AskDong

After a relatively pleasant bus ride from NYC, I’m back in Boston.  I decided to take the $15 Greyhound bus on both legs of the trip. In actuality the price of the bus ticket is really $16.20 after the convenience charge.  I decided on Greyhound over the Chinatown buses based on reliability concerns.  I believe my reliability concerns were validated as on the trip back, my bus passed a broken Fung Wah bus pulled over in the c lane near Hartford. When I got to the bus station, I actually had to wait for two buses before I got on.  The line was wrapped around many times over.  At that moment, I thought, “hmm maybe I should just go over to the Chinatown Bus gate and pick a bus.”  It’s been a while since I’ve taken a Greyhound bus to New York, and I have never seen it so packed.  Between the $15 online fair reduction and the reliability problems on the Chinatown bus lines, Greyhound I believe has taken marketshare back.  If anything, it seems like Greyhound needs to add additional buses to the route.   The bus I boarded for the return trip was packed as well.The bus I took back to Boston arrived early at South station at 12:35 AM.  It was suppose to arrive at 1:20 AM.  I had originally resigned myself to taking a cab back to my apartment, but I was given a new lease on frugality by the early arrival.  I could take the T.  I ended up boarding the last red line train from South Station, and the Last C line trolley from Park street.   My total travel costs from Boston to New York and back, $32.40.   Not too bad.

However, once I was in New York, my expenditures were much higher.  I easily spent more than $32.40 traveling within New York.  Then my expenditures on both drink and food were well in excess of what I might have paid for any rail ticket.  I think there’s no better way to spend money than on food and drink with friends and family.  This is my vice if it can be called a vice.   The key in spending money is picking only the place you want to spend money, and not elsewhere.  That’s why I took the bus and made the travel portion of my expenditures a small part of my budget so I could spend like a drunken sailor while I was in the city.  

I’m going to NYC this weekend to visit some friends. Everytime, I go to New York, I’m confronted with a decision of comfort vs. price. If I weren’t traveling solo, I would drive, but traveling solo that option is less advantaged from a cost perspective and a travel perspective. My other options are: flying, train, and bus. Pricing out the options they are as follows:

• Chinatown Bus: $30 Roundtrip
• Standard Greyhoud Bus: $55 Roundtrip
• Limoliner: $142 Roundtrip
• eFare Greyhound Bus: $30 Roundtrip
• Airline Shuttle: $165-$244 Roundtrip
• Amtrak: $144-$278, $278 is for the Acela
• Driving: $40 in Gas, and potentially anohter $40 for parking (though I usually manage to find street parking)

If I had my druthers I would take the train. I find traveling by train the most comfortable and convenient when it comes to traveling between Boston and New York. In both cities the train is convenient. More importantly traveling on the train is comfortable. The ride is smooth, the noise level pretty good. Given that the flight between New York and Boston is only about 1/2 hour, you would think that traveling by air would be preferable given the similar pricing. However because the LaGuardia, Newark, and JFK are all rather inconvenient in relation to the city plus the hassle of any airport, I find that traveling by air doesn’t save as much time, and incurs much more hassle.

Then there is the bus. I’ve mostly taken the bus to and from NYC, and mostly the Chinatown bus. I’ve been on two different broken buses, and I’ve always been crammed. There’s no question traveling by bus is the least pleasant, but it’s also by far the cheapest especially if you take the Chinatown buses. For those not familiar with the Chinatown buses, they are buses that were originally out of Chinatown (and still run out of Chinatown in NYC) that were originally intended to serve the Chinese who often traveled between those two cities. They were originally $20 each way which at that time was a good $20 under the price of Greyhound. Quickly by word mouth, theses buses began serving the communities of NYC and Boston at large (mostly students and poor young urban types such as the younger version of myself). Other companies started up and now there are at three different Chinatown bus companies, Fung Wah, Lucky Star, and TravelPakUSA. Greyhound/Peter Panned facing competition aggressively lobbied against these companies and eventually got Boston to ban them from pulling up on the streets in Chinatown. However, the bus companies adapted and now use a gate at South Station. If anything Greyhound’s plans backfired, making the buses more convenient than ever. Greyhound is response has an eFare option where they price advance tickets at $30, equal to the Chinatown fares. These tickets are only available online and clearly are intended to compete with the Chinatown buses. The 3rd bus option is the LimoLiner which is luxury bus which seems a bit of an oxymoron. I know in the end my desire to save a buck will overrule whatever desire for comfort I have, and I will grudingly take the bus.

Someone I know was recently in Aspen for an event hosted by some millionaires, I won’t name names here in the blog. In any case you’ve probably never heard of them, but they are some of the millionaires amongst us. They are not, however, The Millionaire Next Door, unless you happen to live in 18 million dollar house in Aspen. All I know is that husband was head of equities for a major Investment Bank in London back in 2000. Through some innuendo, I understand he might be the head of hedge fund now, or just retired. In either case, the man has made more money than most of us could dream of ever having. If I had to venture to guess, the man is probably worth between $25-$100 million. He’s no Carlos Slim, but his checking account probably earns more interest than what many of us earn a year from our jobs.

