patrick.net

requiem,

15% discount to avg. price for that particular qtr?

The RE correction has not really started yet...

DinOR:

I believe it's lower of 85% of purchase price date or 85% of subscription date value (for the given offering).

Downtown Palo Alto is full of demons (bums).

No it's not. That's Downtown Santa Cruz.

requiem,

Oh, o.k. There are a few different ways to calculate that. My wife's co. left "the lower of" part out. Who administers your plan? Their plan was w/Merrill and they didn't give a rip about executing any type of sell order strategy.

ESPPs are pretty good deals. You get to buy, usually at a favorable price, and it works out as 'enforced savings' the way 401(k)s can.

If you LIKE your company and believe in the fundamentals of the company, once you've 'rebalanced' by not buying for awhile, get back in at a lower level and make sure to buy more to balance.

If you get a REALLY good deal on your company stock, a rolling sell might make sense. I try to avoid selling unless I'm unloading a stock just because I hate fees and taxes.

SFWoman,

I got the same KBHomes email today.
Here are pics of the ad:
http://new.photos.yahoo.com/jtfrankl/album/576460762391505683

The ad reminds me of an old Dennis Miller joke. Bunch of hicks are sitting around the ice fishing hole/campfire/whatever. One of them cracks an ice cold Old Milwaukee and says "it don't get any better than this".
Dennis: "Oh yeah? Then why don't you just shove that gun of yours down my throat and pull the trigger right now!"

I spoke with a parent at school, she and a few friends at HP were just given early retirement this week.

Regarding ESPP, even if you are overweight in your company stock, why would you NOT stay enrolled and simply do same day sale? It is FREE money. Who cares if is taxed at a higher short term rate? It is a minimum 15% gain with almost no risk if you do same day sale.

You guys can all complement me on the genius of my "BA = 1650 Spain = Alexandrian Macedonia" comment later :)

You guys can all complement me on the genius of my “BA = 1650 Spain = Alexandrian Macedonia” comment later

Of course astrid is a genius.

I am going to eat cakes.

Oh, I was assuming same day sale was standard. My plan has a 15% discount, same day sale allowed, price can be locked for up to 2 years. I generally take the money and run.

astrid,

We DID give you credit for calling the China Meltdown correctly now didn't we? :)

DinOR,

LOL! Yeah, thanks. :)

I need a smile - I probably lost $1,000 or so from my Roth IRA - 401(K) today.

Most real companies of any size have ESPP as a benefit. By ‘real’ companies, I mean companies that have at some point or another produced profits for multiple consecutive years.

I know someone who made a million on ESPP, ESPP was offered before the company went public, people loaded up on $5 shares, of course, during the dot com everything went up 2000%. Funny the company isn't so real, they re-instated earnings for 2 or 3 years from the second quarter they went public.

Different ESPP have different rules, some are 5% whereas I think most allow 15% discount, some take the lower price of the beginning and ending period while some just take 5% off the ending period.

Here's a good link about tax implication:
http://turbotax.intuit.com/tax_help/employee_stock_purchase_plans_turbotax/article

Doug H,

Sorry you were offended I did not generalize the whole south. Just sharing my and my partners experience since we moved down here. I've also met some very hospitable folks. I guess I'm a little geocentric I'm far from arrogant I don't have enough money or contacts.

GC,

I'm actually not too depressed about losing money, but I bet all my Shanghai relatives lost a bunch. Hopefully they'll still afford to buy me dinner.

I’m actually not too depressed about losing money, but I bet all my Shanghai relatives lost a bunch. Hopefully they’ll still afford to buy me dinner.

It lost less than 10% of value after years of extraordinary gains. I am sure the market there is not dead.

I think China is a lot more than 10% over-valued...

I feel bad for the pension fund investors they have no choice. The private investor that's another story. The market was way overdue for correction those who play generally have enough wealth so that a loss such as todays' won't put them in the poorhouse. The rest of us working stiffs are lucky to have enough by retirement. Whatever the case gambling is gambling whether in Vegas or the market. I think this is the beginning of the fall we've talked about for years. Time to hunker down...

HARM, sweet delicious hate mmmmmm, there is a store in $anta Barbara that is selling 24k gold plated cod pieces, all the blink for less buck. I was going to order one but they were all out of gynormous

Man, I need to learn to spel.

Thanks for the ESPP comments. Over here, it looks like it's just Computershare (formerly equiserve). Holding time for more favorable tax treatment is two years from subscription date and one year from purchase date.

I do get the feeling that taking the 15% gain even with taxes would make more sense than not. Let's see... $150 per kilodollar into the plan (maxing out) gives about $22.50/kilodollar of paycheck. Take out taxes, and it looks like a pay raise of a little over 1%.

Oh, WRT China, Mish linked to a truly disturbing story:

http://www.latimes.com/business/la-fi-chinastocks16feb16,0,6712382.story?coll=la-home-business

"After emptying his savings account, Lu Gang borrowed funds from his mother, relatives and friends. Now he's planning to mortgage his home."

No points for guessing where the money was going.

requiem :

IIRC, the 2 year period does NOT change anything with the 15% (or 5% or x%) discount that you got on the purchase date. The discount is always taxed as income no matter how long you hold. (I could be wrong here.)

