HOW ONE iTuliper IS INVESTED?

[Debt-freeTICer]

Re: HOW ONE iTuliper IS INVESTED?

[quote=Sharky;68810]Welcome to itulip. And Happy Birthday!



I can certainly understand what attracted you to the deal. That kind of investment would have been almost perfect about 10 yrs ago.



Before Ka turns to Poom, we're likely to see:
-- Lots of bankruptcies in the retail sector
-- A big downturn in commercial real estate
-- Further credit tightening

I don't know anything about your tenant's businesses, but if I were you I would definitely investigate that in detail, if you haven't already. How well-positioned are they to survive the market downturn?

CNBC reported yesterday that "Family Dollar was the top winner on The S&P 500 at 36% increase for the year ( I don't own any stock of any kind and only watch CNBC with a sadist's interest. Like watching a train wreck).

If the earnings from this investment are intended to be your only source of income, I would be concerned about the above issues. Are you in a position to be able to get by if your income drops by 50% or more? What if it goes away entirely for 6 to 18 months?

I just purchased these one year ago, so I have taken the last year off, but am getting active again in sales and intend to pay everything off ASAP. I wonder about missing out on paying off with inflated dollars though.

Nice on the surface. The flip side is that the real estate market is terrible at the moment, and is likely to get much worse before it gets better. The tax savings won't help you if the property drops in value by 50% or more over the next 4 to 6 years.

Family Dollar is putting 200 new stores online this year and Fresenius (the dialysis Co.) is growing as well. I may be missing something, but if a million dollar property today is earning $75,000 income (7.5 CAP rate), and the underlying RE value drops in half, but continues to earn $75,000 by lease contract for another eight years, does that make it a 15.0 Cap rate? We were fortunate to be able to purchase these as whole properties at the maximum CAP rate. There are many people sitting with $50K -100K in Treasuries just taken out of the Market who would probably jump at the chance to have a regular passive income of 5.0 -6.0% right now. Am I naive? I could probably sell my holdings out in TIC form at these rates, but I have talked it over with my Agent and it would be unethical, as he is presently selling TICs at 6.5-7.0% CAP rates to small investors.

The key to investing in the Ka phase is to retain as much purchasing power as you can. It's less about profit and more about safety. And safety means diversification. After Poom hits, taking on a lot of debt can allow low-risk leveraged investments, with the debt being paid back with inflated dollars.

Personally, I sold my commercial RE holdings a few years ago. I own my home free and clear. I cashed out my 401(k) and paid the tax penalty. My liquid holdings are divided between gold, a little silver, and cash (including foreign currencies). I've been out of the markets entirely since July.

You might want to consider selling at least some of your current investment and diversifying a little (if it was me, I would sell it all and take the tax hit, but I'm probably a bit more paranoid than most). If you decide to hang onto the property, you might look into ways to hedge your investment somewhat. Maybe by shorting RE ETFs, for example, or shorting companies similar to the ones your tenants are in, etc (there are many options in that area).

[quote]

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

For 2008, I lost 3.50% in my portfolios. As ole Paul Harvey, the radio commentator, used to say on one of his programs, "and now for the rest of the story.

The rest of the story is that I finished the year with a 15.26% drawdown, which for me made it a pisser of a year. Had greed not predominated my thinking, somewhere around when I was up 18+% in September, I should have said, "Jim, be happy with what you have and get the hell out of Dodge." But the past is past, and lament changes nothing, at least not where I live.

What is important now is what lies ahead of us, which I am sure no one fails to recognize. I am not a long-horizon type, so my focus continues to be what happens next, which translates for me to mean: what happens with the current trend?

By my tracking the DJI is up 17.81% from its Nov intraday lows on the 20th or 21st. The SPX up 21.89%, the NDX up 18.92%, and RUT up 34.51%, and the $XVG (Value Line Geometric Index) is up 32.82%. By one definition, a 20% up move, the SPX, RUT, and $VGY are now in "bull markets."

Below (table) is my best effort to track Paul Desmond's so-called Panic Buying and Panic Selling indicator since 11/19/08. When both volume and points are down 90%, he calls that Panic Selling, and vice versa, when volume and points are up 90% for a day, he calls that Panic Buying. I have no idea what is Desmond's intrepretation of these data (assuming mine are close to his reckoning), but one could call the 90% down day on 12/01 followed by two 90% up days since then (and in his original study he also considered two back to back 80% up days as "equal" in significance as a 90% up day) some sort of a bull market buy signal. If I just followed this sole indicator, my orientation would be rather bullish right now.

	SPX	NY UP VOL	DOWN VOL	NAS UP VOL	DOWN VOL
11/19/08	806.58	1.84%	98.16%	0.76%	99.24%
11/20/08	752.44	7.74%	92.26%	1.62%	98.38%
11/21/08	800.03	73.83%	26.17%	93.59%	6.41%
11/24/08	851.81	93.68%	6.32%	97.99%	2.01%
11/25/08	857.39	68.62%	31.38%	72.66%	27.34%
11/26/08	887.68	91.83%	8.17%	94.78%	5.22%
11/28/08	896.24	73.83%	26.17%	71.69%	28.31%
12/01/08	816.21	1.20%	98.80%	0.78%	99.22%
12/02/08	848.81	87.94%	12.06%	95.21%	4.79%
12/03/08	870.74	78.66%	21.34%	83.97%	16.03%
12/04/08	845.22	22.87%	77.13%	10.73%	89.27%
12/05/08	876.07	85.11%	14.89%	93.68%	6.32%
12/08/08	909.70	87.45%	12.55%	93.38%	6.62%
12/09/08	888.67	29.17%	70.83%	15.52%	84.48%
12/10/08	899.24	67.76%	32.24%	87.62%	12.38%
12/11/08	873.59	14.63%	85.37%	7.75%	92.25%
12/12/08	879.73	72.23%	27.77%	80.54%	19.46%
12/15/08	868.57	29.76%	70.24%	15.89%	84.11%
12/16/08	913.18	94.08%	5.92%	98.72%	1.28%
12/17/08	904.42	47.75%	52.25%	53.24%	46.76%
12/18/08	885.28	22.49%	77.51%	17.50%	82.50%
12/19/08	887.88	56.58%	43.42%	65.76%	34.24%
12/22/08	871.63	18.23%	81.77%	10.80%	89.20%
12/23/08	863.16	30.28%	69.72%	23.84%	76.16%
12/24/08	868.15	62.14%	37.86%	65.18%	34.82%
12/26/08	872.80	71.48%	28.52%	82.84%	17.16%
12/29/08	869.42	33.19%	66.81%	29.87%	70.13%
12/30/08	890.64	90.01%	9.99%	95.64%	4.36%
12/31/08	903.25	80.28%	19.72%	93.36%	6.64%

Richard Russell is the only person I know or ever cross who comments on Lowry's Research (Desmond is at Lowry; owns it for all I know). Below is from Prieur du Plessis' blog from yesterday covering events through Dec. 30.

Turning to Lowry Research, its Selling Pressure Index (supply) has been steadily declining, but the Buying Power Index (demand) has not made headway as potential buyers remain unnerved and stick to the sidelines. “Normally, at final bear market bottoms, the Buying Power Index will plow higher as institutional money rushes in to pick up ‘bargains’,” said the 84-year-old Richard Russell (Dow Theory Letters).

http://www.investmentpostcards.com/

So between what I see in up 90% days and what Russell relates to the Buying Power Index, I opt on the side of continued caution in here, versus generating any wild enthusiasm that a good bottom has been put in for the bear market that began last year. All of this relates to the equity markets.

Another indicator I follow is the ISEE total calls number. http://www.iseoptions.com/WebForm/vi...rue&link1=true

I don't know as I write this if that link will show exactly what I am referencing, but one can manipulate the image and just show the daily readings and the 10 day moving average, and the time span. Put in a time span for at least back to a year, and you'll see it is at a high. What would be helpful is an SPX chart superimposed, but no such luck. The high I have on 12/30/08 is 154 using a 10-day EMA, the previous highest reading in my data was 153 on 10/9/2007 which coincided with the SPX and DJI tops, but the NDX and Nasdaq did not top until 10/31/07, while the RUT and $VGY had topped in July 2007.

A third indicator is the McClellan oscillator, a rendition of which is below in the lower panel.



The oscillator--blue line--shows a series of three decreasingly high tops since early in the recent fourth quarter. The data I follow which is the classically calculated McClellan oscillator, vs. the ratio adjusted oscillator above, has reached recent peaks of 234, 282, 203, and 279 on 12/31. These all are overbought readings and have existed since 11/28 when the 234 mentioned occurred. Normally this indicator goes from overbought to oversold--producing negative numbers.

Since an oversold reading of -318 on 11/20 of McOscillator, and the recovery from that to positive readings over the succeeding three days, there have been no negative readings. This indicates to me that a downturn in momemtum is due or even overdue. Nevertheless, such a downturn does not have to happen in here, and even if it comes, it might yet turn out to be just a correction of some significantly powerful upmove off the 11/20/08 lows.

One other thing strikes me about the recent generally positive action of the equity markets and that is these moves up have been on very low volumes, certainly influenced by the holiday season, but nevertheless very low volumes. See for yourselves.



My allocations are not significantly changed from those posted above on 12/20.

Though I suspect a pullback in here, I have nothing allocated to profit from that eventuality, i.e. no short equity positions.

Good luck to all in 2009.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

The good news is 2008 is just about over.

My tax-deferred account is about flat for the year. This is comparatively good, considering. But when I remember being up 100% at one point, I don't give myself good marks.

Today I took my short position (50%) to cash. I still retain BGEIX and GOLDX (a beaten down 25%). I'm looking to unload the inert PSAFX, but not sure where to go. I also own a chunk of RYWBX (since the FX market is just about alone in not chewing my butt).

In my trading accounts I'm carrying over only CEF. This morning's COMEX fix banged my stop in GTU (Crooks, I'm not going back to that thinnly traded vehicle, too jumpy).

And to all a goodnight. Good luck, I think we're going to need it.

walenk, I compliment you on your forthrightedness in pointing out the actuality of your year's experience, and I am truly sympathetic with you that you experienced such a drawdown from your highest gains during the year.

I expect we will see a lot reports in the coming weeks about how this, that, and another investment advisor did for 2008, but I'll bet you a silver dime, that few will mention their drawdowns (and not to do so, hides a lot of pain and truth).

A Bull Market in Lies By JOE QUEENAN

We'll feel better if we own up to being a nation of losers. Barron's 12/29/08


RECENTLY, I WAS STANDING AT THE COUNTER IN a gourmet market in Tarrytown, N.Y., ordering a sandwich I could no longer afford, when a neighbor sidled up to me.

"How you doing?" he asked. "I haven't seen you in a while. How are the kids?"

"The kids are OK," I replied. "And I guess I'm doing as well as can be expected, now that Armageddon has arrived, and the four horsemen of the Apocalypse are grazing on my front lawn."

His look expressed puzzlement. Then he caught my drift.
"Oh, you mean the stock market?" he said.

"Yes, I mean the market." What else could I possibly mean?

Now his previously dour face took on a disconcertingly chipper expression.
"I don't know what prompted me to do this, but I got everything out of the market in October of last year," he crowed. "I could see that the whole thing was way overvalued, so I moved everything into bonds and cash. I'm really glad I made that move when I did."

NOT FOR A NANOSECOND DID I believe him.

Warren Buffett didn't get out of the market in October 2007. Neither did Larry Ellison, Steve Ballmer, Steve Jobs, Steve Schwarzman or anybody else. Moreover, I could tell from the modest purchases my neighbor was making -- a bagel without butter, much less lox -- and from his generally hangdog expression, that the market meltdown had hit him just as hard as everybody else.

Yet, for whatever the reason, he was lying about having dodged a bullet that everyone else had taken right between the eyes. It was as if by pretending to be smarter than everyone else, he somehow erased the pain of not being smarter than everyone else. But lying about not having lost half your life's savings overnight doesn't change the fact that you did lose half your life's savings overnight. So why bother?

I had seen this sort of thing before, of course, back in 2001, when once-preening stockholders in Pets.com and CallmeandIllsendoveramaidandavideo.com and Whatever.com suddenly were harder to find than people who bet on the French in 1939 or the Germans and Japanese in 1945.

The same people who told you how rich they'd become when the Nasdaq was on its way up were only too happy to tell you how clever they had been to head for the exit before the index began its horrifying ride back down.

