amoeba's Account Talk

[Boghie]

Amoeba,

What is the highest monthly expense you have?
Have you broken out your monthly expenditures in something like Quicken?

Mine is taxes. And, I ain't rich. Kinda hidden. Taken out before I have a chance to see ‘em. All together, about 33% of all my spending. This rich guy 'owns' a condominium, 'owns' a CIVIC, and has a gubmint job. Rich beyond belief.:nuts:

Increasing the tax burden of folks living off dividends is a grand and glorious thing. Your grandmother will love it. She will get the opportunity to reduce her after-tax dividend income by 10% - 20%.

Increasing tax on investing will do great things for your investment account. Increasing the trading cost by 10% will definitely boost the market your TSP depends on. But then, maybe Bill Gates invests in a different S&P 500 index fund than you do:nuts:

 

[amoeba]

I could take you to task on your last sentence but I won't - maybe some day you'll be rich.

If richness was based on buying and holding, you'd be a millionaire. As it is, you've made nothing for the last 10 years. I can live with my 30+ IFT's per year, take my 1/2 - 3/4% per month and no years in the red, and not lose any sleep over it.:cheesy:

Taxes generally, I pay alot of them, Boghie. Taxes on unearned income such as cap gains, selling houses? Nope, don't do that. Anything I want to invest goes into the TSP and roth-IRA and the rest I spend, while maintaining a moderate amount of mad cash for rainy days and such.

 

[Boghie]

The $250/500 thousand thang is a lifetime benefit and requires a significant residency; it really doesn't come into play for flippers and speculators.

This benefit is intended to ease the process for homeowners to move up and buy a bigger house as their needs increase. It is also useful for empty nesters readying themselves for blissful retirement. They can downsize and pocket the gains toward a retirement 'account'. As normal, lots of Baby Boomers locked into that thought and recently got hammered. Anyway, not too many folks (especially flippers) are able to use this benefit now – and, probably for the next decade+.

Also, the capital gains on a home are taxed at 25% Federal and an additional ~12.5% for Kalefornea. Thus, if someone actually makes a capital gain on a primary house sale of $250,000 in this real estate environment he/she will pay $93,750 in direct taxes. Additional taxes will be ‘recovered’ for any tax write-offs made on the property (depreciation). Grandma – who bought her house in 1971 – and sold it yesterday to avoid the ‘Alpo Meal Deal’ plan would have almost another $100,000 less to eat on under your plan.

Do you know how losses are treated in unearned income – like mutual fund, stock, and bond sales? When you have a gain you are taxed fully on the gain. When you have a loss you are limited to a $3,000 per year write off. So, let us postulate that BT had a 50% ($250,000) gain last year in his taxable account. Upon selling he owes Uncle Sam $37,500 right now. Conversely, had he sold everything he had on March 9, 2009 and lost $250,000 he could only write off $3,000 against income for the next 83+ years. Writing off $3,000 saves you a massive $1,000 in Federal taxes per year in most middle class brackets. For we unlucky Kaliforneans add another 10% in tax and nothing extra for the write-off. What a joy!!!

Finally, Birch will pay taxes on the gains. There is a nice balance point right now. It seems worthwhile to sell and pay the tax. Increase the tax and there will be a significant reduction in selling. There will also be a significant reduction in buying as investors factor in the tax liability. The proposed dividend tax adjustment will promise even worse – resulting in folks wanting fewer dividends (leading to ENRON price appreciation gaming and corporations jiggering their books to show less taxable profit). Thus, a significant reduction in tax revenue. See Kalefornea.

 

[amoeba]

no limit on $250/500K real estate taxfree boondoggle

The $250/500 thousand thang is a lifetime benefit and requires a significant residency; it really doesn't come into play for flippers and speculators.
.

A couple things:

1. I believe you are mistaken about that; it is not a lifetime benefit; you can do it every two years; once for each member of a married couple;

see http://www.gibbons-realty.com/realestatetax.html

for example

2. Birchtree and the buy-and-hold myth. If his other investments are like his TSP; Birchtree is paying no taxes because he has no capital gains. The 3-year member records here show him 100% in equities, with the exception of 6 weeks, at 5% in G-fund, and that only recently.

He got his clock cleaned in 2008 to the tune of -40%, and my guess, and Birchtree can chime in, is that he rode the dot-com and post-9/11 crash down to the bottom. He ran his crank-case dry three times in the last decade.

Not me. I did ride it down in 2000-1 from the peak (I don't even wanna think about it, but it was 1,500+) down to 1,249. Been in mostly F-fund and G-fund since. I suppose if you were to equate that to S&P points, it would be something like 1,600. With no risk.....sure, there are good years - and days - in the market, but the buy and hold days are gone, out the door, a decade + ago.

3. I'm not in favor of the health-care plan, or tax imbalances. But the existing flat 15% cap gains tax is the ultimate free lunch, and the $3K limit is the offset to that free lunch.

In other words, there is no such thing as a free lunch; especially when the market isn't going anywhere for a decade. But if it goes up, you get a free lunch.

The effect of the imbalance (i.e., in cap losses, vs. gains), has the effect of increasing the buy-and-hold mentality; nothing except a minor loss is worth cashing out on. So if you hold stock, and have losses (like Birchtree, for example), you better hope that this doesn't change, because if it does - none of those buy-and-holders-I wanna-sell-now-ers will pay any income tax for the next 5 years, drainin the treasury.

 

[Birchtree]

You've got Betula papyrifera chuckling so much that leaves are falling early.

 

[Handballer]

If you mean increasing the capital gains tax rate (from 15%), it's ridiculously low, and Obama is an inflator because his attempt to increase it to pay for universal health care won't pass due to special interest by people with lots of money. I think that's already priced in.

What is not priced in is some other, non-Obama-related, concensus which would change the rate - Obama would take this to 23.8%, but someone else might go lower, or higher.

It wouldn't apply to anyone until their unearned income exceeds $250,000 in a given tax year, so if that's middle class, things have changed.

I personally don't think it will change anything....because whatever Obama succeeds in.....could be whipped around again with the next administration. So If anything like this passes - the sellers would turn into temporary buy-and-holders-till-Obama-is-outters....which would inflate stocks further.

What Obama may do, is permanently get rid of the home-seller tax write-offs of 250-500K, or whatever they are....which....would have the effect of subtracting about $50-75K from the after tax net gain of such sales. This would be a good time to make such a change, with the real estate market flat.

I'm all for more taxes on rich people who don't pay enough.

Define rich people.

 

[Birchtree]

Buddy - check this out. Feb. 5th I was at ranking #200 with a -4.90%. You were at ranking #38 with a +2.00%. Because of my extraordinary buy and hold strategy I'm now at #84 and +4.84% and you are at #187 with what +2.25%. I suspect that JTH will blow your doors within the next eight trading days. Enjoy that 100% G fund - a sensable approach when there is so much fear. I made a 7.04 point gain on my CXG today - should I take my multithousand dollar profit now or hold out for more gains? Inquiring minds want to know.

 

[amoeba]

Birchtree is eating my shortz

Buddy - check this out. Feb. 5th I was at ranking #200 with a -4.90%. You were at ranking #38 with a +2.00%. Because of my extraordinary buy and hold strategy I'm now at #84 and +4.84% and you are at #187 with what +2.25%. I suspect that JTH will blow your doors within the next eight trading days. Enjoy that 100% G fund - a sensable approach when there is so much fear. I made a 7.04 point gain on my CXG today - should I take my multithousand dollar profit now or hold out for more gains? Inquiring minds want to know.

You made nothing in the last 3 years because you were 100% in equities. You are eating my shortz, not the other way round. Whether you also made nothing in the whole last decade, like the C fund, I don't know. I do know that I did.


And there is no CXG as a TSP option, so no comment

 

[Elgallo]

Sometimes its about building the base nothing more. If you are on the Lily Pad that's not happening. You are buying equities (CSI) aren't you?

 

[amoeba]

what's different now.

Sometimes its about building the base nothing more. If you are on the Lily Pad that's not happening. You are buying equities (CSI) aren't you?

If you are in C-fund in the last decade, you went in reverse. If it got up to 1,600 this year, I'd still be ahead of that.

What's different about times now is the government intervention reaching extreme proportions. Any form of prediction or instinct goes out the window because nobody can tell what sort of stimulus or bailout will come up tomorrow.

Will this continue? For how long? I don't know. But the effect is complacency in an economic environment of high unemployment, overpriced housing, low interet rates, and people living off the dole.

 

[Boghie]

Amoeba,

Have you noted the trend line in the 'G Fund'?

2000 6.42
2001 5.39
2002 5.00
2003 4.11
2004 4.30
2005 4.49
2006 4.93
2007 4.87
2008 3.75
2009 2.97​

Here is inflation:

2000 3.38%
2001 2.83%
2002 1.59%
2003 2.27%
2004 2.68%
2005 3.39%
2006 3.24%
2007 2.85%
2008 3.85%
2009 -0.34%​

We are deflating - thus, the 'G Fund' return is shrinking. Inflation will increase the return. However, you are looking at gaining a point or two over inflation at best. When the Feds got to pay back the Social Security notes my guess is that inflation will mysteriously vanish.:cheesy:

Anyway, taking a 10 year time span that started at the end of a market boom and ended at a market crash is a bit deceptive. True, but...

