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Kauai Businesses Honored for Going Green

The Rotary Club of Kapa`a  honored eight local businesses as winners of the 2008 Kaua`i Green Business Initiative Awards (KGBIA) at yesterday's Rotary Luncheon held at the Aloha Beach Resort . “All of the winning businesses have gone beyond environmental compliance to adopt and exemplify best ‘green’ practices over the past 12 months,” says Rodney Pascua, chairman of this year’s program, noting that each business displayed a proven track record in one or more of the areas of efficiently using raw materials/supplies, managing waste responsibly, managing shipping/handling responsibly, saving water and saving energy.”

Winners included:  Island Soap Company, in the category of Wholesale and Retail Manufacturing; The Shoe Repair Shop, in the Retailer category; Habitat for Humanity under the Nonprofit category; Aloha We Deliver! in the Home Business category; Unlimited Construction in the Builder/Developer category; Saffron Mediterranean Cuisine in the Restaurant category; Farias Cattle Company in the Grower category; and H&S Publishing in the Publisher category. All organizations had representatives on hand to receive the awards except for Farias Cattle, whose owner was supposed "riding a cow" off on the mainland.

All of the entrants showed how their ‘green’ initiatives benefit the environment as well as the economic performance and long-term success of their businesses.

In the Island Soap Company entry, General Manager Jim Psaila outlined how the business initiated electricity conservation by installing an 18,000 KW photovoltaic net metering system at its Kapa`a factory location — saving $1,000 per month.  The business also cut its landfill debris by half by recycling cardboard, paper and glass, and purchasing end roll paper (previously discarded as waste) from The Garden Island newpaper to use for shipping its products. The landfill on Kauai, located way out on the west side near Kekaha is a major ongoing environmental issue on the island.
Island SoapRotary Club Vocational chair Rodney Pascua thanks Steve Mitchell from Island Soap and Candle  who is holding his bamboo plaque award for his company's green efforts.


An obvious winner was The Shoe Repair Shop, based in Lihue and owned by Ray Duarte, Jr., which saves the environment and has a positive impact on customers’ pocketbooks by recycling leather goods and restoring them for continued use.  Ray's short speech to the audience of Rotarians and guests was certainly the funniest. He mentioned a couple of his long time motto slogan's which include "Before you throw it away, check with Ray!" and "I can heel and save soles".
Shoe repair shopBeth Tokioka, Ray Duarte Jr. and Vocational Chair Rodney Pascua pose after Ray delighted the crowd with his humor.

Kaua`i's Habitat for Humanity, Inc. entry, submitted by Executive Director Stephen Spears, outlined an impressive effort to save energy and reduce homeowners’ utility bills by securing grants to create an Energy Efficiency Fund, which will ensure installation of solar water heating systems in all new Habitat homes.  Another grant, the 2007 High Energy Cost Community Grant Program, gives Habitat the funds to purchase and install roof-mounted solar hot water systems and thermal insulation in the walls and ceilings in 32 houses.  Six homes in the Eleele Iluna subdivision are being retrofitted in 2008 — with 17 homes due to be finished by the end of 2009.  The environmental and cost-saving benefits, through the relatively simple modifications of solar hot water systems and insulation, are expected to reduce homeowners’ monthly electric bills by 50 percent. HFH includes an energy savings strategy in their homeownership sessions now and are making a difference. Next month, HFH will have completed their 100th home on Kaua`i.

Two Time Winners
Second-time winner, Aloha We Deliver! expanded its already substantial “green” efforts of supplying biodegradable/eco-friendly products (which replace Styrofoam and plastic) to restaurants, recycling packaging, and streamlining its shipping and delivery practices.  This year, the company President Jennifer Sifuentes volunteered to assist Zero Waste Kaua`i and spearheaded ground-breaking waste management practices — at Taste of Hawaii, the KIUC Annual Picnic, the Healing Garden Festival and the Kapaa Coconut Festival. Jennifer reported that the diversion rate of waste from this month's festival was 93%.That's huge.

