ERICOPOLY

I'm not calling the top (it's obviously not in my skill set) but I would certainly be gone today. So anything after this point I can stop being annoyed by this stock.

Not waiting until today to unload SHLD.

Awesome! Thanks.

Is there a low cost Health Savings Account (HSA)? Something preferably with a self-directed brokerage option where we can pick individual stocks/bonds/options? I see Wells Fargo has an HSA, but the investments are limited to Wells Fargo mutual funds. Their bond funds charge between 70 and 80 basis points for expenses. That's roughly 15% of the income! For comparison, Vanguard charges only 59 basis points for a comparable bond fund inside a variable annuity (and variable annuities have a reputation for being expensive).

Supposedly about 15% of Californians are uninsured. Does anyone believe they have an extra $9,492 in their annual family budget with which to purchase one of these bronze plans? I'm curious to see how many people actually sign up versus pay the $500 penalty. The penalty of course is only 5% of the actual cost of insurance. Not much of a penalty really. I believe you still have to factor tax credit based on income level, which considering median or avg income of 55K for household in CA , would be about 6000 to 7000 dollars. Please check how much will tax credit help me from below link. Let me know what you think. www.coveredca.com/frequently_asked_questions.html I see. Once I've got my portfolio entirely in MKL and Berkshire shares (no dividend income), the rest of you working Americans will subsidize my insurance. Thanks!

Supposedly about 15% of Californians are uninsured. Does anyone believe they have an extra $9,492 in their annual family budget with which to purchase one of these bronze plans? I'm curious to see how many people actually sign up versus pay the $500 penalty. The penalty of course is only 5% of the actual cost of insurance. Not much of a penalty really.

The strange thing though is that in California the bronze plan costs the least overall if the shit really hits the fan. This is what I wrote: Total maximum cost for family: Bronze 60: $12,700 + $9492 = $22,192 Platinum 90: $8,000 + $16,536 = $24,536 So it's like you play this game where you are better with Platinum than Bronze if things are really bad, but if things go from really bad to extremely bad, then you'd have been better off with the Bronze rather than the Platinum. So that's what I find really weird. Anyways, if you choose Bronze you cost yourself (worst case) $5,656 too much over the course of the year (over the optimal play). But you save $7,044 annually if no sickness occurs. So I feel that Bronze is the optimal play if you don't have preexisting conditions. Honestly, what a bizarre system.

Thank you! You are our tax expert here! Do you feel like the reviews here would be some concern? http://www.yelp.com/biz/interactive-brokers-llc-greenwich regarding the reviews. This makes no sense to me "IB force liquidated my positions and created a loss in my account that would have been greater than if all my trades had gone wrong. ". He goes on to say that he had enough liquidity, and then makes the point that these were European style options and couldn't be exercised prior to expiry. Something tells me that IB cares more than just whether or not you need any liquidity before they expire -- perhaps the direction they trade in the interim makes IB nervous about having enough liquidity when they expire. Impossible to know without the whole story. But do you believe him when he says that they created a loss greater than if all his trades had gone wrong? All of them? That sounds nonsensical.

(thinking out load) I think the Platinum90 is something you choose if your family has pre-existing conditions. No deductible (vs $5,000 for Bronze) and the cheapest co-pays, hospital stays and lab tests. I guess that's why the maximum cost is a bit higher -- to price in the fact that these policies are more likely to blow the ceiling out due to the tendency of it to attract the sickest people.

So I have a question about these -- either I don't understand what the words "maximum out of pocket" means or something doesn't add up. I used their cost calculator at coveredca.com. Age 47 adult and age 40 adult. 2 dependent children under 18. Premiums: Bronze 60: $791 monthly ($9,492 annually) Platinum 90: $1,378 monthly ($16,536) Maximum out of pocket for family: Bronze 60: $12,700 Platinum 90: $8,000 Total maximum cost for family: Bronze 60: $12,700 + $9492 = $22,192 Platinum 90: $8,000 + $16,536 = $24,536 Here is the question: Why are BOTH the minimum possible annual cost AND the maximum possible cost lower for bronze60 versus the platinum90 plan? Minimum annual expense: $9,492 annually if you go with Bronze60 plan Maximum annual expense: $24,536 annually if you go with Platinum90 plan www.coveredca.com/shopandcompare/#healthplans

If you're only getting paid 50% of the borrow cost (and the borrow cost is very high like SHLD), then it might be better to simply buy only call options. When the borrow cost is high, put/call parity will break down to reflect the cost of borrowing shares to short them. With options, the borrow cost is "locked in" unlike the common stock. It is strange that the borrow cost is so high with SHLD. It costs roughly 10% annualized to short it synthetically (write 2015 calls at-the-money and use proceeds to offset cost of 2015 at-the-money puts). The cost delta is the "synthetic borrow" cost. But I suppose if you expect the stock to drop suddenly like it did already this year, then it would be perhaps better to just short the common and pay the borrow. That 10% annualized synthetic cost of shorting would be the more expensive path to take if the stock went back down to $40 next week.

