I take a late lunch, and go over to the gym to work out. I do this because the gym is much less crowded in the afternoon than if I go right at 12. While I do my 1 hr cardio workouts, I have been reading The Essays of Warren Buffett: Lessons for Corporate America. It is a fantastic read. Buffett’s style of prose is both easy to read and amusing. What is more however, is his remarkable insight into business shines through in every page.

I am reminded as I read it, of Richard P. Feynman and his book “Surely you are Joking Mr. Feynman.” While the topics are different the authors view of the world is the same. That is, they both break down topics that initially appear to be complex into their simplest components. Boiling down a subject into the easiest pieces is both the best way to understand it, and the fastest.

Feynman also said that if you can’t explain a topic to someone in 60 seconds, then you don’t really understand it yourself.

While reading Buffett’s work I came across something I had read in his financial reports before (they are all well worth reading) and it struck me just as strongly as I had read it the first time. Currently, the market is falling badly, and bank stocks in particular are taking a hit. Some of them should be taking a huge hit as they are in danger of a collapse, others should not as they are fundamentally strong.

And that brings me to Buffett. Everyone is panicking and selling bank stocks, regardless if the bank is actually strong or not. In fact, the stronger banks are falling in price, and the ones in serious danger of collapse have their share price going UP. So, in light of that, I reprint the Buffett Quiz:

A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.
But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?
Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the “hamburgers” they will soon be buying.
This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.

I check my credit rating every November. It always pays to keep track of it. The last time I checked, my FICO score was 715. A bit low because of a black mark that I have, and I have to wait until 2008 for it to disappear… However, I had $350.00 sent to a collections agency by ADT alarms for an account that should have been canceled. However, they made an error on the issuing of a new contract, and failed to cancel the old contract. Since my name was also connected with the original contract, they sent the supposed “outstanding” amount to collections. And the first I heard about it was from the collections agency – about an account that was no longer mine!

After months of effort and phone calls, I managed to finally get that account removed from collections. The collections people “suggested” I pay the $350, which I refused, because it was an error first off, and secondly, that would have had zero effect on my credit rating! Thus I fought it. Today I confirmed that it was in fact removed, and my credit rating jumped up from 715 in November, to 743 as of today. I am just shy of the 750 mark, and I eventually want to stay above 800. A number of people think I am a bit silly tracking my credit rating like this, but just a few points adds up to thousands and thousands of dollars on a mortgage. In fact, with my new rating, I should be able to get a rate that is lower than what I got originally, even though the prime rate is higher than when I got my mortgage.

Of course, I am now about to take on massive levels of debt in order to finance a second home – and I have been approved for the second mortgage, which really surprised me. So I am taking some significant financial risks doing this, but I am getting closer to my goals. That does not mean of course that it is not worrisome. However, at least living out of a real home as opposed to a motel room will be nice when I finally achieve that.

The pirate bay is back online, althought it appears that their MySQL database is under heavy load. They have changed their title to: “The Police Bay” in an ironic twist.

Data circulating amongst the internet seems to indicate that the large raid on the Pirate Bay was orchestrated by the MPAA contacting the department of foreign affairs in the U.S. Which in turn, contacted the department of foreign affairs in Sweden, and they mobilized the equivalent of the Swedish F.B.I. to arrest the members of the Pirate Bay.

However, what the MPAA does not apparently realize is that many people in Sweden have become galvanized over this issue of a corporation based in the United States interfering in copywrite law in Europe. Indeed, an “Pirate Bay” political party has formed in Sweden around this very issue. That, and according to Swedish law, the Pirate Bay is not actually violating any laws for running a bittorrent tracker, as they do not host any of the files on their servers.

It seems that there will very likely be a big backlash against the Swedish Police, who may even have to pay damages in this matter, and that despite publishing a document about their “victory” the MPAA will be worse off in the long run. The Pirate Bay was well known before this raid, and it will become even more well known after it, as it seems that it is very unlikely that any charges will actually be levied.

This does not work out in favour of the MPAA. But then, I don’t feel sorry for either the MPAA or the RIAA or any similar companies. They make their income off of controlling an effective monopoly on the film and music industries respectively, and their presence is not required for the distrobution of either movies or music. Indeed, they siphon profits off of artists, and damage what would otherwise be a free market solution to aquiring movies and music. Consumers would be better off without them around, and ironically, so would the artists.

Attacks such as the ones on the Pirate Bay will only serve to hasten their demise.

I recently ordered some very high powered magnets for an invention that I am working on, and I got the rest of the components together to test the beginnings of my prototype, and it works! Granted, the full prototype is not yet ready, but I have verified that all the parts will function as I had anticipated. After I aquire the remaining parts (which I should have by this weekend) I can begin testing the prototype in earnest.

If all goes well, it should be fairly easy to licence this idea, in the meantime, I will end up getting myself fairly messy as I tear apart a few basic houshold items, some automotive parts and some other things, and leave a general mess around as I build a fully-functional prototype. I can’t wait to fully test a working model.

Slowly, the story about the bursting of the Housing Bubble is coming to the forefront, understand what is going on so that you can protect yourself. I have blogged about this before, and apparently few believed it. However, CNN is reporting that the downturn has come, and a quick search of google news shows more stories stating that the bubble is popping than not.

What can you do?

First, you need to know your area. Know the real estate in your area, the change in housing values and sales will depend very much on your location. Second, be aware part of the reson for the bursing is specualtors buying many places and hoping to flip them. Third, you need to be aware that interest rates are rising. So, hopefully you have locked your mortgage rates in.

How does knowing your area help? Knowing your area helps because you will know how much housing has increased, for example, in my area, housing values increased by 36% in the last year. That is signifigantly above the normal increase of around 4-5% per year. Knowing how much the area increased recently lets you know just how much of a hit your area will take with the popping. If you live in one of the more central areas that was less affected by the bubble, chances are your home did not appreciate as much, and housing values will suffer less of a loss.

Knowing that speculators have been trying to flip houses helps you because it keeps you aware of future deals. Knowing that a large buying frenzy has been going on by people who have been seeking to buy high, and sell higher lets you know that some people are going to be forced to sell. This also lets you know that the amount of houses available for sale will increase, and that at the same time, the added supply will drive housing prices down. So, if you don’t yet own a house, or you are in the market for deals (assuming you properly know how to take advantage of them) a buyers market is approaching.

Interest rates in the United States are rising due to the massive debt that the Bush administration has racked up with the Iraq war, and the rates will only become worse if Iran is attacked. If the value of oil goes up, it is very likely that stagflation will hit (more here.) What you need to do in this case is protect yourself from rising interest rates. Rising interest rates will increase your mortgage payments, and how much you owe. So, if at all possible, lock your rates in now. If you are in a market for a house in the near future, be aware that combined with all the other factors, housing prices will fall dramatically in the next few years. It may sound scary to buy a house when interest rates are high (as they will be) however, this is when you can find the deals, when people are desperate to sell, or no one is buying. In that case, stay will flexible mortgage rates. You only want to lock in your mortgage rates when the rates are very low, or starting to rise.

So, protect yourself! Learn what it means to be a contrarian investor! Warren Buffett claimed that there was a real estate bubble in May 2005, and I agreed with him then. Pay attention to the contrarians, never follow the crowd, reap the benifits.

Well, it looks like Ubisoft ended their contract with Starforce. Maybe not for the reasons I would have liked, however, that might mean that there will be a version of Prince of Persia: The Two Thrones that I can buy without Starforce included. Gamespot Story has more, although their take seems to be that Ubisoft backed out of using Starforce because of a $5 million dollar lawsuit against them.

I will still buy a non-Starforce Prince of Persia 3, but Ubisoft, listen to your customer base faster next time, BEFORE the lawsuit, ok?

Damn you Ubisoft, long live Bethesda!

I recently finished playing Prince of Persia: Warrior Within, and I have some gripes about it. It was a good game to be sure, but not nearly as good as Prince of Persia: The Sands of Time. What made the difference is that the Prince suddenly became “extreme” and the likable Prince of the original was replaced by an arrogant brat. Much of the feeling of the original was lost.

However, Ubisoft Montreal apparently has managed to rectify this with Prince of Persia: The Two Thrones. Heck, they brought back Farah from POP: Sands of Time for it. That is a beautiful concession to the fans of the first one. And they managed to integrate the story of POP: Warrior Within to make everything cohesive…

So, here I am wanting to play Prince of Persia: The Two Thrones.

And, I want to pay for it. That I want to put down my hard earned money and BUY a copy of this game.

Then we come to starforce.

Ubisoft has contracted with a company called Starforce that creates copy protection for games. Now, it does so to protect its property. I can understand this. However, one of the first things I did after installing POP: Warrior Within was go and download the safedisc crack, so I could play POP: Warrior Within and not have to constantly search for my game CD.

Maybe that makes me an evil pirate. Yet, I purchased the game – I paid for it. I did not pirate it. I own it legally. So, I can do whatever I want with it, other than violate copyright.

And that brings us to Prince of Persia: The Two Thrones, which uses Starforce. Starforce uses some nasty techniques to register itself within a windows system – some view it as spyware, others view it as needed. However, the software HAS been known to cause problems with things such as burners etc. It is not a piece of software I want installed on my system. Yet, to play Prince of Persia: The Two Thrones this software MUST be installed, and to make matters worse, it does not uninstall after removing Prince of Persia.

That is not acceptable to me. Again, I understand that software companies would want to do this to prevent theft – even if it does not work at all, as I have seen POP: The Two Thrones on Bittorrent sites for a long time now. So, sure, I could pirate it and not pay for it (and apparently it still installs starforce, so so much for that!)

But I don’t want to do that. I want to pay for a good game, I want to play that same game too. I just don’t want that game messing with my system. It is that simple.

I registered with Ubisofts forums, and a whole bunch of other methods, to complain about starforce, and ask them if they were eventually considering removing it. But it looks like they provide no contact emails, and they delete or lock any threads in the support forums about starforce now. So, it seems that they are in full protection mode now. That is NOT a good policy for a company to be in. Instead of responding to customers needs, they are now shutting customers out. Customers like me.

You see Ubisoft, I want to buy Prince of Persia: The Two Thrones. I REALLY want to PAY for it. But you are treating me, the customer, like dirt. Like I am some filthy pirate, like I can’t be trusted. And, you have decided to install software that I don’t want on my machine if I choose to buy your game. I don’t like that. So, Ubisoft? You don’t get any of my money. Don’t worry though, I won’t pirate your game – I just won’t play it at all.

Bethesda, on the other hand has created Oblivion, the sequel to Morrowind. And, after the controversy that Ubisoft has had with Starforce, they decided to only use Safedisc as their copy protection. So, guess what? I will buy Oblivion, and not Prince of Persia. Bethesda listens to their customers. Maybe that is why Oblivion is quickly becoming one of the best selling PC games of all time already.

Listening to your customers, what a novel concept. Ubisoft? You listening yet?

My Visa Credit Card just got charged over $1500 for a computer purchase in Ontario. Now, I don’t live in Ontario, and I don’t purchase computer parts from Ontario. I do occasionally purchase parts from Vancouver, but that is because it is fairly near to me.

Thus, I am a victim of credit card fraud today, and I get to join the masses. I suspect that this will be quickly resolved, but I suspect that the vendor will be left footing the bill…

Unless the perpetrator was stupid enough to do this in an online transaction – then they will have the address of this individual. And in that case, I hope they prosecute the Credit Card Fraud.

I must say it was shocking to suddenly see over $1500 on my Visa out of nowhere, and as someone who keeps good tabs on his credit card and finances, it certainly made me leap out of my chair.

All this after BC Hydro has just refunded me my original deposit on my power bill from when I bought my house – that is a good sign as it means my credit rating will be going up again – but this incident better not damage my credit rating or I will be very angry. As I mentioned before, I check my credit rating once per year, but not more often than that. After this, I may just check it again in a few months to make certain there are no errors on my report, because I will not stand for a false charge on my Visa card, or a false mark on my credit report.

If you google for Housing Bubble you find a number of various pages on the feeling that there is a housing bubble.

If you use Google News, you find that for bubble stories, about 7 out of 10 say that there is a housing bubble. The remaining 3 or so do not.

To make matters worse for laypeople, these articles cite market conditions and formulas, and often a great deal of references to economic principles that the average person just knows nothing about.

So, what do you need to know? What are the broad implications of a housing bubble? And, is there really a bubble?

Chances are, you live in an area that is undergoing a bubble. You can tell if real estate has been crazy in your area in the last few years. Now, if you live in a mining town in Northern Canada, you probably have not seen this. However, in my area, my house just appreciated by 29% in one year.

I want you to think about that number. 29%.

Other areas in North America have had a much much greater growth in housing values than 29%. What is so interesting about a number like that? Well, the stock market grows at 10%. If you can do better than 10% you are beating the stock market. If you can do 15%, and maintain 15%, you will be the next Warren Buffett.

Now, in recent memory, where did we see a dramatic climb of investments before? The tech bubble. The tech bubble burst quite severely, however, the housing bubble might not pop in the same way. It could slowly deflate, or it could simply stay flat… that is, housing values might not drop, but just stay as they are for a number of years.

Chances are that they will drop.

The question everyone asks is “when”? The answer is nobody knows. If I knew exactly when bubbles would pop, I would be the next Bill Gates, but I am not. The sage rule about bubbles that the likes of Jeremy J. Siegel and Peter Lynch advocate are as follows:

“If you know you are in a bubble, get out. You can’t know when it will pop, only that it will.”

The secret to beating the housing bubble is to get in there after it deflates. Yes, it might go flat, housing values will probably go down. But they will NOT keep going up faster than the stock market. Mark my words on that.

This was an interesting listen. I had to take it in bites, and I listened to it while commuting to work, so it took me a little over 2 weeks to consume. There are sections that are long and dry, just like the economists themselves, however, there are also sections that are thoroughly engaging. The sections on modern economists are entertaining enough. However, the sections on Adam Smith, and particularly Karl Marx are the real gems. I can see how many people, particularly those whom are fond of Marx are both distrustful and critical of this book, but Skousen’s depiction of Marx is not one that I have ever heard prior. Indeed, Skousen points out aspects of Marx’s life that supporters of his theories would rather sweep under the rug. It is often pointed out how he lived in squalor while in England and in Soho. His children suffered from severe malnutrition, and his standard of living was appalling. This period lasted about 15 years, and during this time he wrote the small treatise “The Communist Manifesto”. What people fail to point out is that he was one of the Bourgeois prior to spending all his money in an attempt to finance a revolution. He was adulterous, although this has no bearing on his work, that would be an Ad Hominim if it were. And finally, as he wrote the communist manifesto, and lamented that the workers should be taken care of, his children were starving, and suffering. Yet, he was offered work that would have allowed his children to eat, and his standard of living to improve, but he refused on idealistic grounds. He chose the idealistic view over his children. Perhaps that is laudable, but I do not think so. Later on, he invested in the stock market (after writing Kapital, which is rife with economic theory errors) and made a killing, and was once more one of the Bourgeoisie again. I find that quite ironic. This was, in my opinion the strongest part of Skousen’s work. Again, fans of Marx will disagree.