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Old 08-25-2010, 07:12 PM   #201
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Anyone noticing what is happening in Japan - below 9,000 -

Bloomberg - Business & Financial News, Breaking News Headlines

The Nikkei average hit its all-time high on December 29, 1989, during the peak of the Japanese asset price bubble, when it reached an intra-day high of 38,957.44 before closing at 38,915.87.
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Old 08-25-2010, 07:19 PM   #202
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Which brings me to the expectation that the Saints - WILL NOT - repeat their Superbowl victory.

However I have some mad money to 'buy a few good stocks' and shift some deck chairs(er stocks) on the Titanic come regular season and to keep the Hormones happy. As a hobby mind you.



17th yr of ER. Target Retirement 2015 full auto with deduct to checking.

heh heh heh - even got lazy on my ole psst Wellesley razz.
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Old 08-25-2010, 07:34 PM   #203
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Dex,

Yes, I own PRPFX in a taxable portfolio. IMHO, it makes a terrific core holding and you can build around it (if you want to) with other holdings as they become attractively priced.


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Thanks, that does look like it could be a core holding that fits me.
Do you own it?

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PRPFX: Summary for PERMANENT PT- Yahoo! Finance

Bogleheads :: View topic - Updated Modification of Harry Browne Permanent Portfolio
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Old 08-25-2010, 07:57 PM   #204
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Other than being extremely positive (I'm slightly bullish) I complete agree.

Good companies are make very respectable profits. They are paying off expensive debt with cheap long term debt positioning themselves well for the future. (I read some are thinking of issuing 100 year bonds!!)

The strongest companies are sitting on tons of cash earning no interest and if they can't find suitable investments are starting to return some of it to share holders in the form of increased dividends and stock buy backs. This will help generate some demand and help propel stock prices upward.

The US and European economies do suck and IMO the politician and the pundits have pretty much run out of ideas on how to fix things.

That is the bad news the good news is that world is bigger than just the US and Europe. This last decade create roughly a billion new consumers in place like China, India, Brazil, and Russia. The BRIC nation are important part of the world economy and most of their economies are doing just fine.

Now it takes lot of Chinese consumers with an extra $100-$200 a month to spend beyond necessities to make up for an American consumer that has an extra thousand to spend, but they will eventually pull us out.
Clifp - I really like your outlook summary/overview. I think you are right.

But I think we still have to get through a lot of investor exhaustion. Still - the patient investor will rewarded.

Audrey
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Old 08-25-2010, 08:03 PM   #205
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So, not too many comments on my concept of "Political Efficiency".

I have been thinking about that for a while. I observed that many people look down on market timing, for the various well-known reasons. And those are all valid, I will admit. Yet, so many also have strong political inclinations, whether they openly post about them or not. So, I asked myself that if people could not be sure about the market movement, and they knew that it was futile to predict the market future, how could they be so sure of the effects of their favorite candidate? It seems to me that nearly all politicians sounded a lot better on the campaign trail than their actual performance when they actually got the seat. To be fair, they might not have been able to do what they wanted because of various reasons, but the net practical effect was the same: it might not matter that much.

So, I posted earlier about my discouragement with voting, and might just let the public deliver its "Political Efficiency", so that I benefit without doing any work, the same as investing by indexing.

Now, you might have sensed some sarcasm in my post.

Yes, the sarcasm is there. I do not believe that either the market or politic arena is truly "efficient". But I do know that it is tough to beat or to predict either. However, for me myself, guessing the market direction is a lot more fun than thinking and arguing about politics. So, I have spent much more time trying to time the market than to follow politics, the later mainly as it might influence the market.

On voting, I was told all my life that a citizen should be grateful to have that right, and should exercise that right. So, borrowing from the portfolio rebalancing principle, I can vote in a similar manner. I shall vote against all incumbents, regardless of their political party. That maintains the balance in the political system. It keeps a political bubble from getting out of hand, just like the recent housing bubble, or the tech stock irrational exuberance of 2000.

How can one have a portfolio with all stocks? Or all bonds, or cash? Similarly, what will this country look like with all Republicans, or all Dems? I would not want to live in such country!!! There must be a balance of them, and I have to do what I can to restore the balance, the same way as rebalancing my portfolio.

Will I be able to maintain the above principle, or will I in the election booth be having second thoughts and willing to give my favorite candidate a little more benefit of the doubt than his opponent? Oh it is going to be hard...


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Can't we all agree to just call it "investing" and move on with our lives?
No. The problem is that we call our action "investing" and the other person's "gambling".

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I'm still in the market, about 80% stocks. Probably 15 to 20 years until I draw my retirement. But, I have several vested pensions, with COLAs, to anchor me. Unless the masses rise up and take the pensions away.
I am more than 70% equities too, and it has been hurting me like crazy. Kept telling myself I will sell rebalance when it gets to 80%, but the darn thing never got there.

