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Random Ramblings
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With a larger number of rentals, it all smooths out as each month is closer to the average

This I totally %100 disagree with…With more units comes more aggravation…More leverage,more debt,more tenant issues,higher likelyhood of evictions,repairs,damages,renovations,higher taxes over time…But I do see your idea that more is better and things would average themselves out…This would hold true IF rents were a sure thing,they are not…It would also hold true if expenses didn’t go up 3x as fast as rents…We all know as landlords that the market sets the rate for rents,not our expenses…

RookieNYC,

I’ve got to say that I think you’re looking at this the wrong way. All of the things you mentioned are just part of the business. I’m not surprised when an eviction occurs or when I have repairs to do. These things are 100% predictable and occur with regularity. When you only have a few units, they don’t occur that often and can seem to be a surprise, but they really are not. For example, I am currently evicting about 1/4 of 1 percent of my tenants each month. That doesn’t mean that I will have the same number of evictions each month, but rather that the eviction rate will average out to be .0025 per month. Currently, I haven’t had an eviction in four months, and I certainly wouldn’t be surprised or dismayed if I had 3 or 4 evictions next month.

I’m really not sure what you’re saying when you say “if rents were a sure thing”. Again, non-payers are a predictable part of the business and this closely matches the eviction rate. Nothing unexpected here.

Finally, expenses are going up but so are rents. At times expenses increase faster than rents and at times, rents increase faster than expenses. As a matter of fact, I took around rent increase notices today that will become effective March 1st. We are currently at almost 100% occupancy and the demand is allowing rents to rise. That’s new for me, because we haven’t had this pricing power until recently.

I think that you’ll find that the aggravation dies down after you’re in the rental business for awhile. At least, it certainly has for me. When I first started, I would get excited if someone called to say that one of my tenants did this or that, but not now. Unless there is an genuine emergency (which is VERY RARE), I just tell the tenants that I’ll deal with it the next time I’m in town.

I firmly believe that I'm the one that brought culpability to these boards when speaking of stock trading and I'm sure you would agree..Dream trading is rampant on this forum,or I say use to be..I guage my year by % up or % down..I post ideas that people can invest with and profit from and at the same time I admit my mistakes..Losing $$ trading is part of trading,but not all are net losers..

You are absolutely correct that you brought culpability to these boards and rightfully so! There is still a lot of dream trading in that only winning trades are being posted and losing trades are just forgotten. I am certainly not in your league, but I have been successfully trading for over 10 years and I know B.S. when I hear it.

I always said that its best to have *numerous* forms of income...But to say that one is better than the other is unfactual,this theory only pertains to the individual running the money

Agreed! I’m not saying that RE is better than anything else. In fact, if I could find a better way to make money, I’d switch in a minute. I’m not in love with real estate investing and I have no illusions that it is glamorous or sexy. I’m just in it for the money (and the schedule).

The other BIG reason that I like the rental business is that I am in control of the results.

Are you really?..You dont control the tenants if they pay you or not…You dont control if they vandalize your properties,you dont control the taxes going higher or the water or insurance…You most certainly have more control than an idiot like me who uses property managers,but in control of the results %100 you are not…But the way you do it is the right way,that much I will say…But then the debate goes on if your rentals make more than a high paying job…If you are happy that is all that counts,for me the action is the juice…

You are correct that I can’t make a particular tenant pay or keep them from vandalizing my property (or control any of the other things you cited). However, those things occur with predictable regularity and again are all just part of the normal expenses of the business.

As to the pay, I don’t think there is an answer there. Could I work my butt off and get a corporate management level job that pays more than my rentals? Yes. On the other hand, if I wanted to work my butt off, I could increase the number of rentals I have and make a lot more money from rentals.

Mike

122

I got to thinking about this further when I was out driving. What I particularly love about the stock market is the absolute control YOU have over what happens in your account. You can’t control a stock not going the way you intended it to go, but you can exit at anytime and that’s that. No going to court, no phone calls to angry tenants, no resentful tenants trashing anything because they didn’t like the fact that they had to pay their rent and are now being evicted, etc. When you trade a stock, you’re done, and all from behind a computer screen from home. I love the simplicity. You’re not going to win every trade, but you CAN exit when it isn’t working out the way you planned it and move on to the next trade. No strings attached. Now, there are absolutely perks about REI that you just don’t get with the stock market too. I just think people place REI too highly on a pedestal at times because they only hear the horror stories of some chap losing thousands of dollars in the market because he didn’t know what he was doing. REI and the stock market both have their pros and cons and that should be that. I don’t think you can necessarily say one is better than the other. It’s all a matter of preference.

123

Chris,

Correct me if I’m wrong, but you’ve been trading for a total of what - 3 weeks? With all due respect, I don’t think that is enough experience to know anything about trading yet. If you survive trading for a couple of years, then I might think that you’re for real.

Mike

124

Understood. Fortunately, I have tough skin. We all begin somewhere. At the end of the day, it’s exactly how I put it. Your main objective is to preserve capital. It’s really not that difficult of a concept to understand that you can beat the market overtime when you trade ‘smart.’ You go into each trade with a exit strategy setting your stop loss and analyzing for an exit when your trade does move in a way that you expected it to. I don’t expect you to take advice from me and that’s completely fine. I trade for me. Your argument is valid that I haven’t been trading for long, but I took it more as a personal shot rather than you just approaching the valid points I laid on the table. Hell, I even went as far as pointing out that they both have pros and cons and have different yields for different types of investors. I guess you can’t learn or discuss anything with anyone that doesn’t have years of experience under their belt.

125

Chris,

I am not trying to give you a personal shot. I’m just pointing out that 2 weeks experience trading isn’t even remotely close enough to judge the merits of trading. Right now, trading options is very easy. The market is trading in an artificial range of 8,000 to 9,500 (on the DOW) with the government backstopping it at 8,000. The market should be at 5,000 and would be if it were not for the government. Have you noticed that everytime the market gets to about 8,000, the government pumps out the latest bailout news to prop it up. This is great for options trading because the volatility is keeping many of the option premiums high and yet there is little downside risk to the market thanks to the government.

My point is that you haven’t been trading long enough to understand what really happens. You haven’t had a string of trades go against you. You haven’t had a stock suddenly be cut in half because of an accounting irregularity. All these things and more will happen to you if you trade long enough. It’s kind of like having the tenant from hell in a rental. It doesn’t happen very often, but when it does, it can be ugly.

Finally, if you’re going to post your trades, please post all the details in real time. Post the number of shares or contracts, the price you paid or received, and the profit or loss in dollars. That way, we can see what you are really doing. I don’t care how many shares or contracts you do, but it provides context and reality to the story. I often buy only 100 or 200 shares of stock and sell covered calls on them.

Mike

126

Just to add a little reality to the mix, let’s look at those June 09 $16 QQQQ puts that FDJake is holding. He bought 600 at .75 and 400 at .40. That’s $45,000 + $16,000 = $61,000 he spent on those puts. They are currently worth .18, which would be $18,000, for a paper loss of $43,000. I’m sure that he can afford to lose that amount of money, but I wouldn’t want to be sitting on a $43,000 loss with the time value of the option premiums decreasing ever day and the government propping up the economy.

I am not posting this to take a shot at FDJake. I have great respect for his opinion. He could still be right and the market could still crash before June (it certainly should). The question is whether the government will keep propping up the market via bailouts between now and June, and will that keep the market up. My point in posting this is that you can lose a bunch of money even if you made a completely logical and reasoned trade.

I believe that he also has a bunch of Ford $7.50 LEAPS. I actually thought about buying some of them myself. That was another very logical trade that could still be profitable, but with the government continuing to screw things up, at this point that is a very risky trade also. Again, the point is that you can win big or lose big due to factors that are completely out of your control.

This is the REALITY of trading and investing in the stock market. Only a VERY SMALL percentage of traders make a significant amount of money over the long term. In fact, that’s true in the rental business also and almost every other business.