Supposing you live in California and have a large portfolio margin account allocated 100% to Berkshire Hathaway B shares. You never need to pay tax again (or until they pay a dividend). You just borrow on margin to fund your spending and hedge the loan with at-the-money puts. Yes, puts cost you money but so do taxes. I'll bet it's better to go the margin+puts approach. As the stock rises over time, the cost of those puts on an annualized basis falls lower and lower (if you never change the strike price). You then start to generate gains on that stock you never sold (but otherwise would have sold) -- these gains come as a result of Berkshire appreciating over time at a rate higher than the annualized cost of this non-recourse leverage. Every now and then the accumulated capital losses from the puts can be utilized to offset capital gains on the Berkshire Shares (selling some shares to pay down margin loan).

Thank you Eric. But waiting for a day still sounds inconvenient to me. because in my Fido cash account, I can sell a stock and immediately use that unsettled proceeds to buy anything, be it option or stock. Are you using portfolio margin? Aren't you worried about their instant liquidation policy? I was terrified of the instant liquidation policy before I understood was portfolio margin is -- then I switched from Reg-T to portfolio margin and I don't worry anymore. Thank you Eric. could u please tell me a bit more about portfolio margin? I don't plan to actually use margin. I am just worried if ib platform would have a bug and force me to liquidate Scneario: 1) $100,000 cash balance initially. 2) I purchase $190,000 worth of common stock, and $10,000 worth of puts using a $100,000 loan. $200,000 total invested 3) The puts are at-the-money Okay, under Reg-T margin the account could be liquidated in a flash crash. Under Portfolio Margin they can see that the puts completely protect the value of the loan they've extended me. So I'm safe in a flash crash. From their perspective, it's the same as if I invested $90,000 into the common stock and just put $10,000 into at-the-money calls (without taking a loan). But instead of doing that with calls, I have the outstanding margin loan hedged with at-the-money puts. It's non-recourse leverage at this point -- they know that and I know that. In my example I'm assuming puts and calls are at the money, and there is pricing parity. Hi Eric, Just a quick question. How far out do u usually buy the puts for (i.e 6 mths or 1 year)? I am holding 2015s presently. I will roll them to 2016s within a few months of their issue. What is the advantage of leveraged buy plus put options, vs direct purchase of call options? One thing I could thing of is that you could lend the shares out to collect some interest. Then your true cost of leverage is the put options value minus lending interest, which could be cheaper than direct purchase of calls. Is that the only reason to do this? I am still a bit worried if their real time margin algo for the portfolio margin would be bug free. If they make a mistake, I will get liquidated at the wrong time. ::) Taxes. How do you roll a profitable call position without incurring taxable events? This isn't a problem when you roll puts along. If the put is showing a gain there will be an offsetting loss on the common. Also, I'd rather write off the margin interest (investment expense offsetting investment income) when incurred instead of it being embedded in a call premium (capital gains rates).

Thank you Eric. But waiting for a day still sounds inconvenient to me. because in my Fido cash account, I can sell a stock and immediately use that unsettled proceeds to buy anything, be it option or stock. Are you using portfolio margin? Aren't you worried about their instant liquidation policy? I was terrified of the instant liquidation policy before I understood was portfolio margin is -- then I switched from Reg-T to portfolio margin and I don't worry anymore. Thank you Eric. could u please tell me a bit more about portfolio margin? I don't plan to actually use margin. I am just worried if ib platform would have a bug and force me to liquidate Scneario: 1) $100,000 cash balance initially. 2) I purchase $190,000 worth of common stock, and $10,000 worth of puts using a $100,000 loan. $200,000 total invested 3) The puts are at-the-money Okay, under Reg-T margin the account could be liquidated in a flash crash. Under Portfolio Margin they can see that the puts completely protect the value of the loan they've extended me. So I'm safe in a flash crash. From their perspective, it's the same as if I invested $90,000 into the common stock and just put $10,000 into at-the-money calls (without taking a loan). But instead of doing that with calls, I have the outstanding margin loan hedged with at-the-money puts. It's non-recourse leverage at this point -- they know that and I know that. In my example I'm assuming puts and calls are at the money, and there is pricing parity. Hi Eric, Just a quick question. How far out do u usually buy the puts for (i.e 6 mths or 1 year)? I am holding 2015s presently. I will roll them to 2016s within a few months of their issue.

Thank you Eric. But waiting for a day still sounds inconvenient to me. because in my Fido cash account, I can sell a stock and immediately use that unsettled proceeds to buy anything, be it option or stock. Are you using portfolio margin? Aren't you worried about their instant liquidation policy? I was terrified of the instant liquidation policy before I understood was portfolio margin is -- then I switched from Reg-T to portfolio margin and I don't worry anymore. Thank you Eric. could u please tell me a bit more about portfolio margin? I don't plan to actually use margin. I am just worried if ib platform would have a bug and force me to liquidate Scneario: 1) $100,000 cash balance initially. 2) I purchase $190,000 worth of common stock, and $10,000 worth of puts using a $100,000 loan. $200,000 total invested 3) The puts are at-the-money Okay, under Reg-T margin the account could be liquidated in a flash crash. Under Portfolio Margin they can see that the puts completely protect the value of the loan they've extended me. So I'm safe in a flash crash. From their perspective, it's the same as if I invested $90,000 into the common stock and just put $10,000 into at-the-money calls (without taking a loan). But instead of doing that with calls, I have the outstanding margin loan hedged with at-the-money puts. It's non-recourse leverage at this point -- they know that and I know that. In my example I'm assuming puts and calls are at the money, and there is pricing parity.

Thank you Eric. But waiting for a day still sounds inconvenient to me. because in my Fido cash account, I can sell a stock and immediately use that unsettled proceeds to buy anything, be it option or stock. Are you using portfolio margin? Aren't you worried about their instant liquidation policy? I was terrified of the instant liquidation policy before I understood was portfolio margin is -- then I switched from Reg-T to portfolio margin and I don't worry anymore.

Options settle the next day. So instead of selling your common shares you can write deep-in-the-money calls (lowest strike on the market). Get your cash tomorrow. Eliminates 2 out of the 3 days in the settlement period. Bonus: you might not have to pay tax because you didn't sell your common. See "constructive sale" rules -- I said "might". You have to play by the rules in order to avoid the tax. I wrote deep-in-the-money FFH calls, used the proceeds to buy ORH calls. Then when ORH popped, I sold ORH and bought back the FFH calls. I didn't owe tax on the FFH. But if I'd instead sold the FFH shares, I would have needed to pay tax.

That's a creative idea. A couple of questions though. Why do I need to go into margin to do this? Can't I just invest, say, $50k into an annuity (or whatever the limit is), and short $50k of the same bond fund? Also, what about the cost of borrowing to short and the cost of the margin borrowing (if the margin does in fact make sense)? Why is it still worth it after paying those fees, especially when rates go up? Those are good questions -- and whether or not the tax savings is larger than the extra expense depends on the interest rate the bonds pay as well as the tax rate. The scenario I had in mind should have low borrow expenses. I was thinking to short muni bonds and allocate the variable annuity in taxable highest-rated bonds (higher yields than tax-exempt munis). Muni bonds trade with lower interest rate because the yields are tax exempt. Thus I thought I could capture that spread to help defray the other costs.

I would appreciate color from anyone with more knowledge of the above. Does anyone have experience doing this? If there aren't specific standards set from the IRS, I'd be interested in comments from anyone who does this. Do states with income taxes go with the IRS? As mentioned above, I made this Real Estate Professional election when I owned two rentals in Seattle area. There was no limit to what I was allowed to deduct. My wife was a full-time realtor. I owned the rentals. We managed them ourselves (no property manager). We did 100% of the work in advertising the property, securing the tenants, responding to them, etc...

A few days ago I had an old high-school acquaintance send out a message to all of his Facebook contacts (including me). I haven't seen him for 22 years. He's trying to raise money for his PhoRent business: https://wefunder.com/phorentcom So I guess he was blocked from this kind of direct solicitation before. Have to say, I don't like being approached for money. I wish the SEC didn't do that.

I don't believe you specifically stated what it is that you are talking about -- I genuinely want to understand. I still think you're talking about the $125,000 household income ceiling, above which you can't deduct excess real estate expenses against your earned income. Are you talking about something other than that?

My son is in AYSO, under 6 league. They don't keep score (officially) and nobody wins or loses. However my son knows if they won or lost the game. He knows how many goals were scored. He talks about the team they beat soundly, versus when they lost. Not pulling the wool over his eyes. He's intent on putting points on the board anyhow, even if the grownups try to pretend like the kids don't have a clue.

Oh. I was talking about writing off real estate losses against a person's earned income. That is something that was popular and then closed in the 80s. So when you mentioned something that was closed in the 80s, that's what I thought you meant. Only... it was not closed for everyone (just for most people)... they left in a provision for "Real Estate Professionals". Under those old rules (and still today for Real Estate Professionals), you can deduct millions if you want against your active income. Or you can deduct billions or trillions -- well... what I mean is there isn't a limit. Additionally, I think you need to play an "active" role in the management of the property -- if you hire a property manager then I think you lose the ability to write it off against anything but passive income (so not your earned income from your job).

I'm liking that thought.

Every year for at least the last 5 years they've announced this normal course issuer bid at this very time of year, and every one of those years they haven't reduce the share count. Instead, they've paid dividends which forces people to pay tax even if they don't need the cash and just want to buy more FFH shares anyhow.