Real Estate Information Archive


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Weekly Mortgage Update!! Rates are still below 4%!

by Mick Marsden

Here are the current mortgage rates as reported by Carl, Christine and Wendy at Fenwick Mortgage in Old Saybrook, CT. 



New Rules for Home Mortgages

by Mick Marsden

We work a lot with the capable staff at Fenwick Mortgage. This month Christine Bulgini wrote about how the rules have changed for buyers, sellers, and self-employed folks as well. If you're buying or selling a home today you need to know the new rules and how they may impact your goals: 

Mortgage Matters: Housing Market...The New Rules of the Game


After taking a beating during the Great Recession, the housing market seems to be staggering back to its feet. But as we make our way back to some sense of normalcy, many new rules have been established - with still more to come.


For those buying your first home:

  • OLD RULE: Little or no down payment required
  • NEW RULE: It is now the norm for lenders to require a down payment of 20%. For those with less of a down payment, mortgage insurance will be required, but a good credit score along with other stricter guidelines must be met. And the higher the credit score, the cheaper the mortgage insurance premium. The biggest barrier we have seen to first-time home ownership has become saving enough for a down-payment.


For those selling a home:

  • OLD RULE: Once the market bottoms, hold out as long as you can to net the biggest price gain.
  • NEW RULE: As sales prices tend to drop as the year draws to a close, listing your home in the spring has become more valuable than ever.


For self-employed borrowers:

  • OLD RULE: With exceptional credit scores, income documentation not required
  • NEW RULE: Regardless of the amount of assets or the borrower's credit scores, self-employed borrowers must show sufficient income based on previous two years tax returns.
    • This is similar to those who earn a substantial amount of income through bonuses or commissions - must have two year history of it with the same employer.


For those refinancing:

  • OLD RULE: Refinancing or adding lines of credit within a just a short time after home-purchase was possible due to appreciation of property values.
  • NEW RULE: With property values challenged by current conditions, only those who have a larger equity can refinance to get a lower rate, and getting a 'cash-out' loan, even more challenging.


These are just some basic rules which have become the result of added regulations and stricter lender guidelines.


By the way, everyone should become familiar with CFPB (Consumer Financial Protection Bureau). They are the new financial Federal Government watchdog for consumers, and will be responsible for issuing new or changing existing regulations. Check out

A Letter to Investors from Andy Kramer

by Mick Marsden

I've placed my trust and confidence with my investment decisions with Andy, principal of Kramer Capital Management for many years. I can honestly say I've never been disappointed. Shu Feng Wu is Andy's secret weapon and has always been there for me for whatever I've needed. I just moved funds about to do a self-directed IRA and she was great in getting the job done for me in spite of J.P. Morgan's lackluster service and performance in my time of need. Shu was relentless in getting them to do what they were supposed to do. If you're an investor and want the them yesterday. 

Below is Andy's 3rd Quarter newsletter on the market. I hope you find it as interesting and informative as I do:

October 3, 2011




Dear Investors:


The third quarter of 2011 saw the worst stock performance in 2 years, with global indices down precipitouslyDeclining markets caught many by surpriseWhen the third quarter began, investors were looking towards growing profits, excess cash on balance sheets, low interest rates and the presidential cycle, which all pointed to higher stock prices.  Perhaps these positives, which are still evident, will reassert priority in investors’ minds before year-end, an intriguing possibility.


When markets move from hope to worry, it is often violent.  The last three months were no exception. KCM portfolios had become more defensive throughout the first half of 2011; a consequence of the deteriorating macro picture that we discuss often in our blog posts.  We redeployed cash, raised from timely selling, into more concentrated precious metal mining stocks for reasons we have outlined in much previous correspondence. This move looked prescient, as most of our newly acquired positions appreciated throughout the first two thirds of the quarterIn the last month, however, gold and precious metal mining stocks finally succumbed to the pressure of the global liquidation.


