Autopsis » Econ / Finance

Total Cost of Ownership for Overland Expedition Vehicles

Doug — Fri, 20 Jun 2008 18:07:48 +0000

Introduction

When you discuss the purchase of an overland expedition vehicle (OEV), typically the only costs mentioned are the purchase cost and the options cost. Very rarely, ongoing operational costs are mentioned. You will probably never hear anyone discuss the costs of selling of the OEV when they are done using it. Unfortunately for potential and current owners, the purchase price is only a small portion of the total costs of the ownership experience with an OEV.

The critical perspective that is missing from almost every OEV purchase is not the simple cost of the vehicle and its options but the total cost of ownership (TCO) of the vehicle over the entire time span of ownership experience.

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Click here for the full document: www.hackneys.com/travel/docs/oevtco-overview.pdf

Parallels

Doug — Fri, 28 Mar 2008 13:49:30 +0000

In the early 1900s Argentina was the second richest country in the world. In subsequent decades its middle class enjoyed a very high standard of living. The country was rich in seemingly infinite natural resources, copious crop producing areas whose soils were as rich as any on the planet short of Iowa and vast, wide open spaces, ripe for exploration and exploitation.

In the subsequent decades the population of Argentina made a decision, whether it was conscious or unconscious is open to debate, but it was a decisive one, nonetheless. The large middle and smaller upper classes of Argentina decided to abdicate governance to a small ruling class while they enjoyed a life of leisure, decadence, and for many, a non-stop party.

The following decades brought a parade of one corrupt and incompetent regime after another, vacillating between right, then left flavors of greed, fraud and ineptness.

The alternating conservative and liberal governments used common methods to divert the population’s attention from their disastrous job of non-governance: radical partisanship, extreme nationalism, phony threats from across the borders and abroad, illogical wars, blaming all problems on foreign or world body institutions, etc.

All the while the population watched popular entertainment, cheered on their favorite football team and partied the night away.

Finally, after nearly a century, the party came to halt. The country’s public debts were enormous, unemployment rose, runaway inflation ensued, real GDP fell, the currency collapsed, the government defaulted on its bonds and the economy imploded.

Any parallels you may draw to a country you are closely familiar with are entirely up to you.

Kodak and Our Future

Doug — Mon, 15 Oct 2007 06:37:03 +0000

Steven Sasson, the inventor of the digital camera, was inducted into the Consumer Electronics Hall of Fame today.

He invented the digital camera in 1975.

Steven didn’t work for Nikon or Canon or Matsushita or Sony.

Steven worked for Kodak.

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Two Interesting Perspectives on the Housing Bubble

Doug — Mon, 10 Sep 2007 12:42:59 +0000

My comments last month about the U.S. Housting bubble generated a lot of comments, however, it came before I started this blog, so they all came back via email. This will be your chance to share your comments with a wider audience than just me.

Since last month we’ve seen a further erosion in market value of homes across the U.S. with price deflation in almost all markets. The contagion spreading from the collapse of the subprime mortgage market and their back-end collateralized debt instruments, bonds and other financial delivery platforms has reached into the conventional mortgage arena as well as financial markets around the globe.

Being that we’re in a U.S. presedential election cycle, it was inevitable that this would turn into political fodder with candidates tripping over themselves upping the ante on who they’d bail out if only they had their hands on the checkbook. President Bush, bastion of conservative free-market forces himself, has jumped on board by opening up the FHA to distressed “misled” home buyers faced with foreclosure.

I viewed all of the bailout rhetoric as fairly benign but was introduced to a new perspective by an editorial in the Sunday Oregonian which follows.

For a more light hearted and humorous look, albeit bone chillingly sobering when you look at the numbers, check out this informative blog on poster-child examples of how we ended up in this mess, the “Real Homes of Genius” list http://drhousingbubble.blogspot.com/search/label/real-homes-of-genius (thanks to Floyd for sending this along). And just as a reference, our expedition vehicle that we’re living in has a footprint of 182 square feet. Keep that in mind as you read the prices that people have paid for <1,000 square foot homes.

Be well,

Doug

SUBPRIME MORTGAGES

No Sympathy for a Bailout
Sunday, September 09, 2007
PETER VILES

President Bush announced his intention Aug. 31 to reach out a hand to the “many Americans” who “may have been misled” in the subprime mortgage market.