In the Builder category, Unlimited Construction also won for the second straight year for its “green” activities on its job sites as well as at its own offices — saving money through reduced materials costs and waste, fuel savings, electricity costs, recycling and reusing materials — which diverted thousands of tons of materials from Kaua`i’s landfill.  According to President Randy Finlay, companywide “green” operations undertaken in the past 12 months, include:  mandated recycling plans on all job sites, the use of bio-fuel in the form of recycled cooking oil to run all equipment, and the installation of photovoltaic systems on all job sites and in the company’s Lihue headquarters.  Job site “green” activities include:  designing a thermal transfer system at Kaua`i Lagoons Resort using the existing lagoon to cool the 80 condo units, instead of installing a cooling tower;  building the islands’ first LEED-certified “green” building — the Botanical Research Center for the National Tropical Botanical Garden and earning LEED “Gold” status; and employing unique, state-of-the-art recycling practices at its Westin Princeville Ocean Villas Resort project.

Winning this year in the Restaurant category is Saffron Mediterranean Cuisine located in Princeville.  Highlights of the restaurant’s “green” efforts include:  buying most of its produce from organic local farmers, introducing Princeville Ranch beef to its menu (less than 5 miles from farm to table), and employing a near zero waste policy (due to an exhaustive recycling program — with most of its food waste going to pig farmers). “The restaurant also uses biodegradable to-go containers, has switched to CFL light bulbs in the office and kitchen, employs water conservation during food preparation, reuses waste paper and purchases recycled paper for printing menus and other materials,” states General Manager Aaron Feinberg.

Farias Cattle Company, based in Kilauea, won in the Grower category for creating completely “green” ranches in Kapa`a and Hanamaulu.  Situated on old sugarcane fields, Owner Robert Farias, Jr. notes that the ranches support about 1,000 head of cattle, which replenish the soil with natural fertilizer, control overgrowth of vegetation (greatly reducing the use of fuel for mowing or tilling), and produce a sustainable food source for the local community.  The company’s ranches also use no potable water on site.  Instead, they utilize a ditch system, which siphons the water (which would normally go into the ocean) into water troughs and surface irrigation, with the rest going to irrigate a large taro field for a neighboring farmer.  In addition, the ranches use no electricity on site, and when power is needed, generators or battery- powered devices are used.  The ranches’ waste products are kept to a minimum and all discarded feedbags are given to a local farmer for weed control use in garden beds — eliminating the use of herbicides.  Finally, to ensure its viability in times of drought, the company has started a hay baling business on the island and has almost completely stopped the use of mainland feed to sustain its shipping cattle and the cattle it processes (6,000 to 8,000 head) for all other ranchers on Kaua`i. 

In the newly created publishing category, the winner is Kapa`a-based H&S Publishing, publisher of Kaua`i Magazine, Kaua`i Real Estate Magazine, Hawaii Data Book & Newcomers Guide Series, print-on-demand books and the Kaua`i Green map.  According to Chief Executive Officer Rob Sanford, the company’s “green” printing practices include:  using a printer that is devoted to improving sustainable forest management in the United State and Canada, printing on recycled paper using vegetable inks, using elemental chlorine free paper, and recycling unused paper products.  In the company’s overall operations, it uses recycled paper and has cut its paper consumption in half by using both sides of the paper.  In addition, its use of a solid ink color printer, (think Xerox) instead of a color laser printer has produced 90 percent less waste and reduced toxicity by 100 percent, since solid ink is a non-toxic, resin-based ink similar to crayons.  The company cut its office space in half by having five of its employees telecommute, which also reduced the business’s carbon footprint significantly. H&S also reuses incoming packing materials for outgoing parcels and offers “pay online green invoicing” to help clients and
its own operations reduce paper and envelope consumption, while eliminating postage costs.

Green Business Award Winners
Seven of the Eight Green Business Award Winners pose in front of the Rotary Club of Kapa`a's Banner

Making a Difference
Last year, the Rotary Club of Kapa`a awarded plaques to 11 companies at its inaugural awards luncheon ceremony, where recipients spoke passionately about their “green” business efforts. This year the plaques were made on Kauai out of recyclable bamboo. Beth Tokioka from the Kauai Office of Economic Development provided the plaques and was an active participant in this program to honor our "green model citizens".

“This program is such a great way to highlight the businesses that are making a difference for the island’s sustainability, the planet’s well being and ultimately for the people of Kaua`i and the world,” states Ken Stokes, president of the Kaua`ian Institute and past president of the Rotary Club of Kapa`a — and creator of the Kaua`i Green Business Initiative Award program.  “We are proud to sponsor such a worthwhile endeavor and excited to honor this year’s award recipients.”

