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Archive for July, 2010

Final Walk-Through – The Value of Your Contract

27 Jul

A walk-through is an important step in a real estate transaction. To get the most out of it, make sure you understand the terms of the purchase contract.

Check Things the Contract Specifies

When you signed the contact to purchase your new home, certain elements and characteristics were specified. If the home does not match those elements on the walk-through, the contract will give you leveraging position. Consider the following:

If theres a hole in the wallboard caused by the leg of a table going through it when the seller was moving out, the house is not in substantially the same condition as when you wrote the contract and the wallboard was intact.

If you fill up that lovely, large Jacuzzi tub and the jets wont work, there is a problem with the working systems of the home. If you start the dishwasher, and it leaks before the cycle is finished, that appliance is not in normal working order. If all the surface burners on the stove wont light (if gas) or heat to red hot (if electric), ditto. If the heat or air conditioning wont come on, we have another problem with the working systems.

Allow yourself enough time to really pay attention and check on things. Usually an hour to an hour and a half is enough. Dont have a chip on your shoulder. Do be a good business person and systematically check.

If your contract calls for something you cant easily judge and it requires a third party to do it (such as the HVAC service mentioned above), you can request a copy of a paid bill at settlement. This is usually sufficient indication that the work has been done, and you know whom to call if there is a problem.

What If You Find a Problem?

Settlement may, or may not, be delayed if a problem is discovered. If its small and something you can easily fix, you may just want to ignore it. If it is something expensive and extensive, you probably dont want to ignore it. Many approaches are possible, but my inclination would be to go to the settlement table anyway and request that enough money be set aside in an escrow account held by a third party (not the buyer or the seller) to fix the problem. Id pad the amount a little to be sure theres enough. Those funds could then be used to complete the needed work and then the balance released to the seller.

If the seller is not willing to accept the idea of funds in escrow, Id request a delay of settlement until the work has been completed. The terms of such a delay need to be spelled out in an addendum to your contract.

Setting out to use walk-through to change the terms of a contract is not fair. However, if a walk-through shows that the terms of your contract have not been met, you need to figure out how to get things back on track and are behaving appropriately when you do so.

Most walk-throughs go smoothly. Lets hope yours is one of the smooth ones.

 
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Fantasy Income

20 Jul

As Einstein said, everything in life is relative, and ones income is no exception. While the vast majority of the world lives with an income that is below poverty level (eating only one small meal a day), there are others who make up the jet set and fly first class across the planet to share dinner with a friend. Who is happiest? Hard to say, for income ultimately has little to do with happiness. Its all relative.

The income of many corporate executives boggles the mind. Newspapers refer to these salaries as breathtaking, mind-numbing, eye-popping, and scandalous. While it takes courage and dedication to be the top person in todays major corporations, shareholders still have a hard time grasping that the CEO is worth $10 million a year before benefits. No one really knows if these corporate officers are really happy or not.

School teachers have dreams of sharing and shaping the future of the young generations. They put in as many hours as the CEOs, and in todays world struggle along with kids against drug and alcohol use, the violence and abnormal sex presented by TV, disintegrated family lives, a multitude of languages, and poverty life-styles. The daunting challenge of a teachers work environment would destroy anyone not truly dedicated to teaching. Income counts to a teacher, but it does not control the final choice to teach. Almost every-body agrees that teachers are way underpaid. Their satisfaction comes from nurturing the future the best they can under the circumstances, not from their income. Doctors and dentists have the amazing distinction of not blinking an eye at charging a poor person an entire years income for healing or fixing them. True, the doctors do have medical school bills and technical equipment to pay for. However, the poor person can experience more pain from the dentist describing the new yacht he bought then he does from having his tooth drilled. When they go home at night, who is happiest? Theres no way to tell. Money doesnt buy happiness, its only a tool.

Although the grass on the other side of the fence always looks greener, following ones own dreams of creativity and service, and loving your fellow humans just the way they are, remains the most exciting, happiest way to live ones life. Making decisions based on income alone leads down a pathway of defeat. Loving the income you have right now magnetically can attract more, and the loving adds the happiness.

 
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Excellent Cure for Extravagance, and Especially for Mistaken Economy.

13 Jul

When you find that you have no surplus at the end of the year, and yet have a good income, I advise you to take a few sheets of paper and form them into a book and mark down every item of expenditure. Post it every day or week in two columns, one headed necessaries or even comforts, and the other headed luxuries, and you will find that the latter column will be double, treble, and frequently ten times greater than the former.

The real comforts of life cost but a small portion of what most of us can earn. It is the eyes of others and not our own eyes which ruin us. If all the world were blind except myself l should not care for fine clothes or furniture. In America many persons like to repeat we are all free and equal, but it is a great mistake in more senses than one.
That we are born free and equal is a glorious truth in one sense, yet we are not all born equally rich, and we never shall be.

