Ken Lewis Doesn't Look So Smart Today, Does He?

Should say "I can't believe steve can be so stupid . . ."

"You are not taking a loan beyond your existing capital and collateralizing that loan with your egg mcmuffin."

First of all, how do you know that JuiceMan can actually afford that Egg McMuffin? You don't. Second of all, buying a home is capitalizing an expense.

If you can't figure that out, please re-take the 6th grade and then get back to us.

"When you take a mortgage, the opportunity cost of buying a house is not the full price of the house because you would not take the loan in the alternative of not buying the house."

And if you didn't eat the Egg McMuffing - or otherwise dispose of it - you wouldn't charge it to your Discover Card.

Let's say your mortgage costs are $1,000 a month. Is there no opportunity cost for that $1,000 because you wouldn't be spending it if you didn't buy the house? Couldn't you spend it on something else?

Let's say you can rent the same place out for $500 a month. Is there no opportunity cost to the $500 difference? Such as, rather than investing it in repaying the loan balance, you could invest it in a tulip farm?

Oh good, another discussion topic by steve, about steve, for steve's ego.

Oh, and this:
Does it matter HOW you finance your college education? No. Does it matter that if you take out a student loan you must spend that money on tuition? No.
No wonder you've remained so perilously attached to the real-estate market. You don't understand a) the difference between a loan and the collateral for it; or b) the basic concepts of economics.
You buy a meal at McDonalds, pay for it with a credit card. Is there a different opportunity cost than if you paid for it in cash?
No.

From the guy who says that the tax deduction you get from mortgage interest paid on a home purchase doesn't count in the calculation for the cash flow associated with purchasing a house using a mortgage.

let the countdown begin to the rebuttal using childish acronyms, links to Investopedia and Wikipedia misunderstood and misapplied, and, well, the rest of you know how it is going to go

"From the guy who says that the tax deduction you get from mortgage interest paid on a home purchase doesn't count in the calculation for the cash flow associated with purchasing a house using a mortgage."

I never said that. What I said was that it is not included in the 12x ratio price-to-rent ratio, and that it's not included as part of PITI and therefore isn't used to finance the purchase, and that you pay for the deduction through increased property prices.

Moreover, if you read what I wrote earlier you will see that if you do the standard cash-flow analysis - buying a property to rent it out to an unrelated third party - it SPECIFICALLY includes all of the mortgage interest and tax payments. So not only can you not understand what is true - that the opportunity cost is based on the amount you invest regardless of the source - you haven't read what I wrote.

i think its pretty obvious that the opportunity cost of a property purchase is limited to what you could have applied elsewhere. therefore if you would have invested it in securities, then the opportunity cost is limited to about 2x the cash portion of your price (ie what you could have margined to). if you would have invested in another property then it is the full amount of the cost of the property.

"I tried to reduce this argument to a level you could understand: that the opportunity cost of buying an Egg McMuffin is the same whether you pay for it in cash, or with your Discover Card."

Talking in circles again steve (and calling me dense which is hysterical). This would be true if you could spend the mortgage money on an Egg McMuffin, but you can't. You yourself said you can't confound a loan but now you are saying I can buy and egg McMuffin with it? Which one is it steve? You are tangling up your own argument.

"Let's say your mortgage costs are $1,000 a month. Is there no opportunity cost for that $1,000 because you wouldn't be spending it if you didn't buy the house? Couldn't you spend it on something else?"

Absolutely. You could rent instead and therefore you wouldn't have a mortgage. This (again) was exactly LICC's point.

“Very dense. Very dense. Very dens.”
“"That's a stupid question."
“I used to think you were reasonably intelligent”

Aren’t you the one that cries about personal attacks? Calm down Stevie boy, this isn’t the first time you been made to look like a complete moron.

Typical steve the clown- backpedals to deny his original statements, lots of nonsensical babble to avoid admitting he is wrong, on and on.

Hey Juiceman, I'm sorry to hear you are having trouble affording egg mcmuffins. I hope you get back on your feet soon buddy.

Thanks LICC, according to steve I can take out a mortgage and buy one so I'll call my bank Monday.

“"That's a stupid question."

That's a personal attack?

"this isn’t the first time you been made to look like a complete moron."

No it's not - I have yet to be. I gave you earlier all the things that I've said - I've yet to see you address any of them.

"You could rent instead and therefore you wouldn't have a mortgage. This (again) was exactly LICC's point."

So therefore buying the property has no opportunity cost? That's LICC's argument.

But that can't be so - if you're spending $1,000 a month paying off your mortgage, the opportunity cost is on that entire amount. Which is the amount of the mortgage.

To say anything else is nonsense.

"This would be true if you could spend the mortgage money on an Egg McMuffin, but you can't."

Of course you can. If rather than paying $1,000 a month in mortgage you paid $1,000 a month on Egg McMuffins.

That's the opportunity cost.

