My Theory on the Electoral College

People think the electoral college failed in the 2016, so now they want to get rid of it. Correlation, is not the same thing as causation. What if it was something else that failed? If we saw a car crash, and the airbag failed to save someone’s life, would we argue to get rid of airbags? Just because a failsafe fails in one particular situation does not mean that the fail safe is not doing it’s job. Instead, I would argue that the problem is we need more than just the Electoral College as a fail safe. Here’s why…

In Jim Whitehurst gave a Ted Talk, Economics of The Information Revolution, he outlines three major epochs in the modern economy and which people were able to extract the most value. I will quickly summarize:

1. History of Humanity – 1800s – Land. Land mapped directly to power. The more land, the more food you had, the money you had, the more power you had, the more people you controlled. It was a direct mapping between land and power. The electoral college worked well because coincidentally, it also mapped to land. This meant that land holders balanced each other’s power out.

2. 1800s – 1980s – Manufacturing usrups land. Things changed with manufacturing because land became less important than machines. The machines that extracted food from the land became the most valuable assets. The more manufacturing you had, the more power you had. Selling tractors and cars, Henry Ford and friends indirectly extracted more value from the land in that short period of time than had ever been done before. The electoral college didn’t keep up nor help balance this shift in power. Instead, the unions eventually formed and things balanced out after a painful journey.

3. 1980s – Now – Information usurps manufacturing. With the age of information, the machines that extract food are now mostly a commodity, but the information on where food will grow, which food will grow best, how to prevent disease, and how to genetically modify the food is the most valuable asset. This information is wildly more valuable than the tractors. Owners of the information are the ones who extract the most value from the economy. The electoral college and unions can mitigate this power imbalance. Facebook, Twitter, Monsanto and others leading the information economy are extracting the most value, and essentially have nothing to balance that power.

The irony of this whole debate with is that the people with the “information” are the ones setting up this straw man against the Electoral College. We dont’ need to get rid of the Electoral College, we need the new thing that helps prevent HUGE imbalances of information. Some people are rambling on about it, including me, but none of us seem to have the answers. Hence, Zuckerburg (Facebook) is going to propose is “own” business friendly regulation to mitigate the threat of an Information College. He feels no guilt about this because he figures he’s as good/bad of a person as anyone and he might not be all that wrong.

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Let Me Explain Poverty

Let Me Explain Poverty

 

 

 

 

 

 

 

 

Growing up:

  • Your dad goes to jail on your birthday
  • Vietnam veterans smoke pot and party with your dad
  • Your dad hits your mom
  • You hit your dad with a bag of diapers
  • Your mom points a gun at your dad’s face
  • Your parents divorce
  • You move in with your grandmother and uncle
  • You remember the sound of your drunk, angry uncle throwing your grandmother’s cat down the stairs and breaking it’s tooth. He’s mad for who knows what, and you avoid him as much as possible
  • You are hungry toward the end of every month because the food stamps run out
  • You change schools every year, sometimes you go back to schools you have already went to
  • You have barely any friends because you change schools every year
  • Kids steal your stuff because you live in a poor neighborhood
  • During a summer program at the local school, you and your friend get handcuffed to the jungle gym for hours and chased around by older kids. Nobody helps
  • Your electric, gas and phone are off randomly. Friends call, and get the disconnected message – the next day at school, everybody knows your phone is disconnected
  • A kid that hates you, trips you at recess, while you are running full speed, and you have a scab along the ridge of your nose for months. Nothing happens to him
  • One of the kids from school sees you buying milk with food stamps and tells everyone at school. They make fun of you, even though most of them are probably getting food stamps as well
  • You know and understand all of your parents financial struggles
  • You watch your cousin’s cat fly up in the air, land on the ground, and die in convulsions after two kids in an old sedan speed up on purpose to hit it. They are in a gang, so there is no recourse
  • Your mom tries to enter you into a better school where all the kids have more money than you
  • You are too poor to get braces and have huge, bucked teeth
  • At the beginning of each year, the teachers are mad at you because you don’t have the “folder” they told you to buy. You’re too embarrassed to tell them that you are begging your mom every day, but she just doesn’t have the money until…
  • You wear used clothes on the first day of school, everyone knows and laughs
  • You wait for your mom’s income tax return so that you can actually get something that is brand new – you wait and plan for it, scheming, seething with desire. It’s almost sensuous planning for that one moment of pleasure.
  • No girls want to date you
  • All the kids make fun of you because you “are ghetto”
  • They make fun of you because you “talk like you are black”
  • You sit alone at lunch because you barely have any friends
  • You get “jumped in” to a dumb local gang by having four kids “fight” you for five minutes (probably because you are lonely)
  • You get taken hostage by two of the toughest kids at school. They punch you in the face, pour soda on you, and hold you for hours. Eventually, you escape on your bike while they chase you. Your heart pounds.
  • Because you hate school so bad, you miss so much that you fail a semester, then another semester…rinse, repeat
  • You tell the principal about how bad it is and he doesn’t care
  • You tell your guidance counselor and he says you should drop out and join the military because you will never amount to anything
  • You barely graduate high school with a 1.66 grade point average – mostly because you failed so many classes because of absence
  • You know you have no future

