GOLD ! Norair Yeretsian

The Gold Obsession : Real or Hype ?

It has been around for thousands of years.

” We have gold because we cannot trust Governments.” said President Herbert Hoover (1933) .

Was President Nixon right to end the Gold standard (1971) ?

Did the American and world economies just out grow the restrictive Gold standard ?

” They wonder much to hear that gold, which in itself is so useless a thing,
should be everywhere so much esteemed, that even men for whom it was made,
and by whom it has its value, should yet be thought of less value than it is. “
Sir Thomas More (1478-1535) Utopia of Jewels and Wealth.

A obessive yellow piece of metal called : Gold.  Who says it has any value ?

What is the value of  Gold and why should I care ?

I do not like Gold, neither its look or its concept of a storage of wealth.

We , Man say it is so — valuable, a treasure, something we need to show we are wealthy.
The powers that were – said it was an item of  worth. So men would seek it out and fight for it.

” Who has gold has a treasure [that] even helps souls to paradise.” 

 Even religious groups joined in the chorus for Gold.

Gold is not going to save you.

If you are lazy, unproductive, unimaginative, lacking creativity, drive, will and determination , your fortune will never come.

Seeking Gold is an old idea, whose time has come and gone.

What is value but some intangible thing that most of us may agree upon ?

Fads have come and gone, but Gold has been consistent – people have desired it.

It is easy to move and in the old days played the role of a common international currency.

War breaks out, take your gold and run !

A story was told about a hundred years ago about this supreme possession;
” a man who boarded a ship carrying his entire wealth in a large bag of gold coins.
A terrible storm came up a few days into the voyage and the alarm went off  to abandon ship.
Strapping the bag around his waist, the man went up on deck, jumped overboard, and
promptly sank to the bottom of the sea.
Asks John Ruskin: ” Now, as he was sinking, had he the gold? Or had the gold him ? “

This is a new age, so maybe we are beyond it, get over it and around it.

 It was political and economics mixed in, as we moved to this new age.

New Rules and not the status quo, those that have the Gold ruled.

On the investment side was Gold a good investment ?

Valued at $ 35 / ounce in 1970 , by January 1980 to$ 634 then rising to $ 850 record high January 21 .

By 1985 the value/price was $300/ounce, the stock market crash of 1987 caused a bump to $ 486.

” At the end of 1997, gold broke below $300. It had fallen by more than 60 percent in the course of less than eight years.”

( The Power of Gold : Peter Bernstein, 2000 ) 

As of this morning $1247 Canadian / ounce and chatter that it May be going up to $ 1500 ( Sept/2010).

Is this a good investment?  What about the  volatility over the years ? 

Gold is supposed to be a store for wealth and a hedge against inflation ?

 However the proof is not in the numbers over the years, too many bumps.

Gold does not pay dividends , No cash flow. So it is only speculative .

So you have to be a good market timer to make money.

Not just understanding the local market but one who understands and follows the global market place.

As well as making all the right calls on gold, in a complex system of currencies,governments
and geo-politics and the world of speculators. This is not the play ground for the small investor to consider.
Exercise caution !

What are your thoughts about Gold , does it command your attention ?

Let’s discuss it versus other investment opportunities ,

 Join us : www.yinvestthinktank.blogspot.com

Twitter : EnvoyCapRealty

Envoy Capitol Realty Inc., brokerage     Toronto , Canada
Buy/Sell/Lease/Manage/Develop/Syndication — Investments

email :  capitalmoves@gmail.com

Blog: www.capitalmoves.blogspot.com

Nor Yeretsian   [ Facebook ]   (  September 13,2010 )

We can do better ! by Norair Yeretsian

Just keep it simple.

Try to understand it. Understand how they make money by doing it.

And if you understand the nature of the business — investment and can see

how they make the money this is more than half the battle to making money.

 Well that’s what Warren Buffett says anyway.

Who’s Warren Buffett, a rich guy who started out very modestly .

Charlie Chaplin can still make you laugh  after all these years.

The Classic comedy illustrated by Chaplin is simple – yet golden.

The audience understands it , he communicates with no words.

Yet we ( most ) of us fully comprehend the humorous message.

It’s brilliant.

It’s straight forward , good clean fun !

He captured our lives in his reflective comedy.

What we may have wanted to do in any given circumstance , however we were not / are not brave enough to actually do it.

Watch him, you will love it !

If we could somehow simplife our message to our target market or customers

, so that they are entertained enough to listen and comprehend our message to them.

