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Re: Do Commodities Hedge Against Inflation?

Bonds provide income. Stocks and real estate provide real growth and income. Commodities provide no income and best keep up with inflation, but they might provide a portfolio benefit from occasional low correlation. Some might argue that bonds don't produce income either, at today's interst rates. ...
by dmcmahon
Fri May 24, 2013 9:52 pm
 
Forum: Investing - Theory, News & General
Topic: Do Commodities Hedge Against Inflation?
Replies: 35
Views: 1009

Re: The new profitability factor, US and int'l evidence

AS to the rubbish comment. The simple equation I will show will show how why this is simple common sense. Don't need anything more than this equation Expected Returns = Expected Cash Flows/Price So if you have the same PRICE (market value) the firm with higher expected cash flows (higher profitabil...
by dmcmahon
Wed May 15, 2013 10:01 am
 
Forum: Investing - Theory, News & General
Topic: The new profitability factor, US and int'l evidence
Replies: 167
Views: 7381

Re: SF BayArea - Buy Home or not

That rent/buy NPV analysis looks questionable. Any such analysis is going to be very sensitive to the terminal value. It's also going to be somewhat sensitive to inflation. IMO the analysis is assuming a high rate of return on investments and then using that to discount the cash flows on an investme...
by dmcmahon
Tue May 14, 2013 12:26 am
 
Forum: Personal Finance (Not Investing)
Topic: SF BayArea - Buy Home or not
Replies: 45
Views: 2044

Re: calculating SS benefit: $25k/yr x4 yr vs $100k yr once

Exception #2: Your earnings from age 60 onward are not indexed for wage inflation. So earning the maximum in those years actually counts for more, assuming wage inflation is positive (because, if they were indexed, they'd have to be indexed downward ). Can you please explain this? Seems like a max ...
by dmcmahon
Mon May 06, 2013 9:05 am
 
Forum: Personal Finance (Not Investing)
Topic: calculating SS benefit: $25k/yr x4 yr vs $100k yr once
Replies: 17
Views: 1274

Re: College is Totally Worth It (at these schools)

When we contrast the four-year cost figure versus say, household median income figures for the years 1975 through 2011, we see an interesting comparison arise. Firstly, note that the median household income rose about 424.2% during that time (source: http://www.census.gov/hhes/www/income/data/histo...
by dmcmahon
Sun May 05, 2013 1:43 pm
 
Forum: Personal Finance (Not Investing)
Topic: College is Totally Worth It (at these schools)
Replies: 39
Views: 2872

Re: Only after a 150% stock market rally in 4 years...

Perhaps we young investors know that US Treasuries at 2% aren't going to get us to retirement in real dollars in a country with a major aging demographic problem and long term debt issues. I'll pass on loaning Uncle Sam money at 2%, thanks. Amen bro - I don't think it's market timing to pass on an ...
by dmcmahon
Sat May 04, 2013 8:42 am
 
Forum: Investing - Theory, News & General
Topic: Only after a 150% stock market rally in 4 years...
Replies: 115
Views: 12245

Re: When you reach your number and keep working

IMO, you need clarity of thought about what you really mean by "reaching your number". Using that phrase connotes the idea that there is a precise dollar amount beyond which the marginal utility of wealth is zero. I doubt that is true for most people. I agree. It's not a precise target. I...
by dmcmahon
Sat May 04, 2013 6:17 am
 
Forum: Personal Finance (Not Investing)
Topic: When you reach your number and keep working
Replies: 71
Views: 6636

Re: How many investments do you own? (clarification below)

Counted all FDIC instruments as one.
by dmcmahon
Thu May 02, 2013 5:21 pm
 
Forum: Investing - Theory, News & General
Topic: How many investments do you own? (clarification below)
Replies: 64
Views: 2691

Corporate profit margins - sustainable?