Price volatility across asset class increased dramatically during the third quarter.  The S&P 500 had daily moves in excess of 1% on a record number of days for a three month period.  These were not trending moves, but often violent swings that went nowhere.  This added volatility can be problematic for position oriented money managers like us.  Our portfolios are concentrated in areas and situations we follow closely and believe in long-term.  As example, we want to own precious metal mining companies and oil and gas production not because of short-term stock price appreciation but because, if these businesses continue to generate free cash flows and that free cash flow grows, share prices should be considerably higher in years to come.


Obviously, if long term appreciation is anticipated, entry prices are paramountWe looked prescient in our recently re-established gold mining overweight, but their precipitous declines off September highs will impact monthly and quarterly portfolio results.  From a technicaperspective (Appendix A, B and C) we dont think anything importantly bearish is happening, except volatility is increasing.  This could work in our favor in the future, during possible runs higher. Fundamentally, recent global macro concerns that are causing the harsh markets only strengthen the long term case for gold.


During the last three months global concerns—European sovereign debt risk, emerging markets economic slowdown, and US political morass—contributed to the “risk-off tradeWe first witnessed “risk off in the 2007 -2009 bear market when all assets except the US dollar and US Treasuries declined.  Recent market behavior is eerily reminiscent of those dark days.  Why investors rotate en masse into US dollars and 10-year treasuries yielding 2% baffles us.  A strengthening US dollar seems the more absurd of these two, although not by much.


It is clear to us that a Federal Reserve led by Ben Bernanke will do everything it can (and maybe some things it cant) in an effort to create good” inflation.  He and his comrades, of whom there seems to be a dwindling number as evidenced from the three dissenters in the last two interest- rate policy meetings, continue to signal excessive monetary stimulus, even in the absence of any compelling data that proves its effectiveness. We continue to expect further quantitative easing

or other innovative policy in their unceasing quest to artificially create economic growth.


Future currency debasement is as close as we know to an economic certainty It continues to amaze us that, even though the fiat dollar is only 35 years old (in its present iteration), and the history of fiat money is over 2000 years old, that there are still so many who rest confident that this current group of global mandarins are somehow clever enough to successfully manage this overwhelmingly complex systemFiat money always depreciates.  That has been its unblemished record for over 2000 years and this time will be no different.


If one expects the dollar to depreciate, then a ten-year bond yielding 2% per annum paid in said depreciating currency hardly seems like an attractive investment—yet investors continue to buy them in record numbers.  Thesafe haven” status of both the US dollar and the Treasury markets are the presumed cause of demand.  We believe that is true during periodic “risk off episodes, but the underlying and constant demand for treasuries is more a part of the global currency racto the bottom. As the dollar depreciates against other currencies US consumers, still the straw that stirs the drink, buy fewer imports.  Global growth slows.


In order to stay competitive, foreign governments try to keep pace with dollar debasement which requires them to continue to purchase US government debtWhat was at one time a synchronistic positive interrelation now looks frayed and problematicWill the countries with net savings, like China and Brazil, continue to support this mercantile relationship As inflation and internal social conflict grows in these countries we believe it will become harder for those large buyers to justify using their savings to support our debt If demand weakens and thus interest rates, despite the Feds repeated ministrations, rise would others, fearing debilitating losses on their largest remaining asset, rush to sell We think that is a possibility In any caseas we indicated above, we see no reason to own a low-yielding obligation paid in a depreciating currency no matter what the present results show.


Looking out to year end and despite the bumpy ride, we continue to favor owning risk assets in commodity-related sectors and special situation ideas that should react independently of deteriorating economic fundamentals.  We suspect that markets are getting close to levels where buyers will emerge It is possible that if a rally can sustain for a number of weeks, a year endrally can gain momentumPlease continue to check our blog at for updates.



Andrew Kramer                   Shu Wu

      Portfolio Manager                 Associate 


Mortgage Matters: So...What Are Mortgage Rates These Days?

by Mick Marsden

This is the question I get asked every day. When I started in this business answering a question about rates was easy. It was easy because guidelines for underwriting a home loan were very generous to say the least! Today, before we can quote rates, we need to ask numerous questions above and beyond the loan size because answers to these questions can change the rate.


For instance:

 · What is the purchase price?

· What is the amount of your down payment?

· What is your credit score?

· Have you been employed consistently in the same line of work for the past two years?

· What type of property are you looking at? Condo? Single-family home? Seasonal property?

