beerbaron
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Posts posted by beerbaron
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I spent few minutes looking at the AmEx cards offered on their website. It seems that they are oriented strongly towards people who fly a lot. I don't. I prefer cash back. Right now I have 3 credit cards.
A Fidelity AmEx which pays 2% cash back deposited into my brokerage account. With no limit on the cash back per year. This is the card I use most often by far.
An Amazon.com Visa which I only use at Amazon.com, because it pays 3% cash back on Amazon purchases.
And I have a Citi Master Card which I only use if I'm somewhere that doesn't accept AmEx. It pays 2% cash back, but has a $300/year limit on the rewards.
None of the cards have an annual fee or give air miles or have airport privileges, but I'm not interested in any of that anyway.
I also only get cashback cards. Thanks for pointing out the Amazon one. The canadian version has 2% cashback, not 3%, but I buy enough books and other stuff there that it's probably worth getting over time. There's also a 25$ gift certificate when you sign up.
Chase Visa Amazon Card has 0% currency transaction fee in addition to some cash back. What you pay is the market spot price. Great for vacations!
BeerBaron
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turnover on mutual fund indexes generate taxes in general (e.g., 4% turnover), but for the last 10 years, they've managed to avoid any taxables due to inflows, is my understanding.
I'm not sure if that is true for ETFs though. This is from an article I found on it:
ETF Capital Gains Taxes
Low portfolio turnover strategies:
The sale of portfolio securities by a fund may trigger capital gains distributions to shareholders. Therefore, funds that experience lower portfolio turnover are generally more tax-efficient than those that buy and sell securities regularly.
Index strategies, which most ETFs and many mutual funds follow, generally have lower portfolio turnover than actively managed strategies. This is not always the case, however; some indexes rebalance frequently, and some active m
anagers limit portfolio turnover to minimize capital gains distributions.
Additionally, the fact that most trading of ETF shares occurs on the secondary market, rather than directly with the ETF, may reduce the frequency with which the ETF needs to sell portfolio securities to account for share redemptions. Mutual funds that do not experience regular net outflows (outflows in excess of corresponding inflows) may also limit the sale of portfolio securities to meet redemptions.
In-kind redemptions:
Many ETFs require authorized participants to create and redeem shares in kind—that is, to exchange ETF shares for a basket of securities, rather than cash. This allows the ETF to avoid selling securities to raise cash to meet redemptions, and thereby also prevents capital gains distributions. Additionally, when redeeming in kind, an ETF can provide the authorized participant with the underlying securities with the lowest cost basis, further reducing the ETF’s tax burden. Other types of investment products, including mutual funds, may also use tax-efficient strategies to reduce capital gains, but the ETF structure encourages their use.
Another strategy I have explored would be to make a corporate entity in say, the Bahamas. For as long as I don't liquidate my shares of the corporate entity I should not have to pay taxes on it. anybody has input on this?
I find the derivative strategy proposed in the white paper to be painfull. It's like getting kicked in the knee instead of in the junk... painfull. Furthermore, selling s&P derivatives to offset your holding is a very dirty hedge.
I have always found that buying puts on an index if like trying to time the market. Selecting a single security that will outperform the general market, I can probably achieve. Finding the proper moment to time the S&P is just dumb.
BeerBaron
BeerBaron
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An this is the story why I have a shitload of cash doing nothing in my margin account and none in my tax free accounts. Adding a criteria that the stock has to be a super long term holding greatly diminishes the available companies available. Catalyst almost become your enemy.
I don't understand why the article says even a index fund has taxes tough. If I hold an ETF for 20 years, I ouly have to pay taxes at the end of the term. Regardless of the actual constituents of the ETF. Does the ETF get taxes on it's turnover?
BeerBaron
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I would add high operating leverage (software business, money management, etc...)
BeerBaron
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Thank, quite comprehensive.
BeerBaron
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Sometimes we see comments like the yield of Italy is 2.6% and Germany's is 1% implying that Italy would default on it's debt every X years. What's the formula to get the implies default rate?
Thanks
BeerBaron
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IBM has made Watson and data analysis as one of their 3 pillars for future growth. They are probably the only company in the world to put that much effort and resources.
BeerBaron
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I would argue that i was who i am before i knew what value investing was. I just recently realized that most pleasures from buying stuff do not offset the displeasure of spending hard earned money. It is a virtue and a curse because you can never enjoy life at its full potential.
To conclude, value investing gave me the theory of buying cheap asset. Which is only an extension of not spending money, hence who i am
Beerbaron
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Thanks! Sounds like a good idea. Just curious, what broker do you use? Anyone have specific cheap ones that they've used for a while?
I'm in Canada, so my brokers are not available to you. Just shop around, I'm sure there is one that fits your needs.
BeerBaron
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I am willing to tolerate risk if the price is right. These $1,000 are the bulk of my savings which I want to worry the least about. I have a couple of hundred that I will definitely invest on different ideas of mine to get more experience with capital appreciation. I'm cool with losing the couple of hundred but I still need the bulk of the $1,000 in case I need cash. Also, what's the absolute cheapest online broker you guys know of? If the trading fees are low enough I might consider using some of the $1,000 on my own ideas as well because otherwise the brokerage fees are too much. I'm not cool with paying $10 to buy and another $10 to sell a $100 position. My capital needs to appreciate by 20% just to break even.
I think with a 1000$ you should aim to have one or two positions so that frictions costs are tolerable.
I would suggest 50% index fund (S&P 500) and another stock. Aim to keep the S&P500 long term (10Y) and the stock medium term (3-5Y). The good news is that a 1000$ any major mistakes will be offset by your new savings. As your nest egg gets bigger you increase the amount of positions to your desired level (10 maybe?).
As for the broker choice, take a broker that does not charge monthly fees. With that amount the fees would eat into your savings quite fast. One thing that is important is to no be trigger happy, friction fees will be running in the 1-2% for each transaction which will kill any outperformance.
Forget dividends, and focus on capital appreciation, do you really care about those 30$ in dividends? It's not like you need it to live on right.
Ah yes, don't forget that your risk tolerance is whatever does not make you lose sleep at night!
BeerBaron
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As Second Cup transforms towards a new era of growth in sales and profitability,
the company is seeing the emergence of attractive opportunities to invest
capital. Accordingly the company believes it is prudent to retain available cash
resources for redeployment into investments that will maximize long-term growth
in share value. Given this renewed focus on growth, the Board of Directors
decided to discontinue the dividend payout.
I wonder what they have in mind? Investing in pot cafes down south?
How candid is the CEO, could it simply be that the company is tight on cash, they want to expand but will need to open corporate stores to test the concepts?
BeerBaron
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Great quarter. Two questions for you forensic accountants out there.
2) anyone surprised at continuous CPI losses despite most exposure being in Europe that has had sub 1% inflation for past several months? Would've thought people would think deflation is a possibility at this point.
If I remember properly the cpi derivatives are based on a set level. So even if there would be 0% the derivatives would slowly decay. Obviously the guy at the other side of the deal would be nervous for a few years...
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I find it incredible that in 2014 there is no central bond exchange and that we still have to go trough trade desks. Trillions of dollars trade on the bond market and yet it's not accessible to the retail investor.
BeerBaron
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Happy birthday. I wish you another 100 so that you can compound money until you can buy Berkshire.
BeerBaron
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I would not do that. If by some means she has less money in 5 years than now she will be very mad at you. 4% is an ok hurdle but not low enough to invest in 5Y treasuries... which would make it a riskless arbitrage.
I find that helping people make money without managing yourself is a negative risk return. If you are right you get very little benefit and if you are wrong you could ruin the relationship.
BeerBaron
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How is that even possible? Depositors would flee the banks and store their money anywhere else... Can someone explain how this would work?
BeerBaron
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So how can the ECB enforce negative interest rates without a bank run by depositors?
BeerBaron
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Oh boy do I ever have reasons. I have worked in companies with cooperative teams in China, Korea, Japan, India and Israel.
With China, this is my experience. Suppose another team needs something done ASAP. It is sunday. So I ask the manager in china to get her team to help. She has to have a meeting with me and I have to labouriously explain what needs to be done. Then I have to write a document. By tues they may have some idea we need to do this. By wed we probably have another meeting with some engineers and the manager. And then they start working, on thurs. So say they make 1/5 what we make. What I could do in a week, seems like they can only get started on on Thurs. They got 2 days while I have 5. Already you can see how I can be much more productive. The key is that management thinks that since a woman can have a baby in 9 months. They can hire 9 chinese women to have a baby in 1month. Well, it dont work that way.
Any I haven't mentioned the politics aspect. Though the engineers are honest and want to do a good job, the key is who is in charge. I had to deal with a female manager, and to call her stupid is being generous. She is in a software/hardware coding group as a technical manager and she cannot write 5 lines of code if her life depends on it. I think only in china can she get as far as she does. Yes she may make 1/5 my salary but it still makes me resentful that technically she was manager in this project. She is also negating the brains of their team of 10.
Another aspect is the innovative culture that only exists in north america. I wrote a piece of code, the key to making our company more efficient is to keep this code for future generations of products. I kept telling people, do not cut and paste it, reuse-it. The risk of reuse is that it might break the current application. Now you have one piece of code for two places. It is safer for the engineer to duplicate it to have two pieces of code for two applications. And that's what he did, I realize no amount of convincing can change that. The engineers are just out to do their job w/o caring about the big picture, why bother, when the manager is incompetent.
Believe me, our management would love to ship our jobs to asia or texas or anywhere it is cheaper. But you know what, right now I am in an asian company that has moved their R&D to silicon valley. They must have realized in the end we are a bargain!
So in the end it isn't IQ or education or training, or culture alone, it is a combination of all that makes one worth that much.
What you described in your examples was an incompetent engineer. I've seen many incompetent engineers in NA too, they just did not climb the ladder that much. In China relationships can bring you pretty high in the corporate world, especially if you have a tight ass.
However, I would not be ready to challenge North-America's top 1000 engineers against China's top 1000 engineers. Technically our ass would get kicked, they have studied harder, longer and better than us. They would work harder and longer thant us as well. Overall, I hugely respect China's engineers but we have to understand that the spectrum of technical qualifications is much wider than in North-America. An undergraduate from Shangai's university is probably much more qualified than one from Ningbo's university.
BeerBaron
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Hello
I am wondering if anyone here by chance knows how banks in Japan performed during the country's deflationary period. I looked at the charts on google but don't believe I am getting reliable information. Other than Japan, is there any other nations on the planet that had a very long deflation?
Thanks Gary
The US post 1929 had very strong deflation pressures.
BeerBaron
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Q1 2014 Conference Call Transcript
Gio
Too bad no questions were asked about their latest investment in Greece.
BeerBaron
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Separate topic - how/where did you run into him? Did he talk about anything else?
I heard he was giving out a stack of 500 pages plus a quiz about the material. If you answered the quiz right and gave it back to him by the end of the day he'd give you a secret stock tip. Word going around Omaha is "c c b d a a d..."
I thought it was up up down down left right left right b a select start?
CONTRA!
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I think this is a great topic and I am still absorbing the article.
From this article and others, I am crystallizing my rationale for investing during times of very negative sentiment. I wrote (link below) that my best gains have been running into very unknown negative news. First example is in 2000 when US tobacco lost a $200 bil decision in florida. Unless overturned, the decision would bankrupt us tobacco. Fast forward today, MO and its spinoffs are up 7-10x. Second example, WLP dropped to $50 after the supreme court upheld obamacare. Today it is $100.
Obamacare and the Engels court ruling are both huge unknowns, so people just jump off, but to me that seems like the time to place my bet (with guidance from sources like the Harvard paper)....
Anyone else got other examples from recent memory? ...... My latest bet BTW is ERUS on Russia.....
http://bovinebear.blogspot.com/2012/08/why-i-own-wlp.html
Watchout tough, Berkowitz has the best approach in regards to crisis stock. Ask yourself if the business has an actual value for society. You might have been lucky with your tobacco picks.
Banks = Yes
Offshore Drillers = Yes
For profit education = No so much
Tobacco companies = No
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Why don't you start with the patent and see if you can understand anything from it?
BeerBaron
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$5 for lunch? Dang. Mine is usually about $1 (or less). 8)
Which restaurants offer anything under 3$?
BeerBaron
I bring my lunch. ;)
I do it for a couple reason. Obviously, to save money, but also to avoid crap like hormones, antibiotics and GMOs.
Ahh, I eat out most of the time, making my own lunch the night is not worth the trouble if you consider that to make a submarine myself costs 4-5$. Plus, half the time at night I eat at my parents... its one thing to go eat their food it's another to take the leftovers and bring it to work the next day. Lol.
BeerBaron
Early retirement
in General Discussion
Posted
Retirement planning is quite straightforward in an excel spreadsheet, I don't know why people rely on web sites/financial formulas.
To reflect what Eric has said, it's very likely that you will die with 2-3M$ if you were conservative in your assumptions. Better to die with a few dollars then to starve at age 70. It must be really bad to retire with no money... all the time in the world and no means to enjoy it.
BeerBaron