Tue 7 Apr 2009
Cut, borrow, or tax to bridge the gap?
Categories: New Jersey Real Estate , Politics , Property TaxesFrom the Philly Inquirer:
New Jersey faces “historic” tax-revenue drop
New Jersey is facing a “historic tax-revenue collapse” that could leave the state with a $100 million deficit by the end of the next fiscal year.
That was the assessment of Budget and Finance Officer David Rosen of the nonpartisan Office of Legislative Services, who presented his findings to the Senate budget committee yesterday.
“New Jersey finds itself in the most significant revenue downturn in its modern history,” Rosen said.
Rosen projected that New Jersey would bring in $606 million less in revenue than previously anticipated by the Corzine administration from the current fiscal year through the end of the next on June 30, 2010.
If that estimate holds true, the state would be forced to make more spending cuts or increase revenue to balance the budget, as required by the state constitution.
Rosen said that only twice in the last four decades did the state’s revenue decline from one year to the next. Revenue declined 2.1 percent in fiscal 1975 and 1.9 percent in 2002, he said.
The Office of Legislative Services estimates that revenue for the current fiscal year, which ends June 30, will drop 11 percent from the previous year. For fiscal 2010, OLS projects a decrease of 3.7 percent.
Declining income, sales, and corporate tax revenues helped fuel the projections.
…
State Treasurer David Rousseau, who addressed the Senate budget committee yesterday afternoon, noted that a difference of $600 million over two years of state revenues amounted to less than 1 percent. But he acknowledged that the difference, if accurate, would affect the budget.Rousseau said the administration would adjust revenue estimates downward if warranted.
“This administration continues to work to find every dollar of savings we can, and we will not shirk our responsibility to provide additional recommendations to balance the [fiscal 2009 and 2010] budgets if further revenue reductions are warranted,” Rousseau said.
Rousseau is slated to present new revenue figures in late May, which will include critical April tax collections.
BOHICA!
From Bloomberg:
Europe’s Recession Deepens as Investment Declines
Europe’s recession deepened more than estimated in the fourth quarter after companies scaled back production and consumer spending declined.
Gross domestic product in the euro region declined 1.6 percent from the previous three months, the most in at least 13 years, the European Union’s statistics office in Luxembourg said today, revising down a March 5 estimate of a 1.5 percent contraction. Investment plunged 4 percent and household spending fell 0.3 percent. From a year earlier, GDP shrank 1.5 percent, the only full-year drop on record.
From CNBC:
Banks’ Toxic Debts Could Hit $4 Trillion: Report
Toxic debts racked up by banks and insurers could spiral to $4 trillion, new forecasts from the International Monetary Fund are set to suggest, British daily The Times reported on its website without citing sources.
The IMF said in January that it expected the deterioration in U.S.-originated assets to reach $2.2 trillion by the end of next year.
But it is understood to be looking at raising that to $3.1 trillion in its next assessment of the global economy, due to be published on April 21, the newspaper reported.
In addition, it is likely to boost that total by $900 billion for toxic assets originated in Europe and Asia, the Times said.
NJ deficit grows; savings shrink.
“Rousseau said the state will save less money from the furloughs as a result and is negotiating with public employee unions to find other ways, such as reducing overtime pay rates, to save the same amount of cash.”
http://www.courierpostonline.com/article/20090407/NEWS01/904070346&referrer=FRONTPAGECAROUSEL
From Newsday:
NYC zoos facing layoffs, but still aim to upgrade
The organization that runs New York City’s Bronx and Central Park zoos says more than 100 employees have agreed to take buyouts, but layoffs will still be necessary as the economy takes a bite out of its budget.
…
The society is trimming its payroll by $10 million. It is estimated that dozens of its 1,200 employees may lose their jobs.
Grim: Ref 5: At least they haven’t resorted to “laying off” the animals. You wouldn’t want to see what happens to a zoo in a war zone.
“Shore towns can help their small businesses by having days where beachgoers don’t need to buy tags.”
http://www.courierpostonline.com/article/20090407/OPINION/904070310/-1/newsfront2
Here’s an idea that’s DOA.
Karen,
She doesn’t always portray an accurate picture of the market, but what can you expect from a Realtor?
On her blog, she lists the following transaction:
3 Clinton St. Listed -$204,900 Colonial Sold -$225,000
This isn’t at all accurate, and might give someone the impression that a property sold for “over asking”.
The property was originally listed for $515,000 in 2007, and stayed on the market for 180 days. At that point it was foreclosed on, and taken back by the bank (REO). The bank listed the property at $294,900, where it didn’t sell. Was reduced to $204,900 over the course of 277 days, when it finally sold at $225,000. Not quite the same picture when you know the facts.
Kudos to Grim’s Center For Intellectual Alchemy (ChiFi’s Term)…..Carry on.
I received a note from [redacted, some tax service] saying I could save more than $2000 if I sign up and pay $49 for its services. Does anyone have any experience with this service? Thanks.
Some members of the current administration (and even a few almost-appointees) might be interested. Does it work with Turbo Tax?
#10 - I think they’re great!
…. oh, wait….
How about this one as a leading indicator of the housing market?
From MarketWatch:
Pier 1 fiscal Q4 loss 33C vs 16C profit
Pier 1 fiscal Q4 comparable sales down 9.7%
From the WSJ:
Homeward Rebound: Weathering the Storm With Kin
Families around the country are weathering out the recession by hunkering down with relatives and friends. It’s not just a lower-income phenomena either. The homeward bound are former white-collar and blue-collar workers who believe they might have a better chance finding work in their hometown because they know more people, who, in turn, know still more people. But with jobs scarce, that doesn’t always work, and rumors of jobs are just that. At home, though, they can at least get help with food, shelter and clothing.
Interim casino could open within a year
“In 2006, when the SugarHouse project won one of two slots licenses for Philadelphia, the partners told regulators they had $445 million in financing from a gaming unit of Merrill Lynch.”
http://www.philly.com/inquirer/breaking/news_breaking/20090406_Interim_casino_could_open_within_a_year.html
What is [redacted, some tax service]?
#13 - IIRC, Pier 1 has been struggling for some time now. I’m actually surprised they’re still around.
