SELL IN MAY AND GO AWAY.

                                                 Eureka, TX, Cemetery.  Memorial Day 2012

I Have Been Out of Town.  For most of the month of May, I have not been at home.  I had to go to Phoenix to settle my Dad's estate.  In case you think this blog looks different than the one you are accustomed to seeing, Blogger changed the format of Blogspot, and I am having to re-learn some of the things I thought I already knew.  Anyway, I plan to do better during June and return to my weekly schedule.  For this post, I am reverting to my customary habit of writing about financial matters.

Sell in May and Go Away.  This is a shopworn cliche that reflects the seasonal tendencies of the stock market.  In most years, the summer months beginning with the first of May results in a market down trend.  For my own portfolio, I tend to ignore this rule; however, I am not surprised when the market does drop at this time.  On March 23, my post was mainly a comment on the energy markets; however, it might be appropriate to call your attention to the fact that, since that date,  the Dow has dropped 5% 13080 to a closing price of 12419 today.  According to the "experts," this drop is due to more than just seasonal adjustments.  It reflects the scary situation in Europe in which several governments are on the verge of bankruptcy due to the huge amounts of debt these governments  have built up in order to provide an impressive list of benefits for their citizens.  Those of you who think we should do more to establish a society where the government provides those benefits might be well advised to consider what has happened there as governments attempt to institute austerity measures. These are meeting with increasing resistance from citizens who feel betrayed when the government can't afford to provide the promised benefits.

Enough Politics.  I also want to call your attention to the fact that I pointed out the huge disparity between the price of a unit of energy provided by natural gas and that provided by petroleum.  I predicted that it was absolutely necessary for the price of gas to increase or the price of petroleum to drop.  I am surprised that this has happened so quickly.  Natural gas increased 25% from $2.00 per million BTU on March 23 to $2.50 today.  Crude oil, on the other hand, has decreased 16.7%  from that day's  $105 per barrel to today's price of $87.5 per barrel.  Given an approximate price of gasoline at $3.80 in March, a 16.7% decrease should reflect a current gasoline price of $3.17.  This indicates that there is room for a decrease; however, before we get our hopes up, we should remind ourselves that there are seasonal factors that might tend to keep prices higher until the summer driving season is over. 

Recommended Investment Strategies.  I'm sure my clients aren't surprised to find out that I am standing pat with my investment program of cash flowing investments.   Any stock I will either emphasize dividends or covered call options, or a combination of the two.  If neither opportunity exists, I will pass.  I hope those of you who have followed this blog will give me another chance to re-establish a more regular schedule.  Health permitting, I promise to do better in the future.

A WAR LIKE NO OTHER.

Two Warriors Home From The War.

The Above Picture Shows Josh and Shane. They were two warriors who recently returned  from Afghanistan.  Each in a different way. One suffered injuries that ended his life and left his family to grieve. The other came home with no visible wounds but he is certainly a different person than he was when left home five years ago at the age of 19. The two were devoted friends drawn close by the dangers they faced on an almost daily basis.   They had each other's back until an Afghan bullet ended the life of one and left the other with an unforgettable loss.

I Learned About Both On Facebook. After months of listening to politicians and high ranking politician's comment on the war, I felt I was getting a slanted view. I wanted to talk to some of those who were part of the so-called "boots on the ground" crew.  I called Josh and told him I had some questions that I would like him to answer.  He graciously agreed and we met in a coffee shop in Beaumont, Texas.  He brought his laptop and showed me some movies of actual combat and some still shots of various locations he had experienced.  These gave me an excellent picture of the environment he experienced.

I Asked Josh Numerous Questions.  I knew he had been part of the elite 101st Airborne but I didn't know he had undergone two deployments, one in Iraq and another in Afghanistan.  He believed the biggest danger in Iraq was roadside bombs while they were a fire fight virtually every single day in Afghanistan.  When I asked about our progress in transferring the war to the Afghan troops, he replied that he never trusted any of them.  They stole from the Americans and they had been known to fire on American troops when they traveled behind them.  This resulted in keeping them in front of any troop movements to avoid incidents like that. 

How Is This War Different?  There are no draftees in this war.  All are volunteers with most of those well aware that they would be in combat at one time or another during their term of enlistment.  Most had cell phones and Internet access in order to contact the folks at home.  This can be a major benefit compared to earlier wars when the troops had to hope that they received  letters from home.  This can also be an added stress as conflicts at home can be multiplied by phone calls or other communications that end in powerful arguments and fights over control and power at home.  Research has shown that the majority of suicides in Iraq were the result of a failed relationship at home.  Josh was exposed to this, having undergone a divorce during his enlistment period despite the fact that part of the reason for the enlistment was to provide a better future for his family.  Research has also indicated that the stress of going from deployment to stateside and back to deployment can also contribute to depression and anxiety among the troops.  I doubted the validity of this research until Josh informed me that the boredom of their home base in Ft Campbell, Kentucky caused many soldiers to want to be re-deployed.  The dangers of deployment caused these same soldiers to want to go back stateside. 

What About Living Conditions.  While most of these soldiers have a roof over their heads most nights, living conditions are certainly less than ideal.  Personal hygiene is difficult to attend to.  Showers are often cold and water, especially hot water is in short supply.  Troops are in close quarters with bunk beds.  When soldiers are on patrol, personal hygiene often becomes even more of a problem, especially for females.  While these conditions are better than experienced by soldiers in previous wars, they are still stressful. 

The Future.   I don't have a statistical sample of how our soldiers feel about the future of the war but Josh thinks the Taliban will be back in control within a short time after we leave.  Although the Taliban are an unprincipled group by our standards, it appears that the Afghans feel like the the Taliban better represent their views than the Americans.  The average Afghan wants us to go home.  Josh believes that we are accomplishing little over there.  I tend to agree.  I supported our mission when it started but I think we have stayed too long and put too many men at risk for a longer period than our potential benefits justify.  I am ready to bring everyone home now, leaving with a warning that we will be back to strongly punish those who would attack our country again. 