And now this same appalling crew of smirking, self-congratulatory, lying-through-their-teeth Johnny-Left-Earlies is back.

MY NEIGHBOR'S DUPLICITY IS AN example of a phenomenon that psychiatric specialists refer to as retroactive prescience, or rear-vision Cassandraism. This is a mindset in which a person who has been the victim of a catastrophe seeks to mitigate the trauma by denying that it ever happened. "No, I did not get my teeth knocked out in a fistfight. I chose to have them removed because I look better with dentures." Or, "No, I did not shave my head because I was going bald anyway. I did it because I wanted to look like James Carville."

By petulantly denying that they have fallen into the same trap as the rest of us, the retroactively prescient want to make it look as though they are always the masters of their fate -- never victims of circumstance, innocent bystanders, babes in the woods or lambs being led to the slaughter.

People who have lived through the Great Depression or the Battle of Britain or owning season's tickets to the Detroit Lions often say that what enabled them to survive these cataclysms was the sense that they and other folks were all in this awful thing together. People living through dark times derive solace from trading hair-raising anecdotes; the sense that we are not the only victims or suckers in town makes hardship easier to endure. You think you've got it bad because you're stuck with 600 shares of Citigroup? Guess who bought Bear Stearns at 90?

People who used to sit at the lunch counter and gas-bag about the Yankees and the New York Football Giants now debate whether Barack Obama should have appointed Larry Summers as Treasury secretary, instead of Tim Geithner. This reinforces the sense that we are living through a harrowing national crisis that we will look back upon with a sense of pride and accomplishment for the rest of our lives, provided we survive it.

INDEED, THERE IS SOMETHING ALMOST HEROIC about the sight of an entire nation's populace stepping forward to admit they have been annihilated by the recession. That's why those newspaper articles discussing the market losses of Buffett and Gates and Ellison are so uplifting. Some of us lost a few hundred thousand clams here and there, but those poor clowns lost billions. That's gotta take some of the sting out of it for the rest of us.

Conversely, there is something mean, antisocial and, yes, cowardly about those who insist on watching the whole debacle from the sidelines. People who lie about fleeing the market before the tsunami hit are cravenly refusing to lock arms with their countrymen and participate in this character-building, mettle-testing national ordeal.

They're stuffed shirts on a modern Titanic, escaping in their own lifeboat, where they regale each other with stories about having stopped payment on their checks to the White Star Line all the way back in Southampton because they knew the damn thing was going to sink anyway.

The worst thing about faux financial-fiasco fugitives is their absurd delusion that they are getting away with something. Sorry, Charley: The rest of us can see right through you.

Anyone who actually liquidated a portfolio in October 2007 wouldn't still be tooling around in a Honda Civic or a PT Cruiser. He'd have upgraded to a Lexus, and a big, fat one at that. Anyone who had truly gotten out of the way of that oncoming tractor-trailer called the U.S. economy wouldn't still be getting his Extra Bucks Card scanned at CVS or shopping for generic toilet paper at Sam's Club or racing off to the early-bird special at the multiplex.

As for those rare individuals who did get out of the market in time, they're careful not to gloat. As well they should be. Speaking for myself, if I meet one more guy in the gourmet market who congratulates himself on going 100% to cash last October, I'm going to wait until no one else is around and then start swinging, and I'm going to swing hard.

Then, I'll sneak away.

If anyone asks me about it later, I'll just say: "I wasn't there. I don't know what prompted me to do this, but I was out of the market long before the nastiness erupted."

---

JOE QUEENAN'S new book, Closing Time: A Memoir, is scheduled to be published in April.

[walenk]

Re: HOW ONE iTuliper IS INVESTED?

The good news is 2008 is just about over.
My tax-deferred account is about flat for the year. This is comparatively good, considering. But when I remember being up 100% at one point, I don't give myself good marks.
Today I took my short position (50%) to cash. I still retain BGEIX and GOLDX (a beaten down 25%). I'm looking to unload the inert PSAFX, but not sure where to go. I also own a chunk of RYWBX (since the FX market is just about alone in not chewing my butt).
In my trading accounts I'm carrying over only CEF. This morning's COMEX fix banged my stop in GTU (Crooks, I'm not going back to that thinnly traded vehicle, too jumpy).
And to all a goodnight. Good luck, I think we're going to need it.

