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Volume 2: Issue 10 | Date: December 5, 2018

PRIVATE CLIENT NEWSLETTER

You are receiving this letter because you are either a high-net-worth client of Blackburne & Sons Realty Capital Corporation (since 1980) or you once applied for a commercial real estate loan of $1 million or more using C-Loans.com or CommercialMortgage.com. Blackburne & Sons and C-Loans, Inc. are sister companies.

Today we’ll discuss the reason why stocks fell by 799 points yesterday. We have lots of cute, clean jokes, some funny pics, and a surprising video of a cop complaining bitterly about a vehicle driving too slowly.

Joke Du Jour

Fifty-one years ago, Herman James, a North Carolina mountain man, was drafted by the Army. On his first day in basic training, the Army issued him a comb. That afternoon the Army barber sheared off all his hair. On his second day, the Army issued Herman a toothbrush. That afternoon the Army dentist yanked out three of his teeth. On the third day, the Army issued him a jock strap. The Army has been looking for Herman for 51 years.

You Are Now a Private Client of Blackburne & Sons

Please be sure to tell us when you call. "George asked me to mention that I am a Private Client of the firm.” My loan officers are trained to snap to attention. Our commercial mortgage office number is 916-338-3232. Alternatively, you can apply for a commercial real estate loan or a non-owner-occupied home loan by clicking here.

Just a Nice Walk...

Want to Speak With a Loan Officer From Blackburne & Sons?

Blackburne & Sons, our private money commercial lending company, continues to seek slightly-flawed first mortgages between $100,000 to $1.5 million on standing commercial properties nationwide.

To apply for a private money commercial loan from Blackburne & Sons, please find your favorite loan officer below:

George Blackburne

(916) 338-3232

Ext. 314

NMLS #382122

CA DRE #01873244

Alicia Gandy

(916) 338-3232

Ext. 310

NMLS #389678

CA DRE #01430908

Tom Blackburne

(916) 338-3232

Ext. 317

NMLS #1014118

CA DRE #01919403

Michael Young

(916) 338-3232

Ext. 312

NMLS #1535540

CA DRE #02012847

Love Pill Joke

A lady goes to the doctor and complains that her husband is losing interest in marital relations. The doctor gives her a pill, but warns her that it's still experimental. He tells her to slip it into his mashed potatoes at dinner, so that night, she does just that. About a week later, she’s back at the doctor, where she says, "Doc, the pill worked great! I put it in the potatoes like you said! It wasn't five minutes later that he jumped up, raked all the food and dishes onto the floor, grabbed me, ripped all my clothes off, and ravaged me right there on the table!" The doctor says, "I’m sorry, we didn’t realize the pill was that strong! The foundation will gladly pay for any damages." "Nah," she says, "that's okay. We're never going back to that restaurant anyway.”

Earn Up to 12% Interest in Your IRA or Your Kid’s College Fund

You probably have money set aside for your retirement and for the cost of college for your children and grandchildren. It shouldn't all be invested in the stock market. In California, the first trust deed investment business is huge. A recent law change - the JOBS Act - now allows accredited investors nationwide to also invest in these same first trust deeds and first mortgages. Please click here to receive investment offerings.

THE REAL REASON THE DOWN FELL BY 799 POINTS

- Today's Observation, Part 1 of 3 -

Arguably we can blame much of it on Warren Buffet. He once said on CNBC’s show, On the Money, “Consistently invest in low-cost index funds.” Now first some background:

According to Wikipedia, the term, Nifty Fifty. was an informal designation for fifty popular large-cap stocks on the New York Stock Exchange in the 1960’s and 1970’s that were widely regarded as solid buy- and-hold growth stocks, or "Blue-Chip" stocks. These fifty stocks are credited by historians with propelling the bull market of the early 1970’s.

Their subsequent crash and underperformance through the early 1980’s are an example of what may occur following a period during which many investors, influenced by a positive market sentiment, ignore fundamental stock valuation metrics. The long bear market of the 1970’s which began with the 1973–74 stock market crash and lasted until 1982 caused valuations of the Nifty Fifty to fall to low levels along with the rest of the market, with most of these stocks under-performing the broader market averages.

