Steve Hemingway

So, is this your first recession?

Fri, 02 Jan 2009 20:29:28 +0000

Black humour from Scott Adams.

HR Departments

Fri, 26 Dec 2008 21:26:15 +0000

And a special thanks to ...

Thu, 25 Dec 2008 08:24:48 +0000

It's Christmas, but I have bought only a tiny number of presents and sent cards to only a small subset of those I'd like to (mainly on the basis of who I always send cards to, however little I see them in the year). I was going to write a blog going through things I'd seen or done during the year, but that really wouldn't be very interesting either to you or me. Apologies if that applies to the rest of my entries, to you at least. I'd first like to say thanks to my good friend and now former colleague, Lua Meng. I've learned a lot about China, and about the Chinese from Lua. Of course, the main thing I've learned is that they are all very different, and that their culture doesn't actually make them very different to the rest of humanity. It was due to Lua that I started to invest in Chinese real estate, which has actually been a very successful venture. There aren't many markets where I could have invested and still made money recently, but Zhuhai is one of them. Admittedly most of the gains come from the appreciation of the renminbi against the pound, but that exposure was one I actively sought when I started investing. Little did I know that the pound would sink like a stone within nine months. I'd also like to say thanks to Ashley for making us so welcome in Beijing and to MWH for managing my properties in Zhuhai and to their parents for bringing up such a splendid family. I'd next like to say thanks to Gary Dickenson and Tony Palanca and Jacky Lau, the key China Direct Partners. I met Gary this April, and was immediately impressed by the proposition that construction companies in the UK could secure significant savings by sourcing direct from China. Since then I've heard several hundred reasons why this should not be the case, principally from sceptical potential customers. It is true that, with the implosion of the UK construction industry, I haven't exactly had a flood of orders. Nevertheless, I believe that my time will come with CDP. The RMB will weaken, the UK construction industry will recover, UK manufacturers will get more expensive, the tax burden on UK manufacturers will destroy their international competitiveness, and distributors will widen their margins to the point where direct procurement becomes a compelling proposition. I know this probably sounds like a sales pitch, but I happen to believe it. Next I'd like to say thanks to Mervyn King and the boys and girls at the MPC. The drop in the repo rate has made a real difference to my cost of funds. Nothing much has fed through, but because all my borrowing is on tracker rates I should see significant savings in financing costs - by far the dominant ones - in the new year. Costs of funds for lowly-geared investment companies like mine remain crippling. This is a subject very close to my heart, but I don't want to waste Christmas day riding my hobby horse. Next I'd like to say thanks to Brad Davis at Pension Practitioner.com. This is one of a new breed of specialist pension administration companies that allows SSAS trustees to dispense with the services of an actuary. For many pension schemes an actuary may be good value. For a small scheme like mine, with one or two beneficiaries, the costs involved are wholly disproportionate. Since the 2005 Pensions Act (don't quote me on that) the requirement for a pensioneer trustee has evaporated, and, frankly, huge savings can be made. I've spend a lot of money on actuarial services for my SSAS, but frankly I've seen no benefit from it except a knowledge that I have complied with the law and don't need to worry about being arrested. Now it's simply an unaffordable luxury. Next, I'd like to say thanks to Steve Nye at the Robin Hood and Little John in Rabley Heath. If you live in the Knebworth/Codicote area I urge you to try it. It's a traditional pub with food and good beer and either no music, or music quiet enough not to be noticed. Last, but not least I'd like to say thanks to my family. They have been wonderfully indulgent to me for yet another year.

UK Real Estate Investment

Fri, 19 Dec 2008 10:23:46 +0000

I have been investing in UK property for about thirty years. I have made some money, and lost some, but net I'm ahead. I don't claim to be a genius, or a 'guru', but I am looking a lot smarter now than many buy-to-let investors who took on excessive leverage with short-term and expensive financing. I have also stayed out of the market for the last six or seven years, which has helped a lot. The market has changed. You probably noticed, but you probably didn't crunch 'the numbers'. I have been looking at the prices at which houses sold at auctions in the SE over the last few months. In order to do this I accessed the Essential Information Group's website, using a trial short-term login. Some basic information about past and future auctions can be obtained from a login, but full property details require a subscription. I plan to buy some UK property in the new year. I could leverage up my expertise if I could join forces with some other investors to form a syndicate. You could be passive or active members of the syndicate, but you cannot become a member unless you are prepared to restrict investments to older houses with good yields and prosperous locations; you can also not become a member if you think that gearing is some kind of magic. I could either set up the investment through a limited company (my preference) or through some other structure, like an LLP. If you are remotely interested in joining forces then drop me a line to steve.hemingway@gmail.com. At the very least we could share access to research resources such as the Essential Information Group. I am thinking of buying leads which will give contact details of people facing repossession and looking for landlords who are prepared to buy their house and agree to a tenancy so they can continue to live there and pay rent (sale and rentback, sale and leaseback - a classic business trick for obtaining liquidity that is now more and more popular with individuals who borrowed to much). These leads cost money (the sellers of the leads spend a fortune on Google Adwords - just do a search for 'quick sale' or 'quick house sale' and see the sorts of sponsored links that appear). If you want to hear more, call 07712 176618.

Google Hot Trends

Thu, 11 Dec 2008 21:30:35 +0000

This is something that I would really have just posted on del.icio.us but it's a widget which I need something to embed in. Here it is:

It is part of Google Trends, which is Google's attempt to (intelligently?) highlight new things that people are searching for.

If it can happen to Damian Green, what hope for the rest of us?

Sat, 06 Dec 2008 17:00:58 +0000

This post on the TPA website is one of the many about the raid on Damian Green's office. It makes the point that a huge amount of legislation has been passed which makes this kind of thing more likely, but it is only now that MPs seem to be remotely concerned about this kind of thing.

BTL Thoughts

Fri, 05 Dec 2008 11:58:31 +0000

I spoke to Fred of Resident Broker. The website is down, but he is very much up and about. Resident Broker is a specialist BTL mortgage broker. They seem to know what they are doing and gave me a picture of the market. Essentially the banks are punishing new borrowers for the sins of their forebears. The *best* deals available now for BTL are from Birmingham Midshires, with 5.89% fixed for 3 years with an astonishing 2.5% initial fee. The best tracker rates are Bank of England base rate + 3.75%. Nobody will lend at more than 75% LTV, and *the only* no-fee deal is from Northern Rock is offered at 8.04% - practically a credit card rate. Banks will not lend on HMOs any more, they are reluctant to lend to student lets. It seems practically impossible to get any finance for property investment. This sort of situation is going to result in some real bargains coming onto the market. The situation is improved by the existence of people like PJT Finance who can structure deals to achieve much higher levels of gearing than banks officially are happy with as long as 'BMV' (below market value) prices are available. Having been deeply sceptical about the whole BMV concept in the past, I now can recognise that with new finance being impossibly expensive compared to existing finance there will be sellers who may be prepared to sell at any price to "de-leverage" (un-gear?). There are a number of sites offering 'BMV leads' - i.e. the contact numbers of desperate home owners facing repossession. This is maybe not the sort of bottom-fishing that everyone is comfortable with, but with the prospect of a house being sold at a no-reserve auction by a bailiff instructed by the mortgage lender (which, as we saw above, has no compunction about taking it's pound of flesh at the point of lending) I can see why some owners might choose this option. A couple of sites offer this service - Network Property Buyers and 24-7 Property dot Com. You can see a consolidation of leads at this forum at Singing Pig.