Then you:

  • Constantly struggle to keep a car running, so you can get to your job at a grocery store
  • Rebuild the motor on your car to keep it running
  • Have a suspended license because you can’t afford insurance
  • Learn to “act white” as demanded by society
  • Figure out how to get into college anyway
  • Beg your single mom who is depressed and alone to fill out the financial aid forms, always late, and barely ever receive any money
  • Struggle to work in a warehouse loading and unloading trucks while going to college on loans
  • Eventually get a job in computers, as a lab assistant for minimum wage
  • Survive on $20 a week after bills, eating macaroni and cheese, and 99 cent whopper juniors
  • Eventually, you start to know more about computers than some other people
  • You stop dying your hair dumb colors, take off the combat boots & chain wallet, and start interviewing for jobs
  • Eventually, you weasel your way into a real computer job supporting developers, and servers
  • People think you work really hard at work
  • But, you are rough around the edges, and everyone knows it
  • You are not calm and patient, and you speak your mind too much
  • You eventually have an offer at another company to make more money, but your dad and you get into a screaming match because he doesn’t think you should “give up a good thing”
  • 10 years later, you are still going to school
  • People still look at you a little weird because you can’t quite hide it all….

Eventually you:

  • Graduate college with 3.9s and 4.0s every semester
  • Get a job with a major technology company and make more money than you ever believed was possible
  • Learn to speak well, write well, and influence
  • Travel the world
  • Learn to speak three languages
  • Become just another white dude in tech
  • Gain expertise in several different disciplines including engineering, sales, marketing, and product management
  • Work too much and struggle to balance it with life
  • Bring others along for the ride
  • Try to be a good ally
  • Google offers you a job, finally. You turn it down.
  • Gain weight from working too much
  • Are attracted to adventure sports because of baggage in childhood – but it helps you hide it all
  • Freak out and loose all the weight
  • You put on a great show
  • You finally get over the fear of bringing children into this world
  • Even though you have significant expertise, you struggle to figure out whether you have enough life left to start a business and try your hand
  • Try to explain to others that choosing to “take risk” is a luxury

Or

  • You fail at any step of the way and go back to the beginning…
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Armchair Quarterbacks & The Florida School Shooting

Armchair Quarterbacks & The Florida School Shooting

So, you think you know what you would do in a school shooting? You think that Sheriff should have ran into that Florida school without thinking right? Yeah? You’d do some kinda John Mcclane shit from the original Die Hard? Let me tell you why you have no idea what you would do. There’s a lot more to tactically assaulting a building than what you think.

