What's luck got to do with it?

"you make your own luck"

"the harder I work, the luckier I get"

"except for bad luck, I wouldn't have any luck at all"

After posting about Casey Serin, I spent most of the night thinking about the role of luck in my life and whether I should believe in it at all. All of the successful people I have met have outwardly stated that they believe their success is due to hard work, persistence, good organization, etc. Few seem to think that they were just lucky. On the other hand, nearly every poor person I have known (between having rental property for 10 years and trying to recruit people into Amway for an equivalent length of time, I met literally hundreds and hundreds) blames his or her lack of success on bad luck.

My wife is from mainland China and it seems that the Chinese have a strong belief in luck. She seems to think she always has bad luck. She grew up during the cultural revolution was very poor and remembers not having much food to eat, standing in line long hours to get an egg or some meat. (Even today in the US she goes to great lengths to make sure she doesn't leave the slightest trace of raw egg in a mixing bowl.) Her first husband abandoned her when their daughter was born and she was left alone in the Northwest province of China a thousand miles from her family. So she sent her baby home to her mom and lived alone, studying long hours to get an accounting certificate. She finally got her certificate and found a job on Hainan Island in the South China sea. But the bank was corrupt and went out of business. So she found a new job in a large city only a 10 hour trip away from her parents. She somehow managed to buy a house, marry a budding entrepreneur and pay off the house completely in few years. But the entrepreneur cheated on her and left her, taking his share of the business (worth a lot of money) without giving her anything. Still, through her frugality she had saved enough to buy a house for her parents and pay for it in cash. So she owns two homes in China completely paid for worth nearly 2 million yuan - a hefty sum for an average person in China.

A few years ago she decided she wanted to emigrate to America and found a man to marry (me!). But it was her bad luck to find someone who wasn't rich. After all, all the other Chinese women she know had married rich Americans! So has my wife had "bad luck" all her life as she claims? On the one hand she represents some one who sets goals (although she doesn't write them down) and diligently works towards them and inevitably achieves them. But she seems to focus on all the bad breaks she thinks she has gotten.

What about me? My outward demeanor is always optimistic. I was always telling the people I sponsored in Amway one of the first two quotes above. I have constantly tried to sell my wives that with a just a little more time we are going to be successful at _____ (fill in the blank- real estate, Amway, commodity futures, stocks, etc.). Initially in all my ventures I believed I really would be successful. But as they flopped I most often blamed (internally) my bad luck. Even today I feel that I have the worst sense of timing. I moved all my 401k savings into stocks in late 1999, I bought real estate in the 1980's just before the market crashed. E-gad - I am getting into real estate now again after it has peaked!

During my time in Amway I read hundred's of books, listened to thousands of tapes and heard hundred's of successful business people speak (both from inside and outside of Amway). They all espoused a thinking process similar to Steve Pavlina. Basically, our thoughts are like magnets and we can literally "Think and Grow Rich". Steve Pavlina has an experiment he is running to try to attract $1million. Can success be this easy? It is both inspiring and frustrating to read about how easy it is for others to make a lot of money such as this college student. I also know very personally my sister-in-law's success has a lot to do with extreme hard work. Her business InOutSouce.com is one of the fastest growing firms in Philadelphia and she is well on her way to riches. But she thinks luck has nothing to do with her success.

I remember when I first saw the Amway marketing plan. I was absolutely convinced that I would be a millionaire in 2 years. I felt certain that anyone would have to be an idiot to turn down the idea. The first two months I sponsored every one I talked with. I believe that they bought into my belief. One night I had an awful realization that I was going to be responsible for hundreds of people when I became successful, I would have to deal with so much money, etc. and I literally became scared. Doubt started to creep into my thought pattern and I started to have trouble sponsoring. That doubt has stayed with me in every venture since that time.