IMified - Widgets

Fri, 05 Dec 2008 09:33:40 +0000

https://www.imified.com/settings/widgets.cfm

Twitter and Imified are two web based services that I heard about somewhere, signed up to (they are free, as in beer, after all), and then wondered what all the fuss was about. Just to explain: twitter allows you to make blog-style posts from e.g. your phone, but only up to 80 chars. A kind of haiku blogging, I guess. I find it very slow to text and so although I do occasionally post from my phone (usually on a train when I am bored with reading), but it didn't, as they say, change my life. Imified is a most peculiar service. It is basically what we used to call a CLI to the web. For those youngsters reading this, a CLI is a command-line interface. That is the sort of way that Real Men (TM) interact with computers.[ref1], like DOS of a shell in Unix. Anyway, the way imified works is that you add imified as a chat buddy on the instant messaging system of your choice. Mine is (inter alia) Google Talk, so I'm a mate of imified@imfied.com. He's (almost) always online, but his line in banter is extremely limited. What I eventually discovered is that to make the system remotely useful it is necessary to do two things: (i) install a useful widget - twitter in this case, (ii) create a short cut through the menu system. The need to create shortcuts didn't dawn on me until today. The problem is that the menu system is clunky, and the imified servers are *really* slow. So there is a huge different between being able to type "/tweet finally worked out how to use the imified shortcut system" and navigating through even one level of menu structure. There is a lot of stuff about how to use imified on the imified blog [ref2] but the problem is that if you're like me, you just install the app and then start using it, regarding a need to actually read instructions as humiliating admission of defeat. The weird thing about both Twitter and Imified is the absence of any sane business model. These are useful little web gizmos, but I cannot imagine paying much to use them. I might be persuaded to part with, say, 0.1p to post something, but it would have to be the kind of micro payment that has successfully resisted development of the whole history of the commercial web. Same goes for imified - a tiny payment would be tolerable, but it would have to be use based. Frankly I'd be very reluctant to sign up for 10p a month, because I know that something else would come along to displace imified in my affections, but I'd completely forget to cancel the paypal standing order. I can't imagine either have scope to monetize users via advertising (especially imified where you don't even see a web page). Somebody somewhere is funding these things with no obvious commercial potential. I suppose the same could be said for Netscape once. References [ref1] Real Men Don't Program in Pascal Imified Blog entry introducing Imified

Knebworth retail

Wed, 03 Dec 2008 22:55:32 +0000

The following is a list of the shops of Knebworth: Hairdresser Post Office Estate Agent (Halcyon) Portrait studio (new) Bank Estate Agent (Country Props) Solicitor Supermarket (small) Charity Shop Fish and Chip Shop Locksmith (not really retail) Estate Agent (Putterills) Betting Shop Indian restaurant and takeaway Chemist Tanning studio Dry Cleaners Bridal shop Soft furnishings shop Estate Agent (AMS) Butcher GP (not retail really) Hairdresser Beauty studio Florist Carpet fitters / shop Blinds shop/fitters Scooter/motorbike shop Deli Letting agent (Herts Lettings) Art / Craft studio Dog Grooming parlour Car audio workshop Opticians Cafe Newsagent Dentist Radio & TV Estate Agent (ABC) Hairdresser Hairdresser Funeral Directors Builders Merchant Off Licence/food retailer Estate Agent (Admiral) Chinese takeaway Chemist Baker Funeral director Signwriter Estate agent (Mather Marshall) Cafe Beauty salon Bead shop (yes, a shop which sells beads!) Scooter dealership (also sells cars and does car and bike service). Hairdressers Beauty salon Kitchen fitter There are some premises with no obvious presence on the high street other than perhaps a door with a nameplate - there is certainly a recruitment firm and a financial advisor somewhere, but the above is the set of retail businesses in the 'commercial centre' of Knebworth, most of which I walk past each day on my way to the post office. It is interesting to see the mix. What stands out for me is the sheer number of estate agencies. Not all are pure sales agencies, but clearly the vast bulk of income into these businesses is from sales, at least traditionally. The total sales in the last quarter on record in the SG3 postcode area, according to the land registry (e.g. from upmystreet.com) is around 17. With eight agents operating in the village this gives them about two sales a quarter each! Properties in Knebworth have an average price of £350K. If we assume that fees are around 1.5% we end up with total income per quarter into these firms of around five thousand pounds. This will barely cover their rent and rates, let alone their staff costs or advertising. A page in the local paper will cost around a thousand pounds. Letting fees will make a small impact on their finances, but will probably barely cover their marginal lettings costs. I know a lot less about the economics of the other businesses in the village. I would guess that they are hardly better off, except the food retailers. Coming soon to a high-street near you: vacant retail premises at once-in-a-generation low rents. There are 22 retail presmiess available in a search in EGpropertyLink. This has to go up very soon. Factors influencing this mix of retail businesses must include:

if businesses are perceived to offer a particularly local service (estate agents)
where the cost savings possible on the purchase for an average visit are likely to be small compared to the costs of travelling to Stevenage - dry cleaner, post office, newsagent, supermarket
historical inertia - radio and TV, builders merchant
costs or effort of transporting product back from shop to a home in Knebworth - builders' merchant - takeaway food suppliers, bakery
unique service or product supplied to customers who travel from a long distance - motor cycle dealership, car audio fitter, dog grooming service.
combination of product and service which is delivered locally - kitchen and carpet fitter, blind fitter, poss. car audio fitter
customers are less than averagely likely to be able to get to shops where a cheaper product is offered - optician (also offers chiropody etc.)
personal relationship with provider of product/service is important - solicitor, hairdressers, beauty salons
services/goods where the average profit per customer is very high relative to the (modest) rents charged in Knebworth.

It is possible that local shopping will become more popular as people want to release 'working capital' and make more frequent and smaller shopping expeditions, travelling on foot or bike rather than car (or even by car, but using less fuel because of a much shorter journey). This will to an extent play into the hands of Knebworth shops, but I can't see that it will be enough. The products and services provided in Knebworth tend to be infrequent-purchase, high profit per visit kind of things, which are the ver things that hard-pressed consumers will save on in the months and years ahead.

Christmas Cards

Mon, 01 Dec 2008 22:31:45 +0000

My Christmas Card list breaks down as follows:

Family, probably a majority, even though I have relatively few living relatives,
School friends - a few,
Friends met through our children's schools, even fewer
university friends, similar to school,
former work colleagues - surprisingly few, probably because working in London I rarely socialised with my work colleagues at home, and never had any reason to exchange home addresses
friends from the village where I have now lived for nearly 24 years - almost none, because I am not a part of any 'community' in this village,

Very few people I have met recently end up on the Christmas Card list. Sending the wretched things seems ridiculously quaint. Once upon a time I had a real need to use a person's address to send them information or money (in the form of a cheque). Now the only reason I would need to have someone's physical address is to visit them, or, to send them a Christmas Card. To contact someone purely for the purpose of sending them a card seems seems very odd. The only message I communicate in my Christmas cards is "We're still alive". I have to be careful what I write here, as I really enjoy reading the circular letters that a few of my friends send out. Obviously, if you are reading this you know quite a lot about me. However, I never blog about my family because I'm sure they don't want to be identified as the wife or children of that embarrassing guy who blogs at www.stevehemingway.com. Really, if you are interested to know about the family you should invite me for a drink, or a meal. You will then hear about us in excruciating detail. If you are broke, but reasonably tolerable company, then just get me to invite you for a meal. I have posted on Facebook and Twitter asking for postal addresses. I will make the offer here too. If you get your postal address to me in time for me to post you a Christmas card, I'll send one to you. I promise. Get a move on!!

Another poke in the eye for freedom

Sat, 29 Nov 2008 21:13:20 +0000

http://blogs.ft.com/maverecon/2008/11/another-poke-in-the-eye-for-freedom/

Willem Buiter is fast becoming my favourite blogger. This post is outstanding. His European perspective is a wonderful antidote to the UK-centric line that most columnists take. It is very sad that no opposition party has taken this issue with more force. As Buiter says, all governments have form. It would be wonderful if a serious politician could write the following, or even something approximating its sentiment but in less eloquent terms.

