Monday, 30 January 2012

I have a split biking personality

The weekend just passed I have got my bike back – it is now repaired with many upgrades from its initial buying specification.

As I have rebuilt my bike over the last month or so, I have noticed that I am becoming more and more obsessed with the weight of my bike. This has not taken on total insanity levels – for example I have bought a good pair of Zipp drop down bars (about 260g) – why would I want to spend £200 more to save 20g and buy carbon handlebars? But despite these sensible choices weight is becoming more and more of a factor in my decision making. The bike shop (without me asking) has told me that the weight of my bike dropped from 11kg to 9kg overall, this is not super light by any stretch of the imagination (the frame is aluminium with carbon forks) it still represents a reasonable weight and quality for a fast commuter bike. When I add the drop down bars I expect this will save about 300g – 400g as well.

I have bought a lighter wheels / cassette / chain / chain-set / pedals – these are justifiable decisions – I went for the Sram Rival or Force components. I am not crazy or rich enough to go and blast my money on the Sram Red bits. Besides I think there is a very serious decline in bang for the buck you get as you move up the components price table. I felt that Apex (which the bike was primarily fitted out with) was good but I prefer the extra quality and slightly less weight of the Rival – I will only get Force for the chain-set, front mech and shifters.

I realised that I am becoming weight obsessed though when I got the angle grinder and hacksaw out over the weekend in an attempt to make my own bike stand for my garage at home. My reasoning for doing this? Well if I build a bike stand, then I can take the kick stand off my bike. The way I figured it out was that removing the kick stand, lighter pedals and my new wheels, I will make the most significant weight savings at the cheapest cost (in the case of the bike stand which I am mostly making from scraps the cost is nothing) I was going to buy a cheap stand but I looked at the reviews and they all said what was on offer was awful and I have no desire to spend £80 on a decent item!

So where is all this leading me? Well when I first got my bike there followed a period of gadget buying – all of these little items ending up on the bike – the weight increased, nothing dramatic, but bit by bit it got heavier. So there then followed a period of stripping off – pointless reflectors, lock holders went. Then as I replaced things like the saddle the weight came down a bit (comfort was still the top priority)! Nowadays though I am actively thinking about weight as well as quality when I buy something – I look to see how much it weighs – price point is still the top priority and quality even more so.

Evans has proved invaluable in this process, especially a great Salesman called James in their London Bridge store – he has taught me things about quality that would never occur to me and fortunately he also realises that I am not going to be totally crazy about weight in my buying choices. Yet there still remains the fact that I have replace my pedals for something lighter and I have got rid of my kick stand. I would like to point out that the light wheels and tyres were driven by me winning the gift voucher – otherwise the old ones would have remained for now.

But I am not really a racer boy – yes I like to move on at a good pace and whilst not enjoying being overtaken whilst commuting in (I do still feel a little miffed when it happens but I am not going to kill myself trying to overtake them again). Whilst I am on this point has anyone else noticed that Brompton bike owners really hate being overtaken? What is it with them is their some sort of small bike syndrome yet to be discovered?

But I also like tootling along on my bike, taking in the scenery and generally being unstressed. This does not gel with my new bike setup (and especially not with my further plans with respect to a new frame). Whilst trying to analyse myself – I have come to the conclusion that I am a person of extremes. Some days I just love to bomb into work – build up a real sweat and feel like I have had a thorough workout, other days I just want to amble along. So here is the problem – can I amble when I am on a “go fast” bike? Let’s be honest here – an older guy on a carbon fibre steed cannot get away with ambling along – people are going to think – look at that old guy, money wasted on a good bike that he is not fit enough to use. If I was young and healthy looking then people would think “look at that guy, he could really crack on if he wanted to on that bike – but he is a sensitive soul and is taking in his locale and the scenery – either that or he is recovering from a 400 mile mountain race”.

Oh the confusion of it all! What am I going to do when I want to amble? Nothing else for it but I am going to have to get some 2nd hand “Dutch” bike for those days, trouble is that is going to mean even more expense (money, given that I am saving up for  a “go fast” bike that I just don’t have (nor given the cost of components that will need replacing from time to time, that I am not sure I will ever have). What I spend must at least be realistic with all of life’s other costs. The truth of the matter is though that I want a go faster bike more than I want a tootle around bike – so it is just going to have to take priority.

Another worrying aspect is – what if I get a tootle around bike and then start thinking about how I want to make it go faster (a Q bike if you will) or is it called a Z bike, I can never remember?

Now we get back to our friend the Brompton bike owner – is this his problem and why he has to beat everyone, is it because he is on what is conventionally seen as a slow bike and he feels the need to prove his own personal athleticism by beating a person on a grown up bike and therefore showing what an exceptional dude he is?  

Now that my bike is back and all fixed up and all go faster, I have firstly noted something very fundamental that improves speed and distanced travelled more than everything else! It turns out it is not carbon fibre noodles but is in fact the rider himself that makes the biggest difference. Because I have been out of the saddle so much in the past 3 months, with my broken ribs and injuries from the crash; I noticed something very interesting as I tried to ride the bike back the 800 meters from the bike shop – I was very slow and very unfit (and still in pain)! This also offers an additional problem for me when I review the new parts – how can I compare them to the old one when I myself am so below par? So rather than rush out reviews on new parts I am going to take my time – firstly because of that the reviews will be insightful and secondly because I cannot make an real judgement on the parts until I can compare them on an equal personal fitness level to where I was with the old parts.

Thursday, 26 January 2012

Big House Price Fall- comming soon - here's why.

I am still injured from when the car hit me – back and neck pain is still stopping me having a reasonable night’s sleep. Additionally given that my bike is not yet back from the repairers there is basically nothing I can write about of value (do I ever) about cycling (other than complaining about lack of cycle lanes but I am not a fan of that – besides there are already enough people Blogging on that topic). So I am going to have a blast at some Economics as a diversion (be grateful my other passion is History). Please bear in mind by using cycling I was able to predict the fact that Medvedev would not run for President of Russia months before it happened!

Whilst reviewing my list of Twitter followers – I noticed one of my favourites @freakonomics Given that I was an investment banker for 18 years of my life (Salomon Brothers) I have always had an interest in Economics – not the  boring bread and butter FX / Interest Rates but in searching for a hidden key into how and why people act and think in certain ways. To me this has always been an added and valuable tool in predicting market movements (and profitable I may add).

That’s the intro over – now why do I think house prices are due to come down more significantly over the next year or two? Let’s be honest there is always some doom-sayer coming out with such a line on a fairly regular basis. That not my style – my pet dog could have predicted the recent decline with all the macro-economic events occurring (seemingly daily). But in my opinion we have now reach a significant tipping point that is going to remove the whole foundation of the current market. The interesting thing to me is what was that tipping point and how will it alter some previous market conceptions.

Let’s look at the recent history; despite a raft of bad news and poor lending conditions, the housing market still seems to be carrying on in a reasonably solid way and to be honest no really reflecting economic statistics, so why is this? Well there are a number of factors – simple things such as the intransigence of sellers to move their prices too low and maybe move into negative equity. More importantly a large amount of support has been put into the housing market (particularly the lower end) by “buy to let” buyers. This market has also been artificially inflated by the current low interest rates that don’t look like rising significantly for the foreseeable future. Finally there seems to be an unending demand that only grows daily this is because social housing is at a low, and for many other reasons such as more people living alone or mass immigration.

When other markets dropping, there is currently few reasonably safe areas to invest in, housing and gold being the obvious exception. To understand this you have to think about the average Joe on the street – not for him a Bloomberg Terminal firing a raft of statistics. His job does not involve constant chats with fellow market professionals about the nuances of the market about a stock that is going to outperform the market as they have just completed R and D on a major new killer product. He will glance at the markets in the middle of his daily free paper and only be aware of the headlines. In the UK, property has always had a soft spot in small investors hearts – and why not. Despite everything, prices rise in general and you can earn income from renting out the property and if worse comes to worse you will always have a roof over your head.

The buy to let market has now taken over from Social Housing. The Government now builds less housing and relies on private investors to buy and lease their properties. Many landlords choose to lease to the Social Housing sector – people renting in this sector often offer two major benefits; firstly they have their rent is paid by the Government (still a triple A) and secondly tenants tend to be less fussy, after all the house is free for them. With careful management of your residents you can weed out undesirables and find yourself on a nice little earner – house prices may vary but over time they are bound to rise, and all the time you have your debt (mortgage) paid for you by the rental fees, meaning you should make some income on it as well.

Now we come to the reason why this is all going to fall apart and look at the effects this could have.

The Government has recently put in place a housing benefit cap as follows:

£250 for a one-bedroom property  per week
£290 for a two-bedroom property per week
£340 for a three-bedroom property per week
£400 for a four-bedroom property per week

All in all, unless you are very liberally minded, not to low. But this is below the amount being paid to quite a large number (nice and vague of me) of Landlords currently, especially in places like London where rents are higher.

“Buy to Let” is a very simple calculation – no Black and Scholes or Newton Raphson needed for this. How much have you borrowed to buy the house multiplied by the mortgage rate then subtract that from the rent. As long as rent is greater than mortgage payment all is bearable maybe not fantastic income but there is no way you are going to pull out due to the long term benefits (owning the house outright in 25 years’ time and therefore a pension in place) unless that is, it starts to drain your monthly income.

Once the scenario is reached of a negative impact on the landlords monthly income then the they are going to think seriously about selling up, even if the landlord can take the pain at the beginning, others will not be able to, they will sell, then as the housing market becomes a buyers’ market and prices inevitably drop the landlord will think very seriously as to why you are holding onto an asset that drains their monthly income and is also decreasing in value. Surely it would be far better to get out now and buy back in when the market bottoms? The buy to let market is a business, there is no sentimental attachment to a family home. This scenario is very likely – despite the demand outlined above buyers outside the buy to let market are not able to gather enough of a deposit to enter the market. New home builders and housing associations can cover this by offering to cover the deposit which you just pay off at the end or when you sell the property. This type of offer will generally not be in the power of small private investors to offer.

Why do I think this is going to happen? Just look at the facts – the housing market is way out of kilter, to be in a situation where it costs more on a monthly basis to rent a property than to own it is just not practicable, it is there because house prices are artificially high coupled with the need for larger initial deposits.

The curious thing about this upcoming correction is that it is going to start in London. Throughout my lifetime, prices have always started to drop outside of London initially and only as the crisis worsens, work its way down to London. This time London is going to lead the way, the reason for this is simple, house prices in London are higher than the rest of the UK generally. The higher the Landlord bought the property for, the higher his mortgage payments will be and the more the housing benefit cap is likely to affect them.  

Please note that for all of the above I am not including the properties of the mega rich, as with all things related to the rich – they follow their own rules which are outside of what I have outlined above.

So here’s a question – is this a bad thing? In attempting to answer this I am going to try and remain non-political and only look at things from an economists point of view. I confess now I am a Liberal and when I say liberal I mean in the true sense. I believe that Governments are there to regulate and provide a society in which people operate within rules and generate wealth, have self-determination and the right to make errors. Housing benefit has eschewed the housing market, Governments are paying more than  what is currently a realistic market rate for property rental, expensive areas are having their prices held artificially high. If Mr X (working) wanted to move his family to live in an expensive central London location he may not be able to afford it – prices are too high for what he earns. Therefore he would make the choice to move to a cheaper area, given that wages are not exactly rising (unless you drive a tube train) more and more people would have to make this choice, eventually supply and demand would lead to Central London Landlords to reduce their rent, the market would correct and rental prices would reflect the current economic circumstances, when the Government is footing the bill this is not a situation that occurs. The landlord brings in his Social Housing tenants and price levels are maintained.

Now you will hear people in the media complaining that this will make people homeless, undoubtedly this will happen (with much press coverage) but look below the tip of the iceberg and the real benefits far outweigh this. Firstly there is the ethical question, if you are working, paying taxes and in the unsupported housing market, there will be restrictions as to where you can live, you will have to rent relative to your means not to your wants, you will have to live further out and maybe travel into work. It is understandable then that such people will feel little sympathy for a person who is having their rent paid for them out of taxes not being able to live in such a location also – especially if that person does not need to be tied to an area for work reasons (though not always the case). But there are ways for the Government to set aside a contingency budget so that those who are forced to move can do so with minimal fuss.

Once the initial teething pains and relocations (please to God this is done with sympathy and common sense) then the market will correct. House prices will come down as explained above and therefore come into the reach of more people, rentals markets will reflect economic reality and not Government Social policy, additionally the tax bill will be reduced. So for the non-landlord it is a win win situation, less tax and more sensible house prices. Maybe people will start to buy shares again and enable companies to invest in machinery and R and D to create more jobs? Come to think of this no wonder every time I hear this subject talked about on radio phone ins, it is always the Landlords ringing up and complaining!

I have never been a fan of the UK housing market – everyone is obsessed by house prices going up. In positive economic times it seems that all people do is poor their money into ever greater mortgage payments, if interest rates drop then people get bigger mortgages, never thinking they may go up again in the future – somewhere in their head they think “sure interest rates may go up but at least the value of my house will be greater” never thinking to link the fact that when interest rates go up house prices will drop – this is because people are mortgaged to the hilt and an increase in interest rates leads to a flood of people offloading houses they can no longer afford the mortgage for. The only people who have benefited where people selling mortgages.

House prices often outperform other investments by many multiples. They also, when it turns ugly, underperform at a rate of knots with income and capital gains falling in unison. To be honest if it wasn’t against my free market principles I would suggest we index link house prices – how marvellous would that be – no more over borrowing by individuals, money saved would be used on buying consumer goods and investing in shares of genuine wealth creators and no more dodgy property developers driving around town in expensive cars. We need to get back to the fact the a house should primarily be a home and not an investment, nowadays so many families seem to buy houses with the intention of using them as an investment and not a home. Even if it is an investment it is fairly pointless with only builders gaining employment, jobs they would have anyway as houses will still need to be built.

People who benefit the most from a greatly increasing property market are the developers and old people selling up to move to Spain (where they lose all their money on a dodgy Costa development that gets torn down later because it lacked proper approval) or a smaller house. The rest of the population – struggling with children and a multitude of bills just end up paying more for a larger house if they move up the ladder (think about it, an increase of 10% means you may sell you £100k house for £10k more but it is going to mean the £200k house you buy is going to cost you £20k more).

A more stable house price structure will enable people to plan for their future with far more accuracy, a house is the biggest thing that most people purchase in their life, for such a structure to suffer from such volatility is crazy, medium term financial strategies and the reduction of inflation is always talked about for the economy of a country and yet we still allow ourselves to be trapped by wild swings in prices as individuals on our houses. But it is nearly impossible to convince the average person on the street of this fact – the same person watches the news and thinks when GBP gets stronger against the USD it is only a good thing (well it is if you are an importer or going on holiday there).

So reducing Government impact on the rental market will help reduce the distortions affecting it and that may not be such a bad thing (unless you are a landlord).

Back to cycling now.

Wednesday, 18 January 2012

Thank Evans for the £250

As some may have read in my last post (though I must admit that for all the great pain and suffering I gathered very few hits) I was walloped significantly by a car back in mid-December. There are some obvious downsides to this, firstly I am still in a large amount of pain in my back and lower neck. Secondly, my bike is still at the fixing shops (though I have been told that my insurer sent them a cheque this week – so I hope everything will come together soon. Great so the bike will be working but not my body!

Anyway, the above insurance cheque has led to some interesting choices, for example my leather saddle was “grazed” down one side – now this obviously means it is less than near to its previous “nearly new” state but, it also means that I can choose if I want to use the £180 for the saddle on buying a new one or put up with the graze and spend the item on other things (upgrades).

In the crash I lost my bike computer, front light, chainset, helmet and bent the wheels - total cost around £595. Also my bike has had a recall for new front forks (production fault). Coupled with this need to repair broken bits, I also, very fortunately, won £250 from Evans bike store for the “review of the month” in December. YEAH some good news! Funnily enough it was for the Specialized Prevail helmet that I bought a couple of weeks before the accident – as a side point I think I could add some crash test data to the review now!

So all in all the gives me £850 that I HAVE to spend on my bike (I am not allowed to spend it on anything else). This coupled with a little of my own cash has given me a nice list of upgrades which I will review over the coming months namely:

       1) Sram Rival Chainset
    2) Sram Rival Rear Derailleur
    3) Sram Rival brakes
    4) Mavic Ksyrium Equipe 2011 Wheel Set  
    5) Lezyne LED Super Drive 2012 Light
    6) Continental Grand Prix 4-Season Tyres

Additionally an improved chain and Cassette – but really can anyone write about these things with any authority?

With a few thousand miles of experience of my old parts I hope that the reviews will be more informative than before and hopefully offer some insights for the average cyclist looking to make reasonable upgrades, that are still price realistic – it is going to be interesting to see how much of a difference I do or don’t notice.

In addition to these changes I have also changed the size of the front chainset to 53/39 from 50/34 and I have kept the same rear cassette sizes (I have no intention of climbing the Alps so I don’t think I am going to miss those really low gears. Also I have changed my crank length from 172.5 mm to 170mm. I did all the reading and body measurements on the right length to have, to be honest I think I was left more confused than when I started – in the end I decided that on average 170mm was the recommended and also I felt I had a little dead space in my leg turning between 9 and 12 O’clock – therefore I felt that odds on 170mm was worth the risk – we shall see.

I also have long-term plans to firstly change my bike to drop down handle bars and get a properly measured stem, to this I will add Sram Force shifters and then finally I will save my pennies for a new frame. All the old parts where possible will go on building a bike for my son, I have always been one of those people that buy generic at the start, but after gathering knowledge always build the second version my own to my special preferences I also hope that I can build a bike with my son that he will like and want to use more often.

So bearing in mind that I got £250 from Evans for best review of the month – you know you should come back here for more insightful reviews! And once again thanks Evans for the free £250 upgrade.

Friday, 13 January 2012

Well that hurt – a LOT!

After a six week break from cycling from a broken rib I had got back on my bike – I had bought a new helmet and was starting to get back into the rhythm of daily cycling, dare I say it but I was starting to get the feel for it again, my bones were no longer aching and my fitness levels were starting to pick up again.

As I cycled into work on the 22nd of December life was starting to get back into its natural path – work had many priorities that I needed to work through but generally all was well with the world again. That was before Mr dumb ass driver decided to try and have a go at killing me for no other reason than to save a couple of seconds in his inconsequential drab and pointless life (yep I like this person a lot). For reasons that shall become clearer later, I cannot go into to many details – but I hope the following will primarily help me vent my rage but additionally let me assist you my fellow rider in how to deal with the idiot car driver that tries to kill us from time to time!
Because I need to let you understand what happened, there now follows a brief description of the attempt on my life by Mr X – the careless driver who is the villain of this post. I am going to briefly describe the accident with all the name etc. removed. This is because the police are taking the driver to court and I would rather not prejudice the proceedings in any way.

Please see following diagram and description

I was travelling on the main road (xxx Road) which is a dual carriageway. I was in the in the left hand lane about 2 feet from the curb. As I was approaching the left turn to zzz road (I was continuing straight) I saw the Silver Renault Clio. He was stopped on the other side of the road waiting to turn right into zzz road. At about 10 – 15 meters from the entrance to zzz road I saw that the Renault was still stationary. As he had not moved and I noticed a silver people carrier coming out of zzz road looking to join the main road, the car on the side road now became my prime concern in case it pulled out in front of me (at this time I was doing about 20 mph). The people carrier stopped, as I passed the entrance to zzz road I was hit on my right side by the Renault. I was catapulted forward over the handlebars and ended up in the road – I continued in the same direction I was travelling in through the air, I managed to turn my body so the back of my shoulder would hit the ground first – I figured this was safest as I was wearing a backpack and had a helmet on to protect my head. The bike went under the front of the Renault, it had it me at a 90 degree angle at the entrance to zzz road

The driver of the Renault tried to go forward after the accident but had to get out and move my bike as it was in the way – he moved my bike to the side of the road. I am not sure how long I was on the ground for (or if I was knocked out)  but I got up and asked (ok I shouted) the driver asking why he had not seen me. 

I was in a lot of pain especially in my shoulder and it felt like it was broken – also I had a dead left leg. Although in shock I was determined to get the driver details as previously I had been hit by a driver and they had tried to make a run for it.

I took the basic driver details of his name and phone number and registration number, I was also given the details of the witness who had also been riding a bike and was travelling in the same direction as the driver of the Renault. My main concern though was to get myself to the local A and E and because I knew I was not carrying a lock for my bike I wanted to get my wife to come and pick me up and take me there and also collect the bike at the same time.

The lessons to be learned

Firstly – this was one of the most impossible of all accidents to predict – I am more than aware of danger spots to look for and I had with all reasonable common sense removed the driver who hit me as a threat (he was stopped and was to all intents and purposes waiting for me).