Before I go on, let me tell you, I don’t know shit. The more I learn, the less I feel like I know for sure (see full disclosure at the end of this article). That said, I have learned a few things about guns, and terrorism over time. Also, when the Florida school shooting happened, I happened to be in the middle of reading a book called Terror at Beslan about the Chechen terrorists who took over a school in North Ossetia (part of Russian Federation). It was a shitshow with 1000+ kids taken hostage, 300+ people dead, hundreds of children, and like 800 wounded. A..complete…shit show. Worse, it could happen in America – but I digress.

If you think the Sheriff was a total pussy and should have ran in guns a blazing, let’s start with some background information to frame this question right.

Tactics for Assaulting Buildings with Terrorists and Active Shooters

First, there are two main tactics for assaulting buildings. While in the West, we have these things called civil liberties, the Russians see no need for that. They are a bit more stoic, pragmatic, and nihilistic.

  1. Western special forces and law enforcement generally follow a philosophy which can be summed up with the phrase, “speed, surprise and violence of action” – you will find that this language is common in any discussion of tactics. Generally, it means, train like a mother fucker so that a whole team of law enforcement or special operators can move into a building quickly, organized and overwhelm the enemy. This will minimize casualties for civilians and operators, minimize the time to take control, and maximize casualties of the terrorists.
  2. The Russians generally follow the above philosophy as well, but they add some stuff that doesn’t sit well with Westerners. First, they LOVE gas. They will use paralysis gas, sleep gas, all kinds of gas. Even when terrorists have gas masks, it knocks out all of the hostages so that they can’t be used as human shields, nor get in the way of friendly fire. Second, they will shoot through hostages. The Russians generally consider you “already fucked” once you have been taken hostage. If you survive, great, but if not it’s because you were already dead anyway. Third, they like to take the terrorist’s families hostage and use them as bargaining pieces. Kinda interesting.

What The Sheriff’s Deputy Probably Knew and Didn’t Know

Now let’s move on to some shit the Sheriff might have been thinking. I don’t know for sure, but it’s reasonable to think that almost any law enforcement officer would know this stuff…

  1. An AR15 is loud as fuck. People know when somebody is shooting an AR15 or AK47 (which is even louder). This gives you an indication of what you are facing if you hear one firing in a building.
  2. AR15s are WAY, WAY, WAY more accurate than pistols. They are frighteningly more accurate. The first time I ever fired one, I could hit hard drives (like 3″ X 5″) from like 100 yards away – without my reading glasses on. They are fucking terrifyingly accurate.
  3. AR15s will shoot through anything in a school, ANYTHING. There is nothing that would provide cover, so you have to move, fire, move, which most average cops don’t know how to do very well. Here’s a video of an AR firing through cinder blocks – this isn’t like the movies where you duck around the corner and you are fine.
  4. It’s possible he had no idea who was shooting. Could have been a trained terrorist (yes, they are well trained, read Terror at Beslan and you will never feel safe again)
  5. It’s possible he had no idea how many shooters there were
  6. It’s possible he had no idea if there were hostages
  7. It’s possible he had no idea if there were bombs
  8. It’s possible he had no idea about anything
  9. It’s possible he was following local department policy on SOLO ENTRY AND “CONTACT TEAMS” which are all over the map depending on police force

Facts

  • If he ran in by himself, he would not be following best practice for assaulting a building
  • He waited 4 minutes
  • The investigation still isn’t complete so we don’t know a lot yet
  • If he would have ran in, and shot a kid by mistake he would be fucked
  • If he ran in, and got shot to death, he would be fucked
  • If he ran in and the shooter had a kid hostage, he would be fucked
  • He didn’t received any clear commands that we know of
  • The shooter is responsible for killing the kids – he is not

The Actual Solution

After reading Terror at Beslan, I have realized that nobody in the USA is talking about the real solutions.

  • More guns is not the answer. Arming teachers is retarded. The average cop qualifies once a year and fires like 60 rounds. That’s not enough, and they don’t do more because it’s expensive. No teacher is going to have the time/money to train enough. Furthermore, it’s tactically useless in like 99.9% of all scenarios. In Terror at Beslan, there was an armed guard, and an armed police officer. Both were taken hostage by terrorists, gave up their weapons, and were summarily executed because they could be a danger later. If you are telling me that a teacher wouldn’t give up in a heartbeat if given the “hostage” choice, you are crazy. As an aside, never take the hostage option, it’s a ruse. Always fight to the death. My two cents.
  • Less guns is not the answer either. Banning guns only takes them away from normal people. The Charlie Hebdo Attack and the Bataclan Attack happened in France where people can’t easily have guns. Taking guns away does not stop terrorists or crazy people (who are almost always smart). Technically, we could probably stop stupid, crazy people by taking guns away, but I don’t think it would help enough that it’s worth the political battle.
  • The Russians learned from the Beslan attack. The citizens had a shitload of weapons, including rocket launchers and machine guns, but they still didn’t assault the school (but armchair quarterbacks think the Sheriff’s Deputy should have with a 9mm pistol). The terrorists did, however, gather intelligence on the school for weeks, maybe months.
  • So, the main thing we can do is wake the fuck up, and keep our eyes open. Terrorist typically build intelligence, just like special forces. This is just like child molesters, so when you see the crazy looking dude in the white van sitting outside the school, say something!!!
  • Active shooters are similar but different. But, they usually post stuff on social media, so again if you see something, say something!!!
  • I think the gun restraining order is a good happy medium, it adheres to every fact we know about active shooters and terrorists. Terrorists probably don’t buy all of their weapons, but they will often give away telltale signs while gathering intelligence. Also, following the money stream is useful, which the FBI already does.

Enough Armchair Quarterbacking

I get that people think things should be a certain way, but they’re not. They’re just not. There are practical constraints to the possible solutions.

  • Cops ought to train to fire while moving, have body armor, practice with ARs, and be physically fit.
  • In reality, they qualify once a year, firing 60ish rounds and many are overweight and out of shape
  • We always want what ought to be vs. what is
  • We need to live in reality vs. fantasy
  • We need to think about how to fix things vs. get mad and rant

Full Disclosure on My Background

  • 42 year old, white male – 168 lbs 5’9″
  • College degree in Four Field Anthropology. Minor in Computer Science. Took a special topics 300/400 level sociology class on terrorism after 9/11.
  • Market and sell free software for a living
  • Have shot AR15s and plenty of handguns, semi-automatic and revolvers
  • Train at gun range once per quarter – typically fire 200 rounds – do drills like a martial art
  • Train 4-7 times per week – weight training, jump rope, rowing, running in weight vests, basically nutty
  • Personal records: 360 lbs X 3 deadlift, 315 lbs X 4 squat, 205 lbs X 2 bench, 130 lbs X 1 overhead press. No other exercises matter.
  • Grew up very poor, have been in plenty of physical fights
  • Trained in high school in a private fight club – fought every day – every day – boxing gloves, no kicking in the privates, no gouging eyes, no other rules – lost plenty – won plenty
  • Have been kicked in the head – three times to be exact – same fight – it sucked
  • I don’t believe more guns are the answer, I don’t believe less guns are the answer either
  • Radically neutral politically, always looking for the logical fallacies on both sides (I hate Libertarians too)
  • I have never been in the military, been a law enforcement officer, or shot at anybody, but I have empathy for these jobs….
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Today We Brought You Home From The Hospital

Today We Brought You Home From The Hospital

It’s just before Midnight on September 26th, 2017. Today your mother and I brought you home from the hospital. Someday, when you are ready, I will share this letter with you because I think that reflection is important for personal growth. As the clock ticks past midnight, I am reflecting about a conversation that I had today with my mother, your grandmother, about what childbirth means. She said, that to her, giving birth to another human being is about the past, the present, and the future. I found this intriguing – she explained, that when you look at a child, you can see the past. Some of a baby’s physical features come from their grandparents – this is a looking glass into the past. Also, some of a baby’s characteristics come from each of the parents, who also experience the birth, in the present. The parents and the baby will continue to live in parallel as the baby ages and matures. Finally, the baby will grow into it’s own individual person. The baby will be a mix of new characteristics, different from the past, different than its parents and grandparents, yet carrying a piece of the past forward. Sort of a way for the parents to live on – in part. Old and new together as one.

