Friday, December 21, 2007

Ron Paul Campaign Contribution

I've been highly tempted recently to donate to the Ron Paul campaign. I have many reasons to do so:
  • He's the only candidate that I believe when they speak.
  • He's seems to have an understanding of the issues - and more in depth than any of the other candidates, or at least more understanding than they are willing to show to the unsophisticated masses.
  • He will work to eliminate the IRS - my contribution could even be viewed as an investment in this light.
  • He's the only one trying to make the country freer. Less interference and monitoring sounds good to me.
  • Most of his other issues found at
  • I have more money than I really need.
So, you may be asking, "Why haven't you gone ahead and contributed, Mark?" I'm opening it up for comment first; I want to be sure I'm making a good decision. So I ask you: Why shouldn't I contribute to Ron Paul's campaign? Is there a more deserving candidate?

Sunday, December 16, 2007

Music and Parties

I went to a great party tonight. It was a graduation party for an old friend from high school (and a bit in college). The thing that made it a hit, though, was the live music. People brought guitars, a banjo, bass guitar, upright bass, harmonicas, shakers, and voices. People would start playing a song and whoever knew the lyrics would sing aloud.

I only wish I were musical in some way. I don't play any instruments and I have no rhythm for even shakers. I can sing (poorly and never in public), but I know no lyrics. It makes me want to keep a guitar in the house, though, so other people can play when they come over. It'd be kind of like how I keep alcohol strictly for the enjoyment of others.

It also got me thinking about how seldom this happens anymore. I can't personally attest to the good ol' days, but the old movies often show impromptu musical fun at neighborhood gatherings. Really, neighborhood gatherings have also stopped, for the most part - maybe an occasional block party if you happen to live on a social block. I'm going to ask my brother if he has a spare guitar he'd like to leave at my place. Perhaps we can revive this tradition.

Dining Room Set

I went to Nebraska Furniture Mart with my mother and my little brother, Jake. I decided to take advantage of their 30 months of 0% interest financing and fill up my dining room, finally. We walked the floor for about an hour with a sales lady before setting in on 4 sets. They weren't all next to each other, so it was a long process of taking a mental picture of one and then running over to compare it to another. I'm sure that sales lady loved us.

I found pictures of things online!

My table and china hutch thing!
My sidebar/buffet/server! (The chair shown in this picture is like mine - the wooden back.)

It's exciting, most definitely. And surprisingly expensive. I had priced tables before, but I hadn't counted on having to buy two extra chairs for when the leaf is in (always for a lazy bum like myself), a sidebar/buffet/server, and a china hutch thing. I understand that it's necessary to fill the room with something, and that these things probably have an actual purpose, but I hadn't considered them until my style consultant (my mother) said I needed them.

Options Update: Savient (SVNT) (again)

Whatever news Savient (SVNT) released on Thursday ended up being good news. I only skimmed the release and saw something about gout. Gout didn't seem to be a big deal in the episode of House M.D. that it played a role in. Oh well, the important thing is that SVNT is up to $18.90, which is well above the $12.50 it needs to be at in order for my shares to be called away and for me to be done with this. I don't particularly like being invested in a company I know nothing about. But for a 25% return in a few weeks, I'm willing to make an exception every so often.

Tuesday, December 11, 2007

Options Update: Savient (SVNT)

So, it's been awhile since I've updated things on the financial side. I realize it's not anything people read in detail, but tonight I have nothing else I can write about.

So, if anyone happened to check up on Hythiam (HYTM), they'll quickly realize that it is far below my $5.80 break-even price. Yes, I seem to be losing money on that. But, this hasn't stopped me from experimenting with highly volatile options writing. Enter Savient, another small pharmaceuticals company. They apparently have some data coming out sometime in December, but I have no idea when. No matter when the data comes out, though, it is causing the implied volatility to be in the 220% range, which is ridiculously high. I bought 300 shares at $12.10 a couple weeks ago and was able to sell 3 covered call options for $2.60 each. Thus, I made roughly 21% for the month of December.

It is possible that whatever news is coming out will be negative and the underlying stock price will plummet, but there is more call interest than put interest, and I do have 20% downside protection. Plus, the stock price has reached $15.40 today, so any plummet starts from a profitable position. I see it as much more likely that my shares will be called away at $12.50 and I will be done with the matter. Of course, now that I've said that, the exact opposite will happen, as with Hythiam. I should learn to keep my fingers from typing such things. Well, wish me luck.

Wednesday, November 28, 2007

New Cat

Monday, November 19, turned out to be a fairly eventful day. It all started when my brother, Brian, called about 10am letting me know that he was in the neighborhood tutoring math with Aimee and they'd be happy to stop by in about an hour, if that was alright. For some reason, this didn't strike me as particularly odd, so I naturally agreed.

About an hour later, they arrive at my front door. When I open it, Aimee greets me with "We brought you an Apple," while handing me a gray kitten. She was extremely tiny, especially given that she was supposed to be about 3 and a half months old. The vet said she was probably the runt and had her food stolen, but that it shouldn't affect her overall development much. She has definitely added some weight, and so looks more normal. She no longer smells like a ferret, but still is a smelly cat.

Fiona and AppleHere are Fiona and Apple together.

Apple is very cuddly and likes to rub her face on people's faces, which is cute. However, she hasn't learned how to jump, so she claws her way up things, including legs, which is painful. She's learning, though, and is a very cute cat regardless.

Tuesday, November 6, 2007

Cat Toy - Laser

I ate at my parents' house for dinner this evening. My brother needed to get a mouse in order to feed his snake, so we went to the pet store. While we were there, I figured I'd get a cheap $2.99 laser pointer pet toy. When I finally got home, I unpackaged it and put in the included batteries. Fiona immediately chased after it and was very exited. Mouse was initially interested, but never excited about it, and quickly lost interest in favor of a crazy-hyper Fiona and the threat presented therein.

Fiona pounced and scrambled after the laser all the way upstairs and around my room. When I shut it off, she began breathing very deeply. I first thought I had run the wind out of her, but then noticed she had her head low to the ground and was breathing into corners and dark places. She was intent on finding the mysterious shiny thing! I indulged her for another minute or so, but then had to get down to installing Supreme Commander: Forged Alliance.

Fiona, however, still had nothing better to do. She began sniffing around again, pawing at everything it could be under or behind. She then began whining very loudly in addition. She has finally calmed down, but I'm not sure whether I should bring the laser back out. She loves chasing it, but it upsets her so much when it's gone. And now she's back to whining.

Small Company Earnings

HYTM was listed as releasing it's earnings yesterday, November 5. Instead, their expected earnings release date was pushed back until November 12. I think this is a phenomenon pretty much unique to small companies. I can't imagine Google, IBM, or Apple getting away with a week's delay in releasing financial information.

In fact, HYTM hasn't really gotten away with it. The past couple of days have seen HYTM drop down to $4.71 so far. Incidentally, this puts me fairly deep in the red. We'll just have to see what the implied volatility does after earnings. It may still be worth holding on to if I can still get >5% a month in options premiums. Or perhaps earnings will beat analyst estimates and I'll get my shares called away after all.

In other news, Garmin (GRMN) is down below $100 again. I think if I had $10,000 or multiples thereof, I would buy some GRMN shares and write more out of the money covered calls. Garmin seems to be down on fears of a TeleAtlas bidding war with TomTom ( However, I see this as both a good move and temporary. Garmin has about $1B cash on hand and is worth >$20B, while TomTom probably has less on hand and is worth ~$6.3B.