Note the phrase: “…influenced by a positive market sentiment, ignore fundamental stock valuation metrics.” Arguably investors have been ignoring the PE ratios of the FAANG stocks.

We are almost certainly in a bear market, but –

my $10 K-Mart crystal ball tells me that there is nothing to fear.

This is not a prelude to another big economic crash, and it might not even be an immediate prelude to a recession. The stock market just got overvalued, and the market is correcting.

Part 2 of 3 Continued below.

Oops!

Need a Commercial Real Estate Loan?

C-Loans.com is a commercial mortgage portal. It will take you just four minutes to complete your mini-app. Then C-Loans will sort through its databank of 750 commercial lenders and produce for you a custom-generated Suggested Lender List containing twenty to thirty lenders who are perfect for your particular deal. You put a check mark next to six lenders and then press, "Submit." Within minutes hungry commercial lenders will be contacting you with offers.

Vampire Joke

Patient: Doctor, I think that I've been bitten by a vampire.

Doctor: Drink this glass of water.

Patient: Will it make me better?

Doctor: No, but I'll be able to see if your neck leaks.

THE REAL REASON THE DOWN FELL BY 799 POINTS

- Today's Observation, Part 2 of 3 -

Why am I so confident that this not a prelude to another crash? Where are the malinvestments? You will recall from earlier newsletters that the Austrian School of Economics eschews blind adherence to charts, curves, ratios, and statistics. Instead, Austrians think that the beliefs and confidence of individuals are far more important. When individuals lose a boatload of money in bonehead investments (malinvestments), they change their behavior and greatly reduce their spending.

Even though the market value of the FAANG stocks (Facebook, Apple, Amazon, Netflix, and Google) soared to dangerous levels and a substantial correction is probably in process, individuals did not get totally wiped out, like those poor Albanian peasants got wiped out when those pyramid schemes swept their country in 1997, or like Americans investors got wiped out during the Dot-com Mania. Yeah, okay, FAANG stocks are likely to fall for years, but these companies aren’t going anywhere, and their stock market investors are not going to get wiped out. These are nothing but paper losses.

The All important Part 3 continued below.

The TV Show, "The Punisher" is now on Netflix, and It's Pretty Good

If You Cannot Find a Lender on C-Loans, Then Try Our 2nd Portal

We actually own another commercial mortgage portal, CommercialMortgage.com ("CMDC"). I paid $100,000 just for that domain name. Ouch. Actually it was very worth it. Anyway, CMDC is a much easier and faster commercial mortgage portal than C-Loans. In addition, CMDC enjoys over 3,000 different commercial lenders.

So why shouldn't you just always use CommercialMortgage.com? Unlike CMDC, C-Loans.com actually allows you to submit your commercial loan to dozens and dozens of commercial lenders, six lenders at a time. But if C-Loans doesn't produce just the right lender, then you should move on to CommercialMortgage.com. And best of all, both our our commercial mortgage portals are 100% free.

In Indy, Meijer's Delivers Groceries the Same Day to Our Door

Don’t Be Afraid of 7% to 12% First Trust Deeds. We Have Been Selling Them For Almost 40 Years

Blackburne & Sons Realty Capital Corporation was founded way back in 1980. George Blackburne III is an attorney, licensed in both California and Indiana. If you can net 9% interest, you can almost live off your interest (assuming you have a reasonable amount of capital). Important note: If you reside outside of California, you must be an accredited investor. Please click here to receive investment offerings.

Turkey Fact

Turkeys have heart attacks. When the Air Force was conducting test runs and breaking the sound barrier, fields of turkeys would drop dead. (Poor birds)

True story: The Blackburne family once saw a rafter (herd) of 300 huge Tom turkeys run across a dark road and into our headlights. It was Thanksgiving, and these birds were huge and fat. They must have escaped from a truck or a farm.

Here's Why You Want to Stay Close to Blackburne & Sons

Founded in 1980, Blackburne & Sons is an old-time syndicator. There are very few of us left. The Tax Reform Act of 1986 pretty much nuked the whole syndication industry off the face of the Earth. Because you know a syndicator, you now have access to some special money.