Humm. Cut or tax? Cut or tax. Hummm. If we cut, we do not further sour the business environment and we make a dent in the existing budget bloat. Also, once things turn around, we will have that much more surplus to pay-down the accumulated debt. Taxing, on the other hand, makes us even less competitive as a state, makes life tougher for our residents, and continues a legacy of poor fiscal management and saddles future generations with greater debt.
Clearly, this is a slam-dunk decision — tax.
Humm. Cut or tax? Cut or tax. Hummm. If we cut, we do not further sour the business environment and we make a dent in the existing budget bloat. Also, once things turn around, we will have that much more surplus to pay-down the accumulated debt. Taxing, on the other hand, makes us even less competitive as a state, makes life tougher for our residents, and continues a legacy of poor fiscal management and saddles future generations with greater debt.
Clearly, this is a slam-dunk decision — tax.
I read this crap and this dirtbag is an incediary windbag. I’m getting tired of everyone attacking the poor bankers. All they tried to do is lend money and when real estate terrorists began talking negatively about real estate, a problem was created for the poor bankers. What did they ever do to you other than try to loan you some damn money? If anyone needs to be in the streets, it’s the real estate investors who got jerked and prevented from making some more damn money.
Punch My Ticket says:
April 7, 2009 at 1:16 am
… The US is doing everything possible to avoid these awful realities, but probably the worst self-deception is the idea that everything would be okay if we could just “re-start lending.” That’s just not going to happen. There is no more capacity to service the debt we’ve already piled on. Americans borrowed too much, and the bankers who made obscene fortunes in fees and bonuses in fraudulent lending managed to leverage this unpayable debt into the greatest collective swindle the world has ever known. The swindle has sent poison into every cell of the macro socio-economic organism, and further swindles are unlikely to revive it…
Kunstler this week
This is not directed at anyone in particular, but, given the amount of money we spend on education in this state, perhaps we can agree to at least try to show that the taxpayers got something for it:
“What did they ever do to you other than try to loan you some damn money”
Lend.
Lend.
Lend.
I know that 3/4 of our elected officials and reporters seem not to know the difference between loan and lend, but can those of us here try to keep the straight?
Loan is a noun. It is what we get when someone agrees to lend, a verb, us something.
No one can “loan” us money, a car, or the shirt off their backs. They can — as are in “are able,” as as distinguished from “may,” as in permitted to — lend us any of those things.
http://www.economist.com/blogs/freeexchange/2009/04/the_current_shifts.cfm
The Current Shifts
“This is why international coordination of policy responses is so crucial. We can’t simply expect the American government to temporarily fill the economic gap left by the American consumer.
The world needs to permanently fill the economic gap Americans were never supposed to have occupied in the first place.”
Americans now need to live within their means - if everyone is sitting around waiting for the Americans to over-consume again - They may need to wait a good long while…
http://www.bloomberg.com/apps/news?pid=20601213&sid=awjJmRaGgwSI&refer=home
“California Foreclosures Jeopardize Renters as Banks Seize Homes”
Here’s a business opportunity for someone. Property manager for banks that could be making $1 billion in rents annually instead of flooding the market with foreclosures.
Cindy,
Isn’t that what people keep asking us to do — resume spending? It is an absurd notion that spending is rhe key to growth. In the short term, it may be good for corporate entities. In the long run, it is the road to poverty.
Clot - Congrats on a well-deserved win last night. UNC out-played MSU every step of the way.
(24) Absolutely Shore - I just don’t see it happening.
http://www.boston.com/community/moms/articles/2009/04/02/lets_make_a_deal/?page=1
Here’s one for you Stu -
“Let’s make a Deal”
“New Jersey faces “historic” tax-revenue drop”
This message brought to you by the Realtors of Bucks County, who remind you, We’re Not New Jersey!!!
[27] Cindy
Being Boston, I had to look.
“”People act like they just got off the cruise ship in Cancun,” said Karen Fabbri, owner of the Moxie boutique on Charles Street, who has jousted with customers trying to score discounts on items that are already 70 percent off. “The etiquette of shopping has gone out the window.”
Hum. So etiquette demands you pay what the stick says??? Maybe on tony Charles Street, where if you have to ask what the price is . . .
[29] redux
“sticker” even. (damn sesame-seed sized keys)
Nom,
It is early but, that has to be the post of the day. And it is in keeping with “the Donald’s” take on Palm Beach vs. NY.
“New Jersey faces “historic” tax-revenue drop”
Just raise taxes, what are they waiting for? NJ suckers will pay up.
In mod for reasons that escape me. Perhaps more coffee will make it clear.
20. Part of investing is risk. Or did you miss that chapter in econ 101?
(29) Nom - Don’t you think Stu will like that one? “flexible prices”
what recession? My confidence is back.
please pass HFCS ketchup for my frech fries..
“Quarter of companies globally set to freeze pay: survey”
http://news.yahoo.com/s/nm/20090407/bs_nm/us_global_wages_survey
[34] Cindy
Forget what stu likes. Heck, I like it.
“Part of investing is risk.”
For this reason, I have come to the conclusion that I would like to see the Fed take $1T and create 4 new banks with an initial capitalization of $250B each. They would then attract all the sound assets from the damaged institutions and then those damaged institutions — and the investors in them — can take their losses and go BK as appropriate. To keep funnling dollars from the fisc into them is throwing food money after bad in order to save investors who allowed the banks to behave badly in the first place and who made huge fortunes from that bad behavior.
299k SF home in Millburn. End of days? Sure it’s tiny and on almost no land, but shouldn’t it be worth at leask 500k? This is Millburn after all!
GSMLS 2620273 77 Rector Street
Okay, this is an honest to god tax news story, even though it sounds as if Pravda has resurfaced as an arm of the government again.
“MOSCOW—The Russian government April 6 claimed the world looks with envy at the country’s income tax rates, and pledged to sustain its low rate despite growing financial problems.
Russia’s personal income tax, at a flat 13 percent, will remain unchanged, and will not be replaced by a progressive income tax, Prime Minister Vladimir Putin told a parliament session. “The whole world envies us” for our low income tax, he said. Following introduction of the flat rate, tax collections are up 12 times over the past eight years, Putin said.”