Garmin used to be in a position of having TeleAtlas in the hands of TomTom and Navteq in the hands of Nokia, meaning they might face an increase in mapping costs. Garmin has either put TomTom in this position, or forced them to go deeper in debt by upping the price of TeleAtlas. If Garmin gets stuck buying the company, they at least have the advantage of being able to afford it, and they have a longer history of acquisitions, which implies to me a better ability to integrate TeleAtlas. It will be interesting to see how this develops. Unfortunately, I'll be watching from the sidelines.

Wednesday, October 31, 2007

Implied Volatility (updated)

I've been continuing my research into options strategies. Earnings season is here again, which always causes a spike in implied volatility. GRMN released it's earnings this morning. Yesterday, the implied volatility of at the money calls were in the 80s and 90s. Today, they are in the 60s. I suspect they will continue to fall for a couple more days.

Implied volatility is the free-market version of statistical volatility. SI indicates how much the underlying stock actually fluctuates, while VI indicates how much people expect it to move. What's this mean for options? Before major events, like earnings releases, IV spikes, as do options prices. Thus, much of the movement people expect is already priced into the option. In general, right before earnings is a bad time to buy options. However, if you own shares in the underlying stock, writing covered call options is very good, or if you have cash on hand, you can make a quick 2-4% by writing cash secured puts.

Anyway, in my research, I found a great site for finding highly volatile options:

Here, you can specify a minimum stock price, minimum open interest, and a % out of money maximum something that I don't understand. I don't know exactly what all the filters in the Power Tools tab do, this one included, but I like sorting by the 'Call Implied' column. Unfortunately, the filter is confused by recently split stocks, where a $10 stock with a $20 strike will trade at $2 (the $20 strike option was written before the split, and the options trading house hasn't fully updated everything), so it looks like the $20 strike is trading abnormally high, when in actuality, you can't really trade it. It will also show a lot of $5 stocks with a $7.50 strike trading at $0.10. This isn't a high enough price to make much money writing options, sadly. To avoid the latter problem, I like to specify a minimum stock price of $6. Higher priced stocks have closer strike prices.

Using the sorted 'Call Implied' column, though, I've found HYTM. I don't quite know what to make of it, yet, but it's a $6.50 stock with a $7.50 November 2007 call option price of about $0.70. That means people are willing to pay a 10% premium betting on a 15% move in one month. Admittedly, HYTM's earnings is on November 5, so I don't know what the long-term IV is like. This may be a stock only worth writing options against this one time. Also, Google Finance's stock page for HYTM shows a news story where the state of Washington kicked out HYTM's drug rehabilitation cocktail because it didn't work. Collecting a 10% premium isn't a good idea if the underlying company goes broke.

Either way, I went ahead and bought 1200 shares and wrote 12 call options for $6.45 and $0.65, respectively. After commissions, I made about 9.7%, which I will fully realize on November 17. Then I'll be able to see how much a regular month's option is worth. I may end up bailing out after that time. Or, I may get my shares called away at $7.50, giving me a total profit of ~25%, instead. I can live with that.

Updated at 3:00pm

HYTM announced a double blind study, so the stock price shot up to $7.30 (+0.85 over purchase price), and DXUKU (Nov $7.5 calls) are now at $1.10. So, I missed out on some options premium profit, but at this rate, it's looking like that 25% profit on November 17 will be happening. I can still live with that.

Tuesday, September 18, 2007

In Honor of J

J, who commented on my last post, has noticed that people in big cities are not polite. As an example, she mentioned holding doors open and thanking others for doing so. It generally doesn't happen in big cities.

Since then, I've been observing behavior between strangers closely for politeness. Here are my observations, in order of precedence:
  • Black people are exceptionally polite when white people hold doors open for them. White people are quiet when the reverse is true. Reasons for this discrepancy will be left to the comments.
  • There appears to be a correlation between politeness and kilometers from a city's center. Suburban strangers say thank you almost always, while those in the city are usually quiet.
  • Gender roles are still expected: Women holding the door for men will be taken advantage of grudgingly and silently. Men holding the door for men will be taken advantage of with an accompanying strange look (and silence).
  • Men hold doors more often; women say thank you more often. When a man and a woman encounter a door, the male is most likely to hold it open for the woman. The woman will almost always say thank you. A man will hurry through doors held open by anyone, often at the expense of a proper thank you. However, it should be noted that men often exchange nods of acknowledgment/thanks which cannot always be reliably observed.
  • Finally, suburban men are the most likely to hold doors open for as long as people flow by. Perhaps city dwellers have learned when to give up looking for the end of the line and sneak by early to find their groups.
I am a habitual doorman and have not learned to ever abandon my post except at the conclusions of large meetings, such as at church. But, if it weren't for my duty of accompanying my grandparents, I don't think I would particularly mind being stuck for a few minutes holding a door. It would be an excellent opportunity to observe thankful people, if nothing else.

Monday, September 10, 2007

Republican Debate

The past couple weeks have been extremely busy with the U.S. Open tennis tournament. That's over, sadly, but it means I have some more time on my hands now that I'm not constantly watching. And that means I might update a bit more often.

Like tonight, while I'm watching the New Hampshire Republican Debate I missed earlier. It's a bit sad at times, but I'm at least learning a few people's positions. I just wish Fox News was a quality news service/site. I can't watch the entire debate in one video. In fact, I can't watch the entire debate. They have it broken up into pieces which don't follow each other exactly. Portions are missing, one part 2 video was just a duplicate of the part 1 video, and many descriptions had spelling/grammar errors. That's not even mentioning the crappy moderators and questions.

I cringed every time I heard Giuliani speak, even though he did have a couple good points. Actually, everyone except Sam Brownback had at least one good point. So, on the Republican side, I'm now stuck between Ron Paul, John McCain, Mike Huckabee, Mitt Romney, and Fred Thompson.

Fred Thompson hasn't been in the race long enough for me to know what his positions are, so he will remain in the undecided column. Mitt Romney has some nice things to say, but there's the recent controversy about his campaign staff and illegal activities - I will again reserve judgment for now. Mike Huckabee has my support for the Fair Tax plan, but I worry about some of his other issues, like abortion and gay marriage (among the reasons why I don't call myself a Republican).

John McCain did very well in the debates, but I didn't feel like he answered any tough questions, or answer with any real details. So, he did very well, but didn't provide any information. Until he does, there's nothing of substance to believe him on. Speaking of belief, Ron Paul remains the only candidate so far that makes me believe he's telling the truth. One of his major problems, I think, is that he has detailed stances on all his issues. It's like when I took tests in school and I'd answer each question very thoroughly, but run out of time and leave some blank. He doesn't have the option of leaving some blank, but isn't given enough time to fully answer questions, either. I would love to see him answer some detailed questions about a number of issues.

For instance, he's talked extensively about economic issues and foreign policy issues. I haven't heard him talk about all the plans for handling the effects of eliminating many of these governmental functions. He wants to eliminate the income tax and reduce spending (yay!), but wants to do so by eliminated the Department of Education (in addition to a few intelligence bureaucracies and the IRS, which I'm mostly in favor of). I'm wondering how he envisions education happening, and if left up to the states, how he plans on that being funded. I'd like to know exactly what he expects to happen in Iraq after a rapid withdrawal of forces. Most Democrats need to answer this question more thoroughly, too.

