DTEJD1997

Hey all: I'm considering buying a commercial property in Michigan. It is near Detroit, but NOT in it. I personally know the owner, and he solicited me to buy it. When he told me how much he was asking, I almost fell on the floor! The price is solidly LESS than a luxury car... The building is commercial/retail, about 6k sq. ft. It has retail space on a major secondary road, a parking lot, offices, bathrooms, and a couple thousand sq. ft. of 20' warehouse. There is also separate access to warehouse, which is very nice. It gets better yet! There are TWO paying tenants. They are utilizing the warehouse space to store valuables. They come in about once a week to pick stuff up/drop stuff off. Rents from the two tenants are very low, about $400 a month combined...The area has a TON of vacant space. I would conservatively estimate commercial vacancy at 35%. So there is not much room to increase rents from the existing tenants...So the building is cash flow NEGATIVE at this point. The REAL PROBLEM is the property taxes. They would equate to about 7-8% of the cost of the building. Some months, property taxes are the single highest expense. Insurance is just over $200/month. So taxes & insurance are close to $500/month. If I located my business there AND filled up the building with tenants, it would be only marginally cash flow positive. What is a building worth that is in a marginal area that is cash flowing $600 a month (and gives you a space to work out of)? $100k maximum? $80k realistically? That is also if most things go smoothly... So I am crunching the numbers. The key is lowering the property tax... The local government is pretty stupid in my opinion. Taxes are high to begin with AND assessed values are 2x or more of true market prices. This results in nobody willing to commit fresh capital. There are VERY FEW new businesses in this area, almost everything has been there for years. It is becoming a vicious circle. Government, strapped for cash, squeezes harder. Capital goes on strike or flees. Less money for government, so they squeeze harder....repeat, repeat. Any thoughts? Any advice? Thanks!

Saltybit: You are on the right path! I still have some NTE, and my family is HEAVILY invested in it still. Unfortunately, they have a moderately profitable positions instead of tremendously profitable positions. One family member has been in NTE since it was OTC in the early 90's... I would suggest that you take a look at Deswell Industries (DSWL). This is now a net-net stock. I have been following it since the 90's also. Much like NTE, I suspect their real-estate is worth SIGNIFICANTLY more than what it is carried on the books for. This could be a multi-bagger if the company is liquidated OR turned around. Meanwhile, you are paid 9%+ to sit & wait for either eventuality. This has been a mixed bag for me. I am ahead in some positions, behind in others...As the years pass, the dividend can & will help me out. Another one is not technically a Chinese company, but a casino company in Macau. Emperor Entertainment (EPETF, 0296 HK). I've been in this one for a while now. I should have backed up the truck when I established my initial position. I believe this to be a quality company, and is still undervalued even after it's tremendous run. I'm looking for another dividend increase... There are several others that I have small positions in, or am simply investigating further. You certainly have to be careful & skeptical, but there is tremendous opportunity for those who are willing to do the work and are patient.

I & my family have significant investments in & around China. We are somewhat insulated from problems by buying into companies with FORTRESS like balance sheets. All of our investments pay dividends, some of them fairly significant. They all have high insider ownership also...All of our Chinese investments are headed by EXTREMELY conservative management. The companies are more conservatively financed than 99% of American companies. No debt, tons of cash, paying out healthy dividends. Managers in the USA could learn from their Chinese competitors. I can remember slugging things out in law skool, hearing about "problems in China". That was 15 years ago. In the intervening time, there have been ups & downs, but the clear trend has been up for China. Meanwhile, the trend for the USA has solidly trended down. I have no doubt that China & other parts of Asia are already pulling away from the USA and that the trend will only continue and perhaps accelerate...