If you extend it to fifteen years than the 'C Fund' whomps the 'G Fund'. Same for twenty years. Same for five years. Mix in a little 'S Fund' and 'I Fund' action and BT is eating Filet Mignon. I've got some stuck in my teeth right now. Yummy

Also, just a side note: The 'G Fund' is the Social Security 'trust fund' account - it is the return of the Social Security investment. That is, the IOU interest for the use of the 'lock box' assets paid by the Federal Government to the Social Security account. It is going broke because it is NOT inflation adjusted. It is adjusted to wage inflation which is generally larger than inflation. Thus, the Federal Government is promising a larger annual return than they take in. Thus, it is going broke. Also, why folks on Social Security will see NO cost of living expenses while the 'Great Recession' is in full bloom.

 

[amoeba]

Birchtree is eating cardboard

Amoeba,

Have you noted the trend line in the 'G Fund'?

If you extend it to fifteen years than the 'C Fund' whomps the 'G Fund'. Same for twenty years. Same for five years. Mix in a little 'S Fund' and 'I Fund' action and BT is eating Filet Mignon. I've got some stuck in my teeth right now. Yummy ​

QUOTE]


Look Boghie - I'm not advocating holding G fund like Birchtree holds C. I plan to go back in, when I feel the circumstances warrant. But Birch is not eating anything but paper losses. Make that cardboard.

5-years ago, Ummm, better check your charts. The S&P, after peaking a few weeks earlier at 1,230, dipped to 1,171 (on 3/21/05). We aren't there.

As far as 15 or 20 years ago, all that shows is that the preceeding period of abnormal P/E inflation did not continue.

The other thing about money 15 or 20 years ago, and I think I stated this, is, guess what? I was 100% in C fund 15-20 years ago. I got out in a big way just after the dot-com crash. So what the flip is everyone thinking about the current market that makes it a buy-and-hold? You made money 15-20 years ago, for a 5 year period, and that justified you holding for another 10 years to make nothing?

Not me.

And by the way, I do agree with your analysis of the G-fund return, and that is yet one more reason (low interest rates), why equities are inflated.

As for the mid-month prediction - the jury is still out there. You are looking somewhat better right now, but it could be a wash. It does not look like the rest of my life was determined by the last half of March 2010.

 

[Boghie]

Got Ya Amoeba,

It just kinda looked like you G/F the way BT C/S/I.

I am bailing out slowly from this thing too. Kinda seems to be a toppy market at best. Just don't think I can time anything. So I am rarely all in or all out.

However, if we start heading into a Medical Care Induced Economic Quota I will be running for the exit. At that point asset preservation is the key. However, I have to temper my political mind when managing my financial assets:toung:

 

[FAB1]

Re: Birchtree is eating my shortz

You made nothing in the last 3 years because you were 100% in equities. You are eating my shortz, not the other way round.

LOL! Shhh, he wants to forget that bit. Well my x-ordinary buynhold stratwhatever got me from like -7 to daylight. Not going to let greed
wipe me out now. One thing for sure BT will Hold even in a sinking ship
mebee you will wave bye-bye to him on the way down.

 

[Birchtree]

My tail lights are really starting to get dim as I pull further away. I'm holding #79 with a +5.30 position and will add more today and possibly over the next six trading days. There is a lot of G/F traffic up front which clears the route. Mack-Daddy got out for about two days and went right back to the S fund - that's a smart move in a bull market. See you in April my friend.

 

[FAB1]

My tail lights are really starting to get dim as I pull further away

That happens when ya get older, stuffs get dimmer... you forget your Head from your Tail - haw haw

 

[FAB1]

Oh I am not completely out - if stocks fall and buyers run to Bonds, I will be there to take profits.

 

[amoeba]

well - it's looking better for birchtree and boghie, but we are talking 20 points (1,170) vs. my bail at 1,150. If 3/30/10 was the top of the market and there is to be no other buying opportunity this year....well...then my bet was off.

I suspect, now, that much is building into the 4/2/10 jobs report expectation of +200K; I will see how I feel about that...like everything else....it is clouded over by stimuli....but people see positive numbers and think something is different, so, it could be a big move.

Then again, late buyers on 4/1 may be suckers, and any sharp rally could be sold into.

 

[amoeba]

just a quick update: market appears to be heading no-where this week; pops and drops; perhaps sovereign wealth fund day trading in a light volume environment; who knows?

Boghie/Birch are making me just nibble at my words (that is, my expecation of S&P under 1,150 by month's end); and then again - month is not over yet. Not so bad a March for someone like me, who never likes to spend a day in the red.

 

[amoeba]

Another flat day on light trading:

It will be hard to make much sense out of the next jobs report; expected by most to be in the ~200K range; it will have to be analyzed to factor out temporary census hires, returns from snowstorms, and stimulus-related hires, to see what is really happening.

I have no idea what it the number will come in at; or how the market will react....job and housing markets remain poor here out west. Pockets of affluence remain, but that (i.e., not everybody in a breadline) isn't a good barometer imo.

I actually think the big move will be next monday.