Among the Republicans, I like Paul's views on gay marriage and abortion the best so far: Gay marriage isn't the real issue after we start treating human beings as human beings, regardless of individual attributes, and leave abortion up to the states. In fact, Paul thinks most things should be left up to the states. Which is good in a lot of ways, but I want to hear his answer on what happens when people have motivation to move to a particular state that allows them to live the life they want. This would seem to lead to a segregated population (that portion of the population that can afford to move, anyway), makes buying a house a riskier proposition tied to political futures, and changes state governments' focus to passing laws that result in a larger population in order to get more tax revenue to spend. We'll switch from Red and Blue states to gay and straight states, pro life and pro choice states, war and peace states, druggie and straight-edge states, etc. Some of the unity of a strong central government is a good thing.

So, it's a good thing there's more time before I have to decide who to support, because I need it. Of course, who I support at this stage makes little difference since Kansas has no primary. Oh well.

Thursday, August 16, 2007

Earnings Strategy: The Aftermath

So, Earnings for Google (GOOG), Apple (AAPL), Garmin (GRMN), AMD (AMD), Amazon (AMZN), and Akamai (AKAM) were all done by August 1. I've delayed writing about my findings because I've been highly distracted by Harry Potter. I'm done with that now, though, so here it goes.

Even though GOOG moved down 30-40 points after earnings, no reasonable combination of 540-560 strike price options make money. For AAPL, I tried looking at further out of the money options. Once again, the movement wasn't large enough to make money. GRMN was interesting in that it had a spike up after earnings, but then kept rising another 10 points. I don't think I would have made money off the initial movement, though. I didn't do any real analysis of AKAM, but after the fact, I think it's movement of 20% would have resulted in some profit. AMD barely moved at all (meaning a large loss in strangle options), which I found surprising given it lost another $600M last quarter.

So, what did I learn? First, I learned a bit of new terminology. When you buy a put and a call option at the same strike price, that's called a straddle. When you buy a put and a call, both out of the money, it's called a strangle. Second, I learned that a very large price change is required to make either of these work through earnings. Third, my previous talk of increased volatility was mostly wrong. It turns out that statistical volatility will indeed increase, but implied volatility (IV) will plummet. Thus, options tend to lose half their value right after earnings, everything else being equal. Bummer.

In the future, then, I'm going to analyze longer-term options, which tend not to have such high IV shifts because of earnings. I'm also going to look at what is required to write both a put and call option to take advantage of the IV crush. Normally, to write a call, you have to have the 100 shares in your account. To write a put, you have to have the cash available to buy 100 shares at the strike price. I'm not sure what assets I need, exactly, to buy both, as I'd think they'd cancel each other out to some extent.

For now, my overall earnings strategy is GET THE HELL AWAY! Things are just too wild around earnings season. Now I just need the overall market to improve so I have money to invest again.

Wednesday, July 18, 2007

Earnings strategy

For this quarter, I plan on evaluating a few strategies on investing. I definitely want to research this quite a bit more before I bet real money on it. Earnings is a notoriously volatile time for stocks. A company can have profits increase by 50% and still have a stock price drop of 15% because revenues were 1% lower than expected. It really makes little sense.

Anyway, the companies I watch tend to react violently one way or the other. It's fairly rare that the stock doesn't move considerably up or down. We'll start out by looking at Google (GOOG), because it's closing price on Tuesday of $555.00 is ideally suited to such an analysis, being halfway between two strike prices.

So, GOOG earnings is July 19. I wouldn't want to buy options for July, as those expire on the 21st. Chances are that I'd lose everything. Instead, I'll look at August contracts.


As you can see, puts are relatively cheaper, meaning people expect Google to rise. I tend to agree with this prediction, but that's not the exercise at hand. I'm trying to figure out what exactly will happen if I purchase both calls and puts right before earnings. I will definitely lose a day of time value, which is a fairly significant portion of the month of time remaining.

If the stock price rises, the calls will gain value and the puts will lose value. The delta (change in option premium for every dollar change in underlying stock price) gets higher as options get more valuable, though. This ends up keeping the premium at least as high as the stock price - strike price (for calls). What this means is that as the stock moves in one direction, the profitable contract should theoretically start to gain value faster than the losing contract loses value. Also, if there is a significant move one way or the other, the volatility will increase, further improving the profitable contract's price while padding the fall of the losing contract.

Now, if the stock doesn't move much, then the time value lost will outweigh any of the above considerations. I estimate this to be well under a 5% loss for the day, though. I also need to look at the effect of trailing stop orders and regular stop orders. For GOOG, I'm currently thinking something along the lines of a trailing stop on the call that would trigger a trailing stop on the put. I'm hoping this would make the call's spike right after earnings result in maximum profits and then trigger an order to take advantage of any overcorrection or profit taking.

Over the next week or two, I'll do some virtual trading and see how things work in practice with various stocks/options. I'll keep you posted.

Thursday, July 12, 2007

Limit Orders

Similar to my previous post on the financial-benefits-to-homeownership, I am now making a list of the benefits of limit orders:
  • The market sometimes behaves irrationally - a large institution buying or selling stock can significantly affect the price in the short term. You can place buy limit orders to take advantage of spikes downward in the market and sell limit orders to take advantage of upward spikes in the market. For regular purchasing or selling, this also makes sure you don't get taken for a ride between the time you get a stock quote and the time you press the 'Place Order' button.
  • Options are priced based on the underlying stock value, but they tend to move in $0.10 increments. A buy limit order of $3.50/share will theoretically be executed as soon as that jump takes place, meaning the stock has to move back a smaller amount before it rises to $3.60 (again, theoretically. Also, this doesn't equate to profitability, as there is the ask/bid price spread). A sell limit order has the opposite property, but is still a good thing due to the previous point.
  • Limit vs Trailing Stop: a trailing stop order can result in higher profits if the stop price rises above the limit price. However, the actual execution of the order is a market order, which means it could execute at any price. For instance, I tried a trailing stop on some Google options. The stop value got up to $9.50, but when it finally executed, I only got $9.33. A limit order may miss more profits than a trailing stop order, but the profits are more predictable.
  • Limit orders may not execute, which can be both bad and good. First, you may not have your order execute and your money will sit idle (or you will still own a stock you may not want). But, this makes them ideally suited to conditional orders like one-cancels-all. For example, let's say I have $10,000 to invest. I can place a one-cancels-all order on three different stocks - 20 shares of GOOG @ $500, 133 shares of GRMN @ 75, or 100 shares of IBM @ $100. Given today's closing prices of $544.47, $79.69, and $109.10, none of these are likely to execute - I chose the prices for easy calculations in my head. But, if any of these stocks suddenly (even if only briefly!) becomes an amazing deal, I'd be able to take advantage.
Fewer points here compared to the homeownership post, but they're longer. I have a couple options/earnings strategies I want to flesh out, too, so be looking for that. Hopefully I get around to it soon.

Saturday, July 7, 2007

High school and facebook

I was bored the other day, as usual, and decided to check facebook for updates, again as usual. I saw a friend's friend and remembered she was someone I used to like in high school. This got me to look at all the SME 2001 graduates.

It was interesting to see the variety of life paths even just six years after graduation. Some people were wearing suits, traveling for their job. Some were still partying nightly. A surprising number were still best friends with their high school friends. I did't recognize quite a few names. A few were married; a few had kids. The married part may have influenced the name recognition, though.

I recently watched Grosse Pointe Blank again, and my uncle was just in town for his 30-year high school reunion. This may have something to do with me thinking of seeing all these people again in a few years at my 10-year reunion. It will be interesting, for sure. I also knew a lot of people older and younger than I. I guess I won't really be able to see them at any reunion.

