First Of All, Know Thyself

One of the most important elements of success in trading (and life in general) is knowing yourself. If you do not understand how you tick, you will never be truly prepared for the demands of trading, and likely your performance will suffer as a result.

Let me use myself as an example.

I am what might be considered project oriented. By that I mean I like to move from one thing to the next – always have something upon which to focus my attention. As my friends and colleagues can attest, once I complete a project – and sometimes even before I do – my thoughts shift to the next one. I actually get antsy if I have nothing lined-up. Predictably, this is reflected in my trading.

We can actually think of trading as a series of projects. Each position one takes on is a new project which incorporates analysis of some sort (automated or otherwise) and trade decision-making. When a position is closed out, it is like wrapping up a project. It’s over and done – time to move on to the next thing.

There’s a little problem with that, though. This kind of “project” approach, in the case of someone like me, can lead to overtrading. This isn’t the kind of overtrading which is referred to when one speaks of taking on positions which are too large, though. Rather, I am speaking of trading too frequently. In my case, when I close a trade I find myself immediately eager to open a new one. It doesn’t matter whether I made or lost money on that first trade. Because of my “need” to have a project going, my psychological pull is toward finding a new trade to make. (Note: I do not consider this in my case to be like the “fix” trading provides as an intermittent feedback mechanism, like gambling.)

This little personality trait of mine is something I figured out a while back when I realized that I am most comfortable when I have an active position in the market.. It doesn’t matter how large or small that trade is as long as I can check on it periodically and feel like I’m involved. Knowing this, I take two approaches to avoid the overtrading problem.

The first thing I do is trade longer-term. By doing so, I give myself the opportunity to take on long “projects”. I often have trades with durations of weeks or even months. These aren’t all my trades, mind you. I do trade short-term at times, but my schedule is such that longer-term position trading tends to fit best most of the year.

When trading shorter-term, I use a second approach to combat the “project” itch. Specifically, I try to step away from the market for a while following the completion of a trade. It lets me clear out the emotional residue of finishing a project and come back at it fresh. That can quite often make the difference between taking impulsive trades and being properly selective based on my analytic methods.

Of course, this is just one example of the sort of psychological hurdles which come up in trading. We all have patterns of behavior which are based in our personal lives that can quite easily carry in to trading, positively or negatively. Brett Steenbarger’s outstanding book The Psychology of Trading provides an excellent discussion of how this can happen, and ways we can overcome the problematic ones. The primary point is that we need to be able to look at ourselves like an outside observer. In that way we can get to know ourselves, and that’s at least half the battle.

Five Budget Tips to Help You Save

Saving money is much easier than earning it from scratch. But it is also much harder than it is to spend money, and as a result, most of us spend what we would rather save. In order to begin saving money, we need to have a plan, and the more automatic the plan works, the better. When we are confronted with the choice between spending money and saving it, we run the risk that we will give in to the temptation to choose instant gratification. So taking the choice out of the equation is one of the first steps to a steady savings program.

Here are five tips for budgeting and saving money, the automatic way:

1) Set up an automatic withdrawal program with your bank, so that every time you make a deposit, a percentage of the money you deposit is automatically transferred to a savings account that is harder for you to access. One way to do this is to have your bank use an automatic deposit system to put a set amount of money – for example, $100 – into your savings account each month.

2) Save your loose change and small bills. Put a piggybank in your kitchen and every time you come home, empty the change from your pockets and put it in the piggybank. Toss in a few one-dollar donations from time to time. Although it sounds juvenile, you will be surprised how much you can save with this old fashioned method. And it is so much fun to break the bank when it won’t hold another cent.

3) Write down everything – and that means no exceptions – you buy. Keep a log of every single purchase you make. Write down what you bought and how much it cost. If you left a tip, write that down too. Be diligent about keeping your log book, and if you do it well, you can just do it for a month and gather enough information to help you save even without the log book. Most people find hidden expenses, like $10 per day for coffee or $50 per month for a gym membership that is never used, and then they can easily adjust their budget to save money immediately.

