Investing 102

[LS1-IROC]

So the wife and I met with Chuck last night. Was overall a good experience. Anyhow...we started talking about capitol gains and the current rate of 15%. He felt strongly that by this time next year we will be looking at an increase in that rate. Any thoughts about that?

[Bucketlist2012]

Originally Posted by ErikLS2

Pretty good jobs report just came out this morning. I'm far from an economist but to me this is very good news. It was much higher than the so called "experts" predicted and most measured areas saw an increase. Some prior months were revised up as well.

If this continues you can plan on seeing Obama back and I'm not sure interest rates will remain low as long as they had initially planned either. I don't have any big things to buy anytime soon so I say bring on the inflation. That's probably inevitable anyway with all this QE we've been doing to keep the ship afloat.

Here's the report if you want to read it:

http://www.bls.gov/news.release/empsit.nr0.htm

I believe that they will cook the numbers for the election...And yes, they will keep propping up the economy with spending to keep the economy going through 2012..

So, if you have positioned yourself well with your debt, and your investments..

Inflation will help you... People have had plenty of time to get ready..

I don't see the government in Left or right...That is Politics,,the exact noise that they want you to buy into, and argue about.. I see the Fiscal policy, the domestic and foreign policies, as Investment tools, nothing else..

Keeps me from having to talk politics and religion with anyone..

But the FACTS are , do you see the spending continue, ala Home mortgage and student loan bailouts, just for starters, i could go on...

If you see more spending, then there is money on the table waiting to be made..

But boy that gets into Investing/Speculating. I do not day trade, but i do formulate a yearly game plan, as well as mid and long term plans..

I need Greg's input, I know his returns are stellar , so i may be spinning my wheels some, .

[hifi875]

Originally Posted by ErikLS2

Pretty good jobs report just came out this morning. I'm far from an economist but to me this is very good news. It was much higher than the so called "experts" predicted and most measured areas saw an increase. Some prior months were revised up as well.

If this continues you can plan on seeing Obama back and I'm not sure interest rates will remain low as long as they had initially planned either. I don't have any big things to buy anytime soon so I say bring on the inflation. That's probably inevitable anyway with all this QE we've been doing to keep the ship afloat.

Here's the report if you want to read it:

http://www.bls.gov/news.release/empsit.nr0.htm

Our government has a peculiar propensity to come out with ambitious unemployment numbers only to come out with corrections 3 or 4 months later. it has occurred many times since obummer has taken office.

[Bucketlist2012]

Originally Posted by hifi875

Our government has a peculiar propensity to come out with ambitious unemployment numbers only to come out with corrections 3 or 4 months later. it has occurred many times since obummer has taken office.

My point exactly...Do NOT buy into, the noise.That is all it is..

As Greg says, that is when the little man on wall Street makes his moves..

look back at all the numbers...They readjusted the wrong way,everytime, weeks later, to be swept under the rug..

Again, no politics, just facts...facts that can be used to make money..

[GregWeld]

Originally Posted by LS1-IROC

So the wife and I met with Chuck last night. Was overall a good experience. Anyhow...we started talking about capitol gains and the current rate of 15%. He felt strongly that by this time next year we will be looking at an increase in that rate. Any thoughts about that?

Yep --- When that happens you'll see two things -- less trading so people will go back to buy and hold -- OR -- the rats leave the ship and buy Muni bonds which will drive the prices up therefore the yields down.

Either way - the government loses.

They -- the 535 idiots that actually run the country - don't understand that 15% of everything is better than 35% of nothing.

[Sieg]

Nice to see I'm not the only that has developed a serious distrust for any .gov related noise.

Considering the code of "ethics" in modern politics you can't trust the noise. All one has to do is compare core campaign promises vs. their actual performance and accomplishments record during their terms.

I know this because I'm in the rug business.

[hifi875]

Originally Posted by solarguy09

My point exactly...Do NOT buy into, the noise.That is all it is..

As Greg says, that is when the little man on wall Street makes his moves..

look back at all the numbers...They readjusted the wrong way,everytime, weeks later, to be swept under the rug..

Again, no politics, just facts...facts that can be used to make money..

exactly, and the mainstream media just ignores it or it gets just a snipit of coverage.

[GregWeld]

I should have explained the MUNI BOND yield to tax relationship as they are directly linked.

Depending on what tax bracket someone is in - you can calculate what TAX FREE return you need to EQUAL a taxable return.

So as taxes go UP on dividends or LTCG's -- then the return required to equal that NET goes down.

So in Washington state -- we have no income tax -- and if I can buy a TAX FREE BOND paying 5% --- I'd have to get a TAXABLE return @ 35% income tax rate of 7.69%

Right now -- with dividends taxed at only 15% that taxable dividend only needs to be 5.56%

Since it's "riskier" and harder to make that 7.69% income in the stock market -- why would a person bother -- when they could just buy 5% tax free munis -- be guaranteed to get 100% of their capital back at "X" date...

[Bucketlist2012]

Originally Posted by GregWeld

Yep --- When that happens you'll see two things -- less trading so people will go back to buy and hold -- OR -- the rats leave the ship and buy Muni bonds which will drive the prices up therefore the yields down.

Either way - the government loses.

They -- the 535 idiots that actually run the country - don't understand that 15% of everything is better than 35% of nothing.

Great Line.... I use it all the time....535 People are running 300 Million people into the ground...

Amazing.. but back to Greg's point of no listening to the Noise, and make the Investments for you and the Long Term.. Not the short term, or the left or right...YOUR money....Forget about the 535 and the way they work..it is your world that counts..

[GregWeld]

Okay -- so let's examine the STOCK MARKET and DIVIDENDS if they change the tax rate -- now that you've digested the BONDS vs STOCKs and taxable / non taxable return quality.

DIVIDENDS are paid as a dollar amount... i.e., they are declared in an AMOUNT not a PERCENTAGE. SO..... as the stock FALLS in price -- the PERCENTAGE of the dividend return INCREASES.

Now -- if I have to make a 7.69% taxable dividend --- to equal a 5% tax free bond -- what has to happen to get there?? STOCK PRICES HAVE TO FALL...

The oldest saying on Wall Street --- "as interest rates RISE - stock prices DIE"

Ignore the relationship at your own peril.