Strangely enough, I've always lacked school spirit or any real connection with classmates of any particular year. I don't know exactly what makes me feel some sudden connection on facebook with my fellow 2001 graduates. A friend recently talked to me about how older people have a more developed empathy center of the brain. I commented on how this made sense given my recent observations: I got a bit emotional during Freedom Writers, among other movies, whereas I used to feel next to nothing when family members and/or neighbors died. I guess the same thing applies to school pride.

Well, here's to 2001 Shawnee Mission East.

Tuesday, June 26, 2007

I got a kitten!

So, my mom called me up this afternoon and asked if I wanted a kitten. Seems she was visiting a friend's farm and they had an extra kitten. They were pretty sure it's a girl, but it hasn't been fixed or shot or anything. I'm strongly leaning towards getting her front declawed, like my brother's cats. Carrie is upset with that idea, but oh well.

I've all but decided to name her Fiona. She's just the cutest thing. She spent the first night sleeping on my stomach and chest. I was reminded of Look Who's Talking, where John Travolta is babysitting, and Mikey falls asleep on his chest. I've already been having quite a lot of baby-wanting time, but this cat has really spiked my paternal instinct. Now all I need is a wife who wants kids.

Last night, she followed me up to my room and slept in there (with an apparent break to go down and throw some food around). So, what I've learned:
  1. Dragging a string behind you teaches cats to follow you pretty well.

  2. Since cats bury things in their litter box, it may be dirtier than you think.

  3. Being a safe place for a kitten to go to when the big cat gets pissy makes it love you.

Tuesday, June 5, 2007

Spiels I like to give

I have a couple things planned out to say whenever the occasion arises. I figure I should write them down before I become senile and forget about them. This means that some of you will be bored by this post, as you've already heard these.

Stocks: I really don't understand what a stock is. If I went back in time and had to modernize an economy, I wouldn't know how to describe the concept of a stock. A company decides it wants to bring in some money, so it issues some pieces of paper to the public. These pieces of paper allow you to vote in shareholder meetings, but the founders of the company typically give themselves a majority holding to start out with, so this isn't a very useful thing. The company is then under no obligation to buy back the shares, pay dividends, or in any other way make your stock valuable. What you hope will happen is that someone will look at this company and decide that they really want this worthless piece of paper and buy it from you. It just makes no sense. And then there's the fact that money is never created in the stock market. For every gain there is a loss somewhere along the line. Stocks just give us with too much money something more to buy than goods and services.

Peeing: For some reason, men like to stand when they pee. At a urinal, this makes sense, because there is no where to sit. However, it makes absolutely no sense to stand and pee into a regular toilet. Let's look at this for a moment: Why do women yell at you to lift the seat up before you pee? Because you miss and/or splatter and urine gets on the toilet seat. Now, why is it ok for this splatter to land on the rim of the toilet bowl and surrounding floor? It's just plain nasty.

Friday, June 1, 2007

Mortgage payment

I mailed off my first mortgage payment yesterday. Assuming it arrives on time, I will be almost $300 closer to being debt free. Hey, that's more than 0.1% of my debt!

I've really spent a lot of money over the past month. I bought a house, refrigerator, washer, dryer, kitchen table, 6 chairs, a TV stand, a 65" TV, and 4 bar stools. And that's just from Nebraska Furniture Mart! The problem, though, is that I'm slightly cash poor right now. Not severely so, but enough that I feel nervous about investing any more of it right now.

I wish I could remember all the things I've been meaning to write down.

Sunday, May 20, 2007

Been busy

I've been pretty busy of late, both with work and social life. I'll devote this post to my house, though, as that's where the most significant progress has been made.

I got my washer and dryer! It's a high efficiency front-loading washer. One thing I wasn't counting on was having to get all new high efficiency laundry detergent formulated to work with less water and the like. I gave my laundry detergent to a friend at work, so at least it'll get used.

Either today or tomorrow I plan on going to Nebraska Furniture Mart and picking up my breakfast area table and chairs, along with some bar stools for the kitchen counter area. My grandparents said hey want to make my kitchen table set a housewarming gift, but pretty much all gifts are hard for me to accept, let alone a $700 one. But, I'll go with it on this one.

Speaking of the kitchen, it's amazing how little cabinet space there really is in there. Alternatively, it's amazing how much stuff Carrie has. It is a very good thing that I have a roommate, or I'd be completely embarrassed at the empty nature of every room. She moved her big stuff in this weekend, too, which means I will soon have to move my couch into the basement.

Which means I need to get a TV for the basement! So far, my favorite is Toshiba 65" DLP at If it weren't for charging taxes in 4 states, including Kansas, I would be able to get it cheaper there. Also, TV stands are ridiculously expensive. I'm disliking that whole situation and halfway considering throwing together some ugly plywood and making my own stand. But, as anyone who's seen my desk knows, that won't look very good. I'm making an effort to get out of college mode, but $300-$400 for a piece of wood that just sits there is discouraging.

Having a TV will be great for watching DVDs, but I will also need to get some sort of live TV feed. Comcast cable is horrible, in general, so it's between DIRECTV and AT&T's Uverse. I would like to go with Uverse because it comes with 3 free receivers, including one DVR, while DIRECTV charges $5/mo for extra receivers and more for DVR. Plus, with Uverse, I'd get cable and DSL without having to buy a phone line for some reason, so it would be cheaper. Unfortunately, my address comes up on their website as not having Uverse available. Houses down the street have signs in their yards about it, though, so I will have to call on Monday.

Also, I got my new wireless/gigabit ethernet router and gigabit switch. The router is pretty nice, but I can't get wireless encryption to work with Carrie's laptop. I will have to try configuring it with my laptop from work, sometime, to see what the problem is. The gigabit switch is primarily for LAN parties, for now.

That's all for the moment. I will try to update a bit more often.

Friday, May 4, 2007

Thoughts on IBM

A couple days ago, I had a thought about my job at IBM. It was a pleasant thought that went like this: Even though I'm stressed out about work and insanely busy, I genuinely enjoy my job!

Now, I know people rarely keep loving their job after the initial novelty period, but for now, I'm going to enjoy it. Even better? I actually feel like I'm good at my job! I'm getting progressively more responsibility. Unfortunately, I haven't actually gotten everything done on time that I was supposed to, but because I've been taking time out to fix some other very important stuff, no one blames me.

Which brings up another good thing: I found the cause of a bug that's been nagging me for the past while! I think this should make next week just manageable enough that I can get some more moving done.

Unfortunately, this post can't be all happy.

This Slashdot article and the article linked therein (Lean and Mean: 150,000 U.S. layoffs for IBM?) talks about possible upcoming layoffs in IBM's Global Services division. The consensus at Slashdot is that Cringely have overly speculative columns, and that 150,000 layoffs would be 40% of IBM worldwide, not IBM's US workforce.

Still, it does make me a bit nervous. I don't know which comments are fully truthful, but there are some good points in general. Global Services consultants are who customers deal with. When they get laid off, customers don't appreciate having to walk a new person through their setup. If it's also true that our sales force has been making unprofitable contracts to up their numbers, then we have a bigger problem than Global Services having slow growth.

Software, though, is amazingly profitable for IBM. Thus, I'm not directly concerned about my job. I'm more concerned about the future of IBM as a whole. At this stage, though, I don't have enough information to really comment intelligently. So, I will wait to worry about this until more information is released. And in 10 years, when I'm CEO, I'll see what I can do.

House Closing

So, on Monday I signed a whole bunch of papers. Before that, there was a bit of excitement. My homeowners insurance wasn't officially processed yet, so I had to run down to their office and get everything sorted out. Plus, I wasn't told until about 9:30am what amount to get a cashier's check made out for. Incidentally, I don't think Bank of America charged me for my cashier's check. That made me slightly happy. Anyway, I was a few minutes late to my 10:00 meeting.

