ERICOPOLY

5% rent increases and a maintenance cost of only 0,33%? That is certainly optimistic! What does it cost to refurbish a room in a $3M home? What about a new bathroom, kitchen? Placing a new roof? Landscaping the garden? I didn't say $4m or $5m home. It doesn't take much to hit $3m here. As for optimism... that would be if I mentioned capital gains. Like if the property appreciated... 1% annually... it adds $30,000 a year tax-free (until it hits $500,000 total at which point it starts becoming taxable capital gains). Now, a $30,000 tax-free capital gain covers $30,000 of after-tax expenses. 5% a year rent increases for Montecito don't appear high -- the incomes have been growing at least that fast... this is not median income people, or low income people. The people in the upper income brackets have been seeing income growth in excess of that for quite a while. The public elementary school is better than the regional private schools, so the rental demand is very firm. Say you have 3 kids -- that's $75,000 of private school tuition saved! Leaving you with just $25,000 rent for a nice house on an acre in Montecito. It's bizarre, but these rents aren't as high as it looks for families with multiple children.

The people who have accumulated $3m after-tax are probably paying roughly 50% income tax (California income tax on top of Federal). Thus it's probably close to $6m of pre-tax income.

A $3m home (near me in California) rents for $100k a year. About 3.3% gross rental yield. It takes almost $200k of pre-tax income in California to pay that rent with after-tax dollars in the luxury home market (where people pay the peak income tax rates). Therefore owners get about $200k a year of imputed income. After covering property tax ($30k pre-tax) and maintenance ($10k of after-tax costs), maybe you are at $150,000 or so. So it's down to only a $50,000 a year pre-tax income difference between renting and owning... that margin gets slimmer and slimmer every year with rising rents. A 5% increase in rent cuts it to $40,000 a year. So in just 5 years, it could be down to zero. That's how homes are priced here... five years of rent increases to close the gap. You start clawing back those funds if rents continue to rise from there.

Hey, I like almonds, get rid of the alfalfa instead. Maybe someone will crack fusion in the next decade and can build a bunch of desalination plants over there. I was thinking about a value-added-tax on agricultural products that gets steeper for high-water-usage crops, and goes to zero for low-water-usage crops. They can then take those tax revenues to pay for the expensive desalinators and their energy costs. This way the farmers can stop externalizing the cost of their water usage to me (my dying landscaping), meanwhile pocketing all of their profits for themselves. I think it's fair that they cover the external costs of their water use.

10% of California's water goes to watering almond orchards. California supplies 80% of the world's almonds. 15% of California's water goes to growing alfalfa. http://www.slate.com/articles/technology/future_tense/2014/05/_10_percent_of_california_s_water_goes_to_almond_farming.html I'm not going to bother saving water in my house anymore. This is pointless and stupid. We have an endless supply of water within a stone's throw of Los Angeles, San Francisco, and San Diego. Time for some desalinators and let the water shortage be the world's problem (no more almonds on your shelves, and grow your own hay). Either cut me in to the almond grower's profits, or count me out for conserving their water for them.

My father likes to talk about how much the inflation of the 1970s helped him. He really stretched himself buying a home in 1970, but 10-15 years later his wages had soared and the debt on the mortgage did not. So he had positive operating leverage.

It seems like maybe 2-3 additional people out of 100 were unable to find work during the 70s. I'm looking at unemployment data: http://www.infoplease.com/ipa/A0104719.html Or perhaps 1 in 100 if you compare the unemployment rates of the 1970s to that of the early 1960s.

Just out of curiosity, why do you ask? Looking for the next WorldCom? I was thinking that this can be a proxy for knowing which stocks are held by "weak hands". (lots of forced selling on a big swing downwards) You would need to know whether or not they have hedged the leverage with put options. The leverage is then non-recourse, and you'll never get the forced selling.

Canada is too cold for everyone to want to live there.

Just out of curiosity, why do you ask? Looking for the next WorldCom?

You are supposed to smoke a lot of pot after a head injury because it helps to control the inflammation/swelling.

I saw the news of the S&P500 crossing 2,000 today. It's up 4% annualized since the 2007 peak.

Yes, Shilling predicted a decade of deflation. He made that prediction in 2003. So, maybe I should consult Madame Tarot.