Learn from the masters . You will be rewarded.

We can do better . We can make it simple to understand and act !

And it can be Fun …

Join Us in discussion as we explore these and other ideas …

at ;   www.yinvestthinktank.com

Twitter :  EnvoyCapRealty

Envoy Capitol Realty Inc., brokerage     Toronto , Canada
Buy/Sell / Lease / Manage / Develop / Syndication

Blog : www.capitalmoves.blogspot.com

Email : capitalmoves@gmail.com

Nor Yeretsian       August 26, 2010

The Subprime Solution by Robert J. Shiller

” Real estate is still a market where location counts. ” says Professor Shiller .

As the boom turns to a bust :

” The rate of decline is roughly inversely proportional to the speed of the increase.”

There were also differences across metropolitan areas and within these markets

wherein : ” low-priced homes behave considerably differently through time than

high-priced homes.

The lowest price tier showed the biggest increases during the recent boom, until 2006

and the biggest drop afterward. This phenomenon may be observed in many cities.”

Therefore as an investment strategy you can not treat all real estate even

in one category (residential) in a location the same.

This wonderful book is worth your time and attention.

Twitter : EnvoyCapRealty .

email : capitalmoves@gmail.com

Nor Yeretsian        (  July 27 , 2010 )

Envoy Capitol Realty Inc., brokerage  Toronto, Canada

www.capitalmoves.blogspot.com

Join the discuss and follow the group :

www. Y Invest Think Tank . blogspot . com

Everyone wants Easy ! Norair Yeretsian

Everyone it seems wants Easy and no one wants to work for it .

Our culture does pressure us to get rich quick or win a lottery.

With the juiced up advertising on every medium selling a lifestyle few can afford with an average income.

Alternatives or a second job must be found. Get motivated !

Real estate is a great way to get rich — patiently , over time.

When you rush it, mistakes happen .

We over leverage to compensate , so that a little rise

in the markets will deliver major success !

However we take on the added risk with the asset purchased and

suffer a greater loss when the markets drift down.

Possessing the maturity of  a patient wisdom in our practices with

our investments and our relationships will reward us over the long-term.

Sometimes slow can be better than fast.

What do you think, have any stories you wish to share ?

capitalmoves@gmail.com

Envoy Capitol Realty Inc., brokerage , Toronto , Canada

nyeretsian@yahoo.com  ( July 25, 2010 )

www.capitalmoves.blogspot.com

July 25, 2010       Nor Yeretsian

Don’t Follow The Crowd ! Nor Yeretsian

It is hard not going with the flow.

There are even books entitled :The Wisdom of Crowds , more act smarter than a few.

It is safer in the crowd , or at least it use to be .

We are human beings after all. We have herd instincts, running with the crowd.

This could be and has been dangerous for investors.

One of the best quotes I ‘ve heard coming from Gov. Sarah Palin, was

when she said that up here in Alaska there is a saying :

“The only thing that goes with the flow is a dead salmon.”

It says something about the fish and something about the direction of the crowd.

At times the crowd may be smarter than a few, elections / the stock market , etc…

However when the markets get hot, and a bubble starts to form -

everyone seems to jump on board and it starts to get scary.

A good book to explore this over the top behavior is Charles MacKay’s  collection

of stories which covers a couple of hundred years and looks at ;

The Mississippi Scheme(1719 and 1720, John Law )

The South- Sea Bubble(1717 -1727)

Tulipomania(1634-1636)

these are classic examples of  Banking ( and paper money )

Real Estate and a Tulip ( an object of affection value ? ) over heated bubbles and Crowds gone wild !

Book reference 1814-1889) Charles MacKay’s  Extraordinary Popular Delusions and the Madness of Crowds .

nyeretsian@yahoo.com   July 21, 2010

Twitter :  EnvoyCapRealty

Envoy Capitol Realty Inc., brokerage    Toronto, Canada

www.capitalmoves.blogspot.com

Money Never Sleeps Nor Yeretsian

With the right investment, income and cash flow will be continuous.

With the wrong investment , expenses and de-valuation will be continuous.

Due Diligence is your short-term and pre-investment requirement
so that  risk(s) will be minimized / mitigated.

Let’s continue the discussion … email us @ capitalmoves@gmail.com

Twitter at EnvoyCapRealty.

Face Book : Nor Yeretsian

www.capitalmoves.blogspot.com

nyeretsian@yahoo.com    (July 19,2010)

Envoy Capitol Realty Inc., brokerage  Toronto, Ontario Canada

Buying/Selling, Leasing, Management, Development of Real Estate in Toronto .

