Daily Archives: October 4, 2010

It was always thus

Or at least it was true when I attended college. Get into an Ivy and stop working – you’d made it, and would never have to work again. Until the real world hit, but heck, that was four to seven years later and even then, old school ties could probably keep you afloat for a career. That’s why I was so cheesed when I was rejected by those folks back in the day. I had to work for a degree.Right now, only 23% of Harvard classes have final exams. That means for  77% of your courses, you need only smile on your brother and all get together right now. What a deal. The Chinese are going to eat our lunch.


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Jamie Oliver’s chicken nugget experiment fails

Too funny: He’s trying to teach a lesson but it fails, miserably. Good for him for posting the disastrous results. That’s an honest man. And if I’m to be honest, those nuggets look pretty good to me, too.

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This will bring a change to deer hunting

DARPA’s coming out with the second generation of the “one shot, can’t miss” sniper rifle.


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This is cool

I was prowling the Internet for a cheese grits recipe and found this site. What’s neat about it is that it’s got a calculator button, so, for instance, while  the original recipe serves twelve (those Southerners!) you can punch in a more typical New England number like “four”, meaning serve two and save the leftovers, and the program recalculates the ingredients. Nifty. It’s meatloaf and cheese grits at the Fountain house tonight.


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Hedge fund fees: a sucker’s game

From a friend at Barclays, this:

There was a very interesting article in the Telegraph which uses Buffett’s record to show just how unfair the typical “2 and 20” is to fund investors.

Buffett of course ran a partnership where he received no performance fees until exceeding a minimum threshold. If he didn’t perform, he didn’t get paid. The “2 and 20” of today ensures that the hedge fund manager always gets paid and paid extremely well if he/she performs.

Here is the article, the impact on amount of wealth compounded is staggering:

“If you think the row about fund management charges is a tedious technicality then prepare for a rude awakening.Terry Smith is the latest outspoken multi-millionaire to lob a hand grenade into this debate which will shake the City to its foundations and could bring several institutions crashing down.

He claims investors are left with less than a tenth of the total returns some fund managers receive – and usesWarren Buffett’s famous Berkshire Hathaway fund to illustrate the impact charges can have on long-term returns. Mr Smith says he is “not so much shocked as flabbergasted by the number of people who do not realise the impact of these performance fee structures”.

Taking typical hedge fund fees as an example – but widening his attack to performance fees charged by rising numbers of unit trusts and open-ended investment companies (OEICs) – Mr Smith said: “”As you are aware,Warren Buffett has produced a stellar investment performance over the past 45 years, compounding returns at 20.46 per cent per annum. If you had invested $1,000 in the shares of Berkshire Hathaway when Buffett began running it in 1965, by the end of 2009 your investment would have been worth $4.8m.

“However, if instead of running Berkshire Hathaway as a company in which he co-invests with you, Buffett had set it up as a hedge fund and charged 2 per cent of the value of the funds as an annual fee plus 20 per cent of any gains, of that $4.8m, $4.4m would belong to him as manager and only $400,000 would belong to you, the investor. And this is the result you would get if your hedge fund manager had equalled Warren Buffett’s performance. Believe me, he or she won’t.

“Two and twenty does not work. That does not mean that 1.5 per cent and 15 per cent is OK, or even 1 per cent and 10 per cent. Performance fees do not work. They extract too much of the return and encourage risky behaviour.”


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Women vs. men

Unemployment rate for men is 11.4%, women 8.4 % This is the result of a deliberate policy choice by Obama. I’ll have to go prowling the Internet but there were articles, back in the Stimulus days, of how women advocates persuaded the White House to shift stimulus funds from construction jobs – dominated by men, to social services, nursing and education, all in order to benefit women. Well, they got what they wanted, but the economy still sucks.

