Big Government Cripples Incentives To Save Money

[caryalsobrook]

We have self directed IRA, and we put 25% of employee earnings into the account each year. I started making a killing when I stopped investing into mutual funds. I only wish I had sold the 100 k or so that I had already put into them. That is my next move. I am sure Sambo would agree that the biggest downside to doing this is that you have to keep up on what you own on a daily basis and most don't have the time, the motivation, or the savvy to keep up. Personally I would say it is worth it.

To Franco, I should have invested in land 10-15 years ago. If you look at historical land prices adjusted for inflation, they are at an all time high. If I had big holdings there, I would be thinking that now is a great time to divest, but who knows, comodity prices might keep things propped up for a while. But, I would be nervous.

I pity anyone who thinks that saving isn't worth it... They have a bleak future in front of them.

It is refreshing to see a post by you absent graphs that are mininterpreted or just downright false. You say "you pity anyone who thinks that saving isn't worth it". Let me tell you of a dear friend of 40 years who was like a brother. He made his money in commercial real estate and was quite successful at it, making an income of at least seven figures. His goal was to use as little of his money and as much of the bank's money in his investments. Just before he died, he was negotiating a bank loan for another of his investments and the loan officer commented that he wanted a 30 year loan and questioned why so long a loan given his age. His response was that the only reason he wanted a 30 year loan was because he felt that the bank would not make him a 40 year loan! I'm sure he had managed to move some of his debt free assets to his son before he died and avoided any death taxes. He lived a lifestyle of the so called 1% with the desire to spend his last nickel the day he died. Frankly I am not as smart as he. I'm sure I would probably miscalculate.

You used to advocate ordinary income tax on estates. Given that when you die, the only tax exemption you estate would have is burial expenses and I am not sure they are deductible, tell me why you would pity him and why you think his life was bleak? Given the death tax, just asking

[Franco]

I am sure you have done all the research to back your statement - are you saying all the folks who went through the crash of "29-'31 ended up broke? I don't think so .

What I am saying is that there is no rhyme or reason as to the way stocks fluctuate in value. How many stocks have we seen zoom up in price when those companies have yet to turn a profit, then go bust or near bust? Stock value today has more to do with what money manipulators do, as opposed to the real value of a company.

Also, look at the policy of the Fed Reserve in keeping interest rates artificially low. Not only did this policy fuel the housing crisis that hit much of this country, the current Fed policy is a recipe for disaster.

[LokiMeister]

What I am saying is that there is no rhyme or reason as to the way stocks fluctuate in value. How many stocks have we seen zoom up in price when those companies have yet to turn a profit, then go bust or near bust? Stock value today has more to do with what money manipulators do, as opposed to the real value of a company.

Also, look at the policy of the Fed Reserve in keeping interest rates artificially low. Not only did this policy fuel the housing crisis that hit much of this country, the current Fed policy is a recipe for disaster.

Actually, if you truly watch the market and watch a stock, there is a rhyme and reason why the stocks fluctuate in value from day to day. You can also see why a stock will go up or down over time. Is there manipulation of the stock market? Sure, but not as significant as you think. Watching and play the market has shown me that.

The big problem with the raw land that you buy Franco is you truly don't know what it is worth. It is only worth what someone will pay for it. And after a few years of ownership, there could be a market for it or there might not be. Then you have the property taxes that you have had to pay, further decreasing your return. You would be better off buying an apartment building where people are paying you to stay there.

[huntinman]

[QUOTE=LokiMeister;984900]Actually, if you truly watch the market and watch a stock, there is a rhyme and reason why the stocks fluctuate in value from day to day. You can also see why a stock will go up or down over time. Is there manipulation of the stock market? Sure, but not as significant as you think. Watching and play the market has shown me that.

The big problem with the raw land that you buy Franco is you truly don't know what it is worth. It is only worth what someone will pay for it. And after a few years of ownership, there could be a market for it or there might not be. Then you have the property taxes that you have had to pay, further decreasing your return. You would be better off buying an apartment building where people are paying you to stay there.[/QUOTE]

Can't shoot ducks and geese in an apartment building...

[Buzz]

It is refreshing to see a post by you absent graphs that are mininterpreted or just downright false. You say "you pity anyone who thinks that saving isn't worth it". Let me tell you of a dear friend of 40 years who was like a brother. He made his money in commercial real estate and was quite successful at it, making an income of at least seven figures. His goal was to use as little of his money and as much of the bank's money in his investments. Just before he died, he was negotiating a bank loan for another of his investments and the loan officer commented that he wanted a 30 year loan and questioned why so long a loan given his age. His response was that the only reason he wanted a 30 year loan was because he felt that the bank would not make him a 40 year loan! I'm sure he had managed to move some of his debt free assets to his son before he died and avoided any death taxes. He lived a lifestyle of the so called 1% with the desire to spend his last nickel the day he died. Frankly I am not as smart as he. I'm sure I would probably miscalculate.You used to advocate ordinary income tax on estates. Given that when you die, the only tax exemption you estate would have is burial expenses and I am not sure they are deductible, tell me why you would pity him and why you think his life was bleak? Given the death tax, just asking

I am not in the position to explain the details, but I kindA like the idea of having something left to pass on to my daughter. If you think it is good to be left with nothing so your kids don't have to suffer the fate of a portion going to the tax man, that is fine. There are accountants and lawyers who specialize in estate planning. Maybe your friend should have visited with one. We have good lawyers and they are full of great ideas that we never considered on our own. It is a shame that the tax code is complicated enough to have created that industry but it is what it is.I don't plan to work all my life and don't want to be poor in my old age. Do you live on SS?

[Franco]

Actually, if you truly watch the market and watch a stock, there is a rhyme and reason why the stocks fluctuate in value from day to day. You can also see why a stock will go up or down over time. Is there manipulation of the stock market? Sure, but not as significant as you think. Watching and play the market has shown me that.

The big problem with the raw land that you buy Franco is you truly don't know what it is worth. It is only worth what someone will pay for it. And after a few years of ownership, there could be a market for it or there might not be. Then you have the property taxes that you have had to pay, further decreasing your return. You would be better off buying an apartment building where people are paying you to stay there.

I own some rental condos is desirable locations that attract quality tennants too. I refuse to deal with mariginal rental property, I'll leave that for the middle-easterners that live in here. I'll have to post a pic of a Whitetail buck that I shot on my raw land

As far as rhyme and reason with stocks, I read the stock market report daily. Events like US stocls tanking because Greece might not get bailed out or market going up after banks have been downgraded, shakey economy and some vague data report is all market manipulation! The economy is NOT sound, our monetary policy is in the toliet and our ever growing Fed Gov does not make for a healthy stock environment. If we had real Capitalism and real Free Markets I would take a different view.

[Buzz]

I own some rental condos is desirable locations that attract quality tennants too. I refuse to deal with mariginal rental property, I'll leave that for the middle-easterners that live in here. I'll have to post a pic of a Whitetail buck that I shot on my raw land

As far as rhyme and reason with stocks, I read the stock market report daily. Events like US stocls tanking because Greece might not get bailed out or market going up after banks have been downgraded, shakey economy and some vague data report is all market manipulation! The economy is NOT sound, our monetary policy is in the toliet and our ever growing Fed Gov does not make for a healthy stock environment. If we had real Capitalism and real Free Markets I would take a different view.

One problem with the market is that it is dominated by traders, not investors. To learn what an investor is, see "The Intelligent Investor" by Benjamin Graham. Best book I ever read. I will agree that the stock value of good stocks goes up and down for no apparent reason. It is the herd mentality of "the traders." I know that Marvin will beg to differ and point to Lynch.

[LokiMeister]

If you don't actively invest in stocks you might not get what I am talking about. Spend some time on www.fool.com and you might begin to see what I am talking about. Reading the stock report every day will show you that things are being manipulated. Actually invest in a number of good stocks will show you that it isn't manipulated as much as you think.

I know I can't get you to change your mind, Franco, but what happens to your land when no one wants to buy it and the good stocks I bought that got manipulated are still worth something?

One thing you have to realize when you talk to financial reps and people is that they aren't necessarily concerned with the economy. Look at the market the last three years. Economy in the tank, market back up to where it was in 2007. It was a buying opportunity.

[Franco]

I'm headed for Barnes & Noble after lunch for a DVD, I'll pick a copy of the book up.

[Marvin S]

One problem with the market is that it is dominated by traders, not investors. To learn what an investor is, see "The Intelligent Investor" by Benjamin Graham. Best book I ever read. I will agree that the stock value of good stocks goes up and down for no apparent reason. It is the herd mentality of "the traders." I know that Marvin will beg to differ and point to Lynch.

You're a smart guy if you know what I think - actually I have an unread copy of Graham's book which I bought during a move & haven't been able to locate it since. What folks say he says is nothing outstanding but I can point out many fairly good investors who follow his approach or so they say - Allmon, Price, Henke, etc. seems their brand of Graham only worked during certain market moods but sounds good to the average investor. Those are the funds that have been long jettisoned along with the momentum folks. If you had been following the market during the latest drop you would have noticed that sound companies, well managed do not drop like the rest - look at MKC, JNJ, PLL as examples. & you could look at the examples I gave IHOP - certain sectors are a must. A good scare seems to do more for the astute investor than the so-called herd mentality. I believe I read somewhere recently that 80% of all trades are computer driven, as long as you know those conditions exist you can work to the model. As for folks whom I respect Ralph Wanger & Charles Royce would come to mind. I have been in both Acorn & Penn Mutual since the late 80's. Acorn's "Squirrel Chatter" (comes in the regular reports) is a must read & immensely informative on a current & future events basis while the Royce fund's messages are somewhat more geeky. When I talk to the better half I remind her that Royce was the guy in the bow tie who spoke so eloquently at the luncheon the Royce funds hosted for their local area investors. Forbes featured Royce recently as the driving force behind the restoration of an iconic lodging on the East Coast.

I equate some of the talk to Wooden's invention of the "Zone Press" at UCLA in the 70's. The only issue I have with that is our local team in SD was using the same press in the late 40's & our coach had used it during his playing days in the mid-40's. So a lot of things sound good are pure BS.

I'm mostly self taught through trial & error - & fortunately the errors are less than the good ones - some stocks treat you well & some don't though they appeared to be sure things initially.

As for the offspring - they get what's left - as long as the taxman shareth not. I was going to fund a scholarship at SDSM&T but found they no longer track the data necessary to make that what I wanted it to be. While I was there the Dean of Students & I did not see I2I so I was going to show him what it took to be a success. Though in general what the folks in charge thought made a model student was correct, there is room for the guy who thinks creatively outside the box . For the annual Beard Derby festivities & dance we did the local tav's for some gals for some of the hardup guys at Mines to frolic the dance floor with - this offended the sensibilities of the faculty. Of course this was not the only thing where the accusations had some merit or maybe none but that made no difference to this little tyrant. Which only made some of us get more creative . As per usual there were the toady's that would not challenge anyone, sort of like the FT game .