[technovelist]

We don’t actually lunch with Warren Buffet, but a guy who beat me up in fourth grade did go on to become Sharon Stone’s first husband.

It must be thrilling to be so famous!

[technovelist]

There is no shortage of engineers in the US; in fact, many engineers are involuntarily unemployed. There IS a shortage of engineers who will work for wages as low as the H1-B workers.

I agree that the quality of the H1-B engineers seems to be as good as that of citizens (which at least in the case of software engineers isn’t very good, in my experience). But the H1-B workers are not paid the same, which I believe is mostly because they cannot switch jobs as easily as citizens.

[technovelist]

Yes, I have an explanation. There is an almost 100% accurate rule when dealing with advisory services: If an advisory service has a wonderful track record up until you start using them, as soon as you start following their advice they will lose their golden touch.

This is due to “survivor bias”; that is, even if every advisory service used random numbers to make their predictions, if there are enough services, one or more of them will have an excellent track record, viewed retrospectively. Unfortunately, that doesn’t mean that their track record will continue in the future, for obvious reasons.

[technovelist]

I’m a homeowner, and I take the standard deduction, which if I recall correctly was approximately $10,000 last year. It is slightly more than I would get by itemizing, as well as being much less trouble and much less audit-prone.

Of course, I live in a state with no income taxes and have a fixed 5% 15-year mortgage less than 1x my yearly income.

[technovelist]

My reasoning for a 90% drop is simple: the entire economy of the world is based on unlimited amounts of “liquidity” flooding out of the Federal Reserve. As explained by the Austrian School of economics, every great inflation must end in one of two ways:

1. They will stop printing money due to fear of hyperinflation. This will cause a crash in all assets dependent on inflation, and the most illiquid, i.e., real estate, will go down the most due to the attempt to raise cash. See the Great Depression for an example.

2. They will keep printing money even in the face of rejection by the market. This will cause the complete destruction of the “dollar” and end the division of labor in this country (and probably many others as well). In that case, of course nominal prices for real estate, as for every other asset except bonds, will soar, but prices in real money (i.e., gold) will decline dramatically. See any hyperinflation for an example.

The main question, of course, is timing. Looking at the disastrous trends in the federal budget, even with all the tricks they can come up with to make it look better, I believe that we are near the beginning of the runaway part of the inflation. So I don’t think it will be more than a few more years, probably less than five.

[technovelist]

Trough: 2010-2011
Drop from peak: 90%

[technovelist]

SebNY said:

“I am repeating myself because it seems that a few people on the forum don’t get it: H1-B visa holders are NOT paid less than a similarly qualified US citizen.”

I heard your claim the first time. Unfortunately, it is quite incorrect. H1-B visa holders are on the average paid MUCH less than a similarly qualified US citizen, regardless of what the law supposedly requires. Here is some research on this exact topic.

[technovelist]

As the guy who was falling off a tall building said when he passed the 30th floor, “Everything’s fine so far.”

[technovelist]

I wonder what people 20 or 30 years from now will say if they see these shows. Will they believe that anyone could really be so stupid and/or insane as some of these people?

[technovelist]

My point was that since you cannot know with certainty that you will be able to sell before your ARM resets, it is very hazardous to assume that you will be able to do so, regardless of your intention to do so.

To take your examples: Leasing a car makes sense only if it is a deductible business expense. Financing a purchase makes sense if you get a favorable rate.

As for the life insurance example, it always is better to buy term than whole life, with the very rare exception that if you have a very large estate, there can be estate planning reasons to buy whole life at very advanced ages when term is not available. And even this exception will probably go away if they get rid of the death tax.

By the way, I do know something about life insurance, having passed a couple of the actuarial exams many years ago.

[technovelist]

The bid/ask spread should be a fraction of a percent at a big bank. As for interest rates, they are higher in countries with shakier currencies. The question is which will have a better real return, not just a higher interest rate. I’m betting the dollar won’t do too well in the next few years.

[technovelist]

I would sell. I think the downside risk is too great considering that the $180K or so that you would clear by selling now would almost double your current savings. As for worrying about inflation from holding too much cash, I agree that is something you should handle, but luckily since you are going overseas it shouldn’t be hard for you to set up a hedge in the form of a foreign-currency bank account. And of course there is always gold, which is inexpensive to store and highly liquid, unlike real estate.

[technovelist]

I don’t agree that “if you’re going to live in a house for less than 5 years, then you’re better off with an adjustable mortgage that resets not earlier than 5 years.” There is no way on earth that anyone can guarantee that you will be able to sell the house when you are planning to.

If you’re planning to live in a house for less than 5 years, you should rent rather than buy.

[technovelist]

That was an amazing show last night. I thought I’d seen everything, but that “flipper” was really special. Her contractor should get a medal for not braining her.

[technovelist]

Sounds reasonable to me. Are there put options on WaMu? If so, buying some that expire next year is probably the safest/best way to play it.

[Author]

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