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Reverse mortgage: What’s the catch?

May 12, 2015

I am retired. I just woke up to face another glorious Monday. I usually turn on the TV from bed because the nonsense on the tube wakes me up faster when I watch the follies of men. This time there was the usual wars where people die because they don’t know how to organize formidable forces, but wait a minute here is a doozy,  a “reverse mortgage” commercial by a famous ex-US senator. Impressive. I am trying to sound cynical. I had to comment on that one because as an immigrant many years ago I have been caught many times by the so-called “attractive but never-delivering commercials.”  The day I stopped listening to most commercials I started making real money. The “catch” is that reverse mortgage works for the “fee makers” more than for the “home makers.” If you knew that why did you get a reverse mortgage?

The answer: The difference is in perception. Is your home is a progressive money-making business or a regressive source of income? That depends on age and attitude. If you are too old you rather pay others to do what you can do better? I understand that. You know others are more interested in their own income than yours but pretend the opposite. Now, if you are lazy or stupid not to do the “business” yourself that’s the “catch,” otherwise a home is really a bonanza, a gold mine for a smart dude. I borrowed the max they would lend me at the lowest interest they could offer and the highest amortization (there are great deals out there). I put the money to work for me at 25% and had enough to live on in luxury and easily pay the increased monthly mortgage payments (my stupid best friend paid off the Hugh mortgage from inheritance). As I said, a home with a large equity is a gold mine. Sure, if you have a “mutual funds” personality like my friend has then go for reverse mortgage. It fits your attitude. But, if you enjoy running your own financial affairs without fear of loss go for a max loan on your house, but wait, don’t do it if you don’t know how to split the “gelt” in a half. The reverse mortgage catch is: consider doing it only if you don’t know how to live and invest!

Freddie Gray: The psychology of injustice.

May 3, 2015

Actually this posting belongs in my psy. blog not my money blog, but I’ll leave it here. Freddie Gray died after being arrested by 6 police officers. The judicial system that will have to handle the officers had become compromised by president Obama who injected himself into the relationship between blacks and whites to get their votes (he got 95% of the black votes). One example, he said, “Trevor Martin could have been my son.”  That statement was not only stupid coming from a “uniting” president but also unconstitutional and psychologically provocative. Obama should have been impeached for lack of psychological insight by making this innocent statement because it induced blacks all over the country to “riot for presidential justice” ever since. Zimmerman was found not guilty in court and the 6 officers will also be found not guilty (or reduced charges) in court. Obama cost the American tax payers a lot of money and indirectly causes more young blacks to disobey the police and die at the hand of untrained police officers who don’t know how to handle disobedience. The relationship between the police and young blacks will improve on January 20, 2017 when an “objective” republican president takes over. I am a registered democrat, but I count the days that this manipulative “Chamberlain” Obama steps down and let the USA stature rise again!

Spend or Save?

April 17, 2015

I was sitting with three smart friends this afternoon at a coffee shop by the Marina discussing the US economy. I have a section in my book on investing called Americanism. Of the three I was the only one that was 100% sold on the American economy. They asked me why I was so sure, after all there are many economists and commentators who believe the US economy is heading toward a 2015 recession (possibly every 7 years), depression (never again because of legislation) or  China economy leaving us behind. The year I wrote about Americanism Obama became president and the DJ was at 9000. Today the market is at 18000 and I made enough money to dance. How do I have the 100% confidence where to put my money that my friends don’t have? It’s simple, there are 2 underestimated documents written in human history that I studied to the hilt, almost at the level of understanding required by a PhD. One is the US Constitution because I was an immigrant (the second document I won’t tell you unless you give me a good reason you want to know). That American Constitution is so goddamn secure and permanent that any investor in the world knows that his money is 100% safe only in New York! My friends didn’t realize that China sells its products and services in the US to the tune of five trillion dollars! The Chinese take about 20% of the money to build infrastructure in China that employ Chinese workers and improves their standard of living and sent the rest of the money to buy stocks in American companies listed in NYSE. The companies can now use the extra cash to hire Americans to build great infrastructures! Furthermore, Americans are smart because they don’t save. They go to Chinese banks for the rest of the money that wasn’t sent to NYSE. They borrow that money for interest payments the Chinese can’t refuse and use the money to visit Shanghai and Paris and Hawaii and have a good time for peanuts. Now you know why Americans always have more money than other people. They borrow, invest, buy goods and services and in the process raise a great standard of living, while helping the Chinese do better too. Now, this wonderful process started happening in india and other countries but not in Japan! The poor Japanese, they can’t shake off their fear of taking risk. In Japan this great economic process of consumerism (spend all your savings) failed. Why? Because the Japanese, either by culture or pessimism,  love to save and hate to spend. In fact, in Japan you get punished by the government if you save too much! They know that growth means spending in general and exponential growth means spending on schools and infrastructure, but they can’t do it. They try to copy the Americans who never save, but they can’t. Why? Oh well, it is human nature that what is simple to do is the hardest to do –  to be simple!

Greece is missing the point! So does Spain the the EU!

January 28, 2015

I am back from Vacation. Your patience is rewarded. This analysis is simple, good and true. you will understand the dummies in Europe! Since I spoke in Rome on behavioral economics, I was invited to present my study at a few more Universities. I refused. I decided to write my third book instead. Let will tell you the essence of my behavioral economics study here on my blog because after speaking at UCLA and at the university of Valencia where no gentle professor dared to challenge my views! I came to the realization that Spain (and now Greece) are stuck on scarcity thinking and austerity planning and I can’t shake them off!

