Tuesday, December 21, 2010
Market Update: Property Taxes Keep Rising...
Feature Article: Investing Lessons from a Winning Trader
Critical Reads: 2010's Top U.S. Real Estate Sales
The Funnies: Cute Christmas Story
Property Taxes Keep Rising Even Though Home Values Have Dropped
Want to save some money next year? Consider petitioning to have the value of your home reassessed for your property tax valuation.
Turns out that property tax rates are set based upon the budgets of each local government, not based upon property values. Many local governments have dramatically increased their property tax rates because it's their only option to generate more revenue.
As an example, property tax rates in Northern Jersey have increased 12% while property values have fallen. If you have a few minutes, check out an article by Charles Hugh Smith at this link. It almost makes you worry about what property tax rates will be in the next year or two...
Investing Lessons from a Winning Trader
Several years ago, Jack Schwager released a book featuring numerous interviews with successful stock market traders. In the book, he asked each trader about lessons they had learned and how they became ultra successful investors. This is a great book and strongly recommended for all investors. The title of the book is, " The New Market Wizards - Conversations with America's Top Traders", and you can find it at Amazon.com, including a Kindle version.
One of the experts interviewed was Randy McKay, who turned $2,000 into $70,000 in his first 7 months of trading. He went on to winning trades in 18 out of 20 years. This is an amazing track record in the stock market. The author of the book asked Randy Mckay the following question:
"You were a winning trader right from the start. Is there anything different you did that helps explain that early success?"
Here's Randy's answer:
"One of the things I did in those early years that worked was analyzing every single trade I made. Every day I made copies of cards and reviewed them at home. Every trader is going to have tons of winners and losers. You need to determine why the winners are winners and why the losers are losers. Once you figure that out, you become more selective in your trading and avoid those trades that are more likely to be losers."
When Randy mentioned that he copied cards and reviewed them at home, he simply meant he reviewed and studied all of the stock trades from each day. He analyzed why he made the trade, what happened with each trade and detailed lessons learned.
Maybe we could use Randy's strategy to evaluate our investments. What investments did you make in 2010? How did they go? What went well and why? What didn't go well and why? What can you learn from each investment? What mistakes can you avoid in 2011?
Believe it or not, we can apply Randy's strategy to just about any area of our lives including projects at work, family relationships, real estate investments, and progress towards our goals. The key seems to be analyzing what we've done and to looking for ways to improve.
The next question the author asked Mr. McKay was:
"What other advice would you have for traders?"
His answer was:
"The most important advice is to never let a loser get out of hand."
Are you holding on to some bad investments that you might be better off letting go? It's best to think mathematically about each investment instead of emotionally. Seems like Randy learned this lesson early on and it helped him become one of the greatest stock market investors throughout history.
Investors Buy 233 Unsold Condos in Michigan
An article recently appeared in Crains Business Detroit highlighting a large real estate investment of 233 condos. Two firms partnered to buy into a large unsold condo project in Ann Harbor that stalled out when the housing market sagged. They paid on average of $60,000 for each condo, which was $71,000 less than the last sale price of $131,000.
The most interesting part of the story is what the investors plan is for the condos. "For now, we plan to continue renting the units and create a community atmosphere," he said. "Then, depending on the market conditions, we'll decide in three-to-five years whether to change it."
Looks like the big time investors are buying properties at the bottom of the market with intentions to rent the properties for 3 to 5 years. Based on our research, 2011 looks like it might be the best year to invest as the real estate market bottoms out. Click here to read the article.
2010's Top US Real Estate Sales
If you've tried selling a home this year and were shocked at prices, take a few minutes to check out these top 10 home sales. Believe it or not, these sales might make you feel a little better. The "Le Belvedere in Bel Air, California was originally listed for $85 million and ultimately sold for $50 million. Ouch. Here's the link to the article which includes pictures.
Want to cook in Jessica Alba's Kitchen or Sleep in Mick Jagger's Bed?
A new article reported, "Many celebrities own two or more homes and a surprising number of these big-name stars will rent you their home -- as long as you can afford it. Yes, it may seem strange that a privacy seeking celebrity is willing to rent out his or her home, but it makes financial sense. The income from renting a house helps defray the high cost of a mortgage, property taxes and maintenance." Click here to see how much it will set you back to rent Mick Jagger's home.
Cute Christmas Story
There was a man who worked for the Post Office whose job was to process all the mail that had illegible addresses.
One day, a letter came addressed in a shaky handwriting to God with no actual address. He thought he should open it to see what it was about.
The letter read:
Dear God,
I am an 83 year old widow, living on a very small pension.
Yesterday someone stole my purse. It had $100 in it, which was all the money I had until my next pension payment.
Next Sunday is Christmas, and I had invited two of my friends over for dinner. Without that money, I have nothing to buy food with, have no family to turn to, and you are my only hope.. Can you please help me?
Sincerely,
Edna
The postal worker was touched. He showed the letter to all the other workers. Each one dug into his or her wallet and came up with a few dollars.
By the time he made the rounds, he had collected $96, which they put into an envelope and sent to the woman.
The rest of the day, all the workers felt a warm glow thinking of Edna and the dinner she would be able to share with her friends.
Christmas came and went.
A few days later, another letter came from the same old lady to God. All the workers gathered around while the letter was opened.
It read:
Dear God,
How can I ever thank you enough for what you did for me?
Because of your gift of love, I was able to fix a glorious dinner for my friends. We had a very nice day and I told my friends of your wonderful gift.
By the way, there was $4 missing. I think it might have been those b@stards at the post office.
Sincerely,
Edna
I for one, don't think the folks at the post office get enough credit. They work their tails off during the holiday season and are forced to deal with a lot of cranky customers! I couldn't imagine having to deliver the mail 6 days a week throughout the winter months!
Merry Christmas!
Rob Minton
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