I thought the following article might be of interest. I've been concerned that corporate profit levels (and therefore stock market valuations) might be at unsustainable levels, yet I've had a nagging feeling that the raw profit/GDP ratio was bound to be misleading due to globalization. The author at...
by dmcmahon
Wed May 01, 2013 4:58 pm
 
Forum: Investing - Theory, News & General
Topic: Corporate profit margins - sustainable?
Replies: 19
Views: 972

Re: Form 8606 and Turbo Tax

We get that you didn't file 8606. The remaining point of our confusion is, did you report the rollover distribution, for which you would have received a 1099R?
by dmcmahon
Mon Apr 29, 2013 5:05 pm
 
Forum: Investing - Help with Personal Investments
Topic: Form 8606 and Turbo Tax
Replies: 17
Views: 684

Re: Form 8606 and Turbo Tax

I've had to do a 1040X for an unrelated error. It's straightforward - TurboTax will do it, simply indicate that you want to create an amended return instead of a regular one, then go through the steps to enter the differences vs the return you filed. If you didn't report the distribution for the rol...
by dmcmahon
Mon Apr 29, 2013 4:23 pm
 
Forum: Investing - Help with Personal Investments
Topic: Form 8606 and Turbo Tax
Replies: 17
Views: 684

Re: Form 8606 and Turbo Tax

I've never had a problem. I'm assuming the OP is seeing the "distribution" reported as extra income, subject to a double tax. This shouldn't happen - it should show, on lines 15a and b, the total amount of $5k and the taxable amount of 0. You do need to get through the income section and i...
by dmcmahon
Mon Apr 29, 2013 12:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: Form 8606 and Turbo Tax
Replies: 17
Views: 684

Re: VMMXX Flatline at 0.01 - is the buck about to break?

A more realistic worry is that theses funds will end up exposing you to floating nav per new regs.
by dmcmahon
Sat Apr 27, 2013 8:39 am
 
Forum: Investing - Theory, News & General
Topic: VMMXX Flatline at 0.01 - is the buck about to break?
Replies: 22
Views: 1639

Re: Frontline--The Retirement Gamble

I think the show might have been better as a series hitting some of the issues raised in more depth, to wit (a) decline in traditional pension schemes, (b) high fees, (c) insufficient savings rates, and finally (d) the effects of the serial-bubble economy we've had during most of these folks peak ea...
by dmcmahon
Fri Apr 26, 2013 10:26 am
 
Forum: Investing - Theory, News & General
Topic: Frontline--The Retirement Gamble
Replies: 291
Views: 25537

Re: [Poll] My Tax-Advantaged Accounts > $3m?

As a regular W2 worker, you'd have a better shot accumulating a pension benefit of equivalent value in a government DB plan. You'd certainly have a good shot if you had the DB plan and a DC plan. But in a job with just a DC plan, most have almost no possibility of saving $51k per year - try $17-20k ...
by dmcmahon
Sat Apr 13, 2013 1:28 am
 
Forum: Investing - Theory, News & General
Topic: [Poll] My Tax-Advantaged Accounts > $3m?
Replies: 55
Views: 3816

Franchise Tax Board letters to someone else at my address!

I've been receiving letters from the California Franchise Tax board addressed to someone else (who I've never met) at my home address. I've been returning them unopened with WRONG ADDRESS - RETURN TO SENDER written on the envelope. Yet the letter keep on a' comin'. I can only guess at the contents a...
by dmcmahon
Wed Apr 10, 2013 11:49 am
 
Forum: Personal Consumer Issues
Topic: Franchise Tax Board letters to someone else at my address!
Replies: 2
Views: 343

Re: Incorrect total basis on form 8606 for a prior year

Duckie wrote:
dmcmahon wrote:Question: what address should she send the corrected 8606 forms to?

The same address she would send her 1040 form (the one if "not enclosing a check or money order").


Not the address for amended returns then. Because we are talking about fixing forms for 5 years prior.
by dmcmahon
Mon Apr 08, 2013 9:40 am
 
Forum: Investing - Help with Personal Investments
Topic: Incorrect total basis on form 8606 for a prior year
Replies: 12
Views: 1150

Re: Incorrect total basis on form 8606 for a prior year

I have a friend whose just discovered she made a very similar mistake. Fortunately no tax is due in the earlier years - she caught it for 2012 when she rolled the IRA over into a Roth, so the tax is due this year.

