Obama’s Tax Follies

While I didn't vote for Obama, I had high hopes that he would govern from the middle and lead our economy into recovery. Unfortunately, Obama, Pelosi and Reid cannot seem to understand one simple fact: Industries create good jobs, the government does not.

For example, our banking industry took a huge hit in the financial meltdown. Many of their executives deserve to get canned. Nevertheless, imposing a $19billion tax increase on the industry is folly. The simple truth about taxation is that Taxation causes people to do less of the taxed item.

Be it lending, hiring its own employees, or offering good deals to consumers, banks won't do good things for the economy unless they can keep the money they earn.

TD Bank – Screws Customers Over

A few days ago, I received a notice from TD Bank indicating they were changing our account number. While it would not seem like a big deal, we have a brand new box of checks that are now worthless. To compensate us for our loss, they offered $25.00. Of course, a new box of checks is $30.00.

 

Thanks Guys.

Sirius/XM Radio – Worst Company in America

In July, one of our accounts is going to expire and we have chosen to non-renew it. Much to my surprise (and Ire), the sent me a notice that the account was going to "auto-renew" in July and that they were going to hit our credit card with an annual charge. In addition to raising prices on the subscription, they now charge a "music royalty fee" and have commercials on music stations. Why should I pay a royalty fee to hear commercials and music stations?

With a baby on the way, we are looking to cut expenses and this is a no-brainer. Nevertheless, I decided to keep the subscription until they expired. Of course, the idiot CSR claimed they had to cancel the service immediately. Thankfully, a supervisor fixed the problem, but I am tired of dealing with them and their idiocy.

Former Sirius Customer

Tax Eaters v. Tax Payers

Across parts of Europe, there is drama over the need to impose "austerity" plans on governments in places like Greece and Spain. Across America, states like New York and California are facing dramatic financial crises brought on by enormous deficits.

Ultimately, all of these problems involve a tension in Democracies between people who consume taxes and people who pay taxes. Between beneficiaries of social programs (ex. Retirees on Social Security) , employees and businesses who are dependant upon govt spending (contractors), and government workers, the number of people who are net tax consumers is substantial. Furthermore, they have a strong incentive to vote in blocks for people who spend more money. Even politicians who are against more spending are rarely willing or able to cut spending – unless … the Net Tax Payers are unwilling or unable to pay more in taxes.

In the case of Greece, the country does not generate enough economic activity to support the tax load the government workers insist upon. In the case of New York, higher taxes would likely reduce economic activity and ultimately reduce tax revenues. Unless they get someone with the political willpower that New Jersey got in Governor Christie, they are in for a world of pain.

My Detailed Asset Allocation – Retirement Investments

Thanks to Fidelity, I am able to accurately evaluate the asset allocation in my IRA (Fidelity) and my 401(at Merrill Lynch).

Asset	%
Domestic Stock	42.84
Top of Form Foreign Stock Bottom of Form	5.24
Bonds	30.32
Short Term Fixed Income	16.15
Commodities	3.52
Other	1.93

 

 

Stocks: Definitely tilted towards Large Cap Growth Stocks.

ATT Fined – A Decade of Slow Repairs

Simply put, they should be ashamed.

AT&T Faces $1 Million Fine For Decade Of Slow Repairs

Why Best Buy is Terrible!

When I bought my HD TV through Amazon.com, they charged me something like $10 for a HDMI cord. After taking my old system apart in anticipation of delivery tomorrow, I decided that I needed two more HDMI cords for the Blu-Ray and my sound system to work optimally. Best of all, using HDMI course would eliminate the mass of cords behind my TV.

When I tried to buy the same cord from Best Buy, they wanted a minimum of $50 each b/c they only offer the Monster branded cords. For only $100 dollars per HDMI card, you can own the 1000 series cord that does exactly what my $10 cord will do.

Solution: I ordered two more cord from Amazon.com.

Bought TV From Amazon.com

Last week, we decided to splurge on a new Samsung 46" LCD Television. By using them, we saved over $200 off what Best Buy wanted. With free "Super Saver Shipping," it was a no brainer.

Baby Preparation Plan Report

1. The spring renovations are largely complete. Once the bathroom is finished, we will be done with the large preparations.
   
2. Next up, painting the baby's room. It looks like the grandparents and aunts are going to be providing the furniture.
   

   
    

   
    

   All in, I estimate we are 75% complete.

