My afternoon train reading:

• Fiscal Madness (Tim Duy’s Fed Watch) see also Petrified by the fiscal cliff? Relax, it’s just a slope (Reuters)
Much ado about liquidity? Lockup expirations and stock prices (AswathDamodaran)
• Why the Days of Stock Picking May Be Coming to an End (CNBC) see also Why Buy and Hold Investing Can Never Work (A Rich Life)
Buy at the point of maximum pessimism Looking for Silver Linings (Alhambra Investment Partners)
Bruce Bartlett: The New Republican Tax Policy (Economix)
• When the U.S. Asked Europe for Its Money Back (Echoes)
• Pot legalization puts U.S. bankers in a pickle (Reuters)
• Big Banks vs. Elizabeth Warren: It’s On (Again!) (Mother Jones)
• Tax reform? We need a revolution (LA Times) see also To Reduce Inequality, Tax Wealth, Not Income (NYT)
• How to Live Without Irony (Opinionator)

What are you reading?

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Investors Play Name Game on Muni Debt

Source: WSJ

Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

16 Responses to “10 Tuesday PM Reads”

  1. Jojo says:

    The old dammed if you do and dammed it you don’t choice…
    ———-
    Businessweek
    Politics & Policy
    The Problem With Patching Up the Tax Code
    By Peter Coy on November 15, 2012

    As the U.S. approaches the fiscal cliff on Jan. 1, closing some of the tax loopholes that cost the Treasury $1.3 trillion a year is emerging as a seemingly easy way to end the impasse over budget reform. House Speaker John Boehner favors broadening the tax base to generate more revenue without raising rates. President Barack Obama, while continuing to demand higher rates on top incomes, says limiting the use of loopholes for the wealthy could be part of the solution.

    Loopholes are woven into the fabric of daily life: the home mortgage interest deduction, the favorable tax treatment for investment income, the break that leads so much of health insurance to be provided by employers. Some benefit the rich; others the poor. Some enhance growth; others, not so much.

    Tightening them up has potential, but done wrong it could cause more problems than it solves. A botched spackling job could hurt the poor and the middle class and also remove incentives for businesses to invest and grow–without producing a lot of revenue. “It may prove difficult to gain more than $100 billion to $150 billion in additional tax revenues through base broadening,” Congressional Research Service economists Jane Gravelle and Thomas Hungerford wrote in a report earlier this year.

    [graphic]

    http://www.businessweek.com/articles/2012-11-15/the-problem-with-patching-up-the-tax-code

  2. ConscienceofaConservative says:

    HP stung on last year’s autonomy acquisition. I’m wondering about their due diligence process. 80% write-off

    http://www.reuters.com/article/2012/11/20/us-hp-results-idUSBRE8AJ0OB20121120

  3. MorticiaA says:

    http://www.nytimes.com/2012/11/18/opinion/sunday/a-new-southern-strategy.html?pagewanted=1&_r=0&src=recg

    “A New Southern Strategy,” written by a liberal from a southern state. Since I’m feeling Blue in a Red state (though I’m really more center-left than extreme-left), I can totally identify with what the writer says.

  4. VennData says:

    Anyone who criticizes “Buy-and-Hold” is holding up a straw man. Bogle, Bernstien Swedroe, et al insist upon REBALANCING. Annually or in another simple manner. That maintains your risk profile. You will outperform the average investor with your risk profile this way. Guaranteed.

    Ignore the nonsense rejecting buy-and-hold, since that is not what Bogle et al are suggesting you do.

    Also ignore David Merkel at the Aelph blog. This far Rightist says here (from BP)

    http://www.ritholtz.com/blog/2012/11/10-monday-am-reads-38/#comments

    “…You might argue, “But I can buy index funds, lower my expenses, and live with modest underperformance, rather than greater underperformance on average from active managers….”

    You’re not “under performing.” You are a better than average investor since you are paying less in fees than all of the other investors combined. They pay for active, you only pay for access to the low-cost index product.

    If you want to judge the indexes as if you were getting them for free, how do you propose getting them then? There is no way to capture the index returns without someone doing it for you. You cannot possibly get the index returns exactly so you cannot possible be “under performing.”

    But you are a better than average performer, guaranteed.

    Merkel is wrong, again.

  5. willid3 says:

    deficit has actually been coming down for 3 years. faster than has been acknowledged
    http://news.investors.com/blogs-capital-hill/112012-634082-federal-deficit-falling-fastest-since-world-war-ii.htm

  6. Conan says:

    In reference to the article on taxes, I have always advocated for a flat tax. However I never thought of the idea of a 2% tax on wealth. I agree that this should be done. Many money managers would charge 2%, plus a cut of the profit. We are too fixated on Income, the point is the 1% are there because of wealth.

    Another way to make a compromise is to make the 2% tax, but do something about the inheritance tax. This is onerous on small business and farmers. Many folks have to sell to just pay their inheritance tax that destroys family business.

    Read about Bill Clinton’s Flat Tax plan and see how it could work fairly:

    http://www.forbes.com/sites/toddganos/2012/07/06/a-simple-federal-flat-personal-income-tax-system/

    Read this as to how the original Income Tax worked when in acted in 1913:

    http://en.wikipedia.org/wiki/Revenue_Act_of_1913

    Inheritance tax Fiscal Cliff:

    http://money.cnn.com/2012/06/01/pf/taxes/estate_tax_increase/index.htm

  7. theexpertisin says:

    MorticiaA,

    I submit that lockstep urban and race-based voting at present sends a chill up my spine, much as Republicans must have felt when southern Democrats voted lockstep to withdraw from the Union in 1861. Two sad chapters, one historical and one ongoing, in our history.

