ERICOPOLY

There is something impractical about their next car, the Model X. The gullwing doors sort of make it impossible to have a roof rack.

Of course the forecast for the next three days are 70, 75, and 74. Taxes or not, the standard of living here is higher.

Slate has a good writeup: http://www.slate.com/articles/business/moneybox/2012/11/boehner_and_the_fiscal_cliff_the_house_speaker_is_bluffing_about_the_bush.html?wpisrc=obinsite Basically reminds us that the GOP can't stop Bush tax cuts from expiring, and for political reasons can't vote against a middle-class tax cut in 2013 (which benefits even the rich, as some of their income would also be taxed less, being the first $250,000 of income).

Well, here's one opinion on the subject: http://globaleconomicanalysis.blogspot.com/2012/11/prepare-for-demise-of-california.html I actually don't disagree with the direction of results he expects from this, just the severity. I'm quietly hoping that some of the rich people in Montecito will pack up and leave, so I can buy a house here at a discount. This place is crawling with Republicans.

However, when you leave your employer and rollover a 401k to a Rollover IRA, you can have 100% of the after-tax money go directly to a Roth IRA, and have 100% of the pre-tax money go directly to the Rollover IRA. The after-tax money from the 401k can go straight to the Roth IRA even though you haven't yet decided whether or not to do a Roth Conversion on the pre-tax money. That's what I did :) EDIT: Actually, it might have just been the Roth-401k contributions that went straight to the Roth IRA. I had both Roth-401k and the regular pre-tax kind in that company plan.

Well, I'd never thought of that. But a minute on Bing found me this: One other potential planning opportunity involves Roth conversions. While IRA required minimum distributions are not considered unearned income they are considered part of MAGI. Roth IRA distributions are not considered unearned income or MAGI. http://www.thestreet.com/story/11709964/1/2-obamacare-taxes-hitting-high-income-earners.html

There is one other little advantage to Roth IRA conversions. 5 years after you do a conversion, you can withdraw the amount you converted without incurring the usual early withdrawal penalty. There might be some reason for withdrawing some funds early. In my case, if I run out of taxable funds early on I might need to withdraw a portion of my Roth IRA early. Actually, since I did my last conversion in 2010 I only have to wait until tax year 2015. I'll be 42 years old, much younger than the 59.5 that I'd otherwise need to be.

This makes perfect sense -- if the rate is the same or higher. If the rate when you retire or convert is lower, then it might not (let's say that you stop working and has no income except the conversion amount). Right, totally depends on your income you expect when retiring. I flushed my IRA completely into a Roth IRA because I'm expecting to have some taxable income from variable annuities when I'm of retirement age. I'm not sure you saw what I posted earlier, so I'm going to write it again: I will probably invest some of those [taxable] funds in variable annuities (which are effectively mutual funds taxed the same as Traditional IRAs). There are no limitiations on variable annuity contributions (meaning you can put billions into them if you wish). So I will make slow withdrawals from the variable annuities to shelter the profits at low tax rates each year.

I'm venting at that WSJ article from a day or two ago that talked about the big writedowns coming if corporate tax rates are reduced. The point of the article was clearly to scare the reader about the coming "losses".

One thing we could do is lobby our local Congressman to bring the corporate tax rate up to 90% so that the value of the DTA would soar.

I suspect that the Fiscal Cliff was born out of the Republican hopes last summer for a Republican White House. Why negotiate for fiscal reform from a weak position when you firmly believe you've got a shot to control the White House in 2013? So the fiscal reform was punted to a post-election date. Now both sides can get serious, knowing which cards they hold. The most important outcome of this election is that it's over.

In the last statement, I assume that by "Traditional IRA", you actually meant "Roth IRA"? I meant Traditional IRA. I don't think my paragraph was very clear. I'm trying to point out that I expect my IRA to be huge, meaning if I hadn't converted it already then one day when withdrawn it would effectively be taxed at the top rate. Today's top rate at 35% isn't that bad. Who knows, we could get some Republican presidents to jack up the rates again, like Eisenhower did (to 92%) and like Hoover did (from 25% to 63%!). But even if today's top rate of 35% is still the same down the road, it's still better to convert now rather than later. In that last sentence of my prior post I was trying to convey that it's better to pay 35% of the account value now rather than later because I'm using funds from my taxable account to pay the tax. There is no way that my taxable account is growing at the same pace as a Traditional IRA can grow (with it's tax deferral). So if you don't pay the tax today, then you wind up using an ever larger % slice of your taxable funds to pay that tax down the road (this is because your taxable funds grow at a slower pace than your Traditional IRA). Hypothetical, if future tax rates aren't higher at retirement (i.e. time of withdrawal) than today, and if one can compound at a high rate, then one should be indifferent between Roth and Traditional, in my view. At a low rate of compounding, one should prefer the Roth. Huh? I just explained why it's better to do the Roth conversion now rather than later even when the tax rates are identical. Let's say two things first: 1) your tax rate is 25% on $100k worth of conversion whether you convert today or in 5 years' time. 2) Your accounts (taxable and IRA) are all going to double over the next 5 years. Scenario A: Convert Today: $25,000 in tax paid on conversion amount. You pay this in cash from your taxable account Scenario B: Convert Five years from now: $50,000 tax paid on conversion amount. There you have it. So now do you see how you've stuffed it up? The $25,000 that you could have used to pay your tax was doubled, so now it's $50,000. You kept that $25,000 invested in your taxable account, it's now worth $50,000 pre-tax. It's not worth $50,000 after-tax. You've blown it. The IRS is thanking your for your mistake.

Oh yeah, and there's more to my thinking that I left out. Traditional thinking is that you don't convert 100% of your Traditional IRA because you want some money to withdraw a little bit each year at low tax rates after you reach retiremenet age. My approach would seem wasteful to them. However, I will also have sizeable funds in my taxable account. I will probably invest some of those funds in variable annuities (which are effectively mutual funds taxed the same as Traditional IRAs). There are no limitiations on variable annuity contributions (meaning you can put billions into them if you wish). So I will make slow withdrawals from the variable annuities to shelter the profits at low tax rates each year. Thus, I have no strategic use for a Traditional IRA and it's better for me to convert the entire account to Roth IRA as I have done.

In the last statement, I assume that by "Traditional IRA", you actually meant "Roth IRA"? I meant Traditional IRA. I don't think my paragraph was very clear. I'm trying to point out that I expect my IRA to be huge, meaning if I hadn't converted it already then one day when withdrawn it would effectively be taxed at the top rate. Today's top rate at 35% isn't that bad. Who knows, we could get some Republican presidents to jack up the rates again, like Eisenhower did (to 92%) and like Hoover did (from 25% to 63%!). But even if today's top rate of 35% is still the same down the road, it's still better to convert now rather than later. In that last sentence of my prior post I was trying to convey that it's better to pay 35% of the account value now rather than later because I'm using funds from my taxable account to pay the tax. There is no way that my taxable account is growing at the same pace as a Traditional IRA can grow (with it's tax deferral). So if you don't pay the tax today, then you wind up using an ever larger % slice of your taxable funds to pay that tax down the road (this is because your taxable funds grow at a slower pace than your Traditional IRA).

I rolled my 401k to a Rollover IRA at the beginning of 2008. I waited until the end 2008 to convert the first 1/2. That was my first mistake as it appreciated a lot in 2008 while I sucked my thumb. My second mistake was waiting until 2009 to convert the second 1/2 of it. I was planning to not book any gains until 2010 (to keep my income below the allowable conversion limit) but then Fairfax bought out Odyssey Re and blew my income sky high. Then I had to reverse the conversion and do it again in 2010 (with no income limits). I wound up paying tax on 5x as much conversion principle this way, compared to if I'd just converted the entire thing on day 1 in 2008. Don't wait is my advice -- you never know how much gains you'll make. After paying taxes, do you think that you are still ahead comparing to invest that amount in traditional IRA? Oh, yes, no doubt. For one thing, Washington state didn't have an income tax. Now I live in California. Big difference right there. 1/2 of my BAC warrants are in my Roth IRA. Now, suppose that account is worth $25 million in 2019 at age 45. What's it going to be worth when I'm 70 and I start getting hit with forced withdrawals? At 10% per annum, I'd say north of $250 million. No doubt in my mind getting it all into Roth IRA is the best move as early as possible. Here is the short reason why: Let's assume the rate of compounding (I invest in the same things) is the same in the taxable account as well as in the Traditional IRA account. I would be trying to grow a present tax bill (to do a Roth IRA conversion today) in a taxable account at the same rate as the Traditional IRA (which compounds tax free). So a Roth conversion today is a no brainer unless you can make after-tax returns in your taxable account grow at least as fast as your tax-deferred compounding rate in your Traditional IRA. And if you can do that, then do it in your IRA too!

I rolled my 401k to a Rollover IRA at the beginning of 2008. I waited until the end 2008 to convert the first 1/2. That was my first mistake as it appreciated a lot in 2008 while I sucked my thumb. My second mistake was waiting until 2009 to convert the second 1/2 of it. I was planning to not book any gains until 2010 (to keep my income below the allowable conversion limit) but then Fairfax bought out Odyssey Re and blew my income sky high. Then I had to reverse the conversion and do it again in 2010 (with no income limits). I wound up paying tax on 5x as much conversion principle this way, compared to if I'd just converted the entire thing on day 1 in 2008. Don't wait is my advice -- you never know how much gains you'll make.

How does the election change the forecasts for California's demise? The liberals now have a supermajority, state income taxes were raised on the rich, sales tax was increased, etc... Gridlock is over in Sacramento

Yes, it's just about perfect weather here. Just what I needed. You probably read that I started riding horses (first lesson today). I will soon be taking surfing lessons too (got a board from Costco). The Santa Barbara area is pretty much kick ass.

Dammit, the Republicans won. Cheer Up, Republicans You’re going to have a moderate Republican president for the next four years: Barack Obama. http://tinyurl.com/ajxup7z

Look, if you can make 15% a year for 80 years then you'll be able to find lots of pretty ladies who will call you whatever you want.

YES I would.. irregardless of what class of asset it is.. 15% after that many years is tremendous I guess you wouldn't include Walter Schloss as a 'superinvestor' then even though Buffett calls him one That gets a bit strange because if a fundholder puts all of his money into Schloss' fund and mirrors Schloss performance, isn't the fundholder also a superinvestor?

Nah, a Value Trap.

Man, how long can someone take to explain why stocks bottom? Spit it out, short and concise, move on.

He grew up in a privileged household where his father was on Reagan's staff (well, a policy advisor to Reagan) and Volcker was a friend of the family & household guest. So he has this confidence of being an imagined important person that isn't born from his own competence. That's my psychoanalysis of him anyhow.

14.45% annualized since 1974 is pretty solid, though many have done much better. http://www.centman.com/investment-strategies/cm-value-i-all-cap-value/performance Many? You will struggle to come up with more than 5, maybe 10. Even if you would come up with 50 it will still make them a Superinvestor. They will certainly rank in the top 0.1% of the fund population. Great notes!! There are plenty of under-the-radar hedge funds/family offices that have done better; there's a guy out in California that has done 40% annualized since the early 80s. I can't confirm all of the records I hear about, but I hear enough scuttlebutt to make me believe that W.E.B. isn't entirely in a class of his own. With that said, Arnold Van Den Berg is a great investor. He was one of my recommendations to my parents when they were looking for a new asset manager. There are many good managers out there, but few go through the pains that CentMan takes to put clients' minds at ease. Customer service is usually the most neglected aspect of "value-focused" funds management. 40% annualized over 25+ years? surely this individual must be on one of those Forbes' list How do you get on the Forbes' list? Like if I just keep compounding my money as I've been doing the past 9 years, I'll surely qualify for the Forbes list at some point here. But do I call them up and tell them I'm rich so put me on your list? What's the etiquette there? Maybe some people are worth $5b but don't want everyone to know, so they don't tell Forbes.