Question: what address should she send the corrected 8606 forms to?
by dmcmahon
Sun Apr 07, 2013 8:31 pm
 
Forum: Investing - Help with Personal Investments
Topic: Incorrect total basis on form 8606 for a prior year
Replies: 12
Views: 1150

Re: Revoking our revocable A-B Trusts

If the trusts are revocable why are you doing extra tax returns and dealing with K1s? Or is that a concern off in the future? FWIW I think you may be on to something - given the higher limits now and the way the law gives a couple a large combined limit, the classic A-B structure makes sense in fewe...
by dmcmahon
Sat Apr 06, 2013 6:34 pm
 
Forum: Personal Finance (Not Investing)
Topic: Revoking our revocable A-B Trusts
Replies: 13
Views: 967

Re: Munis and Stockton California

"Unfunded obligations" is one of the most misleading claims out there. No time period is given (is this per year, over an infinite horizon or what?), no context is given (is $500 billion over a long time period a lot in a $15 trillion a year economy?), almost no obligation is funded (what...
by dmcmahon
Wed Apr 03, 2013 12:34 am
 
Forum: Investing - Theory, News & General
Topic: Munis and Stockton California
Replies: 18
Views: 1710

Re:

I think those who are in their peak earning years are usually better off with a regular 401K because they are deducting taxes at their marginal rate that will later be paid at rates less than their marginal rate. Assuming a retiree is living off nothing but Roth 401K and 401K distributions, he won'...
by dmcmahon
Tue Apr 02, 2013 1:54 pm
 
Forum: Investing - Theory, News & General
Topic: Roth 401(k) versus 401(k) for high income investors?
Replies: 44
Views: 3950

Re: Help - young military investor with family

Although not directly responsive to your questions, this thread on military investing may be of general interest to you:

viewtopic.php?f=10&t=48901

Thank you for your service.
by dmcmahon
Sun Mar 31, 2013 4:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help - young military investor with family [Military]
Replies: 23
Views: 971

Re: Buying versus renting; Trulia says buying is 44% cheaper

Yes, they were comparing apples to apples, very like homes in the same neighborhood so that it would be a valid model. They were specifically trying NOT to do what you mentioned. That may be true, but the point is that there's still a consumption aspect to the decision. When I bought my house I was...
by dmcmahon
Sun Mar 31, 2013 4:06 pm
 
Forum: Personal Finance (Not Investing)
Topic: Buying versus renting; Trulia says buying is 44% cheaper
Replies: 37
Views: 3264

Re: Has the tax increase pushed anyone over into Annuity?

Wins by a whopping 1% after 30 years, using a best-case estimate of the ER, and (if its a stock) neglecting the negative cap gains treatment. Discounting that extra $1 back 30 years to present value, it's near enough to zero. Pass.
by dmcmahon
Fri Mar 29, 2013 12:27 am
 
Forum: Investing - Theory, News & General
Topic: Has the tax increase pushed anyone over into Annuity?
Replies: 15
Views: 1717

Re: Has the tax increase pushed anyone over into Annuity?

A variable annuity might make tax sense for REITs, because REIT income is almost all taxed at your top rate. However, given the higher cost of the variable annuity compared with the low cost of the mutual fund or ETF, it would take a very long time for the tax deferral to outweigh the expenses. Tha...
by dmcmahon
Thu Mar 28, 2013 5:45 pm
 
Forum: Investing - Theory, News & General
Topic: Has the tax increase pushed anyone over into Annuity?
Replies: 15
Views: 1717

Re: Buying more of international?