Two days earlier, presidential hopeful Sen. Barack Obama of Illinois called for fining “predatory lenders” to bail out “hoodwinked” families. In California, Los Angeles City Councilman Richard Alarcon wants a $5 million revolving fund to “help homeowners on the verge of foreclosure.” The news media report on families losing homes, disabled owners facing foreclosure and newlyweds being tossed into the street.

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What did you do in the great real estate bubble crash, grandpa?

Doug — Wed, 08 Aug 2007 14:23:55 +0000

Legend has it that on a pleasant September Friday morning a rich stock broker stopped to get his shoes shined on his way to work. As he perused the morning paper he overhead his shoe shine boy trading stock tips with the boy working next to him. It slowly dawned on the broker that these two rag slapping, spit polishing boys, were both highly leveraged into the roaring stock market. They were counting and comparing their market winnings as his shoes were completed. He paid the boy, with a very small tip, and walked onto his office, his brooding face in sharp contrast to the sea of happy, chatting faces filling the financial district, all riding high on the swelling wave of market wealth.

When he arrived at his office he closed the door and sat alone, oblivious to the chattering stock ticker tape machine in the outer office.

He knew it. He could feel it. If even the shoe shine boys were riding this wave, it could not be real, it could not be sustainable. The shoe shine boys were his omen. If he only had the courage…

He picked up the phone and put in a sell order on every stock he owned. The transactions all cleared by the end of the day.

He faced the longest, loneliest, nerve wracked Labor Day holiday weekend of his life. His mind would not rest. Doubts and misgivings crowded his brain. Had he done the right thing? Had he ruined his life and the life of his family?

After the weekend, he went back to work. It was Tuesday, September 3rd, 1929. By the end of the day, the Dow Jones Industrial Average lost almost half of its value. Everyone who was leveraged into stocks was wiped out by margin calls. He was the only one he knew who survived.

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A few years ago I read a story about a 23 year old who owned five brand new homes in the Phoenix area. He financed them with 100% financing and gimmick mortgages. Just as he’d done the first few times, he planned to flip them, make a ton of money, and then do it again. And again. And again.

It was an omen.

But it wasn’t our omen. By that time we’d already sold out of the San Diego real estate market, having become convinced the bubble was unsustainable.

Our timing was very fortunate. Ours was one of the last homes in the area that went to a final, last and best offer auction among the interested buyers before the market there imploded.

My prediction at that time was that the people who were sitting on a lot of cash would do very well in the coming crash. I said they would be circling above, waiting for the foreclosures, and pouncing on prime properties in desirable areas. A dime on the dollar for a premium location will look very good in five to ten years when the market recovers.

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The question I banter about among my friends now is, are we at the end of the beginning of the real estate crash, in the middle, or only at the beginning of the beginning?

Regardless of where we are, exactly, in this curve, one question none of us will be able to escape will come from our children and grandchildren when they ask us 10 or 20 or 30 years from now, “What did you do in the great real estate bubble crash, grandpa?”

This will be a time of great turmoil. But as I learned when I produced media, “in panic there is profit.”

You will note in the accompanying story that the gimmick mortgage birds will be coming home to roost in the next year or two. About $1 trillion dollars worth of mortgages will reset to higher interest rates in the next two years. There may be 1.7 million or more mortgages that foreclose in that period. That deluge of low cost properties will drive down real estate prices across the board.

Buying opportunities will abound, both foreclosed and retail.

We will be living through one of the most unique economic opportunity periods in modern history.

How will you answer the question?

“What did you do in the great real estate bubble crash, grandpa?”

Be well,
Doug

New York Times
Business
August 1, 2007
ECONOMIC SCENE

Keep Your Eyes on Adjustable-Rate Mortgages
By DAVID LEONHARDT

Two years ago, when the housing market was roaring along, I called a mortgage broker on the West Coast and asked for some help. I told him that I wanted to interview some recent home buyers who had taken out an adjustable-rate mortgage — one of the big drivers of the boom — and he was nice enough to pass along a short list of names.

One of the buyers was a business consultant in her 40s. She told me about her charming new house and the fact that she expected it to be a good investment, even if it had cost a bit more than she wanted to spend. Then I asked about her adjustable-rate mortgage.

“I don’t have an adjustable rate,” she said.

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Achieving Financial Independence

Doug — Thu, 05 Jan 2006 03:34:24 +0000

Some thougths on achieving financial independence:

http://www.hackneys.com/docs/financial_independence.htm