patrick.net

CaptainShuddup says

Who's giving you 10% when the fed interest rate is super low?

No one is going to give you 10%. You'll have to work at it.

CaptainShuddup says

Who's giving you 10% when the fed interest rate is super low?

There are many tens of thousands of money managers that have earned well over 10% per year for their clients, that is since 2006. Most of this time the fed funds rate has been near zero, and this time interval includes a dramatic drop in the stock market.

One requisite is that the account be large enough to be worth their wild. 2 million meets this requirement. 10 million even more so.

Isn't 10% what Madoff promised his clients?

CaptainShuddup says

marcus says

Not only is your english language background somewhat limited, which you seem to intentionally exaggerate with the first sentence (nice troll - you couldn't be that stupid)

No, not intentionally meant for you, I said the Smart people.

For the literate people out there,...you know, people who read, starting off with a non sentence (ie putting a period in the middle of a sentence) makes you seem like exactly as much of a dolt as you are.

CaptainShuddup says

I think the majority of people today even the smart ones.

Don't realize that there's being rich, then there's being rich for the long term.

2 non sentences in a row, as the lead in to your little essay.

I'm actually very forgiving of certain sloppiness in this medium. But what you do is just an obvious troll of those that are more literate and more intelligent than you.

I get it. Everyone with an IQ over 90 is what you refer to in a derogatory way as "a liberal." And you get a kick out of pushing their buttons. You think it's ever so amusing to make those liberals think that you're even more stupid than you are.

Somehow since it's intentional, it allows you to feel that you aren't an idiot ? Is that it ?

Okay,...fine. I'm a liberal by your definition (ie not an idiot) . So ? Why is that so amusing ? These liberal smarty pants types are going to point out your bad grammar or syntax, and you're going to think "hehee, I did it on purpose to troll them. I'm so clever. And if they finally figured out I do it on purpose, that sort of covers the other times past and future when it's not on purpose........etc, etc."

CaptainShuddup says

Isn't 10% what Madoff promised his clients?

Successful money managers don't guarantee returns. And I don't think Madoff did either. He just showed a fraudulent history of making over 10%. And that was on a fund that was too huge to do that well, and supposedly doing arbitrage type strategies that were impossible.

Bessides what Madoff promised was more.

Markopolos later testified to Congress that to deliver 12% annual returns to the investor, Madoff needed to earn 16% gross, so as to distribute a 4% fee to the feeder fund managers, who would secure new victims, be "willfully blind, and not get too intrusive".[69]

http://en.wikipedia.org/wiki/Madoff_investment_scandal

CaptainShuddup says

If I had my druthers, I would rather have a couple Million in a bank somewhere making me 4% than to have a one time 10 million dollar windfall.

That would be 80K a year guaranteed no matter what. And the year after that, and the next...

I sure hope you would talk to a financial consultant (or a middle school math teacher) before making that decision.

2 million at 4% vs 10 million at 0%...are you fucking serious?

If you didn't touch the 2 million or any interest it generated, it would take over 40 years to grow to equal $10 million.

How much longer do you have to live? 50 years? let's just take the 10 million at 0% interest and divide that by 50....You could spend $200k per year for 50 years before you ran out of money.

He wanted to be the first one on his block to take a position contrary to Thomas Piketty's thesis in the popular new book, "Capital in the 21st Century."

Maybe he heard a segment from some angry mouth breathers on talk radio (or FOx) who are upset that Piketty is right, and wanting to attribute it all to communists that will use it as an excuse to steal more money from the rich to give to the "takers."

Unfortunately for the Captain, who chooses what to believe strictly on the basis of what he wants to believe, just wishing that Piketty is wrong and making up some nonsensical gibberish is only going to convince one single person ( himself) that he has a point to make on this subject.

I can never decide if the captain is the king of trolls or has simply smoked way too much dope. Anyone have any insight?

CaptainShuddup says

I guess what I'm saying being rich today, doesn't seem to have the same meaning it did in the past, nor is it a guarantee that you wont ever be broke again. If I had my druthers, I would rather have a couple Million in a bank somewhere making me 4% than to have a one time 10 million dollar windfall.

That would be 80K a year guaranteed no matter what. And the year after that, and the next...

Ummm...

The 2041 TIPS pay 2.125% interest right now. If prices double, the rate effectively doubles. Right now the ratio is 1.072, essentially saying the $1000 you invested in 2011 is worth 1,072, plus the biannual interest payments.