[swgprop]

Re: HOW ONE iTuliper IS INVESTED?

I am a 35% TIC owner of 4 NN commercial leased, new construction, single tenant, corporate sponsored, properties. My mining partner, Dick, owns the other 65% ($2.6 million) ... These leases are all at 7.5% CAP rate on 10 yr. initial term with 3 five year renewals. There are 2% per year rent increases on all. 2 are Family Dollar Stores, 1 Dollar General and a dialysis center.

It strikes me that if you have to own retail based commercial real estate your tenant makeup is pretty good. Family Dollar and Dollar General are in a retail segment that should perform well during poor economic times (now).

http://www.lohud.com/article/2008812230362

That said, there are no guarantees of continued success...

http://online.barrons.com/article/SB...lenews_barrons

Your fourth tenant, a dialysis center, is in a potential growth industry given the aging boomer population.

You didn't say what percentage of your total holdings these properties represent. Assuming they represent the lion's share of your net worth, I would agree with Largo and Sharky; you may want to pursue a course of diversification and liquidity. You state you have the opportunity to sell some of your interest in the properties. While I am envious of your 100K in passive income, personally I'd sleep better at night having a healthy percentage of my holdings in cash and gold.

Best of luck and welcome.

[LargoWinch]

Re: HOW ONE iTuliper IS INVESTED?

I realize this is waaay out of the norm for this forum, so please be kind. Today is My birthday.

1st: Happy Birthday!

2nd: Thanks for your post and welcome to iTulip.

3rd: I find your post very valuable and perfectly fitted for this thread. So don't be afraid to test your strategies, better be warned on the internet in a forum than losing your precious life savings.

Besides, the only members to be really afraid of are The metalman and Lukester and maybe Jim Nickerson on a bad day (he remains a AAA gentlemen though), but I prefer someone punching me on the head here than doing stupid things with my hard-earned money.


Having said all that, iTulip does not provide investment advice (Ed. I hope you approve of my disclaimer), but its members on a voluntary basis will if they feel like it.

Myself, being in Canada and with limited knowledge of the IRS tax code cannot help much.

However I would venture and say this:

a) Given the size of your capital, I think you should "invest" in an iTulip membership! (Ed. do I get brownie points for this?).

This paper from EJ regarding 2009 could prove very useful:
http://www.itulip.com/forums/showthread.php?t=6504

b) One of the main issue I see with your investment is that it is not liquid.

c) What if we have a severe recession lasting multiple years? How many tenants can you lose to break even?

d) Lastly, the last bubble occurred in RE and I doubt it will re-inflate to previous level. Inflation will of course support nominal prices somewhat of a deflated bubble, but I think inflation will show up somewhere else. My humble guess is that Gold and Crude Oil are likely to benefit the most. Hence, your nominal returns maybe ok, but your real returns may turn out to be negative.

e) I don't know about the costs of ownership, but if the increase in rent are capped a 2%, your are likely to suffer during POOM.

f) Last but no least: EJ/Ed. do recommend a mix of gold and cash (nothing else at this point).

[Sharky]

Re: HOW ONE iTuliper IS INVESTED?

My first post.

Welcome to itulip. And Happy Birthday!

I am a 35% TIC owner of 4 NN commercial leased, new construction, single tenant, corporate sponsored, properties. My mining partner, Dick, owns the other 65% ($2.6 million). We chose to pay cash because Dick is 77 years old and did not want debt, and I am 55 and was using this investment to replace my working income. These leases are all at 7.5% CAP rate on 10 yr. initial term with 3 five year renewals. There are 2% per year rent increases on all. 2 are Family Dollar Stores, 1 Dollar General and a dialysis center.

My $101K annual income, paid monthly has been great.

I can certainly understand what attracted you to the deal. That kind of investment would have been almost perfect about 10 yrs ago.

My question for fellow iTulipers, "Do you think I am safe to hold these through Ka-poom?"

Before Ka turns to Poom, we're likely to see:
-- Lots of bankruptcies in the retail sector
-- A big downturn in commercial real estate
-- Further credit tightening

I don't know anything about your tenant's businesses, but if I were you I would definitely investigate that in detail, if you haven't already. How well-positioned are they to survive the market downturn?

