Robert J. Abalos Real Estate Report

Tom Vu: Get Rich Quick Real Estate Millionaire, Late Night TV Infomercial Pioneer, and...Poker Player???

robertjabalos@gmail.com (Robert J. Abalos) — Tue, 27 Jul 2010 19:02:00 +0000

One of the earliest get-rich-quick real estate gurus to understand the power of the late night TV infomercial was Tom Vu. By the way, his real name is Tuan "Tommy" Vu.

You just could not escape his sales pitches for creative real estate courses in the 1980s and 1990s. Not only were they terrible, they were funny. Here is one captured on YouTube. In broken English, this Vietnamese-American waiter-turned-real estate "millionaire" surrounded himself with mansions, yachts, helicopters, and especially lots and lots of big breasted women in bikinis pitching his foreclosure and motivated seller home study courses and seminars.

I used to watch the ads just to marvel at his audacity, especially when he would insult his audience calling them "losers" for not ordering his $1,000 products.

Well, Tom Vu has long departed the real estate world. The answer why is obvious. The sun does set on all creative real estate gurus and their empires.

Today, Tom Vu is, drumroll please, a professional poker player in Las Vegas. Here is his page at the World Series of Poker website. Apparently he's a very good poker player and has won millions of dollars at the tables.

He now lives in Las Vegas and you can find him playing poker at the casinos downtown most nights.

In just another trek down creative real estate guru memory lane, remembering the phonies of the past and the con artists of the present. At least Tom Vu didn't wind up in Federal prison like William McCorkle or sued into bankruptcy like Joseph Kaiser. That's one good thing I can say about him.

Robert J. Abalos, Esq.

Treasury Secretary Geithner Says Let Bush Era Tax Cuts Expire: Exactly Who Buys Real Estate Anyway?

robertjabalos@gmail.com (Robert J. Abalos) — Mon, 26 Jul 2010 16:22:00 +0000

U.S. Treasury Secretary Timothy Geithner made the Obama Administration's case yesterday for letting the Bush-era tax cuts on the "rich" (actually those making over $200,000 per year) expire in the name of fiscal discipline.

Coming from a guy who has a history of not paying income taxes this argument was laughable, almost surreal.

Geithner, probably the most inept Treasury secretary in American history, is about as convincing on the subject of taxes as Tiger Woods preaching on the virtues of marital fidelity.

Forget about the macroeconomic implications of hitting people, LOTS OF THEM, with serious tax increases in the middle of a recession. Not exactly stimulative, is it?

Let's deal just with the implications for real estate. Who exactly buys rental properties and commercial real estate? With the industry battered, bleeding, and still suffering, does real estate truly need another serious financial hit?

So who exactly who can buy all those surplus rental properties flooding the real estate markets? Single mothers working at Wal-Mart? UPS truck drivers? What about baristas at Starbucks? The guy who makes sandwiches at Subways?

It's the upper middle class and the rich, silly. $200,000 a year isn't exactly rich but these people normally have surplus capital to invest, in of all things, real estate.

Instead of making a mortgage payment on a new rental property held for retirement, these people can now just send the same amount of money to Mr. Geithner so he can make interest payments to the Chinese government on all those bonds he sold them to finance the bloated and growing Federal deficit.

Geithner needs to be fired. NOW. This fool has never had a job in the private sector by his own admission and his bizarre ideas and incomprehensible answers to the most serious economic problems of the day prove this daily, unfortunately for us.

Robert J. Abalos, Esq.

Continuity Programs are the Latest Get Rich Quick Guru Trick: Ron LeGrand's New Course as an Example

robertjabalos@gmail.com (Robert J. Abalos) — Sun, 25 Jul 2010 18:15:00 +0000

Late night TV and the Internet are once again filled with real estate get-rich-quick authors pitching their latest "secrets" to millions of dollars and investment success.

Only this time they are recognizing the obvious. Their target market of victims which are lower middle class paycheck-to-paycheck workers don't have $495 or $1,995 to spend on some ridiculous home study course. The days of wine and roses are over, economically speaking, for now.

Instead, they pitch what the Federal Trade Commission calls "continuity programs" on its own website. Here is the FTC warning and description for your reference.

How these programs work is simple.

You buy some small inexpensive item, like a book or CD, and give the seller your credit card information. The amount doesn't matter, $9.95, $19.95, whatever, even one dollar will do.

AUTOMATICALLY you are enrolled in some sort of "club" or "society" or "program" where you are AUTOMATICALLY billed money every single money UNLESS YOU CALL TO CANCEL.

These amounts can range from $29.95 to $69.95 or even more.

You see the scam?