 

Special thanks to Melissa Mojo for generating this great PR for our Rotary Club of Kapaa

Whale Tech to assist Hawaii Superferry?

The front page of this morning's Honolulu Advertiser has a story above the fold about the controversial Hawaii Superferry integrating so new high tech devices on their vessels. According the Advertiser, the  Hawaii Superferry is installing a high-tech thermal imaging system that could detect whale spouts more than a mile away and reduce the risk of collisions with humpback whales.

Whales in the ocean

Perhaps this will address one great level of concern about the ecological soundness of this transportation alternative. Read the full story about whale tech on the Hawaii Superferry.

Air, Ground and See - More Sustainability on Kauai

My friend Ken Stokes, from the Kauaian Institue, will be on the radio at  Noon hosting the Friday talk show on KKCR normally honcho’d by Keone Kealoha and Andrea Brower of Malama Kauai.

Click here or on the KKCR graphic to listen live

KKCR

Keone and Andrea are at the Bioneers conference in San Rafael, and will be calling in to report on the opening days’ plenary roster of inspiring speakers. That’s the air attack bit.

On the ground,Ken is  down for the consultants’ briefing on the County’s “energy sustainability plan” RFP, and hopes to be part of a team to get this contract. Nothing is more important than Kauai anticipating ‘peak oil’ and forging contingency plans for supply disruptions.

The ’see’ bit is from Pacific Business News, where  Janis Magin quotes  Ken in a piece on ‘greenwashing’ in Hawaii (via PBN, sub req).

Magin had called to inquire about Hawaii companies who might be engaging in ‘greenwashing’…and voila! I’m quoted as saying there is little of this going on out here.

What Magin didn’t mention was the second part of my comment, which was there is little ‘green’ marketing, period. Hard to greenwash if you’re not trying to brand your stuff ‘green’, ya know?!

Ken maintains my favorite Sustainability blog and I quote him frequently. You can subscribe and read it yourself. Ken states:

"I’ll soon be posting impressions of the sustainability network in Seattle and Portland, where Susan and I spent 3 marvelous days apiece. Wudja believe we say the mountains (Rainier and Hood) every single day, and actually caught some sun at Cannon Beach? Are we blessed or wot?

Meanwhile, turn up the volume! We’ve all got lots to think about and talk about as the sustainability imperative looms…"

"So if you wait for the robins, spring will be over."--Advice from Warren Buffett

Here is an interesting adaption of Warren Buffet wisdom applied to the world of real estate. I think Michael makes some very astute points. I frequently speak to buyers who are "waiting for the bottom of the market". Meanwhile, interest rates went up half a point in the last week. I believe IT IS A GOOD TIME TO BUY...

Via Michael Sahlman e-PRO - Miami Beach Florida Real Estate:

"So if you wait for the robins, spring will be over."--Advice from Warren Buffett

Warren Buffett Investment Advice

Warren Buffett said in his recent Op-Ed piece in the NY Times "So if you wait for the robins, spring will be over." Although, Mr. Buffett is speaking about his philosophy relative to stocks, I believe it also applies to real estate investing as well.

When the richest man in the world speaks, I listen and take notes. Even though this may seem to some like simple homespun wisdom, Mr. Buffett is perhaps the most respected investment adviser in America, if not the World. He started investing when he was a child and because of his passion and his focus, he is now worth over 50 billion dollars. I found his Op-Ed article "Buy American I Am." in the October 17th edition of the New York Times fascinating on many different levels.

Below are several more of the quotes and observations Warren Buffet made that I found most interesting and relevant to the world of real estate. What follows his quotes is my interpretation of how I think it relates to real estate right now.

Warren Buffett Investment Advice"In waiting for the comfort of good news, they are ignoring Wayne Gretzky's advice: 'I skate to where the puck is going to be, not to where it has been.'"  Warren Buffett quoted Wayne Gretsky here. I believe many people are trying to outfox the real estate market, which is really impossible. You cannot. Each week dozens of people ask me when the market is going to hit bottom, and my answer is always the same. If we are not at the bottom, we are very close.