So, from this, I want to share with you three reflections today. One for each of – the past, the present, and the future. I hope that these might be useful to you in your life.

The Past

It was recently discovered that modern human beings have been around for at least the last 300,000 years. If most of our ancestors reached maturity around 15 years old, which is reasonable up until the last few hundred years of human history, you and I both have approximately 20,000 generations of ancestors. Let that sink in. Even with my best efforts to search ancestry.com, while your mother was pregnant with you, I could only find names for perhaps 4 or 5 generations at best. That means we have approximately 19,995 generations of ancestors for which we have no information, not even their names. Little is known, much is not.

This puts things into perspective. The things that we think are important, stressful or even joyful today, will become insignificant in the immenseness that is the past. Individual people, the generation that they are part of, the politics of that day, and even entire millennia will fall by the wayside to time. When life seems hard or difficult, try to remember this – think about how difficult it must have been for our ancestors 5,000, 20,000, and 300,000 years ago. Day to day life had very little convenience – it strikes me that the word “convenience” may not have even been invented until perhaps 5000 years ago.

I think about this every time I change one of your diapers 🙂 Our ancestors didn’t even have disposable diapers, much less the Munchkin STEP Diaper Pail (so that they wouldn’t have to smell your poopy baby butt).

The Present

Life is better now than it has ever been. This is, of course, a double meaning. Technology is better than it has ever been, but there is also a trend in 2017 toward doing Yoga, meditation, and practicing mindfulness (whatever that means) – basically focusing on the present as opposed to the past or the future. And what way is better to focus on the present than by controlling your breathing (a bit of sarcasm) – which is normally handled by your autonomic nervous system along with your blood pressure, but I digress…..

As I write this sentence, I can hear you squeak, coo and cry in the other room – I can hear one of the cats run up the stairs, and Christopher come in the room and nail the Moroccan Pouf in my office.

These moments are precious. Raising you is going to be amazing, watching you grow, seeing you become your own person, separate from your mom and me.

Tonight, before I wrote this letter, I ran to the store, picked up the Munchkin STEP Diaper Pail, then went for a two mile run, took a shower, and changed your diaper – I believe for the fifth time. Today is never easy – the only easy day is yesterday (David Goggins, my 2017 man crush), because it is done.

The Future

The future is constantly happening – it’s a constant barrage of decisions. Keep running or quit – stay in college, or drop out – lift the heavier weight today, or change the programmig because it’s too tough (a concept from weight training), procrastinate, or take action? This is the set of decisions that you will be bombarded with. We all are, but the sum of how you make these decisions will take your life in small, incremental course changes that will add up to a huge amount by the end of your life. They will be difficult to see day to day – like heartbeats, breaths, and steps, they will seem small, but will add up to huge consequences, not only in life itself, but in the way you look at life and engage with it.

Park far away and walk two minutes instead of spending that exact same time driving. Save $5 a week instead of spending it on frivolous things. Finish the book before playing the game. Finish the homework before watching TV. These are the drills that are not enjoyable today, but create a happier life in future – which in turn makes it easier to do the new drills. In the end, you can end up with the same one year of experience five years in a row, or five years of new experience. Either way, you will be five years older.

Decide what you want and make small incremental steps towards it because five years from now, you will be five years older whether you do it or not. The small incremental steps build upon themselves. This can end with feeling either content or regret. Primates are not very good at imagining the future, much less deciding what they want. Practice that skill and you will be happier over time instead of less happy as you age.

Conclusion

I can tell you with 100% certainty, I feel better today than I ever have. I have you sleeping in the other room with mom and the cat (Christopher) driving me nuts licking the Moroccan Pouf. I feel this good because I am content with the choices I have made to get here and I am confident that we can raise you with a better life than I had growing up.