"Of course you can. If rather than paying $1,000 a month in mortgage you paid $1,000 a month on Egg McMuffins."

Yes you are right! If you lived in a Egg McMuffin! Would that be next door to the Keebler Elves?

http://i4.photobucket.com/albums/y114/vertkingjones/areyou.jpg

blah blah renting blah blah better than buying blah blah egg mcmuffin LMAO blah blah tax benefit PITI blah blah oh JuiceMan blah blah ignoring LICC blah blah LMAO blah blah 12x blah translation spanish blah blah 350 Bleecker blah blah Lehman blah blah Hugh McColl blah blah marginal blah guacamole

Don't misstate my prior comments steve/clown, you do that enough with your own comments. When comparing the costs to buy v. rent for a person taking a mortgage, and accounting for a buyer's opportunity costs, you have to be an imbecile to say that your entire monthly payment, or the entire purchase price, is an opportunity cost. Your opportunity costs are the amount you are missing if you take your next best alternative. For most, the next best alternative isn't saving all their money by living for free. Again, a pretty simple concept for most people who aren't clowns. When determining the opportunity costs in the buy v. rent scenario, it is the amount the buyer could have earned on his down payment if he did not buy and otherwise would have invested it. Once again I will state: You cannot assume the buyer would have taken borrowings for the same amount of the mortgage and then invested it. You have nothing intelligent to say to refute this.

JuiceMan's self-proclaimed goal is "dispelling myths, fabricated numbers, and fictitious analysis."

Then JuiceMan says, "Yes you are right! If you lived in a Egg McMuffin! Would that be next door to the Keebler Elves?"

So now JuiceMan's argument is that because you need a place to live, there is no opportunity cost to buying a property.

You're arguments are getting flimsier and flimsier, JuiceMan, which is pretty amazing since they started off flimsy to begin with.

If you pay $1,000 a month in mortgage payments, there is a $1,000 opportunity cost as you could have spent that $1,000 on rent, on a car, on a vacation, on a houseboat.

That is the FULL amount of the mortgage, albeit amortized over time. Exactly why the full amount of the investment is taken into account when calculating the opportunity cost. You contend that the opportunity cost is only on the down payment, but then can come up with no explanation for the opportunity cost every month of paying down the mortgage.

Because like all the bulls on this board, what you write is bull.

Just admit it.

"You're arguments" = "Your arguments"

So steve thinks that an opportunity cost of buying is the loss of the opportunity to spend the money on rent? Wow, this guy really is a clown.

"You cannot assume the buyer would have taken borrowings for the same amount of the mortgage and then invested it."

I never said they would.

"So steve thinks that an opportunity cost of buying is the loss of the opportunity to spend the money on rent?"

What?

Seems plain that beyond calling me names there's nothing LICC or JuiceMan can do to show anything other than that if you pay $1,000 a month mortgage, the opportunity cost is the value of what you gave up for the full amount of the mortgage, which you're repaying at the rate of $1,000 a month.

blah bull blah blah always blah blah LMAO blah blah PITI blah guacamole blah overpriced blah blah where's Spunky blah blah LMAO blah blah 12x blah lived in Miami blah blah auditor blah blah 50% drop blah blah Ken Lewis blah blah marginal blah 2002 prices blah blah

Mygense, you dropped the best part of your post: guacamole!

Yes, I thought the guacamole was the best part as well.

"other than that if you pay $1,000 a month mortgage, the opportunity cost is the value of what you gave up for the full amount of the mortgage, which you're repaying at the rate of $1,000 a month"

Yawn. The argument doesn't change whether it is monthly or not. You yourself have already said that mortgage does not have an opportunity cost, so what are you arguing now? That I should be buying Egg McMuffin’s with my mortgage money?

"You yourself have already said that mortgage does not have an opportunity cost, so what are you arguing now?"

A mortgage is a legal agreement, JuiceMan. It does not have an opportunity cost. What does have an opportunity cost is what you do with the money you receive in exchange for the collateral.

"That I should be buying Egg McMuffin’s with my mortgage money?"

If you want. Or just admit this little example:

You buy a house for $100,000. Put down $20,000. You could have invested that $20,000 elsewhere, so it has an opportunity cost.

Then you borrow $80,000 for 30 years at 5%. Your monthly payments are $429.46. If you didn't have that mortgage you could have spent that $429.46 on something else - Egg McMuffins or not.

Are we good so far?

If so - and we need to be since EVERYTHING you do with money has an opportunity cost - then the full amount you invest in the house is what you calculate the opportunity cost on, because every month you're spending money to pay down that loan.

blah opportunity blah blah cost blah blah guacamole blah blah PITTY blah nybits.com blah blah blah petrfitz blah blah lived in Spain blah blah never said that blah economics degree blah blah no effect blah blah antitrust blah blah ROTFL blah blah P/E method blah 1999 prices blah blah

Amazing how dull steve's brain is that he can't understand that failing to have to pay rent when you own your home is not an opportunity cost.