This is a locked in guaranteed real return of 2.125% for the next 27 years.

Real Principle Risk free $10 million at 2.125%, (state tax exempt) > $2 Million at 4% nominal.

2.125% real return. If inflation is 2%, then the nominal return is 4.125%.

I'll take the $10 million windfall, thanks.

CaptainShuddup says

And Marcus is having a Luke Sky-walker moment here, he's in shock that someone can be rich, and not be Rich at least not for long.

$10 million can be invested risk free in TIPS and will always return and real income 4x the real median income. By math, that means once you amass ~$2.5M in wealth, you are guaranteed to make at least the median income for life if you invest conservatively.

$2.5M is under the estate tax exemption, so if you only have one child, and they only have one child, etc. a net worth of $2.5M today will earn at least the median income (barring tax law changes) for your decedents ad finitum.

If you spend less than the median income, then wealth will only grow in real terms.

BoomAndBustCycle says

But I also hate stressing the FEW times a year it rains in So Cal.... over whether I'm gonna come home to a leak. Tough call.. I have the summer to think about it atleast.. Never rains in So Cal in the summer.. atleast not downpours.

It is forecast that we'll have a moderate to strong El Nino this coming winter, which often brings heavier rain. Something to consider when making roof decisions.

control point says

2.125% real return. If inflation is 2%, then the nominal return is 4.125%.

What inflation, there is no inflation. Only price fixing.
We're not getting more money, we're paying more money.

control point says

$10 million can be invested risk free in TIPS and will always return and real income 4x the real median income.

Security Term CUSIP Reopening Issue
Date Maturity Date High Yield Interest Rate
5-Year 912828C99 No 04/30/2014 04/15/2019 -0.213% 0.125%
10-Year 912828B25 Yes 03/31/2014 01/15/2024 0.659% 0.625%
30-Year 912810RF7 No 02/28/2014 02/15/2044 1.495% 1.375%control point says

The 2041 TIPS pay 2.125% interest right now.

Not according to https://www.treasurydirect.gov/instit/annceresult/annceresult.htm

I'm breaking my own rules again by responding here, but the answer to this concern is easy. Simply put, and as I've mentioned a zillion times like a broken record, the overall stock market has delivered an average, long-term return of between 7-10% a year for well over 100+ years. People think I'm stupid for saying so, but look it up. That's a better return than real estate, and its a more consistent return than just about any other investment one could make. Are there risks? Yes. Can you lose money at times? Yes. That is why its wise to hire a financial planner and have them do the work for you.
Even if only 50% of 10 million were to be placed in boring stock investments, that would likely still provide a lifetime of comfortable living with the remainder of the cash simply sitting around somewhere.

control point says

$10 million can be invested risk free in TIPS and will always return and real income 4x the real median income. By math, that means once you amass ~$2.5M in wealth, you are guaranteed to make at least the median income for life if you invest conservatively.

That's not even remotely true.

edvard2 says

Simply put, and as I've mentioned a zillion times like a broken record, the overall stock market has delivered an average, long-term return of between 7-10% a year for well over 100+ years

If you average it out you'll get closer to 4%. You have to be pretty lucky to get 7 to 10 over years.

mell says

Note that this ill always benefit the wealthiest (most leveraged) the most.

Not really--as we've discussed before. A rich person losing 50% of his wealth is much, much less harmful than a working stiff losing his job.

BoomAndBustCycle says

I've heard all the horror stories about HELOC's.. but plan to do this responsibly.. and put it all back into the house for practical repairs and updates. I see I can choose between a Home Equity Line of Credit or a Home equity loan...

Welcome to homeownership. Homes only increase in x "value" if you put x dollars of maintenance into them. (Unless you sell in a bubble.)

SFace says

HELOC is probably better than a loan, less fees.

Get a floating rate. I think rates are around prime + 1%. (around 4.25%), tax deductable. The larger than line, the better the rates. I do not believe 3.25% is out there unless you are prime, in Palo Alto and taking out 500K.

I am planning on buying a house (rental property) with cash but then want to get some sort of loan where the house will still be cash flow positive, but I'll use the money for something else, maybe another purchase. Any thoughts on the best way of doing this? Thanks.

CaptainShuddup says

Not according to https://www.treasurydirect.gov/instit/annceresult/annceresult.htm

http://www.treasurydirect.gov/instit/annceresult/tipscpi/2014/tipscpi_912810qp6_052014.htm

FortWayne says

That's not even remotely true

You don't understand tips then.

tatupu70 says

mell says

Note that this ill always benefit the wealthiest (most leveraged) the most.