Season Ticket - Investment

A buddy and I purchased to season tickets to the NY Jets in hopes of reselling them at price sufficient to pay off the PSL.

De-risking my Portfolio

Many investors fail to understand all investments are a constantly changing risk/reward calculation. With all the problems in Europe, I believe there is little chance of a big move up in the stock market. Furthermore, I believe there is a real chance of another 10% correction. Bottom Line: I am trimming my investments in stocks and building cash for a time when I think there are good buying opportunities.

Note, any fixed income investments should be of short duration (Less than 3 years) as interest rates are going to rise.

Personal Seat Licenses

A friend and I went in on two PSL's and season tickets to the New York Jets. Our plan is to attend 1-2 games per year and to sell the rest of the games on Stubhub. Hopefully, we will get enough for our tickets to pay for the PSL cost.

While it is a risk, we hope our "investment" pays off.

Lane Bryant Ad Controversy

It is nice to see clothes built for real people. Unlike the sickly thin women modeling most clothing, the woman in this ad has real curves. For Lane Bryant, getting banned was the best thing that could have happened to them – free publicity.

Lane Bryant Youtube Clip

SEC Charges against Goldman Sachs

Simply put, I think the charges against Goldman Sachs are weak. Paulson went short the mortgage market and ACA and IKB went long. Paulson was right and made a fortune. The others were wrong and lost one. That is what happens on Wall Street. ACA and IKB need to put on their Big Boy Pants and move on.

If there was any fraud, it was by ACA and IKB management. They told people they knew what they were doing and that they did due diligence on their investments.

Example: http://dealbreaker.com/2010/04/ikb-told-investors-it-drills-down-on-cdos/

TIPS Auction Today

Today, the treasury holding its auction for 5 year TIPS. If you are looking for an income investment with some inflation protection, these offer an excellent opportunity. Most brokers will allow you to invest without any commission.

Shopping For Baby Furniture

If anyone has any good ideas/advice on baby furniture, I am all ears.

Why we chose our 529 Plan?

Because our state does not provide any tax benefit for 529 contributions, the high fees associated with our state's plan (broker-sold) made it a poor option. Since I wanted a low-fee plan, I looked at Vanguard, USAA, and Fidelity. Vanguard has some great plans; however, they had account maintenance fees and requirement for a large initial investment. USAA's plans were OK, but not great. Ultimately, we went with Massachusetts's 529 U.Fund Plan for the following reasons:

1. Since they are not broker sold, we don't have to pay any load to investment advisors.
   
2. The overall fee structure is competitive. In particular, they do not charge an account maintenance fee;
   
3. I like the investment options;
   
4. We have accounts at Fidelity and their service has been very good over the years; and
   
5. Our Fidelity Amex Card earns us 2% Cash Back which I will direct into the fund.
   

We started our fund with $500 and a $50 per month investment.

Having a Baby – Opening 529 Plan

For my readers, I apologize for not posting in some time. My wife and I received the wonderful news that we will be having a baby soon. In addition to fixing up the house, we are opening a 529 plan with Fidelity for our child. No maintenance fees and low fund fees. You have to love that.

Teacher’s Union Idiocy

Under pressure from a powerful teacher's union (the UFT), the corrupt politicians in New York managed to throw away $700m in federal money. With New York's state government under severe government strain, leaving money on the table is unthinkable. I guess children do not matter.

 

http://www.nypost.com/p/news/local/how_uft_torpedoed_ny_shot_at_5BZ190XQl0Of16NfBw7p1N

Why Obama Does Not Get It?

Although I did not vote for him, I had high hopes that Obama would lead from the middle and develop plans to help our struggling economy recover. Unfortunately, he seems to have a need to blame people/industries who are making money for our problems. Right or wrong, the bank bailout worked. One year later, all the big banks (except Citi) have paid back the tarp money and many are making record profits. In normal times, this would be seen as good news for the following reasons:

1. Profitable banks pay big bonuses to people who pay income tax on their bonuses.
   
2. Profitable banks look for ways to make more money. They make loans and hire people to service them.
   

Instead of allowing our economy to profit from profitable banks, Obama sees them as the enemy. In addition to raising taxes on banks, he wants to punish them for their new profits.

Since he announce his new "plan" to attack our banks, our stock market has cratered. Good job!!