Wow, that dividend really fell off a cliff! What's up with that? Total over 2012 was 2-3x higher than the 50 cents implied by the most recent dividend. Was going to buy after the dividend so as not to buy a distribution. But if this is the new normal...ugh.
by dmcmahon
Thu Mar 28, 2013 1:50 am
 
Forum: Investing - Help with Personal Investments
Topic: Buying more of international?
Replies: 13
Views: 1409

Re: Has the tax increase pushed anyone over into Annuity?

...The problem is, interest rates are so low that even saving the 55% (temporarily) .... If you're talking about a short time horizon, then the savings is modest/temporary, but if it's longer, then the compounded growth on the tax savings is not temporary but yes partly dependent on current yields....
by dmcmahon
Wed Mar 27, 2013 11:40 pm
 
Forum: Investing - Theory, News & General
Topic: Has the tax increase pushed anyone over into Annuity?
Replies: 15
Views: 1717

Re: Has the tax increase pushed anyone over into Annuity?

I seriously considered them last year, and the door is still open. It's not just the higher investment taxes I'm facing - California's income taxes also apply and were raised last year retroactive to Jan 1 2012. The state income tax ranges from 9.3-13.3% and applies to all income, including capital ...
by dmcmahon
Wed Mar 27, 2013 10:43 am
 
Forum: Investing - Theory, News & General
Topic: Has the tax increase pushed anyone over into Annuity?
Replies: 15
Views: 1717

Re: Selling fractional ETF shares

How big a problem is it to let the dividends accumulate as cash and then reinvest them along with new money as you go along? With typical payouts in the 2% range, you're only talking about $200 over a year on a $10k account. If the concern is rebalancing, can't you mostly get that done with new mone...
by dmcmahon
Mon Mar 18, 2013 7:20 pm
 
Forum: Investing - Help with Personal Investments
Topic: Selling fractional ETF shares
Replies: 16
Views: 882

Re: VTSAX vs VTI (mutual fund vs etf)

I like the intra-day liquidity of ETFs if I'm shifting assets. It's frustrating having to wait for the market closing price on a Mutual Fund, especially over the past few years when you could see relatively large price swings during the trading day. It was especially frustrating to have to wait seve...
by dmcmahon
Fri Mar 15, 2013 7:59 pm
 
Forum: Investing - Help with Personal Investments
Topic: VTSAX vs VTI (mutual fund vs etf)
Replies: 7
Views: 629

Re: Ron Delegge vs John Bogle on ETFs?

As a long term investor in ETFs, I don't consider it a problem that hedge funds invest heavily in them with high turnover. That lowers the bid-ask spreads! Ditto. I appreciate the liquidity and price discovery function, and don't mind if some fractional amount is skimmed from my trades because I do...
by dmcmahon
Fri Mar 15, 2013 10:43 am
 
Forum: Investing - Theory, News & General
Topic: Ron Delegge vs John Bogle on ETFs?
Replies: 11
Views: 1030

Re: TAX question - doing tax myself - confused

I'll caveat my responses by noting that I'm not a tax expert, not an accountant, and not a lawyer. Just "some guy on the internet". Heck, I could be a dog! 1. I invested some $$ in stocks/bonds using wells-trade retail site last tax-year (2012) but never SOLD any shares - DO I STILL NEED T...
by dmcmahon
Wed Mar 13, 2013 12:03 pm
 
Forum: Personal Finance (Not Investing)
Topic: TAX question - doing tax myself - confused
Replies: 17
Views: 1200

Re: How can I adjust cost basis in turbo tax for a wash sale

The statement from my broker is, shall we say, less than clear on the point. I see this transaction commingled on a list that includes others involving more recently acquired shares. The list doesn't provide specific values for the relevant "box" - instead, a general statement is made abou...
by dmcmahon
Sun Mar 03, 2013 9:36 pm
 
Forum: Personal Finance (Not Investing)
Topic: How can I adjust cost basis in turbo tax for a wash sale?
Replies: 4
Views: 246

How can I adjust cost basis in turbo tax for a wash sale?