Warren Buffett Investment Advice

"In short, bad news is an investor's best friend. It lets you buy a slice of America's future at a marked-down price." To me most of Miami is on sale right now at values below that of 2005. Depending on the location and property, real estate values are down between 20% and 40% from the highs of late 2005 and early 2006.

I believe investing long-term in oceanfront and waterfront property in the Miami area whether it is a primary residence, vacation home or investment property. In taking a page from Warren Buffett's playbook, I believe that you should plan on holding it for at least several years at a minimum. The key is long-term.

South Beach, Miami Beach, Bal Harbour, Surfside, North Bay Village and Sunny Isles Beach all currently offer great buying opportunities in different price ranges. We have a lot of inventory right now with over 5,800 condos and homes available for sale in waterfront buildings in these areas and only 130 to 180 selling each month. Right now we still have more than a 3 year supply, so there is a lot of competition out there and if a condo is not priced right, they will not sell for a long time. Note that I am not including Miami-Dade County as a whole. Right now in Miami-Dade there are almost 25,000 condos available for sale of which only about 500 are selling each month. That is more than a four year supply.

Miami Beach and South Beach Real Estate

 

Mr. Buffett stated "Let me be clear on one point: I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month - or a year - from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up." Isn't this the kind of advice we should be giving our clients? I believe it is impossible to predict where the real estate market will go in the next few months or years. All I know is that eventually prices will go back up, especially in the most desirable areas, which are oceanfront and bay front condos and waterfront homes.

Warren Buffett Investment Advice"Today people who hold cash equivalents feel comfortable. They shouldn't." To me this means that if you have the cash and liquidity to invest in real estate, now is the time to do it. As we said before, it is impossible to time it just right, but it is a pretty good bet that real estate bought now will be worth a lot more in 10 years.

 

"Be fearful when others are greedy, and be greedy when others are fearful." What an interesting thing to say. What great advice when you couple it with common sense. Isn't it true that most people that become wealthy do so because others are unwilling to go against the tide? Most people follow the herd. They say that more fortunes were made during the Great Depression than at any time in history. Perhaps this is a time to take advantage of some great opportunities.

Disclaimer: The information provided herein is supplied by several sources including the southeast Florida MLS and is subject to change without notice. Miami Beach and South Beach Real Estate Blog does not guarantee or is any way responsible for its accuracy, and provides said information without warranties of any kind, either express or implied. Entries on Miami Beach and South Beach Real Estate Blog represent the opinions and ideas of the author(s). Miami Beach and South Beach Real Estate Blog does not express the views of the broker.

Copyright © 2008 By Michael Sahlman, P.A., All Rights Reserved.*"So if you wait for the robins, spring will be over."--Advice from Warren Buffett*. 

Trees Lounge - The Hot Spot in Kapaa

Great Sounds and Food at Trees

Trees Lounge in Kapaa, behind the Coconut Marketplace, is just about one year old. In their first year, Owners Mark and Candice have turned this urban-like environment into the happening spot for life music and chilling for all of Kauai. Trees has built a local clientelle and so despite a dip in tourism on Kauai, Trees is going strong.

Tree mean's three in Pidgin, Trees Lounge offers Jamaican, New Orleans, and Hawaiian culinary delights served pupu style or "sharable". Trees Lounge provides locals and visitors an exceptional dining experience in a lounge atmosphere. Indulge in one of our inventive cocktails or a nice glass of wine while enjoying authentic flavors and sounds from Jamaica, New Orleans, and Hawaii. The Trees experience combines a swank lounge feel, while enjoying live entertainment.

Here's the lineup for the next week or so:

OCTOBER:

16 Island Grass - country music, Kauai Style

17 True Bruddahs - Funky Reggae to chill by

18 Randy Carnevalli and friends - Randy is Kauai's veteran bass player who always has some rockin' musicians by his side

19 Norman Ka'awa Solomon, Hawaiian - my good friend Alan Thomas produced Norman's last CD

20 Randy Carnevalli, Dan Parslow, Ron Rhoades, Blues/Rock - Funk and Blues with Dan the Man, a classic rock guitar virtuoso

21 Rosie and friends

22 Sean Carillo - Hawaiian style

23 Kundala - eclectic trancy jazz and fusion featuring Estabon on guitars and Bill on keys and effected trumpets

Trees Loung in Kapaa

Beautiful Bar-height tables, comfy booths and velvet chairs to relax in at Trees Lounge Kapaa