The original purchase is a loss leader designed to get your credit card billing information and hook you on the program. The seller often loses money on this sale but makes for it big time over the next few months.

To see a classic continuity program in action take creative real estate guru Ron LeGrand's latest home study course offering. Here is a link for your reference.

LeGrand, who has been selling get-rich-quick programs since dinosaurs roamed the Earth, has the continuity pitch down just right.

He offers tons of stuff he values in the "thousands" of dollars for just $1.

Yes, those of you who believe you can truly get something for nothing would love this offer.

But wait, in the fine print of the offer at the bottom of the page, after you scroll through thousands of words of sales copy, you find the actual terms of the purchase.

By agreeing to pay $1 for his new wholesaling home study course and all those freebies, you also agree to join his "Gold Club" and pay $59 a month (AND EVERY MONTH) until you cancel.

Also notice that your first month's membership is charged to your card when you make your purchase. So all that stuff that is pitched for just $1 actually costs you $60.

I will give LeGrand credit for making the sales disclosures visible at the end of the offer. Normally you need an electron microscope to see the fine print.

But the net effect is the same. $59 a month, every month, until cancellation. And if you think canceling is easy, just try.

This scam is popping up everywhere from online real estate courses from "universities" without accreditation to newsletter subscriptions to, just like in LeGrand's case, club and society memberships.

PEOPLE WAKE UP!

You can't buy the secrets of instant unlimited wealth from these characters unless you want to make a fortune running continuity programs like they do.

Robert J. Abalos, Esq.

The American Middle Class is Shrinking and so is the Market for Your Rental Properties

robertjabalos@gmail.com (Robert J. Abalos) — Sat, 24 Jul 2010 18:20:00 +0000

The statistics overwhelmingly prove that the American middle class is shrinking.

Wages have fallen. Debt has risen. Equity has collapsed. What happened to all that real estate equity, all those 401(k)s, and even the income off bonds?

The rich have gotten richer. The poor have gotten richer too. But the middle class, that huge bulge of people in the middle that propels the entire U.S. economy, has gotten smaller and is slowly disintegrating.

This simple fact has profound implications for the future of the United States. And for any real estate development venture or project based on selling to the middle class.

Suburban middle class development is dying. The old school idea of building subdivisions in within an hour's drive a major city is becoming an anachronism. It just does not work any longer. The "Drive Until You Qualify" homebuyer is overburdened in so many ways they are becoming an endangered species.

I meet many real estate investors all the time who are basing their retirement plans on the ownership of "bread and butter" middle class housing, especially single family homes. I'll rent them out and let the tenants pay off the mortgages, or so the thinking goes. Then I'll refinance or sell them at age 65.

All I ask is who will buy them in 2020, 2025, 2030? How will they buy them? And why?

Ignoring the macroeconomic trend that your target market is disappearing is inviting disaster.

Robert J. Abalos, Esq.

Congress Spends $604,000 on Bottled Water: Interest Rates are Headed Higher, MUCH MUCH MUCH Higher

robertjabalos@gmail.com (Robert J. Abalos) — Fri, 23 Jul 2010 22:51:00 +0000

Your honorable servants in Washington DC are really good at doing three things:

1. Borrowing lots of money from the Chinese government by ringing up massive Federal deficits. This fiscal year so far (with three months to go) another $1.1 trillion has been added to the U.S. deficit.

2. Passing pointless laws that no one wants, no one can understand, and no one can follow. Want examples? Start with the Internal Revenue Code, ObamaCare, and the new financial reform law which is nothing but a 2,300 page description of many new administrative agencies and their rule making authorities to come.

3. And, of course, spending lots of money on themselves, treating each member of Congress like a Renaissance prince straight out of the House of Medici. The idea of asking American taxpayers, many of them living paycheck-to-paycheck, to pay for the Hollywood lifestyles of Congressman is beyond reason.

The latest example of #3 above comes from an examination of the House Expenditure Report Database where we learn such interesting tidbits as Congress last year spent $604,000 on bottled water and millions of dollars on catered lunches, grocery shopping trips, and bar tabs including at one of my favorite hotels in DC, the Hyatt Regency on Capitol Hill.

Under normal circumstances, such actions would be despicable.

When 18% of all Americans are unemployed and fighting for financial survival and the nation is broke from trillions of wasteful spending, such largess is criminal.

But, of course, it's not just $152 tabs at Quiznos that are killing the country. Mr. Obama's new budget suggests spending $161 million for the National Endowment for the Arts, a $5 million increase over last year.

Isn't it nice when the nation is closing prisons and public parks, delaying necessary road projects, and eliminating the manned space program all for budgetary reasons we can spend more money on art that no one wants to see or buy?