· When will the closing be? 30 days? 60 days? 180 days? (Is it a short sale?---be careful)

· What type of loan program do you want?

· Do you have liquid savings after closing that can cover your payments for 6 months?

· Do you want to pay your own property taxes?

One of the benefits of working with a mortgage broker is the ability to find lenders who best match a borrower's scenario. There are lenders that might not look at credit scores and just look at the credit report. There are lenders that charge extra if you want to pay your own taxes and lenders that require that you cover 18 months of housing costs in a liquid savings account after you close on your home. We have the flexibility of choosing from dozens of lenders so we match a borrowers scenario with the lender. We call this process the "The Perfect Mortgage Match"™. Call Carl at 860-388-LOAN (5626) for more information. 

The Kramer Capital Management Newsletter

by Mick Marsden

I really look forward to each of Andy Kramer's insightful newsletters and analysis of the stock market. Here's October's outpouring from a brilliant mind. He and assistant Shu Wu have served me diligently for years and the trust and confidence continues. Here's this month's newsletters posted with permission:

Dear Investors:


In the third quarter of 2010 the S&P 500 closed up 11% on the heels of a blistering 9% September rally.  KCM accounts continue to modestly outperform, primarily due to our overweight gold mining companies, as gold continued to appreciate, up 20% YTD.  The 4% YTD return on the S&P does not reflect the bizarre, herky-jerky action.  In 2010 there have been no fewer than 4 swings of greater than 7% in both directions (Appendix A).  In early July the markets looked ready to embark on a new bear trend only to hold the previous support level around 1000.  The subsequent 12% rally had all the characteristics of a short covering rally: when those most negative on the markets cover their bearish bets because important technical support levels hold.  The market then rolled back over, weighed down once again by the inevitable reality of the harshness of our current deflationary debit debacle.  The market bottomed again at the aforementioned support level in late August (after another 8% sell-off) where the current 11% up move commenced.  The current rally, like the previous one, is a “reflationary” trade: a “risk on” mindset.  The current meme, QE2, widely anticipates further Federal Reserve easing and monetary stimulus.  Unfortunately, we believe this new attempt by the central bankers will inevitably fail.  It remains our contention that while brief periods of calm and optimism are possible, there is no magic elixir for what ails our economy.  We continue to anticipate difficult and volatile markets for years to come.


While Appendix A highlights the large swings that have characterized the market in 2010, Appendix B shows a longer-term picture that reflects the trading band that has transpired for over a year.  Apart from a brief attempt in April to break out to the upside, which was quickly and emphatically rejected, the market has meandered in a well defined trading range.  The difficult trading environment reflects the opaqueness of future outcomes.  There are many more questions than answers.  For the remainder of the letter we highlight three areas that are critical to understanding potential outcomes.


Perhaps the largest and most important unknown is the future direction of interest rates.  The Federal Reserve continues to firmly state that low short term rates will be with us for the foreseeable future.  There is little doubt that they have the necessary tools to insure this outcome.  Perhaps we are alone in our skepticism, to paraphrase the great American novelist John Steinbeck, “the best laid plans often go awry.” 


The latest US Treasury data list approximately $2.4 trillion in federal publicly-held debt maturing within one year.  This is approximately three times greater than any previous yearly maturity. Will the market be able to absorb this gargantuan supply (not to mention the trillions of debt financial institutions will need to refinance as well as the borrowing needs of state and municipal governments) and keep short term interest rates at generational lows?  Chairman Bernanke assures us he can.  If he is right—and we are not sure he is—it would mean another large round of money printing (quantitative easing is the new Orwellian term for this) which will result in new lows for the dollar and highs for gold.  One reason we suspect that keeping rates low is not a high-probability outcome is the enormous faith bond investors have placed in this outcome.  Fund flows in 2009 and 2010 have seen large moves out of equities into bonds.  The size of the crowd (enormous bond inflows) strongly argues for caution.  Simply put, if all these investors are right at this extreme, it would be the first time ever that such large flows in one direction correctly forecasted future prices.


