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The politics is deeply involved in the markets now. Just watch how things go from here. 2009-2010 all over?
2014 Malibu 2LT, 2015 Cruze 2LT,
What's the campaigning for--the third term.
2014 Malibu 2LT, 2015 Cruze 2LT,
What's the campaigning for--the third term. That's going to throw the markets. Look at Egypt.
2014 Malibu 2LT, 2015 Cruze 2LT,
See the article I posted last night in response to Rob. Apple may get a run-up because some are expecting a special dividend while tax rates are lower. It's also probably going to exceed earnings expectations. I also am keeping an eye on Microsoft. I still think the Surface can be a player. Microsoft is a lot more B to B than Apple so I don't view store traffic and buying vs Apples stores so seriously. The Surface is more for the corporate world with a trickle down to the consumer as gravy. So I'd give it more time to catch on. interesting that the NY Times did a story on how hot tablets are for Christmas gifts and never mentioned the Surface.
http://www.nytimes.com/2012/11/29/technology/personaltech/tablets-are-hot-holida- - - y-gifts-but-which-one-to-buy-review.html?ref=business&_r=0
Reuters reports Costco Wholesale Corp will pay a special $3 billion dividend to investors as the company posted monthly same-store sales that beat forecasts.
According to CNN, that allows investors to pay the lower 15% tax rate currently in effect on dividends.
Retailer rolls out big payout ahead of year-end tax uncertainty
Costco will spend $3 billion to pay a special dividend of $7 a share next month ahead of higher tax rates that may kick in come January.
http://seattletimes.com/html/businesstechnology/2019784028_costcodividendxml.htm- l
I'll play devil's advocate - from the article you linked:
Among the biggest beneficiaries of Costco’s special dividend will be co-founders Jim Sinegal and Jeffrey Brotman, and Chief Executive Officer Craig Jelinek...Sinegal, who retired as Costco’s CEO at the end of 2011 but remains on the board, and various related entities together own more than 2 million Costco shares...His payout from the special dividend will be about $14.4 million.
Brotman, Costco’s chairman, and various family members and related entities together own 734,834 shares, making the special dividend worth $5.1 million to him. Jelinek owns 197,142 shares and will receive $1.4 million.
This pretty much helps out the biggest shareholders. True we small investors might get a bit of a bonus but this is all about cutting the potential tax bill for the richest shareholders IMHO.
More devils advocate - from the same article:
Though Costco had more than $3.5 billion in cash and equivalents as of Sept. 2, it plans to pay for the special dividend by issuing new debt. It sold $3.5 billion of debt Wednesday, its first offering in almost six years.
So they are borrowing money to pay this special dividend which in the long term will cost the corporation more.
I'll bet you'd have a coronary if GM did such a thing!!
GM has done much worse multiple times. That said I have decided buying COST to take advantage of the Dividend is a no win situation. Their stock has been closer to $95 over the last year. So I buy at the current price of $102 by Dec 5th and collect the $7 dividend then sell the stock. It is likely to be back down around $95. What have I gained. If I had bought in 2009 when it was in the $50s I would be fine.
I think it is quite clear it is a dividend to benefit the major stockholders before the end of the year. And quite interestingly the CEO is a big bundler for Obama.
http://washingtonexaminer.com/biden-goes-to-costco-after-executives-cozy-up-to-t- he-white-house/article/2514670#.ULeLg6zAcaA
That's what typically happens as dividend dates approach - the price goes up by the amount of the dividend and then drops by that same amount the day the dividend is paid.
Basically anyone buying now is paying a premium for the dividend.
http://finance.yahoo.com/blogs/breakout/why-apple-investors-owed-30-share-christ- mas-170140899.html
But once the dividend is issued, the price will drop by a similar amount because the cash is no longer there and the stock loses that value.
Of course that's in a perfect market where the fundamental dynamics of the stock market actual apply. In today's market, it seems that fundamentals don't apply and a stock can be beaten down or raised up on a whim.
My area isn't exactly low cost either - but many lower cost areas I have visited simply aren't as nice, whether it be for employment or overall surroundings.
Speaker John Boehner, R-Ohio, on Thursday rejected a White House plan to avert the so-called fiscal cliff at year’s end that would generate nearly $1.6 trillion in new tax revenue over the next decade and require Republicans to allow Congress to relinquish its control over the nation’s statutory borrowing limits.