INTEREST RATES ARE HEADED INTO DOUBLE DIGITS OVER THE NEXT FEW YEARS.

There is no check on runaway Federal spending. NONE. The only choice for the Fed is to monetize the debt even if Congress radically raises taxes. Interest rates are going to skyrocket.

If I had to guess by 2012 or 2013 we are looking at 10%+ mortgage interest rates, if you can get one under Mr. Obama's new financial reform rules, that is.

Robert J. Abalos, Esq.

UPDATE: Representative Charles Rangel Charged with Ethics Violations: Rent Control Apartments in Manhattan for a Congressman Living in DC?

robertjabalos@gmail.com (Robert J. Abalos) — Thu, 22 Jul 2010 22:22:00 +0000

U.S. Representative Charles Rangel, once one of the powerful men in Washington, was today charged with multiple ethics violations by the House Ethics Committee.

I wrote about Rangel's problems in this blog on December 23, 2009.

One of the ethics violations centers around rent stabilized apartments Rangel controlled in New York City. The program is to help people maintain their "primary residence" through rent assistance.

Ask yourself how a Congressman who works and lives in DC can have FOUR "primary" residences in New York at the same time. Such are the abuses of rent control and why the idea, which never made sense, needs to go finally go away.

Rangel served his country honorably during the Korean War and for forty years in the House. It is a shame to see a magnificent career like his end this way over something so petty.

Robert J. Abalos, Esq.

Another Update on PennyMac: I'm Still Right

robertjabalos@gmail.com (Robert J. Abalos) — Thu, 22 Jul 2010 18:42:00 +0000

I have been following the continuing saga of PennyMac Mortgage Investment Trust (ticker "PMT") since its IPO in July 2009 in this blog.

Here is my original July 29, 2009 post when I told readers the $20 per share offering price was too high.

Here is my update on December 28, 2009 when I said that the price of the stock, then $17.34 per share was still too high.

Well, today I'm still right. PMT is trading at $16.34 per share this very moment and has never reached its $20 offering price. IPO investors have been underwater since Day #1.

PMT is now profitable, reporting seven cents per share in the first quarter of 2010. This is excellent news for a good company with great people behind it. But the sector will get hit by rising interest rates and a new recession in early 2010.

I like PMT. I said so a year ago. Just not at this price. By any measure the valuation is rich starting with its negative price earnings multiple. PennyMac has a trailing P/E of -$.27.

I'll check back again in the future. Like I said, great sector, great people, great company, just too expensive.

Robert J. Abalos, Esq.

Obama Financial Reform Law Will Drive Down Home Prices and Raise Interest Rates

robertjabalos@gmail.com (Robert J. Abalos) — Thu, 22 Jul 2010 01:31:00 +0000

If you thought getting a mortgage was tough these days, try again in few months once Mr. Obama's financial reform bill signed today into law becomes effective.

Think what would happen in the Post Office ran your local mortgage broker. That's your future when you go to buy your next home.

Here is one excellent analysis of what will happen under the new financial reform law, including higher interest rates on mortgages and much more paperwork to get them (including having to prove to the U.S. government and not just your bank you can afford the monthly payments).

I'll go further. A lower number of buyers mean home prices must fall.

Fewer borrowers will qualify under the new rules. Banks will write fewer of these loans because, let's face it, why bother? They are now required under this new law to hold many more of them in their portfolios which sounds like a good idea but ask yourself this question.

Given the reckless government spending, the massive $1 trillion Federal deficits, the certainty of higher interest rates, the likelihood of a double dip recession coming early in 2011, and all the monetary mismanagement lately by the Fed, would you loan someone $250,000 on a 30-year note at just 4.5%?

This is an absurd risk and bankers are not stupid. Many will exit this line of work if they cannot readily sell the notes to investors to spread the risk.

What the feeble U.S. economy did not need was yet more government regulation and paperwork.

It got TONS and MILES of it in spades today.

Robert J. Abalos, Esq.

Five Retarded Get Rich Quick Schemes (and Guess What Scam is Number One)

robertjabalos@gmail.com (Robert J. Abalos) — Tue, 20 Jul 2010 19:24:00 +0000

The "Get Rich Quick in Real Estate" schemes you see advertised all over the Interent and late night TV are just that. The promoters and sellers of these home study courses, seminars, and mentoring programs GET RICH QUICK.

The buyers of these programs rarely make a dime.

People fall for these creative real estate con artists for the same reason people get burned by Nigerian phishing scams or any criminal confidence game. Desperate people need money quick and that is what these Internet scammers promise, but of course, never deliver.