One may say; there is a man who has an income of fifty thousand dollars per annum, while I have but one thousand dollars; I knew that fellow when he was poor like myself; now he is rich and thinks he is better than I am; I will show him that I am as good as he is; I will go and buy a horse and buggy; no, I cannot do that, but I will go and hire one and ride this afternoon on the same road that he does, and thus prove to him that I am as good as he is.

My friend, you need not take that trouble; you can easily prove that you are as good as he is; you have only to behave as well as he does; but you cannot make anybody believe that you are rich as he is. Besides, if you put on these airs, add waste your time and spend your money, your poor wife will be obliged to scrub her fingers off at home, and buy her tea two ounces at a time, and everything else in proportion, in order that you may keep up appearances, and, after all, deceive nobody. On the other hand, Mrs. Smith may say that her next-door neighbor married Johnson for his money, and everybody says so. She has a nice one-thousand dollar camels hair shawl, and she will make Smith get her an imitation one, and she will sit in a pew right next to her neighbor in church, in order to prove that she is her equal.

My good woman, you will not get ahead in the world, if your vanity and envy thus take the lead. In this country, where we believe the majority ought to rule, we ignore that principle in regard to fashion, and let a handful of people, calling themselves the aristocracy, run up a false standard of perfection, and in endeavoring to rise to that standard, we constantly keep ourselves poor; all the time digging away for the sake of outside appearances. How much wiser to be a law unto ourselves and say, we will regulate our out-go by our income, and lay up something for a rainy day. People ought to be as sensible on the subject of money-getting as on any other subject. Like causes produces like effects. You cannot accumulate a fortune by taking the road that leads to poverty. It needs no prophet to tell us that those who live fully up to their means, without any thought of a reverse in this life, can never attain a pecuniary independence.

 
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Emini Futures S&P 500 And NASDAQ 100 : Basic Trading

06 Jul

Emini Futures S&P 500 And NASDAQ 100 : Basic Trading Info

What are Index Futures?
Future contracts originate from commodity trading. A future contract is an obligation to buy/sell a certain quantity of commodity at a specific date for a specific price determined at the outset of the contract. Future contracts are frequently used for hedging risks and also for speculation.

For example, with the recent hike in oil prices, an airline company which uses a lot of fuel might want to hedge it’s exposure to oil prices through the purchase of oil futures. If the price of oil is $60 now and is expected to go up to $70 within 3 months, the airline would hedge its exposure by purchasing the 3 month future contracts so long as the agreed price is less than $70.

Oil prices now $60
Expected oil price in 3 mth’s time (by airline) $70
Price of 3 mth oil contract (by oil producer) $68
Actual price 3 mths later $65

Let’s assume the airline can find an oil producer willing to sell oil 3 month later for $68, the company would enter a futures agreement with this oil producer for delivery of a certain quantity of oil in 3 month’s time. If the price of oil falls to $65, the airline still has to purchase at the agreed price of $68. But what propelled the airline to enter the futures contract in the first place is its expectations of future oil prices going up to $70 in 3 months and buying at a price below $70 (3 months later) seemed reasonable to the company.

Index futures are cash settled, there is no physical delivery of commodity as in the case of wheat, corn, etc. Although index futures can also be held for the long term, the time span we are concentrating on is a day. We are using the index futures as a vehicle for speculation and not for hedging as in the case of the airline company.

What is the Emini S&P 500 and NASDAQ 100?
NASDAQ 100 and S&P 500 index futures is listed on the Chicago Mercantile Exchange (CME) and trades on the Globex electronic system. CME acts as the counter party for each trade, hence if you short futures, CME will be taking the long position and vice versa.

NASDAQ 100 Emini contracts is actually one fifth the size of their larger counterparts, the NASDAQ 100 index futures. Each point of the index will represent $20 and the minimum fluctuation ( tick size ) is 0.5 points which is equivalent to $10.

S&P 500 Emini contracts is actually one fifth the size of their larger counterparts, the S&P 500 index futures. Each point of the index will represent $50 and the minimum fluctuation ( tick size ) is 0.25 points which is equivalent to $12.50.

Globex opens from 16:30(EST) on weekdays and 18:00(EST) on Sundays and public holidays. The closing time is 16:15(EST) on all days. However, there will be a scheduled maintenance of Globex from 17:30 till 18:00 (Monday through Thursday, nightly). I know the timings can be quite complicated, however as day traders, we are mostly concerned with trading when the market is opened as we have to capitalize on the higher liquidity available. I do not recommend entering trades after market hours, due to low volume which leads to slippage. The time span you have to concentrate on is really the market opening hours from 9:30 till 16:15 (EST).

More information regarding the contract specification of the Emini can be found on CME’s website.

symbols for the S&P 500 and NASDAQ 100 Emini index futures. Both the NQ and ES emini contracts have expiry months in March, June, September and December which are denoted by the letters “H”, “M”, “U”, “Z” respectively. Hence NQ05Z will represent the NASDAQ 100 emini contract with expiry month in December 2005. Similarly, ES06H will be the symbol for an S&P 500 emini contract with expiry month in March 2006.

March H
June M
September U
December Z

 
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