Not really--as we've discussed before. A rich person losing 50% of his wealth is much, much less harmful than a working stiff losing his job.

We discussed this before indeed. The working stiff losing his old job would find a new job that can pay more because the new employer has a chance to buy the previous employer's assets at fire-sale prices. Both Google and Amazon in their early years were well known for picking up equipment and office furniture from failed dot-com's. Less money spent on hardware, rent and servicing debt, the more money to pay employees and devote to customers.

Your paymaster the banksters don't like that, but prefer the old debt stay, and have the cost transferred to other people, leading to market place clog-up and long term unemployment for the working stiff.

Reality says

Both Google and Amazon in their early years were well known for picking up equipment and office furniture from failed dot-com's. Less money spent on hardware, rent and servicing debt, the more money to pay employees and devote to customers.

LOL that profit margins and economic value captured by workers is determined by anything more than the market. A new employer also gets to buy employees at fire sale prices.

tatupu70 says

Not really--as we've discussed before. A rich person losing 50% of his wealth is much, much less harmful than a working stiff losing his job.

Not really...

Assuming a)So called rich person, loses 50% of his wealth, which could be 100% of his growth, if he started with that 50% originally. Not only that, that other 50% may have been what he depends on to maintain his bills. His income has just been cut in half. Anyone with a Mortgage and Bills knows they don't want half. The guy who lost half his income probably hasn't been working and is considered Dopped out of the workforce, and will have a hell of time getting a job to build back up nest egg. And his bills will be draining the remainder of his nest egg, faster every month as he pays bills. The interest he earns will be less.

b)The guy who lost a good job, if he was at least smart enough to save a years worth of salary, has a year buffer. And he is fresh in the job market. He'll probably bounce back quickly and not have to use more than a month or two of his savings.

Just because people have a million if they are trying to live off it, they are on a set fixed income. There is no room for error. I realize up to a point you have enough money to live indefinitely regardless how you manage your resources. But I'm not talking about extremely wealthy people or people who have wealth because they were finance and investing savvy. Many people come into money, save up enough money(not likely anymore), win a lotto pool, or some other windfall means. They don't automatically become magnates and moguls. And for this argument, I'm talking about people with only 1mil to 2mil, that is just enough to manage a meager income through.

Those people who don't consider their money how ever they have it tied up earning them income, don't consider any of it "Mad Money" or in any way disposable.

It's why when you ask a relative or Friend who you think is rich, for a decent chunk of change, you ever notice they say...

"I don't have THAT kind of Money."

They have some Money, but it's not That kind of money.

edvard2 says

I'm breaking my own rules again by responding here, but the answer to this concern is easy. Simply put, and as I've mentioned a zillion times like a broken record, the overall stock market has delivered an average, long-term return of between 7-10% a year for well over 100+ years. People think I'm stupid for saying so, but look it up.

You are looking at stock indices themselves with dividend reinvested without taking into consideration transaction costs. Index funds are not the same as indices with dividends reinvested. Funds have transaction cost and tax cost when trying to track indices, which have very different stocks over a long period of time. Managed funds have even higher transaction costs.

That's a better return than real estate, and its a more consistent return than just about any other investment one could make.

You are forgetting the dividend payment on real estate (rent income or owner equivalent rent), and the leverage allowed.

control point says

Reality says

Both Google and Amazon in their early years were well known for picking up equipment and office furniture from failed dot-com's. Less money spent on hardware, rent and servicing debt, the more money to pay employees and devote to customers.

LOL that profit margins and economic value captured by workers is determined by anything more than the market. A new employer also gets to buy employees at fire sale prices.

Did average hourly wage drop by more than 50% during the market crash of 2008-09? Market crash is when the wage earners win big viz the capital owners.

Reality says

Market crash is when the wage earners win big viz the capital owners.

Only if they keep their jobs...

tatupu70 says

Reality says

Market crash is when the wage earners win big viz the capital owners.

Only if they keep their jobs...

No. They get a deal from the new employer who doesn't have to service the old debt, and they get a better deal from the liquidation sales themselves.

Reality says

Did average hourly wage drop by more than 50% during the market crash of 2008-09? Market crash is when the wage earners win big viz the capital owners.

Wages didn't drop?

Why is 50% chosen?