If the earnings from this investment are intended to be your only source of income, I would be concerned about the above issues. Are you in a position to be able to get by if your income drops by 50% or more? What if it goes away entirely for 6 to 18 months?

Mining claims are recognized by the IRS as Real Property and qualified for 1031 Like Kind Exchange. Hence the purchase of other RE.

We both would have been in 50% tax brackets. My Basis (after claiming expenses in previous years) in the claims was only $1600.00. We paid no income tax and no commissions to purchase the properties. The whole $4million of our proceeds went into the purchase. If we hold these, or continue to exchange for like kind until we die, our children will get the properties tax free, due to the step-up in basis. Nice way to have Uncle Sam take on half of the risk and get none of the benefits.

Nice on the surface. The flip side is that the real estate market is terrible at the moment, and is likely to get much worse before it gets better. The tax savings won't help you if the property drops in value by 50% or more over the next 4 to 6 years.

If there is some better investment, I can sell as much of my property as I want and only pay Capital Gains now. The Realtor I purchased through, is still selling about a million dollars of this type of property per month. He said if I sold this in pieces of $50,000 minimum investments and up, I could sell at 6.5% CAP rate (a 13.3% Profit). He will charge me seller's commissions if I cash out, but nothing if I reinvest in some of his other inventory.

The key to investing in the Ka phase is to retain as much purchasing power as you can. It's less about profit and more about safety. And safety means diversification. After Poom hits, taking on a lot of debt can allow low-risk leveraged investments, with the debt being paid back with inflated dollars.

Personally, I sold my commercial RE holdings a few years ago. I own my home free and clear. I cashed out my 401(k) and paid the tax penalty. My liquid holdings are divided between gold, a little silver, and cash (including foreign currencies). I've been out of the markets entirely since July.

You might want to consider selling at least some of your current investment and diversifying a little (if it was me, I would sell it all and take the tax hit, but I'm probably a bit more paranoid than most). If you decide to hang onto the property, you might look into ways to hedge your investment somewhat. Maybe by shorting RE ETFs, for example, or shorting companies similar to the ones your tenants are in, etc (there are many options in that area).

[Debt-freeTICer]

Re: HOW ONE iTuliper IS INVESTED?

My first post. My first investment was $1.4 Million cash. I found iTulip after I had made my investment. I welcome your critical analysis of how I did.

I am a 35% TIC owner of 4 NN commercial leased, new construction, single tenant, corporate sponsored, properties. My mining partner, Dick, owns the other 65% ($2.6 million). We chose to pay cash because Dick is 77 years old and did not want debt, and I am 55 and was using this investment to replace my working income. These leases are all at 7.5% CAP rate on 10 yr. initial term with 3 five year renewals. There are 2% per year rent increases on all. 2 are Family Dollar Stores, 1 Dollar General and a dialysis center.

My $101K annual income, paid monthly has been great.

My question for fellow iTulipers, "Do you think I am safe to hold these through Ka-poom?"

I have been reading here for about 9 months and have great respect for your opinions.

Let me give you some additional information which I hope has given me some comfort as I understand Ka-poom.
If we have hyperinflation, the Dollar store leases have a clause, "If store sales exceed $2.5 million annually, we receive a payment of 3% of gross sales over the 2.5."
The value of the Medical center for calculation of the Lease Payment is adjusted to current replacement costs at the time of the renewal periods.

When we purchased these properties, the rent per sq. ft. we are receiving was 20-25% below comp values in the local areas. We felt this was a nice cushion, if we had to replace our tenants.

Last of all, "Where did I get the $1.4 million to invest?" Dick and I sold 65 Square miles worth of mining claims on Iron and Rare Earths in Utah. Mining claims are recognized by the IRS as Real Property and qualified for 1031 Like Kind Exchange. Hence the purchase of other RE.

We both would have been in 50% tax brackets. My Basis (after claiming expenses in previous years) in the claims was only $1600.00. We paid no income tax and no commissions to purchase the properties. The whole $4million of our proceeds went into the purchase. If we hold these, or continue to exchange for like kind until we die, our children will get the properties tax free, due to the step-up in basis. Nice way to have Uncle Sam take on half of the risk and get none of the benefits.

