Sunday, May 27, 2007

fuBarrio/GL Update


It has been forever and a day since I've posted. Lots of things "happening" here in Uruguay.

I've been pretty busy during the weekdays, and sick as a dog last weekend so I didn't get a chance to update everyone on the 'haps'. Here is a brief summary:

Montevideo weather:

it's still sunny at times, but the weather is much colder and the "windchill" makes it almost chilly :) keep in mind, this is coming from the perspective of someone who was living in the bay area, ca, so "chilly" doesn't mean snow or anything like that....just not "shirt sleeves" type weather like so many of the other months.

Our living situation:

we are moving out of the "pocitos nuevo" neighborhood back to punta carretas. "pocitos nuevo" is a nice hood, close to shopping restaurants, nice homes, and situated between pocitos (beach neighborhood with lots of expats) and buceo (costal hood with port for small pleasure crafts and sailing lessons, etc where the uruguayliving offices are located).

loved the apartment. could love it more without all the construction. i made a post about the construction on day one i think and haven't touched on it since. it hasn't stopped. i've refrained from boring you with the details. let's just say that once i found out that the owners of the building had expanded the work to be done on the building once the project was started...thus extending my "pain" i was forced to look for somewhere else to live.

the next occupants will have a nice place once the construction is over with. it won't be us.

punta carretas is a slightly older neighborhood that went through a "renaissance" when an old prison was turned into an upscale "mall"....yeah, i know.... :) it's really not as hideous as it sounds. malls here aren't like the US with seas of parking lots, chili's, tgif's, check into cash's and various and sundry sketchiness.

the idea was i'd get a flat in an older buildin with fewer occupants (2 to 4 unit) but i just couldn't find it in the time frame i had. basically, gl was going crazy with the construction and i had to compromise with a small-ish 2 bedroom 2 bath in an access controlled building on a relatively quiet tree lined street. i'll take some pics so you can get a feel once we've moved in.

because the neighborhood is more upscale, and it's furnished pretty nicely actually, the apt will cost us 750/mo. "all in". not as cheap as you may have been led to believe apts run if you read the "hype" from international living or elsewhere. 750 is actually 650/mo + "gastos comunes" which includes paying for the doormen (24/7) building maintenance, elevators, and central heat.

House Fund

if ya'll have been following along, you'll remember that i've been calling for a collapse in northern hemisphere realestate for some time. if you've really been following along, i had opined that the realestate prices in Montevideo that had no relation to fundamentals (median incomes) were being driven by a few things:

1.) govt money (uruguayan and foreign -- this is a capital and there are lots of embassy employees etc.)
2.) foreign company money (there is a little bit of this...people bein paid in dollars or euros and living on pesos...nice gig if you can get it)
3.) equity locust money....People with big appreciation in western Europe and north america either selling outright or heloc'in the homestead to afford cash purchases "down under".

1 and 2 aren't goin to slow alot unless things get REALLY bad, but i suspect that the flexibility of the equity locusts is going to be limited a bit and i'm hoping that it takes some pressure off of the insanity down here.

that said, any natural slowing will probably be offset by more and more people "discovering" uruguay and the fact that it has what a lot of people are seemingly looking for these days....peace and tranquility.

So, with that backdrop, and since we had decided to stay here on a more permanent basis i had decided that buying would only be possible given a couple of criteria:

1.) i could purchase something in the 150k range so i wouldn't be tempted to sell and move up if/when a drop in prices occurs here
2.) paying cash for something in the 150k range wouldn't significantly derail my other financial plans.....right now, it WOULD! :)

so, i had decided that i would try to turn 50k into 150k as an experiment in "gambling" and speculation, stripped naked for all the world to see here.

however, as it became more obvious that we weren't goin to be able to ride out our lease....much less extend it a few months to get me to next fall (when i suspect things could move more in my favor -- at least for positions i feel comfortable taking), i lost a little bit of my gusto for "gambling".

just as well, i reckon, as my two positions i've taken have been pathetic underperformers.

1.) i held a 2x s&p short and sold it after a 1% decline after realizin shortly after the purchase that there wasn't even a trend in place. i was just "wishin and hoping"

2.) i purchased txm.v thinking that things would pick back up in Uranium juniors for a minute before the seemingly inevitable summer doldrums. it was a really ill-advised purchase because the price was falling off the table with no visible support at the time.

the deadcat bounce saved me and i was actually up from 4.39 all the way to 5.2...then, i noticed something ominous....

Relative Strength

another uranium junior that i own (in another account) started rocketing up on higher volume (EMC.TO). trading was halted and they announced they were in "exclusive talks" to be acquired (perhaps).

the problem is that, that friday the entire sector (it seemed) when up heavily.....except txm.v. i got sick that friday night/saturday, or i was going to post something explaining "relative strength". Relative strength in a sector is important to look at because it gives you a much better idea of the strength of a given security than just looking at the perfomance alone.

imagine tiger woods and i golfed a round in a hurricane. tiger was 10 over and i was 110 over par. rather than conclude that tiger was a talented weekend duffer by looking at his score alone, by noticing that he was facing substantial "headwinds" (no pun intended) it would give you better predictive ability as to how he might do on a nicer day.

i had noted a month (or more) back that (US symbol EMU) was showing great relative strength.....i had attributed that privately to the fact that their uranium was closer to market than some of the other speculative juniors and they may be able to take advantage of the squeeze on short term supplies.

however, when the buyout speculation began across the industry 10 days ago and txm.v didn't move, it was time to get clear.... i didn't :) price fell from 4.8 to 4.15 over the next few days before rebounding slightly. i think if the industry faces a disappointment things could get rough for txm but i still suspect there is a floor of support just under 4 until the drill results are in. time will tell.

Ok...GL has just prepared me some 4 bean soup....time to eat lunch. I'll continue the update in another post.


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