I have been suffering from a series of painful boils since late December. Having tried several natural cures such as turmeric and tea tree oil, I finally gave in and went to the doctor this morning. An incredibly painful 15 minutes ensued, with the doctor giving me several shots to numb me and then going in and scraping out all of the infected tissue with a knife. When she was (finally!) done, there was a pile of bloody gauze pads next to me and I felt weak and dizzy. I am now on antibiotics and have another doctor’s appointment scheduled for tomorrow morning.

This entire health issue has led me to a deeper realization, which I wrote in an email to S this morning, and after some thought, decided to post here. This is what I wrote to him, verbatim (except that names have been shortened.) I hope that it will bring some of you to a deeper understanding as well.

As I understand it, we are not much more healthy than we were as a culture thousands of years ago. Sure, we may live longer, as a consequence mainly of better nutrition and recognition of certain cause->effect relationships (washing hands regularly->fewer contagions enter the body). But we are not, as a whole, healthier on a day-to-day basis.

There is a deeply ingrained belief system in our culture that we must go to a doctor (a professional) to cure all ills. You and I now know this to be just one of many paths. For instance, there are many ills that can be cured simply by realigning Self with Nature and Source. In particular, those “common” afflictions such as colds and infections can be cured without the need for a doctor.

Yet our culture, this one, the one that we live in now, insists to us that we must see a doctor to cure these common problems. We are constantly being reinforced by TV ads for medications, our own parents who have the same belief system, and by friends who think they are just telling us to “do the right thing” and go see a doctor to get “cured.”

I was not aware how deeply ingrained my belief system about doctors was until today.

There were several things I could have done to not make these boils as bad as they were. I needed to realign myself in even a deeper way than I had already tried to. I needed to ask for healing on a daily basis and receive it. I needed to do simple utilitarian chores like changing my sheets and washing my clothes. But none of this did I do until today, when I finally saw a doctor, and realized that subtle changes after the doctor visit had taken place. In particular, I felt that I was healed. This, more than anything else, will cure the boil.

Now you and I will recognize a very important lesson, albeit not without a significant amount of discomfort and pain that I have been through in the past several weeks: that those people who claim that alternative medicines do not work, who believe that the natural cures so well-researched and in use for thousands of years are lies, have such an ingrained dominant belief that doctors will cure them that truly, only doctors are able to cure them. The fact that I was not aware of this ingrained belief system in myself until today shows how far beneath the surface it lies; so far that most, when reading what I have just typed, will write me off as a quack.

This system was reinforced by my parents, who see doctors on a regular basis, by M, because his belief is so far dominant that he can’t even think of doing anything else, and even by you, L, and others who said “You might want to see a doctor about that.” And, in the mindset that I had and have, that is correct. It was the only thing that cured me.

I fought the doctor visit not for true root belief, but for fear of visiting the doctor, which is the wrong approach and an excellent way of treating myself to more misery when I finally did go to the doctor.

Now I have two choices: I can either wipe out the entire ingrained belief system that doctors will cure me, and I will not need to see them; or I can embrace my belief system, understand that it is a belief, but not a totally bad one, given the options, and go to the doctor quickly and get things cured instead of letting them sit around in me for weeks. No other path will work, because any other path is simply rejection of one of the two above paths.

It is an interesting dilemma, with each having its own rewards: the main reward of the first path being that I will feel more in control of myself and have more harmony, but will be difficult to fully embrace given our culture; or the second path, an acceptance of the primary belief system in our culture and tacit acknowledgment and nod to those who have created this culture. The second one will put me in better harmony with those I choose to help, since they are here in this culture; the first will put me more in tune with myself and better able to regain health quickly so I can help more people. The first, of course, is a much longer road than the second, because tearing down an ingrained belief and then rebuilding it from scratch, especially with the poor documentation of alternative cures that this society has, will be difficult and time-consuming.

This was an excellent realization for me and one, I hope, that I will not have to realize again in the way that I did this time around.

Tara (always an interesting read and a very cool chick who gets it) writes about finding her mojo in a recent blog entry. She goes into detail about companies that have “mojo” (that almost unexplainable “cool” vibe you get when you use their products or services) vs. ones that don’t. A couple of the points she mentions are “don’t be a commodity” — since commodities compete on price, not value — and “have a higher purpose” — which is a point I jibe with on a personal level, but never quite really had on a business level.