Another area where large unknowns exist, along with a uniformity of belief, is China. Chinese economic growth continues to be an important theme in most investment managers thinking.  Strength in emerging markets and commodities is generally attributed to the voracious appetite of this new economic giant.  At KCM we are very familiar with this theme and have used it ourselves to justify our long-term belief in commodity investing.  We are much less sanguine today.  The Chinese growth story is certainly a major economic force that will continue for many years; however, recent data and commentary from experts in the field show some potential cracks in this view.  Growing income disparity has led to social unrest and large wage concessions in some industries.  In addition to wage inflation, real estate prices have appreciated rapidly; this also concerns authorities.  Environmental problems caused by breakneck industrialization combined with reports of excess capacity in certain industries indicate the potential for a concerted effort by Chinese authorities to slow down economic growth.  The potential for Chinese authorities to put the brakes on their torrid growth trajectory could have large consequences for global growth.  We also note that within the equity sector, emerging markets is the only sector enjoying inflows.


Finally there is the issue of the huge fiscal crisis in many of our states and how these deficits will impact future employment and federal spending projections.  There are a number of negative economic consequences that seem probable.  Perhaps the most consequential of these will be the negative drag on employment that strained state budgets will cause.  Since the onset of the financial crisis in 2007, private payrolls have declined dramatically but some of this retrenchment was mitigated by state and city governmental hiring.  This trend is over.  As states’ revenues continue to decline, state and local employment will suffer.  In a Wall St. Journal op-ed, Meredith Whitney estimated “that austerity measures will cost between one million to two million jobs for state and local government workers over the next 12 months.”  It is important to understand that talk of additional stimulus is illusory.  Any new stimulus approved by the Federal government, albeit an unlikely possibility at this juncture, will be needed not to stimulate per se but to maintain current programs and spending.  


Our list of concerns and questions is much longer then the three we discuss here.  Perhaps the hardest thing for us to understand is why there is not more outrage, social acrimony, and hostility against the current entrenched power structure.  Perhaps we are again just early in understanding what the probable outcomes will be.  We note with foreboding the debacle that is unfolding in residential housing.  First there were the homeowners who legitimately couldn’t afford their homes and stopped paying mortgages.  Next came the “strategic default” when the homeowner, acting rationally, realized there is no economic value in making their payments if their house price was under water.  We now see large financial institutions announcing foreclosure moratoriums.  Why should anyone pay their mortgage?  Perhaps this is civil disobedience in the 21st century?


Obviously this letter, like many of our previous ones, continues to rationalize our long-term bullishness on gold. We are no longer the lone wolf singing gold’s praises, however, and while we have no expectation that we are close to a long term top we do worry that the current ubiquity of bullish opinion argues for a correction.  We are watching closely and might try to hedge some of our exposure to help mitigate some volatility in the days ahead.  In other news, we are now fully ensconced in our new home at Northeast Securities.  Our new partners continue to impress us with their level of professionalism and friendliness.  It is with a heavy heart that we close this letter with the news of Shu’s father’s passing.  It was as sudden as it was tragic.  Our extended KCM family has been a tremendous support for Shu during this terrible time and we thank all of you for your kindness.


Andy Kramer

Portfolio Manager

The Mortgage Bankers Association Hypocrisy

by Mick Marsden


This blog is on what irks me most about the media these days. They don't really cover things that expose the hypocrisy and abuse from thieving CEO's and politicians alike. It seems like the last bastion of radical thinkers and those shining a light of the truth is left to folks like Jon Stewart. A few weeks back there was minimal news coverage on homeowners doing strategic defaults on their mortgages. A strategic default is where some one who can actually pay their mortgage payment defaults because it makes no short or long term sense to keep paying for an asset that is worth so much less than the balance they're paying down. Businesses do it all the time. Many businesses don't hesitate to simply not pay a vendor or keep to an agreement that no longer works for them. They selectively screw a few people they promised to pay to fatten their bottom line and to turn towards more profitable situations…even thought they could have been honorable kept to their word. 

I was blown away by the true and humorous spot that exposed the Mortgage Banker's Association's hypocrisy. After thinking about it, I wasn't surprised. It's the status quo of the power wielding CEOs and politicians doing the old do what I say not as I do deal. So here's the story:

Hypocrite John Courson talking out one side of his face...