“A complete break from reality,” is how the plan, delivered to Boehner and other congressional leaders by Treasury Secretary Timothy Geithner at their Capitol offices, was described by a congressional Republican aide familiar with what was proposed. President Obama’s liaison to Congress, Rob Nabors, also was at the meetings.
http://www.nationaljournal.com/congress-legacy/white-house-cliff-offer-to-boehne- r-a-break-from-reality--20121129
Same ignorance sent to the Senate:
Geithner’s visit to his office left McConnell discouraged about reaching a “balanced” deal on tax hikes and spending reductions designed to prevent a shock to the economy in January. “Nothing good is happening” in the negotiations, McConnell says, because of Obama’s insistence on tax rate hikes for the wealthy but unwillingness to embrace serious spending cuts.
Geithner suggested $1.6 trillion in tax increases, McConnell says, but showed “minimal or no interest” in spending cuts. When congressional leaders went to the White House three days after the election, Obama talked of possible curbs on the explosive growth of food stamps and Social Security disability payments. But since Geithner didn’t mention them, those reductions appear to be off the table now, McConnell says.
http://www.weeklystandard.com/blogs/mcconnell-burst-laughter-geithner-outlined-o- bamas-plan_664210.html
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http://finance.yahoo.com/blogs/daily-ticker/politico-ben-white-ready-market-rall- - - y-because-fiscal-162337883.html
What does Obama lose if we go over the cliff? Nothing, because he and the media will blame it on Republicans.
What does Obama gain? A bigger club to hammer the Republicans with, more tax revenue, plus most of the cuts are from the defense dept.
Never let a crisis go to waste.
2013 LX 570 2016 LS 460
Unless I totally missed something on the interview, White did not say that there would be a big sell-off in the market going forward. A lot of folks have already sold shares of their stocks in order to avoid a higher tax on LTCG. He said that there would be a deal done before the end of the year and that would result in a stock market rally. The market is in a sort of a limbo right now waiting for a final resolution on the fiscal cliff issue, but I believe that the market in general is leaning toward a resolution as well. Otherwise, we would have seen a big collapse the past week or so.
As far as Apple paying a special dividend is concerned, this would be gravy, but I am not counting on it.
If you already hold the stock BEFORE the divi is announced you should make a little money. If you are buying short term just to make a buck on the dividend you will probably be disappointed.
2013 LX 570 2016 LS 460
Should be interesting.
As long as the deal includes anything resembling reductions in spending, it'll be a good thing. I'm thinking either: 1) it won't or 2) there won't be a deal of any kind.
Going off the so-called "cliff" can advance some agendas, or so I'm told.
What does Obama lose if we go over the cliff? Nothing, because he and the media will blame it on Republicans.
What does Obama gain? A bigger club to hammer the Republicans with, more tax revenue, plus most of the cuts are from the defense dept.
Never let a crisis go to waste.
Houdini,
I respect your opinion but I do not agree with it in this case. So, if I read you correctly, you think that there is a conspiracy taking place between Obama/media against the conservative Republicans on this issue. In other words, Obama does not at all care if we go over the fiscal cliff and he says "I am going to get what I want no matter what just to stick it to the other side". Even though most folks here on this Forum cannot stand Obama, I DO NOT believe that he will intentionally allow the economy to go over the fiscal cliff. He is not evil. There are negotiations taking place behind the scenes. The final deal WILL have additional spending cuts than what he proposed yesterday and there will be tax increases period.
What are you going to say about Obama when there is indeed a compromised deal that goes into effect?
I sincerely hope that you are right and I am wrong about this, and that a fair deal can be reached. If that happens I will give Obama kudos.
2013 LX 570 2016 LS 460
This falls into the "hide and watch" category. If whatever happens by the end of the year includes anything resembling actual reduction in spending (not reduction in the rate of increase), then you will have been correct.
I can hardly wait.
That clearly puts you with the majority here on this Forum.
I sincerely hope that you are right and I am wrong about this, and that a fair deal can be reached. If that happens I will give Obama kudos.
Fair enough!!
Charlie - what exactly are you seeing that is making you so positive unless you are banking on the bad deal I outlined. To me it looks like a widening gulf and I don't think Washington has a clue about what the psychological reaction (and resulting recoil in consumer spending) that higher taxes means. Without spending cuts the dollar will go weaker and prices of oil etc will rise so lower taxes and higher commodities. Great recipe for a recovery LOL. BTW - throw out the 2.7% GDP increase. It looks nice as a headline but it was mostly due to Government spending on fixed assets. Business spending on the same was down. If it was the other way around I'd be thrilled.
I am sure I will be paying more in taxes.....I hope the Republicans hold out for some meaningful cuts, but cuts in waste and not cuts for the genuinely needy.
My attitude is that I have paid high taxes pretty much all my life, but I have also prospered......Like Mr Buffet said, `do the deal to make money, and not how you may pay taxes on the gain`or something to that effect.. Frankly I don`t even consider tax consequences ---so maybe that is why I pay so much
As I have sold a house this year, I am surprised at how stringent the accounting for the cost is.....I certainly will pay more attention to that in the future....The only things that make the cost basis go up is money that is spent on replacing tangible things.....I don`t think the cost of insurance is a factor...Put a new roof on is fine, but not repairing one...Strange....Tony
Len, I believe that all the snippets from leaders of both sides in recent days is only posturing as Tony said above. There is too much at stake and eventually in the next few weeks there will be a grand compromise and "everyone will live happily ever after". Seriously, this is the way I feel after listening and watching to the various news outlets (excluding Fox). What I believe to be a fair deal will get done. The Republicans will give in to some tax hikes and the Dems will come up with some additional spending cuts.
You can call me a fortune teller if you want but I honestly believe that I have some ESP/psychic ability. How do you think I was forecasting the weather for almost 40 years?
But he's not a good leader. He cannot negotiate and work with Republicans; note how he runs out of Washington to try the populist campaign talks to the little folk rather than staying and being a leader. He had little record as a leader and he was still elected with help of the compliant media.
I'm not sure he's a good politician because he's only doing what his advisors, Axlerod, and others on his staff, tell him to do. That's why he has no real backbone and is not able to consummate a negotiations with Boehner without going back to his advisors as in the previous deal that fell through.
I'd rather see him stay and be involved in the negotiations with the Republicans who were elected by the people, in the Senate AND in the House.
I heard a politician state that the cliff has 1 trillion of cuts over 10 years our of project 9 trillion $ of increase, and those cuts are only in the projected increases rather than cuts in the actual current spending. This is like Obama's past "savings" in budgets (like one that got 0 democrat votes in the Senate) where the "savings" was in spending we wouldn't make on the two "wars" we were going to phase out. Not real cuts.
I see that fact, if true, as additional reason there's no impetus for Barry to reach an agreement. He will try to isolate himself from being involved to keep his name clean in the MSM's reportage, but try to use it to again paint he Republicans as the bad guys.
I see this causing the market going down and then getting a rally after the new year and the bad news settles in.
2014 Malibu 2LT, 2015 Cruze 2LT,
In these cities the Democrats have managed to gain power and stay in power by buying votes, demonizing their opponents, empowering unions, and getting a large portion of the people on the gov. dole.
By doing this, the Dems win every election, even while the cities are crumbling into ruin and bankruptcy in front of the voters eyes.
What many people still do not understand is that ALL these people care about is gaining and staying in power...and they will do anything to accomplish this one goal, with no regard what-so-ever about the consequences.
They have now managed to take the plan national, all while the MSM (read George Soros) cheers and helps them along this path to destruction. Our country has been taken over by no less than a revolution...and most of us are not even aware of it. Out without even a whimper.
What does all of this mean to the stock market and investors? I have no idea.
2013 LX 570 2016 LS 460
What does all of this mean to the stock market and investors? I have no idea.
I don't know so I sold almost all my stocks and Mutual Funds. Until we gain control of our economy again. I am buying more real estate that gives me good ROI. It puts my son to work and we do better as a result. I should be closing a fixer on a little over an acre of beautiful oak trees and Sweet Gum. The house needs a lot of work. Bones are good and the lot is worth my $20k offer. Bank is in TX and will lose about $90k on the foreclosure. There are some good deals. I sure would not buy anything in CA now. We just got tagged as the worst run state 2nd year in a row.
Notice the 5 best run states are Red. 4 of the 5 worst run states are Blue. I gave Iowa the benefit of the doubt as they don't know what they wannabe.
http://finance.yahoo.com/news/the-best-and-worst-run-states-in-america-150415625- - .html
PS
I am still tracking all my sold investments. So far it was a smart move.
2013 LX 570 2016 LS 460
Regards,
OW
In 2011, 35,000 taxpayers making more than $200,000 a year paid no federal income tax. As Matthew O’Brien notes at The Atlantic, 61 percent of those avoided tax for the same reason: their income consisted largely of interest on tax-exempt municipal bonds.
As Washington looks for options to broaden the tax base, and particularly to eliminate tax preferences for the wealthy, why not eliminate this exemption?
2013 LX 570 2016 LS 460
Longest Winning Streak Since ’05 Shows Tax-Rise Bet: Muni Credit
U.S. state and city debt is set to outpace Treasuries for the longest stretch since 2005 on bets that tax increases will be part of lawmakers’ plans to shrink the nation’s deficit.
The $3.7 trillion municipal market has rallied each week since the Nov. 6 re-election of President Barack Obama, who wants to make top earners pay higher taxes on ordinary income, capital gains and dividends. Helping fuel the gains, U.S. muni mutual funds added $1.1 billion in the week to Nov. 21, the most since August, Lipper US Fund Flows data show.
Investors are also set to receive about $21 billion next month from maturing local bonds, funds they will be looking to reinvest, according to Janney Montgomery Scott LLC in Philadelphia.
“There’s a wall of cash out there right now that’s waiting for debt to come to the market,” said Michael Pietronico, who manages $860 million of munis as chief executive officer of Miller Tabak Asset Management in New York.
Obama has proposed raising the top federal tax rate on ordinary income to 39.6 percent from 35 percent. His administration is talking with congressional leaders about ways to avert more than $600 billion of spending cuts and tax increases set to start in January, in the so-called fiscal cliff
http://www.bloomberg.com/news/2012-11-30/longest-winning-streak-since-05-shows-t- ax-rise-bet-muni-credit.html
2013 LX 570 2016 LS 460
Let's just say that he is a lot more optimistic than most of this group.. (and, he isn't too fond of bonds, right now...)
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What I'll add to the Wall Street comment is that the street will be OK as long as China and others keep financing us. If they slow down or stop then interest rates rise steeply and the burden on interest to existing debt will alone be a killer. The whole assumption of Dems is that the financing on very low rates will never stop so why worry about a deficit. It's a pipe dream of course and no one is going to want to be around when that bubble bursts. Witness again this column which is pretty much how the whole democratic party thinks and is why the states you noted are sinking fast - especially as highly skilled labor flees them.
http://www.nytimes.com/2012/11/26/opinion/krugman-fighting-fiscal-phantoms.html?- - - _r=0
Again - I think it's easy to be hopeful on a deal getting done as long as what you want or are saisfied with is a bad deal. I understand Charlie's post but look at a year ago. Same comments that were supposedly posturing by both sides and nothing but a bad deal got done and of course Obama left Washington to hit the campaign trail so the MSM could blame the reps. This stuff is oh so predictible now. For that reason there's little to no chance of getting a good deal done. Plus a good deal upsets the whole democratic strategy for votes.
I saw in interview with him this past week discussing the issues on with the capital gain tax.
His take was this: If I come to you with an opportunity to make money, is the first thing you think "Hmm no because of the increase in the capital gain tax?
Basically those that earn income mainly from capital gains won't stop investing just because they will pay more taxes. They will continue to seek out opportunities as they aren't going to stick in the bank for 1%.
AFAIK, Buffet has never been about short term investing.
Small Business investments to buy and build business that create jobs with high risk money (most small businesses ultimately fail) which is all long-term is a very different story.
That's right, they are different. But even those should follow the same train of thought. Should I let my money sit in the bank earning me 1% because I'm afraid of potentially paying more taxes sometime in the future? I believe the vast majority of business owners are smart enough to know they can earn more earn a far greater rate of return despite higher CGT than just letting the money sit there.
I saw the insipid questions that Matt Lauer was asking him... All about the short term gyrations of the market because of the upcoming fiscal cliff... Talk about not knowing your interview subject... Buffett invests for the long-term.. .he couldn't care less about the fiscal cliff and capital gains taxes...
But, he did make the same point in the Businessweek article. "If I call you up at Midnight, panting about the best investment I've ever seen, are you going to ask me what the tax is going to be?" (paraphrased)...
He says make as much money as you can, and taxes will take care of themselves...... I agree with him... That's what he did to get filthy rich.... it's not a strategy for once you get there..
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A lot of folks have VERY short memories. I remember well when Treasuries were paying 15-17%. My Uncle was upset when interest on them fell during the Reagan administration.
There is too much uncertainty to start or expand a business right now. One of these days the Democrats will have to accept the fact that the uncertainty is caused by their policies. Everything Reagan did to kick start the recession he inherited, Obama has done the exact opposite.
http://online.wsj.com/article/SB10000872396390444812704577609863412900388.html
If Warren Buffett called anyone up and stated something like that you'd view it like winning the lottery or an investment with no risk. So of course taxes would never enter the equation. Unfortunately investments like that only work if you have tons of inside info. Starting a new business venture or guessing how to play the market is very very different. Plus Buffett has such a weight on stocks because in effect his business does nothing but buy stocks and accumulates positions that anything he buys will go up. Of course he's also known to have had rights to buy shares in the past at prices that are under market because of his volume buying.