Hey all: My highest conviction idea is an industry...mining, specifically copper, silver, gold... I am slowly assembling a portfolio of small miners. They are typically selling at a discount to book, LOW single digit cash flow, EXCELLENT financials, good prospects. A good percentage of them are selling for low single digit P/E. A gaggle of them are paying good dividends. If the following things can happen/hold, these stocks are going to move significantly higher... A). Price of gold, silver, copper does not go down significantly. Pricing appears to be firming up in 2014 so far. We'll see if it holds. B). Some of the companies are in dicey jurisdictions. None of them are having significant problems AT THIS POINT....the situation in S. America & Africa can change quickly though... C). There are no operational problems at the mines. All of the companies I'm buying are executing according to plan, OR very close to it. So far, I've got a huge gain in NevSun (NSU). I've got smaller gains in Mandalay Resources (MND.to) and Caledonia Mining (CALVF). I've got other positions that are small gains/small losses. I find the field FULL OF BARGAINS. I can't think of anything else that comes close at the moment.

Hmmm....yes, I've heard there is a lot of fraud, but isn't that mainly in the companies that are not actually producing? Am I wrong in the assumption that if a miner says we mined XXX ounces and had revenue of say $100MM and have X amount in the bank, wouldn't that be audited annually? I know there have been blowouts (BRE-X?) but if a company is producing and has reported earnings and is paying dividends, wouldn't that reduce the chance of fraud?

Hey all: Anybody else looking at the junior miners? I generally don't like mining companies, but these are odd times for the industry. As long metals prices don't go down too much further, there could be a lot of opportunity here. What is interesting is that a lot of the "majors" are LOSING money at these price levels. They have high costs and some marginal deposits. Some of the mines/projects are being mothballed or put on the back burner. There are several juniors that are still solidly profitable at $1,200 gold, $20 silver, and $3.25 copper. I'm finding juniors with P/E's of 5,6,7... I was also surprised at the debt levels that some of the majors are carrying. There are several juniors that have NO debt and in fact have substantial amounts of cash on the balance sheet. Some of these juniors are also trading at a substantial discount to book value. Finally, and perhaps most importantly, some of the juniors have ALL of the above characteristics and are paying substantial dividends. I'm finding several with dividends of 5 or 6 percent, sometimes even higher. One problem is that some of the juniors will have 1, 2, or maybe 3 producing mines, and thus have concentrated risk. Why buy a major that has some turkey operations, when you can buy a variety of juniors that all have good operations. There is also some serious political risk too, but once again, I think this can be reduced by buying a basket of companies with operations in different jurisdictions. Anybody else thinking along these lines?

Best resource stock for 2014? Where to begin? One thing I'm finding is that a large of the gold/silver miners seem to be over leveraged. Some of them are carrying large amounts of debts. They also seem to have a lot of marginal mines and thus are LOSING money at these price levels. Conversely, there appear to be many small producers that have excellent deposits, are making money, and have much better balance sheets. Heck, some of them have single digit P/E's, pristine balance sheets, and are paying good dividends. Nevsun (NSU) comes to mind. Another example is Mawson West (MWE.to). There are many others that I'm trying to establish/build positions in. Of course, there is a lot of risk, but I think it is worth taking a shot at some of these. We will see in the upcoming year!

I've been poking around the mining sector. I bought some CALVF today, just a small initial stake, but I was also trying to get some Mawson West. Anybody else buying miners?

May I suggest that perhaps there be a poll..."Do you PROFESSIONALLY manage other people's money?". I have a tremendous amount of input into a couple of family & friends accounts. I don't "pull the trigger", but they come to me for ideas, advice, and execution strategy. I am not directly paid for any of this advice or work, so I'm just an "amateur". I know a few other people do the same thing.

I have a few times... Funniest one is where they asked "what are you doing"? There hasn't been a shareholder at our annual meeting for at least 7 years! Once the initial shock of it wore off, management was actually quite friendly. I think it is a good idea to attend when you can. You can "measure up" management to some degree...you might meet other shareholders and exchange ideas & contact information...you sometimes get swag...it send the message to management that they have at least ONE engaged shareholder...and best of all, you can give praise or yell at management, whatever the case may be... If shareholders got more active, I think companies would be better run...

Well yes, but you still have the problem of fraud going on with some of the schools. They are enticing students to take out the debt with false/misleading statistics regarding employment possibilities and income levels. How is it fair for somebody to be "tricked" into taking out loans thinking they will have a reasonable shot of paying them back? Several of the "for profits" have been successfully sued for this very thing...many suits have failed... Several (12? 14?) law schools have been sued also. Most of the suits have been dismissed in the early stages, but not all of them. Additionally, you have government intervention in the loan market. There is NO underwriting criteria. In the eyes of the government, a law degree from Cooley is the same as a degree from Harvard. Obviously, in the real world this is not the case... My suggestion would be to let the free market decide what, if any, level of student loans should be allowed. Also make the loans dischargeable after a period of time, say 4-5 years. Gambling debt is able to be discharged...many loans are made on little or no collateral that are also able to be discharged. Why should student loans be any different? If you think students should NOT be allowed to bankrupt, I would suggest that NOBODY be allowed to bankrupt. Bring back the debtor's prisons :) REMEMBER, people that take out business loans are grown adults, they should suffer the consequences of their actions...

That is very true, but what about all the fraud? Specifically, many of the "for profit" schools have been sued (some times successfully) for telling students that you will $70k a year with your culinary degree! Or law schools saying they have a 98% employment rate with a $75k median salary? To date, none of the law school lawsuits have been successful, but just give them time... I personally had two employees who were told by recruiters that they would be making well over $20/hour if they got their "A+" computer certification from the school. I told them not to believe that, but they did...only after getting the certificate did they come to realize that they would make LESS than they already were in the warehouse/shipping department! I am sure I'm only scratching the surface here about schools inducing students to enter their programs. There is NO underwriting discipline when it comes to student loans. Why should the lender not take any risk? Why should the educators get a free pass? Shouldn't they have some stake in the outcome of their students? There is a law school in Michigan that has a bar passage rate of LESS THAN 50%!!!! This has been going on for over a year now. How do they have such high employment rates? I fail to see how a graduate from a bottom tier school who has FAILED the bar exam is going to be employed in the legal field! http://abovethelaw.com/2013/12/harder-michigan-bar-is-here-to-stay/ I STRONGLY support students being able to bankrupt out of their loans if they have made a good faith effort to repay them after 4-5-6 years. Why is society loaning such huge sums of money to people who have LITTLE chance of ever paying it back in full? Why does education cost as much as a house now? It was not that expensive 20 years ago, even adjusted for inflation...

Jay: Figures in the assumptions is the key! Here in my area of the country, very few people with high school diplomas are pulling down $30k a year. There are certainly some, mainly men in the skilled trades or unions...plumbers, pipe fitters, HVAC, truck drivers, etc. Stevedores, etc. Nurses DEFINITELY do not start anywhere close to $80k. I used to date an emergency room nurse for over a year. She worked VERY hard, and made decent money. She had just about 10 years experience, and was making about $60k, depending on overtime & such. I am in a fairly low cost of living environment. Looking at some career websites, they are reporting nurses starting at about $36k (fresh out of school), to about $90k a year with 20 years experience and some specialties. So I guess your assumption is a little high, but can come close after 20 years or so. Any way you slice it, assuming she stays in state, this girl is going to have a VERY HARD time in life (from a financial perspective). Spending $100k to get a nursing degree is a very foolish thing, yet a lot of people do it. A lot of society thinks that all education is good, regardless of the cost. Effective education at low or reasonable costs is worth it. Ineffective, or highly priced education is a life ruining mistake.

