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I am leaving San Mateo for China first thing in the morning tomorrow.  Sorry for the lack of updates but these couple weeks have been insanely busy for me.  We actually still haven’t completely closed on the house because of a bunch of mix ups and confusion.  Hopefully it will be done tomorrow, but I won’t be here to see it.  That sounds pretty precarious and believe me, I have been pulling out my hair for about two days.  I have also been trying to tie up loose ends at work and it has been two extremely chaotic weeks.

I am so glad that I will be leaving on a jetplane tomorrow because I just need to get away from this crazy country for a while and escape to another crazy country.   We will be watching the presidential election through the filter of CCTV.  The hubby already voted early on Saturday, so he is all set.

I will be back early morning of November 14th, but there will be an excellent guest post by in a couple days.   Stay tuned!

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Sometimes I just read something so amusing that I feel fortunate to have read it. Well, today my ex-coworker sent me a link to former hedge fund manager Andrew Lahde’s goodbye letter and it is one of these funny manifestos that made me laugh. Andrew Lahde managed Lahde Capital, which had a 870% return last year because he shorted subprime mortgages. Today he announced that he is quitting the business in a that I thought was the most sensible thing I have read in more than a month. Here are some takeaways.

female viagra side effects – In Lahde’s words, these idiots were “low hanging fruit” that “were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.”

female viagra side effects – I write about this often, and it is refreshing to see someone actually quitting the grind even though he has the potential to earn so much more money. Andrew says that he will “let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck.” He also says that legacy is pretty overrated because people will forget Steven Balmer and Larry Ellison eventually so “throw the Blackberry away and enjoy life.” He also mentioned that he will try to recover his health, which is more important than chasing new deals.

female viagra side effects- I think after witnessing the string of bailouts that marginally benefit everyday folks, we could agree on the point that the government is pretty broken. Lahde wants to see a forum where smart people come together to make up a better government. He thinks of the forum as Linux going against Microsoft. I don’t see that as very likely, but it’s fun to fantasize.

female viagra side effects- This is probably the longest section of the letter, and possibly the most amusing. He makes some good points about how hemp is a really useful plant that was outlawed by a government that allows advertising for alcohol and more addictive drugs for the sake of money. My ex-coworker said, “I can just picture this guy lighting up half way through”.

Anyway, have a good weekend everyone. Live a little away from your computers and Blackberries, and as my crazy Spanish teacher would say, “No fuma drogas!”.

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So a couple weeks ago I wrote that we entered escrow for my husband’s parents’ home.  Since then, we have locked down a 30 year fixed mortgage at 5.875% with a 0.875% origination fee last week.  Looking back, I am so glad that we locked down the rate because a Our loan has no prepayment penalty so in the unlikely chance that mortgage rates ever sink significantly again we can always refinance.

Additionally, we also got dozens of disclosures, inspection reports, and the appraisal report.  I think the hubby is getting tired of reading all of these forms that explain to us what we’re getting into.  I find the disclosures very helpful, though.  Even though we are buying the home from someone we trust, we still need to know all the problems and issues the property has. I actually found out a lot of things I didn’t know previously about the house.  The hubby was reading the report and found a few surprises, too, but they were mostly minor.

The appraisal report showed six comparable properties and gave an appraised value range of $514k to $550k and I thought that was a fair estimate for the current market, but the appraiser did note in the report that the market could slip down further due to the tightening of credit and the amount of foreclosures in the area.  In fact one of the comparables he used was a bank owned property and it sold for $520k.   We’re technically purchasing it for quite a bit less than the lowest end of the appraisal so we will have some cushioning for the down market.  The good thing about the appraisal is that our lender should accept that the house is worth a lot more than the loan amount we’re seeking and we will not have  to get mortgage insurance.

Next, I did a lot of research into home insurance, and learned quite a bit about building materials and various natural disaster zones.  For example, the home has a concrete tile roof, which is considered one of the most long lasting roofing materials and some insurance companies actually give a discount for that.  The bad news is that the home is in a zone with high incidences of brush fire so a couple insurance companies actually refused to quote me.   In the end I settled with a policy sold by Nationwide, which offered the best balance of coverage and price.  I got more than ten quotes and the range of prices was from $440 to $1200 for varying amounts of coverage. Interestingly enough, the most expensive policy didn’t really cover more than some of the cheaper policies so I guess  it really pays to shop around when you are purchasing any kind of insurance.