Personal I assume the reason why he hit me was because he thought I was “only” a bike and was probably only travelling at about 5 to 10 mph – he thought he had time to cut across the road into his turning before I was there – had I been in a car he would not have taken the chance – but seeing as it was only a cyclist he thought it was OK. The driver gave some excuse that he thought I had stopped and that is why he set off – I mean really! I was still accelerating away from traffic lights I had been stopped at 50 meters earlier, I had stopped accelerating and was covering my brakes in case the car pulled out from the left but I was still moving along at about 20mph. All the above took place over a 3 or 4 second period.

The truth is that you are going to end up focusing on the most obvious danger and it just (and still) doesn’t seem possible that the guy was going to make a charge for turning when he had clearly seen me. The sad truth is he was arrogant and thought he was better because he was in a car (even a crap one like he was driving).

I had no way to avoid the crash if I had turned left I would have gone head first into the car waiting to come out of the side road. But at least I kept my senses about me after he hit me and deliberately spun to hit the ground on my back as I knew I had a rucksack on. I am just glad my feet came out of the pedals quite easily. 

Anyway I had, despite the pain I was in (and am still in) tried to be reasonable with the driver – I asked him to give me details of his insurance so I could contact them and sort out the damage to my bike and clothing (and some very obvious medical attention I was going to be needing for next couple of months. Once again this guy came up trumps – despite my repeated calls (which he ignored) he refused to give me his insurance details. He merely sent me a text saying “he had informed his insurance company of the MINOR incident and it was up to me to deal with it”.

Well this was the final straw and what can only be described as a monumental error on his behalf. Sadly for him – I am insured on my bike for crashes – so the next day I called them, filled out all the forms and got the LBS to quote for repairs (£595). This was all very easy to do and I was additionally told by the insurance company that I must report the accident to the police. I called the Met Police (101) and reported the incident – shortly afterwards the police contacted me again and I was informed that they would pay me a visit at home that afternoon. The police visited me that day and took the details of the accident.

Also because my bike insurance only covers the bike and not medical or clothing they told me to sign up a personal injury lawyer. And here is the fun thing, the witness to the crash was a fellow cyclist (going in the opposite direction) and he happened to work for a personal injury lawyers firm! Needless to say I asked them to represent me.

So the long and short of it is – the driver now has:

1)  An expensive bike fixing bill
2)  Another large bill for a broken helmet and damage clothing (and readers here will know I don’t buy cheap stuff)
3)  A court summons from the police for careless driving (3-9 points and a £200- £800 fine)

Funny thing was on about the 6th Jan I got a call from his insurance company (I guess he had got the summons) asking if they could sort the claim out. I felt sorry for the guy from his insurance – I explained to him what had happened and the steps I had to take. He knew full well that it was now going to be a lot more expensive for them – not only would they be receiving a bill for the items damaged and physio – but I shall also be billing him for 4 lost days of work, the skiing holiday that I was booked on for the 29/12 to the 5/1 and which was totally wasted as I couldn’t ski and for the massive amount of pain I am still in – for example the last two nights I have had a total of 1 hours sleep due to the pain.  I have severe damage to the muscle and tendons in my shoulder and totally screwed up lower neck and massive amounts of bruising all up my left leg (which makes for a great picture by the way).

At the scene of the crash I also got pictures of him – his car – the road and the very clear dry weather.

Because I have crash insurance my bike will be fixed and ready to go long before I am, and his momentary lapse in concentration (for this read arrogance) is going to cost him dearly – I really can’t see his current company being that keen to hold onto him as a client.

1)      Get insurance
2)      Get a witness
3)      Take photos
4)      Call the police
5)      Get even – if they don’t want to play nice then why should we?

See you on the roads again in a couple of months (I hope). But here's a thought - the drivers need to save a couple of seconds of his time (and by the looks of him - his time wasn't that important) he could have left my wife without a husband and my two kids without a father to help them through their early years - was it really worth the risk?

Funny things said by the driver:

1) I thought you had stopped that's why I took the turn.
2) Don't worry at least you are alive (hmmm no thanks to him)
3) It was a minor incident (yes I guess it was if you were sitting in a 1 ton metal cage with crumple zone - my crumple zone was my rucksack)