From one of the "leading deflationists", A. Gary Shilling. I believe he went to the Fairfax dinner in Toronto a year ago, and was hailed as one of the economists they respect: The Boom Is Coming, and Sooner Than You Think http://www.bloombergview.com/articles/2014-07-18/the-boom-is-coming-and-sooner-than-you-think I disagree with the economic pessimists who believe, as I outlined in yesterday’s column, that persistently slow growth will be the norm for years to come.

Interestingly, he doesn't mention the elevated profit margins anywhere in the story... which I find strange considering it's sort of like the core reason why some people argue that the market isn't all that high relative to earnings (as well as the core reason why people argue the earnings will fall) Yet valuations remain high, and it would be comforting if they made sense. So I’ve been trying to come up with a theory to explain today’s elevated stock prices — and maybe convince myself that they could remain lofty for some time. One factor to consider is that bond prices are high, too.

Proof by desire? I've heard that argument often, and it never made sense to me. What's the logic that makes it follow that because we have desires that can't be satisfied, that it means that some magical way to satisfy them exists. How about some things just can't be satisfied? How about our imagination is powerful enough to think of things that aren't real (which you can clearly see by looking at the world of fiction)? We can also dream of un-assisted flying and magic and dragons and other dimensions and superpowers and immortality and such, and that doesn't mean they're real. Seems like bad logic and wishful thinking to me. Well, that particular quote would be a good one for a fortune cookie. As kids, we would always add "in bed" to the end of every fortune. So it then becomes: “If I find in myself desires which nothing in this world can satisfy, the only logical explanation is that I was made for another world... in bed”

I am interested at the moment in the idea that praying can bring psychological benefits even if it's just a trick on the mind that you are talking with God. For example, the Dos Equis "Be Thirsty My Friend" commercial is trying to get you to think that if the World's Most Interesting Man drinks Dos Equis, then you will get more enjoyment from it as well. There is something in there which I think is related... that we all somewhere yearn to make contact with very important people... and that we'd feel good if we could believe that we've established that ultimate social connection and that he was with us everywhere, and that we talked to him daily, etc... I found a website that has quotes taken from CS Lewis' "Mere Christianity": https://www.goodreads.com/work/quotes/801500-mere-christianity example: “If I find in myself desires which nothing in this world can satisfy, the only logical explanation is that I was made for another world.” Personally, I don't come to that sort of conclusion. I think that "want" creates motivation, and that drives us to invent tools, etc... However if I were to speculate on why "all roads lead to Rome" with his conclusions, I would suggest that he is benefitting from the situation I described before -- the more he believes in God, the more feel-good drugs he gets in his brain when he prays to God. It tends to make sense that the more you believe, the more it would reinforce the effect. Thus he would tend to see God everywhere and everything would be viewed as evidence of such. The motivation is there. The question is... does prayer really simulate conversation in the brain, and does it really deliver the feel-good drugs... or am I just guessing. I would be very motivated to read C.S. Lewis' works if he was delving into that topic. Suppose it works in the brain like a drug. You mentioned that he was a skeptic, and now he is a believer. Okay, but I could think coffee tastes bad as a child, but later start drinking five cups a day after being persuaded by the caffeine. It's easy to say that about caffeine, but I know less about the effects of prayer on the mind. I'd like to know more. Just some 1 cent video on the idea that brain scans change after prayer: http://www.wltx.com/story/news/health/2014/05/15/studies-show-the-physical-effects-of-prayer/9151157/

His thinking is in line with mine. Heaven is a psychological state you experience in this life, and so is hell. You don't wait to die to experience hell, or heaven. Therefore, these religions that just forgive you automatically for doing sins should not be misconstrued as a free hall pass.

So proselytizing then would make the drug even more powerful, because your prayers would become more effective if everyone around you agrees that God is the most powerful being in the universe. So powerful that he even created the universe. The more everyone repeats the same thing, then the more success you'll have convincing your mind that you are conversing with the single most powerful social connection in the universe. Thus, you get rewarded with the most powerful dose of brain chemicals possible for a social conversation. Even though it's a make-believe one. You need others to believe in order to help you believe even harder -- the "social proof" effect. Thus, somebody of another religion, if converted or killed off, will either increase your belief if converted (and thus your chemical reward) or will prevent your faith from being shaken by counterarguments (if killed). I don't know if singing a song like "I've Got a Friend Named Jesus" carries the same sort of psychological importance as the typical name dropping that goes on (I went to a dinner party and met the President!).