"failing to have to pay rent when you own your home is not an opportunity cost."

What, then, is it?

Second - if you are paying a mortgage, you could have spent that money on other things. Rent, cars, houseboats, vacations.

Here, LICC:

http://www.economicshelp.org/blog/economics/opportunity-cost-of-buying-house/

"The opportunity cost is next best alternative foregone. So the next best alternative to buying would be renting. If you rent, you will save yourself £250,000 and a likely depreciation in house value, and you will pay rent rather than a mortgage."

I think I speak for a lot of people when I say
SHUT UP ALREADY

steve, thanks for another meaningless citation that doesn't support what you are saying.

I think I speak for a lot of people when I say:

DON'T READ IT IF YOU DON'T WANT TO.

LICC: "failing to have to pay rent when you own your home is not an opportunity cost."

Citation: "So the next best alternative to buying would be renting."

LICC: "another meaningless citation that doesn't support what you are saying."

Care to chime in, JuiceMan?

about 1 hour ago
ignore this person
report abuse I think I speak for a lot of people when I say:

DON'T READ IT IF YOU DON'T WANT TO.

oh really, who do you think you speak for? You don't seem very popular and you are definitely a loud mouth

"You don't seem very popular"

On a blog? Should I care?

"and you are definitely a loud mouth"

I have a lot of smart things to say.

At this point you guys are arguing definitions, and not anything useful. stevejhx has his definition for "opportunity cost". Unfortunately for him, that definition has no practical use for any actual buy vs. rent comparison. We have our definition of "opportunity cost". It actually does have practical use for real people.

Who cares who's technically correct? Even if he is (which he obviously isn't), our response is pretty simple: ok, your definition has no practical applications, so we're going to take our definition, rename it guacamole-math, and use it. Who cares what its called, its what reflects reality.

You are the typical lonely and unpopular man. No one has come to stick up for you for good reason nor has anyone agreed that a word you said is smart.

"You are the typical lonely and unpopular man."

Why thank you! I love pop psychologists!

"No one has come to stick up for you for good reason nor has anyone agreed that a word you said is smart."

Because they don't know what they're talking about.

wasn't this blog about ken lewis?

Lonely, unpopular, self-delusional.

I understand now, only you, only you know what you are talking about. No one else.

Fantastic

ElaineBarts... what is it with morons that have to lower themselves to personal "on-line" attacks... EB... like Tupac said.... go f urself

EBarts, I have THIRTY-THREE THOUSAND MYSPACE FRIENDS!

How can you call me lonely?

LMAO.

Look, anyone who claims to know what "opportunity cost" is, and then says that the opportunity cost of buying is not renting, deserves to be outed. Because not renting is, in fact, the opportunity cost of buying: "the next best alternative." And anyone who claims that when you buy a house the opportunity cost is just on the down payment and not on the full amount also deserves to be outed, since every single month you pay a mortgage installment based on the full amount you owe.

So people who don't know what they're talking about - you're just one more - rather than point to anything remotely proven or accepted theoretically, claim they're right, I'm wrong, and they walk away.

I'm sure you do have 33000 Myspace friends. How many real friends? How many people would even call you a colleague or an acquaintance they'd admit to?
Right now, you are a loud mouth, just consider shutting up and moving on to a more productive role in the world rather than being a loud mouth, self-acknowledged the only person who agrees with yourself.

My bad Stevie.. sorry to leave you swinging by yourself.. my son had a 104 fever ... been in and out of ER all weekend.. now we're just doing the tylenonl/motrin regiment. F'n cold NYC.

Mygense.. :)

dmag2020... let's see if we can bring this back to Ken Lewis.. .what was Ken's opportunity cost / best alternative of rushing into the ML deal? I'd say sitting on the sidelines and picking it up for 1/100 his purchase price vs. risking the BKs of his own company.
F'k this I was being a patriot... if I was a shareholder.. I'd say that's why I pay taxes.

He could have also done a spot carry trade in oil and arbitraged a ton of money (that's when you buy spot oil and sell futures minus cost of storage of oil and capital cost of money tied up - barring any somali pirates he could've made $MMMMMM w/o taking any risk... that's what I call opportunity cost)...so this gets back to what is opportunity cost:

Techie.... for techie the opportunity cost of writing Stevie is maybe missing out on a da fa gay (mandarin? for shoot the plane = english for masturbation) watching Heather Brooks. See if you have a free soul and options to do something else... then it's up to your imagination and availability of options that can be considered opportunity costs.

If I had a student that couldn't get a concept I'd make things simpler so here it goes. A harvard educated banker once quit his job and worked at McD... crap... gota check on son...b back

Hope your son's okay. Ice on the forehead.

"sorry to leave you swinging by yourself"

Not to worry. I have 33,000 myspace friends!

