Down goes the Dow

Pointing Out the Obvious wrote:

The term 'realized' pertains to tax treatment.

That depends on your definition of pertain.

Randy Oldman wrote:

Pointing Out the Obvious wrote:

The term 'realized' pertains to tax treatment.

That depends on your definition of pertain.

Well, that depends on your definition of 'of'.

That depends on your definition of 'obvious'. What's obvious is that this guy is a troll.

"The term 'realized' pertains to tax treatment."

Only to morons.

Tax treatment of a realization is only incidental to the realization itself.

^ This is correct. Consider someone whose primary residence increases in assessed value from $100,000 to $1M. While living in the same home, the person's life remains unchanged as a result of the increase in valuation, except that their tax assessment may rise. The property tax effect is one form of forced realization, that produces an (unwanted) change in a person's life.

Similarly, if a home equity loan is secured, the person's life is changed through the spending that results, and is always accompanied by interest payments, even if there is no spending of the corpus of the loan.

Unless one's life is changed in some real way, there is no "realization". Tax and other spending, transfers to other forms, and exchange are different manifestations of a "realization" having occurred.

The only forms of real wealth are tangible property. Cash is very, very close, because even though a fiat currency is just government debt, it can quickly be efficiently converted to tangible property.

Consider that $1M home--it can quickly become the basis for either a reverse mortgage or a HELOC, or it can quickly become cash, which can quickly be traded for other tangible property.

Intangible rights count only to the extent that they can be effected, which means that there is a market for them--a buyer, and a reliable mechanism of exchange and enforcement. Real property is a hybrid, because depending on the jurisdiction, it is heavily dependent on the registration and legal documentation, and is heavily regulated.

So while tangible property is #1, cash is #1.5, and real property is #2, equities and bonds are WAY farther down the line.

Try getting a loan using the "unrealized value" of your equities for collateral, and see what kind of a deal you can get--if you get any deal at all.

Howard's Folly wrote:

...

Try getting a loan using the "unrealized value" of your equities for collateral, and see what kind of a deal you can get--if you get any deal at all.

So, the bank will look at the price you paid for your equity holdings rather than look at what they are worth today? Is that what you are trying to say? Or are you just spouting pure nonsense without really saying anything?

Holy Batman wrote:

Howard's Folly wrote:

...

Try getting a loan using the "unrealized value" of your equities for collateral, and see what kind of a deal you can get--if you get any deal at all.

So, the bank will look at the price you paid for your equity holdings rather than look at what they are worth today? Is that what you are trying to say? Or are you just spouting pure nonsense without really saying anything?

Yep, the guy is an idiot. My brokerage statements have been very helpful in securing attractive loan terms & interest rates. I have no idea what he's talking about. I am interested in what financial institutions he has had his experiences with, though... If he's actually had the experiences...

By "securing", do you mean "obtaining", or specifically "securing as in security"? If the latter, at what institution, and what was the assessed value of the security, and what conditions were placed on its holding?

Banks only take for security something on which they can execute, and something that precludes prior execution by other parties, or alienation by the borrower. They would need POA over your brokerage account, and you could forget about a tax-advantaged account because the necessary mechanism would void the tax-advantaged status.

Amounts are typically used to assess credit-worthiness, not as specific security.

The US government will not let the market crash--and if it somehow manages to crash anyway, after the crash it will rocket up higher than it was before the crash.

Why? Unfunded pension liabilites and the PBGC.

States face INSANE unfunded pension liabilities:

http://www.statebudgetsolutions.org/publications/detail/state-budget-solutions-fourth-annual-state-debt-report

If these cannot be met, the PBGC is to step in, which it cannot afford to do in any large-scale manner.

The solution? Keep the markets, in which the pensions are heavily invested, propped up. Although it costs some liquidity, it costs a lot less actual money than it would to use the PBGC to address the problem.

Orkney wrote:

The US government will not let the market crash--and if it somehow manages to crash anyway, after the crash it will rocket up higher than it was before the crash.

Why? Unfunded pension liabilites and the PBGC.

States face INSANE unfunded pension liabilities:

http://www.statebudgetsolutions.org/publications/detail/state-budget-solutions-fourth-annual-state-debt-report

If these cannot be met, the PBGC is to step in, which it cannot afford to do in any large-scale manner.

The solution? Keep the markets, in which the pensions are heavily invested, propped up. Although it costs some liquidity, it costs a lot less actual money than it would to use the PBGC to address the problem.

How will the government keep the markets 'propped up' and what is the mechanism?

The Dow finishes Q1 2015 with a tiny loss.

Lame. Maserati = wrong. I could never figure out if he was being sarcastic or not.

I don't think he was being sarcastic. He just talked out of both sides of his mouth. He greatly underestimated the intelligence level here.

Pointing Out the Obvious wrote:

I don't think he was being sarcastic. He just talked out of both sides of his mouth. He greatly underestimated the intelligence level here.

Now that would be quite a feat!

You are delusional or uninformed. You do not appear to be stupid. The markets are propped up by Federal Reserve policy, but when the game is up, well it's up.

I am neither. In fact certain pension funds have been "encouraged" to pursue private equity rather than exchange-traded instruments.

If he was being genuine, he seems to be very wrong right about now.

If he was being sarcastic, he seems to be very right.

The Dow is now at 17,620. If I had any spare change around, I would be buying right now.

Orkney wrote:

The US government will not let the market crash--and if it somehow manages to crash anyway, after the crash it will rocket up higher than it was before the crash.

Why? Unfunded pension liabilites and the PBGC.

States face INSANE unfunded pension liabilities:

http://www.statebudgetsolutions.org/publications/detail/state-budget-solutions-fourth-annual-state-debt-report

If these cannot be met, the PBGC is to step in, which it cannot afford to do in any large-scale manner.

The solution? Keep the markets, in which the pensions are heavily invested, propped up. Although it costs some liquidity, it costs a lot less actual money than it would to use the PBGC to address the problem.

PBGC is for private defined benefit pension plans only.

Yes, which means union defined benefit plans are covered, which includes "the retirement incomes of more than 44 million American workers".

Add to that the public-sector pensions (which have HUGE unfunded liabilities), for which the government is DIRECTLY responsible, and you might understand why the markets cannot be allowed to crash, or find a new, lower equilibrium.

Nice try, gente.

Quick everyone, maxx out your 2014 IRA and 401k contributions! Please!

Signed,

Flagpole

(the guy who already maxxed out at 18k)