The Mortgage Bankers Association bought  a building for their headquarters 3 years ago for $79 million dollars with just 5% as a down payment. A real sub-prime dream deal that no doubt was packaged up with the rest of the crap they sold to investors, retirement accounts, and even other countries. The very sliced and diced crap they shorted because they knew it was going to fail. The Mortgage Bankers Association most likely could have continued to pay their payments but decided to default on their loan and walked away from it’s headquarters in Washington DC because it was so underwater.  This does have a familiar ring to it, no?

Many homeowners over the past few years have been dealing with the very issue with their slice of American pie, their humble abode, their home. For most homeowners there's significant anguish, guilt, and shame. There's also a fair amount of fear. They may ask themselves questions like: Where can we go?  What can we rent? Will anyone rent to us after with my credit is trashed from this default? Will I ever be able to buy another home? All legitimate concerns for sure. 

However, CEO, John Courson of the Mortgage Bankers Association added to the emotional burden for these homeowners in an interview about people deliberately walking away from their mortgages. He said that it was a “moral imperative” that homeowners need to continue to make their payments. (Mostl likely a position driven by his need to be overpaid for his services). This is an amazing statement coming from this pedantic, narcissistic hypocrite that strategically defaulted on his MBA headquarters loan that screwed the investors who bought their mortgage of $75m!  

So where did the MBA go? They rented just a few blocks away and they no longer have the nastily underwater property on their balance sheet. 

Am I advocating Strategic Defaults?  You bet because it's done by the very corporations who are buying elections and dismantling our middle class. I can't stand on ceremony and state that I don't advocate them when the CEO of the MBA has done it on a huge scale and represents the very industry that's party at fault for where our housing market is.  

My main message here is that if you are having trouble making mortgage payments, then a short sale may be your path to getting out with the least damage. You need a real hardship here. Get help sooner than later in this case. Visit: and 

If you can afford your payments and are considering a strategic default consult with your accountant and lawyer and weigh out your options carefully. Create a plan that will be solid for the future instead of sitting and waiting for things to happen. 

The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
Foreclosure Crisis
Daily Show Full Episodes Political Humor Rally to Restore Sanity


Want to laugh and get the sad truth that the real media wouldn't report? Watch the Daily Show's report about the Mortgage Bankers Association Strategic Default. It’s about 5 minutes and worth it.

If your a member of the Mortgage Bankers Association and don't like this blog. Too bad. The truth hurts. If you're not then you'll probably agree with me 100%.

Who pays the commission on a short sale?

by Mick Marsden

One of my clients got behind in payments with an underwater mortgage and didn't want a foreclosure on his record. Although a short sale is not quite as damaging to one's credit as a foreclosure, it's still a significant hit. 


He attempted to try to short sale the house himself to avoid paying a commission. The bank told him to go get represented. Why? For one because they want a professional handling the negotiation and second, the bank pays the commission and not the seller who is obviously in arrears.


If you're underwater and behind in payments or it looks like that's where you're going you should consult with experts immediately. If there are two mortgages on the property this further complicates the process and extends the amount of time it takes to get everyone on board, but we have been successful in getting the sale closed more times than not.


Although banks do not have to follow the new government guidelines, HAFA (Home Affordable Foreclosure Alternatives Program) offers some incentives line $3000 in borrower relocation funds, $1,500 to servicers to cover costs, and up to $2,000 for for investors to allow proceeds to be distributed to subordinate lien holders.  The official Fannie Mae site that has this info and more is below:


The most important step in deciding if selling short is what is best for you is to become as educated as possible. The HAFA site above is a great place to start.


If you're a homeowner looking for a confidential consultation or further information without speaking to anyone then visit:



Get all the information you can so you can decide on what's right for you. 

A View on the Stock Market

by Mick Marsden

My portfolio manager, Andy Kramer, Kramer Capital Management, is a cut above the rest. His insightful and erudite analysis of the stock market, investing, and the like is a refreshing departure from the likes of the other Cramer whose more an entertainer than a big brain on investing. I'll take my Kramer over your Cramer any day of the week. 

I'm delighted to be allowed to post his monthly newsletter on my blog and I will look forward to sharing his insights with you each month. 

If interested in contacting Kramer Capital Management directly, send me and email to: and will make the introduction. 

Here's Andy's last newsletter: 

Dear clients, friends, family and, I hope, a few prospects:

Will the stock market high registered in the second quarter of 2010 (April 26, with the S&P 500 at 1220) be the high for the year, and possibly years to come?  As longtime readers might guess, we believe that is quite possible and will detail some of our reasons in the forthcoming paragraphs.  Our 4/1/10 letter forecasted increased volatility and more bi-directional markets.  Little did we expect volatility to increase by 40% during the quarter and the S&P 500 to decline, at its nadir, over 12%.  The fact that our accounts were positive for the quarter, and year-to-date, corroborates our 4/1/10 message that only those managers willing to short, hedge, and sell will have the tools necessary to achieve positive performance going forward.  While we, of course, are pleased with our results we remain vigilant and humble as we fully expect markets to become even more volatile and challenging in the months and years to come.

Over the years we have used these letters to detail our concerns as unbridled monetary and fiscal policy begat wanton speculation.  During the crisis and its aftermath we have focused on the potential unintended consequences of the haphazard, ill conceived, and politically motivated responses.  One of our favorite strategists, Kiril Sokoloff of 13D Research, titles his missives, "Thoughts on the end game"; we feel this is an appropriate turn of phrase because what we will witness over coming years will be the destruction of the present system and the eventual emergence of its successor.  There are many potential paths and outcomes and we will not pretend to be able to forecast how this crisis will (continue to) unfold, but we intend to stay focused, alert, with both hands on the wheel. And we plan to have the physical, mental, and capital resources to invest in the next growth cycle when it comes, because another cycle always does.

It is true our outlook has become more apocalyptic, if that is possible, as we survey the present landscape.  Simply put, there is no way to grow our way out of our present condition.  More likely will be wholesale debt repudiation and/or massive monetary inflation or perhaps a combination of both.  We have discussed in detail, over many letters, the myriad economic imbalances that exist in today’s world. Nonetheless, there are so many gargantuan examples of the untenability of the current situation that we will discuss it again.

According to a recent report written by the United States Government Accountability Office (GAO), "roughly 93 cents of every dollar of federal revenue will be spent on the major entitlement programs and net interest costs by 2020."  What this government issued report tells us is that in only ten years time, .93 cents of every $1.00 of government revenue will be used to fund Social Security, Medicare, Medicaid, and interest costs, leaving .07 to fund defense, homeland security, welfare, unemployment benefits, education etc. etc.  We know this is not possible but we don’t know how the problem will be resolved.

What about the precarious state of American states?  A recent report from the U.S. Center of Budget and Policy Priorities estimates that in fiscal 2010 the U.S. states collectively posted a near $200 billion budget shortfall, equivalent to 30% of all state budgets, and that is with $135 billion federal emergency bailout assistance.  The situation of the states is even more precarious than that of the federal government because they cannot print their own currency, and because they have a large number of fixed costs which continue to expand.

As dire as the current projections are, the possibility of their being understated is real, as the demographic tide of aging baby boomers compounds the current problems.  As our largest generation moves into its retirement years we should see tax revenues weaken and social safety-net obligations increase.  As Graham Fisher’s Josh Rosner wrote in a recent report,

These boomers are now moving to become the largest tax on the social safety net.  The largest generation in U.S. history will retire with less equity in what has historically been the largest retirement and intergenerational wealth transfer asset for most families—their homes.  In many cases, these people will have no new personal savings when they reach the end of their working lives and will essentially become wards of the state.  This increased burden on the U.S. Treasury, in a decade, is the largest unconsidered impact of the current crisis.

When will our credit markets begin to unravel is just a guess, but one should look to the recent credit market turmoil in Greece as an indication of what we should expect over time.  Much is written to the effect that these problems will stay localized in the PIGS (Portugal, Iceland, Greece and Spain) and potentially Britain as well, but that we in the U.S. are safe because the dollar is the world’s reserve currency, we are the most powerful military force, etc.  To that we simply say "balderdash."  As we have said before and will say again, when a credit bubble blows there is no escaping the eventual pain and suffering that ensues.  It might not be evident in today’s market but it is short-sighted and financially ignorant to be unprepared for the eventual credit debacle that will unfold sometime in the future.