So not only is steve too dense to understand basic economic concepts like opportunity costs, he is delusional as well, thinking that he is the only person who is right.

You know what's sad? Every time anyone makes fun of stevejhx's job as a translator, he responds essentially saying "no its complicated! Look, see this Spanish paragraph, its complicated!".

Yet, we all know stevejhx's keen ability to overcomplicate everything. To talk circles around any issue. To make what previously seemed like a very straightforward and easy question (if I don't put 200k down on a house, what else can I do with it?) so amazingly complicated.

If he applies the same to his work, I feel bad for his clients. They could give him "I like guacamole" as an input and they'll get a 3 page dissertation on guacamole as the "translation".

What is sad is how steve tries to hijack every decent discussion on this board with his bad analysis, incorrect statements and incompetently misapplied concepts.

Here, LICC = tech_guy:

http://www.economicshelp.org/blog/economics/opportunity-cost-of-buying-house/

"The opportunity cost is next best alternative foregone. So the next best alternative to buying would be renting. If you rent, you will save yourself £250,000 and a likely depreciation in house value, and you will pay rent rather than a mortgage."

“You buy a house for $100,000. Put down $20,000. You could have invested that $20,000 elsewhere, so it has an opportunity cost.”

Agreed.

“Then you borrow $80,000 for 30 years at 5%. Your monthly payments are $429.46. If you didn't have that mortgage you could have spent that $429.46 on something else - Egg McMuffins or not.”

Sure, that is a true statement, but it is not the same opportunity cost as the down payment. You can’t look at the opportunity cost of the $429.26 in isolation; you have to look at it as if you have a mortgage. If I choose to buy Egg McMuffins, alpacas, or shares of BAC with the $429.46 the “cost” is much greater and could include:

1) Late fees on my mortgage
2) Foreclosure
3) If foreclosure, then the cost of the negative impact on my credit score (higher rates for future loans, not getting approved for loans, cost of foreclosure process)
4) Half of my wealth given to my wife because of divorce due to the fact that I used the mortgage money to buy Egg McMuffins
5) Cost for my shrink to treat severe depression because of divorce and bad credit

So steve, if you want to come up with a calculation to figure in the opportunity cost of 1-5 above, then I’m perfectly ok with you making the statement that the entire purchase price of real estate has an opportunity cost. If not, let’s just stick with the down payment, K?

stevejhx, what is the opportunity cost to renting?

Imagine what you could do every month with all of that money you spend on rent money. You could be a bum on the street with an investment portfolio that you could only dream of. An extra $3000 every month to invest in your etrade account! Imagine!

Your whole opportunity costs is contingent on the fact that people do not want to be homeowners and are somehow being forcibly compelled to buy. This may come as a newsflash to a lifelong, diehard renter, but that opportunity cost that you pontificate about on the drop of a hat, for most people, is to buy a home.

Your opportunity cost argument works just fine for you, a diehard renter with zero aspiration to own their own home, but for the overwhelming majority of Americans, the reason they get up in the morning and work. Their opportunity cost is to skip out on a dinner out, take the subway vs. taxi, etc., to save money to buy a house. You fail to grasp that basic concept, and that's why it's impossible to have an opportunity cost argument with you.

Most people, including New Yorkers, will tell you that buying their home was the culmination of many different, some small and some big, opportunity costs. For you, you would look at the money to pay the mortgage and the down payment and say, but look at how many shares of company X you could have owned. But for them, owning shares of company X does not even touch owning (yes, they view it as owning, even if technically the bank owns it) their own home.

With every post you scribe about homes depreciating 20% or the 50% number you throw around, you feel like you are drawing attention to the faults of owning. But every week, a new revelation comes out about how flawed the entire Wall Street culture is. People look at Bernie Madoff and say, you can't trust your money with anybody. And with the stock market setting new lows everyday, even in financially sound companies, every argument you have about opportunity costs, investing, treasury bills, etc., is negative and muted.

It's like 2 school kids screaming at each other at the top of their lungs so as not to hear the other. At the end, all that's made is annoying to everyone noise.

"If not, let’s just stick with the down payment, K?"

No, because you are ignoring the monthly payments that you are making precisely on the mortgage whose opportunity cost you deny. If you'd like to take the NPV of the future stream of mortgage payments as the opportunity cost, then I'm cool by that. But the principal will give you a better answer.

Your arguments from 1 through 5 make no sense. Living somewhere you have 2 options: buy, or rent. Whichever you choose, other is the opportunity cost. The reason why it's important is that if it's costing you twice as much to pay a mortgage than it would to rent the same unit, then you're squandering a lot of money that could be spent elsewhere.

Oldbuyers, the opportunity cost for renting is buying.

"Your whole opportunity costs is contingent on the fact that people do not want to be homeowners and are somehow being forcibly compelled to buy."

No. No one is being compelled to do anything.

I'm not a lifelong, die-hard renting, either.

