benchmark

It is confusing -- the IRS says that you can contribute max of $18000 for Roth 401k -- if that's after tax, then you are contributing $26000 before tax money assuming 30% tax rate.

I have an option to do either 401k or Roth 401k or both. I'm curious if anyone has gone through the analysis on the tipping point (income/tax-rate)?

Is there a link or book that I can read up on this? thanks.

Their IV is somewhere between $70 -- $80, so right now it's cheap, but not very cheap. Hence, I'm not sure about holding period, because if it reaches closer to $70+ quickly, then one should sell and move on, as insurance is a boring business and AIG hasn't shown consistency in underwriting profitability.

I had this debate with my friend. Let's say that you bought 200 share of AIG at $50 1 year ago, and then bough another 200 at $60 3 weeks ago. Then to maximize your return, you sold 2 Nov 27 $63 calls. Now you share will be called away. Do you do FIFO which implies that you'll pay longer gain tax, or do you do LIFO which you'll pay short term gain. I argued for LIFO, because you end up paying less tax in dollar amount; He said FIFO is better because you pay less tax in terms of percentage. I argued that unless one is to keep the $60 buy for another year, one should do LIFO. FIFO: (63-50) * 200 = $2600 gain at 30%, which is $780 tax bill LIFO: (63-60) * 200 = $600 gain at 50%, which is $300 tax bill. WDYT?

I'm actually wondering if it's possible to start a fund and being the only investor (yourself)? You can get the benefit of being taxed at 20% for all your income and potentially write off expenses as business expense..

Why selling the leaps now? BAC will likely go up more in the next few month -- of course, the time value will decay as well

That's why that Moynihan is not the right guy for the job. Buffett will always praise BAC and Moynihan, because he got a steal.

Interesting that he sold all BRKB (which Munger specifically said that he instructed his heirs never do) and BAC (which Bruce B still holds a large position) -- different perspective from different value investors :)

I'd love some names of those companies :)

And then, here is Buffett on the future of BRK: The bad news is that Berkshire’s long-term gains – measured by percentages, not by dollars – cannot be dramatic and will not come close to those achieved in the past 50 years. The numbers have become too big. I think Berkshire will outperform the average American company, but our advantage, if any, won’t be great. Eventually – probably between ten and twenty years from now – Berkshire’s earnings and capital resources will reach a level that will not allow management to intelligently reinvest all of the company’s earnings. At that time our directors will need to determine whether the best method to distribute the excess earnings is through dividends, share repurchases or both. If Berkshire shares are selling below intrinsic business value, massive repurchases will almost certainly be the best choice. You can be comfortable that your directors will make the right decision. .. by percentages, not by dollars....??? Buffet has been saying that for years, and I think it is true. Even though it might still be better than most companies, but for us small investors, it might be better to invest your money elsewhere. One thing that I thought for a minutes back in 2009 was to sell BRK and buy others, but didn't pull the trigger ... I wanted to sleep easy :(

Buffet's record is declining, though still better than most, which bring the question that when he leaves, will the return be even worse that it is now? http://www.nytimes.com/2015/03/08/your-money/warren-buffetts-awesome-feat-at-berkshire-hathaway-revisited.html?action=click&contentCollection=DealBook&region=Footer&module=MoreInSection&pgtype=article

" For software, as a big example, amortization charges are very real expenses. The concept of making charges against other intangibles, such as the amortization of customer relationships, however, arises through purchase-accounting rules and clearly does not reflect reality." What does "amortization of customer relationship" means? Are these just the good will that's on the books?

Yes, I was so moved by that interview, he is a hero.

This is excellent. Chou mentioned that q-ratio was the best indicator of a stock market bubble, it's near all time hight atm....

Hy, I had the exact same thoughts -- waiting for it be long-term in Feb/15, but now i'm sitting on a loss...

For example, BAC is at $15.30 but Jan 16 15 option is trading around $1.80, so time value is $1.5 -- how do you estimate this to know if it's reasonable or not?

Schwab, which market will drop by 40%? Housing, energy stocks, tsx? Housing prices have to correct by 40% over time in real terms. If there's a 10% drop over 5 years with 4% growth then we are 30% of the way there. Just about every metric for Canada points to housing being 100% overpriced and the average of the metrics implies 40% drop is necessary. Unless money leaves these housing prices can persist but lending is dropping for a reason (which makes the problem worse faster). EDIT: To go with this, the US housing market is still overvalued because numerous interferences stopped the market from dropping. We will likely see flat housing prices with fast GDP growth to finish the correction while Canada may not have the luxury of positive GDP to save them. Also, the point of maximum pessimism is not even close for the Canadian housing market. If anything, this is maximum exuberance. Yeah no kidding, don't know what this other guy is talking about with his maximum pessimism. Everybody's still leveraging themselves up the ass for crappy homes at 10x their salary, and singing about it. Back on topic, I picked up a few more shares of KRN Karnalyte. Keeping it a small position, but pretty excited about the prospects of a company trading at 55% net cash, with a catalyst in early stages of ignition. It's like a net-net on steroids... BAC Jan17 leaps

Thanks Picasso, this is great info, and that's what I was afraid of. In general, how does one approach land investment? or is it just a too hard pile (i.e., not in my circle of competence)?

I think this would depend on the price, and whether the current quoted price/sq.ft correctly prices that parcel in that particular market. The LLC prospectus might have some DCF projections upon which the $2.50/sq.ft is based, so you might want to take their base rate but double (or even triple) the time horizon (figure 20-30 years instead of 10), weigh the relative likelihoods of the longer time horizons, and whether you could accept these lower adjusted returns. That's my 1-cents worth of speculative advice. P.S. Being an LLC, there's also the illiquidity to consider, plus on-going expenses allocated to the investors. And you might get one of those dreaded K-1 tax forms every year to file with your 1040. P.P.S The broker or representative who pitched you this LLC might have access to the limited market of 7 to 10-year old RE LLCs or non-traded public REITS whose charter investors have since taken a bath to the tune of 50% or more off the NAV. Ask if one of these are available. There are a couple of things that gives me pause: a) If the price appreciation only happens after 30 years, then the return isn't that great; plus if this is such a great deal, why isn't the seller leverage up and get it? b) LLC structure isn't well defined, and I don't like uncertainty.

+1

My initial reaction is that the deal seems like a 'buy-and-hope' -- hope something happen that someone will pay a premium for the land. Does the mixed-use zoning make it more or less attractive? Another wrinkle to this is that this is part of an LLC that will buy the entire land, I was pitched to buy a share of the LLC, which makes it even more complicated.

The asking price of the parcel is $2.50 per square foot, and this is not a leveraged play -- you have to put up the cash to buy the parcel outright, and hoping that some of the comps below becomes a reality...i.e., going from $2.50 to $8-$15 per square foot. 1) Inside 735 acres Mixed-use zone district. Mixed-use can allow to build up to 4 floors with combination of commercial, business office and residential development. Excellent exponential multiple for the highest land use. 2) Parcel is close to two regional artery Ave I and Ave H, at half section, very visible location and allow to build up to four floors buildings according to mixed-use zoning. City last year spent $12M to improve Ave I infrastructure, widening road, paved, add traffic light, sewer and built ramp-up area. As you see, after Ave I infrastructure improvement, the land price keeps to move up from $5.50/sqft at 2011 to $12.5/sqft in 2012, to $18.5/sqft in 2013 and $35.0/sqft in 2014 along Ave I. 3) City has three mixed use areas. Other two mixed use area Lancaster Downtown and new 157 acres Armargosa Shopping Mall have been in the development phase now and land price for other two mixed-use areas already $8-15/sqft. This is last remaining mixed-use area in the city of Lancaster and in the future it will be city commerce center and commercial area and new downtown area. 4) Just walking distance 1.0 mile Northwest of Lancaster First Wal-Mart Super Center at Ave I and 27th Street West. 5) Just 1.2 miles Lancaster Market Place, a great outdoor shopping mall, which is located at Ave I-4X25th Street West, please check website http://www.lancastermarketplace.com/index.html 6) 0.5 mile South of Fox Field Industrial Corridor Project, an 8,238 acre master-planned industrial complex currently being developed which will create a lot of jobs and attract a lot of business and commercial developments. Commune from the parcel mixed use development area to working place is only 3 minutes. 7) About 3.5 miles Northeast of the approved “The Commons at Quartz Hill” commercial development project including new Super Wal-Mart located at Northwest corner of Ave L & 60th Street West. This is 5th Wal-Mart and is just approved at July, 2009. 8) About 2.5 miles Northeast of commercial shopping center development project at 60th Street West and Ave K including home supply store LOWE’s development etc. 9) About 3.6 miles Northeast of approved “The Commons at Quartz Hill” commercial development “Target” shopping center project which is located at Southeast corner of Ave L & 60th Street West. 10) 0.5 miles Northeast of approved 177 single family housing project (TTM 63282, Ave H-8 to Ave I X 40th to 41st Street West. 11) Adjacent to the approved 175 single family house project (TTM 062793) which is located at Ave H-8X37th to 40th Street West. 12) 1.3 mile Southeast of approved 655 house lot project (TTM 62759) which is situated at 160 acres of Southwest of Ave H and 50th Street West. 13) 0.5 miles to the existed finished 143 house lot project (TR060858) which is located at Ave I and 42nd to 45th Street West. 14) 1 mile North of Approved 316 single family house project (TTM62120) which is located at Ave I-8 and 35th Street to 40th Street West. 15) 0.7 mile Northeast of existed 120 single family house project (TR060905) which is located at Ave I-4 and 32nd to 35th Street West. 16) 0.8 miles Northwest of finished 84 single family house project (TTM060241) which is located at Ave I-4 and 30th Street to 32nd Street West. 17) 1.0 miles Northwest of completed 158 single family house project (TR54202) which is located at Ave I-8 and 30th to 32nd Street West. 18) 1 mile Northwest of Lancaster High School which is located at Ave I-8 and 35th Street West. 19) 0.3 miles East of new elemental school which is located at Ave H-8 and 41st Street West. 20) 0.6 mile Northwest of approved 102 single family house project (TTM062794) which is located at Ave I-2 and 31st to 35th Street West. 21) 0.5 miles Southwest from approved 296 single family house project (TTM 064899) at Ave I to Ave H-4 X 30th to 32nd Street West. 22) 0.7 miles Northeast of City of Lancaster approved 88 single family lots development projects (TTM062579) at Ave I-4 to Ave I-6 X 37th to 40th Street West. 23) 1 miles Northeast of approved 195 units multi-family condos project (CUP 08-04). Multi-family is allowed to build up to 3 to 5 floors high-density residential development. Usually every city, multi-family is most expensive land as you see Los Angeles, Orange County and San Diego multi-family land listings. 24) 0.5 miles North of approved 35 single family project (TTM061966) at Ave H to Ave I to Ave I-4 X 37th to 38th Street West. 25) 2.8 miles Northeast of 650 lots approved house project (TTM062757, Ave J to J-8 X 65th ~ 70th Street West). 26) 2.5 mile Northeast of 1594 lots Approved Master Plan Community House Project and sitting at 483 Acres land with 1 school site and 1 park site (VTTM 53229, Ave J to Ave L X 62nd ~ 70th Street West) 27) 5.2 mile East of 1925 lots 640 Acres Approved Master Plan Community Del Sur Project with commercial development, golf course and 3 proposed school sites and 1 proposed park site with 21 acres manned made lake inside (VTTM66241, CUP05-16, Ave G to H-8 X 92nd to 105th Street West) 28) 0.6 mile North, Southeast from two elemental schools. Last year City of Lancaster has approved several more elemental, middle and high schools projects. 29) 2.5 miles Northwest of Antelope Valley College which currently has 10,000 students. 30) 1.0 miles west of Lancaster Baseball Stadium. 31) 0.5 miles Northwest of “Pete” Knight Veterans Homes. 32) Electricity, Paved already exist on Avenue H and Avenue I. Ave H City of Lancaster has spent $9M to improve and Ave I last year city has spent $12M to do infrastructure improvement. Ave H and Ave I have installed electrical, phone line and water line and also being paved, which city spend most cost million dollars to install these utilities and they added a lot of value to land. 33) Avenue H and Avenue I are major regional arterial roads in City of Lancaster which is designed as 120 feet wide on each side with three lanes. 34) City has built infrastructure system such as Sewer system being installed at Avenues I which is always up to 90th street West. Sewer system is most expensive infrastructure city put into. 35) 1.4 miles West of Highway 14 which is now major 8 lanes highway from North to South and connects to Interstate Freeway I-5. 36) 5.5 miles South of Freeway 138 (Avenue D). Freeway 138 is an existing 2 lanes highway. Metropolitan Transit Authority has approved project to expand Freeway 138 to 4 ~ 6 lanes Expressway which connects the Golden State FWY I-5 to the Antelope Valley FWY 14, both major Freeways. 37) Freeway 138 is strategically very important as part of the national project called E220 Corridor. It provides the vital link between the two major freeways, Freeway 14 and Interstate 5 and the shortest route between the fastest economic region of Lancaster & Palmdale and northern California, States of Oregon and Washington. Nearby there are numerous commercial developments...... City of Lancaster has spent almost $1B to complete four big hospitals within a year to accommodate fast growing city and its population, which combine with the existed medical facilities to build strong medical system. 1/4 mile to 3 miles from parcel, it is being surrounded by numerous existed and approved residential housing and commercial development projects. See listed all 108 approved projects from City of Lancaster Tentative Tract Map near this parcel.

Yes, raw land, though lots of lands around it has been approved for housing and/or commercial development.

CA