Maserati wrote:
agip is the only poster on this thread who has understood the point, without taking insult.
Boredom with you does not equal insult. You don't have the power to insult me, because I don't respect you.
Maserati wrote:
agip is the only poster on this thread who has understood the point, without taking insult.
Boredom with you does not equal insult. You don't have the power to insult me, because I don't respect you.
Was Maserati K5's more urbane alter ego?
Banned once wrote:
Was Maserati K5's more urbane alter ego?
Nothing urbane about that condescending blowhard. He TRIES to insult (though with me he can not) and makes assumptions that he has no basis for making. These are not the actions of one who is urbane.
I was using the K5 urbane scale. Not sure why he took a turn for the worse over the past month. Guess the market hitting new highs everyday while he sat on the side didn\'t sit well with him.
Banned once wrote:
I was using the K5 urbane scale. Not sure why he took a turn for the worse over the past month. Guess the market hitting new highs everyday while he sat on the side didn't sit well with him.
I think that probably had something to do with it.
well sorry to see M. go - 'respect where it's due' is right - without a vocal contrarian, this thread is endangered. It would be a bummer to let it die - we;ll see what happens.
For now, I direct attention to an excellent opinion piece in the WSJ refuting Piketty and all those occupy types describing a nation that most of us don't recognize.
The piece's main point is that a better look at the data show clear advances for the poor and middle classes in the USA - that Piketty and others don't give a full picture when they show poor and middle classes fallign backwards. Worth a read.
The main caveat about the piece is that both authors are politicians rather than economists - everything politicians say is tainted by, well, politics.
http://online.wsj.com/articles/phil-gramm-and-michael-solon-how-to-distort-income-inequality-1415749856What the hockey-stick portrayal of global temperatures did in bringing a sense of crisis to the issue of global warming is now being replicated in the controversy over income inequality, thanks to a now-famous study by Thomas Piketty and Emmanuel Saez, professors of economics at the Paris School of Economics and the University of California, Berkeley, respectively. Whether the issue is climate change or income inequality, however, problems with the underlying data significantly distort the debate.
The chosen starting point for the most-quoted part of the Piketty-Saez study is 1979. In that year the inflation rate was 13.3%, interest rates were 15.5% and the poverty rate was rising, but economic misery was distributed more equally than in any year since. That misery led to the election of Ronald Reagan, whose economic policies helped usher in 25 years of lower interest rates, lower inflation and high economic growth. But Messrs. Piketty and Saez tell us it was also a period where the rich got richer, the poor got poorer and only a relatively small number of Americans benefited from the economic booms of the Reagan and Clinton years.
If that dark picture doesn’t sound like the country you lived in, that’s because it isn’t. The Piketty-Saez study looked only at pretax cash market income. It did not take into account taxes. It left out noncash compensation such as employer-provided health insurance and pension contributions. It left out Social Security payments, Medicare and Medicaid benefits, and more than 100 other means-tested government programs. Realized capital gains were included, but not the first $500,000 from the sale of one’s home, which is tax-exempt. IRAs and 401(k)s were counted only when the money is taken out in retirement. Finally, the Piketty-Saez data are based on individual tax returns, which ignore, for any given household, the presence of multiple earners.
And now, thanks to a new study in the Southern Economic Journal, we know what the picture looks like when the missing data are filled in. Economists Philip Armour and Richard V. Burkhauser of Cornell University and Jeff Larrimore of Congress’s Joint Committee on Taxation expanded the Piketty-Saez income measure using census data to account for all public and private in-kind benefits, taxes, Social Security payments and household size.
The result is dramatic. The bottom quintile of Americans experienced a 31% increase in income from 1979 to 2007 instead of a 33% decline that is found using a Piketty-Saez market-income measure alone. The income of the second quintile, often referred to as the working class, rose by 32%, not 0.7%. The income of the middle quintile, America’s middle class, increased by 37%, not 2.2%.
By omitting Social Security, Medicare and Medicaid, the Piketty-Saez study renders most older Americans poor when in reality most have above-average incomes. The exclusion of benefits like employer-provided health insurance, retirement benefits (except when actually paid out in retirement) and capital gains on homes misses much of the income and wealth of middle- and upper-middle income families.
Messrs. Piketty and Saez also did not take into consideration the effect that tax policies have on how people report their incomes. This leads to major distortions. The bipartisan tax reform of 1986 lowered the highest personal tax rate to 28% from 50%, but the top corporate-tax rate was reduced only to 34%. There was, therefore, an incentive to restructure businesses from C-Corps to subchapter S corporations, limited-liability corporations, partnerships and proprietorships, where the same income would now be taxed only once at a lower, personal rate. As businesses restructured, what had been corporate income poured into personal income-tax receipts.
So Messrs. Piketty and Saez report a 44% increase in the income earned by the top 1% in 1987 and 1988—though this change reflected how income was taxed, not how income had grown. This change in the structure of American businesses alone accounts for roughly one-third of what they portray as the growth in the income share earned by the top 1% of earners over the entire 1979-2012 period.
An equally extraordinary distortion in the data used to measure inequality (the Gini Coefficient) has been discovered by Cornell’s Mr. Burkhauser. In 1992 the Census Bureau changed the Current Population Survey to collect more in-depth data on high-income individuals. This change in survey technique alone, causing a one-time upward shift in the measured income of high-income individuals, is the source of almost 30% of the total growth of inequality in the U.S. since 1979.
Simple statistical errors in the data account for roughly one third of what is now claimed to be a “frightening” increase in income inequality. But the weakness of the case for redistribution does not end there. America is the freest and most dynamic society in history, and freedom and equality of outcome have never coexisted anywhere at any time. Here the innovator, the first mover, the talented and the persistent win out—producing large income inequality. The prizes are unequal because in our system consumers reward people for the value they add. Some can and do add extraordinary value, others can’t or don’t.
How exactly are we poorer because Bill Gates , Warren Buffett and the Walton family are so rich? Mr. Gates became rich by mainstreaming computer power into our lives and in the process made us better off. Mr. Buffett’s genius improves the efficiency of capital allocation and the whole economy benefits. Wal-Mart stretches our buying power and raises the living standards of millions of Americans, especially low-income earners. Rich people don’t “take” a large share of national income, they “bring” it. The beauty of our system is that everybody benefits from the value they bring.
Yes, income is 24% less equally distributed here than in the average of the other 34 member countries of the OECD. But OECD figures show that U.S. per capita GDP is 42% higher, household wealth is 210% higher and median disposable income is 42% higher. How many Americans would give up 42% of their income to see the rich get less?
Vast new fortunes were earned in the 25-year boom that began under Reagan and continued under Clinton. But the income of middle-class Americans rose significantly. These incomes have fallen during the Obama presidency, and not because the rich have gotten richer. They’ve fallen because bad federal policies have yielded the weakest recovery in the postwar history of America.
Yet even as the recovery continues to disappoint, the president increasingly turns to the politics of envy by demanding that the rich pay their “fair share.” The politics of envy may work here as it has worked so often in Latin America and Europe, but the economics of envy is failing in America as it has failed everywhere else.
Mr. Gramm, a former Republican senator from Texas, is a visiting scholar at the American Enterprise Institute. Mr. Solon was a budget adviser to Senate Republican Leader Mitch McConnell and is a partner of US Policy Metrics.
agip wrote:
Banned once wrote:I was using the K5 urbane scale. Not sure why he took a turn for the worse over the past month. Guess the market hitting new highs everyday while he sat on the side didn't sit well with him.
I think that probably had something to do with it.
well sorry to see M. go - 'respect where it's due' is right - without a vocal contrarian, this thread is endangered. It would be a bummer to let it die - we;ll see what happens.
For now, I direct attention to an excellent opinion piece in the WSJ refuting Piketty and all those occupy types describing a nation that most of us don't recognize.
The piece's main point is that a better look at the data show clear advances for the poor and middle classes in the USA - that Piketty and others don't give a full picture when they show poor and middle classes fallign backwards. Worth a read.
The main caveat about the piece is that both authors are politicians rather than economists - everything politicians say is tainted by, well, politics.
http://online.wsj.com/articles/phil-gramm-and-michael-solon-how-to-distort-income-inequality-1415749856What the hockey-stick portrayal of global temperatures did in bringing a sense of crisis to the issue of global warming is now being replicated in the controversy over income inequality, thanks to a now-famous study by Thomas Piketty and Emmanuel Saez, professors of economics at the Paris School of Economics and the University of California, Berkeley, respectively. Whether the issue is climate change or income inequality, however, problems with the underlying data significantly distort the debate.
The chosen starting point for the most-quoted part of the Piketty-Saez study is 1979. In that year the inflation rate was 13.3%, interest rates were 15.5% and the poverty rate was rising, but economic misery was distributed more equally than in any year since. That misery led to the election of Ronald Reagan, whose economic policies helped usher in 25 years of lower interest rates, lower inflation and high economic growth. But Messrs. Piketty and Saez tell us it was also a period where the rich got richer, the poor got poorer and only a relatively small number of Americans benefited from the economic booms of the Reagan and Clinton years.