You will face challenges in life, but I hope you will have immense opportunity as well. I want to take you to the tops of snow covered mountains, the centers of huge metropolises, and the coves of tiny islands in the middle of huge oceans because growth comes from seeing, learning and experiencing as much as possible. I will do my best to show you all the beauty that the world has to offer.

The future is bright….

Love You

Dad

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The Carbon Footprint of Teleporters vs. Force Propulsion Travel

The Carbon Footprint of Teleporters vs. Force Propulsion Travel

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Yesterday, marks the end of the historic 2416 election. The Crelian party made major gains in both the house and the senate. Though the robotic judiciary has yet to weigh in on whether the results will be accepted by the Artificial Intelligence Council, it is expected that there is a 43% chance that the human voting results will be deemed not dangerous and thus will be valid.  It was such an historic election because this is the first time in five election cycles that an actual issue has driven voters to enter the grid and vote.

The hot button issue was the carbon footprint of teleportation. Carbon is the leading cause for involuntary vacation of planets in the Breton and Americon planetary systems. Over 11 planets have been rendered uninhabitable since the invention of the teleporter 50 years ago in 2366. Agent Director Chief John Smith Tyrell from The Interplanetary Science Consortium says that, “we are losing planets at a rate of 1 every 4 years” while only “discovering 1 new habitable planet every 5 years.” This leads to involuntary vacation which is putting particular strain on the mining and engineering controlled planets. The Arts and Sciences casts have been unsympathetic and refused to allow the use of teleporters claiming the prohibition of teleporters is the reason they have not had any involuntary vacations of planets under their control over the same period of time.

from the blog www.stuckincustoms.com

The debate stems from the fact that teleporters are often used instead of spacecraft to move people and goods between planets. Teleporters require 100X the energy per ton of cargo moved, but the safety and convenience of teleportation make it the number one choice among many travelers. Ever since Yeltion bandits attacked and destroyed a transport full of middle school children during their mandatory interplanetary culture and linguistics education class – which requires visiting 10 different planets in one semester – lawmakers have made it illegal to use forced propulsion for the transport of children under the protection and care of the Department of Interplanetary Childhood Education.

This is a the first time in five election cycles that the results are being blamed on an actual issue as opposed to cultural differences between the cast planets. Last election cycle the Mining and Engineering coalition’s message that the Arts and Sciences were “out of touch” with “real work” appealed broadly. While voter turnout was only average during last election cycle, natural and AI augmented social media interactions were were up 3% during phase II campaigning. However, this election cycle’s lower turnout and results were based on an issue as opposed to cultural differences. This refutes the Sociology and Psychology cast’s claim that this could never happen again and renews the argument about whether humans have really evolved into a “post issues” society.

While normal election turnout is typically, 5.4%, the lower election turnout of 5.3% in addition to the backlash on the use of teleporters is being blamed by the Anatola party for the results this election cycle. The Anatola party has also appealed the results to the AI Council claiming that “letting our enemies know” that we will be using forced propulsion again will be a disaster and result in more Yeltion bandit attacks.

It’s difficult to say if the Artificial Intelligence Council will accept the results of this election, but it’s clear that the people have made their voices heard. Now it’s time to see if the Crelian party will deliver on their campaign promise to use more forced propulsion for interplanetary travel.

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Primary Residence: Determining What You Can Afford

Primary Residence: Determining What You Can Afford

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Typically, people buy the nicest house that they can afford. Sometime the thought process is that increasing income over one’s lifetime will ease the burden of a large house payment. There is some merit to this thought process, but I would also urge you to analyze this purchase as a banker would.

This first most important thing to understand is that a primary residence may be considered a financial asset, but it is also a liability because you always need a place to live. Unless you want to be homeless after you sell it, you will always need to purchase another home or rent another apartment. Now, if you purchase a secondary residence for the strict purpose of being rented out, this is purely a financial asset. Either way, I suggest you analyze the purchase like a banker.

Bankers understand that there are 11 major properties that can be used to judge a financial asset. Even though your primary residence is not a financial asset, these tools can be useful for analyzing any large purchase that you make. A home as an asset has advantages and disadvantages to it’s properties, much like any investment.

  • Moneyness: Ability to buy stuff. For example, cash and checks can be used to purchase food or clothes. A house or car cannot do this. You cannot go to a grocery store and buy food by trading your house. Moneyness is an attractive feature for a short term investor.
  • Divisibility and Denomination: Cash and checks can be divided down to the penny. This is smallest denomination in the United States. Other assets cannot be divided like this. For example, often bonds are sold in units of $500 or $1000. Houses are sold in complete, while condos are sold by the unit. While you could take parts off your car or house and sell them for their individual value, most people can clearly see that the value of the lumber in your house is not worth tearing your house apart to eat for a week. Divisibility is an attractive feature for an investor, but not for a borrower. A borrower does not want to get twenty $5000 loans to purchase a $100,000 home.
  • Reversibility: This is the cost to purchase an asset. Generally, a house bought in cash has no major cost, but there is also no market maker. This is a barrier to buying/selling a home. If you decide you want to sell your home, you most likely have to hold it until you can find a buyer. This makes you the market maker and slows down the process. You can hire a Realtor to assist you in selling the house, but this adds to your market making costs. Reversibility is an attractive feature to an investor, and homes require significant cost when transacting and do not have very good reversibility.
  • Cash Flow: Cash flow is the amount of money that is received from a financial asset. A home, which is lived in (without renters), will always generate negative cash flow. Taxes, insurance, and home repairs all contribute to this negative cash flow on a primary residence. Cash flow is attractive for an investor. A primary residence provides no cash flow, but a rental unit provides cash flow each month.
  • Term to Maturity: Term to maturity is the amount of time before a profit or dividend will be paid to an investor. For a home there is no specific term to maturity. The maturity date is the date that you can sell it. This requires you to become a market maker as stated above. With a thirty year loan, a house will typically not provide any maturity until several years into a loan, preventing sale at any sort of profit.
  • Convertibility: It’s common for corporate bonds to have a convertibility clause which allows them to be converted into normal shares. This is attractive to an investor for negotiating market fluctuations. A home does not provide any sort of convertibility. If the home market crashes, it can not be changed into a car and driven to a different neighborhood.
  • Currency: Because of currency fluctuations between countries, it can be attractive for an investor to have an asset which can be sold in multiple currencies. For example, there are bonds which can pay interest in either yen or dollars. Obviously, homes in the US can only be bought and sold in US dollars.
  • Liquidity: Checking and savings accounts are completely liquid. Assets (dollars) can be removed at any time. With a house, one can sell it faster by lowering the asking price, sometimes greatly loosing money. Therefore, homes do not have a good liquidity property. Home liquidity is further limited by the lack of a market maker to buy the home at any time and the lack of divisibility. Liquidity is an attractive feature for an investor.
  • Return Predictability: Return predictability can be somewhat tracked using the Case/Shiller Home Price Index. Prior to 2008, the predictability of home prices was fairly steady and attractive. Since the housing bubble burst, it has been more difficult to predict home prices. Predictability is attractive for an investor.
  • Complexity: Complex assets are made up of other assets. Derivatives may be considered more complex because they are composed of multiple financial assets with complex conditions on buying and selling. Complexity, well complexity can be attractive for market makers, but often risk is difficult to judge for investors.Homes, are simple assets composed of only one investment which makes it fairly easy to analyze.
  • Tax Status: Tax paid on an asset can vary wildly. Homes typically require payment of tax once or twice per year. The rate of tax paid varies by state, county, and city which can make it difficult to judge. Even within similar houses in similar neighborhoods in the same city, taxes can vary wildly. When purchasing a home, one must consider the tax. The tax can sometimes be negotiated with the state, county or city after purchase, but this is risky. Some states, counties, and cities can lock in tax at a certain rate after a certain age (e.x. San Francisco) – this is very attractive for retirees in volatile markets.

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