Some years ago, due to a fat-fingered mistake trading some shares, I ended up entering a sale instead of a buy. So I had to buy back the shares, plus make my original buy. Unfortunately, this left me with a small wash sale loss on the block of shares sold, which I've kept track of until finally sell...
by dmcmahon
Sun Mar 03, 2013 3:26 pm
 
Forum: Personal Finance (Not Investing)
Topic: How can I adjust cost basis in turbo tax for a wash sale?
Replies: 4
Views: 246

Re: why not short Treasuries>?

larryswedroe wrote:ftrobin
How else to you propose the typical investor bet against Treasuries?
Larry


How about a mortgage? :)
by dmcmahon
Thu Feb 28, 2013 12:48 am
 
Forum: Investing - Theory, News & General
Topic: why not short Treasuries>?
Replies: 16
Views: 1524

Re: Inflation.....I have not seen much in 10 years

Sheepdogs approximate 50% increase in 12 years seems about right. Only major item not on the list is housing. If you're renting, at least in my area, you've seen about that much of an increase. If you are looking to buy a house, it's far far worse. Almost as bad would be college costs.
by dmcmahon
Thu Feb 21, 2013 10:06 pm
 
Forum: Personal Finance (Not Investing)
Topic: Inflation.....I have not seen much in 10 years
Replies: 56
Views: 2794

Re: Need 2013 1040es and 760es

You can use "open form" feature to open up 1040-ES voucher 1 and use "right click" on each field to override the entries. Thanks, I tried a variant of that and was unable to type into the field, but hadn't thought to right click. Sheesh - what's next, features that work when you...
by dmcmahon
Fri Feb 15, 2013 11:49 am
 
Forum: Personal Finance (Not Investing)
Topic: Need 2013 1040es and 760es
Replies: 14
Views: 607

Re: Need 2013 1040es and 760es

Did TT do that all by itself, or did you have a hand in it? Did TT just make up the numbers out of whole cloth? A bit of both. It makes up the number using some estimation formula based on the prior year's tax. However since mom's income is variable, it's of little use. I haven't used TT recently, ...
by dmcmahon
Thu Feb 14, 2013 11:03 am
 
Forum: Personal Finance (Not Investing)
Topic: Need 2013 1040es and 760es
Replies: 14
Views: 607

Re: Need 2013 1040es and 760es

Or, alternatively, to coax TT to spew forth blank forms? The downloaded version of TT has a "forms" option (near the upper right of the screen) and it allows you to open year 2013 1040-ES forms. I assume you can do the same for your state's. First thing I tried. Forms are filled out thoug...
by dmcmahon
Thu Feb 14, 2013 1:03 am
 
Forum: Personal Finance (Not Investing)
Topic: Need 2013 1040es and 760es
Replies: 14
Views: 607

Need 2013 1040es and 760es

I'm doing my mom's taxes and I've hit a snag. I use TurboTax, and as usual, it wants to spew out so-called vouchers for estimated tax payments. Problem is, it fills in the amounts, which are, as usual, wrong. Normally I work around this problem by downloading the relevant forms from the IRS web site...
by dmcmahon
Wed Feb 13, 2013 10:39 pm
 
Forum: Personal Finance (Not Investing)
Topic: Need 2013 1040es and 760es
Replies: 14
Views: 607

Re: Mortgage payoff instead of fixed income?

I'm a fan of paying off or paying down the mortgage. Did so myself, and no regrets. But would not have done so if it meant zeroing out my bond holdings. Also don't forget to keep enough cash for emergencies. The warning about paying off an acquisition mortgage is correct - if you later decide to tak...
by dmcmahon
Tue Jan 29, 2013 11:46 am
 
Forum: Investing - Theory, News & General
Topic: Mortgage payoff instead of fixed income?
Replies: 46
Views: 2526

Re: WSJ - Avoid Vanguard Total Bond Fund ?

