Sunday, November 30, 2008

Baseball cards update

I went to Strictly Singles with my children on Saturday. The guy there is pretty friendly and knowledgeable. He has albums and sells individual cards.

He has o pee chee baseball albums for all of the seasons I'm interested in. I had made a checklist in a spreadsheet and started with 1979. He had a good 1979 collection. In the first half of the set up to #200 I found all but one card, just missing a Bert Blyleven. The kids were getting a bit restless so that was good enough. It does take a little while poring over the pages against the checklist. The quality of the cards he has in this set is very good.

While he was pricing out the baseball cards for me I let the kids pick out some cards for themselves. My older son picked out o pee chee hockey from this season. They have brought back the pink gum now so that's pretty cool. My younger son said he wanted baseball cards on the way to the store; since he has lots of hockey. But when we were there he passed on baseball and picked some world of warcraft cards.

When we got home my younger son helped me to sort the new cards and put them into the album into the proper slots. We enjoyed doing that.

So a good start. The kids said they want to go back to Strictly Singles so I'm glad they are interested in card collecting too. Next time I'll look at 201-374 of OPC 1979 baseball and hopefully I can get most of them.

Wednesday, November 26, 2008

New wiper blades

I picked up some new wiper blades for my car last night. I've needed new wiper blades for a while now, and my safety inspection is coming up so I decided to get it out of the way. It's good to do it now as the bad weather season is started. It's been about two years since I last changed them. I hope these ones can last for a couple of years.

I ended up getting them at the tire and lube express at wal-mart. When you purchase there, they install them for you for free. Sounds good to me. They are a hassle to install if you're not doing it all the time so that's a nice throw in.

I ended up getting two wiper blades that were about $20 each. So if they last two years then $40 for 2 years isn't a bad price. They had cheaper ones there but the better ones don't really cost that much and nicer blades are more likely to last and perform well when the conditions are bad. So it's something you might want to spend a little more on and not get the cheapest option available.

While I was out shopping I was getting something for my nephew who is turning 13. That's pretty much impossible to shop for a teenager. He's a good reader and he likes video games. So it's pretty much cash or gift certificates is all you can do. I went with a chapters gift card. Christmas is looking like straight up cash, or an eb games gift card.

Monday, November 24, 2008

Ground view on Halifax real estate prices

At work some people got talking about houses and prices. They were a little distance away so I didn't feel like walking over to join them. Anyway what's the point; I couldn't bring myself to throw cold water on their views.

They all live in Bedford/Hammonds Plains. One guy has a townhouse, the others have houses I believe. Two of them bought this past summer. The others I believe bought fairly recently, within the last 3-4 years.

The townhouse guy had an interesting opinion. He felt that his home would either hold its current value, or possibly increase in the next year! His reasoning was something like this. A family with an income of $70,000 a year could get approved to buy his home. Thus because it was comparatively lower priced [I'd guess around $200K] it would hold its present value. They all felt any hit in real estate prices will be felt at the $400 K level and above [convenient since their houses are apparently all under that threshold].

It might sound logical when you first listen to it but there are flaws in that reasoning.

A Rising Tide Lifts Every Ship; The Converse is Also True

During the bubble years 2002-2007 every neighbourhood in Halifax benefited. Prices increased in a way detached from growth in wages and the underlying economy everywhere, from the toughest trailer parks to the most exclusive cul de sacs and south end condos.

Thus the price correction will also be applied everywhere. It is impossible for some neigbourhoods to "keep" all of the price appreciation from the bubble years; that would imply that the price increases were justified. If prices are coming down, they are coming down on every street. No area will be spared, just as no area missed out on the wins during the 1994-2008 bull market of continuous uninterrupted price increases.

Price to Rent Ratio

One of my friends just got a townhouse in Clayton Park West. He's saving hundreds of dollars a month renting vs. buying [plus what he would have lost up front with a $25K down payment + thousands in closing costs]. Price to rent ratio demonstrates that Clayton Park West is overpriced. If that's the case then every townhouse in Halifax is overpriced. Maybe more, maybe less overpriced than Clayton Park West, but still overpriced.

A major reason people were buying overpriced when they could have rented was because they felt they could "earn" truckloads of easy money risk free on the house itself appreciating [i.e. a bubble]. With 40 year/ $0 down mortgages now unavailable; people will be making decisions more on present value and cost and unless rents start rising, buying prices have to come down until they are in line with rents.

It's all relative

The people at work felt that the hit would be in the $400K+ price range. However at the stroke
of a pen a $400,000 house can become a $300,000 house. All the seller has to do is lower his price. There are plenty of people in $400K houses today that bought before 2003 or who never refinanced consumer debts onto their mortgage. If they are determined to sell then they can just take a 25% haircut and move on price to $300K and still realize a meaningful gain.

What happens then? Well anyone listing at $300K now has to move on price. Why would anyone buy his full price house at $300K when the buyer can get a formerly $400K house now for $300K. So the present $300K guy has to move on price because his house is only worth 75% of the $400K dude; and the former $400K dude is now willing to sell at $300K. It's all relative and interconnected.

So the $300K guy takes a 20% haircut or whatever to $240K. And so on and so on. So back to $200K townhouse guy. His $200K townhouse price may be based on a detached price within 1 km of his place going for $250K. But if the $250K detached house becomes a $200K detached then nobody would pay the same $200K for his townhouse when they can get a detached house in the same neighbourhood for the same $200K.

Sunday, November 23, 2008

Christmas shopping online at toys 'r us

I have a nephew who lives in Ottawa. He's turning 4 soon and I also wanted to get him something for Christmas.

Last year it wasn't too bad. My parents went to spend Christmas in Ottawa with my sister. So they just took the presents up with them. This year no one is going to Ottawa so I was thinking about how to get the stuff there.

The problem I found out last year is that postage costs a fortune on a parcel. The postage costs nearly as much as the gifts themselves. I was trying to think of how to get something for my nephew without getting killed on the cost of shipping.

Then I had an idea. Get it on the Internet. Shipping is quite reasonable there relative to the cost of items. So I checked out toys 'r us Canada where I had been before. That is a very good site. The site is easy to use. Search works well. Well organized. Very large selection and good prices.

You can just click and narrow it down without having to type any search text. So I selected boy, age 5-7, price up to $20. There were pages and pages of items. Well laid out with pictures and descriptive text and some had customer reviews. Prices tend to be a tick lower online than in the stores.

There was lots of selection and I was able to find about 8 things that looked good in not too long. I just picked two of them. One for the birthday and the other for Christmas. Combined the shipping was only $5. That is great. I just typed in my sister's address for deliver to and it all works great. It will be delivered to her house. It would have cost me over $5 gas money just to drive to toys 'r us if I tried to get something here in Halifax and ship to Ottawa. If you need to buy gifts for someone in a different province then online shopping is probably the best way to do it.

So that went well. I might even do some more local shopping online. It is a very comfortable and pleasant way to shop; free of the crowds and costs and hassles of going to the store.

Wednesday, November 19, 2008

Canada government mortgage purchase

You may have heard the story recently the government of Canada is buying $75 billion in insured mortgages.

In a way that seems strange. After all if the mortgages are insured then what's the worry? It's hard to make sense of what's happening here.

I have a theory on it. The problem is the insurance. Not that they are insured, but the quality of the insurance itself is dubious.

It is a fact that many mortgages in Canada are insured by AIG. You may have heard of AIG, that's the large American insurance company that is insolvent and was nationalized by the US government.

The reason AIG is insolvent [i.e. unable to pay claims] is largely because of financial insurance. That would include mortgage default insurance, bond insurance, CDO insurance, credit default swaps. AIG miscalculated the risks and when these financial objects went bad at an unexpected rate [including an ongoing tidal wave of mortgage foreclosures] then AIG did not have enough reserves set aside to pay out the claims.