What About Our Returning Soldiers.  I think we owe these men a lot.  It appears to me that one of the main reasons Josh went into the army was due a lack of opportunity at home.  One of his goals was to "become a better person."  I think he was a good person before he left.  At this point, it appears that there are fewer, not more, opportunities available to him now than there were before he left.  The loss of his friend, Shane still weighs heavily on his heart and there is now another.  The recent suicide of Aaron, another of his fallen brothers in arms.  Not a good indication of how well he adjusted to civilian life.  The skills Josh acquired from his five years as a rifleman in the army have little utility in civilian life.  He recently went to work as a security guard at a relatively low rate of pay.  He lives with his parents in a crowded apartment, has no car, and has said that he is wasting his life as a civilian.  He describes his release from the army.  Once he was outside the base of Ft Campbell he was not allowed back.  He sold his car to finance his trip home.

What Are We Doing For These Men?  It bothers me that we can afford to provide an airplane for a previous speaker of the house and fly her staff on junkets overseas.  The GSA recently completed an outing and spent almost two million on food, lodging, and entertainment.  Still, we can't afford to look out for our troops once we have used their service.  We should at least make sure they get back to their homes.  A friend of mine, a retired first sergeant, well informed on these issues, sent me some statistics that show we have in excess of 897,500 disability claims pending for returning veterans.  There is an error rate of 16% in processing these claims.  The majority of these claims (65%) are more than 125 days old.  If we think things will get better soon, think again.  Pending claims are expected to grow to 1.2 million before the
current year is over and we are projecting 50,000 more after that. 

I learned a lot from the time I spent with Josh.  I should emphasize that he did not complain but it was obvious to me that he was not adjusting well.  He has even considered going back into the Army. I asked him if he thought he had post traumatic stress syndrome.  He said no and I believe him. It is obvious to me that he misses the comraderie of his military friends and I am sure he is not alone in that regard.  I have asked him to call me if he needs my help but he doesn't call.  He is a strong and principled young man and I pray that he will find what he is seeking in what has tuned into a difficult environment for younger Americans.

UNDERSTANDING THE ENERGY MARKETS.

Azaleas Native To Big Thicket.

The Picture Above The picture really doesn't relate to this week's topic. I am including it only because it shows a very unique flower. Azaleas that grow native in the Big Thicket where I live. While they lack the vivid colors of those we plant, their delicate, tropical like appearance increases their appeal.

Inefficiencies In Energy Prices. Everyone is complaining about the cost of driving a car. Gasoline prices are in the high three dollar range in most places. Many complain that the cost is being driven up by speculators rather than by supply/demand imbalances. Some congress persons are talking about legislation/regulation to curtail speculative activity. While there is little doubt that speculators influence the price of energy, calling for limits to our freedom to buy and sell for future delivery is but one more example of a government that is trying to control things they don't understand. Suppose I know I will need to purchase a million gallons of fuel in September, I can either worry or buy a contract for a million gallons for September delivery. If the price stays the same, I can sell my contract or take delivery. If the price drops, I can buy on the spot market and recover my part of my futures investment by selling my contract (at a loss). Of course, there are numerous other options but the point is buying or selling contracts for future delivery involves risk but this activity gives me more tools to manage that risk. If there is considerable uncertainty in the marketplace, like the potential for more political unrest in oil producing nations, the cost of buying futures contracts will increase. If there is a huge discovery of high grade oil in West Texas, the cost of buying futures contracts will decrease. There is little the government can do about that.

Energy Is Energy. We talk about buying natural gas by the cubic foot, coal by the ton, and oil by the barrel. It's hard to compare one energy source to another using this kind of pricing. We usually assume that energy from each substance will be priced efficiently. Not true. Natural gas prices are around two dollars per one million energy units (BTU). Oil is $105 per barrel. Since a barrel of oil contains 5.8 million BTU, a barrel of oil should be around 5.8 times that of a million BTU of natural gas. Traditionally, a barrel of oil has been priced at a bit more than this, ranging from six to nine times the price of gas. In the current market place, with oil at $105 per barrel and natural gas at two dollars per million BTU, the ratio is 52.5. This would point to the conclusion that either oil must come down or natural gas must come up. Knowing this should allow us to spot investment opportunities. There is little doubt that the current ratio of oil prices to gas will return to something closer to the historic average.

What's Going On With Natural Gas. You would have to be in jail without a TV or computer not to have heard about new discoveries of natural gas in shale formations in several areas around the continental United States. Natural gas is being produced at a rate faster than we can use it and we are reaching a point where storage facilities are full. The facilities we have built to import liquefied natural gas from other countries are now being considered for rehabilitation to allow us to liquefy natural gas for export to countries where demand is higher than in the US. Several companies are looking to convert our fleet of trucks to run on natural gas and major car companies are considering switching pickup trucks to run on natural gas. There are numerous political and technical problems to overcome but we can not afford to keep importing petroleum products when we have our own source of energy which is much more affordable than that which we import from other countries. Cheap natural gas also puts a damper on other forms of so-called green energy which is not yet economically feasible.

What Are The Implications of All This. Think about it. For all the talk about battery operated cars, there may not be any net energy savings. Even if they had a battery that had a range equal to a tank of gas, when you plug the car in to recharge the batteries, you are actually, burning the fuel used to generate electricity, right now either natural gas or coal. You will discharge CO2 from these plants just like you do from the tailpipe of your car. The only reason it may be cheaper to operate your car on a battery is that electricity using natural gas or coal that is cheaper than petroleum. My guess is that the price of natural gas will increase as we discover more ways to use it. This will put a lid on oil prices and we are probably not looking at huge increases there either. Of course, all bets are off if there is a major disruption in mid-east oil.

Answers From This Article May Not Be all That Forthcoming. I am not sure that my knowledge of this subject is yet sufficient to be of significant value but I hope I have aroused your curiosity to follow some of the news in this area. Now that I have done some research in this area, I hear more and more news through common sources that give me ideas as to future investment activity.

USING OPTIONS TO YOUR ADVANTAGE

Knockout Roses. A Little Early Spring Color

Managing Your Money. In these difficult times everyone is afraid to take risk. Unfortunately, there is no risk free investment. Choosing only so-called risk free investments can result in certain loss. For example, if you try to buy only short-term CDs, your return is less than 1%. This is less than the rate of inflation which means you can't buy as much with the money you've invested as you could when you made the investment.

