Tuesday, March 10, 2015

Turkey Fight!

Living in a rural area has its challenges, but it comes with plenty of rewards. One of the things I've always enjoyed about my adopted home is that while it's not exactly living in the country, it is far enough off the beaten path that there's still plenty of country life to experience. 

One of those things is the flock of wild turkeys that visits my property on a daily basis. They come through and peck at weeds and bugs for me (and occasionally till leaf piles that I put out for them), and they provide a little entertainment with their antics (waking up in the morning to the sound of a turkey running across your roof is funny... after the first time when you've realized what you're hearing).

This morning, that came in the form of a dominance battle between two, sometimes three of the newest jakes in the flock. And this time, I caught it on film:

As I said in the video description on YouTube, I put the fight to "Toreador" from the opera, Carmen, which seemed fitting because like the toreador the song describes, the fight was entertaining and all done for getting the attention of the hens. And all along, the old, experienced, dominant tom in the flock just puts on his full display and struts in the background (off-camera until the 3:50 minute mark).


Wednesday, March 04, 2015

I Bought The Farm

No, I'm not dead yet (but my posting frequency might lead one to conclude that...).

Recently while listening to the Financial Survival Network podcast, I heard of a real estate investment trust (REIT for short) that got my attention.

There are several kinds of REIT's, but the ones that I really like hold property and rent it out (as opposed to the kinds that hold mortgage debt), and then in accordance with IRS rules that govern these entities, they pay out 90% of their revenues to shareholders as dividends. 

My long-time favorite REIT, Realty Income Corp. (stock symbol: O), is a "triple net lease" REIT, meaning in their rental agreements with their tenants it's part of the contract that the tenant is responsible for insurance, maintenance, and taxes on the property, giving O "nothing but net." 

O rents out commercial properties to businesses with good things going for them, typically on leases lasting one or two decades. It's a very solid, stable way to do business, so I don't consider them to be a holding that I have to think about very much. Chances are that no matter what happens economically/politically in this country, there will be business and there will be a need for commercial space in which to do business.

This is the view looking north from my computer desk where I'm
writing this, land that is used to grow wheat - I wonder if I own
a piece of that now?
However, this kind of investment is a degree or two removed from the most solid foundations for investments: food, clothing, and shelter, the things that people always need. That's where the REIT that I learned of through the FSN podcast comes in: Farmland Partners Inc. (symbol: FPI).

This REIT has in its portfolio approximately 48.7 thousand acres of farmland, which it operates as farmland! These guys are not buying farmland and turning it into shitty condos, strip malls, etc. They're producing food, the primary item of the human "big three," something for which demand never goes away. What's more, the farms FPI owns and operates produce "primary crops," things like corn and wheat, which are often rendered into ingredients but which can be easily stored long-term and later consumed as-is. 

Businesses fail, buildings crumble, money supply inflation puts luxuries out of reach, but food is never an option. If people's discretionary consumption choices become fewer and fewer, it will most likely be the case that a big part of the reason for those dwindling lists of wants is the conscious decision to allocate more of their cash flow to satisfying the need for food. Thus, I look at an investment of this sort as almost being a kind of purchasing power insurance policy, much like ownership of precious metals is: as other asset types may begin to crater during a financial crisis, a company that both owns land and produces food should continue to deliver on cash flows relatively well, which can help to keep one's own cash flow up to snuff for meeting the needs of daily life. So, with these things in mind and after looking over the company's performance, I bought in. 

As always, this is not investment advice, this is just my opinion, do your own research, blah blah blah SEC hocus pocus firstamendmentwhat'sthat? 

Wednesday, February 18, 2015

Missing The Point On Bitcoin

I came across this article a few days ago, basically a hit piece on Bitcoin. There's quite a number of these types of articles out there with more being penned almost every day. This one is a fine example of people who just plain miss the point of Bitcoin, which is similar to how some miss the point of owning precious metals. 

The author, Isabella Kaminska, runs down a list of common slams on Bitcoin and other cryptocurrencies: the value of Bitcoins in United States Dollars (USD) terms has collapsed, drug dealers and money launderers have used it, speculators took a ride on it, some Bitcoin-based operations have failed, etc. 

And you know what? That's all true. But it doesn't matter. To understand why, just replace "Bitcoin" with "USD" in that list of woes, or any other currency for that matter, and it's all still true: the value of the USD has collapsed before, drug dealers and money launderers use USD, speculators trade on wild swings in the value of USD relative to other currencies and to commodities, and plenty of USD-based operations have failed (banks).

The most damning thing on that list is the collapse of the price of Bitcoin, but like any other such event it must be understood in context. Yes, Bitcoin is down massively from its historic high. But as I type this, with Bitcoin sitting somewhere in the ballpark of $241, it's also still up astronomically from where it started: zero. The only people who got stung by the fall from its peak are people who tried to speculate on it and rolled snake eyes. People who mined their coins, or who purchased Bitcoin as insurance against a declining currency (much like the proper use of precious metals) probably are not feeling the sting so much.

That said, as an alternative store of value, Bitcoin's price movements do have to be understood in relation to the relative value of USD. As of now, USD is on a tear globally for several reasons, and therefore things priced in USD will tend to fall in price. Thus, when you compare gold and Bitcoin to the USD, similarities emerge. Have a look at these two charts, and mentally draw a line from peak-to-peak; notice the angle from left to right that they both follow?

One year gold chart sampled from the Money Metals Exchange website,
18 February 2015

One year Bitcoin chart sampled from Coinbase.com, 18 February 2015
The only thing that is really holding Bitcoin back is adoption and use. Kaminska tried to dismiss the level of use at present by making an apples-to-oranges comparison of current daily totals with a long-established credit card processor, failing to take into account (or deliberately ignoring) the massive growth Bitcoin use has undergone since its inception.

Meanwhile, unlike Bitcoin's built-in ultimate limit of twenty-one million Bitcoins that will ever exist, the USD continues to be conjured up out of thin air (the cause of inflation and the loss of purchasing power of each dollar). The USD is teetering on the brink of losing its status as the world's reserve currency, too, which will cause its value relative to other currencies and commodities to plunge. In that environment, alternative stores of value, such as Bitcoin, will rise in relative terms. And that's the point, not all of this other nonsense that Kaminska is throwing at it. When that happens, people like Kaminska who put their energy and time into bashing something they clearly don't understand will be caught out in the financial downpour with no umbrella.

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