Until now.

Let’s go back a couple of years, first. Probably one of the most important lessons I ever learned in business was back when I was busting my butt and going to every networking event to not only find customers, but to figure out what customers really wanted in a hosting company. That lesson came in a surprisingly simple form: “Why do your customers choose Simpli?” a business owner asked me at one of those networking events.

I totally tripped over the question. It caught me off guard. “Well…we have great uptime, and are at a fantastic data center…” I stammered. I mean, we had happy customers, and they referred their friends. We were growing at a tremendous rate and could barely rack and stack servers fast enough. We had a great network…in fact, that’s what Simpli touted on its front page: 100% Network Uptime Guarantee. Surely that was why customers chose us!

“That’s not why customers choose you,” he said, smiling. At that moment I had nothing but absolute hatred for this man. How dare he tell me why my customers chose me! How arrogant of him! He wasn’t even a customer of ours! How could he possibly know something that I, the owner of the company in question, did not know?

He could tell I was offended, and apologized. “I didn’t mean to come off like that,” he said. “But what you need to do is ask your customers why they chose you. I think you will find the answer surprising.”

I left, still angry, but conceding that the guy had a point. Knowing I had some homework to do, I emailed some of our best customers and asked them why they really chose us…and the answers floored me. Here I had thought that the #1 secret to running a successful hosting company was to keep the network up and running and the servers happy…and my customers are telling me that while that was important, it wasn’t the reason they chose Simpli. In fact, they realized that a bit of downtime was “in the cards,” as they say. Server hardware does fail. Routing hiccups happen. And while we do our best to maintain 100% uptime, including buying those fancy redundant routers and switches and utilizing multiple network providers, things will still fail every once in a while.

What my customers were saying was that they appreciated Simpli for 1) really doing our best to keep everything online and running, and 2) when bad things did happen, they appreciated the way we communicated issues and kept them in the loop the entire time. In fact, during the 99.99% of the time when things did go well, they enjoyed our personal support, our reaching out of an extra hand, and the willingness of our staff to go the extra mile to make sure our customers were satisfied at every point in the process.

Our customers had mentioned this difference when I had those conversations back in early 2005, but I hadn’t really seen how we were different from our competitors until today.

Yesterday, we signed a new customer and agreed to pick up their servers from a colocation company in San Francisco, which I am not naming here in this blog because their name is not the point. They are a competitor of ours for sure — we have picked up several customers from them in the past, and lost a few. It’s been a net gain for us, however, and the customers we’ve gained had some real war stories about them. Since potential customers often quoted this company against Simpli, I wanted to understand for myself what their setup looked like and how their staff worked. I offered a significant discount to our new customer to go pick up their servers from the other colocation company, and offered to do it myself (even though I haven’t de-racked servers for Simpli in almost a year) because I wanted to see the entire process.

I went into the datacenter and signed in at the security desk, only to be told I wasn’t on the access list for that company. The security guard called their sales manager, who explained that “for security reasons, the security guard does not have Internet access” and that they printed an access list for the guard every day. Okay, fine, I get that, but the problem was that our customer had added me to the access list yesterday at 10AM PST…plenty of time to get me on the printout today. When I explained that to the sales manager, he patronized me, using a “there, there” sort of tone: “You don’t have to be so impatient. Just give me 20 seconds and we’ll get this sorted out. Now if you could please hand the phone back to the security guard so he can put you on the list, we’ll get this all sorted out for you right away.”

That was sorted, then (still with no explanation of how the access list mysteriously got printed this morning without my name on it) and I was off to the datacenter. I asked where I was supposed to go and the security guard said “2nd floor” and pointed in a vague “that” direction. “Elevators?” I asked and he nodded. Okay, no problem. I went into the elevator and headed up to the second floor. A couple other people got out there, too. I had absolutely no idea where I was supposed to go, so I asked one of them. He pointed at a door and said “There.”

The access badge I had been given opened the door, and I was faced with a datacenter. Of course, I had no idea where our customers’ servers were, and everyone else had disappeared. I looked around and spotted someone who looked like he worked there. I asked him where our servers were. “What’s your customer ID?” he responded. (Note: I hate that question. No one wants to be treated like a number.) I told him I had no idea. He pointed at the badge I was now wearing and said “It’s on your badge.”