Amidst all of this stock market turmoil, I am actually glad that I have this real estate transaction to focus on right now.  We are hoping to close in less than two weeks, and so far things have been going well.  I haven’t met any unscrupulous loan or real estate agents that some people say caused the current crisis.  The loan agent I dealt with was very straightforward and explained everything.  There were also many disclosures that are required by law that tell you what you are responsible for and that the real estate market doesn’t always go up.  So after going through this process I don’t think it’s fair to blame all the real estate professionals on the ground floor for the current meltdown.  A lot of them are people like you and me making an honest living.   Home buyers are really responsible for their own actions and everyone needs to do their due diligence before making any kind of big purchase or investment.
~

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Today the Dow Jones Industrials dipped below 9000, and it seems that there is no end in sight. Believe me, I am feeling the pain in my 401ks and IRAs, but life goes on, and I still have a job and I am still quite busy. I truly believe that the reason I and many others have a job right now in the Silicon Valley is because of the last bubble. When the NASDAQ lost more than half of its value and dot coms died left and right the Valley returned to frugality and good business practices and we all should be thankful for it.

When the last bubble happened I just started at UC Berkeley, so I missed all of the crazy IPOs and block parties. After I graduated, I did join a startup, but it was clear that it operated very frugally. It was profitable and maintained a positive cash flow with only one round of venture funding. This company is still operating right now. Since then I have joined two more small private companies and both operated the same way. Overall, I think the companies thriving in the Valley now are better quality businesses than those companies that shot up to $300 a share on the Nasdaq and then died in an ignominious fashion complete with auctions of office furniture.

As a result of the dot com bubble, even venerable technology companies became more frugal than they were and held onto their cash. This is why Microsoft and Hewlett-Packard are able to do stock buybacks this year. My last company actually issued a stock dividend because they had the cash to do so. At least technology companies became more aware of the importance of having a cash reserve for a rainy day, and it sure is pouring right now.

Another thing that happened in the Valley is that IPOs became as elusive as albino koalas. Again, I believe this is a positive thing because if there were rampant IPOs then companies would have overhired again and the fall would be very very hard. A more popular exit strategy for small companies was to be purchased by Google/Yahoo/Microsoft, and again, these large companies were able to do these acquisitions because they held onto oodles of cash.

I hope the housing bubble will serve as a lesson to everyone involved just like the dot come bubble did to the tech industry. The technology sector has become wiser and is now on more solid footing than a lot of other industries. We will all feel pain from the fallout of this financial crisis, but hopefully banks will return to better business practices and people will learn to live more frugal lives. That is actually exactly what happened after the Great Depression. We had a generation of extremely frugal folks and decades where the middle class prospered, but unfortunate history is often forgotten, and repeats itself over and over again.

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Today police in Southern California in a upscale gated community. Apparently the father of the household lost his job a few months ago and decided to kill his three children, wife, and mother in law. He wrote a suicide note detailing his recent financial difficulties and also killed himself. This tragic story isn’t the first in the current financial climate. Last year a North Berkeley family also died in a similar manner when and shot his wife, two children, and himself in Tilden Park. I would really hate to see this happen again so I want to reiterate that life is so much more important than money.

Now, people who are on the edge of suicide or murder probably need more than a blog article to persuade them from carrying through with their plans. However, family members of those recently unemployed should take care to notice depression and homicidal tendencies. In both of these cases it is a head of the household that felt like they had to kill their families due to failing household finances. They probably felt that their families were just as powerless and miserable as them, and they extended their own suicides. So I think those in families that are in financial trouble now due to a sudden change in employment status should pay attention to the mental health of their family members. Someone has to have a clear head and say that money is not the most important thing in the world, and that it is possible to get through these trying times. I think the most tragic thing about these cases is that the children are also murdered because they have their whole lives ahead of them. So perhaps it is safer to send the kids away for a while if things feel desperate.

If you have a family member who is in financial trouble, it is important to offer words of encouragement now. Ask them how they are doing, and don’t take “good” for an answer. Dig down a bit deeper and see how they are really doing, and perhaps more tragedies can be prevented if people just realize that losing money is not a death sentence.

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