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I'm so poor I can hardly scrape together the money for a nice dinner date, but still this would not help me.
The 15% income bracket is $34,000 and that includes the cap gain itself. So, it is easy to go over that limit like you said.

But what expensive dinner did you have in mind? Have you tried the "Herb Farm"? I have not, and it is tough to do so with the market as it is.
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Old 08-25-2010, 08:36 PM   #206
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Maybe this will cheer you up:

Time to take advantage of gloomy U.S. equity markets - The Globe and Mail
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Old 08-25-2010, 09:27 PM   #207
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But what expensive dinner did you have in mind? Have you tried the "Herb Farm"? I have not, and it is tough to do so with the market as it is.
Not an expensive dinner, just nice and good food. Monday my buddy and I had lunch downtown. 2 small pitchers of pretty good but not expensive wine, boudin noir with new potatoes and parsley for me, quiche for him, a small but killer cheese plate for dessert and an espresso for me- $60 with a modest but OK tip.

I had to come home and eat again, so ramp up the quantities and make it evening and I am looking at minimum of $125 -$150 or so. Add brandy or Calvados and a bigger cheese plate or maybe paté and we're at $175. And this is a modest place, but nevertheless very good.

So I mostly go to happy hours, but it is hard to get enough food in that situation too. This usually costs $25-$50. I don't want to be annoyingly frugal with a woman who is good to me. Also, I really like good food.

Ha
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Old 08-25-2010, 09:37 PM   #208
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I'm certainly buying.
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Old 08-25-2010, 09:37 PM   #209
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Yes, eating out is expensive. Thank goodness we are not into that habit, and only do so when traveling.
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Old 08-25-2010, 09:45 PM   #210
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I don't know Ha - with a little careful manipulation a lot of folks could pocket some tax free capital gains. Given the fact that this relatively unknown tax break actually exists - some will get it and won't even know they did, until tax time......

But hey, its' your money..
The article actually answered a question I had. I was pretty sure about the answer, but you can always hope.

Say you're in a position like me, FIREd, living on cash this year, with a small amount of income mostly from dividends and interest, a fairly large mortgage deduction, and likely to be in the 10 or 15% tax bracket. I can sell some stocks or funds I have that have gains (all long term). But it will only be a few thousand dollars worth before it pushes my income up into the next bracket. Yes, a decent little tax break, with the emphasis on little.

Actually, for me it would be better in the long run to use my space in the low bracket to convert some regular IRA to Roth. I might gift some stock to DD and let her low bracket get the 0% cap gains break. But even her low salary will only allow about a $6K or $7K sale before she breaks the 15% bracket limit. Not that big of a deal, although I'll take whatever I can get.
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Old 08-25-2010, 09:54 PM   #211
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Yes, eating out is expensive. Thank goodness we are not into that habit, and only do so when traveling.
Best Deals and Discounts on the Best Local Restaurants – Save Money on Food with Restaurant.com

Go wild.
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Old 08-25-2010, 10:03 PM   #212
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Not an expensive dinner, just nice and good food. Monday my buddy and I had lunch downtown. 2 small pitchers of pretty good but not expensive wine, boudin noir with new potatoes and parsley for me, quiche for him, a small but killer cheese plate for dessert and an espresso for me.


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Old 08-25-2010, 10:21 PM   #213
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Not an expensive dinner, just nice and good food.
Ha

I was surprised at how reasonable the food prices are in Florida . After taking the title to my car dealer we stopped at our local place which is a Seafood restaurant that always has specials ( It's always packed ) . We both had shrimp smaller portion dinners and I had two glasses of wine and Gary had a rum & diet coke . The bill was $20.00 .
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Old 08-25-2010, 10:25 PM   #214
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Originally Posted by haha View Post
Not an expensive dinner, just nice and good food. Monday my buddy and I had lunch downtown. 2 small pitchers of pretty good but not expensive wine, boudin noir with new potatoes and parsley for me, quiche for him, a small but killer cheese plate for dessert and an espresso for me- $60 with a modest but OK tip.


Ha
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You live well Mr. Ha. The menu makes my mouth water...
Hey, if it's not fried I don't know what in the heck he is talking about.
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Increase in Medicare premiums
Old 08-25-2010, 11:03 PM   #215
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Increase in Medicare premiums

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... plus paying a lot more for my Medicare premium next year, and likely some other socialist bullsh*t that I have forgotten to mention. Ha
Isn't it too early to know what the increases in Medicare premiums will be for 2011? Or perhaps you are just assuming large increases - not a bad assumption, certainly. However, it seems to me that these premiums are pretty damn reasonable for what we get for them, and that most people would not really feel the financial effects of paying them. The people paying the higher tiers can well afford them, judging by the very high adjusted gross income required to trigger them. (Yes, I know this is a bit off topic as regards the OP).
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Old 08-25-2010, 11:40 PM   #216
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Isn't it too early to know what the increases in Medicare premiums will be for 2011? Or perhaps you are just assuming large increases - not a bad assumption, certainly. However, it seems to me that these premiums are pretty damn reasonable for what we get for them, and that most people would not really feel the financial effects of paying them. The people paying the higher tiers can well afford them, judging by the very high adjusted gross income required to trigger them. (Yes, I know this is a bit off topic as regards the OP).
Oh, I agree completely. I just mean that if you happen to go over a certain maximum AGI you get a much smaller subsidy on your premium, so bye-bye $96.50, hello larger on a sliding scale which I think tops out around $450 or so. This happened to me twice ( not $450, but a lesser increased amount) but the last 2 years I have kept below the "adjusted" AGI max. Whether one would feel this or not depends on one's sensitivity to noxious stimuli.

Also, don't forget that infrequent or possibly non-recurring things like LT capital gains can trigger the increased tiers.

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I was surprised at how reasonable the food prices are in Florida . After taking the title to my car dealer we stopped at our local place which is a Seafood restaurant that always has specials ( It's always packed ) . We both had shrimp smaller portion dinners and I had two glasses of wine and Gary had a rum & diet coke . The bill was $20.00 .
I agree Moe, these meals sound very good for a very good price. And every coastal FL place I have ever been to had a very nice ambiance.

Ha
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Old 08-26-2010, 10:01 AM   #217
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I started selling my remaining mutual funds and will probably be in 100% cash by Thurs. or Fri.

Bottom line - the downside risk out weights the upside potential.

I'll post more after I'm finished selling.
I got out of the market about 2 months ago and currently have about 98% in cash. I agree with your decision based on current downside risk.
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Old 08-26-2010, 10:21 AM   #218
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Yes, eating out is expensive. Thank goodness we are not into that habit, and only do so when traveling.
One of our indulgences is a Sunday lunch after church. And I can quash any talk of "deflation" with a lot of anecdotal evidence. It seems like all the menus in town are being revised with higher prices every six months or so.
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Old 08-26-2010, 10:58 AM   #219
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The article actually answered a question I had. I was pretty sure about the answer, but you can always hope.

Say you're in a position like me, FIREd, living on cash this year, with a small amount of income mostly from dividends and interest, a fairly large mortgage deduction, and likely to be in the 10 or 15% tax bracket. I can sell some stocks or funds I have that have gains (all long term). But it will only be a few thousand dollars worth before it pushes my income up into the next bracket. Yes, a decent little tax break, with the emphasis on little.

Actually, for me it would be better in the long run to use my space in the low bracket to convert some regular IRA to Roth. I might gift some stock to DD and let her low bracket get the 0% cap gains break. But even her low salary will only allow about a $6K or $7K sale before she breaks the 15% bracket limit. Not that big of a deal, although I'll take whatever I can get.
It's not as little an area for taking gains on taxable investments for married people. As the article stated -married folks filing jointly have a $68k ceiling which allows more room for manipulation. This could be a nice scenario for those ER'd couples living on cash/taxable accounts, working part-time, or with one (or even two) working in one of those ideal ESR jobs. Just depends on your particular scenario. A lot of possibilities here..
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Prem Watsa Deflation Bull, Equity Bear
Old 08-26-2010, 02:01 PM   #220
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Prem Watsa Deflation Bull, Equity Bear

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Actually, for me it would be better in the long run to use my space in the low bracket to convert some regular IRA to Roth.
This is how I see it also, although I have been willing to go to the top of the 25% bracket with Roth Conversions. It is only recently that I have qualified, so I got a late start in doing these conversions. That may have been caused by years of reasonable markets supplying healthy realized capital gains.

But if we continue with very low interest rates and somewhat unsettled markets I may discover that it would have been better to leave my money in the TIRA.

Still, if markets suck there will be opportunities for intermediate term trading, and being able to do this tax free (in a Roth) might be worth a lot. IMO this can't really be modeled, it depends too much on unknowns. But some of you with more deterministic outlooks may illustrate otherwise.

On the market forecasting front, there is something other than Hindenburgs to look at, although it is only a straw in the wind. Prem Watsa, CEO of Canadian insurer Fairfax Financial has been called a Canadian Buffett. He has bought options hedging almost the entire Fairfax equity portfolio, and he has also bought options going long on deflation- ie. if (mostly US) CPI falls, he makes money.

I am a child of inflation. I have always had a money interest, and I can remember my entire life since the late '40s involving inflation. I thought that a democracy could not produce deflation. But given Japan's example, I am no longer convinced of this. It may be that the US is different from Japan in this regard, but we thought the US could not experience widespread housing deflation, and that turned out to be wrong. Previously I thought that if voters liked some thing, and politicians liked the same thing, we would get that thing. No longer so sure about this.

Prem Watsa may be wrong, but he is no idiot and he does not like to waste money as he owns a big hunk of Fairfax. He did buy these options earlier when they were cheaper since there was little deflation consciousness around.

I can't link the piece because I gave up my WSJ sub and I now read at or through the library.

Ha
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