So here in Canada any lender holding an AIG insured mortgage is in trouble because they can't count on the insurance being any good when some percentage of the mortgages default. And mortgage defaults in Canada will be increasing steadily for the next while.

If the insurance is no good then the owner of the loan is facing raw exposure to the loss on the defaults. That would force the lenders to reduce the value of those assets if they have unreliable default insurance protection. Such an asset loss could well leave the lenders insolvent or forced to raise capital in an unfavorable market.


I think it works something like this. Suppose I loan Andy $3000 unsecured. In return Andy agrees to pay me $100 a month for 3 years. So far so good. Then as a precaution I purchase insurance on this loan from AIG for say $200. The insurance is good for the remaining unpaid principal up to $3000.

So I can rest easy knowing that the loan is worth at least $3000 on my books because even if Andy defaults AIG will cover me up to $3000.

Now suppose with recent events I'm no longer confident AIG is good for the money if Andy defaults. This is really bad for me. Now I have to worry about Andy defaulting because I will lose the full outstanding amount of payments owed. I have to reduce the book value of the loan to Andy because it is not worth minimum $3000 any more since if Andy defaults I now have to eat the loss, not AIG.

It could cause other problems. Suppose I have made two other such loans. And I used the loans as collateral on a $9000 line of credit for myself [since the loans with the insurance were worth a minimum of $3000 each]. Now I can be in even more trouble if my line of credit holder sees his collateral is impaired he could cut off or call the LOC; and he has to reduce the value of his asset which is now no longer fully secured. So any other debts using these assets as collateral are now also impaired and would need to be written down.


So instead the government of Canada is absorbing the mortages with questionable insurance, and unfortunately quietly eating the losses when the defaults occur. It's too bad really. The truth is the mortgages the government is buying are basically subprime [although it is taboo to use that word in Canada]. AIG or whoever if they had done due diligence would not have insured them. Of course without the insurance the mortgages would not have been approved by the lenders due to the risks.

I suspect a lot of these mortgages are no money down mortgages, 40 year mortgages, mortages where people have refinanced credit card and other consumer debts onto the mortgage [perhaps multiple times], mortgages given to people with questionable credit history.

How bad will the losses be to the taxpayers of Canada on this $75 billion portfolio? That's a good question. 10%, 20%, 50%? Since the door is now open for a deficit the government may just allocate for a large loss (like 35%) on these mortgages this year and pile it onto the deficit we're going to have anyway.

Saturday, November 15, 2008

busy day

Today was a bit more active than usual for a Saturday. I helped a friend move in the morning. He and his girlfriend are getting a place together and they both moved from their own places to the new place. He brought in movers to carry the furniture and other heavy and awkward stuff. I'm not real strong and my back isn't very good so I took the boxes and such. There was a lot of stuff to move. There always is. It's good because he helped me to move in the past so I'm glad I was able to show up today and help him.

Then it was raking leaves in the afternoon. I stopped in between at McDonalds for a double cheeseburger and vanilla milkshake. The milkshake is kind of a moving day tradition going back to around 1998. It was tasty as always, the McDonalds milkshake always is. I should get them more often.

There were many leaves. I got a good start on it and filled a few bags then around 4 PM it started raining so I packed it up and that was that for the day. Hopefully the leaves that are raked won't blow around too much.

I don't usually do this much physical work in a day. I'll probably be tired and sore tomorrow. I'll sleep well tonight I think. I'm just planning to take it easy.

Friday, November 14, 2008

Baseball cards

I got kind of a visitor from the past around a month ago. My younger son found a couple of shoe boxes of old sports cards that had been in storage for a long time.

He got them out and we enjoyed looking at the old cards together. Back when I was young I used to buy baseball, hockey and football cards at the local corner stores and from a dealer downtown called Wilkie's. I would tell my son little stories about some of the players, stuff like "he was really fast", "I didn't like him", "he was a good player", "he later played for the Expos", "he later became an announcer", "he's a coach today". And the old Rickey Henderson "today I am the greatest" story. Stuff like that.