The Stock Market Has Manageable Risk. One way to manage your risk in the stock market is through the use of options but you have to understand certain basic principles before you venture out. Most people won't bother to learn these principles because they think they are too complex and too risky. The fact is they are simple to understand and utilize in a safe manner.

An Option Gives You The Right To Buy Or Sell At A Specific Price. For example, suppose your neighbor owns the lot next door to you and is asking $100,000. You don't have the cash right now but are expecting a substantial inheritance within the next year. You don't want someone else to build next door so you approach your neighbor and offer him $5,000 to hold the property until next year at which time you will pay him the full asking price. He accepts your offer because he will net $5,000 more when you make the purchase, or if you don't buy, he gets to keep your $5,000. This is a simple transaction to understand.

There Are Two Components To An Option's Value. 1. Intrinsic value. If the lot in question is worth $102,000 and you have an option to buy at $100,000 you are getting $2,000 more of value than you are paying; therefore, the intrinsic value is $2,000. 2. Extrinsic value or premium. Since you are paying $5,000 for an option that has a value of only $2,000 you are paying $3,000 in premium. This leads us to one of the only sure bets in the market place.

On The Day The Option Matures, The Extrinsic Value is Zero. The buyer of the option naturally hopes the property value will increase more than the amount of premium (extrinsic value). If it hasn't he has overpaid by $3,000. Think about it. It is really a simple concept. Both parties are managing their risk. If the price drops during the holding period, the option seller has an extra $5,000 to help him bear the loss. If the price increases, the option buyer has his price set at $100,000. Of course, he has paid $5,000 for that privilege.

How Do We Use This In The Stock Market. One way is to harvest your gain and keep the potential for growth. As an example suppose you own 1000 shares of 3M for which you paid $50,000 for three years ago. You have an another attractive investment opportunity and you need your cash. You also are concerned that the capital gain tax is going to increase to 28% during the next year. To top it all off, you believe there is considerable growth potential left in the shares. Here is one way to handle that dilemma. 1. Sell your shares at the current market price of $86,000 and purchase an option to buy the shares between now and January 2014 at $80,000 for $13,000. This way you get the lower capital gains rate, you can make your attractive investment and you can participate in any future growth. Will this work for everyone? No. It will depend on your perception of the attractiveness of the alternative investment, how likely it is for the increase in the capital gains tax and how strongly the option buyer believes in the potential for growth of 3M stock. It may be a good or bad deal but its definitely one that the investor should be aware of.

This is but one example of how you can use options to accomplish your investment goals. I have published this material before and I doubt that many took advantage of the opportunities created by options. If you invest in the markets, you owe it to yourself to explore these opportunities.

A UNIQUE TIME OF LIFE.

Betty's Mother, Georgia Pearl Roll Boyd

Born 100 Years Ago Today.

Inside Every Old Person... Is a young person wondering "What the hell happened?" I understand that better each day as I watch the person I used to be disappear before my very eyes. The new person in the mirror is different and the process of adapting to the new identity can be challenging. Despite the fact that I have known it was coming for a number of years and even wrote about it when I was a graduate student in my early 30s, I still find the changes surprising. Not that its all bad. There are a number of pluses to offset the physical decline taking place.

Some Memory Decline Is Inevitable. The other night I unloaded the back of Betty's car and took two armloads of groceries in the house. The next morning, I found the garage door still open along with the back door of the car. I must admit to being somewhat forgetful all my life but events like that are much more common now. One of my friends told me that he has systematized his life's routine that he has little trouble with routine matters such as finding his wallet, cell phone, or car keys. We can all utilize these technique if the short-term memory decline becomes too much of a problem. One way that I offset the effects of short term memory decline is to use the rich set of memories I have about the distant past starting as young as three years of age.

You Can Continue Learning. Forgetting what you have already learned is not pleasant but there are now so many resources available that you can replace that learning with new things that interest you now. I may no longer remember the main mechanisms for chain transfer in low pressure ethylene polymerization but I now know that one of the main ways that the brain aids in the balance mechanisms for the body lie in communication of the muscles with the cerebellum in the brain.

Death May Take Friends and Family. I recently lost my dad. While I am greatly saddened by his death, I still have many friends and family left and the ability to make new ones every day. I have also resurrected many relationships with cousins which have become instantly gratifying. I saw a cartoon the other day that showed a woman with two children standing by a grave stone that said, survived by his spouse, two children, and 650 facebook friends. Several prominent neurologists report that one of the best ways to cope with the aging process is to maintain social contacts. Social networking and some chatroom sites can help us do that.

We Can No Longer Ignore the Inevitability of Our Own Death. For a number of us, the main way to cope with our impending demise is to practice denial. We just don't think about it. As we get older, it is almost impossible to do this. I have spent numerous hours in an effort to get in touch with my spiritual side. I have studied the issues and looked at the evidence. While I have not proven that there is a possibility that we might continue to live after we depart this life, I certainly don't consider it impossible. In fact, I think there is a preponderance of evidence that it is likely. Of one thing I am certain. The best strategy for me is to live each day as if it is my last because it may be.

The Value of Freedom. I have more freedom now than at any other time in my life. It is what i have always longed for. Each day when I wake up, I am thankful that I can do pretty much what I please. If I can maintain as much physical capability as possible, I can enjoy this beautiful planet and the beauty that surrounds me. I can experience the love of friends and family until my time here is finished.

THE TRUTH ABOUT PREDATORY LENDERS.

Forty Years Ago I remember it was like yesterday. I was in a strange town that was to become my new home and I had two hundred bucks which wasn't much even forty years ago. Granted, I had a new job at $1,200 a month (equivalent to $5800 at today rates) but I had to make that money last 15 days until I got a pay check. Fortunately, I found a hole-in-the wall apartment for $75.00 and I had pretty well figured out how to make the remaining $125.00 last until payday.


