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Taxing capital gains with higher inclusion would barley move the needle It would also punish the 99% not the 1% who would simply hold their shares and choose not to pay. The 99% who need the capital gains to finance regular purchases would be most hurt by this. With regard to the taxation of primary residence it has been bantered around and it makes sense because let’s face it. That’s where the money is. Look you have a PM that has never kept a budget and is a trust fund kid. He has no sense of the arc of history. Pandemics can last years. It’s almost a guarantee the government will print more money in 2021 than 2020. And guess what. Sh*t happens that we cannot anticipate that’s why wise people save when times are good like 2015 to 2019 rather than run deficits that will “balance themselves “ If you don’t develop palpitations everytime he emerges from his bunker to unleash money from every orfice then you are not understanding the consequences. When he says the government has your back he means you and me are gonna pay for it

That comment made my day :-) I am actually thinking of doing the opposite. Gotta love how smart people can look at the exact same situation and see two completely different solutions / ways forward. No right or wrong. The key is fit. Finding a solution that works for you. Best of luck! you are thinking of exiting real estate (in Vancouver?) and entering the stock market? i’m definitely not smart financially. thx to this board (all the contributors and educators and the administrator Sanjeev of course) — i have had some fun while keeping my capital and some :)) gary, I have learned over the years that I am smart as a stump when it comes to real estate. Dumb luck explains my current situation. When I bought my current residence in Langley (2010) I paid about $600,000 and thought the market might be in a bubble. My mortgage was a little under $400,000 so my starting equity was $200,000. This spring my house might sell for $1,300,000 (perhaps more). My mortgage is under $330,000. With closing costs, costs to break my mortgage and moving costs if I sold this spring I think i might net about $900,000. I started with $200,000 so this would be a $700,000 tax free gain in 11 years (no taxes on principal residence in Canada). Locking in $700,000 real estate gain (tax free) appeals to me. Adding $900,000 to our existing investment portfolio my wife and I will be set up very well financially. If I can earn 6-8% on the total portfolio (my long term average is a shade under 15%) we will be set financially. Another smaller factor is our current house will need some improvements in the coming years. If we stay my guess is we will spend about $70,000 in improvements in the next 5 years (new windows, garage door and motor, plumbing upgrades, new powder room, new kids bathroom, new kitchen etc). We have a nice house... but it will need some work :-) The second part of the equation is lifestyle. Where we live today is a great area to bring up kids: quiet street, great schools (all walking distance), parks, bike trails, newer rec center, shopping close, great sports programs and sports facilities. Great suburban living (50 minutes from downtown Vancouver). Except our 3 kids will all likely be in same University (UBC, on the other side of town) in Sept. My wife and i will be entering the next phase of life (no kids at home; no kids sports activities to keep us busy in the evenings etc). We are thinking it might be great to live in the fun part of Vancouver (close to UBC) for the next couple of years: rent a house ($4,500/month, perhaps more). And be closer to the kids (at school) and spend the next couple of years exploring and getting know the fun parts of urban Vancouver (beautiful city). Actually, this is more what I am thinking; I just broached the idea with my wife and she needs some time to wrap her head around it :-) We have talked about it for the past 6 months or so but I decided it was time to kick it up a notch when I saw what recent sales were going for in my area. We are in no hurry. Historically we have moved every 5 years or so; 11 years in one place is a record for us. The goal is two fold: 1.) improve our lifestyle 2.) lock in / perhaps improve our financial situation No firm decision :-) When we have made moves like this in the past, it normally takes us about 12-18 months for the decision to come into focus. Every move we have made has been a great decision (looked at with hindsight). If we stay I will be happy. Are you considering the possibility that capital gains on the house may be taxed with the next budget? That’s putting some hurry into these decisions for people Somehow “the government has your back” will need to soon give way to the reality of tax increases

“The reality is most people heard Buffett dismiss it and others call it tulips - and that is enough to stop thinking.“ Buffett dismissing bitcoin reminds me of Einstein dismissing quantum mechanics

This will also potentially have a devastating effect on retirement plans

But then why doesn’t everyone just do this with Switzerland. A country with zero capital gains tax ? What you say is not correct. It's not true that Switzerland has a zero capital gains tax. What's true is that Switzerland doesn't have a capital gains tax. The reason why Switzerland doesn't have a capital gains tax is because capital gains have a 100% inclusion rate and are taxed as ordinary income. In addition Switzerland levies a wealth tax on your net assets. Thanks for clarifying I guess not to leave the main point I’m just trying to understand the issue of “flight of capital “. In other words why do we have to keep our capital gains policy similar to US and if capital can easily flee then any other country with low capital gains taxes would just reap the benefits even if US and Canada both raised rates. Just trying to understand these issues from those here that are more knowledgeable

But then why doesn’t everyone just do this with Switzerland. A country with zero capital gains tax ?

Wabuffo excuse my ignorance but I hear this argument often and don’t totally understand it How easily can we really move capital to US markets from Canada ? What is the mechanism? As a Canadian I don’t see how I can simply start investing in US equity and get the lower capital gain tax unless you mean people with capital are just going to leave Canada and become US citizens to get the lower capital gains tax ? I suppose that is the obvious mechanism for the flight of capital argument Thanks

This is more a question for my Canadian friends as the tax situation in US tends to be less severe or at least it can be more difficult to raise taxes across the board The post Covid world may see 1) capital gains inclusion go way up. 75 to 100% 2) principal resident exception on home possibly go away Wondering how some of you are approaching this issues especially with regard to large capital gains you may have in stocks held for many years? I see financial advisors telling people to trigger gains now before it’s too late but killing the compounding machine also has its drawbacks? So far I have stayed with benign neglect of the portfolio but wondering if I am a sitting duck especially with some of the large capital gains made over last 10 years Thanks

I think if we are honest with ourselves we would admit that these political discussions are eroding the online friendships and civility that are required on an investment board to allow people to debate investment ideas and to disagree with the idea but not the person - and not belittle the person expressing the idea. That becomes hard to do when you are attacking each other’s politic views over on the politics section. It’s perhaps a microcosm of America but in a very small way it can start the process of destroying what was built here and that needs to be taken seriously

https://www.institutionalinvestor.com/article/b1n5nhk92q3g62/I-Can-t-Believe-I-m-Saying-This-But-I-m-Passing-on-Seth-Klarman If value investing is merely being poorly practiced by some poor practitioners someone better tell this guy called Seth Klarman that he is just a poor practitioner of the art

Agree. That is a good encapsulated summary of what happened. But to the investors that purchased the equity what was supposed to happen was that the cash burn would be stopped by quickly closing and selling poorly performing stores. The famous line by Bruce Berkowitz one of the value investors involved at the time was that sears losses were optional. It’s easy in retrospect to summarize what happened here as obvious but this gets to the heart of a common value thesis that there is safety in the assets and that assets like real estate that have knowable market values and are fungible need to be given greater weight than unknowable cash flows at year 6 etc. These assets were not safe because in essence they belonged to society NOT to the investors. The concept of multiple stake holders makes it impossible to liquidate large assets and shut down large poorly operating businesses. This is just one of the perhaps many lessons new age value investors need to learn to avoid the value traps that lead to these brutal results

Agree. And one way to think about this is that the market has become more efficient and hence value investing does not work because you get what you pay for whereas in the past you could more easily find valuable assets that were simply being ignored but in the last 15 years these assets that seemed just out of favour were being properly valued in the market. It was the value investor that was missing the boat and falling into a value trap without knowing it.

Now there was hypothetical value in asset, but it could not be converted to cash. If you can not take out cash then investment will not work. Yes but WHY can you not convert this to cash. The thesis for all the value guys in sears wasn’t based on the operating business. It was based on the assets

I don’t know if one can have a proper discussion about this issue without drilling down to specific investments Otherwise we are just speaking in generalities and it’s not useful. So too answer does value investing work we should break down the companies he invested in that lead to the 1.5% returns over 15 years...... Why did sears not work ?? Massive Real estate assets But poor operating business..... but isn’t this the typical value investment playbook. The concept that assets are safer than operations is a critical value investment concept. Throwing out this idea is just admitting that value investing does NOT work. So why did sears not turn out to be a great investment? I think if you can do a post mortem on Sears you can answer the question One issue that will come up is are you really the owner as a equity investor in the same way you were 30 years ago. The concept of stakeholders is stronger now than it was 30 years ago. You can’t go in and wack management and close down all these sears stores overnight. You would be attacked by politicians and the media and brought before Congress. So this is just one issue that has changed. You are no longer the “owner “ in the same way you were 30 years ago. I think there are more lessons to be learned in such an exercise and if done well we may discover that at least in the way it was practiced by Ben Graham and early Warren Buffett value investing does not work - maybe

Fastly

Klarman has been bearish for 10 years. You are being way to kind to Seth Klarman He has been bearish for closer to 20 years and at some point that’s no longer called being early it’s called being wrong https://valuehunter.files.wordpress.com/2009/03/klarman_cash.pdf

Of course, this is likely like the monkey who accidentally got 40 heads in a row But what if all those monkeys came from the same town let’s call it “Robinhoodville” then would it not show that this is not just luck ?

This great board is in danger of losing everything that made it great for so many years. This board needs a moderator Politics and Covid should be immediately banned as topics Perhaps an AI bot could be used to remove posts that are of little investment value I am happy to submit some key words to the bot for flagging purposes Hopefully someone takes this seriously

In the tech space you can look at Gartner for one source of information https://www.gartner.com/en/research/methodologies/magic-quadrants-research

Agree. Since when does Buffett time markets and jump in and out of stocks. Even if he knew there was a market drop coming he wouldn’t sell all his stocks. This are industry specific calls and speak to specific impairments in banking and airlines not a comment on the probability of a market drop

Well USG fell back down to $20 years later due to financial issues associated with the financial crisis and their debt - but on the day they declared they were exiting bankruptcy as I recall the stock went from $35 to $80 -- You had opportunity to buy cheaper only after their financial situation started to deteriorate partly due to the debt they took on to pay off the asbestos liability

Thanks for that summary Another interesting comparison would be Buffett's investment in USG equity which was held through their asbestos associated bankruptcy process. The equity was made whole. It could have been purchased for under $5 and eventually peaked post bankruptcy to $120

I think it's a good bet but many unknowns so I would need to size it fairly small. Same with FCAU, which I do own. My concern with AAPL is there really hasn't been any dominating new tech since the IPAD. What role did Jobs play in it all and can they innovate without him? Didn't the IPOD/IPHONE/IPAD all happen within about 7 years? Now it has been 8 years without anything comparable. You can also throw in itunes I think. The company really went to hell the last time he left, I am concerned it can happen again. I am not really into tech so I might be missing something but this is how I understand the company. That is the bear case and you have laid out the bull case succinctly. I have a hard time deciding which side is correct but agree the market is not pricing much of the bull case in. I think closer to 10x earnings and it's a 5% position for me. That's about all I can do with this one. What I would like to see is some new innovation that review sites are pumped about. If that happens and the stock doesn't move I would make it a larger position. Shalab, thanks for laying out the bear case for AAPL. I agree. The idea of not coming up with a ground breaking product in the post Jobs era is a concern. However, in that case it seems that the bear case for this stock is that it does not move up and stays a blue chip paying a 2%'ish dividend. So if bull case plays out, then win big, if bear case plays out, there is little to lose. Still a company with good revenue. Isn't that the risk ratio we want? Not sure that is the only bear case for apple 1) Iphone sales have peaked 2) The strategy to raise prices to make up for peak sales is not looking like it is going to work 3) AI is weak 4) Apple is not making the best mobile app software -- Google software runs just about anything worthwhile on the iphone (maps, calendars, email). If hardware increasingly become a commodity - and you are not making the very best software then what happens to the company in the long term 5) The narrative that they are a service company now is weak -- they are a rent seeking company -- Why cant i buy a kindle book on my iphone kindle app -- cause apple wants 30% FOR DOING NOTHING - will this stand up in court ?? 6) The majority of their "service business" profit comes from google - who they publicly denounce whenever they can ---- without acknowledging that they are indirectly in the business of selling data through this agreement with google 7) they are burning cash in projects like titan (waymo wannabee) and their movie business netflix wannabe - 10 years too late this is uninvestable -- so theres your bear thesis

"Guns germs and Steel" although also not a typical history book Most history texts that simply recount history are not adding to the broader arch of comprehending the past in a context that informs the present "Guns germs and Steel" was a fascinating read

It was once the widespread belief of citizens in this country that the taxation of assets was off limits This may no longer be the case THis should be on everyones radar -- its a relatively benign way to start off a process that could lead to a class war After all - is that cash in your bank account off limits ? Not many have the savings you do -- why cant you give a little bit more to help out ? http://vancouversun.com/opinion/op-ed/elizabeth-murphy-b-c-taxes-need-a-second-look