Unfortunately the list of problems does not stop there.  The perilous fiscal situation in Europe, rising social unrest in China, the percolating ethnic and religious tensions in 

Afghanistan, Pakistan and now Kyrgyzstan is now suddenly dwarfed by the potential devastation occurring in the Gulf of Mexico.  We will not delve into the potential nightmare scenarios we believe can unfold as this catastrophe grows.  Suffice it to say that we are already a weakened power and this crisis can only exacerbate our decline.

How to manage a portfolio in this environment?  There are always options and possibilities, which is what makes our job so endlessly fascinating and challenging. Whether it is a special situation, undiscovered by the market, or a tactical move contrary to prevailing trends (our most recent example of this was our quick strike this quarter in the volatility index—VXX), we are always searching, studying, and learning to position our portfolios correctly.  The one area that has been and will be our preferred overweight, perhaps for years to come, continues to be the gold mining sector.  We see gold trading at all-time highs but we believe that is not yet reflected in the gold mining sector.  Appendix A is a chart comparing the gold miners to the price of gold.  The chart shows that for the first 6 years of the current gold bull market the miners fluctuated between overvalued (red line) and undervalued (green line) in a well defined band.  The global credit crisis has disturbed this relationship.  Even a move back towards the lower undervalued band, which we believe is quite probable, will greatly enhance the value of our portfolios.  We continue to believe that when the current financial architecture fails, the rush to own gold will remind us of the internet frenzy at its height.  Anecdotally, we remain quite comfortable with our overweight positions as we have yet to find anyone we talk with who shares our position.  The more we get laughed at or dismissed, the better we like it. 

Please note the change in our logo and stationery, courtesy of my sister Rebecca, web-site designer.  In addition, please update your records to reflect our new contact information.  Rebecca is also working with us to build a web-site which will archive our letters from 2006 to the present.  We plan to be updating the site regularly to include commentary, charts and quotes and to build it out as the year progresses, so please bookmark it on your browser and check in with us periodically throughout the quarter.  Thank you for your continued support.

 Andrew Kramer Shu Wu

Portfolio Manager Associate



Appendix A




Todd Hartt joins Fenwick Mortgage

by Mick Marsden

My entire family and I have been using Fenwick Mortgage in Old Saybrook for our mortgage needs for years. Founded by Carl Bulgini in 2005 right here in Old Saybrook I've recommended his firm to many of my real estate clients who've simply loved the rates, service, and courtesy of Fenwick's staff. Having personal experience with a company you recommend to others goes a lot further than hearsay for sure. 



Todd Hartt, whose just joined the illustrious mortgage team, recently left Edward Jones for an opportunity to work with the best. Todd became acquainted with Fenwick Mortgage through his membership at the Riverside BNI chapter that meets each Tuesday at 7:3o am at Essex Town Hall Auditorium. 


Todd Hart: Mortgage Originator Extaordinaire


I met with Todd a few weeks back to get to know him and his work ethic. Wow. Todd's demeanor and attention to detail makes him well suited as the lead representative for the firm. Todd's got more licenses than a boatload of fishermen, Series 7, 66, life and health insurance licenses, and of course hie holds both a national and state mortgage originator's licenses. His background and experience makes him your best choice for your next mortgage or refi. Todd holds an MBA from SCSU as well. 



Prior to working for Edward Jones in Essex, he has 11 years experience in marketing and sales in the Pharmaceutical industry with Pfizer. 


Todd is a local person who was born and raised in Old Saybrook. He is an avid skier and sailor and has 15 years experience professionally in the marine industry, most of that here in Essex. 


He lives here with his 3 daughters and wife, Nicole. 

What you need to know to get your 1st Time Home Buyer Credit

by Mick Marsden, Chris Burdo

Ok, so you bought your first home and instead of being freaked out about it being tax time, you're excited. Why? Because you're expecting a big fat refund or reduction of your tax owed by as much as $8,000. 

