71–80 of 393 posts
All of these converge to push up asset prices irrespective of actual productivity.
The world has had no option but to buy US debt and or non controlling stakes in US companies. All of this has allowed asset prices to explode while the productive economy and our standard of living has stagnated or declined.
Earlier quoted context omitted.
My understanding is that you can play tricks with stocks so that you don't really need to realize the gains to benefit from them. They can be used as collateral for loans, directly donated to charities (lowers down your tax bill w/o forcing you to realize the gain), there's also the step-up basis loophole (or was it already closed?). I may be missing some details (and other creative ways to do "tax optimization") tho…
I had not heard about the donating to charity. Very interesting and tax efficient, but worth noting that you cant make money with it (you are still donating far more than you are saving in taxes).
Let's take someone with a 53% marginal income tax, living in NYC. The person has stock with a basis of $0.0 with a current value of $10, and has held the stock for less than a year (short term capital gains = ordinary income rates). Separately, they have $1,000,000 of income.
Scenario 1) Donating the stock would produce a $10 tax deduction, worth $5.3.
Scenario 2) Selling the stock would produce $10 of returns - $5.3 in income tax = $4.7
In this scenario, donating the stock produces higher returns compared selling the stock. It's a fairly obtuse scenario, since it's rare for the cost-basis to be so low, time-span to be so short, and to have a good use for a tax deduction. It becomes much more likely when a completely illiquid & price inflated stock is donated. If a large chunk of illiquid stock is sold, it'll crash. But donating an inflated chunk of stock would lock in the tax deduction.
Donating shares of a stock when a person knows insider information is called 'insider giving', and is highly prevalent & largely unenforced. https://dlj.law.duke.edu/article/insider-giving-avci-vol71-i....
“All of this has led to weird idiosyncrasies, euphoria, and contradictions. Stocks ballooned, tripling in value since 2009” This is like 9% compounded for 13 years, which is in line with historic averages.
The iShares S&P 500 ETF has returned about 11.6% annualized over the past ten years. Their Ex-US ETF: 2.8%. Point being: the third variable no one ever takes into account when considering Buffett's advice: "just invest in broad market indexes" literally only works in the US, and only has worked historically . It's not a coincidence that the US is the youngest developed economy on the planet. In other words: How high…
For reference, the US share of world GDP is about 25%.
It would not surprise me at all if the most scalable, profitable, and growth-oriented companies ended up on the S&P 500 regardless of where in the world they started or where their revenues originate.
I'm not saying anything about interest rates -- your point there might be spot on -- but US stock markets have huge global exposure, and your implied assertion that there's some kind of "global" benchmark equity growth rate doesn't seem that sound.
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They're meant to use monetary policy to maintain price stability and keep the unemployment rate low. Lots of issues come up where monetary policy would need to react. There are many places where fiscal policy might be better (it can be more finely targeted) and we generally don't see it materialize. So we're left with central bank technocrats using monetary policy.
The alternative to monetary policy isn’t necessarily fiscal policy. The current situation seems to be a combination of fiscal (demand side) problems [0] and supply problems. Congress can, slowly, address supply problems. The Fed can only usefully affect the demand side. As examples that have come up, various shipping laws make shipping expensive. Energy should be cheap to improve economic output, but energy prices ar…
The Fed's job is to control inflation. If supply decreases, the Fed has to see to it that demand does too.
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Interesting. I just asked the builder that built my house* and he said his business hasn't slowed down at all. His primary location since I'm sure that matters a lot: suburbs north of Dallas. * We got the land right before the boom in prices. Paid super inflated prices for materials. Finalized a mortgage before the recent rate increases. I guess overall we came out ahead?
> Finalized a mortgage before the recent rate increases. What a privilege it is to live in a country where home loan interest rates are fixed.
Just wait until we enter the ‘decades long workforce population decline’ period. Once GDP growth decreases by population shrinkage, investing will be fun again!
Well just keep desperately importing people from other countries, unlike Japan and Co. Or, for the other side of the political spectrum, ban abortions/birth control.
> It became the new normal, and the generation that entered Wall St. during this time is now disoriented, for they “do not know a world without cheap money.” [...] Whenever people are humbled by the melting away of things they took for granted, now that’s a topic worth exploring. I'm trying to figure out parallels and implications for tech jobs. Where in tech jobs will be first to decide they need to "rediscover the…
If higher interest rates stay around for the long term, it's quite possible that tech going forward will be a little more like the '90s: An up-front sticker price, plus an extra charge for support. Ad funding (as a continuous revenue stream) may also get somewhat less powerful, but will still be a big deal.
Earlier quoted context omitted.
My understanding is that you can play tricks with stocks so that you don't really need to realize the gains to benefit from them. They can be used as collateral for loans, directly donated to charities (lowers down your tax bill w/o forcing you to realize the gain), there's also the step-up basis loophole (or was it already closed?). I may be missing some details (and other creative ways to do "tax optimization") tho…
I had not heard about the donating to charity. Very interesting and tax efficient, but worth noting that you cant make money with it (you are still donating far more than you are saving in taxes).
Obviously the latter leans towards tax evasion, but that's exactly the point - stock buybacks aren't necessarily tax evasion but they can certainly assist in it.
Earlier quoted context omitted.
My understanding is that you can play tricks with stocks so that you don't really need to realize the gains to benefit from them. They can be used as collateral for loans, directly donated to charities (lowers down your tax bill w/o forcing you to realize the gain), there's also the step-up basis loophole (or was it already closed?). I may be missing some details (and other creative ways to do "tax optimization") tho…
I had not heard about the donating to charity. Very interesting and tax efficient, but worth noting that you cant make money with it (you are still donating far more than you are saving in taxes).