4) Spend less at holidays. And entertain at home. Instead of giving expensive gifts at Christmas, give handcrafted items, poems, or pledges to do errands or barter with friends. One fellow we know agreed to shovel his friends’ sidewalks during one snow season. His friends got a great gift, and he saved some cash to spend once the snow and ice thawed. Instead of going out to eat in restaurants, cook at home or invite friends for a potluck dinner. Rent DVD’s instead of going to the movies.

5) Don’t shop hungry. Scientific studies show that people who have a strong appetite will not only eat more, but they will consume more of everything else, too. Many of us know that if we go grocery shopping while hungry, we will buy more than we need. So don’t do it. Eat first, then shop. But since studies show that it applies to all sorts of shopping, always have a satisfying snack before going to the mall, the clothing boutique, or the sports store. You’ll spend less, and save more.

Extension of Short Leases on Central London Properties

Copyright 2006 Nigel Osgood


* The shorter the remaining term of the lease, the more difficult it will be to sell the property or for potential buyers to raise the finance

* Potential lenders usually require a minimum term of lease at outset of a mortgage facility and, also, require a 30+ years left on the lease at maturity of the mortgage term

* Properties in prime areas of Central London, typically, have leases attached to them with less than 30 years remaining (some have much shorter remaining terms)

* Since the Commonhold & Leasehold Reform Act 2002, it has been easier for an owner of a short leasehold property to extend the term of the existing lease, if he/she has owned the property for two or more years

* Few lenders have identified and responded to this niche lending opportunity; those that have done so, consider the location of the property and the status of the freeholder to be important factors in the mortgage application process

* Quality estate agents and valuers, experienced solicitors and enlightened independent mortgage advisers will all have significant roles to play in this business arena Financing the Extension of a Short Lease

A freeholder will require a monetary consideration in order to extend a lease and there are, essentially, three options for making that payment:

* Pay the premium to the freeholder out of one’s own financial resources

* Apply to one’s existing lender for a ‘further advance’ in addition to the existing mortgage

* Apply to another lender for a re-mortgage to pay off one’s existing borrowing and raise the additional amount required to pay the freeholder

A lending institution will value the property on the bases of its current short lease and also the future increased lease term.

If approved, the mortgage will be based upon the revised lease term and, when the funds are released to the acting solicitor’s client account, the new lease will be executed simultaneously.


An applicant has a 5yrs mortgage of L350,000 on a 15yrs leasehold property valued at L500,000 and he/she can acquire a 90yrs extension to the lease by paying the freeholder a premium of L250,000. The property’s value will increase to L1,000,000 with the new 105yrs lease in place.

A L600,000 mortgage is approved and the L350,000 borrowing is redeemed and L250,000 is paid to the freeholder.

Purchasing a Short Leasehold Property

As, say, a 15yrs lease reduces so does the value of the property decline; a ‘purchase’ application, therefore, challenges a lender more than a ‘re-mortgage’ application.

It is likely that, after two years of ownership, the purchaser will apply to increase the lease as in the preceding scenario; a lender cannot include that factor when considering a mortgage application for a purchase of a short leasehold property.

Again, using an existing 15yrs leasehold property and a 5yrs mortgage as an example, it is unlikely that a borrower would opt for a ‘capital and interest’ facility, given the likely repayments. An ‘interest-only’ mortgage product is not attractive to a lender because of the fact that the reducing lease is likely to have a declining value.

The answer can be a hybrid of the two loan types i.e. a mortgage that is part ‘capital and interest’ and part ‘interest-only’ in order that a lender’s exposure re. loan/value is not impaired.


A lender is prepared to lend 70% of the purchase price/valuation and requires that the exposure is no more than 70% of the declining value at anytime throughout the mortgage term.

