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Bruce7b

Bruce7b
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  • 2-Year Performance Comparison Of Selected MLPs [View article]
    Bruce: My guess is that it would be a little trickier than that. First we would have to adjust the S&P returns for the tax they will pay each year to get an after tax return (and of course that would vary by individual and their marginal tax bracket, etc. and where they held the investment). Then we would have to adjust that tax owed in the future on the MLP--maybe discount it would be the better word. A tax liability owed in 10 or 15 years isn't equal to a tax paid today. You can call that the value of tax deferral (similar to that received by investing in a conventional IRA) or see it as investing/compounding of that deferred tax. My guess is that in the accounting world you don't get into discounting to present value.

    And I'm not even suggesting that it is worth the effort. When the muni yield is adjusted for its tax advantage it is usually a very rough calculation based on top marginal tax rates. What I am really suggesting is that Ron be careful about comparisons of investments that receive different tax treatment and at the least make mention of those differences in his article--better yet is to avoid the comparisons altogether.
    Apr 2 07:03 AM | Likes Like |Link to Comment
  • Why ETFs Are More Tax-Efficient Than Mutual Funds [View article]
    Dr. Gray: Can you bring us up to date on the status of your ETF IPO? I understand it has been at the SEC for quite a while. Or maybe there is a quiet period for such proposals?
    Apr 2 06:43 AM | Likes Like |Link to Comment
  • 2-Year Performance Comparison Of Selected MLPs [View article]
    Ron: I wonder how valuable it is to compare MLPs with the S&P 500 without factoring in the major tax advantages of MLPs. It is almost like comparing Munis with taxable bonds without considering the tax advantages of Munis. My guess is that MLPs didn't "underperform" the S&P over the last two years after any reasonable adjustment for taxes.
    Apr 1 07:02 PM | 3 Likes Like |Link to Comment
  • Amgen: Allowing Dividend Growth Investors To Capitalize On The Biotech Sell-Off [View article]
    Nicholas: Based on your picture you seem to be way too young to be worried about dividends. Amgen is trading in line with fair value and Gilead is 80% below fair value, according to the source you quote. Yet you give up all of that differential for a 2% dividend? Either the fair market estimates you quote are worthless (in which case I wonder why you mention them) or you place some mystical value on dividends.
    Mar 31 07:09 PM | Likes Like |Link to Comment
  • Brent-WTI Price Gap Closing As Cushing Inventories Fall Back To Earth After 6 Years [View article]
    I assume as the spread narrows there are winners and losers. Who are they? Would be a good topic for an article by those with the knowledge.
    Mar 31 05:03 PM | 1 Like Like |Link to Comment
  • Blackstone: A Black Box... Holding A Diamond [View article]
    Dag: I assume Blackstone is an MLP. Did you get a K-1 for 2013 and if so what is the tax breakdown of the distribution--such as return of capital, qualified dividend, etc.?
    Mar 26 12:12 PM | 1 Like Like |Link to Comment
  • Consider Small Caps For Long-Term ETF Strategy [View article]
    You might want to take a closer look at the holdings of your Vanguard fund (VB). Looking at Morningstar, 46% of the holdings are mid cap with the average market cap of the fund at $2.9 billion compared to $1.5 billion for the Russell 2000. So the name of the Vanguard fund might be a little misleading. I have started to nibble at IESM which holds some microcap that bring the average market cap down to $1 billion (Morningstar gives them a very good writeup). My guess is you will find that the excess return compared to the S&P 500 will grow with the smaller market cap. Maybe you need three ETFs to meet your goals.
    Mar 26 10:06 AM | 4 Likes Like |Link to Comment
  • Why McDonald's Still Has Some Pep In Its Step: Part 1 [View article]
    So sales went down 1.4% in 2012 and down another 1.7% in 2013 but your projections are they go up in the outyears, starting at 3% for 2014. Not sure how that qualifies as "extremely conservative". What if the sales continue to go down or stagnate? All the fine analysis means nothing if your revenue numbers are flawed.
    Mar 25 03:19 PM | 1 Like Like |Link to Comment
  • The Sum Of All Fears: Public Service Announcement - The Russell 2000 Is Wildly Overvalued! [View article]
    Looking at your list of 10 fears, it seems like almost every one of them applies equally to the entire market not just the Russell 2000. What makes the Russell 2000 look grossly overvalued is the PE of 83 but according to WSJ Market Data Center the forward 12 months PE for the Russell 2000 is "only" 19.55. Expensive for sure but not comparable to 83 so it seems like there is a big anomaly in that 83 PE number--there must be a big write off, maybe from a large company that has moved into the index from above. Might be worth your time to find out what caused the PE to temporarily explode.
    Mar 24 08:33 AM | 9 Likes Like |Link to Comment
  • Yellen Channels Groucho In First Press Conference [View article]
    You're right. You are overreacting. Did the Fed learn nothing last summer?. I think they did--that short term blips in the stock market are meaningless so they don't have to parse every sentence in every Fed communication; that the market overreacts and undrereacts constantly and those reactions have no impact on the economy--and after three days no reaction on the market. They do provide buying opportunity and maybe that is why the shakers encourage overreaction.
    Mar 21 11:36 AM | Likes Like |Link to Comment
  • Dividends And 'The Magic Pants' [View article]
    Part time: The answer should be obvious. When the special dividend was announced all the DGIs who populate this site hit the buy button for Costco. How could you lose on a big increase in the dividend--book value or any other value be damned? My guess is this special dividend moved Costco into Dividend Aristocrat wannabee status.
    Mar 18 07:15 PM | 1 Like Like |Link to Comment
  • Dividends And 'The Magic Pants' [View article]
    Geekette: Assuming your reply was to me, I used the phrase "until you choose to sell". That's the key--you decide when you want to pay the tax --or even if you want to pay tax . Just like many (most?) people don't touch their IRAs until forced to at age 70 1/2 and some leave the remainder to their beneficiaries. With a taxable account full of non dividend paying stocks you have a huge amount of flexibility. If you need the cash you sell some and pay the capital gains tax and have had the benefit of tax deferral in the years you held. If you don't need the funds they continue to grow and compound with no tax liability.
    Mar 18 03:41 PM | Likes Like |Link to Comment
  • Dividends And 'The Magic Pants' [View article]
    Conkjc: Non dividend stocks come in all flavors. There are many non dividend paying companies with strong earnings, predictable earnings and strong economic moats. That's the point Larry is trying to make (at least that is my reading). Of the 60% of stocks that don't have dividends many will meet your requirements for those things. If you count the low dividend stocks the number grows. I think what Larry is also saying is that if you can't sleep at night without that stream of dividends at least understand the price you are paying. If I "didn't want to rely on a good market" I would just keep more cash, or have more laddered bonds so the cash would be available as needed. I would also include a chunk of REITs and MLPs that put off cash without the tax inefficiency of
    c corps.
    Mar 18 02:31 PM | 1 Like Like |Link to Comment
  • Dividends And 'The Magic Pants' [View article]
    Muskie: It might help us total returners better understand the topic if you could expand on your statement about selling stocks being "a little trickier and a little scarier". I think many DGIs share that feeling but seldom discuss it.
    Mar 18 12:42 PM | Likes Like |Link to Comment
  • Dividends And 'The Magic Pants' [View article]
    Cf: I was comparing non dividend stocks held in a taxable account to a conventional IRA. My point was that you can hold non dividend paying stocks in a taxable account, with no limit to how much you contribute to that account, and pay no tax on your return until you choose to sell holdings--which you are never forced to do. I think I am right in saying that at time of death the unrealized capital gains in that taxable account pass to heirs without estate tax or income tax for all but the wealthiest and the basis of those holdings goes to the market price at time of death (if I am wrong tax accountants please respond). I think we all love the tax deferral aspects of a conventional IRA (which is about their only benefit) but we have the ability to do the same thing in a taxable account by holding non dividend stocks (and eliminate all the negatives of the conventional IRA). You're right of course, the Roth has all those benefits also but many of us have most of our portfolios outside the Roth.
    Mar 18 12:33 PM | 1 Like Like |Link to Comment
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