Welcome to the end of the week and another edition of Happy Hour! Just sit back, relax, and enjoy your end of the week roundup of all things interesting in the land of money.
Several years ago Warren “The Oracle” Buffett gave a prophesy on the potential in housing. He basically uttered the immense opportunity and if it was practical he would buy a couple hundred thousand homes. Wall Street firms and hedge funds took that to heart and bought big. Of course, others had bought up houses already, picking up foreclosed homes for pennies on the dollar and renting them out.
Now those first movers are selling. The reason, the returns on rent from single family homes is dropping. I’m sure, most of the firms and hedge funds that got into the single family home market thought they would sit on the rental income stream for a few years and eventually spin it off as a REIT. Except it’s not quite working out that way. In other words, it’s not as practical as they first thought. Which is exactly what Buffet stressed with “if it was practical”.
I’m no rental property genius, but the logistics for managing occupancy and maintenance on hundreds or thousands of single family homes has to be immense, if not inefficient. That’s not to say it’s not profitable. It’s just not nearly as profitable or scales as well as a more efficient multi-unit property strategy.
The U.S Post Office announced a $0.03 hike on stamp prices, starting next year. The very next day a stamp arbitrage guide was released to take advantage of forever stamps. If you didn’t know (I didn’t), the post office sells non-denominated forever stamps and has for a while.
Years ago, stamps had a value attached, printed on the face. When the cost to send a letter was increased, say from $0.22 to $0.25, that old 22-cent stamp wasn’t enough. You had to buy a 3-cent stamp to cover the difference.
Well, the forever stamp changes all that and presents an opportunity, much like the Seinfeld episode where Cramer and Newman try the Michigan bottle deposit scheme.
- Why Bonds Are Not For Retail – why transaction costs and fees on bonds is so important.
- Tapering, Market Overvaluation etc… – a good take on investments and what to do about the Fed taper.
- How Mohnish Pabrai Crushed The Market By 1100% Since 2000 – a look at one of the more successful value investors toady and his investment strategy.
- 4 Reasons To Have EM Exposure Now – agreed and why I’ve highlighted EM funds recently.
- How to Turn a 3% Return Into a 10% Gain – it’s like a dogs of the Dow strategy but for funds.