I read with great interest and humor this analysis by Cracked.com of the "Five Retarded Get Rich Quick Scams" that people STILL fall for. And this is the point. All my warnings on this website, the warnings of the Federal Trade Commission, and virtually every other consumer protection organization, and just plain common sense cannot save someone from their own greed.

The target market for these get-rich-quick con artists are lower middle class people without any experience in real estate, so-called "newbies" in the trade. The single mother with two kids working at Wal-Mart because her ex-husband is not paying child support is willing to pay $495 for a home study course on flipping properties or short sales because she has no other way out of her predicament. She's willing to spend a week's wages on a chance at financial security because some real estate "millionaire investor" is willing to share "the secrets" of building instant wealth through rental properties.

But buyers of these courses and seminars quickly learn that the moment they open their new purchase there are no magic secrets inside. All they will get from their new real estate millionaire mentors is a series of sales pitches to buy more and newer courses.

It is called "upselling" in the trade. And if you buy from these gurus they place you on a "sucker's list" and share your name so other gurus can also pluck you like a chicken.

Go to any of the seminars where these products are sold and you will see the sheep being led to slaughter, lining up with false enthusiasm to buy a ticket to Financial Paradise. It's sad, pathetic, but all too understandable.

The Cracked.com analysis of RETARDED get rich quick schemes has it perfectly right. John Beck, currently being sued by the FTC for $90 million is just one example of many of these gurus that knows the buyers of these programs are losers the moment they reach for their VISA cards.

But notice which Get Rich Quick scam Cracked.com regarded as being the most retarded, Number One on the scale of dumb to dumber.

Robert J. Abalos, Esq.

The Strange Adventure of Michael R. Mastro

robertjabalos@gmail.com (Robert J. Abalos) — Mon, 19 Jul 2010 16:35:00 +0000

Real estate investor Michael R. Mastro has been a living legend in Seattle for generations. Hugely successful as a developer and rehabber for more than forty years, he had been part of downtown Seattle for as long as anyone can remember.

Then, in 2009, due to excessive leverage and the collapse of the real estate market, he was forced to file for bankruptcy.

But this is where the interesting story really just begins....

Here is an excellent piece from the Seattle Times on how to live like a King when you supposedly ain't got a dime. Much can be learned by real estate investors by studying how Mastro built his empire and why it collapsed.

I once met Mr. Mastro years ago briefly at a charity event. He was as charming as you would expect from anyone who could wheel and deal in large commercial properties for decades.

But now, Seattle is abuzz over the story of the man who fell from grace but somehow still lives a lifestyle fueled by nothing but grace.

Robert J. Abalos, Esq.

Bite of Seattle and a Great Lost Marketing Opportunity

robertjabalos@gmail.com (Robert J. Abalos) — Sun, 18 Jul 2010 22:00:00 +0000

The Bite of Seattle is an annual three day celebration held at the location of the old 1962 World's Fair in downtown Seattle, literally at the base of the Space Needle.

It's all about FOOD, lots of food, and free music and hundreds of thousands of people having fun. What makes this event all the more impressive is that it is free. No admission fees are charged of any kind.

I was there yesterday on what is probably the most perfect day in the history of always rainy and gloomy Seattle. Sunny, cool, weather just about as ideal as any major public event could expect.

From the photo, you can learn two key points. How close the stages are to the iconic Space Needle and what a poor photographer I am.

Anyway, what was relevant for me while I wandered the endless aisles of Junk Food Heaven (Funnel Cakes, yummy!) and saw the few arts and craft vendors selling their homemade wares what a lost opportunity this event is for real estate investors and investment based companies. There were some larger companies advertising through display booths, like GEICO and Verizon and especially the event sponsor Comcast, but not a single real estate firm of any kind.

No sales companies like Century 21, John L. Scott, or Windermere, all huge residential brokers in the Seattle area.

No rental companies like Equity Residential or AIV pushing apartment rentals.

No contractors or home repair companies like Roto-Rooter or Terminix Pest Control.

Home Depot Installation, a vinyl siding company, and a small hardware store chain are sponsors of the Bite so the question is raised. Why not more real estate? Why doesn't one single real estate investor market their "I BUY HOMES" message there? Who wouldn't want a captive audience of 100,000 people every day walking by their booth?

Every single one of the hundreds of thousands of people who visit "The Bite" have one thing in common besides the love of music and junk food. They all live somewhere. Either they rent or own their own home.

What a wasted marketing opportunity. The Bite could have used the revenue. The crowd could have used some practical real estate advice and information. And we all, in the end, could have enjoyed a diversion from all those French Fries, ice cream, gyros, and kebobs that don't exactly sit well in the stomach the next day.

Robert J. Abalos, Esq.

