benchmark

I always said it with a rhyme: "happy wife equals happy life!" It's a big investment and a huge time sink, we'd have to get a rental house for 1.5 years, that's why I'm not too keen on it -- though i think she'll get her way in the end :)

My wife is planning a rebuild of our house, and I'm trying to convince her that the ROI isn't there -- only 10-20% after 1.5 year of construction. I came across this recent article by Ken Fisher, and showed it her. She is still not convinced :( https://www.usatoday.com/story/money/columnist/2018/02/18/why-your-home-lousy-investment-when-you-think-its-great/340516002/

BWP

Can you elaborate on this or point me to the original post of Ericopoly? I'm trying to figure out a way to hedge the gain on bank stocks. Dealing with (maybe not hedging per se though) the gain on bank stocks (specifically BAC) is exactly the problem Ericopoly was trying to solve. In order to avoid a large capital gains tax bill, but still take money out of your portfolio with this strategy, you first must make sure you have a Portfolio Margin account (as opposed to the standard Reg-T margin account). My understanding is that Portfolio Margin will look at different offsetting positions when determining whether or not to make a margin call. For example, if you buy at-the-money puts that cover your bank stock, any decline in the stock should be more or less offset by the gain in the puts. Portfolio margin will give you credit for the gain in the puts, while Reg-T will not. Once you have your appreciated stock protected with puts, you can remove cash from the account by borrowing on margin. Hopefully, the puts expire worthless and you get a tax write-off. Rinse and repeat by buying more puts. If the puts appreciate in value due to a steep decline, sell them and reduce your margin borrowing. If the stock continues to appreciate, your margin borrowing ability grows. Removing cash from the account by borrowing on margin -- is that only applicable to the portfolio margin account? can't you simply do it with the reg-T account?

Can you elaborate on this or point me to the original post of Ericopoly? I'm trying to figure out a way to hedge the gain on bank stocks.

Interesting view. I have never thought it this way -- figuring that with a 3% mortgage, I can get better returns in the market and avoid the tax penalty. Is that not the right way to think about this?

He might still be right, except the market can be irrational much longer ...

To me, a good deed. I think that financial still have some upside. However, one thing that keeps bothering me is that I don't know how these big banks will do with a) online/mobile payments and b) cyber currency. Does that mostly eliminate the need to go to a branch, which is a big moat for the big banks? How will that impair their earnings?

Great post. What website or service that you use to search for used cars?

same Curious on what duration of the puts are you guys buying?

FUEL, GM

How? I looked at put options, the lowest is 842.5 strike for march 17.

I like it a lot, especially the first part of the book.

I had the same issue -- took a big loss on Jan 16, but held on to Jan 17. Fortunately, it worked out, but it was very stressful

Are you still short US markets? I reopened about half of them after the bulk of the rally following November's election. Still waiting on clarity for lasting corporate tax reform or for markets to begin to tank to get confident enough to go back to where it was at. Ultimately, the healthier the U.S. economy is, the higher interest rates go, the higher the dollar goes, and the higher wages will go. These will all act counter-cyclically to continue their contribution to negative earnings growth and I don't believe that there will be an incrementally large pick-up in U.S. consumer spending anytime soon to offset it given that we're hitting years where boomer retirements will be offsetting new job entrants (typically, spending drops in retirement and new workers won't be making enough to offset it). TL;DR - I'm expecting corporate profits to continue to fall in 2017. Was clearly wrong about 7 or so quarters of profit contractions being the end of the bull market, but I have a harder time believing markets will be ok with 11-12 straight quarters of corporate profit contraction without an eventual correction. How did you short it?

We only have Vanguard index funds in 401k, so growing at 10% is almost impossible :(

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 :)