I'll be performing at Trees Lounge on November 25th blending an assortment of jazz, fusion and R&B funk with the soulful James Norman. Hope to see you if you are on Kauai

Princeville Kauai Properties at a Fraction of the Price

You've heard about fractionals right? No?  Well, you must live in an urban area with mostly full time residents. If you live in a ski area in Colorado or British Columbia, you've probably heard about fractionals. Hawaii law defines a fractional as ownership for a minimum of sixty days, to be delineated from the concept/product known as timeshare.

In this buyer's market, seller's have long been desiring to do something different that makes their offering unique. Well, a fractional allows a seller to sell their property in six segments, each 60 days long. It's a great approach to "lifestyle living", meaning, only own the time you are going to use. If you live in Nebraska and want to spend January and February in warm, tropical Kauai, then you only need to purchase those two months of ownership. So, that's the basic concept.

Unfortunately, only a couple of sellers on our island have done the due diligence to properly equip and document their fractional LLCs and also created the marketing to help agents understand and sell the product. In Princeville there are several condos and a a couple of nice homes for sale as fractionals. An owner can buy  a 1.5 million dollar home and live it for a couple of months for only $365,000. That works for some people.

Anyway, it's nice to have options. To learn more about Kauai fractionals, check out one of the leading developers' sites, Island Fractional Homes. The developer has built a beautiful web presence and is doing all the right things to be successful. Here is a list of the current fractional offerings in Princeville:Princeville Fractions

The listings on Kamehameha Rd. and Kaa`humanu Place are single family homes. The remodeled one on Kaa`humanu Place has a cute little lap pool and is right on the Makai Golf Course.  The two different units at Villas of Kamalii (VOK) are very tastefully appointed and developed by the developer i mentioned above. The VOK units are some of the nicest Princeville condos in the entire market.

If you know anyone who has an interest in this type of property, I can mail you a physical packet with pictures, FAQ, and lots of good supporting collateral.

When fractionals began appearing formally about four years ago, all the transactions were CASH ONLY. Now, there are some lenders who will provide loans for the fractional investment.

 


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Fannie Mae REO at Princeville's Emmalani Court - Great Price

This spacious two bedroom condo at Emmalani Court, a beautiful Princeville condo complex that was built in 1992. Emmalani Court borders the Makai golf course and affords both golf course and ocean viewsThis unit, #412, just went on the market today. The listing agent promoted that the property is qualified for ExpressPath financing. As a Fannie Mae REO i wanted to know what that meant.  I searched on AR and found this answer from Bill Cherry, Dallas Realtor who wrote:

The property owner gets the appraisal and inspections out of the way via the Express Path Financing lender -- a virtual lender. When you, the buyer, apply for the loan through the Express Path lender, the approval/disapproval can be quickly determined from your financial information and cerdit score. The cost of the appraisal, inspections, etc. is hidden in the sales price of the home. The concept seems ok to me, but if you check around, there seem to be a lot of questions about it. Whether the lender is OK or not I don't know...

You can find out more about ExpressPath by google searching like I did. Bottom line is, there have not been any 2 bedroom Emmalani Courts that have sold for  under 600K since the summer of 2005. Now, there are four listed under 600k, and it's a great time for a buyer who has an affinity for this fine Princeville condo location.

Call me or email me if you want further details:

Emmalani Court
Entry to Emmalani Court

Rear view of Unit 412

Rear View of Emmalani Court from Makai Ocean's #8 Hole

Emmalani Court - Views of the Pacific

Emmalani Court Fannie Mae REO with views of the ocean

This week's Princeville Caravan

Wednesday is the day reserved for Caravan's in Princeville. There is a caravan usually two times a month on the North Shore and one of them is for Princeville itself. This week's Wednesday caravan featured a nice assortment of homes and condos as usual. Here is the niced home and the nicest condo i found. These are both beautiful offerings.

Queen Emma's Bluff - This street is located on the east end of the main Princeville neighborhood and runs along the Prince Golf Course ( Hawaii's #1-rated golf course) and towards the ocean bluff, hence part of the name. This home was built in the 90's but remodeled and upgraded in the last couple of years. Here are a few snapshots taken from my iPhone that show the views out your back door.