You think this, showing non-supervisory wages as a percentage of GDP falling from 32.7% to 30.8% over the past 5 years is not related to Corporate profits after tax as a percentage of GDP increasing from 7.2% to 11.1% of GDP?

It is important to note we are talking about what happens after the crash, not during it. Capitalists get fire sale prices after the liquidation event. So lets examine 2009 onward.

http://research.stlouisfed.org/fred2/graph/?g=zcx

It's called karma and it's a bitch.

With a $10 million windfall, you could easily and I mean really easily purchase a multisector bond fund and make over $330,000 per year at todays rates. Yes, you would need to pay your fed taxes no matter what at regular rates and depending on the state that you reside in you may need to pay taxes there as well, but you would automatically be in the top 3% of all households financially off of this passive income! I wouldn't even care about NAV fluctuations at that point since the worst that this fund has done over the last 10 years is a little over 11% loss and this was in 2008.

Reality says

No. They get a deal from the new employer who doesn't have to service the old debt, and they get a better deal from the liquidation sales themselves.

lol-yes, that's certainly what we're seeing right now. The unemployed are getting great deals, aren't they?

Seriously--why in the hell would you think that employees would get BETTER deals when the supply of unemployed labor is higher.

Reality says

Bull run stock markets produce the inequality that you guys decry so much.

You've got it backwards. Companies cut wages so that more cash went to the owners. That increased the value of the stock.

Inequality creates bull runs of stocks.

tatupu70 says

supply of unemployed labor is higher

Slight correction. Demand for labor is lower. Supply of labor is unaffected.

control point says

Did average hourly wage drop by more than 50% during the market crash of 2008-09? Market crash is when the wage earners win big viz the capital owners.

Wages didn't drop?

Why is 50% chosen?

Are you so ignorant as not to realize that the stock market dropped more than 50% during the crash? SPX was in the 1500's near its peak in 2007, dropping to 666 at the bottom in early 2009.

You think this, showing non-supervisory wages as a percentage of GDP falling from 32.7% to 30.8% over the past 5 years is not related to Corporate profits after tax as a percentage of GDP increasing from 7.2% to 11.1% of GDP?

It is important to note we are talking about what happens after the crash, not during it. Capitalists get fire sale prices after the liquidation event. So lets examine 2009 onward.

You are criticizing the result of the FED rescue. The crash took place before 2009.

control point says

Slight correction. Demand for labor is lower. Supply of labor is unaffected.

Supply of unemployed labor is higher. But, you're correct that I should have stated it as you say.

tatupu70 says

Reality says

No. They get a deal from the new employer who doesn't have to service the old debt, and they get a better deal from the liquidation sales themselves.

lol-yes, that's certainly what we're seeing right now. The unemployed are getting great deals, aren't they?

Seriously--why in the hell would you think that employees would get BETTER deals when the supply of unemployed labor is higher.

What we are seeing now is the result of half a decade of FED QE. In case you don't remember, and it certainly doesn't feel like it, the crash took place more than half a decade ago. We are allegedly in recovery for half a decade now. LOL. How is that FED pumped recovery that you advocated so much half a decade ago feeling to you now?

I was thinking the same thing last Sunday when this was a big deal on the Sunday morning news/talk shows. Nobody even dared to make that comment (which is what I was thinking), that is...

It was a private conversation. So the guy is provably a douchebag. But you're using a conversation his girlfriend taped to prove it ? Wtf ?

I had the same feeling when there was all the talk about Clinton getting a sexual favors from an intern. So ? It's his private business. I'm not supposed to know that!

Same thing here. All I can think is that it's because of the irony that he owns an NBA team and made those remarks.

Is it a slow news time? Or is it that there's other news are they trying to move out of the headlines.

Is this meant to distract us from what's happening in the Ukraine ? Which happens to also be somewhat less our business than we want to make it.

Reality says

Are you so ignorant as not to realize that the stock market dropped more than 50% during the crash? SPX was in the 1500's near its peak in 2007, dropping to 666 at the bottom in early 2009.

Are you so ignorant to try to compare the percentage drop of value (and an index of value at that, not absolute value. Does the weight of AAPL in the S&P 500 equal the weight of value of AAPL in the overall corporate marketplace?) with the percentage drop of wages?

tatupu70 says

Supply of unemployed labor is higher. But, you're correct that I should have stated it as you say.

I only say it my way because employers are not limited to hiring only unemployed workers.