Carvel46: I hope our society STARTS to think of education as an investment. At this point in time, a LOT of education is a VERY POOR INVESTMENT. In fact, some education is a life ruining investment...Please see the thread I started "For Love or Money?". I can give this board a second example...A good friend's daughter started her studies this Fall at a well known state university. The school is good, with solid reputation. The girl is bright and hard working...but not bright enough to qualify for a scholarship. She would have got one at the local city college, but not the State U., which is where she wanted to go.... She is studying to be a nurse. In 3 years when she graduates, will nursing be a good choice? Probably...but who can say for sure? So here is the rub...the family & girl are borrowing at least 90% of the cost of her tuition, which will be at LEAST $100k by the time she is done. So this girl will graduate with $100k+ in debt. That is assuming she succeeds in her studies (highly likely, but not a certainty), that she graduates in only 4 years, not 5. What happens if she takes 6 months to find steady work after graduating? What if she works part time and takes a YEAR to secure full time employment? The interest ALONE on her debts will probably be $500 a month, perhaps more... So is this a good investment? From an economic standpoint, perhaps not... She will probably have a good time, make friends, perhaps even find a spouse, so it is hard to gauge simply on economics. How do you put a price on the intangibles? So I would argue that she is taking a TREMENDOUS economic risk. If there is any problem, any bump in the road, and she will be in very serious trouble. The cost of education is going to shrink the middle class tremendously. Heck, it has already started...

Interesting interview! I especially liked the part of the salesman selling more efficient textile equipment. I can't help but wonder if all the MBA programs are the same thing! It seems that soon almost everyone will have one, then what? Who will have a competitive advantage? Will you be at a DISADVANTAGE if you do not have one?

Hey all: I was with some "youngsters" this weekend who were in their 20's and maybe early 30's. Most of them appeared reasonably intelligent, and they were ALL college educated. Some of them had more than one degree... What struck me was that the majority of them were working part time jobs. Nobody was strictly "unemployed", all but one worked multiple part time jobs and were looking for a regular 9-5 gig. I asked them about their situations and most were pessimistic as they could not seem to find steady, FULL TIME employment. Some of their part time gigs were reasonably good as far as pay for the hours they worked, but you can't make a living at $20/hr., 12 hours a week. They also did not see the part time positions eventually turning to full time jobs. So I would suggest that perhaps one of the problems is not quite so much income inequality as it is many avenues of advancement seem to be shut off, especially to younger workers. A couple of them voiced the opinion that "the deck is stacked against us". They felt that employers are playing games by hiring multiple part time workers...that their education was worthless or vastly overpriced/overrated. This group of people seemed bright, reasonably hard working, and educated. If they are having difficulties advancing, I wonder about other "regular" folks? Of course, this was a very small sample size (5) of a handful of people in the MidWest so perhaps it is different in other areas of the country.

Anybody buying real estate who is not an absolute expert AND "on the ground" is going to lose a TON of money buying real estate in Detroit... There have been several waves of foreigners who have already got wiped out...

I went through some of my old neighborhoods on the East side of Detroit the other day... Now I understand why my Grandparents and Mother would get so agitated when they visited Detroit... The house I lived in high school is boarded up...about 10%-15% of the housing stock in the immediate area is burned/boarded up. There are large apartment buildings that are burned up and abandoned. Some areas look like there has been street to street fighting. Ruined buildings, burned out hulks of vehicles...ruined people wandering around. The high school I went to is no longer...all of the high schools my friends went to are also defunct (Bishop Gallagher, Regina, Lutheran East). It appears that some type of "magnet" schools are trying to make a go of it. Good luck, I doubt it will work. Progressing onto Harper...The building that had my Father's law office is vacant. Not burned or boarded up, but it is vacant. I would estimate that close to 50% of the businesses on this street are closed. It is so bad even a lot of the liquor/party stores are shut down! The new growth industry appears to be wig shops for some reason. Who needs all these wigs? Alas, even the wig shops are having a difficult time of it, as it appears that 3/4 of them are not open at 1 in the afternoon... I have a package to mail and go into the post office on Harper. The lobby is set up as some type of maximum security prison. You interact with the clerks through bullet proof glass. Got a package? Put it in a revolving air lock chamber. The clerk then rotates it and has access to it. The place is pretty well armored against bullets...but what about poison gas? I've never seen anything like this... I feel like I've slipped into some type of alternate reality...a bizarre dystopian future. Detroit is a very odd place!