Mike

127

I really don’t think options trading is all too easy right now. I trade on a daily basis, not months out. Most of the time, you can tell which way the market is heading before it even opens and from what it does in the morning. If it doesn’t, get out with a small loss and move on. I’ve had my string of bad trades in my first week. I’m still holding onto FAS for a loss of 90%. Big rookie mistake. I didn’t sell when it didn’t go as planned. I tried to catch a falling knife and I got cut, bad. I also had some SRS calls that I bought and got too greedy with. I had profit on my screen, and let it ride. Then, the next day when it pulled back some I sold only to watch it shoot up the next day for a 100+% gain. These aren’t things I would have learned from any book. I’d post amounts, but I’m trading with a VERY small account in comparison to everyone else. Sure, it changes the dynamics of my trading because it’s only xx amount of money vs xxxxxxxx amount of money, but the rules still apply. You cut your losses when you need to and try to preserve capital at all costs. In just the 3 weeks I’ve been trading, I’ve only had 5 bad trades out of 16 altogether. However, those 5 bad trades were in my first week and were VERY rookie mistakes, and costly too. It sucks, but it was a lesson well learned. I actually got away with less than what I’m paying for a class this semester and I learned a lot more in my first week than I ever would have in class. If I can come out with a profit for the year, I’ll be happy. Everything is all still very new and I learn more and more each day. Most of my first day jitters are long gone, and now that I have a few good losses under my belt, it isn’t as scary anymore. I don’t have anything to hide and don’t claim to be a pro either. I actually had a huge preconception that REI was absolutely 100% better than investing in the markets. Hell, I’ve read it in lots of RE books and that just simply isn’t true. I have a great respect for you Mike and what you have accomplished, and apologize if your comments weren’t cheap shots. That’s just how I took it.

128

Chris

those puts on DRYS are gold. Drys imo may retest their 52 lows or even break through them. the CEO has done everything he can to kill this company for his personal gain. I had a target on drys at 6 thats not the case anymore, i may not even touch it. I will post later tonight when i have more time about that companies situation. i read your post on the other site and think you should re open some puts. I’m gonna activate options trading on monday with etrade. If they wont let me short it i might aswell use put options as my short on it.

129

Just to add a little reality to the mix, let’s look at those June 09 $16 QQQQ puts that FDJake is holding. He bought 600 at .75 and 400 at .40. That’s $45,000 + $16,000 = $61,000 he spent on those puts. They are currently worth .18, which would be $18,000, for a paper loss of $43,000. I’m sure that he can afford to lose that amount of money, but I wouldn’t want to be sitting on a $43,000 loss with the time value of the option premiums decreasing ever day and the government propping up the economy.

Yes I havent seen anymore realtime trade posts since that put trade…That kind of loss will get inside a traders head…That is why I dont play size when it comes to options…I want to be right fast and options you have %100 at risk…I don’t like the way they trade,I dont like the spreads,I dont like options and never have…I have posted it numerous times that options are great when they go your way but when they dont the losses are amplified and it can be very painful…I doubt fdjake is worried he made a %300 supposed profit on earlier put trades but if i remember correctly his size was much smaller than this current put trade…He could have easily erased great gains with this trade,but thats trading and you have to control that greed because pigs get slaughtered…Options work best as a hedge not as a primary trade,especially naked shorts…

130

I’ll be watching for a re-entry into DRYS puts depending on the opening/ premarket. My fundamental side is telling me 52 week lows again easily at this pace, but the technicals are screaming oversold for the time period. If the market goes green and bounces off of 8000 heading into the ‘bailout release,’ I could see DRYS retracing some of it’s loss, and with options you want to be exactly right in your timing or at least be riding a wave one way or another. My losses have come from trying to catch falling knives, or trying to be quick on reversals. I’ve had MUCH better success with not fighting the trend and I’ll continue to stick with that if the situation warrants it. I’ve picked several reversals, but not nearly as successful as I’ve been with going with the flow.

I’m keeping an eye on JPM calls and X calls right now depending on how the market tests support. I’d play GLD, and still might buy some calls if market sentiment blows off the bailout hype.