If that dark picture doesn’t sound like the country you lived in, that’s because it isn’t. The Piketty-Saez study looked only at pretax cash market income. It did not take into account taxes. It left out noncash compensation such as employer-provided health insurance and pension contributions. It left out Social Security payments, Medicare and Medicaid benefits, and more than 100 other means-tested government programs. Realized capital gains were included, but not the first $500,000 from the sale of one’s home, which is tax-exempt. IRAs and 401(k)s were counted only when the money is taken out in retirement. Finally, the Piketty-Saez data are based on individual tax returns, which ignore, for any given household, the presence of multiple earners.
And now, thanks to a new study in the Southern Economic Journal, we know what the picture looks like when the missing data are filled in. Economists Philip Armour and Richard V. Burkhauser of Cornell University and Jeff Larrimore of Congress’s Joint Committee on Taxation expanded the Piketty-Saez income measure using census data to account for all public and private in-kind benefits, taxes, Social Security payments and household size.
The result is dramatic. The bottom quintile of Americans experienced a 31% increase in income from 1979 to 2007 instead of a 33% decline that is found using a Piketty-Saez market-income measure alone. The income of the second quintile, often referred to as the working class, rose by 32%, not 0.7%. The income of the middle quintile, America’s middle class, increased by 37%, not 2.2%.
By omitting Social Security, Medicare and Medicaid, the Piketty-Saez study renders most older Americans poor when in reality most have above-average incomes. The exclusion of benefits like employer-provided health insurance, retirement benefits (except when actually paid out in retirement) and capital gains on homes misses much of the income and wealth of middle- and upper-middle income families.
Messrs. Piketty and Saez also did not take into consideration the effect that tax policies have on how people report their incomes. This leads to major distortions. The bipartisan tax reform of 1986 lowered the highest personal tax rate to 28% from 50%, but the top corporate-tax rate was reduced only to 34%. There was, therefore, an incentive to restructure businesses from C-Corps to subchapter S corporations, limited-liability corporations, partnerships and proprietorships, where the same income would now be taxed only once at a lower, personal rate. As businesses restructured, what had been corporate income poured into personal income-tax receipts.
So Messrs. Piketty and Saez report a 44% increase in the income earned by the top 1% in 1987 and 1988—though this change reflected how income was taxed, not how income had grown. This change in the structure of American businesses alone accounts for roughly one-third of what they portray as the growth in the income share earned by the top 1% of earners over the entire 1979-2012 period.
An equally extraordinary distortion in the data used to measure inequality (the Gini Coefficient) has been discovered by Cornell’s Mr. Burkhauser. In 1992 the Census Bureau changed the Current Population Survey to collect more in-depth data on high-income individuals. This change in survey technique alone, causing a one-time upward shift in the measured income of high-income individuals, is the source of almost 30% of the total growth of inequality in the U.S. since 1979.
Simple statistical errors in the data account for roughly one third of what is now claimed to be a “frightening” increase in income inequality. But the weakness of the case for redistribution does not end there. America is the freest and most dynamic society in history, and freedom and equality of outcome have never coexisted anywhere at any time. Here the innovator, the first mover, the talented and the persistent win out—producing large income inequality. The prizes are unequal because in our system consumers reward people for the value they add. Some can and do add extraordinary value, others can’t or don’t.
How exactly are we poorer because Bill Gates , Warren Buffett and the Walton family are so rich? Mr. Gates became rich by mainstreaming computer power into our lives and in the process made us better off. Mr. Buffett’s genius improves the efficiency of capital allocation and the whole economy benefits. Wal-Mart stretches our buying power and raises the living standards of millions of Americans, especially low-income earners. Rich people don’t “take” a large share of national income, they “bring” it. The beauty of our system is that everybody benefits from the value they bring.
Yes, income is 24% less equally distributed here than in the average of the other 34 member countries of the OECD. But OECD figures show that U.S. per capita GDP is 42% higher, household wealth is 210% higher and median disposable income is 42% higher. How many Americans would give up 42% of their income to see the rich get less?
Vast new fortunes were earned in the 25-year boom that began under Reagan and continued under Clinton. But the income of middle-class Americans rose significantly. These incomes have fallen during the Obama presidency, and not because the rich have gotten richer. They’ve fallen because bad federal policies have yielded the weakest recovery in the postwar history of America.
Yet even as the recovery continues to disappoint, the president increasingly turns to the politics of envy by demanding that the rich pay their “fair share.” The politics of envy may work here as it has worked so often in Latin America and Europe, but the economics of envy is failing in America as it has failed everywhere else.
Mr. Gramm, a former Republican senator from Texas, is a visiting scholar at the American Enterprise Institute. Mr. Solon was a budget adviser to Senate Republican Leader Mitch McConnell and is a partner of US Policy Metrics.
Too many pixels - not sure I can say much with the few you left for others but I will say th
I will miss the Maserati poster. I think he was right about a lot of things, and he seemed to lay his cards on the table and admitted that the markets might do as well as he did this year, or better. If his style bothered you that's one thing, but I had a boss like him when I was in my 20's, who turned out to have been right about everything. I used to think he was talking out his anus, or that he was saying things just to be cruel and was secretly some sort of sadist, but looking back on everybody I have known, it is his observations that have most stuck with me, and that I have found the most valuable later in life. I was close to getting fired from that job (financial) but it was only a summer job, which was how I was able to get close to the guys at the top. A couple of years ago I went looking for him to tell him that I appreciated him now 30 years later, but unfortunately he had passed, he was older even back then. To me he seemed to be in his own world, but I guess he could afford to be. His wife was still alive so I went to see her and talk with her about him. I found out that he was really loaded, and that they ultimately gave most of it away to various charities, as they had no kids, which made me wonder had I been more receptive to what he was saying, if either I could have seen some of that, or been one of his projects, which he apparently had, and who all did very well, according to his widow. Hindsight is 20/20. Vaya con dios Maserati, I hope your "high-number" market predictions come true, I am 90/10 equities/bonds, with almost no cash, all with Vanguard.
This thread seems to be past its sell-by date.
Maserati:
"The market will go up."
"The market will go down."
"See, I was right!"
I'm worried that the market may go down but on the other hand it may go up. I make all my investment decisions on that basis.
The Imitator wrote:
Maserati:
"The market will go up."
"The market will go down."
"See, I was right!"
Well, he also did have his own version of the Real Man thing.
Maserati:
1) How many businesses have you started?
2) How many that rely on novelty?
3) How many new technologies have you invented or brought to market?
4) How much original research have you done, on anything?
5) Any patents?
6) Have you lived primitively outdoors for a year with no plumbing or electricity?
7) In another part of the world?
8) Have you ever designed your own clothing?
9) Designed and worn your own haircut?
10) Long hair, even?
11) Converted bush into productive use?
12) Used a construct other than "marriage"?
13) Home-schooled?
14) Do you even use a self-directed 401k?
Dang, this is even harder than the original! OK, how many Real Men out there?
By those criteria I'm totally conventional, although I must say that I have converted bush into a productive use--and outside the construct of marriage, lol
But M seemed to know his stuff. For instance, I didn't know about a self-directed 401k. I just did a quick google, and it's real Does anybody do this?
Flaggy do you do this, if so why, and if so why not? How come nobody brought this up earlier?
Small-time sucker wrote:
By those criteria I'm totally conventional, although I must say that I have converted bush into a productive use--and outside the construct of marriage, lol
But M seemed to know his stuff. For instance, I didn't know about a self-directed 401k. I just did a quick google, and it's real Does anybody do this?
Flaggy do you do this, if so why, and if so why not? How come nobody brought this up earlier?
I actually have a self directed 401k, for what it's worth. Not a huge deal.
I'll check out that link gente.
This feels like a denoument - like the meeting of the 'family' at the end of every 'fast and furious' movie. or after the war, when the surviving members of the platoon show up and pat each other on the back.
I was looking at an interesting little study the other day. They looked at three groups of investors back in 2000-2001. The first group were those that called the big drop correctly and got fully out of stocks (or at least mostly). The second group was made up of market timers that missed the timing of that drop. The third group was made up of those (similar to me, I guess) that just stayed in for the duration. The Third group had pretty good annual returns, although I cannot remember the value very accurately, maybe 5-6% per year. The second group did not do as well, they had average annual returns of 1-2% (ballpark). The third group, despite their correct call on the drop, were actually so poor at market timing (e.g., they failed to get back in to the market until it was well above where it was when they got out) that they actually had returns of about -1%.
Too bad I cannot remember the citation, but it might not be that hard to find.
I have posted here some. I am generally similar to Flagpole overall, especially in that we both tend to save a pretty hefty proportion of our income, although I am older and started saving later, in part because I was an academic that took a while to get through grad school when someone published ti good half of my dissertation-in-progress and so I started that phase again. Like Flagpole, I now find myself in a position where, without real large income, am much further up the wealth distribution than I was up the income distribution. I learned my lesson about investing too aggressively (i.e., getting too greedy) but have stayed moderately aggressive since.