Yes, that is indeed a very hard question to answer, and the correct answer may be different for different people...but I am going to argue that we all have an obligation to try and help other in the "here and now". For example, somebody may DESPERATELY need food, medicine or some other benefit TODAY. Tomorrow may be too late to help them. The money you give TODAY may have a compounding effect GREATER than any investing return you may make on it. For example, helping somebody today will enable them to get their life back on track. Them getting their life back on track may keep their family together. Keeping their family together keeps their kids out of trouble, and has a positive cascading effect.

A Mac Pro with dual 30" lcd's is good for business. You have a little bit of real-estate on your desk to keep multiple windows open simultaneously. I always need to keep a monthly sales log going, hopefully to be updated several times each day ;D I also keep my portfolios open, and a quote window. Also need to read documents/research during the day. I've heard there are now monitors larger than 30" that are starting to sell for reasonable prices. I think you need a HDMI interface instead of dual link DVI. I also have a MacBook air for travel. These work pretty good.

Yes, you are probably correct that Pakistan is indeed a HUGE problem. They have been reported to have reached an agreement with Saudi Arabia to sell them nukes. There have also been reports that Pakistan worked with North Korea. So yes, Pakistan is probably playing a key role in nuclear proliferation. And that is a problem. The point I was trying to make is that nuclear proliferation is BAD. It does not matter WHO gets nukes. ANY new additions to the nuclear club is a bad thing. The more states that have nukes, the more chances there are that one gets loose. The more scientists who know the nuclear process, the greater the chance that they go "rogue". The other point I was trying to make is that a nation that is stable today, may not be in the future. A key example of this is Pakistan. Iran would be another one, so would Saudi Arabia. The Pakistan situation was mishandled, so was North Korea, now it appears we can add Iran. On a slightly different tack, was it not Warren Buffet who said that he though the odds of a nuclear attack on an American city was a "virtual certainty"? "We're going to have something in the way of a major nuclear event in this country," Mr Buffett said. "It will happen. Whether it will happen in 10 years or 10 minutes, or 50 years . . . it's virtually a certainty." Please see: http://www.smh.com.au/articles/2002/05/06/1019441477485.html The end result is this...the more nations that have nukes, the greater the chance for a catastrophe.

Saudi Arabia getting nukes to counter Iran is a fantastic scenario? Not according to the BBC: http://www.bbc.co.uk/news/world-middle-east-24823846 Or how about the National Post out of Canada: http://www.bbc.co.uk/news/world-middle-east-24823846 There are numerous other reports of this, just take your pick. ########### As to an EMP attack, it is a possibility. What are the odds? 1%, 3%, 10%, more? EMP is a well known effect and has been documented many times. Exactly how bad it would be is open to debate. Certainly it would NOT be good, and damage would be tremendous. The point is this, you don't need an overwhelming nuclear arsenal to cause immense destruction. A few warheads detonated by surprise is enough. If there are many states with warheads, what are the odds that some eventually get loose? It does not necessarily have to be Iran. It could be Pakistan, North Korea, or who knows? Warheads could be stolen, given away, sold, lost in a coup... I can think of a dozen different ways this could happen. Or, what if a state does not act in a rational manner? Odds are small, but they are there. Add more states, and the odds go up... Who knows what the world will look like in the future? Countries that are stable today might not be...Allies today might shift allegiance in the future. We just don't know. What I do know is that the more powers that have nukes, the worse it is. If this does not make sense, or seems fantastical to you, I suggest you seriously rethink your position.

