BZ Is Up, Up Is Down Come To New York June 23 April 29, 2011March 24, 2017 You’ve doubtless seen footage of the monster tornadoes that caused such carnage across the South this week. “Scientists” . . . who work with “numbers” . . . at elitist “universities” (they may be elite, but let’s call them elitist, which turns a positive into a negative) have been telling us for years that the greenhouse gasses we dump into the atmosphere will cause ever more violent weather. So some of those scientists will probably – yet again – point to Wednesday’s 160 tornadoes and issue their tired old warnings. There is another school of thought, which is that God sends natural disasters to punish sinners, and that greenhouse gasses are irrelevant to His thinking. He can suspend cause and effect any time He wants, so that – if we do something He likes – He can close the hole in the ozone layer as our reward. (It wasn’t our ban on hydrofluorocarbons that caused this result; it was His decision to close the hole back up.) It won’t surprise you to know that I’m a fan of elite universities . . . that I don’t think God suspends cause and effect (or why would He have created it in the first place?) . . . and that, while we’re laying out our differences, I “believe in” evolution. I don’t know of a single Democratic leader who doesn’t “believe in” evolution. Yet we all know of three 2008 Republican presidential candidates who don’t – watch them again here – one of whom, Mike Huckabee, is on the short list to be the 2012 Republican nominee. A well-known Republican campaign strategist I was with at dinner Tuesday believes Huckabee wins it. Romney could have trouble getting through the primaries, he thinks, for reasons ranging from his Massachusetts health care plan to the religious right’s nutty perception of his religion.* Which brings me to Paul Ryan’s Republican-backed budget plan. Its overall goal – dealing with the deficit – is shared by all. (You may recall that I’ve long decried the Reagan/Bush/Bush policies that sent our National Debt soaring from 30% of GDP when Reagan took over to 100% when Bush handed Obama a $1.5 trillion deficit and an economy on the brink of depression.) And some of the ideas in that budget also make sense – like simplifying the tax code and removing loopholes and unnecessary incentives. (Does the oil and gas industry really still need tax subsidies? The Republicans think so, but I’m hoping we may be able to change their minds.) But privatizing Medicare? Slashing tax rates for the rich – yet again? Eviscerating the Education Department, the Energy Department, and the Environmental Protection Agency? These are not good ideas. The connection between the climate-change deniers and the Republican budget enthusiasts is that both are massively funded by corporate interests, now entirely unleashed by the Republican Supreme Court and its Citizens United decision. That’s the one that stacks the political system even more heavily in favor of the rich and powerful, and allows their influence to be hidden. It’s not that the giant funders of the political right themselves believe natural disasters are God’s wrath visited upon women who take Plan B. They don’t think Katrina was the result of Bourbon Street carousing. But they represent Big Oil and Big Coal and others who reflexively oppose any threat to their profits. And so we have a flood of ads now trying to tell us that up is down. Just as candidate Bush assured us that “by far the vast majority” of his tax cuts would go to “people at the bottom end of the economic ladder” – up is down – so the secret right wing funders are telling people that the Republican budget saves Medicare. (It ends it.) Up is down. The Big Lie. It worked for Bush. The Bush years were a positively grand time to be rich and powerful in America. Will it work again? Watch Rachel Maddow to see how the rich and powerful have their thumb on the scale. *His religion is nutty, too. Taken literally, what religion isn’t? One has to assume Romney doesn’t literally believe all the things you see on Broadway. BZ WARRANTS With BZ up nicely yesterday and the warrants at $1.82 – up 90-fold from what some of us lucked out and paid two years ago – you asked, “What now, with the warrants set to expire June 18?” After first asking each of them to donate liberally to the President’s reelection, I replied that I am inclined to just watch it play out to the end, almost for the fun of it. Having sold 95% of mine at gains ranging from ten-fold to 75-fold, NOTHING from here on out could keep me from enjoying the rest of the ride, even if it’s to zero. And who knows? We might get $2 for these last few. Or even more. Meanwhile, five days later . . . JUNE 23 Any interest in attending our June 23 national LGBT Obama Victory Fund 2012 dinner in New York? Our honored guest will be the President of the United States. Straight allies welcome! Click here to sign up. (It would be nice to meet you after all these years.)
