Friday, August 10, 2012

Special tomato dinner Zely And Ritz

Yesterday, Marie and I went to a special event held at Zely And Ritz restaurant where they were offering a 5 courses dinner, all with various tomatoes in them.
This was our first experience at such event and it was great. Very tasty.  The dessert was exquisite!

What was perhaps very hilarious was who ended up being seated at our grand table. It was Kellie Falk-Tillet of Drucker & Falk. Drucker and Falk is an important property management company located here in Raleigh with which we have established a business relationship with. What a small world! But I think the surprise was even stronger for Marie and Kellie themselves as they have ran into each other just last week at a Pilates class downtown Raleigh.

Just looking at their smile, it is clear the event and the food was amazing!  It is always nice to have those random encounters.


Marie's input:

Now, regarding Zely and Ritz, it is a restaurant that is in a partnership with local farmers in the area, in particular with Coon Rock farm a sustainable family farm localed in Hillsborough. The large majority of this restaurant's ingredients come from those local farms.

The dinner started with a small cup of a "tomato water" which I don't believe I've ever had before. Chef Sarig explained that he blended tomatoes and salt and let it rest for the night. This process allow the water in the tomato to separate from the pulp. He collected the water and served it in small espresso cup with two half tomato floating on top. It was so refreshing and unexpected.

The tomato water was only to prepare us for the first course which was fresh and flavorful gazpacho finished with basil oil. Every bite opened up our senses with a wonderful combination of herbs and spiciness.

The second course was a beautiful arrangement of 5 different variety of tomato (all passionately explained by the NC Tomato Man: Craig Lehoulier) served with  some fresh mozzarella cheese from the Chapel Hill Creamery drizzle with olive oil, basil and balsamic vinegar glaze. The colorful description given by Craig while eating the dish made us experience all the flavor of the different tomatoes and their subtle taste and texture.

The third course was stuffed tomatoes with ground lamb and grilled eggplant served on a bed of creamy tomato risotto. The marriage of the lamb and the eggplant was perfect for that stuffed tomato. The contrast of texture between the stuffed tomato and the creamy risotto was very pleasant.

The fourth course was a grass fed beef ribeye served with Roma tomato confit, roasted new baby potatoes, caramelized onions and grilled cherry tomatoes finished with house made ketchup. The ribeye was to perfection, tender and flavorful. All the surrounding were only adding pleasure to the beef experience.

The fifth course, like a grande finale, had the most surprising taste combination ever. It was a Sungold tomato panna cotta. The sweeteness was just right and when you expected it the least there was an incredible taste of tomato that when it reached your senses, it gave you that WOW factor. It was a fantastic, surprising and sensual experience.

They say that experiences give you more lasting happiness than material things and it's probably true. Good memories, food, people you met and had fun with can be revisited any time and feel those shared happy moment. See you again soon Zely and Ritz, and see you soon Kellie!


Friday, August 3, 2012

Inflation is a tax on capital

Imagine that once a month, an IRS agent would knock on your door and ask how much money you have in your pocket, in your drawers, hidden in your house and in your bank account. Imagine you wouldn't have the ability to hide or lie but instead could only report accurately the cash you have. Then imagine this IRS agent taking 0.5% of that amount and leaving and repeating this again the following month.
This is effectively what inflation is. At least with capital gain tax, it is only taxing us on the gains we have made and leaving us alone when no gains were made or even when a lost occurred. But with inflation, we get tax on any capital we might have, essentially on anything dominated in dollars, debt in particular. If somebody owes you money, that too gets taxed too in this process. It doesn't take long to realize that owing debt is better, as long as you don't pay for it. That's why our partners love the debt we built up for them which they don't pay for, but the property pays for. Interesting to know more? Contact us at

On another note, it is very interesting to stretch this analogy of the IRS agent knocking on your door in the case of hyperinflation such as what happened in Weimar Germany, Hungary, Zimbabwe and many other countries. When price inflation doubles the price every day, you can imagine this IRS agent knocking on your door every hour to take 5% to 10% of your income. How busy do you think you are at making sure you have as little as possible cash on you and in your bank account. In those economy, the people are spending most of their time at trying to preserve their wealth as much as possible as opposed to have the time to work on productive activities.

Saturday, July 28, 2012

Sec Rules on private investment changes from the JOBS program still debated

A few months ago, we wrote the following article below. It was about the SEC rules regarding private investment.

Here is the article:

-----------------<Article begins>---------------

A few years ago, we went to a Chinese restaurant for a Chinese friend’s birthday party. The whole group ordered several dishes that we all shared. None of those dishes are what you would see on a typical American Chinese restaurant menu, nor were those available on this restaurant’s English menu. But they were delightful, spicy and you really felt like you were travelling abroad. We really enjoyed the experience and were happy to have been introduced to this menu. Strangely, this experience is also what most investors experience today. They do not know or are barely aware of the existence of other investment menus that could be available to them.
1929 is inscribed in everyone's memory as the year of the major stock market crash described as the starting point of the great depression. Congress enacted the Securities Act of 1933 and one year later created the Security and Exchange Commission (SEC) which still exists today. What is barely known by the public is how profound an impact this Act has on their investment options today. It explains why most people are invested in either stocks traded on the exchange, mutual funds, Certificates of Deposits or Treasury bonds (and other bonds) or a combination of these instruments without learning much about any alternatives.
Before this Act, anyone who had a business plan, an investment proposal or a business venture seeking funding partners could print flyers or advertise it in the newspaper in order to attract investors. Whether it was an investment in a new business venture or a real estate development or acquisition, all investors who heard about it could review the offering and jump on the venture if they so chose. After these laws, anyone advertising an investment offering without following those rules would face large penalties and could be prosecuted, regardless of whether the investment was sound or not. The dominant social view is that this protects the investor from fraudulent offerings, and we are sure it did and still does eliminate some fraud. However, there is more to the story as it also has had some negative impacts.
Current rules and regulations require a public offering to be subject to complex and expensive proceedings. Unless the investment is for a project that is in the tens of millions of dollars, the costs for making a public offering are prohibitive. As such, they have to seek funding through a private offering and even those laws are very strict as they require the entrepreneur seeking funding to have a prior relationship with a prospective investor in order to offer an ownership stake in the project. But that’s not all. Before the investments proposal is discussed, common practice under current regulation is to have the prospective investor sign a qualification form, and often actual investment proposals are not discussed until subsequent meetings.
To help understand this, let’s go back to the example of the Chinese restaurant. To eat a dish from the special menu, you would first need to establish a relationship with the Chinese restaurant owner. The owner would have first to make you sign a qualification form stating that you are able to eat spicy food and can handle it. Then, this will allow you access to this special menu. The restaurant owner however could not advertise publicly that he or she has a special spicy menu. You could only learn this after having established this relationship.
The Securities Act of 1933 defined a new term called “Accredited Investor” which, in short is a natural person who has individual net worth or join net worth with their spouse that exceeds $1 million or earns at least $200,000 per year or the joint couple income is at least $300,000 per year. This is what that qualification form is all about and it explains why accredited investors have access to more private offerings that ordinary investors. It doesn’t prevent ordinary investors from signing the qualification form but they will have to state they are “sophisticated investor” in order to potentially be allowed into some, but not all investments, although this definition is not clear and it involves more paperwork.
As for the general public, with the SEC on watch for any fraud, people have lowered their guard as they assume that all public offerings have been and are safe. However, this can be a false sense of security, just as the Bernie Madoff and Enron cases have demonstrated. By and large, private investment offerings are where the larger gains are made. The relationship between investors and entrepreneur is closer, the investment is usually more targeted and defined and follow up is done on a regular basis and over the phone. SEC or not, investors today just as before still have to do their homework and study enough about any investment to gauge the risk versus reward that is optimal for their overall portfolio. So the question that should be asked is if perhaps existing restrictions are too high and possibly inhibiting new projects and the economy in general. Interestingly on that front, in the interest of spurring economic development, the Obama administration is pushing to reduce the restrictions as part of the JOBS Act. These changes might come as soon as June of this year and allow companies and entrepreneurs to openly solicit accredited investors. We tend to agree, private funding will help create new opportunities, grow existing businesses and create new jobs. Let’s hope this passes. The SEC will still be there to watch for fraud.
Anyone in the investment business must be aware of all these regulations. They require that we all follow a very specific path to present investments & then to manage investor participation in them. We provide and manage investment opportunities for our existing partners who do not have the time and/or resources to find, analyze, acquire and manage real estate assets. These partners might otherwise have invested in stocks, bonds or mutual funds without ever been aware of this “menu” we are presenting them.
Open your eyes, ask your friends and scan your horizon, there are other types of investments possible; you just need the right contacts.
Phil Champagne, Managing Partner at
Chad Laird, Managing Partner at, a affiliate.

-------------< End of the article>----------------
The battle over this is not over yet as this recent article by Christine Williamson of states:

SEC to meet Aug. 22 to discuss private investment marketing rules

The SEC will hold a meeting Aug. 22 to discuss rules that will eliminate the ban on general marketing and advertising by managers of private investment funds as mandated by Title II of the JOBS Act, which was enacted April 5.
An SEC announcement Tuesday did not indicate when the commission will issue rules governing how managers of private securities offerings such as hedge, private equity, real estate and real assets funds may advertise their investment vehicles.
In congressional testimony on June 28, SEC Chairwoman Mary L. Schapiro said “the commission will be in a position to act on a staff proposal in the very near future.”

Wednesday, July 18, 2012

A conversation with Chad Laird of Southwest Montana Properties

Chad Laird, Managing Partner of Southwest Montana Properties was in Raleigh in June. Phil Champagne took the opportunity to interview him so that our investment partners can better know him.
This is our first such series of video, more are coming. (And I will get some lesson from Matt Lauer until then).

Stay in touch, we will have more interviews and videos in the future.

You can also join our Facebook page at

Sen Schumer: "Get to work Mr. Bernanke" aka Print

Translation: the fight against deflation and job loss means for them:
print, print, print and more print

Monday, July 16, 2012

David Stockman - If the Fed doesn't keep printing, it's game over

There is this famous phrase: Death smiles at us all. All a man can do is smile back. From an economic view point, this could very well be valid. And a man can smile back by protecting his wealth with gold and silver and fighting the inflationary pressure with *key* real estate. By *key* we mean not any real estate, proper due diligence is critical. That's what we do for our partners.