Namahana Mountains

 

 

 

 

 

 

 

 

 

 

 

View of Mt. Namahana looking south from Queen Emma's Bluff

 

OCean View

View across the 8th hole and towards the great Pacific

The home is 3,389 sq. ft, 3BR,2.5 Baths and is listed at 1.895M. View it online to learn more and see the interior photos.

The nicest condo on this week's Caravan was Puu Poa Unit #405. There are currently 10 units for sale in this project which consists of 56 units all with great oceans. This unit is on the top floor (#4) with the most dramatic views. The 2 BR/2BA condo has been completely renovated and tastefully so. While it is not the lowest priced Puu Poa on market ( #103 is 1.399M) this unit priced at 1.59 Million may indeed be the finest value.
View all the listings pictures if you want.


Beautiful white water views with a peak of Bali Hai in the left corner.

Living room

Stunning Living Room with wide ocean views and lanai perfect for coffee and star gazing.

And at least for the next nine months, while the Hotel is closed it's very, very quiet at night.

Is Our Market Turning Around

Here in Hawaii our market tends to follow California. Whatever movement or trends happen there tend to flow here whether sooner or later. The pundits say it takes 12-18 months but I experience that it happens a lot sooner. Our CEO posted this article from Real Trends to share the good news as we get ready for the weekend of open houses and prospecting here on Kauai.

September home sales show market beginning to stabilize as sales are up 1.9% in September 2008 over August 2008; Pricing pressure remains but is easing in a number of regions, according to REAL Trends.
 
Year-over-year results reverse from September as sales post 1.9 percent increase while prices down 9.6 percent versus decline of 11.9 percent in August.  Increase in sales first signal that market for housing unit sales may be approaching bottom.  REAL Trends believes that the market is showing sign of measurable improvement as closings increased slightly in September 2008 over August 2008. 
 
It is more evidence of a "sloppy bottom", a term coined by Realogy CEO, Richard Smith, where monthly results seem to vary significantly from month to month.  The strongest region was the West where unit closed were up 27.1% from a year ago.  The Midwest was also up 7.9% from the same month a year ago.  Lagging was the Northeast where closings were down 10.2% from a year ago.
 
Prices continued their softness with the average price of all closings was down 9.6%.  This showed improvement from the August report where prices were down 11.9%.  The best region was the Northeast where prices were off 3.9% and the worst region as far as price declines was in the West where average prices on closed homes were off 21.3%.
 
"These results are very promising and show that the housing market is moving towards a sustainable floor.  We don't know what impact the decline in equity markets will have or the weakening general economy although historically none of this is good news for housing.  A decline in interest rates and a significant rise in affordability may be enough to offset some of the other negative economic news. 
 
While one month does not make for any confirmation of a housing market turnaround, housing consumers and investors are buying up significant numbers of lower priced foreclosures according to brokerage firms and sales professionals.  Any strong housing turnaround will start with recovery at the entry level.  The recovery in closings in California, Arizona, Nevada and Florida due to sales of lower priced homes is a signal that Americans continue to see housing as a good investment."
 
            September 2008                    August 2008
        Closed Sales    AVG Price       Closed Sales    AVG Price
 
National     +1.9%         -9.6%         -17.5%             -11.9%
 
Regional Report
Northeast   -10.2%      -3.9%           -23.4%            -4.3%
South         -8.6%       -5.0%           -19.8%            -12.9%
Midwest     +7.8%       -11.1%         -19.1%              -7.5%
West         +27.1%     -21.2%          -6.1%             -21.3%
 
Now the Californians and Arizonian's just need to get on a plane here and we'll show them what value looks like on Kauai, right?

 


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Financial Wisdom from a Kapaa Friend Re: The Stock Market Activities

One of my friends and clients here on Kauai is a personal financial planner. If you want to know more about him, check out Personal Financial Consultants, Inc. That's Loren's company. Talk about a rough business to be in these days. Makes real estate seem like a walk in the park. Loren has an office in downtown Kapaa and is available for clients both on island and on the mainland. Whenever the market goes on a roller coaster ride, he usually has a bit of calming insight. I particularly liked what he said in his message yesterday and he is allowing me to publish it here. When I went to bed last night, I was watching the foreign markets start 10% lower. When i awoke early this AM, the market was under 8000. But, it did finish higher although it was a brutal week to be sure. How you find some wisdom in these observations.