Most of my baseball cards are from the 1979-1983 era. Virtually all of them are o pee chee. There's a very small number of Topps and Fleer that I got at Wilkie's. But OPC was all you could get in the corner stores at that time. Unfortunately my 1978 set [my favorite set from the past] which I remember I had nearly finished at the time seems to be lost to the sands of history. All that remains is 16 cars, most of which are badly damaged.

I did an inventory to see where I'm at and if any of them are close to being able to be finished. This is what I came up with.

1978: have 16 of 242
1979: have 240 of 374 (no doubles)
1980: have 132 of 396 (some doubles)
1981: have 193 of 396 (some doubles)
1982: have 200 of 396 (+ 38 doubles)
1983: have 145 of 396 (some doubles)
1984: have 36 of 396

1982, the summer after grade 7, was about the last time I made a real attempt to finish a baseball card set. Summer of 1983 was the last year I played organized baseball. By the summer after grade 9 [which was the best summer ever] I had other interests and I wasn't into baseball cards any more.

I've decided to try to finish the 1979 and 1982 sets because they are more than half done. I'm going to try for 1978 too because that set has sentimental value. I bought an album with 100 pages and I've got the ones I have sorted and loaded in. There's some pages pretty full 7-9 cards; and some pages pretty sparse 1-4 cards.

The other smaller sets I'll just keep in storage. I got a proper plastic card storage box at wal-mart for $6 to replace the baseball shoe box. Maybe I'll see a deal somewhere someday where I can get a block of quality 1980, 1981 or 1983 cards for a good price 5-10 cents each or less. Then I might think about trying to finish those sets.

Now that the inventory phase is done onto the collecting. I checked out kijij but there wasn't much there for the sets I'm interested in. I might post a WTB ad on kijiji and see if anything comes of that. I checked out a placed called D & M Sportscards in burnside. The guy there was pretty friendly and knowledgeable. He didn't have anything for o pee chee baseball in the years I'm interested in. He did give me the numbers for some people he knows who may have them though. That was nice of him. He also said there's a card show around once a month at the Forum multi purpose centre so I should check that out some time and see what's there. I did buy a Beckett's baseball price guide when I was there for $10. I definitely recommend D & M. Book prices don't look too bad for the series I'm interested in so that's good.

So baseball can be a nice project for the next while if I can make some progress with it or just lose interest in it. See what happens with baseball; after that I can still do football which is a bit simpler, and hockey which is a bit more complicated.

Tuesday, November 11, 2008

Went to the optometrist

Continuing with the health theme, I went to the optometrist yesterday. I hadn't been there in a little over two years.

Their office phoned me around June to set up an appointment. But I put off setting an appointment until last week. There was only about a 1 week wait to get an appointment time. I ended up going slightly before lunch at work. I ended up staying late anyway that day so it evened out anyway.

The appointment went well. I have the same prescription as I've had since 2003. I first got glasses in 1998 I believe.

It seems every time I go there I see a different optometrist. The first time it was a female whose name was on the door. Then last time it was a younger female more recent grad. Then this week it was a man who is a partner there.

He was an interesting fellow, a bit chatty. He likes Apple stock; not because of Mac or iphone but because he thinks they control the modern music industry because they have the only way to get anyone to pay for it. Maybe he's right. He also said he doesn't read the text environment Canada weather forecast on the web but knows how to read the satellite shots to know what's going to happen.

The price came to $83. They don't have the swipe card with Sun Life so I had to pay up front and mail in a benefits claim. I should get a good bit of it back if I read the benefits policy right. I ended up using credit card because their circa 1996 debit card machine wouldn't read my PC financial card. I've never had that card fail to swipe before. Still I'll have to order a new card if it fails to swipe again somewhere.

I don't mind the glasses, but still I would sure like to get laser surgery some day.