This millionaire couple has clearly decided to spend some of their money on their brand new home in Aspen. The slide show from CNET only begins to touch on the extravagance of the place. They couple graciously hosted a charitable event that my friend was at. The first give away that this was no ordinary home was the Valet Parking.

One of the biggest difference between a house like this an ordinary house is how much is custom built. The pool table was custom built to match the wood trim. You don’t get that kind of detail without shelling out the big bucks. How many of us would like a bar builit into the “basement”? I would, I know. The kids when they have sleepovers have a place with 3 sets of bunk beds in Hogwarts themed room. I slept in a sleeping bag in the den when I was kid if I went to sleepover. And when I played Nintendo it wasn’t on a 10 foot screen dropped from the ceiling.

Now that I’m older I’d probably enjoy the extra dining room in the wine cellar, surrounded by original works of art including Picasso sketches. If I were more health conscience, I would probably find use for the pilates room even. The only things at the house I probably don’t care all that much for is the land for horses, and actually owning the river flowing through the estate. Unlike Massachusetts when you only own the land abutting a waterway, in Colorado you actually own that portion of the waterway on your estate.

While it’s easy to have disdain for what seems like an extravagant lifestyle, these are people who are living within their means. Their means just happen to be quite above the my or the average Americans’ mean. I don’t happen to believe that frugality in itself is virtue. Modesty and humility are, but those like so many other things are relative. I do not begrudge the wealthy for living well. I would like to live well. The real issues is if life has treated you well either through luck or rewards for your skills, what else do you do with your wealth? I like to think that the couple in Aspen is involved actively in charity, and give something back. My motto is “Live well, and act so that other may live better.”

This past Sunday, I went to some open houses or rather open condos with my parents - I’m encouraging them to move closer to the city. It’s amazing the disparity in listing prices. When I purchased the condo that I no longer live in, the range was much more narrow for similar units. It seemed as if both seller and their listing agents knew much better what a property could sell for. Back in 2002, the housing market was still on it’s upswing, and realtors could easily price a property at some premium of a recent sale. As properties sit on the market longer, it becomes harder to come up with a comparable, and most sellers continue to list at what they might have gotten a year ago. A few bold sellers actually list at what is a market clearing price.

Many sellers and agents have become guilty of pricing at what they want want to sell at rather than pricing what clears the market. We can look at the housing market in the framework of supply and demand as I outlined on Monday. We can argue pretty clearly that the demand and or supply of housing has shifted.

We know empirically that the supply of houses on the market has increased in the past year. We also know that lending standards have increased which would shift the demand curve in (i.e. lower demand as few buyers qualify for loans). A shift in the housing supply alone would serve to decrease prices, as would a lower demand. On the graph above we’re likely on the S’ and D’ curves relative to what we were at previously, S and D. Housing prices should adjust to clear the market.

However, in my casual observation listing prices are not substantively reflecting the new market dynamics, nor are the actual closing prices. There’s much greater reluctance on the part of sellers to lower prices than there are buyers to pay more. When prices are increasing, and listings inaccurate, houses get bid up and sell. When the market turns down, sellers stubbornly refuse to agree to substantially lower prices. This in turn increases the housing inventory overhang which in the long run is more likely to further erode prices as buyers observe the apparent excess supply. A patient buyer will be rewarded as the market further degrades (as expected with the large numer of ARMs reseting in October) which may further push out the supply curve (either via foreclosures or distressed sales). However because the housing market is so local, and so specific, a buyer can probably get a great deal if the he or she is both choosy and a hard bargainer.

July was not a good month (really the last two week) for any of my investment accounts, nor were the first couple days of August which are reflected in my IRA value as 8/3/07.  The value of my IRA accounts dropped nearly 7%.  I saw large decreases especially in my mortgage industry related investments, AHM (American Home Mortgage) and WM(Washington Mutual).  AHM, as I chronicled earlier, I managed to sell before it effectively became a company on the brink of bankruptcy.  I’m glad I got out where I got out.  My shares of WM, Washsington Mutual, has also suffered in light the subprime fallout.   I hold Washington Mutual not for it’s mortgage business, but for it’s overall banking business.  I think it’s well run bank and that knows how to serve retail customers.  However, I should proceed cautiously with my holdings as it might be more affected by the mortgage collapse more than I’ve anticipated.   In my taxable account, I’m planning on selling some of my holdings, but I wanted to wait till after the quarterly dividend paid out later this month.  Hopefully the market will continue to rebound as it did yesterday so I won’t have traded 10% capital loss loss for a 2% dividend gain.

The price I quoted on AHM is the price I sold at earlier in July.  The company has since annouced bankruptcy and is worth less than 50 cents.