So is it luck or hard work that generates success? Or is it a combination? Or is it just my mental thought pattern that attracts or repulses wealth? I just do not know the answer and am really not sure that successful people know what made them successful. Just like when the news media interviews someone over 100 years old and asks their secret to long life. It's all anecdotal evidence and means nothing. More women and whiskey or more vegetables? Who knows really?

So I am jumping into real estate again. Just hoping really that this time I will figure it out. What's luck got to do with it? (apologies to Tina Turner) I hope nothing at all, really.

Networth IQ

I found this interesting site called NetworthIQ which allows you to create a historical record of your assets, liabilities and networth and compare it to others by age, income, etc. It also allows you to show a badge in your blog (See my sidebar). You can see my net worth over the last 3 years and the impact my divorce had on it.

Healthcare China - US

My wife is in China taking care of her mother who had a stroke about 10 days ago. It has been difficult to communicate with her since there are no phones in the hospital and she doesn't have a cell phone. I last spoke with her Friday night (Sat 6am China time) and she was on her way to the hospital for the weekend and ended up staying 5 straight days. It seems that the family has to do all of the patient care in the Chinese hospital her mother is at. The nurses only administer medication. The family helps the patient use the bedpan (there are no bathrooms in the room with 7 other patients in it), change the sheets, and bathe the patients. Someone has to be with her mother 24 hours a day and her father is pretty frail, so it falls on my wife's shoulders. Cost is high for locals ~ 1000 yuan a week Vs her parents retirement income of a few hundred yuan a month. Since her mother never worked she has no health insurance.

When I first went to China I was convinced that US Healthcare was the best in the world but now I am not so sure. One time when I was visiting my wife she developed a UTI and woke up in the middle of the night took a cab to the hospital and within 30 minutes had an IV drip of anti-biotics going into her arm. In the US, you typically wait until morning, call your primary care physician who has you go to the lab and submit a urine sample. Several days later after much suffering you might get a result and some oral anti-biotics. My wife got 3 IV's within 36 hours and then 8 days of oral anti-biotics that time she was ill. The cure was 100% effective. My ex used to get UTI's and spend months fighting the infection because the doctors were so cautious about using effective doses of anti-biotics.

I went into the hospital with my wife to be with her for one of the IV's. We sat in a large room with about 30 other patients sitting in chairs all receiving IV drips. Seems the Chinese have an IV drip for just about everything. The cost is pretty cheap ( less than 100 yuan or $12US). While sitting in the IV room, I saw the nurses constantly breaking small glassware that was part of the medication. There was lots of broken glass on the floor and more than one nurse got cut. There was not nearly the concern about infectious blood transmission that we see here. The hospital was generally pretty dirty (the bathrooms were the typical filthy squaters)

During the last few months I have been struggling to receive health care here. I think was affected by that spinach tainted with e-coli. But my PCP ran one test and discounted that. The only advice I have gotten has been to avoid dairy and eat crackers. Meanwhile it has taken me 60 days to get into the GI specialist. When I saw him Friday he criticized me for taking so long to see him. I about smacked him since it was his office that kept refusing to let me see him.

So I have to go into the hospital Thursday for some tests. I know the hospital will be clean and the care will be pretty good. But was it worth the wait? China seems to have evolved a health care system that is able to treat its mass population quickly and cost effectively. We could learn some things from them. Unfortunately, we rarely look to the East for our solutions.

Extreme Real Estate

There's a young man named Casey Serin who has been blogging about his real estate disasters. He decided to get into real estate by flying around the country buying property hoping it would increase in value - extreme real estate. He didn't have the cash flow or a plan about how to rehab the properties. Now he is facing massive foreclosure. He could even face criminal charges since he has publicly admitted mortgage fraud. The irony of his situation is that he has been able to generate such notoriety thanks to the Internet that he could end up getting rich by being really foolish and unethical.