Soon after gaining office, the joys of secrecy, suppressing information and denying access to information are discovered. An awareness grows that openness and accountability are nuisances which can be avoided or made more tolerable to government ministers by restricting the public's information. It also becomes apparent to government ministers that the defence of the national interest and the safeguarding of national security surprisingly often (and no doubt regrettably!) require that information be kept secret that would be politically embarrassing to the government or the ruling party or personally embarrassing to individual members of government, were it to come out. This miraculous congruence of personal, private, party-political, public and national interests becomes a self-evident fact to politicians of any ilk, soon after their party gains office.

I love this sculpture

Mon, 24 Nov 2008 14:51:47 +0000

The 798 District of Beijing is a fascinating place. The artists who work there are truly talented and original. Not all of them, but a good number of them. This sculpture is a particular favourite. The artist, whose name I don't know, I'm afraid, is very famous, at least out there. If you know it, please comment with his name. Meanwhile, just enjoy the image:

Picasa Web Albums

Sat, 22 Nov 2008 18:51:15 +0000

I have used Flickr for a long time. I usually upload my shots there. You can see them here. I have also used Picasa for a long time. I am not capable of using proper photo processing software, although now there are some amazing pieces of software around, including Portrait Professional, that even I can use to make ugly people like you look like models. The problem with Flickr is that there is no integration with Picasa. Whereas there is a button in Picasa to upload to Picasa Web Albums. And Picasa Web Albums is integrated with Google Maps, so I can easily tag my photos with locations. The result is the following:

From Long Walk

Youtube Democracy

Fri, 21 Nov 2008 18:25:50 +0000

Downing Street are taking the unusually brave step of actually engaging with the public, albeit only through YouTube. The idea of "Ask The PM" is this: think of a question you would like Gordon Brown to answer, then post it on YouTube and the most popular entries will be answered by the Prime Minister himself. The above short clip is designed to force GB to justify his policy. Note that I am not necessarily opposed to a wealth transfer from my generation to later ones.

Creative destruction

Wed, 19 Nov 2008 11:52:36 +0000

As I understand it, Schumpeter coined the term 'Creative Destruction' in relation to the need for new players to provided new products and services and thereby raise the productivity of the economy. The idea was that it was necessary for pioneers like Henry Ford to see the potential of the motor car, and to create firms that provided it, because firms that made horse-drawn buggies would just never adapt to the new technology, no matter how clearly individual managers saw the advantages of the new technology. I checked on Wikipedia and discovered that Amazon, still by a large measure the largest of the online retailers, started selling books online in 1995. Clearly there were a lot of websites running before this, but Amazon had to solve problems of authentication, secure payments, identification of customers etc. which were not needed by the likes of Yahoo!. Twelve years on, banks, whether in the UK or Hong Kong, behave as if the revolution presaged by Amazon never happened. I find that to do some simple transactions from my Hang Seng account in HK I have to send pages of paperwork. Admittedly the forms may be downloaded and printed by me, but I still have to sign them with a pen, provide a copy of my ID and post them to a branch. This clinging on to old ways of doing business would doom banks like Hang Seng (a wholly-owned subsidiary of HSBC, not exactly a minnow), if Amazon ever entered the banking area. However the heavy regulation of banks ensures that the barriers to entry are just too high. So customers are stuck with a 70's banking environment in the 21st century. Call centre operatives the world over seem to be programmed to explain that these outdated ways of operated are for the customers benefit ('for your security') although clearly they are no such thing. It seems to me that the time is over-ripe for a proper, free, narrow, commercial, global, internet bank to emerge. The current situation is akin the the Mediaeval guild system where the incumbents reap large economic rents from their state-awarded oligopoly position. The amazing thing is that we just don't seem to care.