I wrote over a year ago about our first (and only) experience bidding on a house in the Bay Area. Believe it or not, we’re still looking, casually I suppose, and have come near to bidding on two or three houses since then, but not close enough to pull the trigger. The one thing that’s changed is that we’ve narrowed down our needs to being in a “good school district” since our son has been attending speech therapy, and the therapist has advised that we live in a school district with good support in this area in case he would need to continue using these services in school.

Up until now, we were considering semi-fixer-uppers. A few weeks ago, we looked at this house, a trust sale, and even though we were fairly convinced we could probably get it for under $925K asking, after having some contractors take a look, they came out with estimates that were far from figures we were comfortable with. Our thought was that with some add’l money, we might be able to make it look somewhat like the house next door since it has the exact same floor plan (this house sold for $1.27M, another outlier in our opinion). Then we got the estimates:

1. $120K to remodel the kitchen (keep in mind this is a 1920s house, so small kitchen)
2. $75K to redo the basement
3. $60K to put in a bathroom
4. $100K if we wanted to tilt the roof to make it not a flat-top house

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While sitting in a doctor’s office the other day, I happened across an article in Bloomberg magazine entitled “America’s Worst Investment” (magazine cover shown here) that explained why commodity ETFs were such a terrible investment vehicle for individual investors. Since Bloomberg is pretty reputable, and since I had previously invested (and lost money) in RJI, a commodity ETN (exchange-traded note) that tracks the Rogers International Commodity Index, of Jim Rogers fame, I was really interested in what the article had to say.

As I’ve posted here before, I’ve relied on ETFs quite a bit in the past to do the bulk of my passive, buy-and-hold investing. They’re an easy way to diversify and since most of them track indices, there’s not much to think about compared to the difficulties of evaluating an individual stock. After reading Jim Rogers’ books, I was interested in diversifying into commodities, and when someone finally came out with an ETN that reflected his index a couple of years ago, I bought in.

The Bloomberg article is quite eye-opening and explains why commodities ETFs that are based in futures can be a no-win situation for individual investors. You’ll have to read the article to fully grasp the pitfalls of these vehicles, but one vocabulary word I learned was “contango“, something I had never heard of. It boils down in essence to the nature of a futures contract. Unlike an option, where you have the right but not the obligation to buy or sell an underlying security, in futures contracts, you have the obligation to take delivery of the underlying security or good unless you rid yourself of that contract in some way.

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I’ve been a big fan of the site I Will Teach You To Be Rich since 2006, although I’ve not quite been in Ramit’s target demographic for a while. Still, when I was approached to do a review of his site on this blog, I thought it worthwhile since I think I have many readers who’d enjoy his no-nonsense style and benefit from his advice.

It’s also be a nice change of pace from the last couple posts I wrote on special situations investing which, although they’re related to value investing and are real experiments I’m currently partaking in, I do admit are somewhat obscure for the average reader.

First, to be completely clear and open, Ramit is in no way compensating me for this reviewI wouldn’t be reviewing his site if I didn’t think it was a high-quality, valuable resource that my readers would benefit from (and believe me, I probably get many requests to do these kinds of reviews than you think.)
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Big apologies for the downtime on my site the last few hours. It was somehow overloading its server (shared hosting through HostGator), but on the bright side, they gave me a tip to install a plugin called W3 Total Cache. You should notice improved performance by 10x or more. Feel free to leave a comment if you see anything amiss.

Following up on my previous post, I decided to give odd-lot tenders another try and bought 99 shares of WBMD at $50.70 last Thursday. WebMD Health currently has an odd-lot tender offer expiring September 8 to purchase properly tendered shares at $52. The company had previously made 3 other tender offers at $45.80, $46.80, and $50 since April of this year.

Unlike the previous tender offer I participated in for Fidelity National Services (FIS), WebMD’s price is already set and will not go through a Dutch auction process. However, there is also additional risk involved as a clause included in the tender offer specified that the tender offer may be amended, postponed or cancelled if “a decrease of more than 10% in the market price for the shares, the Dow Jones Industrial Average, the NASDAQ Composite Index or the S&P 500 Composite Index since the date of the Offer” occurs. This appears to be pretty standard verbiage in tender offers; however, since the tender offer was announced on August 10th, these indices have decreased 6-8% so far:

With September 8th being just around the corner, I’ll watch the stock closely and likely submit my decision to tender closer to the expiration date than I did for FIS. It will be interesting to see how this one turns out.

Update: WebMD Health waived the 10% market condition yesterday (August 30) referenced above in their latest update to their tender offer statement. Looks good so far!

Update 9/15/10: Received cash for this transaction, 99 shares @ $52 today. All’s well!