Murphy's Law Strikes. One aspect of Murphy's law is Whatever can go wrong, will go wrong. About a week from payday things started to go wrong. A series of one flat tire after another told me that I was in desperate need of four new tires. The old tires were without tread and paper thin. To say that they were unsafe, even to drive to work, was an understatement. I had to have new ones at a cost of around $150.00. Even if I could make these last until pay day, I would not have enough money left after this to last another two weeks. I had to borrow enough to buy these tires.


Limited Choices. My irresponsible behavior of the last six months certainly limited my choices. My credit was poor and my employment unstable. Subtracting my liabilities from my limited assets resulted in a negative number. A typical lender wouldn't touch me. I was forced to consult a consumer finance company. They weren't enthusiastic either but they finally offered me a loan with modest payment and 33 months to pay. I had no choice but to accept at a rate in excess of 24%. Frankly, that was the best deal I ever made. It took most of the 33 months to turn my finances around but without that loan, I might not have been able to get back and forth to work in order to stabilize my life.


Not an Uncommon Situation Today. In this environment, interest rates are low but prime lenders are running scared and holding tightly to their money. Borrowers with no collateral and unstable employment are often forced to deal with some of these so-called predatory lenders just to keep food on their table and a roof over their head. Of course the first option is to find ways to meet obligations without borrowing. You can seek extra work or sell assets as a temporary solution. I have seen well-educated professionals who have taken jobs as retail sales clerks or at temporary day-labor. Remember, there is no dishonor in honest work, no matter how well educated you are. If you can't bring in some extra money, here is a list of lenders who take less qualified borrowers. They are listed in order of risk.

1. Loan Sharks. These are often members of organized crime who loan to drug addicts gamblers. Their rates can be 100% or more and their objective is to retain you as a customer for their illicit activity. These are to be avoided at all cost. If you are tempted to deal with these, make sure you have a rock-solid exit strategy. They may resort to violence to collect.


2. Payday Lenders. These loan on an anticipated pay check. Rates are extremely high and, if you become delinquent, they often will increase the loan size to pay off the current loan and interest. Their collection procedures, while non-violent, are aggressive. Again, it is preferable to have a rock-solid exit strategy before dealing with these.


3. Consumer Finance Companies. These are a step above the payday lenders. Their rates are higher than banks and their collection procedures are aggressive, still they can be a reasonable source of funds as long as you can make the payments on time. The first two lenders on this list are important to get out of your life as soon as possible; however, holding these loans to maturity and making the payments on time can be a reasonable strategy.


4. Credit Cards. Many of these are offered by major banks and competition has forced the rates to lower levels but you still need to be careful, especially if you take cash advances or make late payments. Some of these will increase your rates to 20+% if you are delinquent beyond a certain point. The problem with cash advances is that there can be fees up to 2% up-front.


5. Hard-Money Lenders. These are generally mortgage lenders who loan strictly on the value of the collateral with no value placed on the creditworthiness of the borrower. Rates may not be excessive but up-front fees and delinquency charges are substantial. Most don't employ aggressive collection procedures; however, they can be very aggressive in obtaining ownership of the collateral. Most will extend the loan if you can't pay in full at the end of the term; however, be prepared for substantial fees in the process.

This Is A Quick Survey. As you may have guessed, I am not as critical of some predatory lenders as those who would add another layer of government regulation. They do serve a need in the market place and, if the borrower is sufficiently knowledgeable to manage the risk. can be used to solve problems that may arise. The most important point is not to use them to buy things you don't really have to have. If this is the only way you can afford a certain item, it is usually preferable to delay purchase if the item. Ask yourself, if you really have to have it now or even at all. In the long run, utilizing this type of financing will detract, not add, to your standard of living.

TROUBLE IN PARADISE?

Two Septuagenarians Two Thousand Miles From home

Travel Becomes More Difficult as We Grow Older. We tire more easily. It is more difficult to travel at high speeds due to reduced depth projection and reflexes. Are we worse off than our grandparents in that regard? I hardly think so. Our cars are easier to drive. They have cruise control, power everything, and almost all are air conditioned. Why am I bringing this up? To call your attention to the improvement in our living conditions from our parents and grandparents age.

Now vs 60 Years Ago. The average house is 2500 square feet vs 1200 sixty years ago. In 1950, there was one car for every two drivers as opposed to more cars than licensed drivers today. We could look more at material things like televisions and computers with the same result but what about the non-material aspects of how we live.

Women and Minorities have More Freedom. Women are free to seek work outside the home, receive better pay, and hold more political offices by far than they did in 1950. Racism is still present but is not as extensive in a variety of situations where it used to be prevalent. We have better access to music, entertainment, and the written word by far than we did back then. Even education higher education is more available as one of two children participate in post high school education as opposed to one of five in the 60s.

We Must Be Overjoyed with Our Lives. This is hardly the case. When graded on the same happiness scale developed a half century ago, American happiness has failed to keep up with the progress in things we thought should make us happy. The average American is only slightly happier now than in the 1950's. Likewise for the average Japanese and Australian. The British and German citizens are less happy and the average Russian is much more unhappy.

So What Is The Cause? "Sweet are the uses of adversity which like the toad, ugly and venomous, wears yet a precious jewel in his head.." William Shakespeare. This little quote came from a verse in As You Like It." I was forced to memorize that verse in the ninth grade. It has stuck with me all these years although I never had a clue of what it meant. Now I do. It has to do with another quote from Nietzsche that says, "What doesn't destroy me makes me stronger." Have we had it so easy in the past 60 years that we are losing the ability to cope with adversity?

Research Suggests This May Be True. In a study that listed 15 of the worst things that can happen in life, such as the death of a child, torture, rape, or grave illness they located 1700 individuals who had experienced at least one of those events. When given a test they determined that these individuals demonstrated greater strength and more well being than those who had none. Further, those individuals with two such events scored higher than those who had suffered one, and three events scored higher than those who had suffered two. One more piece of research involved testing of a large sample of soldiers captured by the Vietnamese and tortured and abused for a number of years. Of these, 61% said they had benefited from the experience. Among others, they reported a better appreciation of the value of their own lives; a better understanding of spirituality; and a deeper appreciation of their relationships with friends and family.

So Should We Go Out and seek a Traumatic Experience? I certainly don't recommend that but perhaps we should recognize these events for what they are: An opportunity for growth. It also appears to me that the adversity that our ancestors went through might constitute at least part of the reason for the success of our country. They left home with little chance of seeing their family again, came to a place where they were forced to become self reliant, and faced a multitude of dangers. They grew stronger as a result. Perhaps our government underestimates the benefits that our citizens might obtain from doing what is necessary to withdraw from government benefits and become more self reliant.

Most of The Conclusions Drawn Here are Mine. The statistics cited here came from a book by an author who's work I have followed for a long time. The author, "Dr Martin Seligman wrote the book, Flourish along with several others including Authentic Happiness. Whereas much of the mental health research involves the study of mental illness, Dr Seligman has chosen to concentrate on the aspects of well being and how that can be improved in so-called normal people. His research, which has gone on for nearly 50 years has been extremely valuable to me.

THE SUB-PRIME MORTGAGE FIASCO.

Picture of my Mom (Left) when she worked at Paul's Diner.

I Have Posted Several Pictures of My Dad. Mainly because he recently died. Mom has been gone almost 30 years. I have talked a lot about how hard my Dad worked and it seems appropriate that I let you know that Mom was no slouch in this area either. She waited tables about as long as I can remember. I remember how proud she was of her tips as she kept them in a jar on the table. Perhaps that explains why I seem to leave bigger tips than most folks.

A Few Comments About the Mortgage Business. I started originating mortgages in the mid 1980's. The business was very difficult back then, mainly because of the work you had to go through to assemble a package that could be sold on the secondary market. A lot of people think about banks when they think about mortgages. The fact is that, only the large banks can afford to keep long-term mortgages and they often sell much more than they keep.

It Took Awhile. But we slowly gained market share because we added value be helping borrowers decide which type of loan was best for them and by preparing a file that demonstrated to underwriters how qualified the borrowers were to fulfill their obligations under the terms of the note. Our business peaked in 1993 when we made and sold $150 million in loans. We were heavily taxed to the point that, when the business slowed down, we could not keep all the people we hired. It had been my objective to keep these people as long as we could in case the market improved again.

The Government Was Always Involved The Business. They had an implied guarantee that they would stand behind Fannie Mae, Ginnie Mae, and Freddie Mac in case of difficulty arose that made it impossible to repay the bonds they sold to provide the funds to make the loans. This allowed these agencies to sell bonds at lower rates than most private companies. Some time later, numerous non-profit companies came out with statistics that showed that minority borrowers were turned down at a higher rate than non-minorities. This was true even though turned down minorities had the same income as non-minorities that were approved. All of these studies were flawed because they failed to take into account many other crucial aspects of the mortgage approval process. The government imposed a system called the Home Mortgage Disclosure Act (HMDA) that required all lenders to carefully audit each file and report the results to the government proving that no discrimination was taking place. This increased the workload across the board for the mortgage industry. As if that weren't enough, they pushed for relaxed guidelines in most aspects of the business so that less wealthy borrowers could get loans.

Getting a Mortgage Loan Became Easy. It became so easy that it attracted people with very little financial background into the business. They didn't need expertise, just sales skills. Large broker dealers got into the business. They could barely spell mortgage but they could raise money and sell to their vast network of investors. As underwriting guidelines became more and more relaxed, anyone who could fog a mirror could get a loan that they had little ability to repay. Probably the worst culprits in this fiasco were the rating companies that gave these so-called sub-prime loans an A rating, the same given to large companies with a considerable assets and a long term history of meeting their obligations.

This Made Our Services Less Valuable. When borrowers came to me I expended a considerable amount of energy showing them the implications of getting these loans. I made few loans during that time. What makes it even harder to accept is that many of these borrowers went to other companies who told them what they wanted to hear and approved their loans right away. The result of all these irresponsible practices lead to the breakdown that occurred in 2008.

A Concise Summary of Who Is To Blame. Strictly my opinion but here they are.

1. Mortgage Originators. Although a lot of them didn't know the harm they were doing, it was their obligation to find out. The worst players were those who knew but didn't care.

2. The Government. They pushed for more relaxed lending standards so that more people could buy houses. This was a laudable goal but one for which they lacked the vision to understand.

3. The Large Brokerage Houses. They didn't understand what they were encouraging their investors to buy. Again, it has long been their main function to raise money for business through the sale of bonds and securities. Although they should have taken some time to understand the implications of what they were selling, they treated these packages of loans the same as they treated other securities that they had more experience selling. When delinquencies occurred, they had little idea of how to enforce the terms and ultimately recover and market the properties that they acquired.

4. The Rating Agencies. They should have known that these loan packages were risky and undeserving of the high ratings they were getting. The public believes in these ratings as objective opinions of unbiased third parties who understand risk. No longer can we trust their opinions as being objective.

5. The Borrowers. In the final analysis, it is the responsibility of the borrower to understand the implications of the obligation they are undertaking. While lenders need to be able to explain these, and disclose the underlying risks, borrowers should not take their responsibilities lightly. In the absence of outright fraud by the lender, borrowers have little right to expect the government, charities, or lenders to excuse them from the consequences.

This Should Give You A More Comprehensive View of What Went On. Still, it is a vast oversimplification. One thing should be clear. There is plenty of blame to go around. Those who blame the president, congress, or wall street may be partially right but it goes further than that. I am definitely sorry for those who are losing their home to foreclosure but they definitely participated in this fiasco. Hopefully, they will be more prepared next time.

REFLECTIONS ON 74 YEARS..........

Men of The Storms Family, Circa 1937

This Picture Was Taken Around The Year of My Birth. I doubt that it will interest many other than me. My Dad was the man on the left. Followed by my Uncle Norman, who died when only 37. The short guy on the next right was my Uncle Ray, and the last was my Grandfather, Hardiman Franklin Storms. My grandmother, Dora was already dead of smallpox and buried for several years when this picture was taken.

How Could This Possibly Interest You? There is a good chance it may not. I remember when I was a teenager, I used to find visiting with my grandfather a chore since he only talked about things that happened long ago. What a opportunity I missed. I would give anything for an hour's conversation with him today.

I Was Considered The Brightest Member of The Family. I remember them saying, "That boy's smart, he's going to get himself an education so he won't have to work for wages like the rest of us." Grandpa dug graves, Dad and Uncle Ray grew carnations, and Uncle Norman was a sharecropper, growing crops on the land of others and paying them 25% for the privilege.

I Did Get An Education. I spent many years in universities taking courses in chemistry, psychology, math, and communications. In a way, I proved them right but actually one of the main reasons I spent so much time in higher education was to live up to their expectations. During that time, I found out that I was no smarter than the rest. Later, I found out that it's all "workin for wages." In my professional employment, I have earned money as a chemist, plastics engineer, real estate broker, mortgage broker, and financial consultant. It's been an interesting and varied career.

So What am I Proudest Of? I started at the age of 10, pulling weeds, picking strawberries, sacking corn, and cutting asparagus. I also washed dishes in a restaurant after school. This is blue collar work in its most primitive form. The four guys in the picture above spent their lives doing this kind of work. They got up at 5:30AM six days a week and worked until late afternoon. When they got home, they didn't take naps or watch TV (there was none). They built or added on to their houses, fixed anything that was broken, grew huge gardens, and grandpa even made quilts. My blue collar background taught me more than I possibly could have learned in 7+ years of university education. There can never be dishonor in honest work and I was never too well educated or too smart for any of it.

Why Do I Write This Stuff? I could tell you things that you might find more valuable about things like how to invest, how to borrow, and how to manage cash flow. I will do more of this in the future. I write stuff like this, not because I want to, but because I have to. If no one reads it but me, it will have been more than worth the effort.

GOODBYE 2011

The Moon Comes Up Over Wildwood

Has It Been A Good Year? Not real sure I can answer that one. I lost one of my heros but I got a beautiful great grandson. I have had a large property vacant all year at a cost of about $20,000 but I got about 15% return from my stock portfolio. We had a terrible drought with my lakefront property becoming a mudfront property but the rains came and brought it back to normal in one night that brought almost 7 inches of rainfall. I could go on for quite some time with good and bad but I'm sure you could do the same thing if you thought about it.

The Rich Get Richer And The Poor Get Poorer. From a long-term perspective that's a stupid statement. If you look at the 1950's, it's pretty obvious that the poor are not as poor as they were then. Sure, some of the rich got filthy rich but many of the poor live virtually as well now as the rich did then. But what about short-term. The near depression of 2008 certainly made most of the poor even more so but look at the rich. On average, they didn't become richer. Granted, some did get richer but statistics show that most didn't. Are many executives over paid? Absolutely. Are they being paid too much compared to what they are distributing to shareholders or paying hourly employees? Certainly. But is it worth chainging to a government controlled economy. Not in my opinion. I don't care about the gap between the rich and the poor nearly as much as I care about the opportunity for improved standard of living for the poor. As long as I am better off, it doesn't bother me than many of the rich got even richer.

Adversity Has Its Benefits. This may sound crazy but I sometimes think the success of our nation has to do with the adversity we faced in the early to mid 20th century. Many worked 6 days a week and felt fortunate to have a steady paycheck. Millions suffered the pains of war, from those who went to fight to those former stay-at-home moms who left children with grandparents so they could work in factories to build weapons to fight the enemy. They did what they had to do and there was no free medical care or long-term unemployment benefits. All this reminds me of Thomas Jefferson's statement to the effect that you can't bring opportunities to the poor by taking opportunity from the rich. Although none of my family is wealthy by today's standards, most have done well. The one thing I have observed for the past fifty years is that they have worked like hell for everything they have.

Where Will The Opportunities Be In 2012. Many will dispute this argument. With perfectly good homes being torn down because there are no buyers, it appears that the last place to espect opportunities would be in real estate. While real estate is definitely a regional market, and some markets may not turn around for a long time, places like Colorado are almost certain to improve drastically because of three factors. 1. Low vacancy among rental units points to high occupancy in the future. 2. Record low returns from short-term treasuries and bank instruments make any reliable cash flow stream more attractive. 3. Reduced inventory due to low production of new units has reduced the supply of homes available to buy to record low levels. Over the years, our research has shown that, when inventories reach record low levels a market turnaround is close by.

The Main Problem With Real Estate. Management of real estate can be a huge hassle. I firmly believe that the use of professkonal management is the only way to go for most who want to be real estate investors. Avoiding the hassles of dealing with rent collections, evictions, and maintenance problems is worth the cost of paying for competent management. Call Susan at 303-996-2010 if you want to discuss the possibility of starting or adding to your current real estate investment portfolio.

GUEST WRITER.

Things We Won't Talk About. I grew up in a rural area supposedly sheltered from the dangers of city life. As children, we all knew that there were those in the neighborhood who had a sexual interest in us. For the most part, we stayed away from them. Some didn't. We talked to each other about it but we never told other adults. In a reality TV show some years ago, they did several stories about adults pretending to be pre-teens who talked on the internet with men who expressed an interest in sex with a child. They had a constant stream of men who wanted to have sex with these youngsters. While we would like to think these are rare examples, I am afraid it is not.

I am posting this essay by a woman in her 60's who has a need to let others know what happened to her as a child. I have known her via the internet for several years and can vouch for her honesty. I recommend this article for those who want to be more aware of this social problem and the effect that it can have years after it happened. Your comments would be appreciated. The article is unedited by me and based on her thoughts only.

THE INVADED CHILD

“Shhhhh” was what he used to say. “Don’t make any noise” he would whisper,

As his fingers found the innermost secrets of a small girl child. What was he

looking for? Why was he touching her down there? Nobody had ever done that

before. Why shouldn’t the child say anything? He obviously didn’t want

anyone else to know what was going on. But why? What was wrong with what

he was doing? What was he doing when he would back her up against his

body? What was he doing wrong when he would reach down to what she only

knew as something that would be going between her legs? At the time she

thought it was warm and comforting. “I guess my Daddy does love me,” she

would think to herself. This activity must be ok. He is her Daddy now. And

certainly Daddy wouldn’t hurt her. Her Mommy married him. He had

promised her Mommy that he would take care of her and her children. “I must

be safe”, she thought.