I'm older than probably everybody here, 69 now, retired, and in tax-free muni's and cash.
I worry about the kinds of things Maserati was talking about, especially in view of reports that suggest that states and muni's are fudging their unfunded liabilities:
For obvious reasons, muni solvency is critical to me. I find myself at this point not necessarily caring about truth and disclosure, but more about whether they can successfully continue to fudge for another 10 or 15 years. Never thought I'd say anything like that, but never say never.
Former mediocre marathoner wrote:
I'm older than probably everybody here, 69 now, retired, and in tax-free muni's and cash.
I worry about the kinds of things Maserati was talking about, especially in view of reports that suggest that states and muni's are fudging their unfunded liabilities:
http://www.foxnews.com/politics/2014/11/13/report-state-budgets-fudge-numbers-projected-debt-worse-than-reported/For obvious reasons, muni solvency is critical to me. I find myself at this point not necessarily caring about truth and disclosure, but more about whether they can successfully continue to fudge for another 10 or 15 years. Never thought I'd say anything like that, but never say never.
Yes, but what is your 5k? Do you sometimes ask yourself, 'This is not my beautiful wife'? Can you make balloon animals?
And what about Naomi?
Former mediocre marathoner wrote:
I'm older than probably everybody here, 69 now, retired, and in tax-free muni's and cash.
I worry about the kinds of things Maserati was talking about, especially in view of reports that suggest that states and muni's are fudging their unfunded liabilities:
http://www.foxnews.com/politics/2014/11/13/report-state-budgets-fudge-numbers-projected-debt-worse-than-reported/For obvious reasons, muni solvency is critical to me. I find myself at this point not necessarily caring about truth and disclosure, but more about whether they can successfully continue to fudge for another 10 or 15 years. Never thought I'd say anything like that, but never say never.
I don't pretend to have walked in everyone's shoes, and at age 69, you surely have a reason for being all in munis and cash, and I'm WAY more apt to tell someone who has not yet retired what I think the best approach is (for you could have $20 million for all I know), but here's why I will not have my money in just munis and cash like that when I retire...
...return is way too low. While technically I COULD still retire with my money like that and live on Social Security and what I could draw from my savings, I want more return than that.
I will:
1) Not retire before being 100% debt free including owning my home outright.
2) Have 3 years of expenses saved in a liquid form...cash in bank or CDs or something like that that I can draw from if the stock market tanks for a while.
3) Rest will be in mutual funds with stocks. Will be mostly in dividend-giving funds, but I will spread that around a little bit too looking for some growth.
At this point, not planning to have any bonds at all. The safety net is the cash which I will use for expenses if the stock market tanks. AND, since I will also have Social Security, the cash would enable me to go longer than 3 years if I had to without touching money in stocks.
Former mediocre marathoner wrote:
I'm older than probably everybody here, 69 now, retired, and in tax-free muni's and cash.
I worry about the kinds of things Maserati was talking about, especially in view of reports that suggest that states and muni's are fudging their unfunded liabilities:
http://www.foxnews.com/politics/2014/11/13/report-state-budgets-fudge-numbers-projected-debt-worse-than-reported/For obvious reasons, muni solvency is critical to me. I find myself at this point not necessarily caring about truth and disclosure, but more about whether they can successfully continue to fudge for another 10 or 15 years. Never thought I'd say anything like that, but never say never.
well when your life expectancy is down to 15 years, you can be conservative.
as for the health of states, it is getting much better, not worse, and with that muni returns have been spectacular if you own funds. Up around 8% over the past year.
if you own individual bonds, then that doesn't really matter.
but states do have problems, sure.
If you are concerned about states and want to change your investment strategy, you cuold diversify into different kinds of bonds - obviously US treasuries and investment grade corporates could fit the bill.
Just out of curiosity Flagpole, what ROR do you think I'm getting, tax-free? I'm curious what you think is too low. I have been in them for 4 years now, and loving every minute of it, I might add.
Former mediocre marathoner wrote:
Just out of curiosity Flagpole, what ROR do you think I'm getting, tax-free? I'm curious what you think is too low. I have been in them for 4 years now, and loving every minute of it, I might add.
Like I said, I'm not about to disagree with a 69-year-old guy who likes where he is financially. You've saved your money, put yourself into a position that you enjoy, so who am I to argue?
To answer your question though, today what you can expect going forward for municipal bond rates range from 1.75% to 3.80% depending on length to maturity and A rating, but 2014 has been good for them...up 8.32% as of the end of October. So, I would guess somewhere between 3.8% and 8.32%.