One Stock; Four Funds; Everything April 28, 2011March 24, 2017 AMRN So it was reported that the company has retained Lazard to pursue a sale for $2 billion or more – which would be about $16 a share or more. With the stock more than doubling in a month, and up from its 52-week low of $1.63, Guru understands why there would be lots of profit-taking here but holds out hope for the “or more” part of that report. Based on his comments, I’d assign a 10% chance to some unpleasant surprise; 40% to a sale around $16; 50% to a sale at a better price. No harm selling half so that from then on you’re playing with “the house’s money.” But if these are the true odds (as no one can ever know), they would argue for hanging on to at least half. FORMULA INVESTING I had lunch with Joel Greenblatt, whose four Formula Investing mutual funds I have recommended since their recent inception – FVVAX, FNSAX, FNVAX, and FNAAX. (Because they are not particularly tax efficient, they’re best suited for tax-deferred retirement accounts.) In addition to the case I make for them in the new edition of my investment guide, I learned something else: Joel has a talented team working full time to compile the underlying data his computer then crunches. He does this because, when examining the data he had been purchasing from a third party (and that other value-weighted index funds purchase), he found that his team could do it better, giving his funds yet another edge. PARADIGM SHIFT Everyone’s reading Jeremy Grantham’s latest quarterly letter, which he summarizes, “The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their value. We all need to adjust our behavior to this new environment. It would help if we did it quickly.” That is actually just the “summary of the summary.” Given Jeremy’s brilliance and track record, it’s well worth the click (and free registration).
Taxes, Progress, and Censorship April 27, 2011March 24, 2017 PROGRESS Yesterday: the link to where your tax dollars go. Today: the progress those tax dollars have allowed us to make since pulling back from the brink of depression. THE CASE FOR TAXATION Russell Bell: “Isn’t the best rationale for tax policy that it makes us free, safe, healthy, wealthy, protects persons and property, makes society just? Steve Jobs isn’t wealthy just because he’s brilliant but because he lives in a society that maintains a physical infrastructure that makes the stuff Apple Computer produces the next thing almost everyone wants to buy and an educational infrastructure that provides him competent workers and citizens wealthy enough to buy his products. We will have a freer, safer, healthier, and wealthier country if we expect government to provide the services that make us that way and pay for them. You accept the argument that taxes are a burden and that wealthy people have to pay a larger share because they can, not that taxes are the appropriate price of valuable services and the wealthy pay a larger share because they reap a greater benefit. Have you read Edmund Phelps’ Rewarding Work: How To Restore Participation And Self-Support To Free Enterprise? It’s about the social value of work. The underlying idea is that society can spend money on individuals that benefits society. I commend this idea as the legitimizing idea for taxes. You can read my modest and short review here.” UTERUS. THERE: I SAID IT If you have five minutes (or a uterus), watch this censored Florida legislator make his case for choice. He calls out his state legislative colleagues for espousing small, hand s-off government for corporations but big, intrusive government for average citizens like his wife.
Free Education April 26, 2011March 24, 2017 WHERE YOUR TAX DOLLARS GO Here it is, based on your own income level. Seeing it this way helps to focus the discussion of what and how much to cut. (I would cut things the military doesn’t want, for starters. But the biggest impact I’d make on the deficit is, as Alan Greenspan suggested on “Meet the Press” a couple of weeks ago, just reverting to the Clinton tax rates.) HOW HEAVILY ARE WE TAXED? “In a survey of 28 developed nations by the Organization for Economic Development and Cooperation,” writes blogger Ted McLaughlin, “it was shown that only two of those 28 nations have a lower tax burden than the United States — Mexico and Chile. Currently all taxes totaled together (federal, state and local) comprise about 24% of U.S. Gross Domestic Product (GDP) — by comparison, Great Britain’s tax burden is 34.3% of GDP, Germany’s is 37%, and Denmark’s is 48.2% (the highest of all 28 countries).” Ralph Mason: “I engaged in a debate recently with someone who claimed that the American economic dynamo has been increasingly hampered by big government from Wilson on down, made much worse especially by the New Deal and the Great Society. I looked up GDP per capita since the Civil War to see if there were evidence for this. The result surprised even a liberal like me. Apparently the modern era of ‘big guv’ment’ has been the best thing that ever happened to us.” WHERE TO GET A FREE EDUCATION Bill Gates thinks Salman Kahn has the answer, in 12-minute modules. And it’s here now, free. Here’s converting fractions into decimals. Here’s natural selection and the owl butterfly. Here’s the Fed funds rate. Here’s U.S. history from Jamestown in 1607 to the Civil War (in 18 minutes). There are more than 2,000 of these in all; knock yourself out. Yet think about it: if you can’t afford Tulane but have access to the Internet – and you did 20 videos a day (three to four hours worth) – you’d have done them all in a long summer. And still have time to make some money lifeguarding.