Why did the Mommy marry him? I guess she loved him. Why did he

marry her? Did he love her or did he just want some little girls for his

enjoyment. Why does he do this? Does he understand that he is ruining this

little girl’s life? Does he understand that when she grows older she is going to

realize what he is doing today is wrong? Does he care? Does the mother know

what is going on? Does she care or is she afraid if she says something the

marriage will be over. The little girl wonders.

The little girl is all grown up now and is still doing a lot of wondering.

That little girl was me. I often wonder, as I grow older if my mother really did

knew. I will never know. Both of them have since gone to the other side. All I

can do is guess.

I was 2 years old when my real father passed away. I hear stories about

him, good and bad. I don’t think he would have been sexually abusive. I would

hope not anyway. I guess when I was young, I did really love my stepfather to

be. I have no recollection of any sexual activity with him before I was 6. There

might have been but I don’t remember it. I remember that I was excited about

calling my new stepfather, Daddy. It was very important to me to have a

Daddy. And my mom seemed to love him so it should have been ok. I do

remember, though, that my oldest sister did not like him. And when we moved

to the farm she did not come with us. To me that was sad. I loved her very

much and didn’t want her to stay behind. But he said “We are going to buy a

farm” and it was ok with mother. My sister chose to stay behind and stay with

my aunt and Uncle and their kids. STRANGE. So it was Mom and Dad and

us two small girls, my sister, and myself who was 2 years older than I.

I found moving to the farm as both scary and exciting as only a 6-year

-old could see it. I wonder to this day why he wanted to move us so far from

anyone that we knew and loved. He must have had a plan. As I have stated

before, I don’t know if any of the abuse happened before the move to the farm.

My memory doesn’t go that far back.

I can say I do remember for sure at the age of 6 and 7, my Dad had

started his secret activity. I can remember some evenings when Dad went to

bed and Mom wanted to stay up and read or watch TV, I would go into the

bedroom and lie down with Dad. (Normally that would be an absolutely safe

situation for a little girl) I would love to cuddle in moms’ blankets on her side of

the bed. The blankets were always warm and cuddly and smelled like my mom.

I somehow felt some affection from her when I was under those blankets. I

would fall asleep very fast. To this day I have a blanket that I enjoy taking to

bed with me when I am sick or under stress. Somehow it makes me feel better

Our house was very small and only one bedroom so my sister and I

always slept on the hide-a-bed. But until Mom would go to bed we would sleep

in her bed. If we were tired the only choice we had was to sleep in moms bed.

Which you would think would normally be ok. BUT…

Then one night the hand came and started probing. I didn’t know what

to do but I trusted him. I had mixed feeling about what was happening. Was

it wrong? Couldn’t be. My dad was doing it. It was attention and it did feel

good. So then why did I feel something was wrong? Why did he keep shushing

me? What was the secret all about? Mom would come in the bedroom

sometimes during this time. He would stop the movements immediately. But

when she left the room he would start again. Did she know this was

happening? I often wonder. My mother was a very devoted wife and always put

him before her children. Honor thy husband. Whatever happened to honor thy

children?

As time went on there were more secret meetings. The warm hardness of his being always felt good and natural but, though he never penetrated my

inner aspects, it was wrong just the same. Why was it when mom stepped into

the room to get something or to say something, he would stop. Why didn’t she

see what was going on? Was she that naïve or was it that she wanted to ignore

the situation. I will never know. I can only imagine.

As years went by nothing was ever mentioned. When I came to the age

of, “being a woman”, as my mother explained it, the activity stopped. I guess

maybe he thought I would start smartening up.

Oh how I loved him. Why? He had done me wrong. And by that time I

realized that it was wrong. Why didn’t I say anything then? I guess I thought

people would judge me rather than him. I don’t know. Why didn’t I at least tell

my mother? Would she believe it? I don’t think so. She absolutely thought he

could do no wrong. So as time went on I just put it in the back of my mind and

said that it didn’t matter. That it was over and done with and not one would

ever know. But I knew. And he knew.

Growing up I never had what you would call a real hug, or the real love

that a father would normally give his girl child. He was not ever affectionate,

openly. We never talked like a father and daughter. The extent of his talking

was telling us what to do. “Don’t talk at the table. Don’t interrupt when adults

were talking. Don’t chew with your mouth open.” He would pick and pick at

us until the tears started coming. Then he would scold us for crying. Mom

would be hollering at him because he made us cry and the meal would be

ruined. And God forbid if we would waste some food. At the dinner table we

either didn’t talk or we talked about the subjects he wanted. If we interrupted

when he was listening to the news. That was the end of the world.

My sister reminded me of the time we were at the table and he slapped

my hand with the table knife. I don’t remember why and neither did she but we

remembered the incident. He was a very stern man and definitely was the boss.

We never had the chance as children to advance ourselves. Never had any of

the growing up pleasures such as playing a musical instrument. Dad never felt

it was a necessary thing. It cost too much money. Yet he used to talk about

how he used to play the violin. At parties and dances. So why was a violin ok

for him but not necessary for us to learn how? We never owned a bicycle. Dad

always said feet were made for walking on or he would say, “You pedal your feet

off to give your ass a ride”. God forbid we should have it because it was fun.

We had one sled for sliding in the winter. And had that one sled for many years.

Never had an animal that didn’t earn their keep. Like a horse to ride. “Nope,

cost too much” Yet other neighbors around us were just as poor and had

bicycles and horses. Go figure. So again I ask, “Why did I love him?”

When I would spend time with my friends at their homes I used to think

they were so lucky because their Dad would talk to them. And would talk to

me. Real talk. Not hollering. Not criticizing. Just talking. Asking about me

like I was important to him. When he would give his daughters a hug good

night, he would hug me also. I loved spending the nights at their house. I

wished he could be my dad. Sounds silly doesn’t it.

Later in life I realized that the affection that I thought I was getting was

not really affection, but some kind of a perversion. Mother wasn’t very

affectionate either. I do remember when I was ill; I would lay with my head on

her lap and she would stroke my hair behind my ear. That was about the

extent of it. Never a hug. Ohhhhhh how I wanted a hug.