But what to you have to present to the IRS and what do you have to know to actually collect that bounty you've been looking forward to? As I don't practice law nor have CPA credentials, I reached out to my colleague at the Riverside BNI, Chris Burdo, tax consultant extraordinaire at Ed Muenzner CPA, LLC , to give me the blow by blow so that all of my first time home buyer's and blog readers will have a leg up before they walk into their tax preparation meeting. 

Chris Burdo, Tax Consultant Extraordinaire with Edwin R. Muenzner, CPA, LLC 

Everything you need to know to collect your up to $8,000 tax credit by Chris Burdo

There has been much coverage over the “First-Time Homebuyers Credit but I’d like to review not only the basics of the credit but also go into the finer details that may be of interest from a tax perspective.  It should be noted that this credit originally started out as a loan a couple of years ago and has evolved into the First-Time Homebuyers Credit so my discussion relates to the changes that took effect in November, 2009. Furthermore it should be noted that under the IRS Circular 230 Notice that any tax advice provided in this blog or any attachments cannot be used for the purpose of avoiding penalties that may be imposed on any taxpayer. 

From the amount of press that has been generated about the FTHB credit most potential homebuyers are probably aware that for a first-time buyer the tax credit is a maximum of $8000.00, unless they file as married-filing-separately in which case the tax credit would only be a maximum of $4,000.   Furthermore there is the maximum $6,500 tax credit, maximum $3,250 if married-filing-separately, for long-time residents that have owned and lived in the same residence consecutively for five years within an eight year period.  

There are some restrictions attached to the FTHB credit which are:

  • The credit cannot be claimed on homes costing more than $800,000.00
  • Taxpayers can only receive the full credit if their modified adjusted gross income is up to $125,000.00 for single filers and up to $225,000.00 for married filing jointly.  There is a reduced credit for taxpayers if single their modified adjusted gross income falls between $125,000.00 and $145,000.00 and for married filing jointly $225,000.00 to $245.000.00. 
  • The taxpayer, and spouse if married, must be 18 years of age on the date of purchase.
  • The credit is not available if the taxpayer is purchasing the home from a relative of linear descendent which would be from grandparents, parents, or children for example. 
  • The taxpayer may not claim the tax credit if they are gifted the property or if it is inherited.  

With the tax filing deadline of April 15th looming close by the FTHB credit offers taxpayers that have purchased their homes in 2010 the unique opportunity to take the tax credit in either 2009 or 2010.   Discuss with your CPA the impact that this credit would have for both your 2009 filing as well as a 2010 tax projection and decide which is best for your situation.   

To receive the FTHB credit the taxpayer must attach a copy of the settlement statement, usually form HUD-1, which should show all the parties signatures, the contract sales price, and the date of the purchase.  If the home is newly constructed and a copy of the settlement statement is unobtainable than a copy of the certificate of occupancy will generally suffice which should include your name, address, and the date the certificate was issued. 

As this tax credit also applies to mobile homes settlement statements do not apply in this case but its place the taxpayer would have to provide a copy of the retail sales contract, signed by all parties, the purchase price and the date of the purchase. 

For taxpayers claiming the credit as a long-time resident they will have to provide additional information.  A 1098 mortgage interest statement, the homeowners insurance statements, property tax records for five consecutive years in an eight year period. The eight year period should end on the date that the purchase of the new home is made.

This tax credit is set to expire on the stroke of midnight April 30th, 2010 with the only caveat being a buyer that has a binding contract prior to May 1st to purchase a property prior to July 1st, 2010.  Members of the Armed Forces as well as qualified federal employees serving outside the U.S. borders are given an additional year to take advantage for the First-Time Homebuyers Credit and will be required to be in a binding contract by April 30th, 2011 to purchase the property by the latest of June 30th, 2011.  If you’re pondering a new home purchase please speak with Mick or any member of his capable staff to take advantage of this tax credit.  

Who's doing your taxes?

Don't leave money on the table, or worse yet, on the IRS's table. Have your taxes prepared by a competent tax specialist. The money spent on such a service is often more than paid for by deductions you may have been totally unaware of. 

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