If there is some better investment, I can sell as much of my property as I want and only pay Capital Gains now. The Realtor I purchased through, is still selling about a million dollars of this type of property per month. He said if I sold this in pieces of $50,000 minimum investments and up, I could sell at 6.5% CAP rate (a 13.3% Profit). He will charge me seller's commissions if I cash out, but nothing if I reinvest in some of his other inventory.

I realize this is waaay out of the norm for this forum, so please be kind. Today is My birthday.

[LargoWinch]

Re: HOW ONE iTuliper IS INVESTED?

Ok little update here.

My current allocation entering 2009 is as follow:

Cash	50.5%
Gold	32.2%
Platinum	6.1%
Silver	5.3%
Crude Oil (HOU)	4.1%
Natural Gas (HNU)	1.1%
Palladium	0.7%
Total:	100.0%

I recently added some HOU, but lost 15% on this position in a few weeks. Despite this I will not sell, but add to my cash position until I buy some more Crude (HOU.TO) or some DJ-Aig grains (HAU.TO). In other words: I feel I have enough PMs for now.

Note that the ETFs (HOU, HNU and HAU) are $CAD hedged and 2x leveraged. The allocation % above accounts for this leverage.

Starting this year, my spreadsheet will allow me to calculate my investments return (duh!) at any time during the year i.e. will differenciate between new capital (savings) and returns.

- W.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

Indeed. Lmao on that one!

BTW: time to short crude... I went long this week on 2x leverage.

Last time I went long crude it plunged 15% or so in less than one week! (leverage excluded).

I can understand Jim's decision to sit on the sidelines. The markets volatility is crazier than a drunk beaver dancing on a log headed for Niagara Falls.

Well actually, Winch, the volatility as I have witnessed it in my portfolio and in the $VIX has lessened considerably, though the $VIX (chart above) is still just a hair below its peak in 2002, and nearing 50% off its recent high. My portfolio is more than just a hair beneath its peak of this year.

I have felt for a while that if I closed my longs, the market would go up, and if I held them, the market would go down. I guess everyone feels that way about their trades. I am out mostly, so we'll see what happens.

Mike Burk, who is the only person I cross that makes weekly market calls (record this year 39% correct, 35% wrong, and the rest mixed, i.e. for some weeks some indices were up, some were down and these were rated as a "tie"), today wrote

"Short Term
Seasonal considerations overwhelm everything else.

The second and third days prior to Christmas are often a little weak, but the day prior to Christmas is usually strong. This year, Friday, the day after Christmas, is likely to be a very low volume day that drifts upward, similar to the day after Thanksgiving.

Intermediate term
There is nothing technically to put the Santa Clause Rally in doubt."

My current allocation is:

LONG	0.00%
INTL LONG	0.00%
COMM	3.89%	DBA, UNG, USO
PM	1.57%	PHYS GOLD AND SILVER
EGY	1.95%	TSO, FTO, VLO
CURR	2.97%	FXF, TBT
HEDGED EQUITY	19.63%	HSGFX
12/20/08	30.02%
CASH	69.98%	NOT EARNING JACK SHIT.

The above positions are down 13.3%.

Currently my drawdown is 15.33%, YTD -3.57%, 1 year -2.21%, 2 years cmpd 2.92%, 3 years cmpd 4.38%, 5 years cmpd 8.20%, from 10/2002 lows cmpd 14.54%, from 2000 high -1.64% cmpd.

The upmove off 11/21/08 intraday lows to recent intraday highs has been 21% for DJI, 24% for the SPX, and 32+% for the RUT. I've been of the opinion that a "lot" of people have been expecting something like the ~50% rally for the DJI after the post-1929 crash (I think I am recalling that correctly). A 50% rally or more could happen in here, but my bet is against it. If it were to happen--50% rally--I will feel like shit.

[LargoWinch]

Re: HOW ONE iTuliper IS INVESTED?

Priceless !!! .....

Indeed. Lmao on that one!

BTW: time to short crude... I went long this week on 2x leverage.

Last time I went long crude it plunged 15% or so in less than one week! (leverage excluded).

I can understand Jim's decision to sit on the sidelines. The markets volatility is crazier than a drunk beaver dancing on a log headed for Niagara Falls.

[Supercilious]

Re: HOW ONE iTuliper IS INVESTED?