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An interesting experiment in human psychology that didn’t work

My favorite popular- music radio station is WFUV, 90.7 FM. It’s listener supported, and I’ve a member since 1995, when, prowling the band, I found them playing The Iguanas. Nobody plays the Iguanas except, it turns out, Fordham’s radio station. They hold fund drives twice a year and are commercial free the rest of the time. Until now, they had a minimum membership fee of $60, in exchange for which you got various premiums, escalating with your donation. But, like all such stations, only 7 – 11% of listeners actually contribute.

So this year, they held an “open house” : give what you want, from a dollar on up, and become a member. The idea was  good one, trying to expand membership, but I wondered whether they’d attract new members who hadn’t contributed before or just encourage existing members to cut back on that $60 pledge. It could have gone either way but the station, which normally wrapped up its fund raiser in 7-8 days, is now into day 10 and has only reached 75% of its goal. That’s too bad, but I do find it fascinating.


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It’s not the broker

396 Round Hill Rd

This very nice Kaali-Negy house has been kicking around since at least 2005, when it was listed for sale at $10.9 million. Since then it’s gone up ($11.5, in ’08) down ($7.95 in ’09) and into and out of the care of several brokers. Today it’s marked down to $6.995, and perhaps that will do it. Assessment is $6.


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That was quick

10 Spring House Rd

10 Spring House Road, up on the Merritt (corrected) , came on in May asking $8.9 million, dropped to $6.850 and, still finding no buyer, withdrew it from the market today.


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No one’s gonna steal my house!

216 Byram Shore

Looking over tomorrow’s open house list I see that 216 Byram Shore Road is back up, now asking $3.5 million. It’s a 1910 house on the Byram River that was renovated in 2001 and put up for sale then at $5.3 million. It’s been on and off the market since then, slowly dropping. Assessment is $1.7 million.


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No sales activity, so far

No contracts, no sales.

6 Silk Road

This building lot, carved from the original land around an old (1850?) house in Cos Cob, has dropped from $950,000 to $650,000. Assessment is $599,000, but the original house is also back for sale and going nowhere so it might be worth trying to restore the land and get this thrown in as part of the deal.

A house at 27 (?) Meadow in Riverside is listed today at $3 million, which is almost twice its appraised value. You can probably afford to wait for this one.

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Greenwich Demmerkrats still love their boys

Steven Mandel (Lone Pine Capital) up on John Street is dumping tons of money on Obummer, as is radiation oncologist and Riverside resident Daniel Fass. Suicide is painless, it brings on many changes ….


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State mandated attendance at Washington union rally – for high school students!

No, this isn’t Venezuela, it’s happening in Obama Land.

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“Special interests” support Republicans!

Oops – no, it’s the public employee union that’s pouring $400,000 into Demmerkrat Dan Malloy’s campaign.


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Foreclosure moratorium

Lengthy article here in the NYT describing the problem. Of more interest to me is how Connecticut homeowners can use this mess to their advantage. In “non-recourse” states, where banks cannot go after borrowers for the loan balance remaining after a house is foreclosed on and sold, borrowers should probably sit tight and live rent free for the next couple of years while all this is sorted out, save what you would have paid for the mortgage and then move on, with a couple of hundred thousand bucks in your pocket.

In New England, founded by Puritans, there is no such forgiveness and banks can, and do, sue borrowers for “deficiency judgements”; until now, debtors were advised that they had to exhaust all their other assets before walking away from their home. Now those same debtors have great leverage – if the bank wants to salvage anything from bad loans without a lengthy wait, they will need the cooperation of the mortgagor. My advice to struggling homeowners is to consult a lawyer experienced in this field and see whether a work-out or a short sale can be accomplished. Forgiveness of debt can be a wonderful thing.

UPDATE: thinking about all this, I wonder whether it’s not a good idea for everyone to stop paying his mortgage. Bit of a gamble, but if it works out, you should be able to more than recover your own equity and still profit from the withheld mortgage payments. Check the math for your own situation, but a strategic default is looking smarter every day.


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