Jacob's other journal

Where are you and where are you going?
teewonk
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Post by teewonk »

"I don't want to drop $200 on oak for a table in order to learn."
What do you think of using mismatched wood? Reclaimed wood furniture is popular right now (example). I'm sure you could collect enough from beat-up furniture, doors, etc., over time to make a table.


jacob
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Post by jacob »

So what's new ...
I'm still dabbling trying to establish something that pans out and becomes "what to do after trading". Hopefully that won't be an issue that needs resolving for the next N years, but it's always good to be prepared/have more than zero exits
Trying to follow the edicts of only engaging in stuff that's cheap to start and might eventually make money.
1) Bought a bike computer (it's like a speedometer with a gazillion functions so we call it a computer) which together with my trainer doubles as a proxy powermeter. I managed to snipe it on ebay for $1.5 plus shipping. Retail is north of $50. I'm making a point here.
2) Bought Chessmaster 9000 ($8 on amazon, I'm making another point) and have been practicing my game. It does wonders for my ego to be beaten by virtual 10 year olds.
Both are cheap hobbies but both are semi-useless in terms of fulfilling needs and making money.
In other news, I heard from a ghost from the past (is that the right term?). My phd supervisor contacted me about some of my old research and is willing to sponsor a free trip to Switzerland. (Here we go again. I hate traveling. I've been to 14 countries, but I've only used my own money to go to two of them. First world problems ...) We'll see how that works out.---If I still remember anything and if I can find my old codes. I notice that it didn't take long for someone else to publish papers in my previous niche. The entire research community is resilient in that manner. Individual cogs don't matter but apparently this one is worth inviting. I guess it's nice to be wanted.
(It's funny how my concerns about bridge burning seem completely unfounded. I also noticed that I was actually somewhat interested in the problem. I could have sworn I had forsworn physics forever.)
Still trading paper (not real money) at work but getting much closer to the real thing. It's funny because when I looked at the physics publications over the past few years, I couldn't help but feeling a little of that old "damn, somebody coup'ed me" when I saw "my" projects published under someone else's name. In trading it's different. Even if someone else came in first, it's still possible to do better or even if doing worse, share the rewards. In academic research first-takes-all.


secretwealth
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Post by secretwealth »

jacob: go for it. Going to an academic conference when you're already out of the job treadmill is beyond liberating--it's a sublime experience. It might also be a bit sad to see all the hungry grad students who will most likely wind up academic cannon fodder.
Also make sure to stress in your talk how you're not in academia anymore and, while you're curious how future research on your topic would take shape, stress you won't be doing any of it. That'll raise some eyebrows and, if you're anything like me, put a spring in your step.


Dragline
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Post by Dragline »

Yeah, I'd go if someone else is paying and you can say anything you want.
In the meantime, you might enjoy Mandelbrot's new memoir and his love/hate relationship with academia. He had the bulk of his academic success after he ditched the formal process and spent 35 years at IBM. Some of it is similar to things you have written.
As you get a little older, you may find that life is often circular when it comes to relationships, at least if you're a relatively decent human being. I've found that everyone I've known more than tangentially seems to re-appear at random intervals. (There may be a power law relationship in there somewhere.)


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jennypenny
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Post by jennypenny »

"You have noticed that everything the Indian does is in a circle, and that is because the Power of the World always works in circles, and everything tries to be round. The Sky is round, and I have heard that the earth is round like a ball, and so are all the stars. The wind, in its greatest power, whirls. Birds make their nest in circles, for theirs is the same religion as ours. Even the seasons form a great circle in their changing, and always come back again to where they were. The life of a man is a circle from childhood to childhood, and so it is in everything where power moves." Black Elk


J_
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Post by J_ »

An sich I don't like travel also not so much. But when I go, I combine. We know you have lived in Switzerland, but have you been in the beautiful museums of Basel and Zurich? And made trips by train through snowy hills/mountains? Last winter I did, and stayed at youth hostels, all in walking distance of the train stations of Basel and Zurich. Seeing Tinguelly in frozen ponds... And in Zurich you have the shop of lost properties maintained by the Swiss railways.

Is that an idea?


jacob
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Post by jacob »

New blog post: http://earlyretirementextreme.com/updat ... jects.html
We're running out of space to build new furniture---we have everything we need/can have. I think I'll take to building wood toys for a while to use up some scrap wood. After that I think I'll start replacing the pine furniture with better wood.
I've settled into doing 20 minutes on the trainer a few times per week. At 19-20mph average speed, that routine burns a lot of fat.
My rating on chesstactics has increased to 1300. Not much to brag about. In real games I still make annoying blunders.
The job is good. I like the excitement that comes with stuff that's working. Sometimes I complain about being bored on weekends because they're not as stimulating.


Dragline
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Post by Dragline »

Cheers and Happy New Year!


jacob
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Post by jacob »

The plan for 2013 is/seems to to put all work income into savings in order to buy a house. ---And hope that the Chicago real estate market doesn't rebound in the mean time. There's a significant seasonal component to RE prices where it's best to buy during winter. Despite low-low interest rates(*), I'm not too keen on going THAT way. I'm probably just too cheap to pay various fees.
(*) Although the highly academic heads of the Fed seems to be beginning to notice that their pumping is creating another bubble in commodities and long-bonds. Who would have thunk it? Shortly, they'll be saying it came as a complete surprise. As usual.
Why save? Because I'm having a hard time just selling the portfolio I've spent years optimizing (why dump it when it's still good value?). In that regard I envy those who own "faceless" funds---they can just be sold at will.
DW jumped through the hoops for a well-known tax preparation company and is now working part-time practically full time doing returns along with going to school for the rest of the time.
Apparently there's a significant subculture of taxpreparers who work four months of the year and then do nothing for the rest of the year. This might be an option.
It looks like we'll stay in the midwest for at least a year or more. DW is finishing school + starting work. My work is still great. Hence the house-buying desires.
In that regard, irrationally, we'd like to buy something fancy on one of the metra lines, but rationally it's probably better to buy something boring on one of the L (subway) lines. The metra runs on a strict time-schedule while the L runs all the time. The commute times are actually similar. So far we're looking mostly at Evanston, IL, for those who may care.


George the original one
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Post by George the original one »

> There's a significant seasonal component to

> RE prices where it's best to buy during winter.
In general this is true. The corollary is that the nicest properties are only on the market during the peak price season of late spring/early summer. Usually not a problem if you're shopping for a bargain property...


J_
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Post by J_ »

Interestings plans Jacob.

For one time be not so rational and buy a fancy home, and not a boring one!

Although you predict an economic winter, there will come sometime a summer again. And then if you want to sell again the fancy one will win.

Evanston is close enough tp the big lake if you want start sailing again, you will undoubtly look for a place where you can reach a harbour by foot or bicycle!

And: be flexible if you find a good house, don't wait! For me it seems that it is easier to find good stocks again than to find a just fitting house.

Good luck for you and DW.


tylerrr
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Post by tylerrr »

Jacob, why do you want a house? It seems really out of character for the author of ERE. I'm not criticizing, I'm just saying I wouldn't want to take care of so much square feet when it's just me and a spouse.
I'm assuming you don't want a large house, which means more expense and upkeep....
I guess you are probably viewing it as an investment that you can eventually sell. But as far as practicality, I don't like the idea of buying a house unless it's small and buying it in cash......That's just me.


secretwealth
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Post by secretwealth »

@Jacob: I don't know the Chicago market but I say go for it. No other asset class seems as appealing as real estate. Plus, since you're already very exposed to stocks, I think real estate would diversify your income stream. Bear in mind that you are doubly exposed to stocks: in your personal portfolio and in your job. Hedging with some property would be a wise financial move.
As for whether to buy a cheap or expensive house--the appreciation potential is an important consideration. Here in NYC, year-over-year returns on luxury property has significantly outpaced low-end real estate, which has actually fallen in value in all boroughs over the past couple years. Again, I don't know how Chicago is, but if this income disparity/gravity of wealth to the top income earners trend continues, the value of a $500k house will go up much more than the value of a $100k house.


dragoncar
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Post by dragoncar »

I'm surprised you are saving money and "hoping" that the RE market doesn't rebound while you save. I always thought one of the benefits of ERE was that you always had capital to deploy when the right opportunity came along. If you find an extraordinary deal on a house, I hope you can rationally compare the expected return vs. your worst portfolio holding.


jacob
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Post by jacob »

@tylerr - Because it's significantly cheaper. If we bought a house, our combined expenses would drop to under $10k. They might even go under $6k for two people. Also, we're not looking at more than 1000sqft/1-2bd/1bath houses. In addition there are some thing I could do on my own land which I can't do in an apartment. (Renting a house would be too expensive around here.). In particular, I would like to become competent in metal work which means light foundry work and welding. And I would like to grow a garden again.
@secretwealth - Diversifying out of paper is a big part of the reason! Another reason is learning home-repair skills. Capital appreciation is not a big issue. I think it could take many years for the RE market to recover. Also, importantly, housing in Chicago is undervalued compared to renting.
@dragoncar - I technically do have the capital. However, it would trigger some capital gains taxes. In other words, an ordered transition would be preferable to just hitting the sell-button now that the choice is there. I also find that inertia is quite helpful to avoiding investment losses.


KevinW
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Post by KevinW »

Maybe hedge a little against a RE rally by going long on residential REIT futures, or similar?


secretwealth
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Post by secretwealth »

I find the psychological feeling of having a place to live that no one can take away from you much more satisfying than a strong return on paper holdings.


My_Brain_Gets_Itchy
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Post by My_Brain_Gets_Itchy »

I agree with secretwealth 100% on this one.
In many ways, I see ERE as a process of growing/strengthening your autonomy.
However, no matter how autonomous I wanted to try and be when I was renting, a landlord being able to come into my home and have a certain power over me, always seemed to compromise my autonomy.


JohnnyH
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Post by JohnnyH »

These seem close to the area you are looking for:

http://www.williamsauction.com/property ... t-2/334030

http://www.williamsauction.com/property ... 311/334200

https://www.hudsonandmarshall.com/Prope ... 90731.aspx
Luxury property returns during the "recovery" have outperformed, but the risk is higher. There where periods of months were not 1 luxury property sold in entire states post crash... Also, tax risk is higher on desirable or luxury property (I've seen 1000%+ increases during one insane 10 yr appraisal update).
Also, if you're staying long enough to justify the associated costs of opening a mortgage its a good hedge against potentially falling real wages.


tylerrr
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Post by tylerrr »

@Jacob,
o.k. yeah, a house that small I'm sure would be very inexpensive so you can probably buy it outright in cash and even rent it to people in the future if you wanted to....


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