New Investing in Land Website Debuts September 1, 2010

robertjabalos@gmail.com (Robert J. Abalos) — Sat, 17 Jul 2010 15:19:00 +0000

After many delays the new Investing in Land website will debut on September 1, 2010 along with a new edition of my flagship publication, Investing in Land, the most comprehensive guide for land investors and developers on the purchase, financing, subdivision, and development of land ever written.

Over the next few weeks I am going to be giving you glimpses of what is behind this unique project. But I can assure you it is unlike any real estate website you have ever seen.

From 2001-2007 I ran my original Investing in Land site and if I had to summarize my overall message it would have been this:

"Real estate prices are too high. Sell if you can. Don't buy. Too risky"

I can honestly say now the message of the new site is this:

"Land prices have fallen hard and now is the time to start buying. Attractive valuations. Bargains galore."

I await the release of my new book with much anticipation. August will be a long month.

If you have never written a book you can't experience the feeling of writing one and then waiting for its release. It's like being a pregnant woman who has been carrying a child for 36 months. Enough is enough. It's time to get it out!!

Robert J. Abalos, Esq.

Bridget Fonda Wouldn't Want to Live There Anymore

robertjabalos@gmail.com (Robert J. Abalos) — Thu, 15 Jul 2010 20:13:00 +0000

One of the reasons the world fell in love with the city of Seattle in the early 1990s was the grunge rock movement. Nirvana, Soundgarden, Alice in Chains. Kurt Cobain and Pearl Jam.

The other reasons were the films SLEEPLESS IN SEATTLE and director Cameron Crowe's brilliant Valentine's Day card to his native city, SINGLES. This 1992 film shot on location in Seattle starred Bridget Fonda, Matt Dillon, Campbell Scott, and Kyra Sedgwick and centered around life in an apartment building where all the tenants knew each other and were desperately searching for love.

Well, the apartment building featured in the film is located at 1820 East Thomas Street in Seattle in the Capitol Hill area of the city. I decided to visit the location after recently seeing the film again (for about the tenth time!) and report what I found.

Bridget Fonda would no longer want to live there.

The crisp and neatly manicured apartment building in the film is now poorly maintained, rundown, and seedy. There are tall weeds and debris everywhere.

The building is far smaller than the film's lens makes it appear. You get an almost claustrophobic feeling spending time in the small courtyard which, by the way, never had a fountain like the film portrays. It was added just for the movie.

What is ironic is that this building is in a far nicer neighborhood today than it was in 1992. Back in Bridget's day this area, east of 15th Avenue on Capitol Hill, was extremely gritty and rundown to put it mildly. There has been extensive gentrification over the last ten years with many of the old rooming houses replaced by modern condos and townhouses. For those who remember the grunge era, for example, the home called "The Rat House" occupied by murdered singer Mia Zapata and her band, The Gits, was just four blocks away from Bridget's place. The band gave this distinctive name to their own home because the owner of the building claimed that by eating the rats that lived in the house he scared the other live ones away. He proved to them who was boss when he made a soup from their corpses.

Understand what kind of neighborhood this was back when SINGLES was filmed?

I spoke to a tenant at the property, a young girl who was four years old when the movie was released. She did not know the film or the building's place in movie history but she was excited to learn the facts about her apartment. The opportunity to market these apartments through the film have been completely lost by the owners.

I have posted a bunch of photographs I took of the building on my Picasa website here. You can see for yourself what the building looked like then by watching the movie (available on Netflix and everywhere) and what it looks like now.

After analyzing thousands of rental properties over the last thirty years I can tell you this without any doubt.

This property needs a good resident manager. None lives on site. There is no sign even telling prospective tenants who manages the building or how to contact the owners in the event of trouble. The tree growing on the street on the right side of the building blocks the iconic view most people remember from the film and needs to be pruned. There is rust, peeling paint, and tall weeds everywhere all can be.

SINGLES is one of those great undiscovered gems of a film and that's probably what Cameron Crowe, who went on to direct the Oscar-winning film, ALMOST FAMOUS, intended when he made it. Simple characters in a simple story. You can't watch this film without wanting to live in Seattle because the city itself becomes a leading character in the film, as naive, proud, fun, and unique as Bridget, Matt, or Kyra are on screen.

Unfortunately the Seattle of the film is long gone, not better, but different, and my visit to 1820 East Thomas Street on Capitol Hill yesterday proves it.

Robert J. Abalos, Esq.

Fed Considers Even More Monetary Stimulus Due to Declining Economy

robertjabalos@gmail.com (Robert J. Abalos) — Wed, 14 Jul 2010 18:47:00 +0000

Forget about the fiscal stimulus problems I wrote about just two hours ago in this blog? Well here is yet another daily reminder the lunatics in DC have taken over the asylum.