“Oh,” I said. I was feeling really stupid at this point. I sucked it up and moved on. “Can you help me find our servers?”

“Use the phone,” he said, pointing at a red phone on the wall. “That calls our NOC” — he pointed at a wall with a couple windows in it. Behind it, I could see cubicles. Wait, you have to use a phone to call the guys you can see through the window? Uh, okay… I turned around to ask if he could help, but he had disappeared. I picked up the phone and watched one of the guys on the other side of the window answer it. He came out and showed me the servers. Finally!

This will turn into a long story if I unravel the entire 1 hour, 47 minutes I spent there deracking just 5 servers. (Typically I can de-rack 5 servers in about 45 minutes.) Here are some of the experiences I had:

• I picked up the phone and asked for a screwdriver. They found one and helpfully told me where the rest of the tools were. Yay! Except there weren’t any other tools there, and the screwdriver they had given me was too small for some of our screws. Picked up the phone again. Waited. The guy took several more minutes to dig up a bigger screwdriver, and chastised me with “Haven’t you been here before? You’re supposed to bring your own tools.” Great, except I didn’t have any and wasn’t warned about that. Again, I felt like an idiot.
• I needed a knife or scissors to cut some zip ties. Another phone call and more waiting and the same guy came out with his personal knife (apparently they don’t stock scissors there?) and cut the zip ties for me. Then I found out I had more zip ties to cut, but he had already disappeared. Picked up phone again, waited…same guy came out with the knife. I began to feel sorry for their techs.
• The servers’ rails were really stuck, so I asked for help. The first time I asked for help de-racking them, the tech said “No”, turned around, and walked off. I picked up the phone and waited again. He came out again. This time, another tech came out to help him. This second tech told me that the other guy was new on the job and didn’t know “the rules.” “The rules” apparently included the following, all of which were direct quotes from this guy’s mouth: 1) “We are not allowed to help colo customers.” 2) “We should be charging you for this.” 3) “We’re not datacenter techs; we’re sysadmins.” 4) “Only facilities is allowed to help you de-rack servers.” 5) “You’ll have to enter a ticket and wait for your credit card on file to be charged, and then we can assign someone to this.” 6) “Just be polite.” (I wasn’t aware I wasn’t being polite by asking you nicely to help me de-rack some stuck servers.) And the kicker, which I hereby nominate for Worst Tech Line Ever: 7) “Yeah, um, we do this for a living, okay?” Like I don’t!

All in all, I’d have to say that was the worst colocation-related experience I’ve had in my life, and I’ve de-racked many servers many times. We finally did get the servers de-racked (it took all 3 of us working in tandem — those were some nasty rails) and I walked off, shaking my head.

I recognize this for what it was…probably the best example ever of what sets Simpli apart from most hosting companies. Put simply, we actually give a damn about our customers. We’re the colo company that invites you into our office, lets you sit on the couch, and serves you some water. And we actually (gasp!) have scissors and screwdrivers and zip ties and let you use them. Our techs don’t have condescending, arrogant, holier-than-thou, “we do this for a living” attitudes — we hire people who are smart, with good tech skills, and actually love to help others. In fact, if any of our techs ever had an attitude like that other colo company’s tech did, I’d fire them without even thinking twice. But I know they don’t because I’ve seen them in action, and our customers will back me up on that.

I got that before, but I didn’t really get it from a customer perspective. Now I do. It’s inspired me to finally get our old, long-in-the-tooth, all-about-the-uptime website kicked to the curb. Now I know what I need to write about Simpli. It’s clear that our attitude shines through, and that’s why we win customers. It’s all about helping people and making them realize that they and their businesses are valued. And while we still have our faults and places we could improve, I know in my heart we’re doing the right thing, and that is what will make us successful in the long term.

It was a long and interesting path to finding Simpli’s mojo, but I found it, and I’m ready to tell the world.

By the way, here’s what our new customer had to say: “What kind of customer service is this?”

I had previously stated that one of my goals for 2007 was to get a new TV. It was definitely time for an upgrade from my old 27″ CRT, but I didn’t want to get into a lot of debt to do so.

Then the Bears got into the Super Bowl. 😉

Once upon a time, a long time ago, I’d decided that if the Bears got into the Super Bowl, I’d go to the Super Bowl. I’m a third-generation Bears fan and grew up being teased mercilessly by my peers at a time when the Cowboys were the team to beat. When I realized during the playoffs that the Bears had a strong chance, I started looking into Super Bowl tickets. Of course, they were ridiculously expensive…about $3000 for a pair at the time. I decided I had better uses for $3000.

I gave myself a salary increase as of 1/1/2007. My salary is still not up to where I want it to be, but I have about $760 more a month after taxes now. That, combined with the decreased rent from having a housemate, made me figure I was safe going into a bit of debt for a couple months (I had some stockpiled money, so it wasn’t $3000 in debt) in order to get a HDTV, a new couch, and host a Super Bowl party.

I got a new couch that I really like. It’s brown microfiber — very comfy! Then, last weekend, I decided it was all or nothing, and shopped around for a plasma TV. I’ve wanted a plasma TV ever since years ago when I saw one of the very first Pioneer Elite plasmas in a store (playing Lord of the Rings) and realized there was no other TV with a comparable picture. Plasmas then, of course, ranged into the 5 figures for a 50″. So I waited…and waited…and waited. My stated goal was to buy when a 42″ hit $2000 or less. That happened a couple years ago, but due to the low salary I was paying myself and the high rent costs I had, I couldn’t afford anything. — rent was then 55% of my take-home income. With my current salary and housemate, rent is now running 28.5% of my monthly take-home pay — a dramatic difference. My goal is to get that number to the government-recommended 18.5% of take-home pay through further salary increases and dividend payments from Simpli.

Back to HDTV. I did my research and consulted AVSForum.com extensively. Besides the fabled Pioneer Elite, which was out of my price range, the recommended HDTV seemed to be Panasonic. I visited Costco and Best Buy to do more research. Costco had a coupon that brought the 42″ plasma down to $1300+tax. That seemed like the best deal I was going to get.

Until I searched “panasonic plasma” on craigslist. Seems a lot of people were moving and had to sell their plasma TVs. The going price for a Panasonic 50″ plasma was about $1500. I measured my TV shelf and a 50″ would fit perfectly! I emailed several sellers and found one selling a Panasonic 50″ plasma for $1400. This is the same TV that Best Buy is selling right now for $1999. I asked Seth if he wanted to drive up to Livermore with me to pick it up, since his car would actually fit it. We did so, and now I have a beautiful new TV for a much cheaper price than I would have paid in a store! The only downside is that I only get the remainder of the warranty, and it may be difficult to actually utilize the warranty since I wasn’t the original purchaser — but hopefully I’ll never have to use it. I haven’t had any problems so far with the TV.

I soon figured out that the TV wasn’t the only thing I would have to upgrade. My ancient Sony first-generation DirecTiVo would have to go, too. It only supported 4:3, and the compression the TiVo used, which wasn’t noticeable on my old 27″ CRT, was painfully obvious on the plasma. Back to AVSForum (and TiVo Community as well) to do more research. It quickly became clear that I had two options: 1) Stick with DirecTV and pick up their own PVR, or 2) switch to cable and pick up a Series3 TiVo. My loyalty to TiVo is stronger than my loyalty to DirecTV, so I made a switch I never thought I’d make: I switched to Comcast. I negotiated with them for a better deal since I would get digital cable and high speed Internet from the same provider. Reading the forums later, I realized others were getting better deals, but I negotiated the Digital Silver package, HBO, and high-speed Internet (which was bumped from my current 4Mbit to 6Mbit) for $100/month including tax for the first 12 months. It saves me about $23/month from the Comcast and DirecTV package I had before, and in a year I can call and negotiate again.

Comcast came out to install, but they didn’t install correctly. I’ll spare you the details, but it took 4 phone calls and some Googling to figure out the problem. After the 4th phone call, everything finally started working. That was about 2AM yesterday. So I’ve had HD for almost 24 hours now, and…um…it rocks!