“The whole world envies us.” Wasn’t that what the Soviets said about communism?
Cindy,
I don’t negotiate. I win.
(40) Stu - LOL - You are a man ahead of your time. Now EVERYONE is doing it.
http://modelsagents.blogspot.com/2009/04/sayonara-japan-hello-america.html
“Sayonara Japan, Hello America”
Some comparisons and suggestions
Can somebody suggest some good websites to search for rentals in northern nj? I check craigslist but it seems to be taken over by realtors lately.
[40] stu,
reminds me of the Chuck Norris jokes I have been hearing. My favorite is “Chuck Norris doesn’t go hunting. Hunting implies a possibility of failure. Chuck Norris goes killing.”
I’ve found nj.com quite useful. I’ve mostly lived in centrally managed apartment/TH complexes.
Other one I used was rent.com…
S
Interesting tax release from the CBO on effective tax rates in recent years.
http://www.cbo.gov/ftpdocs/100xx/doc10068/effective_tax_rates_2006.pdf
Apparently, O’bamas tax increases will hit the top 15% of taxpayers. Average pretax earnings in the top quintile were 248K. For tax distribution, the top 10% paid over 55% of all income taxes, the top 5% paid 44%, and the top 1% paid 28%.
Reminds me of a quote by Dr. Laurence Peter: “Don’t bash the rich. When did a poor person ever give you a job?”
And Sam Seaborn (West Wing) “Seeing that the rich pay half the taxes, maybe we want to ease up on them a bit.”
#38 NJGator:
Amazing what comps can/will do. Others will still squawk about how “resilient” their bubble-head filled neighborhood is, but swimming against the tide will eventually lead to defeat.
NJ prices fell with the past bubbles and they will once again……thems the facts!
W8ting:
Go to the town you are interested in and deal with realtors. When you find one you like, negotiate the price down or ask for a reduced fee from the realtor. The problem with dealing directly with the landlord is that they are never around and never market their places effectively. Unlike I did.
Your Tax Dollars at Work
TRENTON — State inspectors have fined 59 bowling alleys in New Jersey, including 10 in Monmouth and Ocean counties, in a crackdown on 50/50 raffles at bowling centers, officials announced Monday.
Inspectors from the Legalized Games of Chance Control Commission, which regulates raffles and bingo, visited the state’s 73 bowling alleys between last September and January at least twice. The bowling centers cited either sold or allowed the selling of 50/50 raffle tickets to both league players and the public, the state Division of Consumer Affairs said.
According to state law, only veterans organizations, religious congregations, charities, civic and service clubs, educational and fraternal organizations, senior citizen associations and clubs, and volunteer fire companies and first aid squads may hold raffles.
“The bowling alleys cited do not meet the requirements for holding raffles,” said David Szuchman, consumer affairs director, in a statement.
http://www.app.com/article/20090407/NEWS/90407031
http://www.wilsoncenter.org/index.cfm?fuseaction=wq.essay&essay_id=517090
Shore - More on the matter of our changing economy…
If you like Tyler Cowan - Marginal Revolution - Here is an essay for The Wilson Quarterly.
“It’s a paradox that it is the large, diverse nations such as the United States that have the greatest ability to maneuver in a crisis and turn on the proverbial dime. That’s good for us, of course, but if a new American Century is about to be born, it’s another sign that the world faces very serious challenges. And that’s not a cause for anyone to cheer.”
“Apparently, Obamas tax increases will hit the top 15% of taxpayers.”
As part of the 5% paying 44%, I am satisfied there is nothing “apparent” about it. Maybe Ned Beatty was really sccreaming out BOHICA as he was squealing like a pig.
The Democratic congress is asking those with money to “kneel down and pray. Pray real good.” Where is burt Reynolds with his bow and some arrows?
some news from the front lines.
I don’t know why they did this, after saying they wouldn’t, but Wells has decided to forego the appraisal on my refi. I signed a form that had comps, and the comps were still somewhat in the ballpark, suggesting that my tony neighborhood (huh? when did that happen?) hasn’t lost too much value since August.
Personally, I don’t think that there are sufficient comps to say that. But if it saves me the appraisal fee, I’ll take it.
[51] shore
“Where is burt Reynolds with his bow and some arrows?”
If he’s smart, in a carribean country that is on the OECD noncooperative list.
Okay, enough fun. Back to work. Someone has to pay for these bailouts.
Gotta love California. Instead of sending our CA taxes to an agency with “income tax” or “treasury” in the name, we send our payments to the Franchise Tax Board. I guess I hold a franchise in CA.
Shore…
The Democratic congress is asking those with money to “kneel down and pray. Pray real good.” Where is burt Reynolds with his bow and some arrows?
The repubs have asked the middle class and lower to “kneel down and *play*” for so long…
S
Nom,
It is about time you started to pay your fair share. Do you know there are some people who pay as much as 15 and even 20 percent of AGI in tax and even pay as much as $20,000 a year in fed taxes?
C’mon, the “rich” must do their share.
Tongue firmly planted in cheek as I write out yet another federal quarterly tax check that would choke a horse, as it were.
Sastry(55):
“The repubs have asked the middle class and lower to “kneel down and *play*” for so long…”
So true.
Whenever you hear these tax facts, you forget that the same 5%’s wealth increased quicker than inflation somehow in the past 30 years. Of course, the other 95%, who are supposedly receiving the aid from the rich, have not been able to keep up with inflation during the same time period. Woe is the rich guy.
I think the upper 5% have no idea how favorable the U.S. tax code is for them when compared with most European countries.
Disclaimer: I think I’m in that top 5%.
Sastry,
Your assessment is devoid of a connection to the reality of the tax code. If I were to suggest a flat tax, I submit that you and many others would likely call it unfair — even if it meant that we all paid the same, with no exemptions.
No offense intended but, I do not think you want fair; I believe you want the special exemptions to go to your income level.
Off Topic but looking for a little direction from you financial folks out there. Won’t bore you with the details suffice it to say that we have had negative experiences with financial planners. Even those recommended to us. Frustration has set in and we now want to actively manage our own accounts. Have some financial background and understand a little more than the basics, but am looking for good books giving some direction on asset allocation, equity selection. Looking to stay out of mutual funds.
