April 18, 2014

Playing Good Financial Defense Can Sometimes Be Worth More Than Good Financial Offense

TaylorMade JetSpeed Driver Set

It's time for what has become an annual reminder on the nature of building wealth: The importance of playing good financial defense.  Roughly 1 out of every 3.7 people reading this post earn more than $100,000 per year, or twice the median household income in the United States; some of you exponentially more.  This is a community of people who know how to make money, in various forms, from a myriad of activities. If you haven't learned the flip side of the coin - how to stretch that money so i … [Read more...]

You Need to Read the 2013 M&T Bank Corporation Annual Report

M&T Bank Annual Report

The Internet problems we have experienced over the past two weeks began again, today, to the point we had to stop working.  There was a huge stack of annual reports that had arrived in the mail from those single framed stock certificates I acquired back when we started our first company, and so I grabbed one and started going through it to at least be productive.  It was the 2013 annual report for M&T Bank Corporation. If you aren't aware of it, M&T Bank is exceptional.  It is one of o … [Read more...]

Don’t Give In To the Siren Call of Leverage

Ben Graham Security Analysis Leverage

So much misfortune in life can be sidestepped if you simply make it a rule to never stretch your finances, yet it's a rule I see violated more than any other both through observation of those around me and through the messages I receive.  Someone can afford a $150,000 house but they try to buy a $250,000 house.  Another can realistically go to a college that will cause them to graduate with $10,000 in debt but they want to sign up for the program that will put them $40,000 in debt.  Then, not on … [Read more...]

Eli Lilly and the Insanity of Foreign Taxes

Eli Lilly Repatriation

I'm going through the corporate bond filings of pharmaceutical giant Eli Lilly just out of curiosity.  They have a huge patent cliff coming up, during which time as much as 40% of their revenue base will be exposed to generic competition.  I wondered what it would do to the risk metrics on the senior bonds so I pulled the Moody's rating and reading over the figures as I listen to an old 1970's song called Snookeroo. Side note: The song is interesting.  After the breakup of The Beatles, Ringo St … [Read more...]

My Objective: To Take $2.4 Million from the Stockholders of KCPL Over the Rest of My Natural Life Expectancy

KCPL

Since the energy saving program 4 months ago, the real world results are exceeding projections.  Thank you, again, to those of you who wrote me with suggestions!  I estimated that the energy efficient light bulbs alone would save an average of 288 kWh per month, or 3,456 Kwh per year.  They are actually saving 317 kWh per month, or a run rate of 3,804 kWh per year.  That means my net cash savings are around $410 per annum. Over the next 25 years, if I put it to work at average rates of ret … [Read more...]

Bing Is Offering Gift Cards and Rewards If You Use Its Search Engine!

Bing Rewards

You all know I love to save money.  Microsoft is so eager to grow its search business that it has a Bing Rewards program that lets you earn all sorts of free stuff if you take a few seconds to setup an account.  Whenever you search, you accrue points.  For example, 525 points gets you a $5 gift card to Burger King, Game Stop, or any number of other places.  Someone who spends several hours a week on a computer could pocket quite a bit of free money or rewards over several years without any real c … [Read more...]

Supreme Court To Hear Important Case on Inherited IRAs and Bankruptcy

United States Supreme Court

The United States Supreme Court has agreed to hear arguments in a case that involves a married couple who went bankrupt after opening a pizza shop.  They owe their creditors $700,000.  However, the wife's late mother left them $300,000 in an IRA.  In ordinary bankruptcy proceedings, IRAs are generally considered off-limits (which is one of the reasons it is important to fund them if you can - they offer significant asset protections not available through other means). The trustee of the ba … [Read more...]

Investment Tax Strategy Can Make Two Identical Portfolios Experience Very Different Outcomes (Part 2)

Asset Placement Tax Strategy for Investment Portfolio Income

After our discussion two days ago, I was thinking about investment tax strategies, again, this morning as I sat in my living room with a notebook, a cup of black coffee, and Sungkyunkwan Scandal playing on television in the background.  It's been several years since I dove into a tax strategy known as asset positioning, but a refresher course is in order. It seems like investors don't pay enough attention to this discipline, and it's almost as important as being able to analyze an income st … [Read more...]

Tax Strategy Matters To Your Investment Portfolio

IRS_Building_Constitution_Avenue

Some of you have written me asking why an investor wouldn't immediately sell an overvalued stock, moving money to undervalued holdings.  These questions picked up steadily once I revealed my turnover rate is practically non-existent in most years as I keep a shopping list of companies I want to own, wait for them to hit my price, then buy with the plan of holding them a very long time.  Although I've answered this question in the past, it sometimes helps to revisit and provide a new answer, il … [Read more...]

I Wish Warren Buffett Would Stop (Effectively) Lying About His Tax Rate

Berkshire Hathaway Annual Report

Back when I was a child, and long before he was a household name, my hero was a businessman from an hour and a half north of my hometown named Warren Buffett.  His company was much smaller back then - he didn't even own all of GEICO! - and the very first time I read about him, there was only a single class of stock, trading at right around $10,000 per share.  I read everything I could about his company, which wasn't much (I didn't even know what he looked like for years as the Internet didn't e … [Read more...]