And your argument is a) not an argument, and b) immaterial in any case.

steve, your contention that the opportunity cost of buying when you take a mortgage is the entire purchase price is absolutely laughable. You have become even more of a joke. The opportunity cost is the missed opportunity from your alternative course of action. The alternative to buying is not to take an equivalent loan and invest it. You cannot dispute that. You know you are idiotically wrong, but you still want to denigrate this discussion so you don't have to admit how stupid your analysis is. No one thinks you know what you are talking about here, because you are obviously wrong, as usual.

"The alternative to buying is not to take an equivalent loan and invest it."

The alternative to buying is to rent. So the opportunity cost of doing one is not doing the other.

So much so that you can buy without taking "an equivalent loan," which shatters one more LICC theory.

Sorry it doesn't give you the answer that you want, but to quote: "You cannot dispute that."

alrighty... you f'ers.. opportunity cost:
If I saw a poor inner city kid (college aged) working at McD.... then I would "project" my opportunity cost for the kid as not going to college and not getting ahead later in life.

This same McD worker's "perception" of his/her opportunity cost could be if he/she wasn't working at McD, he/she could be selling drugs and maybe going to jail like her other friends.

Opportunity cost is based on "your" options at the time... so if u are a hick and never ever dreamed or knew anyone who owned a home... and you saw you could do a NINJA loan... then your opportunity cost of not doing a NINJA is to "feel" you'll be a renter all your life.

So Techie/LICC/JM/OBuyers... if I saw that $200K, i'd think I could pool some other families/friends monies and do a commercial bldg downtown w/ development possibilities and earn a decent C/C return and let all my investors rent while I makez them $.

IF your "view" on this $200K is binary.. keep in bank/buy home.. .then there are your 2 opportunity cost to consider... the more learned you are and the more you see the possibilities of the world the more opportunity costs you must consider. Like my wife and I am considering moving the fam to France(US embassy) as an embassy doc for 2 years... to expose our kids to other cultures.... but that "opportunity cost" of staying in NYC... is not available if you can't forgo the income or you just can't get your mind around it :)

"The opportunity cost to renting is buying"

"Living somewhere, you have two options: rent or buy"

Wrong again by stevejhx. Living at home, living with roommates, you pay no rent. This is the whole point. You only think in your world and not what is possible. The guy that lives at home with his mom, as pathetic as that may be, pays no rent as how the opportunity to buy much more stock, etc., with his income from not paying rent.

Like I said above stevejhx, you fail once again to make a comeback. You say it's immaterial and not an argument. Of course, because my points are fact. Just as I have shot down your "Charlotte 3rd most popular relocation city" thread.

You are really losing relevancy in all of your points. We get it, we get it, you would rather pay minimal housing expenses, have no vested interest in your home and instead use your disposable income to expand your day trader portfolio and chase the market. Like I said,you are the minority. Most people would rather save to improve their home and buy a home and view it as a lasting and long term solution for basic necessity, housing. You just don't get it because you have problems admitting when you're wrong. End of case.

I'm finished proving you wrong time and time again. You are like a stubborn 17 year old girl. You let emotions rather than pragmatism dictate your arguments. You have a lot of feminine qualities about you.

Your insults gain you nothing.

Oldbuyer.... the mom at home couldn't rent out the room? or charge her son to pay his "fair" economic share? Maybe if son left.. mom would sell house and travel the world? Some f'ning person is losing some opportunity cost somewhere as long as resources are limited and time cannot be turned back... in essence Opportunity cost is the result of us all dying at some point.... if it weren't then I'd learn flying at a later time no biggie... I'll be a lawyer this next decade and so on and so on...

There u go again... putting down nice 17yo girls

"Your arguments from 1 through 5 make no sense. Living somewhere you have 2 options: buy, or rent. Whichever you choose, other is the opportunity cost."

Wrong again. I used YOUR example where I have two choices, pay my mortgage or not pay my mortgage. Once I have a mortgage, I can't choose to rent (unless I rent AND pay my mortgage or I sell, which then I don't have a mortgage). The opportunity cost of YOUR example is 1-5 above. Sorry it doesn't make sense to you, try a little harder.

"Sorry it doesn't make sense to you, try a little harder."

If it were my example then it would make sense to me.

Your options aren't "pay your mortgage or not pay your mortgage." Your options are to buy or to rent. Choose one, the other is the opportunity cost.

"Once I have a mortgage, I can't choose to rent."

Not entirely true, but close enough. Once you have a mortgage you must pay it off. You are paying it off instead of renting. Therefore, the opportunity cost of not renting is to pay off your mortgage.

All of it. Not the down payment, which is another part of the the opportunity cost.

"Then you borrow $80,000 for 30 years at 5%. Your monthly payments are $429.46. If you didn't have that mortgage you could have spent that $429.46 on something else - Egg McMuffins or not.”