    Like you,I am a northerner (even worse, the son of Chicago Democratic precinct captains) living in North Carolina. I have the utmost respect for folks who have lived here for generations and am not dismissive of their intellect, creativity and instincts. Or their politics. They deserve respect as fellow citizens, and their vote counts the same as yours or mine.

  8. GoBigRed says:

    I am reading The Signal and the Noise by Nate Silver.

  9. slowkarma says:

    Back years ago, when I was a full-time medium, I did two studies of the property tax in two very different American metro areas. I found huge disparities everywhere, and even with sincere, hardworking assessors, the problems seemed insolvable. The property tax is a form of wealth tax which clearly demonstrates the futility of trying to assign value to property. And the property tax is probably the simplest form of wealth tax, because real estate, despite the travails of recent years, is relatively stable compared to other forms of property, and is hard to hide.

    Or, ask what happens when a small business owner is assessed $20,000 on the value of his business on Jan. 1, but the Christmas season was a bad one and by April 15, his business is gone? What then? The IRS seizes his house? A wealth tax, in the sense used here, is so fraught with problems that the whole idea is ludicrous.

    On the other hand, an inheritance tax is a kind of wealth tax. It requires not an on-going, year-after-year assessment, but only one or two or three assessments, depending on what happens with the owner of the wealth at death. If we want a wealth tax, we should simply devise a strongly progressive inheritance tax — nothing, say, up to $10 million, 30% between $10 million and $25 million, 50% $25 million to $50 million, 75% $50 million to $100 million, 90% $100 million to $200 million, and 99% after that. Let the people who earn the money keep it until they die — then tax it heavily.

  10. Melvis says:

    Taxing the assets of people who defer gratification to build a secure future for themselves while rewarding those who spend every dime is a horrible idea. There is already a huge tax on assets which is the negative real interest rates set by the Fed. Normally there is at least a 2% real yield on long term treasuries. Not now! This hidden tax is killing the savers and elderly. This really pisses me off. People with identical incomes often have much different net worths due to the decisions they have made. This ignorant academic probably has tenure and a guaranteed pension. To equal his pension somebody would have to save many millions of dollars at current interest rates in the private 401k reality. To be fair lets figure out how much cash would be required to be in the professors savings account to equal the private sector and then tax the crap out of him too. To pay for the professors 100,000 pension, it would take $5,000,000 parked in 5 year CDs earning 2%. Most CDs though are currently yielding less. Ok then. Before paying the prof, lets deduct the 2% wealth tax he wants others to pay on the five million. This would of course leave him with zip. You might say that he could earn more than 2% in other investments. Maybe but with some level of risk, none of which he has now. What a joke!

  11. Melvis says:

    Actually the average 5 year cd is yielding less than 1.43%

  12. Event_horizon says:

    Re: NYT wealth tax piece

    Only a university professor of economics could dream up something as stupid as that. So someone who defers gratification, lives below his means, and saves after-tax income his whole life then gets double-taxed on those assets? I’ll be the first one on the next flight out of the country. The tax-flight would be absolutely enormous.

    You know, why don’t we start taxing withdrawals on those Roth IRAs/ Roth 401-ks while we’re at it?

  13. Rob Bennett says:

    Anyone who criticizes “Buy-and-Hold” is holding up a straw man. Bogle, Bernstien Swedroe, et al insist upon REBALANCING. Annually or in another simple manner. That maintains your risk profile.

    But does it? That’s the question at the heart of the challenge to Buy-and-Hold, VennData.

    Rebalancing keeps you at the same stock allocation at all valuation levels. If the market is efficient, stock investing risk is a constant and staying at the same stock allocation is keeping your risk profile constant.

    But, if the market is not efficient and valuations affect long-term returns (which is what the Shiller model posits), risk VARIES with changes in valuation levels. That means that, for an investor to maintain the same risk profile, he MUST change his stock allocation in response to big price swings.

    Rob

  14. [...] late yesterday afternoon linked to my article on Why Buy-and-Hold Investing Can Never Work at the Tuesday PM Reads section of his blog. The traffic brought in by that link made yesterday the highest traffic day in [...]

  15. Melvis says:

    In response to SlowKarma: I agree with the first half of your comments but strongly disagree with the idea of a super progressive inheritance tax. Why should a father not be allowed to hand over a business to his family without them having to buy it all over again every generation! Unless you feel that the wisdom and stewardship of the Government would yield more productive results from this money. The truth is that it will simply be redistributed to more favored and less productive groups to buy votes and reward supporters. If that is the way it is going to be, I quit, let’s liquidate Soros and send me my share. Baby needs a new pair of shoes.

  16. rd says:

    On Bartlett’s interpretation of official Republican policy on tax cuts and deficits

    Bartlett misses the point. His party cannot claim that they are “starving the beast” if the Republican Vice President is declaring that “deficits don’t matter” and the Weekly Standard is claiming that some deficits are better than others:

    http://www.weeklystandard.com/Content/Public/Articles/000/000/005/245esggv.asp

    The Republicans had a major opportunity to slash the deficit and government spending in the early 2000s and blew it in a monumental fashion. They then compounded the error by doubling down on deregulation and ended up with a financial crisis that has driven deficit spending through the roof.

    I am really tired of hearing the current generation of Republican leadership bleating about deficits given that they have been the party of not taxing but still spending for the past 30 years. (Full disclosure: I am a registered Republican who has been forced to vote largely Democratic or Libertarian for the past few years because of the right-wing nut-cases they keep trotting out as candidates – a candidate who wants fiscal sanity while staying out of my family’s personal life would be a really nice change)