Tuesday, November 18, 2008

Homes v. Stocks as Investments

According to an article in Charles Schwab on Investing, Fall 2007 (p. 7), which looks like it was written by Matt Wood, stocks are a better investment than housing:

[R]esidential real estate provided an annualized return of 8.6% during the period from 1978 to 2004, compared with 13.4% for the S&P 500 Index (citing Jack Clark Francis et al, Contrasting Real Estate with Comparable Investments, 1978-2004, April 2007)

In some cases, [owning a home costs] as much as three times the purchase price [due to insurance premiums, maintenance costs, and property taxes]...Robert Shiller says real estate's historic real returns are closer to zero after adjusting for inflation. [David Crook, "Your Home Isn't the Nest Egg That You Think It Is," WSJ Online, March 12, 2007]

I refused to buy any property during the last five years, believing that everything in California was overpriced. Now, however, I am not so sure. Housing and other hard assets might not be a great investment, but they no longer appear to be flagrantly overpriced.

Monday, November 17, 2008

Poem: Lola Haskins

I finally dumped my 8 years old wallet and replaced it with a new one I had in my drawer (it's been there for the last 5 years). In the process of emptying out the old wallet, I found a short poem, by Lola Haskins. It's titled, "Love":

LOVE

She tries it on, like a dress.
She decides it doesn't fit,
and starts to take it off.
Her skin comes, too.

This was one of two poems I had in my wallet. Not sure why I had that particular one in there, other than the fact that it's one of the most poignant poems I've ever read. Can't you just feel the unnamed woman's anguish? I am still in awe of how the last line creeps up on unsuspecting readers, only to bludgeon them so matter-of-factly in the end.

Book Rec: Factory Girls

I am in the middle of Factory Girls, a fascinating book about migrants in China:

Factory Girls

The book is a fantastic read. The writer, Leslie Chang, traveled to China and got to know various factory workers, all of whom migrated from small towns into large cities. She wrote about their experiences, and even seamlessly includes her own family's migration to America. The women profiled are incredible human beings, and reading about their lives should be required for every American high school and college student. What struck me most about the migrants is their desire to do anything to move up in society, including enrolling in "white collar" manners classes. Even though the migrants' wages are absolutely meager--about 50 dollars a month--they forge forward, determined to leave their mark in the city. Think Grapes of Wrath, but Chinese-style. Thanks to Jeff E. for the recommendation.

Yahoo (YHOO) Update

Here is the latest on Yahoo (YHOO):

http://finance.yahoo.com/news/Yahoo-to-replace-Yang-as-CEO-apf-13601499.html

Mr. Yang is going to step down. Bostock has the easiest decision ever--Susan Decker is right there. She takes over Mr. Yang's spot, and using her position on Berkshire's board, talks to Warren Buffett about a partial sale to Microsoft. Mr. Buffett, of course, knows Bill Gates very well. Mr. Bostock can't possibly screw this up...or can he?

Louis Brandeis


A friend picked up the Brandeis train (courtesy of The Green Bag) last month. Isn't it a beaut?

Brandeis has a special place in my heart for these words:

The makers of our Constitution undertook to secure conditions favorable to the pursuit of happiness. They recognized the significance of man's spiritual nature, of his feelings and of his intellect. They knew that only a part of the pain, pleasure and satisfactions of life are to be found in material things. They sought to protect Americans in their beliefs, their thoughts, their emotions and their sensations. They conferred, as against the government, the right to be let alone--the most comprehensive of rights and the right most valued by civilized men. To protect, that right, every unjustifiable intrusion by the government upon the privacy of the individual, whatever the means employed, must be deemed a violation of the Fourth Amendment. (OLMSTEAD v. U.S., 277 U.S. 438 (1928))

"The right to be let alone." Such beautiful words. Too bad it's just a dissent, and therefore not legally binding.

On Prostitution

Re: sex workers, the keys to legalization seem to be as follows: 
1) criminalize excessive and unwanted solicitation, which allows the workers to avoid coercion; 
2) legalize prostitution, which requires police protection and presence for both customers and workers, furthering increasing the safety of the transaction; 
3) tax the transaction, thereby funding other services, like education as well as the police squads assigned to the "Hamsterdam" districts; 
4) require STD testing and databases of all participants before any activity; 
5) place all districts far, far away from "core" business activity, including K-12 schools; 
6) provide housing dormitories and free health care (in exchange for waiving some privacy rights in order to study physical changes or some other constructive health care purpose, and only when the workers themselves choose to see a doctor for more than the required STD-testing) to ensure that they can save their money (think military-style housing); 
6) require that at least 10% of all earnings be set aside into an irrevocable retirement fund until age 50 and put into a balanced fund; 
7) require 5% of all earnings be put into a liquid account accessible upon exiting the business; 
8) require maximum employment of 15 years (I'm not sure about this step, but the idea is that at some point, just like prison rehabilitation programs, the participants would re-enter "core" societies with marketable skills); 
9) apportion some tax revenue to the workers to decide what to do for communal purposes, allowing an indirect education into economics and politics.

BonusPolice protection is necessary to prevent trafficking and mafia involvement--the whole point of legalization is to eliminate the underground economy; again, the idea is to shift police resources away from undercover work and targeting the informal economy into protecting consensual behavior; 

You'll notice I included social services, too, but in non-traditional forms--free housing, vocational job training, healthcare, and financial independence.  

You'll notice I want a time limit to get the women and men out of this business eventually. 

Prostitution is not something most people want to do, but it happens, it will always happen, and we must choose where we want our resources to go and whether we want a society that favors above ground or underground systems.  Re: imbalances in power, they exist in almost every single business transaction. Does anyone suggest all results of imbalanced power relationships are automatically immoral? Shouldn't the touchstone of the analysis be voluntary consent, safety for all parties, and fair pay rather than subjective criteria? In other words, shouldn't the analysis center on how to avoid using the worker as a means rather than imposing a legal structure based on subjective criteria, which will only drive the business underground? 

Sunday, November 16, 2008

Blue Dog Democrats

The WSJ's November 14 letters section (A16) introduced readers to a Blue Dog Democrat, Jim Cooper. I am a registered Democrat, but am fiscally conservative, which makes me a Blue Dog Democrat.

Rep. Cooper makes the point that the federal government "is still using unaudited cash accounting despite the availability audited, accrual numbers. The federal government is the only large enterprise in the U.S. that is exempted from normal accounting rules. If you want the truth, check out the 'Financial Report of the U.S. Government' (available at http://www.fms.treas.gov/fr/)."

That link leads to this one: http://www.fms.treas.gov/frsummary/index.html

A politician who isn't lying, and who's showing us where the truth is? Just doing the former would make him special in Washington, but the latter, too? Bless those Blue Dogs.