Here is your example again steve, right from this thread. My choice? Pay the mortgage on buy Egg McMuffins with $429.46. That is my choice. It YOUR example steve not mine.

“Therefore, the opportunity cost of not renting is to pay off your mortgage.”

Steve, you are losing it. This was my comment from about 50 posts ago

JuiceMan "Absolutely. You could rent instead and therefore you wouldn't have a mortgage.”

So what is the opportunity cost of renting steve?

JuiceMan, you're confusing my 2 points. One is the opportunity cost between renting and buying, the other is the opportunity cost lost for paying more to buy a place to live than to rent it.

"when the mortgage is paid off the renter continues paying rent"

That is true. But when the mortgage is paid off & the house is worth less than the buyer paid for it, the renter is better off.

Or if the renter spent less over the time period than the buyer did, whether or not he owns the place.

Really, oldbuyers, your insults are too much, however - they are reported, and you're on "ignore."

stevejhx still hasn't told me how I can use my mortgage money to buy blue chips... (or maybe he did, I stopped reading, but I would bet site-unseen that he hasn't even bothered).

Paying rent is not an "opportunity" that you lose by not buying. An opportunity cost is something you are missing by making one decision over another. Having to pay rent to live is not at opportunity that you miss by owning your home. Only a clown like steve would try to make that argument.

oldbuyers... do you know where your net worth is today?

Dumbass/wife beater... in 30yrs.. the whole point of not using the down payment is to invest in a higher rate of return and if like in the current market.. the rent vs. downpayment carry option is completely skewed towards renting then you rent and take the opportunity cost of not buying (which is actually positive at this point) and invest it in a higher yielding asset. At the end of 30 yrs... if you're like me.... you'll end up with a cash or equivalent asset which won't cost you 6% to get out of and is much more fungible than a NYC studio. And if you're dying for 10x leverage... give it to me... at the time of my purchase I was levered 15x with a local commercial bank (since paid off... see I could've used the cash flow to buy bigger boobs for wife, a new porsche, 50ft swan etc... but I believed the best use of excess cash was to deleverage myself.. and here I am 15 yrs later without a lick of debt and an open line of credit for $3MM with the same bank... just waiting to buy your studio for $.10 on the $1.)

Yeah.... I don't own my 3bdrm on CPW... I rent... but I sleep much better than all my non-renting neighbors and much much better than my landlord :)

techie... just hand over your to any hedge fund... apparently they carried 30x leverage....just wait... no think b/f you write... no wait a little more.... you're gonna say.. .yeah but the Hedge fund industry lost money.... and my answer would be ... yeah so you lost money in RE too... no asset class or investment decision is guaranteed... even treasuries (it's called deficit spending and rampant inflation).

LICComment... I'd have to fail you in my econ class. The closest opportunity cost of buying is renting... it follows then buying is the opposite (opportunity cost) renting. If you can buy, then you can rent. What is so hard about this concept? Any corporation can lease storefront in manhattan or they can purchase the same space and use it... .are you telling me that Sony, IBM, Goldman sachs don't lease space in NYC? Ohhhhhhhhh! Shit... yeah now you getz it.... they got better uses for the down payment like arbitraging spot carry trade in oil (read all about how all these investment bank are trying to purchase and park oil in Somalia for 9 months to arbitrage the futures price in oil)... .that's an infinite times better usage of their capital than betting in an illiquid asset (RE).

Here are some simple examples: 100 girls in bar... 1 being hottest, 100 being homeliest.
Brad Pitt

w67thstreet, i cannot even try to read your ramblings. they are incoherent. and FYI, Goldman Sachs is building their own office tower in the Financial District adjacent to the World Financial Center. Nice to give examples that are actually truthful.

Now I see why you are not a homeowner. You're just a poseur.

w67th, try learning how to speak in complete sentences and actually learning economic fundamentals before you profess to be an economics professor. You completely misunderstand the concept of an opportunity cost. Just read the comments above so I don't have to waste time explaining this to you.

dipsh-t (no not you LICComment... oldbuyer)... the stmt was does GS lease space in NYC.. .absofuckinglutely... go kick your wife in the head again...

ass---wipe (no not you oldbuyer.... LICComment) .... econ TA at a major university... 4.0 in both econ/finance undergrad... Ivy MBA... more $ than you'll ever have at the age of 25 (I'm a few below 40 now - made $2MM by that time even w/o my wife)...

NO you gotz it wrong... opportunity cost is what is your next best alternative with your time/money... if that happens to be earning 2% in a money market for your LICC... then thru the magic of compounding you'll eat cat food and I'll be dining on caviar and champagne while your daughter cleans up after my kids.. :)

LICC, I agree 100% with you about w67thstreet. He is nothing but a poseur. He cannot complete a sentence that is articulate and expresses a complete thought. Instead, he rambles and overly uses ... which should never be used when trying to make a point. He is like a 12 year old who thinks it's cool to speak/write like an uneducated thug.

