I sat beneath a cherry tree,
A skeleton still in early spring.
Buddings dotted her branches,
Just beginning their life.

I returned to that tree next week.
The buds were in full bloom now.
She filled the sky with pristine white.
I went to have a closer look.

A rock tripped me though.
I hadn’t noticed him there.
I held him in my hand, feeling his heft.
He felt smooth, the edges worn away.

“You are millions of years old.
You have seen mountains rise.
You have seen oceans fall.
How incredible your life must be,” I told him.

I returned to the tree a third week.
There was but one blossom now.
She was almost a skeleton again,
Erupting with beauty no more.

A faint breeze passed by me then.
I saw that blossom shake, then fall.
The final blow dealt.

The blossom floated down onto the rock.
They shared a moment, young and old together.
The serene moment ended with the next gust though.
And I watched the pedals stream down his face.

I picked up the blossom,
Still beautiful as ever.
I realized how similar our lives were.

“Oh cherry blossom,
Our lives are fragile and short, yet
The rock stands forever idle.
The world teems with our energy.
We find more beauty in two weeks
Than he in eternity.
How lucky we are!”

Some people are pessimistic about the potential for wireless internet. The only reason cell phone data is “unlimited” is because no one actually uses it. When they do, they are charged until they don’t:

China Mobile recently changed the way users are charged for sending and receiving data on their phones by no longer allowing unlimited access to the mobile Web and data downloads. While promoting content on its own wireless Web portal, called Monternet, China Mobile has been sending users a message as they try to connect to sites outside the portal, telling them they will be charged for data use outside Monternet. The result is dramatically lower traffic for those sites.

Until multiple information currents can travel inside the same slice of spectrum, separated by distance, there are fundamental limits to wireless bandwidth.

The person/people running In the Money Stocks put on quite a show. He posts a daily YouTube video which does some technical analysis on the happenings of the day. I find the videos more entertaining than Mad Money. He sounds like quite the day trader. Have a listen:

I happen to think technical analysis is a bunch of baloney — most change happens from sudden, unpredictable events, events likely to make this kind of guy trading with massive leverage bankrupt — but I find the analysis nonetheless intriguing. If you are interested in the flow of money, this guy can serve as a sort of SportsCenter for stocks. The 10 minute videos are definitely worth watching, for his east coast, 1,000 word per minute speaking style if nothing else.

Be aware that the free videos, while entertaining and potentially educational, are mere commercials for the product he is selling. All the information is just a teaser, trying to convince you of his wisdom so you will want more, which he would love to share with you for a nominal fee.

In other words, his actual business is convincing people like you and me to pay $100/month to enter a chat room.

That seems rather expensive; it is a front loaded $1,200 annual fee. Even if you have a spare $100,000 of capital to throw around day-trading stocks — and I hope you are either Bill Gates or else not that careless — that is still a 1.2% annual fee — a fee compounding monthly against you. Worse, he has no direct incentive to make you money: he gets the same fee whether he takes your $100,000 to $1,000,000 or $20,000.

Instead of spending all day in his chat room waiting to get the tip to move, you could just hand your money over to a professional money manager’s mutual fund for a lot less. You can get index fund’s with expense ratios below 0.3% — and you should. That is four times cheaper for an investment you need to look at a few times a year instead of hours every day.

This is the same sort of thing the Motley Fool, TheStreet.com and other such places do. They never tell you all of what they know without first trying to get you to pony up some cash. For example, the Energy and Capital site has some great advice for investing in fossil fuels, but to get it, you will need to attend a once in a lifetime $800 seminar. Ha!

People who fall prey to such tactics will almost certainly lose their money. Think about it. It takes a lot of work to create a 10 minute video and post it to YouTube every day. It is very expensive and time consuming to organize a seminar. Clicking “buy” and “sell” takes far less effort. Anyone who outperforms the market consistently will just shut up and invest his massively compounding gains from an island in the south pacific.

The fact that someone is giving advice means one of the following things is true: he can make more money now suckering you into paying for his premium services than following his advice; his advice only works when he makes large numbers of people believe in it; he is just starting to apply his working theory and he will either start charging more (see the first option) or retire soon (see previous paragraph); he is already so successful and rich that helping other people become successful and financially secure is far more personally valuable than increasing his abundance of wealth any further (?).

Whatever you do, do not invest using leverage. That is an extremely dangerous and absurd thing to be doing in this (and any, if you ask me) market.

Keep the faith, and good luck.

Countrywide Bank printed a bunch of ads reminding people that it is an FDIC insured bank. Meanwhile, they laid off people in their “alt-a” (read: D-) rated loan group, Full Spectrum. People in southern california made a run on the bank on Friday. Around 20% of mortgages are held by countrywide.

Capital One is closing its jumbo loan department, GreenPoint.

Think very carefully before you take out any equity on your home. The same goes for accepting an adjustable-rate-mortgage (ARM). Do not assume housing prices will continue to go up. Relative to your income, housing prices will go down everywhere in the country for the foreseeable future.

Hopefully this will mean inflation, so that people working at McDonald’s will be making $100,000/year in the next decade or so.

If this scenario happens, it is critically important that you have as little credit card debt as possible and a fixed rate mortgage. Interest rates and incomes will go up far faster than home prices. If you are making 10% more each year and your interest rate is only 6%, you will soon be in great shape. If you have an ARM, then your mortgage payments will increase right along with your income, negating any benefit you might have seen had your rate been fixed.

If you believe this scenario will come to pass, you must lock in your rate as soon as possible. Call your lender now. Because if you believe this will happen, so will investors. The more investors believe their money will be more valuable tomorrow, the harder it will be to get them to lend you that money today — at least on a fixed rate loan.

The other possibility is recession. Many of us are young and lucky enough to have never worked through one. A recession is far more likely today than it was in June. If that happens, then every $300,000 home in the United States will tank. No one can say how low: $200,000? $150,000? $100,000? This is already happening in extremely speculative markets like California and Florida. It will be terrible if the problems spread to the entire housing industry.

Washington Mutual recently announced that the jumbo loan interest rates would start at 8%. In California, with the median home price being over $500,000, a large chunk of the loans are jumbo (any loan that’s over $419,000 is termed as jumbo in California) loans. As rates go from 6% to 8%, the 2% jump in payments represents a 33% jump in the monthly payments. This means less people will qualify for these loans and real estate prices will fall more than they already have. There’s absolutely no chance that the real estate market in California or in other grossly inflated areas will improve next year.

California’s economy is often a leading indicator for the rest of the country. The housing industry is in a world of hurt. American Home Mortgage has lost 98% of its value since May. Countrywide Financial has lost almost 50%. The Fed has been trying to keep things from getting out of hand. Good thing, last week Washington Mutual was down 25% on the year. Now this is only 15%.

Should a recession happen, incomes will drop. During a recession, a typical person who made $100,000 one year may only make $90,000 the next. If that person had taken out another $50,000-$100,000 in equity at the top of the market, he will have a very hard time keeping current with his mortgage payments. Most of us buy the biggest house with the largest possible monthly payments we can reasonably afford. What was once reasonable will become less and less so as his income drops every year — perhaps $300-$1000 less per month — leaving that much less to pay his mortgage.

The most dangerous part is that he will have a mortgage he cannot afford backed by an equity that is dropping value. Normally if the economic situation changes for a person and he can no longer afford his mortgage, he can sell his home, clear his debts and relieve the pressure. Not true during a recession. His mortgage company may well have determined his home to be worth $350,000 before, but he can only sell it for $250,000 in today’s market. Even after selling his home he will still have a $100,000 debt owed to the bank — more than a quarter of the original (now unaffordable) value. He has two choices: declare bankruptcy or else buy or rent a substantially smaller home, one that he can afford and still pay down the sizable remainder of his unaffordable mortgage.

A person who has built up large amounts of equity in his home will be largely unaffected. If a person has $200,000 of equity on a $350,000 home, and then home drops to $250,000, he can sell the home, clear all his debts and still have $100,000 cash left to put towards the down payment of another home. Since every other home will have dropped substantially in value, that $100,000 cash will go much further.

Once the market improves and prices go up, he will recover all he lost when he sold. We just don’t know how long it will be until the market improves. Assuming a person with no equity can whether the storm — which could take many years — he will be no worse off than someone with equity. But given that his fragile financial situation is what put him into a no-equity loan to begin with, weathering the storm is likely to be an extremely stressful situation.

Keep the faith and good luck.

The situation is bad. The situation I talked about in June remains the same. The dollar is weak; we are too leveraged as a country; we may face an unimaginably bad energy crisis. Traders like Cramer are scared about the risks we currently face:

Some economists have more to say. Listen to why the Fed cannot save us:

The dollar is going to collapse. We have too much debt. Risky debt has been packaged into derivatives and are no spread throughout the entire economy like some sort of plague. This is dangerous.

We need someone like Ron Paul to bring things back into balance, into normalcy:

The great irony is that, assuming the United States does not go bankrupt, the end result will be that we have unloaded hundreds of billions of dollars of debt to unwitting foreign investors. I guess our country has been listening to blowhard snake-oil salesmen like Donald Trump for too long. Shameful!

These videos make me think of the Mandelbrot fractals I did in my graphics programming class in college. I like the third video best. You?