Most of my friends don’t even have TVs. A lot of them pile on my couch to watch shows like Boston Legal every week. I’ve always been one of the more TV-obsessed of my friend circle. It’s weird…most of my friends will watch grainy videos on YouTube for hours and then not be interested enough in “TV” to buy their own TV. I’ve never had too much hangup or pretense about my TV watching. I have a TiVo (and now I have a really nice Series3 TiVo!) so I watch whenever I want. I watch a fair amount of TV, but never feel pressure to watch it…it’s just something I do for fun.

Before this week, I could count on one finger the number of 16:9 HDTVs people I know personally owned: 1, and that HDTV belongs to my parents. Now I have one and I just have to shake my head at all these so-called geeks who have crappy TVs or no TV. HDTV is awesome!!!! Not only are most of the primetime shows in HD, but there are some really neat HD-only channels. For instance, right now I’m watching M:HD, which is just music videos in HD. The music videos are cool, and better yet, there aren’t any annoying VJ’s, and they play a great selection. (The Eagles live was one of the most recent videos they played.) The only commercials are for Mitsubishi HDTVs. HBO has a HD channel, and there are a couple other HD channels that just play old TV shows or movies in HD. Yesterday, one channel ran about 12 hours back-to-back of “The X-Files” in HD. Most of the popular sports are broadcast in HD.

I just don’t think that most of the population is aware of how many shows there are in HD. I sure wasn’t — I thought most shows were still being run in 4:3. It looks like most current primetime shows are taped in HD and then downconverted to 4:3. Even two of our local news stations are running the local nightly news in HD. Better yet, the switch to digital TV means networks can cram more stuff down the same size pipe. The local PBS station, for instance, has converted itself into 4 PBS stations (none HD, it appears, but all digital), which each play various PBS content at any given time. Two local networks have added on 24×7 weather channels in their digital lineup. This is way cool.

The Series3 TiVo gets my thumbs-up, too. It finally has an integrated Ethernet port (what took you so long, TiVo?!) Since my router is upstairs, I bought a Logitech Play Link off of woot.com and plugged one end into the TiVo and one end into the router upstairs. Voila, instant wireless! (It’s not very fast, but it doesn’t need to be.) The front of the TiVo shows what show you’re recording right now, which is nice. The remote is well-designed, but oddly appears to be missing the “List” button, which I used frequently on my old TiVo to go right to the list of recorded programs. (Without the List button, you have to Tivo-button->Select, which is not terrible, but I miss the List button.) The Guide is much faster (FINALLY!) and adding a Season Pass is much faster. Finally, with a 250GB hard drive instead of my old TiVo’s 30GB hard drive, it can record a lot more programs.

I’m very happy with my purchase, even though it means I’ll be paying it down for a couple months. No biggie… soon it’ll all be paid off. In the meantime, I’m preparing for 20-30 people to show up on Sunday for an awesome Super Bowl party! Woo!

Steve Pavlina writes, on his blog, “At the start of each new year, in lieu of creating a New Year’s resolution, my tradition is to select an area of primary focus for the coming year.” Following his excellent example, I’m setting my foci for 2007 and then describing more detailed areas of those foci.

When I think about what I want to accomplish in 2007, the word that comes to mind is “New.” There are a lot of “new” goals and opportunities for me in 2007 — too many for me to post in a single blog entry, but I’ll encompass a few here.

New Stuff. I’ve lived extremely frugally in the past several years. My only major (I consider “major” $1000+) non-work-related purchase since 2000 has been a hot tub, which I bought in 2005 to help me relax. Other than that, I haven’t spent major money on anything not directly related to Simpli in seven years. I’m going to quickly recount what I plan to upgrade or buy new in 2007:

Home stuff:

• A new couch. Now that I have a housemate, I can relax some on the stinginess. This is the top item on the list and will probably happen first. I currently have a futon I bought in 2000 as my couch. It’s time for it to move upstairs to the home office and for me to get a real couch that doesn’t hurt my back…and that everyone else is comfortable sitting on, too.
• A new TV (probably two new TVs; one for the bedroom and one for the living room) is the most expensive item on the list. Last TV purchase: 1999. Now that plasmas have come down in price, I feel that 2007 is the year to buy. This will most likely be later in the year.
• A new bookcase. I need something better to hold the many books I now own. My current bookcase (purchased in 2000) is overwhelmed with a pile of books that just keeps getting bigger. I need a bookcase (probably to complement the one I have now, not to replace.)

Other new stuff: The biggest purchase I’ve needed to make in a while is coming up for me…a new car! I’ve had leetle zoom since 2000, and he’s a 1999 model. He’s starting to get a bit long in the tooth at nearly 130,000 miles. 2007 will probably be the year I replace him with a new zoom (but I’ll keep my LIL ZOOM license plate!)

I may potentially purchase an RV for Burning Man this year, too. Older but still serviceable ones run $10K-$12K used and aren’t a bad investment, considering that renting one for 1 week last year ran $2000+. (I split the rental cost with a friend with whom I shared the RV.) This may also wait. It really depends on whom I go to Burning Man with this year, and what sort of accoutrements he/she/they have.

Wow, that’s a lot of new stuff (and believe me, I think most of my friends would agree that all of those are pretty past-due on my part.) How am I going to afford all of them? That’s where my goals for 2007 come in!

Goals for 2007 (aka Points of Focus; Areas of Growth and Opportunity)

• Raise my salary at Simpli. Frankly, I’m being paid far too little for the CEO position. First-level support techs get paid more than I do. I’m going to raise my salary by 50% this year. That’s long overdue, too. I’ll probably bump it in smaller amounts, and pay some out in dividends if we have a good quarter, but yep, that’s where money for most of this stuff is going to come from.
• Grow SlashChick.com. This, in and of itself, is not really a revenue generator. But it’s important to write about things people are interested in and grow the readership on this blog so I can have better visibility as a whole. Setting aside some time to write at least once a week will be a good growth experience for me.
• Start a new blog. Ruh-roh! What’s that, you say? She’s committing to writing another blog? Yep, and this one has a specific goal (I’ve already decided what that is and registered the domain name, but I’m not ready to introduce it yet.) I’m a writer by nature and I really love writing — it’s a release for me. This will be a very special project that is dear to my heart, and I will likely continue it for years. I’ve already been planning it for a couple months and hashing out details as I go. I’ve got the site structure down, but now I need to write my first entry. I’m not quite there yet, but expect to see it in the next couple of months.

There you go…three big goals for 2007! I have a couple others, but those won’t be public yet. I have to have some surprises…I wouldn’t want you to get bored!

Gosh, I’m really excited about 2007. Simpli is about ready to move into a new office (we’ll post that on the Simpli blog soon; as soon as we finalize the new lease!), we’re getting even more datacenter space, and I feel like the company has really turned a corner. It’s not crazy hectic any more. We’re still growing like mad, but we’re also taking our time and making sure things are done right. We’ve built a fantastic foundation for even more growth in 2007. It’s going to be a great year.

And now a big goal for you in 2007, if I may be so presumptuous: Take advantage of the economy while you still can!

It’s almost time for the new year, and although I have several blog entries I’d like to write, I think it’s time to take a look back at the real estate industry, which I have been tracking as a hobby for 2 1/2 years now.

First of all, most of my predicted bubble headlines for 2007 are still making news. I don’t wish to change any of them, and I’m sticking with those predictions for now. A few more recent stories that jibe well with my predictions (and we’ll see more in 2007!)