131

the volume is the $500,000,000 worth of shares being sold off. The CEO is tying to keep the ocean drill rigs at all costs. i guess even though hes a crook lol i agree with what hes trying to do here. the selloff will continue but will they give it a day or two break to look like its oversold and then dump into it again is the question. I think they just keep dumping

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the selloff is in full effect -20% already premarket. the ceo doesnt care about shareholders only about the company, so this is why the 500m shares will be throw out here so they can keep the rigs. Its gonna break the 52 week lows. I also read that their 4th qtr earnings are gonna be hit hard by all the cancelled deals so I dont see any good news coming anytime soon. drys will level off after the 500m shares are sold into the market.

134

Just bought some more 5 Feb puts on DRYS. My C puts are up too from holding over the weekend. I don’t think I’m going to make anything back on my FAS, which is nearly a 95% loss as of right now. Remember, I bought FAS with that mentality that I just can’t lose and I’m not wrong. BIG rookie mistake. Serves me right for holding and I certainly learned from it. Watch DOW test 8000 now for resistance and if it does, look out below barring any kind of news that may prop the markets up.

Looks like DOW might have resistance at 7900 instead.

135

man reading the message boards about drys is funny. people just dont realize whats going on. they talk about shorts attacking drys which may be adding to its price fall but its $500 m worth of shares being sold into them thats tanking the stock. To make an easy profit count from the day of the shelf registration to sell the $500m, look at the volume and price and have a good estimate on when the $500m has been sold then drys will start to rebound.

I will load up on it when the shares have been sold off. drys is taking the whole dry-bulk shipping sector down with it.

I bet GE is pissed about the timing on this though. being able to sell into the larger volume when the stock was $15 + woulda been the idle place to let them go. grouping dilution with covenant breach couldnt be worse for sharholders.

136

Held those DRYS puts overnight :cringe:. This could be a high reward, but high risk play if we gap down again tomorrow.

137

ok here goes a downside of trading story for the day…I funded a high % mortgage for a guy upstate ny and today was the day that I had to wire funds out of my account to my attorney to close the deal…Anytime I take money out of primary account it shows up as a loss ,duh…Anyway it always compels me to trade to see if I can lessen the number and make myself feel better…Well today was one wild ride…After watching the market open up down but well off its premarket lows I was annoyed because I missed a QQQQ trade and I felt like the market owed me money…But I never chase the market,almost never that is…After watching the market rally earlier in the day I took 10k(shares) QQQQ long only to get my ball$ kicked in very quickly to the tune of $2300…To make matters worse the market starts to attempt another bounce so what does stupid old me do?..I now buy 15k (shares) QQQQ and take yet another less painful but much needed stop…Now I’m down $3500 and its not even 2pm…So much for trying to lessen that amount I wrote out of my account for the day right?..Well not so fast there is more to the story…Now at this point I’m naturally cool as can be but fuming inside over my horrible trades for the day…So now I cant sit back and not take another shot,heck I’m down $3500 already whats the worst that can happen…I lose a few more $$$…I switch over at 2:21pm and buy my trusty old basket of proshares…About 10 to be exact…The market RIPS hard and I sell everything at exactly 3:41pm and finish the day up $163…Lesson to be learned is dont force trades for stupid reasons as I did today…Yes,I’m a professional and I still do stupid sh*t…The difference between me and the average guy is I know probability and I knew that a bounce was imminent…Did I know the market would RIP…HELL NO…Had I known I would have taken a boatload of proshares vs canoe’s worth…To make my day even sweeter my bond funds went up %0.2 on the day and I actually made a nice days pay in the end…But I still feel like I never learn sometimes…Mistakes are part of trading but how you react when things go wrong seperates the men from the boys…I just wanted to share that with you all…

138

this market is funny. drys renegotiates a loan of 200 million and it goes up 30% premarket like it has done something great. I dont even remember hearing anything about pireaus bank and this 200 million when they reported covenant breach. that 200 million is nothing. they still have 2 other banks for 1.125 billion. all this does is allow them to dump shares into the strength today. I would be shocked if drys holds the 20% gain through the day. The dilution is what investors should really be looking at here.

earnings on the 10th and their should be some ugly numbers coming out.

139

BDI is moving up at a good clip now up 49 pts today. I figure it will take off very soon.

140

Oh the perils of holding overnight in this market! I lost ~50% on those Puts when I should have sold before close. I think a lot of these longs are going to get trapped here.