Back in 1984 during a previous real estate boom, my brother was in New Jersey buying a rehabbing houses and making enormous profits. So, naively, I thought I could do the same in West Virginia. Thanks to changes in laws in 1980 to help the Savings and Loan industry, these "banks" were awash with cash. Within an 18 month period I was able to purchase 10 houses - another example of extreme real estate. The S&L didn't seem to care about the rental income (there was none - the houses were trashed) or how I would pay the mortgage. I didn't have to lie about anything. I just made my payments on time and every-time I went in for a loan, 20 minutes later I had a new mortgage. Of course, many S&L's were doing the same thing and not everyone was paying their mortgages like me. This lead to the S&L Crisis

In the Tax Reform Act of 1986 Congress in their wisdom made it less profitable to own rental properties and eliminated passive losses on income taxes. This law led to a real estate collapse. Of course, in the city I lived in we were not only effected by that law, but by a 35% decrease in population. Those two factors made my real estate investments nearly worthless. Despite this, over the next few years we tried to sell the properties financed by the S&L's off and often I had to take a loan out when I came to closing instead of receiving a check.

We lived in a large, beautiful 4000 sq ft home that had been designed by a student of Frank Lloyd Wright, but we sold it to go live in a trashed out triplex infested with cockroaches. Over the next two years we gutted that house from top to bottom and converted it back to a single family home. It took six months to get rid of the cockroaches, there was plaster dust every where and we cooked with nothing but a microwave the entire time (much easier to do today than back then). We had 3 little kids under 6 years of age at that time. Knowing what we know now about lead paint, I feel pretty bad about them living there. But somehow we survived and were able to sell the house at a small profit.

We lost well over $100K during that real estate venture and I think somewhere in my indebtedness I am still paying for it. There are probably many people that have gone through tough times like Casey. I find it fascinating when someone like him can turn their foolishness into something profitable and gain fame. I don't know if this is due to luck, hard work, charisma or what. So far I have not been able to turn my many foolish mistakes into much of anything. Some days I'm not even sure if I have learned anything. Here I am in my 50's contemplating investing in real estate again. Can I succeed this time? Casey still has many years left to correct his errors. Time is running out for me.

Can we win a "civil" war?

Much of the news these days is preoccupied with calling the fighting in Iraq a Civil War in the sense that the Sunni and Shia are fighting it out between themselves. When I hear the term "civil war" I have much different thoughts.


I look at the way we have been fighting wars since Vietnam and think that we have become more and more squemish about fighting wars to win and instead want to fight in a "civil" manner. In other words, just kill the only guys that shot at us first, don't torture the enemy, give them all their civil rights when we capture them, etc.


One of my favorite movies is The Patriot. When I think back to that movie and watch how the British (especially Cornwalis) were determined to fight the war in a "civil" manner, I think of how we are trying to fight the wars of this century. I think the British lost that war because in many ways they were so intent on fighting by the "rules of war" of the 18th century. The hero of the movie, Benjamin Martin (Mel Gibson), fought in a most uncivil manner. Thinking back to wars we have won decisively (the Civil War with Shermans march through the South, WWII with the firebombing of Germany and the dropping of the atom bomb on Hiroshima), are wars where we did not fight with what today we call a "civil" manner.


Fast forward to the 21st century and we are fighting an insane group of fanatics holding ourselves to such a high standard that it is (I think) impossible to win. We use "surgical" airstrikes, won't shoot if we see civilians present or someone is shooting at us from a mosque and provide prisoners with a Koran handled with special gloves so we don't contaminate their sacred book. Meanwhile they use barbaric methods of killing (I dare you to just watch the Youtube video of Islamists beheading Nick Berg), use women and children as shields and send in their children as suicide bombers.


When I attended college the anti-war movement was in full blossom. I cast my first vote for the anti-war candidate George McGovern. As did everyone else, I thought we had lost Vietnam. Only in the last few years have I learned that the Tet offensive was a massive loss for the North Vietnamese. I often wonder, what if Walter Cronkite had not declared that we had lost in Vietnam - what would have really happened and how would it effect the way we fight wars today?


Digesting the 24 hours a day blitz of news coverage it's extremely difficult to maintain any perspective about the war against fascist Islamist. Many don't think Iraq has anything to do with it. Many believe that we can reason with them and they will leave us alone. One of my collegues who until this election has voted Republican recently told me that Kim Jong-ilis just crying for attention and will stop what he is doing if we just talk to him. I suppose Neville Chamberlin thought the same of Hitler.


I think that the terrorists think we are a "weak horse" and for the moment they are right. We cannot win a "civil" war against an uncivil enemy.

Commodity Futures

I once thought that I would get rich buying and selling commodity futures. On the surface it seems like a great way to get rich. Small amounts of cash (it was 5% of the total value of the contract) can control large quantities of a commodity. A small change in a commodity price can yield fast and large profits.

So I subscribed to one of these services that performed "technical analysis" of a number of commodities. I borrowed (great idea!! - not) $10K and opened up a low cost account much like you do for buying and selling stocks. I tried to follow the trendlines and buy when a commodity was on the upswing. On occasion I made (on paper) large sums of money. But over a three month period my lack of knowledge (fundamentals) caught me short. I ended up selling during a rapid downturn and lost not just my original $10K but had to write a check for over $2K. I guess not everyone can be George Soros.

I think investing in futures is a lot like day-trading stocks. A very high intensity venture where you have to be on top of fundamentals as well as know something about technical analysis. My problems with both day-trading and futures is that I just did not take the time to do my homework. Another one of my life's expensive lessons.

Funding Real Estate Purchases

I think there are at least 3 keys to success in real estate (and I don't mean "location, location, location, although if you do live in a growing market you can invest successfully with less knowledge). Marketing (how much you expose your business to the "right" type of clients), funding (getting adequate cash for your deals) and management (having the knowledge and organization skills to do it correctly)

I am currently trying to figure out how to fund my real estate ventures. The first house I purchased this year I used conventional financing. Of course, the bank wanted 20% down and did not provide any money for rehab, so I took out a HELOC on my house to borrow the downpayment as well as to finance repairs, holding costs, etc. Now that money is all used up and all of my equity is in the rental property (My home 1st & 2nd combine to slightly more than my house is worth). I have no cash reserves to speak of and my cash flow is pretty tight. All I have going for me is a very good FICO score (700+).

One option is to try to find only sellers that will finance the property, but usually these types want 10-20% downpayment and I have no cash on hand. Some people talk about trying to find private money, i.e. money from people with cash that will lend you (for example via their IRA's). I do have some relatives with IRA's and such but am not comfortable borrowing from their holdings at this point.

Which leads me to hard money. This is pretty expensive. But generally, if your credit score is high enough (and mine is) you can essentially borrow all the money to purchase, rehab and hold while selling without any of your money. This comes with a high price - generally 6-8 points as well as 15-18% interest. I've looked at a couple of websites (e.g. Brookview Financial and Rehab Funding )offering rehab funding of the type I am looking for and am contemplating whether to take this risk. They want a commitment of 1% of the line of credit, so for a $500K line thats $5K. If I do this, I better find a deal

One alternative is Community Preservation Corp, which specializes in rehab funding. Interest rates are lower (8%) and so is closing points. I applied several weeks ago but they have yet to let me know. They are afraid I won't have the cash flow since they don't fund the holding costs. You also need 10% down on the purchase price and have to pay 20% of rehab costs so this is not easy money for me to come up with.

New Ice Age, oops...Global Warming, oops...?

Temperatures are back to normal after going through a week of temperatures in the mid 60's - must be global warming!! Of course, one month ago we had the earliest heavy lake effect storm in history with nearly 3 feet of snow. The global warming scaremongers point to both events and conclude both indicate global warming.

I'm old enough to remember the scaremongers from the 70's who were so certain that we were about to enter another ice age. I even got caught up on this in high school reading a copy of Paul Erlich's book "Population Bomb".

As a scientist for 27 years, I can say with certainty that neither the 1970's ice age nor today's "Day after Tomorrow" scenarios represent anything but poor science paraded as fact. Most scientists have trouble predicting tomorrows weather, much less the temperature 100 years from now. Remember last spring "scientists predicted the worst hurricane season ever? Well, no hurricanes made landfall this year in the US. There are many scientists that do not buy into the CW about global warming. See this analysis of the Stern Report or this article on Why the Atmosphere is not warming.

There are many more urgent concerns that should be focus of our attention at the moment - HIV in Africa, malaria, suicidal Islamist's that are intent on obtaining nuclear weapons to name a few. But to the true believers a reduction in population will probably be a good thing.

This has become nothing but a political issue where "non-believers" are called "global warming deniers". What amuses me most about leftists is that although they dis people of religious belief they often fall into irrational belief systems that make religious people seem to be faithless.

Here's a funny take by Mark Steyn

And a quote by George Will

Over the millennia, the planet has warmed and cooled for reasons that are unclear but clearly were unrelated to SUVs. Was life better when ice a mile thick covered Chicago? Was it worse when Greenland was so warm that Vikings farmed there? Are we sure the climate at this particular moment is exactly right, and that it must be preserved, no matter the cost?

First Prospect

I bought a real estate course discussing how to buy houses from people going through foreclosure and am about half-way through it. We purchased a service that gives us new foreclosure listing every week and we mailed out 25 letters. Today someone called with a desperate situation and wants to meet! I haven't lined up any financing and don't know how to buy "subject to" the existing financing yet. I will have to find out how far behind in payments they are. Maybe I can do a sandwich lease-purchase (i.e. lease-option the property from the seller and turn around and do it at a slightly higher payment and sales price to the buyer). Hopefully, this is a good sign of real estate success to come.

Network Marketing Amway

As someone who has searched for "home based businesses" on the web, I am on a zillion mailing lists for network marketing businesses and various chain letters. Of course, most are nothing but pyramid schemes and a waste of money. I tried one once, spending $200 and received about $12 in return. I received an invitation today that was an exact duplicate of the original Ponzi Scheme.

I was involved with one of the first network marketing companies for about 10 years starting in the early 80's - Amway. I was able to achieve a moderate level of success (Direct Distributer) but not much profitability. I know many people who quit that business have lots of bad things to say but even though I spent (or shall I say invested) thousands of dollars more than I earned, I thought the experience was a really positive one. I loved the seminars and rally's, especially the large events in coliseums held by a Dexter Yeagar. Got to see many famous speakers (including President Reagon), performers and heard many inspiring success stories. I made acquaintance with many very wealthy people. Their success was undeniable and I don't believe it had anything to do with luck. The experience fundamentally converted me from a socialist/leftist/atheist to a right wing capitalist/churchgoer. I even thought the products were first rate.

So why didn't I achieve the wild success that I thought possible when I first saw the marketing plan? I can only blame myself. My personality is not outgoing - I loath small talk and just could not interact one-on-one with people. I really do not make friends easily. I think success in that business required work, investment and people skills.

It's easy to assign blame for our failures but tough to look in the mirror. That opportunity was not the right one for me. Hopefully, real estate will be. I won't have to make friends with sellers or buyers. It's been a long time since I was involved with Amway. I wish those that participate the best.

airline frustration

My wife is trying to fly to China. She flew out yesterday but the flight was 2 hours late, so she missed the connection to China. Neither US Air nor Air China were willing to help her. A United agent tried to help, but even she got frustrated with Air China. Air China cancelled their Friday flight, so my wife is spending two nights in NYC at $200 a night. We're just SOL as far as the cost goes per the airlines. Don't think I'll fly either of these airlines again. I had a run-in with Sears in 1981 and never shopped with them again. Poor customer service is one of my pet peeves that is unforgiveable.