• Looks like Fannie Mae may take down KPMG with it, as this Titanic grasps at (sues) everything in its path before finally sinking. KPMG out of business? Maybe, maybe not…too close to call at this point. If I had to guess, I’d say the lawsuit will be thrown out and/or KPMG will emerge “victorious” — but battered.
• Florida’s still shaping up to be a disaster. Despite a quiet 2006 hurricane season, Florida’s houses are dropping in value at an astonishing rate, and wind insurance is playing a huge factor in that decline. From the linked article: “Insurance companies dramatically raised premiums after Hurricane Katrina. Depending on where they live and their policies, Florida homeowners may pay as much as 10 times more for flood and wind insurance than last year; premiums can exceed $30,000 per year on mansions.” Woof.
• Naples, FL seems to be “ground zero” for home price declines, taking the one of the largest YOY (year-over-year) price declines for a major market. From the article: “Median sales prices for homes dropped by 13 percent from $479,800 in November 2006 to $415,200 last month.” I’d hate to be someone who bought in 2005. Foreclosure, anyone?
• Ah, yes, and speaking of foreclosures, that’s going to be a popular news item in 2007. Watch what’s happening in Denver now for a preview of what California will be like in 2007 and 2008. Bloomberg says “About 20 percent of sub-prime mortgages granted in the last two years will end in foreclosure as owners struggle to make payments and home prices stagnate.” A reminder that more than 60% of the loans granted in California in the last few years were “payment option” or “adjustable rate” mortgages — exactly the kind of loans that were offered most often to sub-prime borrowers. By 2010, 1 out of every 15 borrowers in California could lose their home to foreclosure. That means, if you live in California, you’ll likely know someone who was foreclosed. The really unfortunate part is that most of these borrowers have no equity in their homes, so there’s no good reason for them to try to hold onto their house. They’ll just give up the keys and walk away…and the “investors” who bought piles of subprime loans on Wall Street will take the hit.
• Speaking of mortgage lenders…how are they doing these days? Well, if the last month is any indication, most of the subprime mortgage lenders will eventually either be sold at cut-rate prices or simply close their doors. OwnIt Mortgage Solutions became one of the first lenders to go out of business last month. That company provided thousands of loans to subprime borrowers in California. There will be more…many more.

I’m now going to go out on a limb and make a few bolder predictions not just encompassing 2007, but the rest of this decade. The oft-mentioned retirement of the Baby Boomers is almost upon us. By 2010, most of them will retire. Or will they?

You see, a lot of those Baby Boomers put all their wealth into dubious investments like overpriced real estate. I’ll use my landlord as an example, but there are millions more like him. In 2004, my landlord had a brilliant idea to buy a bunch of overpriced properties in the Bay Area and rent them out as his retirement strategy. Unfortunately for him, the fundamentals didn’t really make sense, and he’s been losing money on most of them. The rental prices he gets are break-even with his mortgage payments, but by the time he factors in repairs and property taxes ($6250/year on the place I’m living in!) he’s underwater by a significant margin. I assume he expects to sell for a profit (“real estate only goes up!”) to fund his retirement. He’d have to do that in the next 12 months, though, to make much of a profit (if any) and it looks to me like he’s planning to sit on them for a while longer.

Baby Boomers who bought into real estate (or, increasingly, even the stock market, which is fairly overvalued right now as well, though I don’t expect it to crash in 2007) to fund their retirement will be mostly out of luck when they decide to cash out in 2007-2011. That means that the much-vaunted “worker shortage” due to baby boomers retiring will most likely be nonexistent. Remember all those scary charts that projected a massive worker shortage by 2010? I don’t think you’ll see that as the case, with baby boomers going back to work (or not retiring in the first place) because they need so much money in order to survive. Unfortunately for them, most of the Boomers are very consumerist, meaning a “simple” lifestyle is not an option, and thus they will work well into their 70’s in order to continue to feed their lifestyles.

Speaking of “simple” lifestyles, as the economy tanks over the next few years (first real estate, then industries directly related to it like mortgage brokers and construction, then industries feeding the home industry like Home Depot and Lowe’s, then furniture stores, then service industries like plumbling, then businesses who sell to those businesses…creating a dramatic ripple effect through the economy), the “simple”/”frugal” lifestyle will start to come back into vogue. This is the time to take advantage of that trend and start a website, blog, or whatever else you want devoted to some niche of that lifestyle.

If you’re not the entrepreneurial type, I recommend holding off on major purchases and focusing on paying down debt as quickly as possible. Be long in cash and commodities and short in bonds/CDs (no reason to go long in bonds with the inverted yield curve.) Cash will be king once the stock market grinds to a halt (probably in late 2008-early 2009 or perhaps later…hard to forecast at this point.) Even now, there is not much to be made in mutual funds/stocks unless you trade (and trade well/do your research) instead of hold.

I’m also predicting that something major will happen to Lowe’s or one of the smaller home improvement chains. I believe a buyout/merger is imminent in that industry.

That’s a rap for 2006, and some guidelines on how to make money in the coming years. I’ll post more ideas as I have them (and I do have them!) Expect more blog posts from me in the New Year as I integrate blogging into my daily routine. Enjoy the rest of 2006!