If you need a fix and flip loan, a buy-to-rent loan, a bridge loan, or even a permanent loan on, say, your single-wide trailer park in Georgia, we'll make you a private money loan. We've been syndicating hard money loans for 38 years.

If you have some dough set aside for your kid's college, and you want to be extra careful with it, we'll put you into a first trust deed investment (6% to 9% yields) on, say, a nice 8-unit apartment building in San Jose, California.

Let's suppose you are richer than Crassus, and you want to speculate in 11% and 12% first trust deeds. We've got them.

Do you find yields of even 11% to 12% too tame? Want a chance to earn 16% or 17%? We put together syndicates to make preferred equity investments.

Are you a wise investor? We put together syndicates to buy investment properties for all cash. (This strategy has my strongest recommendation.) Because you would own the property free and clear, you should be able to weather just about any recession. Right now we are buying industrial buildings close to downtowns in big California cities.

We have not yet raised equity capital for a developer, but if someone brought us a development deal on a small, multi-tenant industrial building located within a mile of downtown of a large California city, we would definitely take a look at it.

Do you own any first mortgage notes? Want to sell a note at a discount? Better yet, why not simply borrow against it? This is called a hypothecation, and we do 'em.

Please be very wise and play close attention to the following:

Because every loan we make is a new syndicate (as opposed to a fund investment), Blackburne & Sons is always in the market.

When the stock market has fallen by 40%, when real estate values are falling like a knife, and when your own bank is too terrified to lend you a dime, Blackburne & Sons always has a group of savvy investors willing to lend - admittedly at a price - when blood is running in the streets. We are one of a tiny handful of lenders who remained in the market, making loans, every single day of the Great Recession.

So stick close to us. Syndicators are pretty rare, and now you know one.

So True!

THE REAL REASON THE DOWN FELL BY 799 POINTS

- Today's Observation, Part 3 of 3 -

So how did the FAANG stocks get so overvalued?

The problem lies with the way that S&P 500 index funds are structured. When a new dollar enters a S&P 500 index fund, that dollar is invested proportionately based on the market cap of a particular stock, divided by the total capitalization of all of the stocks in the S&P 500. As the market capitalization of the FAANG stocks started to increase, a larger percentage of every new dollar entering an S&P 500 index fund was poured into these FAANG stocks. This drove up the price per share of these stocks and made their market capitalization climb even higher. As Messala said in the original movie, Ben Hur, “It goes on, Judah.” Until it didn’t. The smart money is now pouring out of FAANG stocks.

The similarity between the Nifty Fifty stocks and the FAANG stocks is, to me, remarkable. “What has been will be again, what has been done will be done again; there is nothing new under the sun.” -- Ecclesiastes. Mark Twain said it slightly differently, “History doesn’t repeat itself, but it sort of rhymes.” It is important to note that the Nifty Fifty stocks underperformed the stock market for a decade.

You need to get out of your FAANG stocks and your S&P 500 index funds immediately. You will recall that I sold all of the stocks in my company’s pension plan and my personal IRA 90 days ago. Because FAANG stocks make up so large of a percentage of S&P 500 index funds, a five percent decline in the price of a FAANG stock is going to have a disproportionate effect on the return and value of such index funds. And because S&P 500 index funds have performed so well for individual investors, they are going to be reluctant to abandon them. The smart money will therefore get out of FAANG stocks first, followed by the smarter investors in these index funds, and followed lastly by the average investor, who will bear the brunt of the losses.

The economy, however, remains strong. I do NOT see another financial crisis.

Dog Joke

A blonde and her husband are lying in bed listening to the next door neighbor's dog. It has been in the backyard barking for hours and hours. The blonde jumps up out of bed and says, "I've had enough of this.” She goes downstairs. She finally comes back up to bed and her husband says, "The dog is still barking, what have you been doing?" The blonde says, "I put the dog in our backyard...let's see how THEY like it!”

Sweet Apartment Loan Program for "A" Deals

You're probably used to thinking of Blackburne & Sons as a subprime commercial lender, but since our acquisition of CommercialMortgage.com (I paid more than a house), some of the nation's largest commercial mortgage investors are giving us wonderful opportunities. Please be sure to check out our great new apartment program.

To apply for an apartment loan from Blackburne & Sons, please find your favorite loan officer below: