Profitable Parables

Let’s step back from energy today and reflect more broadly on the goal of becoming more informed and better investors.

I have two stories that’ll help us do that.

Grinding Your Teeth

Last Wednesday I found myself in the dentist chair before 8 am.

You don’t really get to partake in the conversation with the hygienist’s hand in your mouth, so you just have to listen to her smalltalk.

With this particular self-centered oversharer, Nancy, it usually focuses on her twenty-something son (whom she talks about like he’s in elementary school) and her investments.

I already know she has a few alpacas and two condos. She told me the first time I had her – five years ago – and she’s told me every six months since. (Yes, you should conclude she tells every patient this every time for the psychological reason that it makes her feel better about herself.)

Though I’d normally yawn at her chatter if it weren’t for the suction tube in my mouth, I actually took note of this cleaning’s musings.

Being near tax time, Nancy had recently totaled all the expenditures and income from her mini-llamas and beach properties. Her synopsis went something like this:

The alpaca farm did a little bit better than break even. But the condos have been really tough the past few years. I usually rent them for at least 320 days per year. Last year was around 280. The one in Panama City lost money but I think the one in Myrtle Beach should offset it. And I get the tax write-off so…

I was glad I couldn’t add my two cents at this point.

Her monologue went on to discuss the Panama City property and how her and her brother bought it before the rest of complex was finished. There was to be three more condominiums complete with restaurants and attractions.

The developer has since gone bankrupt and the rest of the project will not be completed. Nancy’s condo is worth $75,000 less than she paid for it. As are most of the condos in that city:

By the time I was able to chime in she was talking about her son and how he’s in the market for a house.

I told her I had recently bought a house in the area, and that I wished I was currently renting. With the down payment, closing costs, taxes, maintenance and improvement, and still-falling home values, I’d feel more secure and financially nimble if I were only tied to a lease.

Nancy countered that the tax breaks (I assume she was referring to homeowner credits and interest write-off) would help him out though. Just like they’re helping her real estate ventures.

I rinsed and spat and left.

Concrete Shoes

I was at the dentist so early because I had to be back home in time to supervise some concrete work being done at my house – a new sidewalk to replace the old, cracked-up one.

The work was bid out to several contractors, but I eventually went with Mike, a 31-year-old who had done some foundation work for me in the past.

He’s got a beat-up ’95 F-150 that has as much rust as paint and runs as much as it doesn’t. It doesn’t have cupholders so he uses the center of a duct tape roll.

He’s a really nice guy, works hard, does a good job, and makes sure you’re happy. I help him with the two-man jobs to keep costs down and he takes into account all my concerns and answers all my questions.

Nevertheless, he’s in a position where he needs a down payment to buy materials to get started.

“Materials and fuel keep going up and up,” he said. “And the price of work keeps going down. There’s so many people willing to work, everyone has to bid lower and lower. Everything’s moving in the wrong direction.”

I had some company coming in to town from New York Thursday evening – four close college friends – so I told him we’d have to start a bit later on Friday and Saturday.

Mike was there when they pulled up in a BMW 3 Series sedan, and asked what our plans were for the weekend.

We told him we had gotten a room in the Hyatt, and were going to spend a long weekend in the Harbor, eating, drinking, and being merry.

“Man,” he said, “Must be nice.” “You guys are four years younger than I am. What kinda work y’all do?”

There were two junior ad execs from Manhattan agencies, a Goldman derivatives trader, a finance attorney and me.

“Where the hell do you find those jobs in the paper?,” Mike asked half jokingly and half sarcastically.

You don’t.

All on You

If you want things to be better – finances, investments, careers, relationships – you have to make them that way.

As Dr. Seuss said in his infinite wisdom: Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not.

Everything from how much you make to how well your investments do to the mileage your car gets is up to you.

There are a million quotes and clichés about this topic because it’s true. If you want something to be different, change it.

Research everything. Read more. Compare prices. Keep receipts.

Don’t rely on government – or anyone, for that matter – but instead use them as tools. Seek advice and counsel from those who know more, but interpret it your own way and apply it to your situation.

I and my fellow editors strive to help you do that in many different ways. We don’t simply pick winning stocks, though that’s a big part of it.

But we offer many of the tools you need to be a better investor and increase your wealth. In Energy & Capital, Wealth Daily and Wealth Wire, we cover every aspect of the market from an outside perspective.

(We certainly would’ve advised against condos in Panama City at the top of the market.)

We’ll provide plenty of insight on everything from metals and miners to dividends and desalination.

But what you do with that information – like everything else – is up to you.

Call it like you see it,

Nick