Purchase price/valuation of 15yrs leasehold = L500,000 Valuation of the property with 10yrs remaining = L350,000 Loan term is 5yrs

The lender is prepared to structure a loan on the basis that enough capital is repaid over the five years in order for the exposure to be no more than 70% of the declining value.

In this scenario, L350,000 would have been lent at outset (70% of L500,000 value) and after five years the borrowing would be reduced to L245,000 (70% of L350,000 value).

As the mortgage was for a five years term, the borrower would have to pay off the outstanding L245,000 at this time, having sold the property or from his/her own cash resources or having extended the lease and re-mortgaged.


The processes of purchasing, re-mortgaging or extending the leases of short leasehold properties require the services of knowledgeable and experienced advisers.

There is a slowly-increasing awareness of the market opportunity by a few of the more forward-thinking and flexible lending institutions.

A huge amount of prime Central London property is short leasehold, owned by highly reputable freeholders that have embraced the enfranchisement Act.

In future, those potential buyers of short leasehold properties or those wishing to extend their existing leases can do so knowing that professional and experienced support is available to them.

Financial Readiness: How Prepared Are You?

Home is where most people feel safe and comfortable. But sometimes — say, when a hurricane, flood, tornado, wildfire, or other disaster strikes — it’s safest to pack up and go to another location.

When it comes to preparing for situations like weather emergencies, financial readiness is as important as a flashlight with fully charged batteries. Leaving your home can be stressful, but knowing that your financial documents are up-to-date, in one place, and portable can make a big difference at a tense time.

Here are some tips for financial readiness in case of an emergency:

Conduct a household inventory. Make a list of your possessions and document it with photos or a video. This could help if you are filing insurance claims. Keep one copy of your inventory in your home on a shelf in a lockable, fireproof file box; keep another in a safe deposit box or another secure location.

Buy a lockable, fireproof file box. Place important documents in the box; keep the box in a secure, accessible location on a shelf in your home so that you can “grab it and go” if the need arises. Among the contents:

– your household inventory

– a list of emergency contacts, including family members who live outside your area

– copies of current prescriptions

– health insurance cards or information

– policy numbers for auto, flood, renter’s, or homeowner’s insurance, and a list of telephone numbers of your insurance companies

– copies of other important financial and family records — or notes about where they are — including deeds, titles, wills, birth and marriage certificates, passports, and relevant employee benefit and retirement documents. Except for wills, keep originals in a safe deposit box or some other location. If you have a will, ask your attorney to keep the original document.

– a list of phone numbers or email addresses of your creditors, financial institutions, landlords, and utility companies (sewer, water, gas, electric, telephone, cable)

– a list of bank, loan, credit card, mortgage, lease, debit and ATM, and investment account numbers

Social Security cards

– backups of financial data you keep on your computer

– an extra set of keys for your house and car

– the key to your safe deposit box

– a small amount of cash or traveler’s checks. ATMs or financial institutions may be closed.

– Consider renting a safe deposit box for storage of important documents. Original documents to store in a safe deposit box might include:

– deeds, titles, and other ownership records for your home, autos, RVs, or boats

– credit, lease, and other financial and payment agreements

– birth certificates, naturalization papers, and Social Security cards

– marriage license/divorce papers and child custody papers

– passports and military papers (if you need these regularly, you could place the originals in your fireproof box and a copy in your safe deposit box)

– appraisals of expensive jewelry and heirlooms

– certificates for stocks, bonds, and other investments and retirement accounts trust agreements

– living wills, powers of attorney, and health care powers of attorney insurance policies

– home improvement records

– household inventory documentation

– a copy of your will

Choose an out-of-town contact. Ask an out-of-town friend or relative to be the point of contact for your family, and make sure everyone in your family has the information.

After some emergencies, it can be easier to make a long distance call than a local one.

Update all your information. Review the contents of your household inventory, your fireproof box, safe deposit box, and the information for your out-of-town contact at least once a year.