Fed Chairman "Helicopter" Ben Bernanke is seriously considering even more monetary stimulus due to the obviously deteriorating economic situation in the United States which is becoming more and more obvious by the day and, coincidently, I have been forecasting in this blog for nearly a year.

I am reminded here of those old school doctors who believed the way to heal a patient was to bleed the illness out of him.

Yes, these techniques killed George Washington and many others. But did such nonsense ever really make sense except to the most simplistic minds? If you can figure out how bleeding a person can make them healthy there is hope for you. A job at the Fed is waiting.

Does any rational person believe the Federal government alone can stimulate a moribund and declining $14.3 trillion economy with yet another round of stimulus when the previous THREE rounds have not worked?

What is the definition of insanity? Doing the same thing over and over again and expecting a different result? And what type of additional stimulus do Ben and Company have in mind? Interest rates are already at zero percent and the Fed's balance sheet is a mess.

Just hours after I'm writing about my concerns for inflation and skyrocketing interest rates Bernanke makes my original post today seem tame.

Madness. Sheer madness.

Robert J. Abalos, Esq.

Federal Budget Deficit $1 Trillion So Far This Year: Think About Interest Rates

robertjabalos@gmail.com (Robert J. Abalos) — Wed, 14 Jul 2010 15:30:00 +0000

Your public servants in Washington so far this fiscal year have spent more than $1 trillion than they took in though taxes and fees.

$2.6 trillion spent. $1.6 trillion in taxes. You do the math.

And there is still three months to go on the fiscal year. There is much more spending to do.

For the record, Congress spent more than $1.1 trillion last year they didn't have.

We are now in the 21st straight month of deficit spending.

Um, is anyone thinking interest rates and inflation? The banks are getting a great deal borrowing at zero percent interest and then buying Treasuries at 3%. Nice money when you can get it. But it is INEVITABLE that when interest rise---and they sure can't fall any lower---they are going to have to rise SHARPLY to squeeze out all this outlandish fiscal stimulation or inflation will literally explode. Think Fed policy in the early 1980s, only this time on steroids.

Every real estate market I am studying is getting more unhealthy and the extreme tight money and skyrocketing interest rates that are coming over the next five or so years will only make matters worse.

Congress needs to grow up and stop acting like a college freshman who got their first VISA card. I would say stop spending like a drunken sailor but that is an insult to drunken sailors everywhere.

Robert J. Abalos, Esq.

MUST READ BOOK: Value Investing by James Montier

robertjabalos@gmail.com (Robert J. Abalos) — Tue, 13 Jul 2010 20:34:00 +0000

Everyone knows I am a classic Graham and Dodd value investor who (has) worshipped at the altar of Warren Buffett for many years.

THE INTELLIGENT INVESTOR by Benjamin Graham has been the definitive text (along with his massive tome, SECURITY ANALYSIS) on value investing techniques for decades.

Now it appears we have another book to add to this collection.

VALUE INVESTING by author James Montier is a stunningly comprehensive analysis of why value investing trumps all other forms of investment. This is no superficial analysis of the subject but a highly detailed and statistical review of how buying on the cheap is the only method of securing long-term profits for investors.

Lots of graphs, lots of charts, lots of numbers, and most of all, lots of analysis proving what Graham, Buffett, and I have been telling investors for years.

Buy low, sell higher.

NOT buy high, sell higher. This is momentum investing and it does not work over time.

To get you started before you buy this excellent book, here is an interview with James Montier where he explains some of his ideas.

I cannot recommend this book more highly. BRILLIANT on every level. Every page is bristling with critical advice for investors. This book is simply stunning to read for its depth and practical advice.

For the record, I do not know the author and have no financial stake in the sale of this book.

Robert J. Abalos, Esq.

New Federal Trade Commission Warning on Real Estate Investment Seminars

robertjabalos@gmail.com (Robert J. Abalos) — Sun, 11 Jul 2010 19:11:00 +0000

The Federal Trade Commission has been warning consumers for years about get-rich-quick investment seminars, especially the creative real estate variety you see advertised online and through late night TV infomercials.

Here is one of their classic warnings. The FTC's advice is excellent and virtually no "Make a Million in Real Estate" home study course or seminar offering could pass their official test.

The FTC has just published a new warning, a more visual one that can be printed as a PDF document.

The gurus who sell these investment seminars need to know that a MAJOR law enforcement crackdown in this area is coming. I am in frequent touch with FTC investigators and I cannot wait to announce some new prosecutions on this front.

The bottom line is simple.