After another 15 minutes of waiting, all the paperwork was printed off, and I was ready to sign. That took quite awhile, but it was relatively painless. Finally, I went to get my house key, do a quick walk-through, then head back over to the insurance place to work out car insurance. And eat lunch.

So, the gist of it is that I now own a house, and a sizable debt on said house.

What's surprising, though, is how unexcited I am. I was quite excited during the offer/counteroffer/acceptance stage, but that has worn off. It is surely difficult to maintain a high level of excitement for most of a month, and I've had plenty to keep me busy in the meantime. We'll just have to see if the moving process brings a whole new period of excitement.

On a completely unrelated note, my serious little blog here has been flagged as possible blog spam by Google. I guess most people don't have such boring blogs primarily discussing mortgages. But, I have a mortgage, so there's little reason to talk about it anymore. I'm sure this means my blog will become ever so much more interesting...

Thursday, April 26, 2007

Wire Transfers

I'm breathing a bit easier this evening, as Bank of America has informed me that I have a pending wire transfer. My funds should be available at least by Monday, and that's what matters. Incidentally, I have made about 3.87% since the beginning of the year on that money. In contrast, the money I have with Merrill Lynch has made about 6.41%. Both of these numbers are before advising fees. In contrast with both of those, I have a realized gain of 9.63% plus an unrealized gain of 1.02%, totaling a 7.55% gain in my E*TRADE account, not including excess cash that earns 5% per year. So, the account I closed would appear to be my poorest performing. A good decision.

And on Monday, I will officially buy a house. Hopefully also a good decision.

Monday, April 23, 2007

Financial Advisers

When talking to your financial adviser about closing an account in order to make a down payment on the house you are about to buy, where does responsibility lie? In our conversation a couple weeks ago, he asked when the closing date was. I said my closing date was May 3rd. He then commented on how it should be OK, then, to not overnight the request to close the account. I agreed. He wrote down that the account needs to be closed sometime before May 3rd.

This is so far from what we agreed on. There was a choice on whether to use fast or slow mail, not on when to send the request to close the account. Admittedly, the stock market has gone up quite a bit this month, so by waiting I have made an extra 1-2 thousand dollars, probably, but that doesn't make his actions right. I said I wanted my money, and he kept it from me, telling me one thing and doing another. I'm not happy.

AMD Options Assigned

As I discussed in an earlier post, I bought 300 shares of AMD at $13.00 each, and wrote 3 options contracts to sell at $14.00 with a $0.30 premium. Well, on Friday AMD closed at $14.16, which is more than $0.05 in the money (the most common automatic exercise threshold). Not surprisingly, then, my contracts were assigned.

So, I automatically sold 300 shares of AMD at $14.00 with a $20.06 commission. I'm not sure how the commission is computed, honestly. But, I made $300 - $20.06 in the sale, plus $90 - $15.24, minus the original purchase commission of $12.99. All together this is a profit of $341.77, which is an 8.76% profit on my initial $3900 investment under a month ago. Not too bad.

Even better, I really do think AMD will go down in price again, and I don't think I would have sold my shares otherwise. So, I'm locking in some profit that would otherwise have been likely to disappear in the near future. This is a short term capital gain, however. Also, I'm more impressed with the rate of return than the actual dollar value of the profit. Still, $350 is most of a washing machine.


On Saturday, I went to Nebraska Furniture Mart with Carrie. We started by looking at washers and dryers, but were pushed into refrigerators by an annoying old salesman. So, we looked around at fridges for a bit. Eventually, a less annoying younger salesman asked us what we were looking for. Carrie had some sort of concern over having the freezer on top, and I had practical concerns over having the freezer along the side. So, we ended up with a freezer on the bottom (honestly, what's the difference between this and on the top?) with split refrigerator doors.

My brother said I should get stainless steel for the resale value, but all my other appliances are currently black. I also don't think this will be the same fridge I'll have when I sell the house, so I went with black and saved a few hundred dollars. The fridge was regularly priced at $1,419 or thereabouts, but I got it for $1,163.88. I opted for the extended warranty, so I may have wasted $70. But, it's probably a better investment then the lottery tickets I buy.

Shipping is $44.00, and taxes were $81.78. This gives me a final price of $1359.65, which is lower than the regular starting price. Still a bit more than I was originally planning, but I'm content.

We briefly looked at washers and dryers again until the old guy said hello again and we left. I later looked online, but prices were much higher there. This makes it very difficult to intelligently pick a washer. But, I think I will get the set for about $499 each, putting my total cost of all appliances at around $3000, which is what I had originally budgeted. I'll also need a big TV eventually. $$$.

Sunday, April 22, 2007

Prepaying Mortgage vs Investing

I've been debating on whether or not to buy points on my mortgage, and then whether I should pay extra on the principal or not.

Let's tackle the second question first. There are many issues that disappear when you properly phrase the question. So, we'll have the goal of maximizing net worth at the end of the mortgage term.

House Appreciation: No matter how much of the house you own, it will appreciate at the same rate. Paying down the principal does not affect the value of your house. The only time paying down the principal helps with regards to house appreciation is if you sell it earlier or refinance the loan. You will then get more money from the sale or have to finance less. In my case, where I'd be more likely to keep the house and rent it out after I move, this is completely irrelevant to my final net worth.

Rate of Return: The rate of return on an investment makes all the difference. If the interest rate on the loan is 6% (as mine is likely to be), then paying down principal is effectively a 6% investment. This beats CDs and high-yield savings accounts, and is a guaranteed rate of return. However, the stock market in general tends to beat an 8% rate of return. For instance, last year I made about 14%. Currently, my E*TRADE account has earned 8.88% for the year (which is not a balanced account, and so fluctuates wildly).

Tax Considerations: Money invested is subject to income tax or capital gains tax. Assuming a 25% effective tax rate, my investments must earn a (.06/.75) = 8% rate of return. Well, my investments usually do earn 8% or greater! Plus, paying down principal reduces the amount of interest you pay, which increases your tax burden (interest being deductible).

Points: Buying points is an investment in a lower interest rate and a lower monthly payment. What is its rate of return? The value of a point varies over time and over the interest rate scale. For instance, currently moving from 6.125% to 6% costs .375 points, while moving from 5.875% to 5.75% costs .75 points. At 6%, my $232,000 loan has a monthly payment of $1,390. At 6.125%, it goes up to $1,410. 0.375 points costs me $870, and saves me $20/month, or $240/year. This is effectively a 25% return on investment. Given this new outlook on the value of points, I will need to talk to my mortgage guy again and figure out what is going on in more detail. Not every company has the same point scale, so it may just be that right now E*TRADE happens to have a favorable points system.

The other issue with points is that it also reduces the interest paid, and therefore increases your tax burden. Even still, the numbers above make it seem to be a solid investment.

Psychology: Even though paying down principal is logically a fairly conservative investment, there are a number of psychological advantages. First and most importantly, it feels good to not have so much debt, and to not have so many years left on the mortgage. Second, the more equity built, the more you feel like you have flexibility to sell or refinance. We'll see what I end up doing after my cash flow stabilizes (i.e., after I finish buying appliances, televisions, and furniture).

Monday, April 16, 2007

File server fixed!

I'm almost positive that my file server is fixed! I am very excited. I can now fill up the remaining 600GB (of 2048GB).