And the gain is not 15%, it's much more. First it is in 6 months. So annualized it is like 30%. But wait, you did not put all the money upfront and waited 6 months for it to grow 15% (or 30% APY). You put $X first paycheck, $X second etc and $X on the last paycheck - just 1 day before getting 15% on that last $X as well. So average time it took to grow 15% is like 3 months. That is 60% annualized.

This is if you sell, and hence it's not a bad idea at all to sell every single ESPP stock the moment you get your hands on it. Keep doing that year after year, every pay period.

How many of anyone's investments return 60% annualized ? ESPP is the best investment most people would make, and they don't even know that.

* Not tax advice, not investment advice, not anything you can use to sue me.

ER,

A smarter guy realizes that housing prices are pushed about as high as they can be from low rates anyway. Houses (at least in my area) are poised to lose up to 50% in five years. Inflation would have to hit 20%, and the Feds are not going to leave rates low like that in such a situation.

Aww... my comment is stuck in moderation. It's such a classic example of a FBer about to implode in a shower of pain.

SP, alien :

Mish was mentioning that the shock of Yen appreciating will be monstrous. He also posted comments from a trader who was going long on Yen.

He might be right, he might be wrong. But the amazing thing is such logical, strong arguments almost NEVER come from financial journalists. All you get from WSJ, Barrons and host of others is middle of road, bland and "balanced". Never anything that is original and thought provoking.

Blogsphere has done more wonders than one can name.

OMG!!! This is very scary!

Incidentally, the 'falling down the hill' $200k+ foundation replacment house I mentioned before is also now for rent. Make sure you carry renter's insurance there!

I understand trying to rent them ease the cash bleeding, but do you think these people are really ready to wait 5-10 years renting at a loss? I feel sorry for anybody who rents these places then gets kicked when the place gets foreclosed.

StuckInBA:
You're correct on the discount being treated as ordinary income. I'm still trying to check the math, but I'd mention that the gains do not actually compound. (i.e. I can put in 15% of salary max, and purchases are made quarterly.)

Slyvie,

No harm, no foul..... :)

When you grow up in the South and get stereotyped as having an IQ deduction because of your accent.....it gets old....especially when you are around people from Baaaastun who love to make fun of people talking funny....go figure!

Add to the mix, every time the media interviews someone from the South, it's a either a dude wearing a Confederate Flag and scratching himself or a woman in a floral housecoat, pink hair rollers, and a cigarette hanging out of her mouth. They NEVER interview a doctor, lawyer, or business owner....guess it doesn't help ratings.

The South has numerous shortcomings and I do love to expose them....but we are no better, or worse, than any other group of folks.

Best Wishes

but I’d mention that the gains do not actually compound.

No they do not compound. But one can make a trade every quarter (or six months) that is equivalent to 60% annualized gains. That's a very good trade for most people.

I don't know whether I should be happy or not about the stock market moves - nothing I can do anyway as our administration of our 401k is being "transferred" at the minute and "Please note that there will be a blackout period from 2/26 through 3/2. This means that you will not be able to transfer funds during that period. If you want to make changes to your fund selections, please do so prior to 2/26 or you will have to wait till after the blackout period."

I just knew something would happen!

BOC will not raise rates. They are doing exactly the same as America, signaling without the action. Don't count on the central banks to clean up the liquidity, after all these are government officials, and we know their competency. Forget about rate hikes if we have another couple of days like today.

I am not saying that liquidity problem won't get resolved. It will just be incredibly slow, the whole thing is going to die a slow death, that's all.

We are still living in the same modest home in a decent location that I am happy with if I never have to move for the rest of my life. We refinanced into a 10-year ARM, because I see the interest rate dropping for the next few years, and we have enough to pay it off entirely should the interest rate move in the opposite direction. As I said before, I don't expect the housing market to get back to normalcy until after 2009 or 2010, so that would be the time when we perhaps start looking again.

In the meantime, I am more concerned about what the fallout situation will be. I just hope I get to keep and grow my savings amidst all the turmoil, not to be taxed away by government through massive bailouts or inflation, or not to be screwed by hedge fund failures which may hit me through some wicked butterfly effect.

The Asia/Pacific stock markets (Japan, Korea, Singapore, Malaysia and Aus/NZ) are tanking. Pacific Ocean = Red Sea.

OO,

How about raise rates and increase liquidity through purchases of treasuries. Delete M3 and prentend your fighting inflation while creating it! Rates and money supply are two different items - most people can not grasp this fact.

Paul

Paul,

if there is a recession going on, then the Fed cannot possibly raise rates. The no. 1 priority of any government (which the Fed supports) is social stability, fighting inflation is an after-thought. What the Fed has been doing under Greenspan is actually creating inflation to fight recession. The Americans are deep in debt, many are living from credit card to credit card. This is a democratic country, and if people are debtors, I am going with most people.

Most voters will vote for lower interest rate. I just have a hard time seeing the Fed raising rates to even 10%, that will bankrupt half the Americans.

PAR wrote,

"...hey, can we rewind the post from a couple of days ago for playback? who was it that was saying they were bored with investing in CDs and looking for more action?..."

I described my "boring" I bonds, then someone made a derisive comment about their sucky return.

PAR wrote,

"...hey, can we rewind the post from a couple of days ago for playback? who was it that was saying they were bored with investing in CDs and looking for more action?..."

I described my "boring" I bonds, then someone made a derisive comment about their sucky return.