Stir-fry finance

From The Economist print edition

A Chinese treat for Wall Street’s whipping boy

IF ANYONE had suggested a year ago that one of America’s top investment banks would soon be relying on a firm whose parent was founded by Deng Xiaoping to pull it back on track, they would have been laughed off the trading floor. But that is precisely where Bear Stearns finds itself. Beset by bad news since two of its hedge funds blew up in June, sparking the subprime-mortgage crisis, Bear came under pressure to find a partner with deep pockets. Its response, unveiled on October 22nd, is a strategic alliance with China’s largest listed brokerage firm, Citic Securities. Born of necessity, the deal nevertheless is shrewd for both sides.

Foreign Investment TIP

Hey folks, for those with no clue about markets OUTSIDE the US or UK, here’s a quick way I determine where to invest some money in—- Current Account Surplus and FDI Index. Current Account Surplus is a great way to determine how much a country exports vs imports (exports>imports is usually better) and Foreign Direct Investment is how much money foreigners invest into a particular country—

Here’s a nice list, courtesy of the good folks over at the Economist.

Legal Money Laundering (***gulp***)

Look, there are LEGAL ways of reducing the shock of the dreaded 40% tax rip-off that occurs to my fellow folks who earn a chunk of their income from bonuses and commission (note to reader: I’m assuming that most of you know of this, but for the significant % of those that don’t know, allow me to proceed…).

1. Hypothetically speaking, you can change your tax information by alerting your HR dept (if you work for someone) that you do not want taxes deducted from your pay check, till further notice.

2. For example, lets assume your pre-tax monthly income is $10k–deduct all your monthly expenses, feed your savings account, and put the rest into a high-risk, high return fund in a developing country. Preferably not China or India, but Brazil, South Africa, etc.

3. OR—save the additional money until you have enough to invest in a cash heavy business.

4. In no time, you will be able to generate enough “side” income to offset the tax burden—and if you have the guts, quit your day job!!! I did…

Wealthy—not RICH—people do this all day.

“Credit Crunch” = Opportunity

Regardless of what you hear on CNBC pertaining to the credit crunch, smart business-minded individuals view this situation as an opportunity to make loads of money. And it doesn’t matter on what part of the spectrum you are in. If you’re a mortgage lender, now you can focus on home buyers with great credit, focusing on fixed rates, and not the disastrous ARM’s; if you’re a home buyer, you should be focusing on a home you can AFFORD; and for the pesky investment property owners, ahhh, now is the time to low ball ANY seller you see fit.

A chum of mine just bought a mini-mansion in Northern VA for $350k…..and the asking price was $520k. An apartment building I had my eye on earlier in the year just sold for $375k….the asking price 3 months ago was $500k.

And the sweet deals will get better AFTER Christmas, as homeowners purposely neglect their mortgage payments, and go into deeper debt via Xmas shopping (smfh), thereby driving up foreclosure rates through the roof.

Top 3 Markets to Keep Your Eye On:

1. Seattle, Wash. :
Median home price Q2 2007: $395,300
Median home price Q2 2006: $363,000
Change: +8.9%

2. Washington DC: Average Commercial Vacancy Rate: 7% (est)

3. NYC: Average Commercial Vacancy Rate: 6.5% )est)

I’d rather put my money in emerging markets….I’ll explain later.