I have great respect for Lukester and read his shorter posts carefully.

Priceless !!! .....

[Basil]

Re: HOW ONE iTuliper IS INVESTED?

Jim,

'Cognitive dissonance' . . . 'emotional attachment' - yeah I think both of those terms pretty well sum things up.:confused:

I agree completely that I really need to establish some parameters regarding getting out of stocks (mostly index funds actually) if the rally is dead. As you say its tough. The sales I made in late October were really just gut-based, and I was lucky to catch that bounce.

The SH position is just dabbling for now,won't get further into it until doing something about the long positions.

BTW - the reference to 'Lukester's big rally' was not meant at all to be sarcastic or critical - I hope no one, especially him, takes it that way.

First of all let me say, I have great respect for Lukester and read his shorter posts carefully. After discussions with him, I checked out Sy Harding, as this is one of the people Lukester cited to support the notion of a large rally in December. Harding is of the position that we should rally, not only because his technical indicators say so, but also because this recession will not be any worse than what transpired in the 70s (red flag if you accept the Itulip thesis). It turns out that most of the people calling for a big rally often cite the 70s as the worst this could get. For example Leeb bought the idea that the US government would actually make money from the TARP program. I am starting to think that many of these people are very good, but do not know how to read the tea leaves when somebody has been pissing in the tea. EJ, however, asked the question, "Well how did they make the tea?" rather than assuming it was the same old tea. And that makes all the difference

All of which is to say that (thus far) the rally has not panned out as they thought/hoped it would. I think that Jim is correct in that we have hit the 50 DMA and just cannot get past it. We now have a triple top, or a mini head and shoulders top; make of it what you will. It says to this amateur that we are going down again sooner rather than later.

If one accepts the overall Itulip hypothesis and EJ's read on the markets, two years from now, or maybe even six months from now, one will be very happy to have cashed out anywhere above 8K.

[leegs]

Re: HOW ONE iTuliper IS INVESTED?

Jim,

'Cognitive dissonance' . . . 'emotional attachment' - yeah I think both of those terms pretty well sum things up.:confused:

I agree completely that I really need to establish some parameters regarding getting out of stocks (mostly index funds actually) if the rally is dead. As you say its tough. The sales I made in late October were really just gut-based, and I was lucky to catch that bounce.

The SH position is just dabbling for now,won't get further into it until doing something about the long positions.

BTW - the reference to 'Lukester's big rally' was not meant at all to be sarcastic or critical - I hope no one, especially him, takes it that way.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

I'm very new to iTulip and here's my situation:

Cash - 52% (did some selling out of mutual funds in late Sept and late Oct 2008 (refer to thread http://www.itulip.com/forums/showthread.php?t=6197))
Equities - 42% (failed to commit totally to selling out of stocks. Been waiting for Lukester's big rally to develop)
Gold (BV) - 3%
SH - (S&P short) - 3%

80% of my money is in IRAs.

I am settling on the following parameters for a personal thesis:
- serious inflation will take place
- gold will go up
- oil will go back up a lot
- stocks have a lot further down to go

My sense of timing for the above to happen is 1-2 years, not necessarily next several months, but you can see by my minimal commitment so far to gold, oil, and short stocks that I definitely am taking a wait and see attitude.

Looks like a little "cognitive dissonance" here with SH and the maintenance of your emotional attachment to your 42% equities positions, or a 3% hedge against your long equities positions.

I closed out a bunch of longs last week (at losses), so perhaps that will insure a rally in equities.

You should start a thread "Ask Lukester" and inquire of him as to what's gonna happen.

It is a tough situation with your longs, assuming you have some losses in them, as to what to do now. I have the same problem with some stuff, losses I should never have allowed to buildup, but failed to have cut my losses when I should reasonably have done so had I exercised serious discipline. The issue of your time horizon, 20-years, may over that period bail you out, but no one knows. Look at Nikkei 225 today, 19 years after its peak.

If your reasoning leads you to believe that stocks have a "lot further to go down" then it seems to me wise to decide just what further losses you are willing to accept with regard to the 42% equities position in the case that the "Lukester" rally does not go much beyond where it may be currently, thus removing for you the opportunity to sell into strength.

I wish I knew and could publish the correct and easy answer, but it does not exist, I don't think.