Monday, November 10, 2008

Circuit city bankrupt

You probably heard by now that Circuit city is going bankrupt. Shortly after the main announcement it came out that Circuit City Canada is bankrupt too.

That's a bit interesting to me. There's a circuit city that's pretty close to where I live. So if they are closing out then there might be some good electronics deals. If the price is right then it may be worth it. I was actually thinking of getting some of these electronics in the next few months. If I can get a distress price from a dying circuit city then I might get some of it sooner rather than later.

  • digital camera
  • HD TV
  • 22 inch flat panel monitor
  • new computer
I'll keep an eye on the nearby circuit city and see what kind of deals they are offering. And such is recession. When shops close up it can create good buying opportunities.

Sunday, November 09, 2008

Good housing move

I ran into a friend at Wal-mart last Friday. He said that he and his girlfriend are going to start living together. They are getting a townhouse in Clayton Park West. That's good for him. He's a good guy and his girlfriend is nice. So it looks like a positive change.

He also said that they will be renting the house. I was glad and relieved to hear that. He said he checked the local market and comparable places are currently listing for around $250 thousand. Then he checked an online mortgage calculator and he determined he was saving several hundred dollars a month by renting over what a 30 year mortgage would have cost him. In addition he saves paying the property tax and his insurance will be much lower as he only has to insure his possessions and the landlord has to absorb the insurance on the house itself. Plus if he bought he would be out of pocket $25 thousand down payment plus several thousand closing costs.

The fact that mortgage payments are higher than market rent demonstrates that houses in that neighbourhood are overpriced. In fact all of Halifax is overpriced so markdowns will be coming soon to a street near you. The arrived recession; plus the end of 40 year, no money down, cashback mortgages pretty much ensures that the long overdue price correction will now happen.

It would be crazy for him to buy a house right now. Prices could easily fall 30% in the next 30 months. Let the landlord face that risk and eat the loss if it occurs.

So he and his girlfriend are off to a good start. They get all of the benefits of being in a house; with none of the downside costs and risk. They have avoided making a potentially disastrous financial mistake.

Thursday, November 06, 2008

Went to the dentist

I went to the dentist today. I wasn't really planning to at the start of this week. When I called for an appointment last week the receptionist said it would not be until February. But I went on the cancellation list and it turns out I got to go today.

It's a bit further drive than it was where I used to work, but not too bad. I arrived a bit earlier this morning so I could finish up around the usual time.

The visit was pretty good. I hadn't been to the dentist in around 9 months. She didn't find any problems so that's good news.

Usually in the past I just got the dentist receptionist to call me at work after around 6 months to set up a new appointment. But because of the long wait time when I called in this week I decided to pre book my next visit for 6 months, which corresponds to my benefit coverage.

The coverage is a bit different with my new employer. It's all electronic now so no more of the standard dental claim forms. You just hand over your plan card and they know who you are and how much coverage you have.

One thing which is different is I had to pay out of pocket at the dentist for the first time since I've been in high tech [like 12 years]. My coverage is 90% so I had to spend $13 on my own. But don't cry for me Argentina. With RIM the employee pays a lower share on the health insurance premiums than it was at SupportSoft. So paying around $13 out of pocket twice a year is much better than having 100% coverage at the dentist office and having higher deductions taken out of every paycheque.

Wednesday, November 05, 2008

President's Choice carry trade

I noticed something interesting over on the President's Choice financial site. They are offering a 0.97% interest rate for 6 months on balance transfers on PC MasterCard. At the same time they are offering 3.05% savings account interest.

That means it should be possible to do a carry trade on PC financial; since you can borrow money at a low interest rate and then invest it at a higher rate and pocket the difference. I suppose it's probably more of an arbitrage than a carry trade but I like the sound of the term carry trade better so I'll call it that.

You could do it like this. Use a different credit card to fund a deposit (say $1,000) to a 3.05% PC savings account. Most credit cards have a "twin cheque" feature where you can write a standard style cheque as a cash advance on your card. This advance usually has a fee of around $7.