If your only goal is to dampen the volatility of a 60/40 portfolio, why not just use short term bond ETF, especially in the current environment? How much in return would you really give up? Exactly my thinking FWIW. Interest rates on intermediate bonds are so low, cutting them to zero has a negligi...
by dmcmahon
Sun Jan 27, 2013 12:15 pm
 
Forum: Investing - Theory, News & General
Topic: WSJ - Avoid Vanguard Total Bond Fund ?
Replies: 82
Views: 9805

Re: Bondphopic's Challege

There's nothing wrong with not wanting to get out of an obviously overvalued asset class--witness large growth stocks in the late 1990s. The problem, of course, is when to know when the peak is.. You don't really need to call the peak, you can begin strolling for the exits or practise the type of &...
by dmcmahon
Tue Jan 22, 2013 11:38 am
 
Forum: Investing - Theory, News & General
Topic: Bondphopic's Challege
Replies: 41
Views: 1788

Re: Update: The Incredible Shrinking Market

...the extremely short term focus caused by quarter to quarter scrutiny of results. Private companies can focus on achieving long term investment results while public companies can not. This would seem to be a good trend for the real economy. Except that the general investing public will increasing...
by dmcmahon
Mon Jan 21, 2013 1:06 pm
 
Forum: Investing - Theory, News & General
Topic: Update: The Incredible Shrinking Market
Replies: 87
Views: 8956

Re: Bondphopic's Challege

Well, I'll confess to shortening my maturities and reducing my allocation. You "contest" doesn't allow for the latter, which is an obvious response to an overvalued assets class. Your time frame of one year is way too short. I believe as follows (JMHO): Bonds are priced to give subpar retu...
by dmcmahon
Mon Jan 21, 2013 12:43 pm
 
Forum: Investing - Theory, News & General
Topic: Bondphopic's Challege
Replies: 41
Views: 1788

Re: Tax implications of ATRA

I've always scored the deduction phase-out as approximately the same as a 1% bump in the top tax rate. A dollar above the limit removes 3 cents of deductions, which, at a rate of 35% or thereabouts, is a net increase of 1 cent of tax liability. Someone with few deductions might eventually see this d...
by dmcmahon
Sun Jan 06, 2013 4:33 pm
 
Forum: Investing - Theory, News & General
Topic: Tax implications of ATRA
Replies: 11
Views: 957

Re: If I were a selfish mutual fund manager I would...

Here's an idea: start two funds with aggressive swing-for-the-fences strategies, and leverage them out the ying-yang. The catch: they use opposite bets! The one that loses big is quietly buried. The winner is hyped as prove of genius.
by dmcmahon
Sun Jan 06, 2013 12:10 am
 
Forum: Investing - Theory, News & General
Topic: If I were a selfish mutual fund manager I would...
Replies: 15
Views: 1489

Re: Recommend a printer?

Willing to replace the printer, I had nothing left to lose, so I went in and cleaned the ink cartridge assembly as best I could with alcohol. The task would have been far easier if it had been designed for removal, or if it was at least possible to access the underside of it. Whoever designs these t...
by dmcmahon
Sat Jan 05, 2013 4:51 pm
 
Forum: Personal Consumer Issues
Topic: Recommend a printer?
Replies: 51
Views: 2873

Re: Recommend a printer?

Thanks for all the responses. I'd been wondering about going with a laser due to my sporadic usage, and the discussion seems to confirm that idea. I confess I do like the color output of the ink jet, even for tax forms where there are just a few colored areas, but I guess this isn't really all that ...
by dmcmahon
Sat Jan 05, 2013 1:51 pm
 
Forum: Personal Consumer Issues
Topic: Recommend a printer?
Replies: 51
Views: 2873

Recommend a printer?

My inkjet printer has seemingly failed after less than a year of use. The black color will not print. Replaced the cartridge at some expense despite the suspicion that this wouldn't fix the problem, which it did not. So now I'm junking yet another printer. It's cheap but the utter waste of plastic a...
by dmcmahon
Sat Jan 05, 2013 2:22 am
 
Forum: Personal Consumer Issues
Topic: Recommend a printer?
Replies: 51
Views: 2873
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