VICEX The Vice Fund Has Done Well Over The Years

Vicex, VIXEX, has done well over the years, it has outperformed the Russell 2000, IWM and the Dow, DIA, since its inception. From 2003 to 2005, it rose 80%; and then went on to a peak gain in 2007 of 160%.

Irvine Renter relates that home prices in Las Vegas doubled between 2003 and 2005. So if one took out a second or a HELOC on his property and invested it in VICEX, then he could have had 200% gain on the loan proceeds; outperforming even the vice fund. 

The Las Vegas Case Shiller Price Chart provided by Irvine Renter is a valuable investment chart; I had the opportunity to invest in a rental condo in Las Vegas in 1992 and 1993, but thought the market overpriced and declined to invest.

Financial deregulation came with the repeal of Glass Steagall. It was a vote of 92 to 8 in the US Senate for repeal. Being a naive-simpleton, I had no idea of what the true meaning of the term “financial deregulation” meant: it legalized new products such as CDOs and Option ARMs to capitalize the insightful and impoverish the foolish. Financial deregulation is Orwellian Doublespeak at its best. Look how real estate values took off right after Glass Steagall was repealed and as Alan Greenspan, the Czar of Credit Liquidity, lowered interest rates! The Senators and The Fed Chief remind me so much of The Cat In The Hat, come alive, that is the Dr. Seuss Character who wearing a tall, red and white-striped hat and red bow tie, led the children in a riotous party. So today, the riotous party continues with HAMP, GSE 96.5% LTV home loans, and the FASB 157 entitlement allowing banks to value mortgages to manager’s best estimate rather than to market. But wait, there is more, just this month, the European Finance Ministers met in Summit and announced a sovereign debt bailout superfund that has created an EU Treasury and made Jean-Claude Trichet effectively the European Economic Government Seignior responsible for selling state and corprate debt and issuing seigniorage aid for Greece. Thus more Cat-In-The-Hat-Ism.     

The Case Shiller chart shows a bell curve — prices must return to normal — they will return to 1993 level when there is a black swan event, such as a failed Treasury Auction, or war between Israel and Syria, that suddenly evaporates credit liquidity from the Ten Year US Treasury market place.    

The article references Summerlin; it is interesting that it is a master planned community of The Howard Hughes Corporation, an affiliate of General Growth Properties, (hat tip to Wikipedia); prices have a long, long ways to fall.

And they even have a much, much, much further way to fall in Paradise Valley. What a name! I never knew there was such a place until I read the  Melinda Fulmer MSN Real Estate article Hard Times In Paradise. I then went to Redfin and found the average priced home at 1.7 Million, like the one at 7131 E Berneil Ln, Paradise Valley, AZ 85253.
 
The Irvine Renter article relates that “housing affordability has returned across the nation with most states in the 20 percent to 30 percent range of housing cost-to-income, according to Burns’ report. The cheapest area is Saginaw, Mich., at 12 percent, followed by Pine Bluff, Ark., and Danville, Ill., at 13 percent. The most expensive is San Francisco at 66 percent.” Many people are willing to pay a financial or other price for a desireable place to live. To me Saginaw and Danville are undesirable. San Francisco is desireable.