Would Warren Buffett Use Delta Bonus Miles To Buy FCSC? April 25, 2011March 24, 2017 FREE MILES: AMEX TO DELTA Transfer American Express Membership Rewards Points to a Delta Airlines Frequent Flyer account before June 30 and you will get a bonus of either 25% (under 100,000) or 40% (100,000 or more). So if you transfer 100,000 points you get 140,000 miles – 40,000 extra. I just transferred enough to fly me to the moon. Not literally, of course; whom do I know on the moon? But Delta’s partners currently include Aeroflot, Air France, Alitalia, Avianca, China Airlines, KLM, Korean Air, and Singapore Airlines, among others, so there are lots of places I could go. And Delta miles don’t expire, so I have time to decide. There is a small per mile fee, but it’s capped at $99, so if you were to transfer 200,000 miles – and if you figure they are worth a penny each (arguably, they are worth a lot more if you want to fly business class) – then the 80,000 mile bonus is worth $800, and $99 isn’t too bad. If this could be helpful to you, visit delta.com/servingupmiles. WARREN BUFFETT IN 1983 Fortune first ran this piece 28 years ago, and have trotted it out again this week to coincide with this year’s Berkshire Hathaway annual meeting. As I have lamented many times: if only I had invested the $1,500 they paid me to write it in a share or two of Berkshire Hathaway stock. ANOTHER SPECULATION I sure would have preferred to buy this one a few months ago, much cheaper, but – only with money I can truly afford to lose – I bought a few shares anyway: Guru: “The company is Fibrocell Sciences. On June 22, 2011, they should be getting FDA approval for a product that amounts to giving your own skin to you. They take a biopsy from behind your ear (where a tiny incision won’t be noticed and will grow back seamlessly), grow it for several weeks, then send it back to your doctor in an injectable form. The initial use will be aesthetic: filling in deep lines and wrinkles around the face and repair of acne scars. For wrinkles, it does not have quite the “filling” capacity of leading products such as Juvederm and Restylane (both made of a naturally occurring sugar molecule called hyaluronic acid), but those products get resorbed and must be replaced. Fibrocell gives you your own skin that grows and stays there – you might find you need more elsewhere, but not where it was injected originally. For acne, it’s really the only viable therapy. Laser treatments won’t fill in an acne scar. The cost will probably be about double Juvederm, but you’ll get a more natural look. . . . They went in front of an FDA Advisory Committee in 2009 that voted overwhelmingly in favor of efficacy, but felt there hadn’t been detailed follow-up of the implants to rule out the possibility (however remote) that the injection stimulated cancer formation. In 2010, the company undertook a study that did histology analysis after implantation at 3 and 6 months to look in detail at what happened to the cells. They reported earlier this year that nothing of note was found and they filed this data with the FDA. I don’t see anything that would impede an FDA approval on time. Longer term, they have a research agreement with UCLA to do gene therapy via skin and they have preliminary data in repairing injured vocal chords and in burns. . . . They have been raising money and will need to raise more. By the time of launch, they should have about 100 million shares outstanding. Rodman and Renshaw picked up coverage recently with a fair value of $3/share (stock now $1). I think some of their assumptions are aggressive, but say it’s worth $1.50 – still good upside from here.” ☞ Hey, every 50% helps.
Will AMRN Buy Me a $40 Million Mansion? April 21, 2011March 24, 2017 MANSIONS AND BRIDGES Which is better: (a) Build a $40 million mansion – which is a very nice thing for a rich person to have. (b) Build a $30 million mansion – still nice – and put $10 million into repairing a bridge that thousands of people use every day? That’s essentially the choice we make when we decide what the top tax bracket should be on income, dividends, and capital gains for the very wealthy. The Republican Party answers (a) while the Democratic Party answers (b). For all I know, you choose (a). I just don’t understand why. DON’T SELL YOUR AMRN? So we bought it March 25 at $7.10 – albeit only with money we could truly afford to lose, because they don’t all work out this way! – and at $17.10 three weeks later I was quoting Guru making the case for a target of $25 or more. (The stock closed last night at $16.20.) Yesterday, I posted John’s argument that people won’t take such big pills and that, in any event, fish oil is fish oil . . . followed by Guru’s I-thought-persuasive response. But I am privileged to have some very smart readers – you, for example – and one of them (Wedgewood Communications’ Scott Koppa) responded to that with his own long analysis, most of which soared so high above my head it didn’t even collide with all the other stuff whizzing by: AMRN is really just a marketing play. Hate to say it, but it is. (This is what I do for a living). In the long run — like when they actually go to sell this stuff — it will need a very strong marketing campaign to convince any doc there’s a difference here. And you’re going against Glaxo. So, problems with the marketing campaign: First and foremost, if you’re going to say that EPA alone is better than EPA/DHA, you better have a head to head study. And they’ll never do it, because there is a very