In addition, he has no clue what he talks about, attempts to reiterate what other posters say but incorrectly restates basic facts. Anyone who claims to have an MBA in Economics would know that not only is Goldman Sachs building their own office tower in BPC on West Street but also owns an officer tower in Jersey City. Yet, he posts

{{{{{{{are you telling me that Sony, IBM, Goldman sachs don't lease space in NYC? Ohhhhhhhhh! Shit... yeah now you getz it.... they got better uses for the down payment like arbitraging spot carry trade in oil (read all about how all these investment bank are trying to purchase and park oil in }}}}}}}

and his wanna be thug language:
{{{{{{{NO you gotz it wrong... }}}}}

The guy is a poseur all the way. Very pathetic.

I love that oldbuyers, LICC, tech_guy and juiceman have formed their own support group.

Guys, we're all here for you through this downturn. You need anything, let the rest of us know.

oldbuyers... FYI.. I've been to jail twice in my life (thank goodness it was juvie). Broke a knee in fight.. didn't see the bat coming. 24 stitches.. .metal pipe versus skin... skin always loses...

When I first came to America... I hung out with the wrong crowd... you know both parents working 18hr days not speaking english etc. No excuse, but I've made peace with my testosterone driven stupidity... One guy I beat the crap out of in HS... ended up 15 yrs later on death row.... hmmmm makes you wonder. I gave out much more than I received and if you ever got mugged by some ethnically diverse group of kids in Hell's Kitchen in 83' to 86', I'm sorry.

So I see your point... a somali "gangster" who forces his enemy to shoot a member of his own family.. probably looks at Tupac and Biggie.. and Suge Knight and rightfully calls them "pusses." The guy who tried to kill himself by shoving 3 inches of a 6 inch serrated army knife into his skull and walks into my wife's ER probably thinks he's the craziest.. until he sees the death row guy pull out his own eye and eat it (both true stories)... so yes in the hierarchy of hooddoom, I'm a bit player...

But this much I know, I've lived more and done more in my 40 yrs in life than you'll do even if your pacemaker doesn't knock out till you're 90. I don't care how many diapers I've changed or how many dishes I've done or how many dinners I've made for my wife during her 20 yrs of training and with our 2 small children... I've never laid a hand on a girl and I've never disrespected a woman... and for that I will always be more of a man than you will ever be.

w67 - "I've never laid a hand on a girl and I've never disrespected a woman... "

Good for you. I appreciate the sentiment.

"I've never laid a hand on a girl and I've never disrespected a woman"

About 10 inches higher up this thread, you talk about buying your wife bigger boobs - disrespectful of her looks, and how you treat her like a piece of property you buy upgrades to. Very odd thresholds you have for "disrespected".

techie... psss... remember back in freshman orientation... .No means NO.... and if the girl/or guy ( I don't really care how you swing) is unconscious... I'm pretty sure it's still NO.

When they found a lump on my wife's left breast after our second child... we sat in the room waiting for a second opinion... I must've looked worried cause my wife looked at me and said.. I'm sure it's nothing and if it is, what size do you want them :)

I looked at your post very quickly and was about to lay down my gloves again... but as long as you know that there are thresholds and one has to know one's audiences then you are a little more mature than what I was gonna write...

And really does Dottie Herman have fake boobs? It seems odd that the CEO of IBM doesn't walk around with his enhanced member just oozing out of his Armani suit? Hmmmmmm ... .is she selling RE or selling herself?

techie.. .was that last comment about Dottie disrespectful?

67..Who gives a fuck if you say something disrespectful about Dottie, she drew first blood. So what, so a few hundred people read it. Dottie on the other hand, or breast, or hand on breast (I digress), is disrespectful to the entire human race when she regularly spews outright lies on national television about the Real Estate market. She should stand in Central Park, with her fake boobs, go on CNBC and apologize for being a lying RealtWhore, and ask for forgiveness. She is the RE industry's version of Bernie Madoff.

w67, what's so sad is that you think its *better* that the reason you talked about buying your wife breast implants so casually was because she had breast cancer. Honestly, I think a woman would prefer her husband talk about them publicly just as a joke, but never talk about them if it was truly serious and a response to breast cancer.

You're digging yourself deeper and deeper. I'm sure your wife has told you this a thousand times by now.

spockie (that's my name for you techie from now on).... was Jonathan Swift advocating cannibalism?

No! Get your hands away from the keyboard... don't wikipedia it.... no... think... think some more..... hell if you can't recall who he is how am I to have a conversation with you? Go ahead and look it up....

While you are compiling that in your little brain of yourz think for a moment... do you think patient09, Admiral and I go to open houses and throw dildos at the brokers and I take out the bat for not having a measurement listed? Do u think I walk to my friend's wife and say... hey did you get the 200cc, 400cc or 700cc?