Investment Values Norair Yeretsian

Three investors are considering an investment opportunity which has a

Net Operating Income of  $ 125,000 .

Investor One wants to achieve a return of  10% on the capital he invests.

Investor Two wants to achieve a return of  15% on his equity investment.

Investor Three demands 18.5% on his invested capital.

Using the direct capitalization approach to estimating Value
the three investors calculate the following :

Given the above :

Investor One determines :      125,000 / 10 %  = $ 1,250,000  Value .

Investor Two determines :      125,000/ 15%   =  $ 833,333 Value .

Investor Three determines :   125,000 / 18.5% = $ 675,676  Value.

Using the Rule of 72 we can quickly calculate the time it would take each

of our investors to double their money using each investors’ desired rate of return,

with the benefit of  Time Value of Money ( money being compounded ).

Investor One   72 / 10 =  7.2 years to double his money .

Investor Two  72 / 15 =   4.8 years to double his money.

Investor Three 72/ 18.5 =  3.89 years to double his money.

Be a more demanding investor, you will only get out of life

and investment what you expect and usually nothing more.

Let discuss it , leave a comment / make a suggestion …

Do you have any special techniques to make valuations ?

or Twitter @ EnvoyCapRealty .

nyeretsian@yahoo.com  June 30 , 2010

Speak to your Kids about Investing II … Norair Yeretsian

Well where would you start to speak to your kids about investing
if you were challenged by the subject ?

Do some research and read some basic books which provide a
beginners perspective on the topic , such books like :

Buffettology ( American )

The Wealthy Barber  ( Canadian )
Rich Dad, Poor Dad  ( American)

Just do the research first do not buy anything as yet .

Go to your local bank and ask to speak with one of their investment
advisers (take your son or daughter with you for the education ).
Get a perspective on their products, services, invest ( cost to buy in ) , fees , etc…

Go on-line and visit each investment brokerage’s website to see what their have
explore the Educational / on-line simply Tutorials they offer ( free education ) .

Go on-line to the leading financial news websites
( go to your local bookstore to find out who they are ).

Some good ones are : The Wall Street Journal   ( American )

Globeinvestor.com ( Canadian )

Read some Blogs on investing…you may even want to watch CNBC .
The is a show called Mad Money with Jim Kramer
( entertaining and educational on investing in the market )

You could track some stocks for fun and put them on your watch list
at some of these on-line new feed websites.

If you make it a game style exercise , there’s learning , exploring and discovery happening.

As your confidence builds and you have some savings you can start to explore the market for real .

Be cautious, don’t hand your money to anybody — and don’t all your money in one place / stock.

If you have a bigger capital base, and an income source — you may want to consider Real Estate.

Think twice cut once .  ( old carpenter’s saying )

If you have some comments or other suggestions leave a comment or Twitter works
at  EnvoyCapRealty .

nyeretsian@yahoo.com  June 27, 2010

Austerity Now ! Norair Yeretsian

Well the Bank of  Canada, decided to slowly start to raise rates
this may be a signal from the Bank that lends to the Banks
that money will cost more, in what appears a recovering economy.
The real professionalism will come out much later, when we shall
see if a more balanced growth environment is created and we are
not killing off any chance our businesses have to recover and correct
their position(s)  and growth prospects and start to re-hire  .

With rising interest rates, residential real estate’s rising valuation slows
and  declines historically speaking. This is not good news for real estate.

Just in time of course as the new harmonized tax :  HST comes into play

July 1, 2010 in Ontario,Canada and causes its anxiety among consumers.

This will affect all commercial real estate lease agreements and payments.
As we prepare a memo to all our tenants in our industrial/retail and office
buildings which says they must add an additional 8% to their current rent
to address the new HST ( 13% on top of the combined : minimum plus additional rents )
[ commercial tenants are currently paying 5% GST which will end at 11:59 June 30/2010].

This is a new tax for commercial real estate to incorporate into its system and deal with
at the end it does not matter , however in the short-term it will require an education.

For small start-up companies or individuals — it will be one more thing to worry about.

One more thing to be responsible for, however if you were involved with consumers
you as a business are already collecting this amount and it will now work out more in
your favor .As it is to run like the GST with input and output credits and the like.

Is there any time a better time to change / add new taxes ?
Is the economy in a condition to deal with it ?

We shall should find out.

Consumers are already uncertain about spending ( lower confidence) and
according to records are de-leveraging.