What was the problem, you ask? Well, it would appear that the voltage applied to the DIMM sockets was set at 1.9V instead of 2.1V. I'm not sure if I should blame the RAM's SPD data, or the BIOS for ignoring said data. I'm betting it's bad data on the RAM, because the Corsair Memory website listed both 1.9 and 2.1 as the tested voltage in two different places. They appear to be confused.

Either way, manually setting the DIMM voltage to 2.1 allowed memtest86 to run for a full 24 hours, which is hasn't been able to do for a long time. It's time to plug my hard drives back in, boot up, and transfer some very large files!

Saturday, April 14, 2007

Mortgage options

I had a meeting with my mortgage representative on Thursday evening. It was a pretty standard meeting where he went over what he could offer, what all these papers in the loan application were for, and what I could expect in the next couple weeks. It looks like my closing costs will be slightly higher than what I can get online, but my interest rate will be on the lower end of the spectrum.

I don't feel too bad about paying a bit extra though, for a few reasons. One, and least importantly, he's my dad's friend and they have a group lunch every third Thursday. Two, I will have someone to work with in person. Three, he told me about closing at the end of the month instead of the beginning to avoid what would effectively be an interest-only payment on the first month. Four, he claims to be keeping an eye on the rates and corresponding market, and that he'll call me and tell me when he thinks is the best time to lock in the rate.

So, I've moved up my closing date to April 30th instead of May 3rd. I've officially applied for the loan. I should be getting 6% or less. It's one of those situations where I hate how the market only adjusts in 1/8% increments. I'm not paying for any extra points, as it would take me 8-10 years of saving the monthly payment reduction to break even on the cost. Given inflation and the like, I think I'm better off keeping the cost of the points where it is - invested in various things.

I'm hoping to do an analysis soon of whether or not you should pay extra every month in order to pay down the mortgage faster. So, look forward to that.

Tuesday, April 10, 2007

AMD and Call Options

Today, AMD spiked up as high as 13.61, from a previous close of 12.86. This spike prompted me to go ahead and write 3 April $14.00 call options. Since no one else knows what I'm talking about, I'll explain a bit. A call option allows the holder to buy shares of a stock at a given price (the strike price). Option contracts are typically for 100 shares. The writer of a call option owns these 100 shares, but promises to sell them whenever the option holder asks for them. For this right to buy stock at a set price, the option holder pays the option writer a premium (quoted per share).

A little while ago I bought 300 shares of AMD at $13.00. Thus, I can cover 3 contracts worth of call options. That is precisely what I did. April's expiration date is the 21st. This means I sold the option to buy 300 shares of AMD at $14.00 at any time before the 21st of April. Someone paid me $0.30 per share for this honor. So, I made $90 today, minus $15.24 of commission ($12.99 + $0.75/contract). So, $74.76 in profit. Since I paid $3912.99 (including commission again), I made 74.76/3912.99 = 1.91%. This is also immediately available cash - not just a paper gain.

When these options expire, I will either have sold my shares of AMD for a 7.7% profit (in about 3 weeks), or I will have the shares and be able to write more call options for May. I see the latter as far more likely. AMD got a boost today by saying they won't lose as much money as everyone feared, and that they'll be restructuring the company to cut costs. I don't see this as a lasting price increase, yet. This month is a risky month for options writers, though. AMD releases their 1Q results on the 17th. If they did better than people expected, the price could spike, and I may have to sell. Still, 7.7% (plus the 1.9% made today!) is very acceptable.

Offer accepted

One thing I forgot to mention last post was that the house sale was being handled by a relocation company. Being on the market for 132+ days meant they really wanted to get rid of it. They countered my offer of $280,000 with $292,500 at about 10:30 this morning. I countered back at $290,000, which they accepted.

I've been hopping up and down all day (on the inside, at any rate). I called up one of my financial advisers to close out an account to cover the down payment. That should be a pleasant check to get in the mail.

Now begins the search for a mortgage. Quite a few people have people I should talk to. IBMers get several discounts, so I need to look into those. Then I need to shop for a refrigerator and a washer/dryer set. I also need to do all the appraising, inspecting, and whatever else. Not a terribly fun-sounding set of activities, but definitely very exciting.

You know what else is really exciting? I'll be having a housewarming party! If you want to make sure you are invited, leave a comment!


Sunday, April 8, 2007

Made an Offer

Last Sunday, I went to open houses, as usual. I found [1386311 - 20981 W 116th St - $310,000], which has an amazing backyard. It's got a two-story deck with a screened in sun room (which they filled with a hot tub that wouldn't stay). The yard continued on into a park with sand volleyball, community pool, and a basketball court and playground. The location is fairly ideal, and it's got a lot of cool things about it. My mom found the kitchen to be a bit small, and I found the basement to be a bit smaller than I'd like.

We also found [1376482 - 14557 S Greenwood St - $289,000], which was better than [1375753 - 14116 W 53rd Tr - $288,500] from last time, and in a better location. I still wasn't in love with it for any reason, but it had a decent yard, and was surrounded by nicer houses (which can help resale, apparently).

On Friday, JD and I went to 7 houses, including [1385690 - 15969 Clairborne St - $299,950]. It's a very open house, has a large basement (in two main sections), and large bedrooms. While walking through it, I kept asking, "Where are the negatives?" The only two we could find were the small backyard and the tandem garage. But, the backyard doesn't have a fence to the right, so it opens into the neighbor's yard, which is nice for now. A three-car garage would help while having roommates, but it's not necessary, really. If you go look at the listing for this house, don't worry about the two bedrooms in the basement - they're actually on the top floor with the rest.

Yesterday (Saturday), JD, Carrie, my brother Brian and his girlfriend Aimee, and my parents all joined me in visiting these top three houses. We saw them in reverse order. Everyone liked the Clairborne house and found the Greenwood house lacking. As much as we liked the 116th St house a week ago, it just didn't compare to the Clairborne house. It's considerably smaller, a bit more expensive, and more cut up into actual rooms, instead of areas. The greenspace was the main selling feature, we felt. But, you can't add openness to a house, or much size. For the price difference, I could add a pretty nice deck to the Clairborne house, if I really wanted to. The basement wasn't as nicely finished in the Clairborne house, but it was much bigger, should I ever want to upgrade it.

So, I went back to my parents' house and watched some tennis until JD showed up with some paperwork. He talked about how the comparable houses in the neighborhood have been selling for more, often, and how the subdivision is ending its new construction, which means houses in the area should start to appreciate more. Basically, that this appears to be a pretty good deal. So, we drafted up the paperwork and I signed an offer for $280,000. This includes a home warranty, but little else. Being vacant, there is no washer, dryer, or refrigerator to negotiate over. Once we agree on a price, we can add in closing costs so I can finance those as well. The owners bought the house for $265,000, though, so at $280,000, minus 6% in agent commissions, they'd only be taking in $263,000. The $299,950 asking price is after coming down from about $330,000, so I'm not sure how much lower they can go. We'll find out, though!

I'm pretty excited about the house. It's over 4200 finished square feet for under $300,000. It's located right around 159th and Ridgeview, so it's close to at least one friend from work. The basement has a little exercise room or den, which would be perfect for our LEGO room. At 151st and Ridgeview is Garmin, so it's possible my brother can keep me with a supply of roommates. So, my brother can come over and play ping pong or darts after work, and it's got fairly ready access to I-35.

So, probably a $290,000 house, $230,000 in debt, an extra little bit in monthly income, and lots of maintenance. But, I'll have a house of my own, and I'm pretty happy about that.

Sunday, March 25, 2007

House Hunting

I was house sitting last week at my parents' house. This means I need to update everyone on both last week's and this week's housing search.