NO real estate author, promoter, or guru can promise you a positive result if you buy their products. If you think you are going to get some "magic secrets" on how to achieve real estate success for $495 and buy yourself a lifetime of income and happiness for the price of a seminar ticket you are as DUMB as these seminar promoters think you are.

Robert J. Abalos, Esq.

When Will The Get Rich Quick Real Estate Gurus Admit They Were Wrong?

robertjabalos@gmail.com (Robert J. Abalos) — Fri, 09 Jul 2010 19:46:00 +0000

From 2002 through 2008 while running my website at InvestingInLand.com I warned investors hundreds of times through my newsletter and website articles that real estate prices had gotten way too high, far above their intrinsic values, and that a real estate bubble and crash was inevitable.

Of course, at the same time a rabid wolfpack of get rich quick creative real estate gurus flooded the Internet and late night TV claiming it was the best real estate market in a century and investors who bought properties would make a fortune.

Well, I was right.

They were wrong. These criminals encouraged and presided over the greatest financial loss in history, costing real estate investors more than $10 trillion dollars.

$10,000,000,000,000. A lot of zeros. A lot of ruined lives.

You would think after such a devastating humiliation these slick salesmen of mostly worthless real estate home study courses and seminars would crawl back into the dark holes in the mud that spawned them. But this would actually require a conscience and some shame.

Starting once again in 2008 these very same discredited frauds put away their flipping property home study courses and began pitching foreclosure investing, short sales, and whatever else they could imagine gullible people would buy, proclaiming it was the best real estate market in a century. Look at all the bargains! The low interest rates! All those motivated sellers!

Me? I warned investors that prices were still way too high and a double dip recession was coming, especially in the real estate markets.

Well, once again I'm proven right.

Here is what I wrote about the imminent double dip recession in November 2009.

Here is what I wrote about the imminent double dip recession in real estate in March 2010.

And here is what the mainstream financial media is saying about the double dip recession in real estate today.

IT'S HERE.

What am I predicting now, beyond of course stagnant and negative investment returns on real estate for at least the next five years?

Another crop of get rich quick creative real estate guru course offerings arriving in your email inbox very soon.

Robert J. Abalos, Esq.

Great Investment Advice from the Moguls at Sun Valley

robertjabalos@gmail.com (Robert J. Abalos) — Thu, 08 Jul 2010 19:36:00 +0000

The annual Allen & Company Sun Valley Conference is underway in Idaho and the wealth of investment ideas that pour forth from this gathering of the world's greatest business moguls is staggering.

Why do you think all the invited corporate titans attend this event every year? Why do you think private investment bank Allen & Company hosts it?

To network for sure. But they network with each other plenty every day of the year.

They go to Sun Valley in July to escape the Manhattan heat and to learn about business conditions from each other. A glass of Domain Romanee-Conti (or two, or four....) can open a lot of lips. You learn things you can't read about in Business Week. You get investment tips over a wink and a nod and by reading between the lines.

Plus where else can you see billionaires like Michael Bloomberg wearing white socks with shorts?

The media is extensively covering the event. There is LOTS and LOTS for investors of all budgets large and small to learn about the direction of the economy and much more.

You might not have been invited to Sun Valley this year but that doesn't mean you can't learn a whole lot from what is being said outside your presence.

Robert J. Abalos, Esq.

Do These Two Inspire Confidence in You?

robertjabalos@gmail.com (Robert J. Abalos) — Wed, 30 Jun 2010 16:33:00 +0000

Here are the two men who control the American economy. Mr. Obama and Mr. Bernanke.

Both have never had a real job in business, in fact, the closest either actually came to a real job was as a college professor.

Neither has ever run a company, created a product or service, met a payroll, or given them any relevant experience as an "employee" in the "workforce."

Yet, both men now make laws and draft new regulations that govern every aspect of the American economy.

Does it take a business genius like Herbert Hoover to run a successful economy? Of course not. Hoover made millions for himself in the mining business and ran some of the largest and most successful philanthropic projects in history. Yet his presidency was an economic disaster.

But I'll take Hoover's business experience over Obama's and Bernanke's lack thereof any day.

Yesterday's news: Truly awful consumer confidence numbers.

Today's news: Only 13,000 new private sector jobs created in the U.S. in June.

This is not a recovery. I just don't see it.

Robert J. Abalos, Esq.

New Housing Sales Numbers Hit All-TIme Low: Kennedy Was President in 1963

robertjabalos@gmail.com (Robert J. Abalos) — Thu, 24 Jun 2010 20:19:00 +0000

The new home sales numbers released today by the U.S. Commerce Department reflect a drop in sales so severe the industry is now selling homes at an all-time low, in fact, the lowest sales rates ever recorded since the government started keeping these numbers in 1963.

When the Obama tax credit expired, buyers stopped buying homes.