It is the summer months ( July and August) to test run it, before the last quarter .

If consumers cut back too much , we will loss more commercial tenants.
And everyone gets less revenue : private and public .

What is on the horizon as a counter balance to help push consumers to
spend and help the economy and businesses to invest and expand their operations.
Invest in research and development and push innovation — new products and services
or just better of both.
There is a sense of a pending federal election on the horizon – this wouldn’t help .
It will help pollster and advertising agencies involved with the political parties ,
but what about the rest of us ?

The City of Toronto does have an election coming up in the Fall 2010 and a new mayor to be elected
with hopefully a better fiscal management and just better management.

Save your money, because things are uncertain and there are price increases coming
and maybe tax increases coming — this may be the new normal economy and lifestyle .

An austerity life style for all ?

Let’s discuss your opinion on this with your comment below  or

on Twitter at  :  EnvoyCapRealty

nyeretsian@yahoo.com June 22, 2010

Investment Strategies : Tax free Cash ! Norair Yeretsian

Know your Risk Tolerance before venturing into any investment strategies.

Many options to consider and each has its associated risk(s) and reward(s).

You have the freedom to make money or lose money.

Here is an option : A-II , to consider. It works like this …

You start with a $ 150,000 income producing acquisition in year 2000.

You leverage your investment with a 75% loan- to- value mortgage and
hold the investment for approximately ten years (2009, end).

At which time (2009 / begin 2010) it’s appraised value is determined to be $ 500,000.

Year 2000 —-( ten years)———end of  Year 2009——begin Year 2010
$150,000 ———————————————-$500,000
LTV 75% : Debt equals : $112 ,500 ————LTV 75%: $ 375,000
Equity :   $ 37,500  ——————————- Equity  :  $ 125,000

Debt has been reduced over the ten years , however these principal payments are
with after tax dollars.

Assuming the balance of the mortgage at the end of year ten is $90,000,
we are increasing this with the new financing to $ 375,000.

So that we receive $ 285,000 of new funds into our account [ War chest ].

A number of big assumptions were made :

1. Property is an income producing property …generating Cash Flow !
( your home would work also, but you must have the income to support the debt)

2. For the whole thing to work — Property value must go Up!

3. There is enough Income to support the new financing and you get approved .

4. Since it is a loan to the investment : this amount is tax free ( for now –until sale) .

You have $ 285,000 new funds to enjoy , to invest – to buy another property.

On it goes, it could go on forever or if you over leverage and values drop : you’re out of the game !

The down side concerns :

(1). If property values go down ( and it all becomes upside down, Debt is greater than Values )?

(2) If your income drops off or your tenant(s) leave or stop paying :
can not pay the interest on the loans?

(3) If the  Bank decides not to renew or extend your financing this become a real concern -
may have to liquidate at an inconvenient time: values are low and you are selling under stress. ?

(4). Can you live with the uncertainty  and a little stress ?

(5). You could extend this type of financing indefinitely.

However , if you get to far ahead with a heavy debt burden it becomes
a monster that you may no longer be able to control.
And you are no longer the master ( lord), you have become  the slave to the debt.

Beware.

A professional is always in control.

IF the above numbers held and you Sold the property,
we could do some further calculations to figure out what returns the investor received.
Without the operational cash flows( CFBT – CFAT ; numbers )  to consider or worry about .

Investor Yeretz invests  :
$ 37,500 of equity (year 1 and by year 10) it has grown to and sold for $ 500,000 :
the mortgage has been reduce to $ 90,000 therefore $ 22,500 equity build up .

sale price……………………….. $500,000 sale price
cost of sale (less)…………………. 37,500
balance on mortgage (less)……..90,000

sale proceeds before taxes …. $ 372,500

Return over 10 years     :    $ 372,500
__________________________   =   X          ………..     X = 993 %increase over 10 years

Investment                      :          37,500

Average annual return ( without the benefit of TVM , so simple average ) :  99.3 % a year .

What a large number and yield , wow !

Average annual rate of return on investment (TVM menu on the calculator ): 25.81 % .

1 P-YR    End

N =10

I/YR =  25.8084 %

PV= 37,500

PMT = 0

FV = 372,500

With the beauty of  Time Value of Money , the simple average  of 99.3 % comes down to 25.81% annually .

This is still a great return , relatively speaking .

More in future blogs as we discuss similar types of investments and their returns.

Leave a comment below ….

nyeretsian@yahoo.com    June 18, 2010