Well, last week, I went out with my agent, Carrie, and my mother.

We found [1385397 - 5347 Gleason Rd - $307,000], which I really liked. I even had a feeling of wanting to make an offer. It has a pretty good basement, which makes up for the deck taking up most of the backyard. It's a bit west, and a bit north, but the location is manageable. Overall, I think it was my favorite.

My mom and JD liked [1375753 - 14116 W 53rd Tr - $288,500] the best. It was the end of the day, though, so Carrie and I weren't terribly thrilled. It seemed like just another nice house. The backyard is also small, and the basement is finished, but not all that homey.

On the value side, we found [1360857 - 5703 Noland Rd - $249,900]. It was built in 1987, but had the feel of a 1970s house. There was a tiny bit of wood rot in the back of the house, only had a 2-car garage and only 2 full baths. But, it was still a lot of house for $250,000. The master bedroom suite was simply amazing, but not always in a good way. It was a bit gaudy.

Sunday's open house search yielded [1382477 - 9930 W 128 Tr - $299,900]. This had a very nice first floor, an amazing basement (though not suited for ping pong), and decent size rooms. The main drawback is the cut up basement and the single shared bathroom for three bedrooms on the top floor.

This Saturday, JD, Carrie and I went back out to a few houses. Revisiting [1385397 - 5347 Gleason Rd - $307,000], I noticed some layout issues. When you walk in the front door, you see quite a few different stairs and not much of any given room. The bedrooms on the top floor are slightly weird shaped and aren't always practical when positioning a bed, desk, and TV.

When we went back to [1375753 - 14116 W 53rd Tr - $288,500], the basement looked more usable, the kitchen looked nicer, and the great room seemed more pleasant. The backyard seemed a bit more usable, but still not big enough for volleyball. Overall, though, it has started to beat out the Gleason house. I just wish it weren't so far north.

We also went back to [1382477 - 9930 W 128 Tr - $299,900], which was still nice, but not as good as the 53rd Tr house, so I've eliminated it. [1360857 - 5703 Noland Rd - $249,900] has changed to backup offers status, so that's out, too. [1356306 - 8136 Lingle Ln - $289,950] from a few weeks ago has also changed to backup offers status. I'm not terribly upset by either of these, though. The California front/back split ([1358668 - 7901 W 155th Pl - $294,500]) is still listed as active, but that was for sale by owner, so it may take a bit of time for that to update. Besides, it only had 3 bedrooms on the top floor, which could hurt resale.

Today, I couldn't find any promising houses online to tour. So, I drove around randomly looking for open house signs. It was kind of fun, but not all that productive, so we quickly lost interest. Everyone else liked a for sale by owner house for $339,950, but the basement wasn't great, in my opinion, and the for sale by owner part means I would need to pay JD's commission. The location was better than the 53rd Tr house, but the house wasn't nearly $50k better.

I've told my agent to show me some more houses in the Lenexa area, so I'm closer to coworkers, family, and social functions. We are going out again on Tuesday. I will then do another tour on Saturday. If I'm up for it, I will then do another open house search on Sunday. I then plan on making an offer during the week on my favorite house. I'm ready for this hunt to be over.

Monday, March 19, 2007

File Server Aggravation

I left my server up over the weekend. It was booted into Windows. It was frozen this morning. This is quite annoying, but does have one positive piece. Basically, it is unlikely to be software-related at this point. Since the computer freezes when using either or both sticks of RAM, I'm betting it's not the RAM. The chances of both sticks having slight errors at the same time seems small. I'm going to swap out a different PCI express graphics card and see if that helps things. If it doesn't, I'll be pretty much out of ideas, and almost certainly out of cheaply tested ideas.

I'm house-sitting for my parents, though, so I won't have a whole lot of opportunity to test things, anyway. Damned inconvenient, really.

Wednesday, March 14, 2007

Stock Options

I've been thinking about writing some covered calls, lately. I've been trying to figure out the general strategy I'd like to take, running a few numbers, and asking a few questions of the Internet.

Let's take AMD, for instance. AMD's closing price today was 14.13.
The two main choices I was considering were monthly calls, or yearly. If I wrote a covered call every month, I could make about 1.4% per month in premiums. For instance, April $16.00 calls are $0.23/share. 0.23/14.13 = 1.63%. Then take off a bit for the fact that there are 37 days left instead of 30 and that I'd have to pay a commission. But, 1.4% per month is not a bad return. That ends up at 17% for the year. This is in addition to any stock appreciation!

A January 2008 $17.50 call is 1.29/share. 1.29/14.13 = 9.13%. This looks substantially lower than 17%. There are still other things to consider, though. Let's say AMD releases their Barcelona CPUs and R600 graphics cards early, and Intel doesn't immediately have an answer. AMD could shoot up in price and my option contract may be exercised. In the monthly case, I will make the 0.23/share premium, plus 1.87 in stock appreciation. A nice round $2.10/share. In the yearly case, I'll make the 1.29/share premium, plus 3.37 in stock appreciation. We now have a $4.66/share profit. Still, this is only a fair comparison if AMD surpasses $17.50 in the first month. If it doesn't, the monthly option writing catches up pretty quickly, depending on stock price movement.

It's far less likely that an AMD option will be in the money within a month than it is that it will be in the money within a year. So, writing monthly call options makes me more likely to hold on to my underlying shares. I also have more flexibility to adjust to changing market conditions. Some of the links below also mention that covered calls are more conservative than outright stock ownership.

The premium received does offer some downside protection. With AMD, I see a company that will eventually have a higher stock price. I feel comfortable owning AMD shares long term. I view it as making shares appreciate more. Instead of just getting stock appreciation, I also get option premiums. And I risk the loss of huge profits should AMD skyrocket. I don't see that happening, though. Practically speaking, I'm gaining income, gaining downside protection, and at the worst, only making a significant profit on stock appreciation, rather than a huge profit. I have made it more likely that AMD will be a moneymaker for me. I don't have access to many probabilities, but intuitively, I see my expected return going up at the expense of potentially missing an unlikely surge in stock price.

I'm think I'm going to do it, once I figure out what my AMD target purchase price is.


E-trade options tutorial
Options and Leverage (old and short)
Options and Leverage (new and long)
Covered Calls

Housing Update, Again

[1335619 - 15312 S Blackfoot Dr - $244,000] is now my favorite house in the <$260,000 range. I'm unlikely to find anything much better for the price, so that's encouraging. I'm sure if I had started looking at three bedroom houses, or houses under $200,000, this would seem huge. But, since I pretty much started looking at $300,000 homes, this house looks a bit small. It's not very open on the main floor, and the rooms upstairs are fairly small and blocked off. It's nice to know that I have a viable option that leaves me money in my pocket, and that I can more comfortably afford without roommates.

Still, my ideal house right now is a bit more north, and a bit larger. So, for the next few days, I will be picking out more houses to go see. They will be on the more expensive side, almost certainly. I will also plan my Sunday open house marathon, since I don't want to waste my time with the agent getting me into houses that will be open the next day. I must maximize my time.

Monday, March 12, 2007

Housing Search Update

I'm a bit discouraged on my search for the perfect house under $340,000. So far, I've really liked [1356306 - 8136 Lingle Ln - $289,950], but my brother pointed out a few major practicality issues with the upstairs, and I never have really cared for the basement. [1376694 - 5323 W 132nd St - $328,900] is by far my favorite, but is on the upper end of my price range, and is in pending status (even if this falls through, I'd have to offer almost full price, too). It really is a beautiful home, and I feel like it wasn't nearly so cookie-cutter as most I've seen. While the floor plan has been reused, this house seems to have the best version, too. I vowed against a split level, but this California Front/Back split is pretty amazing [1358668 - 7901 W 155th Pl - $294,500]. Sadly, it got an offer on it last Friday for $289,000, and he's countering at $290,000. Basically, it's almost certainly going to sell.