Very predictable, too. But at a cost of $100,000 of taxpayer money per home sold under the tax credit incentive a very predictable expensive blunder too.

Robert J. Abalos, Esq.

New Middle Class Income Taxes Will Further Depress Residential Real Estate Prices

robertjabalos@gmail.com (Robert J. Abalos) — Thu, 24 Jun 2010 19:56:00 +0000

There is going to be a major income tax increase after the November 2010 elections.

The Federal deficit is way too high. Even Democrats, like House Majority Leader Steny Hoyer admit that a middle class income tax is going to be necessary to raise money. Not just new taxes on "the rich" (above $250,000 per year for a married couple is the official Obama definition) and not just the expiration of the Bush-era tax cuts.

NEW taxes on the middle class.

The simple fact is that the tax code has become so progressive that the poor no longer pay income taxes in the United States. A full 40% of American households no longer pay any Federal income taxes.

This leaves the rich and the middle class. The rich are already getting savaged by the U.S. income tax code. The top 1% of all American households already pay a whopping 36% of all Federal income taxes.

So, that leaves the middle class, Steny Hoyer's latest target.

Higher taxes on middle class people means that real estate prices will fall. Why? Stayed tuned, but think about it in the meantime.

Robert J. Abalos, Esq.

Obama Foreclosure Relief Plan Fails---Just Like I Said It Would

robertjabalos@gmail.com (Robert J. Abalos) — Tue, 22 Jun 2010 07:00:00 +0000

The Obama foreclosure relief plan is failing badly after spending $75 billion to help homeowners in foreclosure.

No surprise here. I predicted this futile program would fail nearly ONE YEAR AGO in this blog.

You can read an excellent article explaining the problems with the loan modification plan here.

The bottom line is simple. When you buy a home you just can't afford, eventually you lose it.

Robert J. Abalos, Esq.

Russ Whitney's Former Lawyer Gets 50 Year Prison Sentence

robertjabalos@gmail.com (Robert J. Abalos) — Sun, 13 Jun 2010 05:40:00 +0000

Real estate guru history wonks will remember the very nasty and bitter legal dispute between get-rich-quick creative real estate guru Russ Whitney and real estate author and watchdog of the very same industry John T. Reed from a few years ago.

Reed, having published a single email critical of Whitney's seminar offerings on his website, found himself being sued by Whitney in a number of state and Federal courts in Florida, the headquarters of Whitney's real estate information empire.

John T. Reed refused to give in and began a campaign exposing the various falsehoods of Whitney's career, such as how he (didn't) turn $1,000 into $4.7 million through real estate investment while working as a slaughterhouse worker in Upstate New York which was the cornerstone claim of his empire.

For a time, the real estate world was abuzz with the controversy, and many of us (including me) followed the dispute like a real world soap opera with daily updates from both sides.

Anyway, Russ Whitney's lawyer in these lawsuits filed against Reed was named Scott Rothstein who made a name for himself in these disputes not only with the numerous lawsuit filings but also his bizarre reasons for requesting continuances, like the need to go on vacation because he already booked tickets!

Mr. Rothstein has been in the news quite a bit lately, having been found guilty of stealing over ONE BILLION DOLLARS ($1.2 billion, actually) as part of a Ponzi scheme.

He was just sentenced to FIFTY YEARS in prison.

Of course, you can't tar Russ Whitney with the same brush wielded by Scott Rothstein. Birds of a feather often do flock together, but then again sometimes they don't.

What I can say without question is that the prosecution of John T. Reed by Whitney was prosecuted in a grossly unethical manner and certainly Mr. Whitney approved of every action by his own lawyer, further illustrating for me how truly grotesque the get-rich-quick real estate industry really is.

This is just a little bit of trivia for you creative real estate guru enthusiasts out there. Just another lesson in those that play with fire often get burned.

Robert J. Abalos, Esq.

U.S. Housing Market in for More Trouble Ahead

robertjabalos@gmail.com (Robert J. Abalos) — Wed, 12 May 2010 23:39:00 +0000

Here is an excellent analysis by real estate analyst Dean Baker who essentially says the same thing I have been telling you here in the blog and in my other writings for years.

The U.S. residential housing market is still overvalued and the optimists who are jumping in and buying all these foreclosure homes are making a big mistake. I see lots of cheerleading on these real estate markets but very little genuine logic as to why its a good time to buy. Lower prices alone does not mean a bargain.

I see NO catalysts, NONE, that will lift housing prices higher for at least the next two or three years.

I see LOTS of reasons why prices can still fall.

Dean Baker was right on the housing price bubble (like I was) and his views should be respected once again here.

Robert J. Abalos, Esq.