you have 42 cows.
* The Mafia shows up and takes over however many cows you really have.

Belgian Corporation

* You have one cow.
* The cow is schizophrenic.
* Sometimes the cow thinks he’s French, other times he’s Flemish.
* The Flemish cow won’t share with the French cow.
* The French cow wants control of the Flemish cow’s milk.
* The cow asks permission to be cut in half.
* The cow dies happy.

Just found this great website called Housing Tracker.

It lists some of the larger cities and shows the pricing/inventory trends for the past 6 months.

I’m glad to know that inventory at my favorite city Salt Lake City, is down to 2,116 from 5,308 in 6 months. for a city with 900,000 people thats really tight supply!

On the other hand San Diego’s inventory jumped from 9,656 to 11,076 in the same time period.

I’m glad I got out while the going was good!

Here’s a great post from The Big Picture on the Consumer Price Index.

Its so funny, I’m reproducing the whole post.

CPI reveals that except for everything going up in price, there is no inflation

Original:

“Consumer prices surged last month on higher energy and food costs but underlying price pressures remained largely contained.”

Translation:

“Consumer prices surged last month.”

Here’s the breakdown:

“In January, energy prices rose 5%, after falling 2.1% in December. The advance was led by a 5.5% surge in electricity costs, the largest increase on record for that component. Gasoline prices last month rose by 6.4% and natural-gas prices increased 1.7%. Year over year, all energy prices advanced 24.8%.

Food prices were up 0.5% due to sharply higher fruit and vegetable prices. Medical-care prices increased 0.1%. Housing prices, which account for 40% of the index, rose 0.5%. Prices for new vehicles increased 0.6%. Clothing prices increased 0.3%, while education and communication rose 0.4%.”

So to reiterate, except for everything going up in price, there is no inflation . . .

Source:
Consumer Prices Jumped 0.7%
As Food, Energy Costs Climbed
WSJ, February 22, 2006 8:49 a.m.
http://online.wsj.com/article/SB114061330703180066.html