Then do a balance transfer from PC MasterCard to the original credit card of $1,007 to pay it off.

Then wait 5 months, making the minimum payment on the PC MasterCard. Be careful not to hit the 6 month point where the 0.97% interest expires on the PC MasterCard introductory rate.

After 5 months empty the PC savings account and use it to pay off the PC MasterCard. This is about where you would be after 5 months.

At 0.97% interest you would pay around $4.07 interest on the $1,007 PC MC balance for a total of $1,011.07.

At 3.05% interest you would earn around $12.71 interest on the $1,000 savings account balance for a total of $1,012.71.

So when you pay off the PC MasterCard you would show a small profit of $1.64.

Now that's not very good because the $7 transaction cost wipes out most of the profit. With increased leverage however it becomes free and easy money.

For example on a $5,000 carry trade with the fixed $7 twin cheque cost you would have an expected profit of around $36.31. On a $10,000 carry trade you could make about $79.64 on the interest rate difference.

So if you have a good credit rating and credit available on a couple of cards then you can take some easy money off the banks. ha ha. I'm not quite there yet myself but being able to do this type of thing is this dream of mine. Perhaps I'll get there someday.

too funny

Check out this spoof on the housing bubble and contemporary real estate.

Another gem from HousingPanic. I'm already in HP withdrawal and looking for a new site so I can still get the truth about what's going on. I like Denninger so far.

Saturday, November 01, 2008

Yahoo domains bait and switch

I got an unpleasant e-mail a little while back from Yahoo domains. I bought a domain name with Yahoo last year for a site that my son runs using Blogger.

When I got it last year the price was $9.95 a year. That's a pretty good price and Yahoo was good to work with so it seemed like a good deal. However a little while ago Yahoo sends me an e-mail informing me that the yearly renewal price on the domain is now $34.95 per year going forward.

Say what? A 250% price increase in 1 year?? I find that hard to believe. It could have been worse I guess. Over on a JoS thread it turned out that some earlier people weren't even told until after they had been billed about the obscene price increase.

If Yahoo had said up front the original $9.95 was just an introductory teaser price and the real price was $34.95 I never would have bought from them in the first place. But they didn't say that. I have a printout of my original bill where Yahoo said the next years price would be $9.95. It's pretty disappointing Yahoo would use tactics like this. This is something you would expect from the likes of scumbag MBNA, not Yahoo. I noticed Yahoo laid off over 1000 people recently, no surprise there.

I expect Yahoo will make money on this deal of more than tripling the price. Possibly at most half the existing customers will cancel. Many customers won't notice or care about the new price; or lack the technical ability to switch; or have other stuff like hosting and web sites etc. bundled in so it is more intertwined and they feel they are stuck with it. Plus new customers who for whatever reason would have bought at $34.95 anyway will still come in. And with fewer customers there would be less DNS servers to maintain, less support calls, less bandwidth to purchase. That plays in well with the layoffs.

Still trust, reputation, integrity, and confidence can take a long time to build up. But they can be torn down pretty quickly. Historically if you did a word association on the terms "Internet" and "trust" together I think a lot of the responses would include google, yahoo, ebay, amazon, paypal. But going forward I would be hesitant to do business with Yahoo since they have demonstrated I may not be able to trust them. That's a real effect but not so easy to assign a cost to in the financials.

So I canceled the Yahoo service and transferred the domain over to GoDaddy. They are easy to work with. A guy I used to work with said he was with GoDaddy and they were good. They even had a step by step PDF document on their site explaining how to switch your domain from Yahoo - I guess a lot of other people are ditching Yahoo too, no surprise. The price was only around $10 CDN a year after the exchange rate conversion. They take PayPal so I didn't even have to give over any credit card information.

The GoDaddy site is very well designed and easy to use. If you have the technical ability to set up a domain with Yahoo in the first place then you are capable of switching it to GoDaddy. I have all positive to say about GoDaddy so far.