ERICOPOLY

I'm thinking much lower than that. Equities did not do well in the quarter, especially some of their bigger holdings like DELL, GE, WFC, USB, LVLT -- ugly. How much do you figure they made in bonds?

This is too bad : Given how prolonged some of these conversations have to be, many people argue that the key problem has been the financial incentives: we pay doctors to give chemotherapy and to do surgery, but not to take the time required to sort out when doing so is unwise. This certainly is a factor. (The new health-reform act was to have added Medicare coverage for these conversations, until it was deemed funding for “death panels” and stripped out of the legislation.) I may be incorrect, but I believe it was the Conservatives who were upset over the "death panels" -- it is ironic if they pushed up the size of government health care spending, meanwhile they complain about the size of government.

They only needed the dividend cut in the first place because of the low appraised values of their ships -- last updated in December 2009. The rebound in container shipping must be having some positive impact on their value. The spontaneous unscheduled acquisition of a month ago, and now the dividend increase. Further, on the last conference call they indicated that they were confident the funding gap would be taken care of by the end of this year.

I found this interesting to get a grasp of where public sector budgets are allocated: http://www.usgovernmentspending.com/us_education_spending_20.html

That's not right as I understand it. There is a capital gains tax (no step up in basis) this year in lieu of the estate tax. The capital gains tax will hit your estate no matter how small it is. Link: http://tinyurl.com/yctyeq7

This has got to be nothing but good news for KSP: http://www.reuters.com/article/idUSN1413039220100714 The Energy Information Administration said that refinery utilization rose 0.7 percentage point to 90.5 percent of capacity in the week to July 9, the highest level since the week to Jan. 4, 2008, when the rate was at 91.3 percent.

He bought the Yankees 37 years ago for $10m, then sold the 2 parking lots included in the deal for $1.2m. So his adjusted cost is $8.8m. He made 13% annually compounded capital gains if it's worth $800m today. Any guess on how much the Yankees are worth?

I bought 50,000 today. So that solves the mystery of who bought the first 10% of your half million :) Why buy 50,000 rights when you can buy the shares at $1.01 or $1.02 or $1.03 in the open market? I bought the shares, not the right. I sold 50,000 rights before buying the shares. As a US investor, I was faced with taking physical delivery of the share certificates if I exercised my rights. I have no desire to keep them in physical form -- will I hide them under the mattress? Do I need to put them in a safe at the bank? I felt like I'd rather just fork over a few hundred dollars more for the shares and save myself the inconvenience. Previously I bought SFK at 20 cents and 40 cents, then more at $1. Now we're back to $1 again and I bought more yesterday.... enough to offset the rights that I didn't exercise.

Seriously? Absolutely :D

Thirty years ago people could make the claim that the US would never again let itself get so upside down in debt because it remembers the lessons of the Great Depression. Where does that leave us today? That's all I'm saying.

I was having a debate with my father who also mentioned Germany and the Weimar inflation experience. To that I said, "Dad, neither you nor I are great historians yet we know about the Weimar experience. Neither are we German." He suggested that it's different when it's actually happened to you versus just hearing about it, so I said "Look, who is alive today in Germany that experienced it? Did the politicians live through it?". I think it happened so long ago that realistically pretty much everyone in Germany read about it, not experienced it. He didn't buy it really, so I said... "Well, here in America we had the Great Depression, and yet we still wound up in the present situation we're in now. So if living through it once didn't change our course, then why are you so confident that Germany will remember it's lesson?" After all, we might have had the Great Depression here, but nobody in our government remembers it. And that was a more recent event than Germany's Weimar inflation. Similar to the Civil War -- we've had one here in the States but nobody really remembers it.

I bought 50,000 today. So that solves the mystery of who bought the first 10% of your half million :)

I think if you are sitting on a gain, then buying a put at-the-money or in-the-money falls under the restrictions of shorting "against the box". I think it restarts the holding period as you suggest when the put is closed out (or expires). I think the IRS uses the term "constructive sale" -- if you search under that term you'll find the rule. Exercising a call option also resets the holding period. You might have been holding that call option for 6 months, but if you exercise it you'll have to hold the shares for an additional 12 months to get into long term hold tax status. So my suggestion works best for situations where long-term calls are not available. When long-term calls are available you have the opportunity to book your gains long-term by selling the call near expiration.

Regarding the suggestion to buy calls... Next year some of us will be facing 38.5% tax rate on short-term capital gains. So as an alternative to buying calls it might make more sense to buy shares on margin and hedge with puts. You can let the puts expire and it offsets some of your short term capital gains. Margin rates at Interactive Brokers are very low, so the tax benefit likely exceeds the interest costs.

I was just about to fax in the Fibrek forms (where I state my accredited investor status) for the rights offering to my broker, when they notified me that if I exercise the rights then the shares will be mailed to me in certificate form! That would be a hassle -- I don't want physical certificates. The broker said they can't hold these certificates for me -- it was Interactive Brokers. If any of you US investors out there exercised your rights, keep an eye on the mail! I wound up buying shares in open market instead, and selling the rights I hold at Interactive Brokers. Then I went to my Fidelity account (my other account) and tried to sell the rights I have there, but they claim the cutoff for selling them was yesterday -- they don't think they would get the trade settled in time if I sold them today. That's a strike against Fidelity.

I have a question about MLP taxation. First, some background as I understand it: 1) Let's say you buy at $6 today and hold the stock for 3 years. 2) Assume that each year they pay $2 distribution -- each year this reduces your cost basis by $2 3) You are not taxed on the distribution during those 3 years. Instead, you pay tax according to reported "net income" per Schedule K 4) During the 4th year (and every successive year) you will be fully reporting the distribution as ordinary taxable income because your cost basis cannot go below zero. 5) When you sell your shares you have to report $6 of regular income in that year -- this is the deferred taxation on your depreciated cost basis My question is this: In years 4+, do you have to pay tax on net income per Schedule K IN ADDITION TO the $2 distribution? Or is it just the $2 distribution that you pay tax on at this point, as it's assumed that the distribution incorporates the taxable income? I'm confused.

One of the things Hoisington talks about is increasing government debt starving the private sector -- or at least that's how I understand the low multiplier of stimulus that he mentions. So my question is... doesn't quantitative easing restore money to the private sector, thus offsetting the impact of crowding out? I mean, the private sector buys govt bonds, and then via the quantitative easing Bernanke thus gets the money back out there again by repurchasing bonds. Regarding the historical examples that Hoisington rely upon... were those periods where quantitative easing was employed on a massive scale?

If giving money to citizens doesn't raise inflation, then let's do it. Immigrants will come, they'll buy houses with the money given away, and the problem will be solved... all without risk of inflaiton.

One of the annoying things (in the US at least) is an arbitrary rule that stocks under $3 cannot be margined. This is ridiculous of course, the price of the stock isn't what determines risk. Nevertheless, the rule exists. Buy a stock for $3.02, and potentially get a margin call if it drops 1%.

Thanks for sharing.

Does anyone here have a fairly good guess as to how much ship prices have increased since December 2009? This question is in relation to what they wrote in their Q2/Q3/Q4 earnings releases last year: Our $1.3 billion credit facility agreement contains a loan to market value ratio requirement that must be met before we can borrow funds under that facility. Based on a valuation obtained in December of 2009, we are currently unable to borrow the remaining $267 million under our $1.3 billion credit facility; however, we do not require this amount to fund the remaining installments for our newbuild fleet. I suppose it's sort of obvious why I'm asking.

Perhaps extremely patient investors will be significantly rewarded. Didn't he continue to hold his long bonds when the 30 yr hit 2.5%? Wasn't low enough yield to sell? In every way that feels like reaching for yield to me, but he clearly doesn't think so. For a significant reward, presumably he means a price much better than that -- what would that look like to him... 2%? 1.5%?

I think that must be right Shalab.

This is the marginal tax rate at 50K. A much more representative figure would be the total % tax paid. If you go to Taxtips.ca you can see that someone earning 50K in Quebec, pays a total of $11,759 federal and provincial tax. When you add in the mandatory govt pension and Employment insurance taxes then the total is $14,703. This makes total tax paid only 29.4% of income (ignoring impact of sales tax/VAT) In BC, that same 50K salary would only be taxed a total of $11,091 for a total tax, pension, and EI tax of only 22.2% of income. http://taxtips.ca/calculators/taxcalculator.htm Can anyone add detail on how that compares to various states in the US? A single person earning $50k in the US pays $8,688 in federal tax -- 17.376%. There is an additional 15.3% tax that covers social security and medicare programs -- 1/2 of that tax is paid by the employer. One might be tempted to say that the combined tax is 32.676%, but the employer takes a deduction for 1/2 of that social security and medicare tax... So total tax paid probably comes to roughly 30% or so. Here in Washington state, there is no state income tax (we have property and sales taxes). Most states have income taxes.

A 10 yr bond today will effectively only be a 5 yr bond (5 years from now). So if you are worried about what the 10 yr rate would be, that's a different story. If the 10yr rate is going to be 6%, then the 5 yr rate would be what... 4% or 5%? So that's only 1% or 2% extra yield per year vs the present 3% yield, so the bonds purchased today at par would be trading (five years from now) roughly 5% or 10% below par (somewhere in that ballpark).