SJ Merc on San Jose's Budget Issues

John Woolfolk talks about San Jose's budget problems:

http://www.mercurynews.com/ci_12058054?IADID=Search-www.mercurynews.com-www.mercurynews.com ["Top SJ management agrees to pay freezes and cuts."]

I am curious to see how cities expect to get more revenue. It doesn't seem like anyone has the stomach for layoffs and other spending cuts. Thus, Californians should expect higher taxes in some form unless they accept the fact that government has expanded too much over the last ten years. Cutting back on government unfortunately means laying off some government employees and/or reducing pension and COLA contributions. When times are flush again, we can afford to be generous. 

Silicon Valley Income Statistics

According to the WSJ (2/17/09, B4, article by Pui-Wing Tam), 42% of households in Silicon Valley earned more than $100,000/year. "Meanwhile, the percentage of households earning less than $35,000 a year reached 20%, up from 19% in 2002."

I hate these kinds of statistics--the term, "households," is so vague. It could be one person earning $101,000/year, or two adults earning $51,000/year. Still, it looks like the recession may not affect Silicon Valley as harshly as other locations. I don't see housing prices dropping severely (not any more than they already have, I mean). Despite the recent condo construction, Santa Clara County doesn't have an oversupply of housing.

Also, the new developers don't seem to have thought things through. Most of the new condos are in downtown San Jose, which won't attract families. If they were trying to cater mainly to singles and young adults, they made a mistake. Most singles won't be able to pay a high price for housing because of two reasons: one, young singles have only one income; and two, they are not in their peak earning years and probably have student loan debt.

Racial Divide?

Here's an interesting political map about Obama's and McCain's voters, when divided by race:

http://www.fivethirtyeight.com/2009/03/how-did-white-people-vote.html

I enjoyed reading the comments. One comment pointed out that the map lacks a control. Without comparing the Obama/McCain map with the Kerry/Bush election, one can't reasonable conclude anything significant. Chances are, the maps might be similar for both elections, meaning there was no racial pattern in the 2008 election.

Just for the Record: NBA Draft (2009)

UConn's Stanley Robinson will be the best player out of this year's NCAA class. My ideal draft order would be this:

1. UConn's Stanley Robinson (Update: he hasn't declared for this year's draft.)
2. Spain's Ricky Rubio (assuming he declares for the draft)
3. Carolina's Ty Lawson
4. Oklahoma's Blake Griffin

Ty Lawson is a wild card. He obviously carried Carolina to the championship, but it's hard to predict PG success based on college play. Just look at UConn's Khalid El-Amin and MSU's Mateen Cleaves. At the same time, he reminds me a little of Orlando's Jameer Nelson.

I am looking forward to seeing Blake Griffin's brother develop--he may become even better than his brother.

By the way, am I the only one who thinks DeJuan Blair might be the second coming of Robert “Tractor” Traylor?

Hamed Haddadi

Today's WSJ (April 7, 2009) has an excellent article on Iranians and Hamed Haddadi, the first Iranian NBA player:

http://online.wsj.com/article/SB123906169774395129.html

Kudos to Joel Millman for writing a great article. Here's one snippet:

Iranians, over a million strong in North America, began coming to the U.S. in significant numbers in the 1970s, before Iran's Islamic revolution and the break in diplomatic relations with Washington. Among the most educated of all immigrants, Iranians -- or "Persian-Americans" as many prefer to be called -- are one of America's wealthiest immigrant communities per capita, according to demographers who crunch U.S. census data.

Mr. Millman definitely did his homework. I'm going to write him an email thanking him for the article right now.

Update: I am going to order Mr. Millman's book, The Other Americans.

Net Worth Numbers

If you ever want to deal with a statistical nightmare, try attaining reliable average and median net worth figures. Below are a smattering of net worth numbers, all vastly different:

From Boston Globe (2009, Jenn Abelson, "The Loss Generation"):

35 and under group: $76,400 (average)

From All Financial Matters (2006):

35 and under group: $14,200 (median) $73,500 (average)

From WSJ (2004, Kelly Greene, "Golden Years"):

34 and under group: net worth of $7,240, including home equity.

So just for the 35 and under age group, we have net worth numbers ranging from $7,240 to $76,400. You'd think there would be a researcher in 2009 who would publish reliable net worth numbers and compare the different numbers published by others, but I haven't seen such a study. If anyone who knows of such a paper, please post a comment and link.

Asset Allocation based on Mohammad El-Erian

Here is an interesting article regarding an asset allocation model:

http://www.thestreet.com/story/10464086/1/an-el-erian-fund-for-the-masses-using-etfs.html

The author bases his ideas on Mohammad El-Erian's proposed investment model. Mohammad El-Erian was Harvard's former endowment fund manager. The following funds/ETFs are mentioned in the article:

LBNDX MUE NVG IJR IGOV DBA IGF

Personally, I am surprised DBC and TIP are not on this list. I currently hold some DBC and TIP and am looking to buy more. Whenever TIP dips below 100/share, I consider buying more.

Update on July 2, 2009: following El-Erian's belief that commodities will steadily increase in value over time, I bought UNG, WPZ, USL, GSG, COP, and SLV. I don't see human populations declining, which means that more resources will be needed.

Natural gas, on the other hand, is a unique commodity that may experience dramatic price fluctuations. Unlike oil and gold, there's plenty of readily accessible natural gas, but if Americans shift from oil to gas, natural gas prices should slowly increase.

Update on July 7, 2009: I added to the July 2 positions except for USL and SLV and opened a small WMB position. What a wild ride this week has been for commodities. I am holding all of these shares in a retirement account to minimize taxes on any dividends/distributions.

Update on July 22, 2009: yesterday, I sold most of the holdings mentioned above--some of them increased 20% in less than a month. I am not a greedy man, and I am concerned that the market may decline when unemployment benefits start running out and CIT experiences liquidity issues again.

The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.