Surely you must be joking... Do you remember the hostage situation back in the 70's? I do... ANY TIME another country gets nuclear weapons, that is a bad thing. Iran is ESPECIALLY dangerous. Saudi Arabia will get nukes if Iran does. There is no doubt to this. There are numerous reports that SA has worked with the Pakistanis to get a nuke if Iran does. This will touch off a NUCLEAR arms race and destabilize the region. Those two could potentially go at it...but think of this...SA is probably pretty stable FOR NOW. Who can say what will happen to SA in 5,10,15 years? Want to bet your life on that? Also think of this...a surprise attack on the USA stands a very good chance of success. How? Load missiles on a junk ship. Do this twice. One for West Coast, one for East. Launch the missiles and have them detonate high over the continental USA. The EMP blasts would fry a good percentage of electronics. No more power, most vehicles disabled, most computers destroyed. What percentage of USA population would perish after 6 months of no power? Then, bring in nukes to 4 or 5 port cities on containers. LA, New York, DC, and one or two others....Houston, Miami, New Orleans, Boston.... Game over at that point...Millions immediately lost, the rest of the population would be in jeopardy. The economy would be ruined for a generation. Less than ten warheads could effectively destroy the USA. You might be able to do it with as few as five. Take out the national power grid AND Washington DC, will the USA be able to respond? Does it matter at that point? So I would argue it is imperative that there are no new members of the "nuclear club".

If I remember correctly, aren't these the guys that typically NEVER has a losing day in their trading division? I would expect them to be good, VERY good. They are JP Morgan after all! Not to have even 1 losing trading day in a typical quarter? That makes me think they are some type of space aliens with 500 IQ's... OR Perhaps they are engaged in some type of activity that results in SURE FIRE profits...even at the expense of their clients. If you were a client, why would want to do business with them? Sure seems suspicious...

You bring up some very good points. People in the USA are truly blessed. No matter how "poor" we are, we have food in our bellies, roofs over our heads, and clothes on our backs. We also have opportunities, to one degree or another. I am just an acquaintance/friend of this woman. She also knows some of my family members. So this is PARTLY my reading of her situation, partly what she has conveyed to me. I do have SOME amount of sympathy for her. Society in USA says "go to school", "study hard", "get an education". I can remember Suze Orman, and other financial "charlatans" prattling on how good student loans were, as it was an "investment" in yourself, and those are the best kind you can make. This woman had a somewhat "sheltered" existence. She comes from a good family and a good town... I know her parents were very proud of her to get an education and advanced degree and admittance to the bar. None of them thought she would still be living at home in her 30's. She is living at home because she has to, not because she wants to. She does work, and has a "good" work ethic. She will work 40 hour weeks. She will even work more. Is she working 80 hour weeks? no... It is only recently that she is wrapping her head around her situation...She always thought if she was plugging away, things would work out. It is only in the past few months that it is dawning on her that it might not. I also know that she has some tremendous cognitive dissonance about her education, understandably so. There is also the "sunk cost" problem. It is very easy to say "walk away", but in practice it is not that easy. There is also the problem that the law schools say our graduates make "$85,000 a year!", when the real result may not even be half of that. So here she is thinking that if I work a bit harder, I'm going to make more money...just got to hang in there. That is not the case. Of course, there are exceptions. I think the BEST course of action for her is to start learning a bit of economics and business. Get a 2nd part time job and use that solely towards paying off/down her debt. Also use that as an entry to another profession. It is NOT that she is lazy, stupid, or shifty...she is just in a very, very difficult position and it has taken her a long time to "wake up", which she is starting to do.... I tell her tale to the board as I found it interesting how the economics of the situation interact with all aspects of one's life in one way or another. I also thought it interesting that she is not some statistical outlier, this is happening to a good percentage of young(er) folks in the USA. To all our foreign members, anything beyond high school usually costs money to attend. Sometimes a student will get a scholarship which may be partial or even full...but that is relatively rare. Graduate school, especially law school, is expensive. There are some law schools which now cost OVER $50k a year solely in tuition. The other very odd thing about law school is that Harvard is ranked #1, cost? $50k a year. Western New England, VERY low rank, cost $40k. Anybody graduating from Harvard will most likely have a good outcome...Anybody graduating from Western New England will be lucky to get a job that pays money! Something that is very low quality costs almost the same as something of tremendous quality. Price is NO indicator of quality/outcome in law school... I think this discussion thread could be tied with the "Income Inequality" thread. This is one way that happens. Too much education is also a sure fire path to downward mobility...