My Real Estate Venture this year

This past spring we found a nice brick cape in the growing suburb of Lancaster. The owner had gone into a nursing home and the kids were trying to sell the house. It had sat on the market for 6 months primarily (I think) due to lots of water in the basement. The asking prices was the assessed value ($105K) and had just been reduced to $98K. We offered $75K with seller paying $3K in closing costs. We ended up at $80.5K with $1500 closing paid by seller. We took out a HELOC on our house to pay for the 20% down required for investment property and the repairs. We closed in May and in 6 weeks we had repainted inside and out, had BathFitters put in a new tub and shower enclosure (too expensive!) and had drain tile put in the basement. We spent about $17K. In order to get some money coming in fast we advertised it as a "rent to own". We had a simple RTO sign in the front yard and that sign pulled in over 500 calls. A newspaper ad and an ebay listing pulled in 2 leads. One nice couple who had gone through bankruptcy signed the agreement. Part of our lease is that they pay for the first $200 of repairs. They also paid us $2500 in option money.
So far they have been perfect tenants - already spending money on the house like it is theirs. Rents are paid on time. This is our inspiration to expand this concept and why I think it is the best route right now to accumulate money for college and retirement.

Another Leap

At this point in my life I am about to leap off the cliff again. This will be my second go-round with real estate. At age 53, after going through numerous financial and personal trials I have no liquid cash, no college savings and am woefully under-prepared for retirement. Three years ago I underwent a costly divorce that took much of my retirement and all of my liquid assets and added to my debt substantially. I have since remarried. Now I have 4 children between the ages of 13-16 who will be reaching college age when I am in my late 50's.


I have tried a multitude of investments and some businesses in the past. I had a fifteen year fore-way into network marketing, I've invested unsuccessfully in the stock market and commodity futures. In the early 1980's I purchased 10 rental properties and lost money on all but one. At that time I was buying properties in WV. They seemed like a good deal - owners were desperate to sell and I thought I got great deals. Unfortunately, the population was at the beginning of a downward spiral which deflated real estate prices even more.


I ended losing money on every property but one. I gave 5 back to the original owner and sold others at a loss. I had to sell my primary residence and moved into one of the rentals ( a triplex). While living in that we converted it to a single family home. Unfortunately, do to personal situation I had to leave WV and sold the house to my company. I had purchased it for $35,000, put $65,ooo in rehab and sold it for $122,000. One year later it sold for $199,000, but someone else made most of the profit.


Now I am going to try real estate again. Again I am in an area of decling population (Buffalo). So, I hope to be a little smarter. We bought a house last spring for $81,000 and put $17,000 in rehab in. Now it is being lease-optioned (rent-to-own) for $1050 per month with a sales price of $135,000. So my strategy is to buy, rehab and try to hold only for a short time. I've invested over $2500 in real estate courses, formed an LLC, bought a website
http://www.jinnaproperties.com/. I have purchased some online real estate information from FirstAmerical Real Estate and am gong to go gung-ho into this.


While my wife and I have been setting this up, she learned her mother had a severe stroke. So today (Thanksgiving) she got on a plan to return to China, leaving me with her daughter. Looks like the next few months will be more extreme

what is this blog about?

Some would say that most of my life I have been going to extremes - I've investing and lost 100's of thousands of dollars trying to make money; travelled half-way around the world to adopt large sibling groups and then lose them; spent time at both extremes of political and religious beliefs; and married to a woman that didn't speak English from the other half of the world. I enjoy skiing on black diamond trails and took up mountain biking down the same ski slopes at age 52.
So, you know a little about the extremes, but what about perspective? To those that don't know me, I am a boring engineer intested in statistics. Having experience both sides of many things, I think I can offer some perspective. But more than that, I hope my readers will give me some perspective about where to go from here. I'll talk about that in my next post.