Expanding on that idea, I believe as humans we want to feel a social connection to important or powerful people. Some sort of instinct to be running with the strongest, perhaps. Social climbers exhibit this. So by "conversing" with the most powerful of all, the All Mighty, we just increase the amount of pleasure by having this special friend that we talk to. The more powerful you make him up to be, the better the psychological reward ought to be.

I haven't ever done so sincerely. However, there is convincing evidence that it would enrich me psychologically (what others call "spiritually"): http://www.huffingtonpost.com/2012/10/18/how-does-prayer-meditation-affect-brain-activity_n_1974621.html When praying, you are being tickled by the "feel good" brain chemicals that reward you for social behavior (see, now we're back to the social instincts thing). Sort of like how you can have sexual pleasure without a partner I guess, you can also have conversational pleasure without a partner. Some form of conversational masturbation.

The Egyptian civilization and religion existed much longer then christianity. Yet barely anyone is talking about it now. There are some really strange things about the bible. For example the tower of bable. They build a tower towards god, so god punishes them for reaching that far into the sky and let them all speak a different language. Now several thousand years later, NASA comes along... Arc of Noah. Why the hell flood the earth? Why make the one guy who did things right suffer for your fuck up by making him build a impossibly large ship. Your god you can do anything... Not to speak about the logical fallacy that God is allmighty and knows everything. Yet multiple times he messes up his creation. And fails to see 'bugs' in his creation. Everyone knows that if you tell someone not to do something they will do it due to how the brain processes language. ::) And then the second time he fks up again with arc of noah. Yeah a brilliant all foreseeing god alright. And finally it turns out people are still bad! Yet now god says, aawww fk it. I give up. No more mass murders. Very consistent and whise alright. Not to say, he is suposed to be an all good god. Yet when one of his creations makes the equivalent mistake of a child taking candy without asking, he kicks them out of paradise. That is like kicking your 5 year old out of your house when he takes candy without asking... Very forgiving and reasonable God alright. I think you can safely say that the bible is mostly bullshit and that this version of god does not exist. No offense but you are a fking idiot if you believe in the god of the bible. And I do not respect your belief and I think your an idiot. Saying anything else would be sugar coating it. If someone tells me they believe in any current religion then I will think much less of them. They are the equivalent of the idiot in the local looney bin claiming he is santa claus. Except this form of insanity is somehow socially accepted. And yeah I am very annoyed by religion, my parents are extremists who tried to jam this crap down my throat during my child hood so that is why I have this irrational dislike towards relgious people. The amount of hypocracy I saw... :o I agree with the Tower of Babel. One would thing, if a tower that large existed, there would be something of it still around. I suppose you think Prem Watsa and John Templeton are idiots then. They are/were both Christians. I believe psychology can rule out somebody being an "idiot" for their beliefs in these matters. Social proof (for one thing) can be a powerful thing. There are many, many reasons for why we believe the things we do.

Would you be opposed to changing the language on the dollar bill to read: "In God We Don't Trust" For the record, I oppose it just as much as I oppose the current statement of "In God We Trust". Get rid of it, get rid of the "One nation Under God" crap too, and maybe, just maybe you'll get your wish of these atheist billboards going away. The atheist billboards are retaliatory -- it's fortunate the atheists show more restraint than the Missourians who forced the proselytizing Mormons out of Missouri at gunpoint..

There is a "network effect" element to it. Or perhaps that's the wrong term... anyways. For example, your belief is apparently reinforced by the occurrence of Jesus in two major religions. Were these to be minor religions, you would not be impressed. Thus, it's like a snowball that gets more impressive as it grows membership. Well, I'd counter that to say if God wasn't at work, the religions would stay relatively small. After all, if God is gonna interact in someway, chances are the results are gonna be pretty large. :P Then why the need to send armies of people to the doorsteps of our private homes to recruit us? How about the major religions instituting a self-imposed ban on proselytizing? See how that works out for the theory that they grow due to the greatness of God. It feels more like they grow due to an army of door-to-door salesmen. If I had to guess, it's more of a maturing process. By sharing the faith, it helps with human bonding. If He does everything automatically, not a whole lot of learning would be done. Do you then not agree that atheist billboards are just trying to aid in human bonding, and without them the learning would not happen?

There's a great Mythbusters on that topic: