The long-term capital gain tax (the stocks you have them for over 12 months) could be the lowest in 2010, and continue similar savings in 2011 and 2012. Now it could be the best time to sell these profitable stocks and you can buy them back right away.
If your adjusted income is $67,900 or less for joint return, you're in the 15% bracket in 2010. Then your long-term capital gain tax this year is 0 according to Wikipedia I glanced thru briefly.
Personally I sold big gainers and I virtually payed 0 tax on the gains in 2010. I've the accountants from Yahoo! Group to confirm it. At first I thought my gains would push me to higher tax bracket, so most gains would be taxed higher. However, it does not turn out that way.
My strategy: Sell long-term gainers in 2011 and 2012. Sell losers in 2013 and convert 401K to Roth in 2013. In 2011 and 2012, try not to have any incomes that would move up my tax bracket.
Transfer some profitable stocks to your children (ok to transfer them to me :)) if they can take advantage of this with the no tax rule. Watch out for kiddie tax implication.
You can transfer a limit of $13,000 this year. You and your wife can transfer $13,000 each to each child tax free. If you have more children and grandchildren, you have more to transfer. The limit is on cost basis, so if you bought the stock at $13,000 and now it is $26,000, it is ok to transfer all the stocks. Check the minor clause if your children is under a certain age.
If you are above this income limit, you should still have a break this year. Consult Wikipedia under US income tax for details.
It sounds rosy, but it may not. First, if your transfer money to your children and s/he is a full-time student, his/her tax rate could be the same as yours. Second, if you have a large long term capital gain, the capital gain is not added to your adjusted gross income. Hence you still enjoy the low/no Federal L.T. capital gain. However, it affects the tax in your social security income.
More info from Wikipedia, click here.
Consult your tax lawyer to confirm. Please verify.
-----------
Tax for the rich!
I would like the rich to pay more, but not unfairly. They have only one vote each, so the politicians would give them a hard time. However, we do not want to kill the goose that lays the golden eggs. We do not to drive them out of the country. We
like to encourage them to invest with reasonable taxes for taking the chances.
(c) TonyP4 2011. Written in 7/20/10. Updated 7/20/11.
#####
Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Monday, July 18, 2011
Friday, July 15, 2011
Making fun of Bill
I agree that Microsoft is a fundamentally sound company with the huge cash flow from Windows and Office updates. For the last 10 years, they do not have much show for that could be larger than Google and Apple combined. However, the stock is very under priced with all the metrics.
Just for fun. Every box of Windows should include the following:
1. This software could lower your productivity.
I do not know why the old version of Windows just read any of my spreadsheets without hesitation, but not the current ones.
Sometimes we like to control your keyboard. At least the intention is good. At worst, you just reboot and lose your current work. No big deal to us.
2. This software could crash any time.
The old version crashes once a year, and this one once a week. Gates will give you the ignorant folks a new term: progress in reverse.
3. This software could screw up your files.
Do not be too alarmed as you can pay us to fix it and major credits are accepted.
4. Your OS may not be able to bring up.
My 3 year old hit a certain key to crash the system when it was being brought up.
5. This software will upgrade by itself automatically and it will be lengthy. Hence, do not use it for important presentations unless you like your attendants to take a coffee break in the middle of it.
6. For corporate communication, try 1-800-BillGate or 1-800-BadSoftware.
7. To prove the point that a sucker never learns, update our software once every two years so to keep your IT dept busy and your managers to blame some one other than themselves.
Not to mention the bonus money for our managers who use it to stimulate the economy and helps our great country to reduce deficit and balance the budget.
The Federal, state and city employees will gladly point out the reason why they need 10 instead of 1 to do a simple job.
Just for fun. Every box of Windows should include the following:
1. This software could lower your productivity.
I do not know why the old version of Windows just read any of my spreadsheets without hesitation, but not the current ones.
Sometimes we like to control your keyboard. At least the intention is good. At worst, you just reboot and lose your current work. No big deal to us.
2. This software could crash any time.
The old version crashes once a year, and this one once a week. Gates will give you the ignorant folks a new term: progress in reverse.
3. This software could screw up your files.
Do not be too alarmed as you can pay us to fix it and major credits are accepted.
4. Your OS may not be able to bring up.
My 3 year old hit a certain key to crash the system when it was being brought up.
5. This software will upgrade by itself automatically and it will be lengthy. Hence, do not use it for important presentations unless you like your attendants to take a coffee break in the middle of it.
6. For corporate communication, try 1-800-BillGate or 1-800-BadSoftware.
7. To prove the point that a sucker never learns, update our software once every two years so to keep your IT dept busy and your managers to blame some one other than themselves.
Not to mention the bonus money for our managers who use it to stimulate the economy and helps our great country to reduce deficit and balance the budget.
The Federal, state and city employees will gladly point out the reason why they need 10 instead of 1 to do a simple job.
Friday, July 8, 2011
Identify Asians
Today is a slow day in the market and I am inspired by the article Being Asian.
Actually you can identify where they come back easily.
1. By their public behaviors.
Japanese bow all day long, so their spinal cords are permanently damaged.
Singapore youngsters will not come close to any car as they have the image of a flogging experience of a teenager (of course from overseas).
Taiwanese folks always line up.
Chinese from Mainland will never line up and will cut you off when you do not pay attention.
2. By the way they cross the streets.
Japanese and Taiwanese always wait for the traffic lights.
Chinese from Mainland treat it as a sport or a chess game. The poor foreigners will never cross the street in Beijing or Shanghai unless they buy life insurance to the max.
3. By the hand bag they carry.
Japanese always buy the real ones.
HongKongers carry the fake ones.
Mainlanders carry the real ones even it costs them 3 months of salary to buy one.
Actually you can identify where they come back easily.
1. By their public behaviors.
Japanese bow all day long, so their spinal cords are permanently damaged.
Singapore youngsters will not come close to any car as they have the image of a flogging experience of a teenager (of course from overseas).
Taiwanese folks always line up.
Chinese from Mainland will never line up and will cut you off when you do not pay attention.
2. By the way they cross the streets.
Japanese and Taiwanese always wait for the traffic lights.
Chinese from Mainland treat it as a sport or a chess game. The poor foreigners will never cross the street in Beijing or Shanghai unless they buy life insurance to the max.
3. By the hand bag they carry.
Japanese always buy the real ones.
HongKongers carry the fake ones.
Mainlanders carry the real ones even it costs them 3 months of salary to buy one.
When you max out 401K contribution
It is a nice inconvenience. You do not have many options at this stage. The following could help, but you need to research further and be responsible for your actions.
* Variable annuity. It allows you almost unlimited contribution and tax-deferred. I have one with Fidelity (which is supposed to be one of the lowest costs). It returns over 400% over 20 years - it is just the average if you consider compound rate of return.
Fidelity has a wide choice of sector funds that I use to play market/sector market timing.
Disadvantages. 1. Fidelity still makes money on fund fees (it is OK if they're performing better than ETFs). 2. All annuities will pocket part of your money at their own spec when they pay out (i.e. annualization).
* You should consider donating appreciated securities to your children (to me if you do not have) and charities, which Fidelity has a nice vehicle.
* You should consider your potential tax rate when you retire. In my case, my tax rate could be higher than my working years due to some good investments. I could be forced to be in the highest tax bracket when I am required to withdraw my 401s.
* Paying taxes is a patriotic task, esp. if the government used the taxes wisely. Click here for evidence.
(c) TonyP4 2011. Written in 7/8/11. Updated 7/8/11.
#####
Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
* Variable annuity. It allows you almost unlimited contribution and tax-deferred. I have one with Fidelity (which is supposed to be one of the lowest costs). It returns over 400% over 20 years - it is just the average if you consider compound rate of return.
Fidelity has a wide choice of sector funds that I use to play market/sector market timing.
Disadvantages. 1. Fidelity still makes money on fund fees (it is OK if they're performing better than ETFs). 2. All annuities will pocket part of your money at their own spec when they pay out (i.e. annualization).
* You should consider donating appreciated securities to your children (to me if you do not have) and charities, which Fidelity has a nice vehicle.
* You should consider your potential tax rate when you retire. In my case, my tax rate could be higher than my working years due to some good investments. I could be forced to be in the highest tax bracket when I am required to withdraw my 401s.
* Paying taxes is a patriotic task, esp. if the government used the taxes wisely. Click here for evidence.
(c) TonyP4 2011. Written in 7/8/11. Updated 7/8/11.
#####
Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Market today
It is a very decent article by Brett Arends at MarketWatch.
What should we do?
* As in my previous predication, the market is still risky and it may not be our normal recovery in market cycle.
* At least for the coming year, I expect corrections of 5% are common (i.e 3 times a year instead of 2). So, accumulate cash for bargains (i.e. take profits when they're due). Should have about 30% in cash. If it does not work, it is a insurance.
Buy on value (i.e. fundamentals) and sell on momentum (i.e. a mirage).
The aging of the world population is one reason that the market will not rise. The debasement of the currency is one of my takes (in a separate post) why the market has risen so fast recently.
* PIIGS will be a problem for a long while. The politicians learn from US to spend to buy votes. When Spain and Italy's bubbles burst, we will have big problems to US as they're far bigger economies than Ireland and Greece.
(c) TonyP4 2011. Written in 7/8/11. Updated 7/8/11.
#####
Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
What should we do?
* As in my previous predication, the market is still risky and it may not be our normal recovery in market cycle.
* At least for the coming year, I expect corrections of 5% are common (i.e 3 times a year instead of 2). So, accumulate cash for bargains (i.e. take profits when they're due). Should have about 30% in cash. If it does not work, it is a insurance.
Buy on value (i.e. fundamentals) and sell on momentum (i.e. a mirage).
The aging of the world population is one reason that the market will not rise. The debasement of the currency is one of my takes (in a separate post) why the market has risen so fast recently.
* PIIGS will be a problem for a long while. The politicians learn from US to spend to buy votes. When Spain and Italy's bubbles burst, we will have big problems to US as they're far bigger economies than Ireland and Greece.
(c) TonyP4 2011. Written in 7/8/11. Updated 7/8/11.
#####
Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Market timing from a fellow blogger
Varan says at seekingAlpha:
If, at the beginning of each quarter, you had switched from SPY to TLT and vice versa depending upon which of the two yielded higher return during the prior quarter, you would have ZERO down years during the period 2003-2010, with only a dozen switches in the eight years, and a CAR of 14%.
Of course who knows if this will work in the future, but at least this year it has yielded 7.45%, pretty respectable.
------
Here are the results of this strategy for you to verify.
First column is the symbol (+ indicating a switch). The two dates are the first days of the week at the close of which the trading occurred, followed by the return. The last three numbers are the adjusted close data and the return for the prior thirteen week period on the basis of which the trade was made.
No need for crystal ball here but of course it is back testing.
You get still better results if you switch between VTI, EFA, and TLT.
All data based on Yahoo adjusted close data.
SPY+ 6/30/2003 TO 9/29/2003 5.11% 98.22 100.30 11.09%
SPY 9/29/2003 TO 12/29/2003 8.09% 100.30 110.10 1.62%
SPY 12/29/2003 TO 12/29/2003 0.00% 110.10 110.10 6.61%
SPY 1/ 5/2004 TO 4/ 5/2004 2.12% 111.69 114.46 6.87%
SPY 4/ 5/2004 TO 7/ 6/2004 -1.94% 114.46 112.37 2.36%
TLT+ 7/ 6/2004 TO 10/ 4/2004 5.48% 84.57 87.00 -0.82%
TLT 10/ 4/2004 TO 12/27/2004 1.90% 87.00 88.33 4.89%
SPY+ 1/ 3/2005 TO 4/ 4/2005 0.02% 121.56 117.36 8.26%
TLT+ 4/ 4/2005 TO 7/ 5/2005 7.52% 89.28 94.35 1.93%
TLT 7/ 5/2005 TO 10/ 3/2005 -1.86% 94.35 91.79 8.18%
SPY+ 10/ 3/2005 TO 12/27/2005 4.65% 122.96 126.96 1.84%
SPY 1/ 3/2006 TO 4/ 3/2006 1.26% 125.19 130.07 4.65%
SPY 4/ 3/2006 TO 7/ 3/2006 -1.82% 130.07 127.43 1.49%
TLT+ 7/ 3/2006 TO 10/ 2/2006 5.97% 83.90 89.10 -0.13%
TLT 10/ 2/2006 TO 12/26/2006 1.29% 89.10 89.45 6.93%
SPY+ 1/ 3/2007 TO 4/ 2/2007 3.04% 142.25 142.16 5.48%
SPY 4/ 2/2007 TO 7/ 2/2007 6.51% 142.16 150.87 1.44%
SPY 7/ 2/2007 TO 10/ 1/2007 2.36% 150.87 152.60 4.74%
TLT+ 10/ 1/2007 TO 12/31/2007 7.68% 88.69 92.78 7.13%
TLT 12/31/2007 TO 12/31/2007 0.00% 92.78 92.78 5.64%
TLT 1/ 7/2008 TO 4/ 7/2008 1.56% 94.18 94.62 8.48%
TLT 4/ 7/2008 TO 7/ 7/2008 -2.97% 94.62 92.07 1.06%
TLT 7/ 7/2008 TO 10/ 6/2008 4.48% 92.07 98.74 -3.06%
TLT 10/ 6/2008 TO 12/29/2008 22.57% 98.74 121.43 6.07%
TLT 1/ 5/2009 TO 4/ 6/2009 -8.44% 115.60 103.54 22.57%
SPY+ 4/ 6/2009 TO 7/ 6/2009 3.08% 83.34 88.94 -4.74%
SPY 7/ 6/2009 TO 10/ 5/2009 22.52% 88.94 102.90 5.24%
SPY 10/ 5/2009 TO 12/28/2009 4.46% 102.90 112.90 17.07%
SPY 1/ 4/2010 TO 4/ 5/2010 4.35% 112.37 118.25 4.46%
SPY 4/ 5/2010 TO 7/ 6/2010 -9.26% 118.25 103.64 2.83%
TLT+ 7/ 6/2010 TO 10/ 4/2010 6.09% 100.83 104.62 14.40%
SPY+ 10/ 4/2010 TO 12/27/2010 8.47% 114.37 125.13 6.73%
SPY 1/ 3/2011 TO 4/ 4/2011 4.95% 126.71 133.43 8.47%
SPY 4/ 4/2011 TO 7/ 5/2011 1.66% 133.43 133.78 5.18%
TLT+ 7/ 5/2011 TO 7/ 5/2011 0.00% 94.04 94.04 5.36%
(c) TonyP4 2011. Written in 7/8/11. Updated 7/8/11.
#####
Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
If, at the beginning of each quarter, you had switched from SPY to TLT and vice versa depending upon which of the two yielded higher return during the prior quarter, you would have ZERO down years during the period 2003-2010, with only a dozen switches in the eight years, and a CAR of 14%.
Of course who knows if this will work in the future, but at least this year it has yielded 7.45%, pretty respectable.
------
Here are the results of this strategy for you to verify.
First column is the symbol (+ indicating a switch). The two dates are the first days of the week at the close of which the trading occurred, followed by the return. The last three numbers are the adjusted close data and the return for the prior thirteen week period on the basis of which the trade was made.
No need for crystal ball here but of course it is back testing.
You get still better results if you switch between VTI, EFA, and TLT.
All data based on Yahoo adjusted close data.
SPY+ 6/30/2003 TO 9/29/2003 5.11% 98.22 100.30 11.09%
SPY 9/29/2003 TO 12/29/2003 8.09% 100.30 110.10 1.62%
SPY 12/29/2003 TO 12/29/2003 0.00% 110.10 110.10 6.61%
SPY 1/ 5/2004 TO 4/ 5/2004 2.12% 111.69 114.46 6.87%
SPY 4/ 5/2004 TO 7/ 6/2004 -1.94% 114.46 112.37 2.36%
TLT+ 7/ 6/2004 TO 10/ 4/2004 5.48% 84.57 87.00 -0.82%
TLT 10/ 4/2004 TO 12/27/2004 1.90% 87.00 88.33 4.89%
SPY+ 1/ 3/2005 TO 4/ 4/2005 0.02% 121.56 117.36 8.26%
TLT+ 4/ 4/2005 TO 7/ 5/2005 7.52% 89.28 94.35 1.93%
TLT 7/ 5/2005 TO 10/ 3/2005 -1.86% 94.35 91.79 8.18%
SPY+ 10/ 3/2005 TO 12/27/2005 4.65% 122.96 126.96 1.84%
SPY 1/ 3/2006 TO 4/ 3/2006 1.26% 125.19 130.07 4.65%
SPY 4/ 3/2006 TO 7/ 3/2006 -1.82% 130.07 127.43 1.49%
TLT+ 7/ 3/2006 TO 10/ 2/2006 5.97% 83.90 89.10 -0.13%
TLT 10/ 2/2006 TO 12/26/2006 1.29% 89.10 89.45 6.93%
SPY+ 1/ 3/2007 TO 4/ 2/2007 3.04% 142.25 142.16 5.48%
SPY 4/ 2/2007 TO 7/ 2/2007 6.51% 142.16 150.87 1.44%
SPY 7/ 2/2007 TO 10/ 1/2007 2.36% 150.87 152.60 4.74%
TLT+ 10/ 1/2007 TO 12/31/2007 7.68% 88.69 92.78 7.13%
TLT 12/31/2007 TO 12/31/2007 0.00% 92.78 92.78 5.64%
TLT 1/ 7/2008 TO 4/ 7/2008 1.56% 94.18 94.62 8.48%
TLT 4/ 7/2008 TO 7/ 7/2008 -2.97% 94.62 92.07 1.06%
TLT 7/ 7/2008 TO 10/ 6/2008 4.48% 92.07 98.74 -3.06%
TLT 10/ 6/2008 TO 12/29/2008 22.57% 98.74 121.43 6.07%
TLT 1/ 5/2009 TO 4/ 6/2009 -8.44% 115.60 103.54 22.57%
SPY+ 4/ 6/2009 TO 7/ 6/2009 3.08% 83.34 88.94 -4.74%
SPY 7/ 6/2009 TO 10/ 5/2009 22.52% 88.94 102.90 5.24%
SPY 10/ 5/2009 TO 12/28/2009 4.46% 102.90 112.90 17.07%
SPY 1/ 4/2010 TO 4/ 5/2010 4.35% 112.37 118.25 4.46%
SPY 4/ 5/2010 TO 7/ 6/2010 -9.26% 118.25 103.64 2.83%
TLT+ 7/ 6/2010 TO 10/ 4/2010 6.09% 100.83 104.62 14.40%
SPY+ 10/ 4/2010 TO 12/27/2010 8.47% 114.37 125.13 6.73%
SPY 1/ 3/2011 TO 4/ 4/2011 4.95% 126.71 133.43 8.47%
SPY 4/ 4/2011 TO 7/ 5/2011 1.66% 133.43 133.78 5.18%
TLT+ 7/ 5/2011 TO 7/ 5/2011 0.00% 94.04 94.04 5.36%
(c) TonyP4 2011. Written in 7/8/11. Updated 7/8/11.
#####
Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Monday, July 4, 2011
Advisors' opinions
If you believe in stock analysts, you believe in fairly tales. They have their own agendas for their own benefits, not yours.
Use Fidelity's Consensus as they sort them by the past predication accuracy.
Aside from Fidelity's Consensus ratings, analyst's best rating means a Buy, and the rest means Sell. They have too many mutual benefits not to be biased.
From my experience, advisors are more wrong than right at market bottom.
(c) TonyP4 2011. Written in 7/4/11. Updated 7/4/11.
#####
Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Use Fidelity's Consensus as they sort them by the past predication accuracy.
Aside from Fidelity's Consensus ratings, analyst's best rating means a Buy, and the rest means Sell. They have too many mutual benefits not to be biased.
From my experience, advisors are more wrong than right at market bottom.
(c) TonyP4 2011. Written in 7/4/11. Updated 7/4/11.
#####
Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
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