Loren says...

Let me outline what is going on, what is real, what is permanent, and what is temporary.

 The credit markets have seized up.  This is real and it is temporary. Almost  all large public and private companies issue commercial paper - short-term debt instruments that mature in less than 270 days to help meet their short-term liabilities.  This debt in the past has been very liquid and quite secure.  It is what has been owned by most money market funds to help them give savers better returns than they would get from owning Treasuries. Since concern has dramatically increased about corporate balance sheets and their ability to meet even the shortest of obligations, two things have happened.  People have fled money market funds, which means that those funds must sell their paper and there is no market for the new paper that is being issued.  When you heard about the "need" for a rescue package, this is the main reason why.  The Fed and the Treasury are trying to create an avenue of liquidity for these instruments.  This part of the plan is what will eventually hit Main Street.  The reason that this is temporary is because it  is too significant to not be worked out.  Everything from hospital payrolls to inventory purchases are dependent upon this mechanism, so it will be  fixed.

 Wall Street is broken.  This is real and it is permanent.  Some of the largest investment banks were using a tremendous amount of leverage on opaque instruments that created even more leverage.  This industry will continue to change and change dramatically.  Access to money will not be as easy, which means profits for these companies will be compromised. Eventually they will come up with new and different ways to make money, but regulation will inevitably make it harder to make as much as they did for contributing as little as they had.  This will inevitably change what types of investments will make sense going forward.  Less exotic will be back in vogue.

Diversification doesn't work.  This is real and it is temporary.  When we have a global melt-down, all investments, other than the very safest, fall. This means that asset classes initially fall together. And this is usually the case for around three to six months.  After that, the most mispriced asset classes come back more strongly than others. Making sure that you stay balanced, take profits in upturns and stay invested in downturns is critical during these periods.  It has worked for us time and time again in my twenty-nine years in this business.

Fear and greed own the day.  This is real and it is permanent.  Every day, stock prices are determined by sellers - who either need to raise money or are convinced their stocks are going down, and buyers - who believe that they are getting bargains on investments that will go up. In periods of turmoil, there are far more sellers than buyers. People get scared that their investments are going to fall forever and sell (often at the worst
possible times).  When markets are going up, people think that they have all the answers and end up buying at the worst possible times.  No one is ever completely rational, but successful investors tend to be less scared and less greedy than unsuccessful ones.

Valuation is never completely clear.  This is real and it is permanent.  You can pay thirty times annual earnings for a stock that is growing at 30% a  year.  You cannot pay thirty times earnings for a stock that is growing at ten percent a year.  All future growth rates are guesses.  This means that on a daily basis, you are never paying the exact right amount for what it is that you are buying.  In markets like this, though, you are generally paying less for future earnings than you did in 1999.  These low prices are ultimately the key to having success in investing over the next few years.

People are hurting.  This is real and it is temporary.  Jobs have been lostand more jobs will be lost.  People who piled on debt will have tremendous problems working their way out of the hole that they dug for themselves.The stress of seeing investments drop can add to the stress that each of us feel in raising a family, or work, or retirement or tending to our aging parents.

But the one universal truth of these times is impermanence.  Nothing lasts forever.  Lower interest rates will eventually lead to a housing rebound. Enhanced credit will help businesses expand and hire. During times like this, don't extrapolate what is happening today to fifteen years down the road.  Focus on the things that you can control.  If you have a well-reasoned strategy and plan in place, you will be fine.  We have worked with countless clients over two decades and have helped them retire comfortably and send their kids through school.  We have seen many types of markets during these times and through solid financial planning and intellectually sound asset management we have weathered the tough times.  We will do so here as well.

As a final note, Warren Buffet, the head of Berkshire Hathaway and the second richest man in the world, has taken on iconic stature in our society.
He plays the wise old grandfather whose advice is always right -sooner or later.  He has a very rational take on the current situation. My take away is this: Buffett has great confidence in the long-term health of the American economy. He has sat on $40 billion in cash for years waiting for
 the right buying opportunity, and is now putting that money to work.

If Buffett is a buyer, then I would not be a seller.