Greece had 4 years of austerity imposed by the EU whose economists are experts on scarcity thinking and austerity programming. The poor Greeks just elected a government that is even more hot on austerity and scarcity! Here is why? The Universities in the EU graduate PhD’s in economists today (I didn’t find one that isn’t!) who believe that the economic problem of Greece and Span (and Ireland) stem from government spending too much borrowed and tax money!!  What I said 2 years ago at the University of Valencia, Spain was, “Your unemployment is high because you spend too little of the EU loans and your tax revenues on the right programs and too much on the wrong programs!  No professor in any room at any University that I spoke asked me to explain, no one did! That means only one thing…that the economists in the lecture halls knew that their entitlements and paternalistic programs would be attacked by me! They glance at my outline and saw, “Dr. Kinarthy wants the Spanish government to take a loan and open 50 community colleges like the ones in California where I come from! Bingo! No paternalism, no entitlements, just great training in needed occupations for 10 million folks!

 

2014 in review: I poster years of experience as a psychologist and investor. My sole purpose in 2014 will continue in 2015 – to make your lives a little easier!

January 7, 2015

The WordPress.com stats helper monkeys prepared a 2014 annual report for this blog.

Here’s an excerpt:

A San Francisco cable car holds 60 people. This blog was viewed about 360 times in 2014. If it were a cable car, it would take about 6 trips to carry that many people.

Click here to see the complete report.

God is an insurance broker!

November 20, 2014

God is not just the best insurance broker, God is the best broker of everything under the sun since the big bang. I know it because I asked Him and He said, “Elior, I am happy you talk to me directly, everyone else talk to me through a middleman, a spiritual broker who tells them what to say. I hate that.” I just saw a TV commercial by the Association of Insurance Brokers. The commercial did not explain how important is the CONCEPT of brokerage (that is my job). These folks that paid for the commercial are the professionals who for a small fee will find for you the best insurance plan for the money based on your protection needs. Not bad, ah? They plug your data into their computer and the bot finds for you the program they think you need. Simple? Then why am I making the fuss over brokerage services, all the way to God!

Here are the rules you need to get sophisticated and improve your life tremendously:

1. Everything in your life can be obtained directly by you or indirectly though a broker (middleman). I was a college professor of psychology, not an investor, when my dad passed away in 1991 and left me a small mutual fund account at Morgan Stanley brokerage. A broker handled my money-making at about 5% per year profit (minus a fee). I had to untill I learned to buy and sell shares myself and pocket about 25% per year (without a fee) every year! Conceptually, I moved from indirect behavior to direct behavior . 65% of the investors in the US and 75% of the investors in Canada use a middleman to invest and never move to direct investing behavior. Like with purchasing insurance or anything else they either don’t have the time to study the market, are bored by the topic, or they are not smart enough to do as well as a broker does.

2. Everything in your life can be obtained directly by you or indirectly though a broker (middleman). I  mean everything, get it? Everything! There is no stigma to it except that most people who do everything in life indirectly through a broker would think you are nuts.. “What do you mean God talks to you directly without a middleman? Don’t you need a rabbi, priest or minister to get through to Jesus or Moses?” What do you mean you cured your cancer? What does your oncologist say?” (“He said I was lucky.”). My friend said, “I know your wife, she is beautiful, how did you find her directly without any help? No problem, I administered a compatibility test called the EPPS to 500 women and she came 96% compatible with my personality” You are serious, aren’t you? Jesus, can anyone “dial a life” for himself without a middle man to broker things?

Yes, you can, but my advice to you is don’t! Don’t even try direct living unless you have a passion to be 100% independent, you believe in yourself 100%, you have all the time, you are self actualized, a maverick dude and you get a big kick out of carving your own path while people are looking. I hear my friends and family say repeatedly, “Elior, her is the luckiest crazy son of a gun.”

 

Share price: Earning is inflated and expenses are deflated.

November 6, 2014

There are 2 kinds of investors; professional and amateur. There are more amateur investors than professionals. The total money invested by the amateurs exceeds the total money invested by the professionals, although the amount invested by each amateur investor is much smaller than the amount invested by each professional. The amateurs usually make less money in a Bull market than the professionals and when the market is Bear usually lose more money. BLASH (Buy Low And Sell High) is my goal, a term I invented and use in my 2 books on investing for amateurs.  My job as an amateur investor who makes as much money as a professional investor is to help my co investors make money or at least not lose money to the professionals, which is usually the case.

Let’s look at Alibaba, the new heavy-set kid on the American block. I bought shares of BABA near IPO and I am making inflated dollars. I am not under the illusion that BABA’s first quarter’s earning after the IPO is really the reported 45 cents per share. It is more like 25 cents per share when you consider the unreported expenses for the quarter as true expenses, which they are! It is legal to inflate earnings by not including as expenses employee compensation, paying salary with stock options, inflating share price with buybacks that raise the value of existing shares (supply and demand). What it does, it sells extra shares by these artificial means in the short run untill the market catches the gimmick in the long run and prices go down. By then the professionals have already cashed in their profits and the amateurs are struck with low price shares they brought at the short-term high price. The fact that the analysts were fooled too by the first quarter estimates is no consolation to the amateur investors who were fascinated by P/E more than cash flow before they bought. The solution is what I did with BABA. I bought the shares for the long run because the short run has in it the hidden inflated price(HIP) on any new stock! It is not hip at all to buy high in the short run and sell low in the short run because companies play shenanigans with how they define their calculated defined expenses.

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