Any direction from the crew as to authors or titles? Thanks
I suspect that if we went to a flat tax with no exemptions, the people would have less tolerance for out-of-control spending. Add to that a special surcharge to pay-down the stimulus costs and folks might even call for an end to those too.
Living,
Stu is the guy I would ask.
“Someone has to pay for these bailouts.”
You can thank your beloved Bush for that.
/Politics off
livinginpa:
Join an investment club. It will provide you with the best free financial education possible.
I have to admit that I’m a bit skeptical. But ok, what’s the best way to find an investment club?
(62) -
For the record, I blame Obama also for continuing Bush’s policies w.r.t Banks.
re:20
101:
“if anyone needs to be in the streets, it’s the real estate investors”
Your wish is coming true even as you watch. Many real estate investors are already on the streets and more are sure to follow. Watch for them on street corners and at transportation hubs.
Governments are not designed to make everyone happy. It is the nature of things that they should cause some grumbling, eye rolling, etc. This is to be expected.
One also expects various groups to feel anger from time to time, or some subgroups at the fringe to feel anger all the time. This is normal and it does not adversely affect government’s functioning.
Widespread anger, on the other hand, is dangerous, and we are starting to see widspread anger developing. Concurrently, we are seeing increasing tension between income groups. Our focus on acquiring things seems to have gutted the idea of the “dignity of work,” and made people angry if they have not achieved certain wealth levels — read, acquired certain toys..
Since 9-11 there blame based on religion has grown greater than at any time since the 1930s. With bailouts to “bankers” we have a perfect storm brewing for those inclined to spew hate toward the subgroup of bankers they love to hate.
The seams are straining, and even if they come apart a bit, seams are meant to be repaired. When the fabric itself tears, all bets are off.
If B.O., King Jon, and others are not careful, the sound we hear will be not a seam but society’s fabric ripping. At that point, all bets are off.
Shore Guy,
I don’t like you one bit. YOU HAVE NO RIGHT TO CHECK MY GRAMMAR. GET DOWN OFF YOUR HIGH HORSE. I’ll use loan as a verb if I want to.
Now stick that in your cud and chew it.
livingpa:
Betterinvesting dot org hosts a whole bunch of chapter events which is a good place to find clubs. There are three chapters in PA. Philly, Harrisburg and Pittsburgh. Rather than attend an event (if they are too far away), you can call each chapter volunteer and ask for leads.
Which chapter are you nearest to and I’ll list the contacts for you.
” Watch for them on street corners and at transportation hub”
Will “stage” home for food?
Shore Guy:
“Now stick that in your cud and chew it.”
I would leave RE a loan for a while.
“Now stick that in your cud and chew it”
Cud is what is chewed, not where something is stuck.
As for being liked, I have a sufficient number of friends. I don’t much care if anyone else likes me as long as I am competent in my work, I am honest, and I make solid contributions to my community and my nation.
I have no particular interest in engaging with you in a negative way and will not do so.
Stu,
ROFL after first spitting coffee all over the dashboard.
Shore 67,
if done correctly the deflection of widespread anger away from the government as a single entity and towards competing groups and classes can be a masterful stroke.
its in the current admins interest to allow the anger to be directed amongst the “rich and not rich” and “everyone vs the bankers”. The alternative is much more distasteful for TPTB
Shore (37) -
“For this reason, I have come to the conclusion that I would like to see the Fed take $1T and create 4 new banks with an initial capitalization of $250B each.”
Despite being from the opposite side of the political spectrum, I completely agree with this idea.
Stu - Thanks. I am closest to Phila.
Kettle,
The problem is that controlling anger so that it does not bring down the government has usually required much more astute and ruthless government institutiins than we have now. I think Cheney and his puppet were up to the task of instituting a police state, b@$tards that they were.
I have no desire to see widespread unrest, but I can see situations in which it will come. I hope we still have 1/2 the character of our grandparent’s generation — which, by the way, was also prone to riot and burn cities, but which also muddled through the Great Depression and then did a heck of a5job against the fascists.
This is what I feel the government should do, although I have lost all faith in them doing the right thing. I honestly no longer believe that they have any interest in helping the country. The corruption in both parties has reached epic proportions. I will probably no longer participate in the election process at the national level as I think there is no ‘real’ difference between the parties.
With all that said, I would hope that the current rally holds through the end of the supposed stress tests. Then the government should do a bank holiday and close the losers and strengthen the winners. At the same time, maybe encourage people to invest in the solvent banks who would then lend (not loan) to businesses. Who knows, maybe even raise the interest rate by a symbolic 1/8th point to encourage confidence in the dollar and the US economy.
Unfortunately, we’ll just keep shoveling money through AIG to the banks that are too big to fail, but too large to govern themselves.
Shore… Where does the flat tax come from? What about people that have paid 70% income taxes in 60’s and so?
I mentally calculate close to 45% of our income as taxes (SS + 25 fed + state; some 1099’s). After some deductions, it often comes down quite a bit. I am sure that many top income levels pay very close to 20% or less [long term capital gains, dividend interest, muni bonds, etc.]
Please don’t make it sound like the top 5% are envying the lives of the bottom 20%…
S
“I hope we still have 1/2 the character of our grandparent’s generation”
Here’s some food for thought:
They paid very high taxes, they fought wars (and did not send poor kids to do proxy fighting). They spent tons of money on infrastructure. They created social security (so that *freeloading elders* can get bailouts).
I think you are aiming too high with the 1/2… I’d be happy if we have 1/10th the character.
living:
Chapter Contact Information:
Philadelphia Area Chapter, BetterInvesting
Sandra Capoferri
281 Mingo Road
Royersford, PA 19468
contact@devalley.betterinvesting.net
(610) 948-5227
This is a good place to start as well:
Model club meeting - April 2009
04/11/2009 9:30 AM to Noon
Montgomery County-Norristown Public Library (map)
1001 Powell Street
Norristown, PA 19401
The library is located in the triangle bounded by Powell, Swede, and West Spruce Streets. It has free off-street parking, which you enter from Swede Street. Take the stairs to the library entrace. Once inside, take the stairs or elevator to the second floor. The meeting is in the Board Room.
Cost:
No charge to visitors.
The Philadelphia Area Model Investment Club is sponsored by the Philadelphia Area Chapter of BetterInvesting.
The club’s purposes are to:
* Invest the club’s assets in common stock for the financial benefit of the partners
* Demonstrate the application of BetterInvesting methods
* Demonstrate well-run club meetings
* Continuously enhance the investing skills of the partners.
Members contribute an amount each month toward the club’s assets, which are used to buy stocks for the club’s portfolio. The monthly amount can range from $10 to $100, at the member’s discretion.
Meetings consist of a club business session, an education component, and the investing activities.
Anyone may attend our meetings to observe our operations and ask questions. There is no charge or other prerequisite.
To join the club you must:
o Be a member of BetterInvesting.
o Have an E-Mail address and access to the Internet.
o Be willing to learn how to use the Stock Selection Guide (SSG) for stock analysis.
o Be willing to periodically analyze stocks and monitor companies in the club portfolio.
Event Contact:
Sandra Capoferri
281 Mingo Road
Royersford, PA 19468
contact@devalley.betterinvesting.net
(610) 948-5227
——————————————
I’m not a huge fan of BetterInvesting.org and their fees, but they are the best option out there for individuals who want to learn how to safely self-direct their own investments.
STU
the government should do a bank holiday and close the losers and strengthen the winners
The real problem is that the big 5 are all international corporations. My understanding is that form a legal standpoint we could onyl close the US portion of the banks. This would however force the international portions of the bank to either be simultaneously undergo similar actions by the respective nations in which they reside, or face the very possibility of throwing international banking into complete disarray.
You wont get the simultaneous action because that would be global recognition that the biggest banks in the world are insolvent. Its a chinese finger trap.
I am not supporting the banks, i say let em burn, but the politicos currently in power are owned by the bankers and none of them have the cajones to step up and pull the plug.
“I am not supporting the banks, i say let em burn, but the politicos currently in power are owned by the bankers and none of them have the cajones to step up and pull the plug.”
Yes they are and this is the crux of the problem.
I supposed we’ll just keep on delaying the inevitable end of our futures.
STU,
dont worry, as BC Bob like to remind us, you cant beat Mr market. You can delay, but no government in history has ever stopped a bubble from deflating. Though the more you delay, the more damage is done in the process of deflating due to resources wasted on attempting to prop up the bubble. but heck, whats a few trillion amongst friends?
livinginpa,
Assuming 99% of technical analysis is BS, the only active strategy that works is knowing the future before the market does and investing accordingly. This is tough work and many years of outperformance could be destroyed by a few bad bets (ie, Bill Miller). This is why many people adopt passive (or low-cost active) strategies using low-cost mutual funds. For a book about asset allocation, “All About Asset Allocation” is pretty good.
Sastry,
No offense intended but, you have ni idea what you are talking about. Whilst there may be a very small percentage of folks who match the description you paint, most do not. Think AMT.
Mrs. Shore and I, for instance pay about 60% of our income in income tax. You would not want our tax burden.
You said earlier you want tax fairness. Okay, why should our next dollar earned be taxed at a higher rate than yours? Just because we make more? Give me a break, that is not in any way “fair.” You bemoan “deductions” taken by the “rich.” Again, please! For example,higher income people can afford to buy higher-priced homes with larger mortgages, yet their mortgage deduction is capped, whereas the lower earners get full advantage.
Pointing to oldtax rates also fails to support your call for fairness. Just because former tax rates were even more unfair does not suddenly mean that the current ones are.
What you want, it seems to me, is to have others pay for the governmenr so you can get a greater per capita benefit from it than you pay. That is not a quest for “fairness.”
Mrs. Shore and I, and the many people we know who earn from say 300m to 1mm work like dogs to earn our money. If you want to tax passive income at the same rate as wages, fine, go for it. But, to claim you seek fairness strikes this taxpayer as less than credible.
It is time for your goose to meet the gander.
Herring
why do you think technical analysis is BS? just curious, i am not a trader or in a club
Kettle,
It is like the USG is attempting to “smother” the economic fire bu dumping trilions of dollars onto the fire and hoping they cut off the oxygen supply instead of providing more fuel.
Kettle1,
For the record, I think it’s mostly BS as well. For the record, everyone I know who practices it is now worse off than had they not.
Herring,
Good book recommendation. I would still advise the club route with book reading to see opposing views to the Better Investing strategy.
#86 Shore Guy -
the many people we know who earn from say 300m to 1mm work like dogs to earn our money
Very well said. Thank you for stating the case for a more fair tax code so well (and without the rage I so often feel). I agree completely, but I think you meant that “m” to be a “k”.
actually “k” means 1,028 wheras “m” means 1,000 and is the traditional method to indicate thousands. I am just an aging codger and sometimes fall back on old conventions.
Stu says:
April 7, 2009 at 11:04 am
living:
I’m not a huge fan of BetterInvesting.org and their fees, but they are the best option out there for individuals who want to learn how to safely self-direct their own investments.
Living: you be really careful…..keep your hand on your wallet.
For the Tax Experts here, a quick question.
For someone (married filing jointly with one child) who makes 160K a year through W2, the total taxes paid for 2008 = 54K as calculated by
http://www.paycheckcity.com/netpaycalc/netpayCalcResult.asp
If I were to incorporate myself, and get paid on a 1099 basis and after all the expense deductions, if I am paying 32K in total taxes for 2008, can you attribute the difference (54K minus 32K = 22K) solely as a benefit of incorporation?
kettle1 says:
April 7, 2009 at 11:38 am
Herring why do you think technical analysis is BS? just curious, i am not a trader or in a club
ket: because it basically is….
caveat….when you are interacting with markets that have broken away from fundamentals, or do not have fundamentals, then technical analysis can be valuable….the basic idea is that IF market participants are using TA as an investing construct, then it will work…..BUT it is a backward causation…..TA works in these markets, BECAUSE people are using TA, not because TA is intrinsically predictive.
Recognize that TA is BEHAVIORAL analysis not investing…..
Stu says:
April 7, 2009 at 10:07 am
livinginpa: Join an investment club. It will provide you with the best free financial education possible.
Stu: not every investment club has a Stu in it…..a lot of people are overconfident and take too much incidental risk…
Zack,
Don’t forget the option of opening a solo 401k, which will allow you to put away over $30,000 a year, thus reducing your taxable income even more. As will business-use auto rentals, life insurance, supplemental health insurance, etc.
Herring123 says:
April 7, 2009 at 11:36 am
livinginpa,
Assuming 99% of technical analysis is BS, the only active strategy that works is knowing the future before the market does and investing accordingly. This is tough work and many years of outperformance could be destroyed by a few bad bets (ie, Bill Miller). This is why many people adopt passive (or low-cost active) strategies using low-cost mutual funds. For a book about asset allocation, “All About Asset Allocation” is pretty good.
LIPA & HERR:
As fair a starting point as any….
http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393330338/ref=sr_1_1?ie=UTF8&s=books&qid=1239120311&sr=8-1
Comrade
>Reminds me of a quote by Dr. Laurence
>Peter: “Don’t bash the rich. When did a >poor person ever give you a job?”
>And Sam Seaborn (West Wing) “Seeing that >the rich pay half the taxes, maybe we
>want to ease up on them a bit.”
Sounds like you are one of the rich. Besides, the rich failed to provide jobs as you say. If you haven’t noticed unemployment is increasing to depression levels and this is WITHOUT Obama’s taxes.
FYI - there is also my e-mail if you have a question….WITHIN REASONABILITY PLEASE
#91 Shore Guy -
Thanks! I learn something new every day.
Technical analysis is what Krammer mixes in with his histrionics while talking about P/E and other fundamentals.
So, it looks like Friday, at the close of the markets, GM gets broken in two. It will be a new twist on Failure Friday.
Ellen,
As badly as I type, especially on this thumb keyboard, I am lucky when just a single letter is off.
ChiFi:
You give good advice. There is no pressure to join Better Investing or an individual club. Many clubs even allow people to audit for a year or two prior to making one a member. Our club “Mad Loot” makes a prospective member attend 3 consecutive monthly meetings prior to being accepted in the club if they so desire.
The BI fees are small ($50/year or so) but somewhat unnecessary. My club has only one or two BI members. Average cost per person per year for club accounting software/website is about $15. Match that up with management fees of mutual funds or even ETFs and you can see the immediate benefit. Now all you have to manage to do is beat the indexes.
BTW, I must shout out to Gator for being an exceptional wife. I’m shooting out to Vegas for Tuesday to Friday of next week to party with my brother and his bizzarro friends. I know it’s a PIA to be a single mom as I occasionally play single dad, but it really works wonders on one’s well being to get away for a few days.
But good advice is to watch your wallet.
#96
What I am trying to understand is the benefit of incorporation.
If someone makes 160K through W2 and the same person incorporates and collects the same amount (160K) in his business account, at the end of the day, is there any difference in Taxes paid/postponed to the government between the two ways.
From my calculation it looks like by incorporating, one can save/postpone taxes by approximately 40%. Is that true? If so incorporation is possiblly the best choice.
The reason is I have a job offer and the recruiter is asking if I want to take up the offer on a W2 basis or corp-2-corp basis.
Shoreguy: ??? The markets are closed on friday. Did you mean thursday?
I’m thinking he meant Friday.
those who are interested in investing: hedge funds and institutional investors have brought the game to another level. TA and behavioral analysis and whatever analysis are now done with powerful software based on sophisticated math inaccessible to you.
Do you believe that you will beat those people with your half-a** graph reading? If someone on the winning side someone else must be on the losing one. Guess where you will be.
Yes. A new twist on the idea of, resurection.
Nom, Poor Guy
Re tax issues
We are trying to mend the patients broken leg before dealing with the cardiac arrest.
The US tax system is bloated and in no one’s general benefit except the special interest. But the current issue is not one of taxes, but of big government and big banks run amok. You can finagle the tax code until the cows come home and you still wont address the underlying economic issues.
The tax issue is more based around the problem that the government wants to spend more then it has and is looking for a populist method with which to reap higher tax returns while maintaining popular support
just my 2 cents
#1 I am a Met fan
#2 TA is the investing equivalent of taking advantage of Yankee fans’ emotions on open day after Sabathia walks 5 and strikes out no one and Teixeira leaves 5 runners on base.
Let them play with their money. If you are interested in investing and you think this market has some upside put your money on an index fund. Don’t trouble your mind or loose your time in “smart” investment strategies because there are none.
Stu says:
April 7, 2009 at 12:15 pm
ChiFi: You give good advice. There is no pressure to join Better Investing or an individual club.
STU: do you mean “bi” stands for BETTER INVESTING????? :) ;) :-P
Zack,
My suggestion is to go and find the best taz lawyer you can. Spend $500 or more an hour if you need to. Lay out the story and let the lawyer give you legal advice. Odds are it will take less than one hour. But, even if it takes 3, it will be well worth the cost. Do not cheap-out. If you do, and problems arise, at that time you will gladly spend many times more just to resolve the issue.
Pay a lawyer up front and avoid problems later. Also, being able to say you “relied upon advice of counsel” can be priceless.
poor guy…You referring to say, the superfund perhaps?
http://www.superfund.com/
“TA and behavioral analysis and whatever analysis are now done with powerful software based on sophisticated math inaccessible to you.”
“If you are interested in investing and you think this market has some upside put your money on an index fund.”
Not bad advice, although I truly think that one can beat the indexes with discipline and fundamental research. Although, agreed it may not be a good return on your time.
“TA and behavioral analysis and whatever analysis are now done with powerful software based on sophisticated math inaccessible to you.”
poor guy…You referring to say, the superfund perhaps?
http://www.superfund.com/
“If you are interested in investing and you think this market has some upside put your money on an index fund.”
Not bad advice, although I truly think that one can beat the indexes with discipline and fundamental research. Although, agreed it may not be a good return on your time. If you enjoy it like a hobby, then it’s really not a bad thang.
Let’s not get ridiculous now, we don’t cut government jobs or benefits here in NJ. What we need to do to make up the revenue short-fall is to inact a State property tax, increase the sales tax by 14% and increase income tax. If the masses can’t pay then f*cking leave the state.
“, although I truly think that one can beat the indexes with discipline and fundamental research.”
And those other time-honored approaches: insider trading and fraud.
Sorry ’bout the double post.
End of Days…..
Larceny and looting of churches….
http://www.nypost.com/seven/04072009/news/regionalnews/tale_of_beauty_and_the_priest_163315.htm
Stu: you are bi?
Shore Guy says:
April 7, 2009 at 12:30 pm
“, although I truly think that one can beat the indexes with discipline and fundamental research.”
And those other time-honored approaches: insider trading and fraud.
Shore: absolutely; no bets, only sure things….
http://www.youtube.com/watch?v=bVVsDIv98TA&feature=related
Thanks for the book recommendations. I had actually picked both of those from Amazon myself. The advice to watch my wallet is especially well taken.
Let me just say that I am not a total novice as my previous post may have insinuated, but lack of time on our part (we fall in the same career/time category as Shore and the Mrs) has rendered both of us unable to really focus (I mean really research various vehicle etc)on our “accounts” as it were. We are not looking to “beat the street”. However, I am not a big believer in mutual funds - expenses high for little return. I personally believe that individual stocks held on a long term basis are a better bet. Now, the problem is that most advisers out there just want to push you into funds.
Thanks for letting me blather on. Again, I really do appreciate your advice. And let me just say that the AMT sux!
NICE!
http://www.youtube.com/watch?v=O8g5t4tsXRo&feature=related
” If the masses cant pay then f*cking leave the state”
Gary,
Do you recall a Corzine aide saying as much about a year or so ago? It was something to the effect of, “those earning less than $100,000 a year are a net drain on the State, and the State would be better off if they left.” Perhaps someone still has a link to the articles in which he said, essentially, this.
“Not bad advice, although I truly think that one can beat the indexes with discipline and fundamental research. Although, agreed it may not be a good return on your time.”
Sorry Stu but I do not think this is possible on a consistent basis. Why do you think there was this explosion of “finance” professionals? Let them play with their money. If you think the market is/will beat inflation make sure you are not on the losing side, where the dumbest investors are and put your money on an index.
This guy could be lying through his teeth, or maybe he is telling the truth….honestly, you would probably do better focusing on your own interests….
http://finance.yahoo.com/news/Goldman-CEO-says-financial-rb-14870739.html?sec=topStories&pos=8&asset=TBD&ccode=TBD
poor guy says:
April 7, 2009 at 12:43 pm
“Not bad advice, although I truly think that one can beat the indexes with discipline and fundamental research. Although, agreed it may not be a good return on your time.”
Sorry Stu but I do not think this is possible on a consistent basis. Why do you think there was this explosion of “finance” professionals? Let them play with their money. If you think the market is/will beat inflation make sure you are not on the losing side, where the dumbest investors are and put your money on an index.
poor: so 1999-2009 is an anomoly? 2008 is an anomoly?
[117] gary
Right now, there is a group of NJ public workers (another oxymoron), picketing in front of Gateway Center, with signs that say “stop attacking public workers” or something to that effect.
Oh, that I could go out there and taunt them. Perhaps with my own sign: “Stop Picking Taxpayers’ Pockets”
Do you think that with the economic slowdown, and with disappearence of PRivate Equity deals, fees from M&A deals and other advisory deals, most of the financial firms are resorting to income from their trading desks? If so, the average Joe day trader will be competing against the full force of the big boys and chances are that most likely that the average joe will be on the losing end. The market can be highly manipulated more then ever.
[114] shore,
“taz lawyer”?
Well, our dorm mascot was the Tasmanian Devil,so I guess that makes me a taz lawyer.
Also a tax lawyer. Zack, it sounds without reading in too much that yours is a simple timing issue. But there is more to what you raise than timing.
I can’t advise on this blog (both my employer and grim would probably go ballistic) but Shore is correct that you should consult competent counsel. Since I don’t know where you are, I cannot recommend anyone, but if you are using an accountant, they probably can refer you.
But I will say this. Shore’s statement that being able to say you relied on counsel doesn’t get you that far if audited. Helpful to avoid “wilfulness” but otherwise useless.
It’s been pretty easy to beat the index the past 5 years. You just buy gold and sit back.
nom #129
They were asking drivers to honk. Sadly, I was the only one that honked.
Seems like the battle lines are drawn on this board :).
S
Ben,
Paulson said to, “Buy GM, bend over, and think of America.”
With apologies to Queen Victoria.
Stu: you are bi?
I’m offended.
Stu thinks poor guy tried and failed.
If banks were allowed to fail, how would FDIC insured deposits be handled?
FDIC is insuring over $4 trillion in deposits, could it be cheaper to bail out the banks than to bail out the FDIC?
If we created the new banks like I suggested, the USG could also mandate that savings held by the bad banks be moved to the new ones. No FDIC loss at all.
So a new Cabela Credit Card ABS deal priced today. It is a TALF eligible deal.
Does anyone else find it highly disturbing that taxpayer funds are being allocated to make credit cards more accessible to buy camping equipment?
[98] poor guy
An apt moniker, I’m sure. Not especially creative, but then neither is mine.
I had a pithy riposte prepared, but I recalled that I try not to respond to posts such as yours. The illogic of what I was doing struck me so I deleted it.
[138] daddyo
not to mention guns and ammo???
[133] sastry
Can you keep it down? I’m trying to get some work done up here.
Stu says:
April 7, 2009 at 1:15 pm
Stu: you are bi?
I’m offended.
You’ve been waiting weeks for this opportunity…..
Zack,
Is the W2 and the 1099 offer for the same amount? There is about 7.5% FICA tax that the employer pays on W2, but you can’t deduct much. If you have a corporation, you can basically put up to 45k in 401k, deduct a gazillion things, and end up in the 10% tax bracket :)
S
Sastry, as the private sector goes, so must the public sector or there will be a collapse. It is that simple, the pay and benfits structure cannot be as disparate as it is today. The public sector needs to make concessions.
I think I would rather be bi than be Bi.
You know, maybe the Cabela’s thing is a big deal. The Fed knows things are going to get bad, so they are making it easier for people to live without homes and go hunting….
On another topic, CNBC just had a discussion about the wave of recent pay and benefit cuts. Dennis Kneale said the Obama administration has changed the environment such that layoffs are now viewed as a bad thing. And he didn’t mean that in a good way.
Nobody wants a public sector job when they are gainfully employed in the lucrative business world.
Stu,
If single, it would double your dating pool, anyway.
Shore Guy,
True, I suppose. Man butt does absolutely nothing for me though. Except for perhaps Gary’s?
Nom, Poor guy
There are a mix of incomes groups on this blog, although the higher end does seem to be better represented. Class warfare is counter productive. if you want a chance of having an effect, why waste your energy on fighting the other income brackets, when you will need every ounce of energy if you want a chance at actually changing government at any particular level.
the thing to keep in mind, is that a highly stratified society is in no ones best interest
#79 -
Sastry
“Please don’t make it sound like the top 5% are envying the lives of the bottom 20%… ”
this is a stupid statement. sorry - but envy shouldn’t enter into the tax code. what’s the difference if the rich envy the poor or the poor envy the rich. envy shouldn’t enter into the calculations.
[137] Shore
Wouldn’t these new banks be insolvent from the start if they had only $1 trillion in assets backing 4+ trillion in FDIC insured deposits? A bank run would make the whole thing fall apart.
the thing to keep in mind, is that a highly stratified society is in no ones best interest
well that is unless you happen to enjoy having your lavish home surrounded by walls that separate you from the slums with little in between
Jcer #144, true… I am not advocating avoiding budget cuts. However, some political appointee will be overseeing most of the cuts, and hurt everyone in the long term [e.g. relaxing industry regulations in the name of "they will bring jobs now"]. I should probably not talk about the industry…
The honk was just a show of support for the little guys.
S
“How about this one as a leading indicator of the housing market?
From MarketWatch:
Pier 1 fiscal Q4 loss 33C vs 16C profit
Pier 1 fiscal Q4 comparable sales down 9.7%”
JB,
I prefer lumber, 60% off its highs.
Sastry,
I would have told them that you were their boss and they should get back to work before they are all fired. After all, who pays their paychecks. Oh wait…Shore Guy does!
Public Announcment:
Make Money junior was born this weekend. Baby, Mom Dad and the big sister are doing fine.
Baby was born in Hong Kong at 3:03 AM Saturday Morning at 3630 grams( 8 pounds) and 21 inches long.
Just landed in this morning…
stan 152,
No, That would be a substantially better reserve rate them almost any bank in existence in the US carries. That is also the entire point of FDIC insurance. We all know that the bank only has 1 trillion in cash to back 4 trillion in deposits, but under normal operating procedures that is more then enough to cover regular customer withdrawals. In the event that there is a larger then usual withdrawal of cash, the FED can loan the bank cash and have it trucked in overnight
Make Money,
CONGRATS
MM,
Congrats to one of the largest babies ever born in Hong Kong ;)
“Paulson said to, “Buy GM, bend over, and think of America.”
With apologies to Queen Victoria.”
Given the fact that I own a Ford Mustang and a Geo Metro (GM), Paulson can kiss my arse! My family has had 5 fords and 3 Chevy’s the past 15 years. If anything, I should be able to take our past purchases and deduct them from my taxes for this Big 3 bailout.
Stu,
This board doesn’t know how truly good-looking I am… go ahead, tell them! ;)
err wait, made a mistake, make it 7 Fords.
Gary (162):
“This board doesn’t know how truly good-looking I am… go ahead, tell them! ;)”
Well, let’s just say you are almost as beautiful as yours truly.
#157 - Congratulations!
Chi,
TA is not BS. I’ll debate any day of the week. How can one reasonably get a grasp regarding 100% of the fundamentals? Half the time, BS is spewed from quarterly reports? If one followed TA, they would have been out of the financials, probably short, long before Schwartz/Cayne uttered that they were in sound fiscal shape. Fundamentals did not alert me to short AIG. However, TA indicated a screaming sale.
How about when fundametals indicate a buy but the stock is spiraling downward?
MM,
Congrats.
Make - congratulations and it was a boy right?
Up!
““This board doesn’t know how truly good-looking I am… go ahead, tell them! ;)”
Well, let’s just say you are almost as beautiful as yours truly
”
But only one of you looks good in a chrreleader’s outfit.
“Wouldn’t these new banks be insolvent from the start if they had only $1 trillion in assets backing 4+ trillion in FDIC insured deposits? A bank run would make the whole thing fall apart.”
No. Currently, the banks have some assets and LOTS of actual and potential debt. What I suggest is to create 4 new banks, and capitalize them at $250B each. There they sit with LOTS of assets and no liabilities. Allow people to move deposits over, now they have even more cash and still no liabilities. Next we allow “good loans” and other assets to move over; here we add some liabilities but acceptable levels of risk, especially given the lack of toxic liabilities.
Now we let the toxic loans bring down the mismanaged banks. Let the investors who never demanded competence or prudence from the banks suffer the losses. No FDIC money is at risk. Even if it were, we would be bailing-out innocents and not folks who caused the mess or allowed it to continue.
“Mrs. Shore and I, and the many people we know who earn from say 300m to 1mm work like dogs to earn our money. If you want to tax passive income at the same rate as wages, fine, go for it. But, to claim you seek fairness strikes this taxpayer as less than credible.”
Just an observation: for a guy who ‘works like a dog’ it sure seems as if you’re reading and posting here a good portion of the day.
make - congrats
MM
Congrats!
Jcer, the “envy” part was in relation to the tax discussion. I think a fair, progressive tax benefits everyone. The strength of US is not money (per capita, some of the really bad countries in the middle east are much higher). Even some pockets in India have fancy places surrounded by slums (Slumdog realistically depicts much of it).
The strength of US is in the mobility of people, reward of success, etc. At least, that’s what I think it is. It saddens me when I see US morphing into a whiter version of India!
S
I follow your blog for a long time and must tell that your posts always prove to be of a high value and quality for readers.
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