When I graduated from high school and went out on my own, I searched

for a kind of affection that I was missing in my life. I didn’t realize what I was

missing, just that I was missing something. I went through years of searching,

then I had my children. That was the best thing that ever happened to me.

Mother had a fit when I got pregnant with my first child. Dad was quiet. What

was he thinking? He never said a word. He never condemned me for what I

had done. Never expressed anything. Maybe he was thinking it was because of

him. I don’t know if it was. I just knew that for the first time in my life I would

have someone to truly love. And I would never treat my children the way I was

treated.

When my dad got very very ill with cancer, I was the one at his bedside

tending to him in the hospital. Mother couldn’t come to the city every day. I

would go every day and make sure he was ok. When he needed his duties

tended to, I was there for him. Why? I don’t know. I didn’t hate him. Why?

Why did I worry about him so when he was sick? I was the one he confided in

when he was so sick and wanted to die. When he did die, I hurt so badly. I

mourned him. Why? He had done me wrong so many years ago. Did he go to

heaven? Only God knows that. I had a funny dream on the eve of his death

that I never told many people about. I often wondered what it meant. I would

like to tell you about it now.

We were at his funeral. The family was going down the isle in the funeral

procession. As we are going down towards the casket, I spied my dad in

the pews with the rest of the congregation. What did that mean? I took

his hand and led him down the isle. I said, “Common Dad, you need to

come too.” When we reached the casket he stopped dead in his track

and looked inside the casket. He was looking at himself inside the

casket. Dressed only in a hospital gown. No pillows were under his

head, no padding under his body, only wood. He was withered away to

skin and bone. He screamed out, “NO!!!!!!!!” and ran back down the isle,

through all the people and ran out the door. Not attending his own

funeral. After he left the funeral the dream stopped. What did that

dream mean? Did it mean that he was going to be punished? Did it

mean that he would never have peace? I really hope not. I do hope he

had to answer in some kind of way when he got to the Golden Gate, if he

indeed got there. We will never know. I have to put that in God’s hands.

I have never been a super religious person, but I do believe that in his

own way, God will take care of this.

I never felt very close to my mom. I believe she loved me in her own way

but I don’t think she like me very well. I don’t know why. Maybe I felt that she

could have stopped the activity that I now know as being wrong. Why didn’t I

tell her before she passed what he had done? Why should I? It didn’t matter

anymore. She would not have believed me. He was gone. What could be done

now? Nothing. What would it prove? So I kept quiet. Not thinking about it

every day; just once in a while.

When mother was so very sick, both my other sisters told her that it was

ok to go. I couldn’t. Maybe because I had to get an answer to my questions

before she left. But it never happened. She died. We were sad but also happy

for her because she was out of pain. She also died without ever giving me the

hug that I so desperately needed. Just one little hug.

Mother was also not very good at explaining the facts of life to us

children. Sex to her was not talked about. When my sister got her first period,

instead of telling me the truth, Mother said that my sister had cut her leg and

she could not play with the boys anymore. What did that mean for heavens

sake. What would the boys do now to her that she had cut her leg.? It was

very hard for a girl of 9 to figure out. My sister finally told me about the

menstruation after months of me torturing her with questions.

I am writing this at this time just because I need to think things out.

People say “Put it on paper, it’s the best way for closure.” I spoke to my

middle sister about the molestations about a year ago. I told my oldest sister

just a couple weeks ago. She was surprised. My middle sister was not. As I sit

and think about the situation so many years ago, in a little house in the

country, I wondered how many he had done this to. Was there others. Did he

ever try anything with any of our friends? I don’t think so but we don’t know.

Maybe. He was in his 50’s when he married my mom. That is a lot of time

under the bridge that he could have done this to many children. We will never

know. He was also married once before he married my mom. Is that the real

reason for his breakup? He said it was because she ran around with other

men. That to is something we will never know. It doesn’t matter. It’s over now.

I still don’t hate him. I hate what he did to me and it makes me feel

resentful that he took my innocence away from me. And he did. I am also

realizing that I was not the only one in life that has had this happen to. There

are so many men, and women, out there that are destroying the lives of so

many young girls and boys alike. What gives them that right? Some of the men

out there are supposed to be religious leaders. Molesting several boys and girls

over a number of years. Church leaders are condoning this by moving them

from church to church and hiding it under the carpet. We have gym teachers,

school teachers, boy and girlscout leaders and perverts from every walk of life

taking advantage of children every where. Why does the law condone it? They

show that by not doing anything about it? They just slap the hands of the

predators.

“How could you let this happen?” people will ask. Well, at a tender age

such as I was when it happened, I knew no better. As I go through life now, I

look at children, around the age that I was, and I wonder what would make a

person molest a child that age. With there chubby little cheeks and runny noses

and eyes of total innocence. What is it in a young girl or little boy that would

turn a man or woman into a molester? I look at my pictures when I was that

age and I wonder what he saw but an innocent child. What was the turn on? A

sick turn on. I don’t have any idea what could make a grown man prey on a

child but I guess only God can judge. I forgive him because I have to for my

own sanity. But I can’t forget.

I refuse to accept responsibility for what happened so many long years

ago on a little farm in northern Minnesota. I DO know that what happened was

not my fault, it was the fault of a man that was desperate for something. Some

kind of perverted need.

I really hope by writing this and sharing this with other people, I can get

past the anger I have started feeling lately with all the media on this subject.

The predators of young children are sick people. People say, “This has been

going on for hundreds of years.” Maybe we just didn’t talk about it. Maybe it

was a forbidden topic. What ever the case may be, the molestation’s and

pervertedness of the situation needs to stop.

I have been to the cemetery to visit once since mother’s death. She past

in 1992 and my Stepfather passed in 1985. I have no reason to go there. I have

never had a need. I know people judge you if you don’t go but…….. Oh well.

You have to want to go before it does you any good. It would do me no good to

go there, nor Mom and Dad. That part of my life is over. I need to move on and

let that part of my life be in the past now. That is the reason why I am doing

this writing. People say “ Write down your thoughts” “Be truthful”. Well this is

it. My truths.

God bless us all and God forgive those who trespass against us. Amen

BY MARIE PAULSON

TOPINSMAMA@aol.com