In my initial post of Dottie, I qualified it with the cancer "out" bc that's the kind of guy I am. These are the thoughts running simultaneously while I smile and nod at the idiot IT support guy I'm working with or speaking with a broker while she tells me the only thing to do is bid higher. If you are a true NYer... you always have this sarcastic/cutting/insightful/double talk in your head.... that's why I can't live in OKC... when the McD kid looks at me when I give him $10.38 for a $7.38 bill and he's painfully typing in $10.38 into the register... the f'n change is $3.00.... you guys get to see the ramblings of my inner thoughts uninhibited and uncensored :)

spockie... I gotz a little lesson for you..."digging a hole" refers to exit2 as she outs herself as a true friend of the jewish people or when oldbuyers biggest put down of me is to explain how he cheats on his wife and makes her do dishes. You... you're just digging your head in the sand thinking if you don't calculate your "unrealized" loss that it isn't real. Good luck with that...

Here's one final ounce of haterade for you... our family invested in some start-up technology company in 1999-2001... one of which will IPO when the capital markets unfreezes (?) but the last time I heard it should net us $500K after the lockup period... so thank you for compiling the code for the company... I'm sure the $200hr compensation seemed great for you at the time... FYI.. it was a $10K investment.. .and just to save you the trouble.... this was not included in the $1MM cash we sit on... boy it's getting me a rash :)

Happy coding Spockie...

p09... by your post, I am assuming yes she does have fake ones :)

Do other people understand w67? Am I the only one who thinks he's under the influence of some very serious prescription drugs?

I understand w67 but I don't believe he is on prescription drugs. In fact, I think his anti-social, sexually-charged, anarchistic, hip-hop tough guy bravado, and general holier-than-thou attitude are done with a fully lucid mind. I think he's just juvenile and longing for adult interaction, probably watches a lot of CNBC and has a jumpy day-trader's addictive edge to him, plus watches a lot of porn when the kids are napping, and I imagine his computer keyboard kind of sticky and deskchair kind of sweaty.

In short, w67 is now lower than rufus on streeteasy.

LMAO.... spockie.... r u like the kid who I beat up in HS... he was all mano a mano..... until he started getting his ass whooped? FYI... all his "buds" stayed outside the circle.... it was the right thing to do.

shrimpwrappedinbacon.... uhhh.... let's see... i think it's all the working out I've been doing, but yes I do have a very healthy appetite of the flesh, my wife knowing this and men's proclivity to wander makes sure that I am quite satisfied (you should've seen her after Spitzer... thank you my man!), nope not a day trader... studies have shown you are either an idiot or a hedgie to trade daily... just pick your spots and know your cycles, not holier just more "conscious", hey we've been married more than a decade... porn, whips, champagne, dildos... whatever floats your boat.... and shrimpwrappedinbacon... you can love your dog... but you shouldn't love your dog... m'okay.... douche bag...

This coming from an idiot who can't post under his "real" handle cause it might cause his "on-line" persona that he's carefully built over the last 24 months on SE to lose "credibility." Am I getting to ya yet?

I don't know what my real handle is.

Unfortunately the best of what you are is merely entertainment. You are more interested in posting about your personality than your opinions on real estate (or peripheral topics). Which means you are the same type of attention seeker as the class clown.

Sometimes arrogance can be tolerated when it is tied to substance. In your case, there's just arrogance, no substance. Hopefully there's a different side to you when you are around your kids.

I don't know what's more amusing - that you (just like petrfitz) are resorting to 5th grade threats of beating someone up, or that even in *your* fantasy land, you still portray me as having all the friends, and you the loner.

I predict Ken Lewis out by mid Feb.

spockie.... read my posts again... does that sound threatening? Do you double clutch your purse when a black girl walks by you?

You ever been in a fight in HS? The word gets out... everyone meets at the hill or whatever... backpacks are put in one area and all the spectators circle around... including his buds and my buds... I always let him get the first hit in... 1) it clears the cobwebs 2) if you're still standing, probably means you can take him and 3) this way when u start turning things around... they let you pummel him a few extra minutes... cause :) he got the first shot in.....

Hmmmm... Petri is my enemy... that makes you my friend... and finally: "the lady does protest too much"

w67, you are such a tough cool dude.
I'll tell you my motivation - I just like to be a troll and point out idiots in society like you. You're a pretty easy target for it.
What's your motivation for all the crap you post ...All the big man talk, all the sex talk? Is it loneliness and cyber fantasy - have I nailed it?
Or are you more complex, with your street smart, great education, big penis, hot wife, black belt, super-smart investor, ironic wit, reliving high school personal style?

shrimpwhoforgetshispasswordandadmitstoittohisnemesisonline....pls I have a thread just for you :) This thread is about Ken....

Gota sell all my cars, didn't know expensive commodes were how we "rich" people were keeping score... crap... I missed that memo....

Hey what a clever response