[1376880 - 17488 W 158th Pl - $224,900] is the cheapest one I'm interested in. It seems to be quite a bit of house for the money, and has a big back yard. There wasn't anything obviously wrong with it when walking through briefly. Only 2.1 baths and only a two-car garage may be a problem for my prospective roommates, however. Plus, it's just nothing terribly special. Basically, it's cheap.

[1357598 - 15996 W 159 Tr - $264,950] is decent, though a bit smaller than what I'd ultimately like. The main problem is the unfinished basement. The remarks sections states "motivated seller," so if I can get it for $250,000, say, then I could finish off the basement for a final cost of about $270,000. This has the added bonus of having a basement as perfect as possible for the house.

[1335619 - 15312 S Blackfoot Dr - $244,000] is next up, but with only a two-car garage. The three full bathrooms is nice. After I refinished the basement, it would have 4 bathrooms, and a wet bar. I wouldn't have to redo every wall, but quite a few would have to move to fully utilize the space. It had a little nook that would be ideally suited for a dartboard, plus the foundation is poured for a basement fireplace already. It's been on the market for over 250 days, so something may be wrong with it, or it may have just been taken off the market for a bit. I'll bet the ceiling could be raised in the basement a bit, most places, too. Overall, I think this is probably the best value I've seen, since I can get the basement refinished how I like it for a total cost of about $255,000 - $260,000. I'll have to take another look, I guess.

I'm going out tomorrow with my mom and agent to see 3 more houses. I haven't picked out which ones, yet - or I could leave it up to him. If any of my readers care to join the house search, I would appreciate additional opinions.

Friday, March 9, 2007

Linux, Ubuntu, and My File Server

My file server has been ill recently. It's been freezing. It has other problems, too, like a loud northbridge fan, but these seem minor in comparison to failing to function at all.

Well, after having it freeze on the login screen, without the screen saver on, I noticed some screen corruption. This says to me that it's graphics related. It's hard to tell if it's drivers or hardware, or a combination. I'm not a fan of manufacturers overclocking their boards by default. Instability is the result. One explanation for the suddenness of the increase in freezing frequency is miscellaneous updates to Ubuntu. Or, perhaps my GPU is just gradually melting and becoming less stable. The problem here is that when booting in Windows, things remained unfrozen for three days before I tried Ubuntu again.

Either way, I figured a good way to test the graphics card problem would be to run in command line mode for awhile, and see if things freeze. Getting Ubuntu to run in command line mode isn't terribly easy, though. Most linux distros have runlevel 2 mapped to command line mode. Ubuntu has levels 2-5 all mapped to the same standard experience. So, I had to do an "apt-get install rcconf" and "sudo rcconf" and then find a site that talked about what each service does.

It makes me feel inadequate and a bit sad that I'm such a linux newbie. I think I'd be embarrassed if I ever had to have conversations about linux with a real techie. Luckily, at work, I have the excuse "I work on .NET, which is Windows only. So, I need an answer for Windows. Oh, I have a linux file server at home, though." I am simply ashamed.

Also, I've had this damn thing for many months, now, and I still haven't even installed apache. I meant to have this thing functioning as an FTP server, website, and collaboration tool for family software projects. I need to get on this, and soon. Once I buy a house, anyway.

Thursday, March 8, 2007

Financial Benefits to Homeownership

I've been compiling a list of benefits to owning my own home. The list is a bit longer than I expected, actually.
  • Interest paid is tax deductible. Based on a $300,000 home value, this will be about a $13,500 deduction, which is about $3375 in saved taxes. Of course, this benefit diminishes over time.
  • PMI premiums are deductible. This will not apply to my house purchase, as I plan on putting a full 20% down, but it's an added bonus, if you have to pay for PMI.
  • Home appreciation. When I first buy my house, I will own 20% of it. However, any increase in value becomes my profit as though I owned the entire house.
  • Immune to inflation. My mortgage payments will end up being rather large, given $240,000 in debt. But, this payment will not change. As time progresses and money becomes less valuable, my mortgage payment just gets easier.
  • Rental income. Being single, I have the flexibility to rent out rooms in my house. While this probably isn't as financially secure as having a wife with a second income, it certainly doesn't hurt anything.
  • Credit building. Due to my parents including me on their credit cars for the past 8 years or more, I have an excellent credit score of around 794. I can claim virtually no credit in this achievement, but it's kind of cool. The point, though, is that making regular payments on time helps your credit score.
  • As opposed to paying rent. When you pay rent, your money goes to the landlord (which I will be!). When you make your mortgage payments, you build equity. You become a little more your own landlord every month.
  • Tax deductible property taxes. Yep, property taxes are tax deductible, too. Of course, you still have to pay them.
  • Points are tax deductible. If you improve your interest rate, points are tax deductible. Which is kind of like getting 25% off the cost of points. Not bad.
Did I forget anything? I feel like I did. Leave a comment and notify me!

House Shopping

So far, I've seen about 25 houses through real estate agents and open houses. I've found a few I like, too. My favorite is almost certainly about to be sold. My third favorite is also in the process of the final paperwork. My second favorite, so far, is available, as far as I can tell, but it's not my ideal house right now.

I suppose I should start with the basics. I am looking for a 4-bedroom house for myself and two roommates I have lined up. I would like it to be somewhat close to work, or at least within easy access of the highway (and then preferably against rush-hour traffic). I require a fireplace, but I don't think I've seen a house without one, ever. Wood-burning fireplaces are becoming rare, however. My final hard requirement is a big basement. I'd like to be able to play ping pong (and also pool?) while having a TV area. A wet bar would be an added bonus.

I've recently decided that a finished basement is not needed if it knocks the price of the house down by $30k. I can finish a basement for less than that, plus it would be done exactly how I want it. Of course, that cost to finish the basement is out of pocket, as opposed to financed. I used to also want a large backyard in which to play volleyball at gatherings. My brother brings up a good point, though: you have to mow it.

Now, given all these requirements (4-bedroom being the main one), I am definitely spending over $200,000, and most likely around $300,000. I've run through the numbers a few times, now. If I purchase a $340,000 house, I can make the monthly payments on my own, but money would be very tight. I have a few built-in cushions, though. First, I don't plan on spending the full $340,000. Second, roommates paying rent should help considerably. Third, performance bonuses and raises should happen at least a bit - that is, my income should rise with inflation, while my mortgage payment should not. Finally, if I end up having to dip in to savings just to keep my house, I can always reduce my 401(k) contributions down to the matching percentage.

So, given that I can afford a house, I now just need to pick one out. I am going to see more houses on Saturday with my agent. I sent him a list of houses I found online, and he looked them over for any major problems (such as one that backs to US-69 highway). I have 18 from this list left to see. We'll probably get through 6-10 houses on Saturday, depending on how close together they are. Then I'll hit up the open houses, as usual, unless my agent says we should continue the concentrated search that day. It's just such a long process.

Wednesday, March 7, 2007


I'm not sure, yet, what the scope of this blog will be. I'll probably end up talking about financial stuff, mostly. This will probably include my search for a house and all that entails. Basically, I think I want separate places for my rational thoughts and emotional feelings. For the record, this is supposed to be the rational one.