real chance that the difference between the two products won’t be significant, especially when coupled with statins. If you look at the Lovaza data on their website, you’ll see the following in the (what would be comparable) statin combination study: [Here, he pastes Table 3, which makes no sense to me and wouldn’t format legibly on this page anyway, so I’ll spare you. Indeed, if I were you, I’d skip anything else that’s not bolded.] Now, you cannot compare PI to PI, so a sales rep can never say any of this. But look at the LDL-C line. The change is 0.7% with the combo. Not great, but not horrible. Note that the end of treatment (EOT) median was 88 mg/dL, which is below the current standard of 100 (that’s one hundred) for patients with a prior cardiac event or multiple risk factors for MI. I have attached a copy of the current guidelines FYI. I think you can see that these patients were comfortably below that level. I do want to read the study (which I have to find) to explain how the median EOT value is reduced below the baseline value while reporting a median % increase, but this is their label, and it’s what the docs will read. And, as a business guy who I’m sure has taken way more stats than me, I know you know that 0.05 is a barely significant difference. Frankly, clinically, it means nothing. I can’t stress that enough. Furthermore, in patients with really high triglycerides, the issue is raising HDL more than lowering LDL, as LDL will be lowered by the statin you’ll use (and they will use a statin). Crestor or Lipitor would do way better than these numbers. You can see, tho, that Lovaza significantly raised HDL above the level you’re getting from the statin, and simva is a pretty good statin for raising HDL. I saw nothing in the release about how the Amarin product affects HDL. This is important too. If you don’t improve HDL, and their HDL is low, the doc will likely combine statins with fibrates, like gemfibrozil (cheap generic) or Tricor. Those also reduce trigs dramatically and bump HDL (their side effect profile is more complex than fish oil, however, particularly when combined with statins, which is why these agents have a spot). But it is important to realize that it ain’t all about lowering LDL, particularly when the whole profile is considered (ie, trigs/chylomicrons, VLDL, IDL, HDL and total cholesterol). There’s more, but again, they will have to displace a standing product with data that won’t support a switch. So, pricing play? Duke it out with Glaxo or go to OTCs. Docs will run labs on their patients anyway, and I gotta tell you, 3 grams of EPA/DHA a day drops trigs like a stone. Prescription or no, combined product or single malt. Clinically, it simply won’t matter what you’re taking. It’s all marketing, man. Also, there’s a danger here. If you’re saying that EPA alone has a different pharmacologic effect than the combo of EPA/DHA, what effect does that have on all the beneficial ancillary effects of the oil, such as the antiinflammatory and anticoagulant effects? FDA might require that these be studied as well — phase III or if they’re lucky, a phase IV postmarketing study. That may be a Pandora’s box that they don’t want opened. FDA would likely require a head-to-head, and you wouldn’t want to run that trial as a noninferiority trial, which is what Amarin did here. It might show that both products were not significantly different for any of the primary or secondary endpoints to be studied. Then they’re second to market with a bigger debt burden and no niche to crawl to. Meanwhile, Lovaza just keeps selling as the only prescription product available. ☞ Guru responds . . . Lovaza was unable to get a “claim” for reduction of triglycerides in patients between 200 and 500. (You can go to the FDA website to see all the details.) The data led the FDA to determine that there was a statistically significant increase in LDL from Lovaza, so the FDA did not give them a “claim.” Without a “claim” on the label, Glaxo is unable to advertise Lovaza to patients between 200 and 500 or they risk a serious fine from the FDA. Glaxo also has a harder time get reimbursement. Amarin has SPAs from the FDA for patients greater than 500 and 200-500. They have satisfied the FDA parameters to be able to get a “claim” that they lower triglycerides in both groups without raising LDL. AMRN will be able to advertise that their product benefits patients between 200 and 500: Glaxo is unable to do so. AMRN will get a big corporate partner (Pfizer, Astra Zeneca, lots of possibilities). So ultimately, your reader is correct: it is all about marketing. AMRN will be able to market their drug as effective for all patients with elevated triglycerides, while Glaxo can market only for the small group of patients over 500. Those are the rules. ☞ So who is right? I asked Aristides’ Chris Brown to read both comments and make his own: Guru is right. That’s why I added to our position the other day. The indication is going to be broader than Lovaza. Your reader is also considerably right. My wife (who is an endocrinologist), would be more inclined to agree with the assessment that HDL-raising is hard to come by, whereas LDL-lowering can be fairly easily achieved with a statin, so given a choice of a drug that lowers TGs and raises HDL but raises LDL slightly (this is Lovaza) or a drug that lowers TGs and lowers LDL and has presumably no significant effect on HDL (AMRN), she would actually be inclined to choose Lovaza. Now, that’s a practice pattern from fellowship. It may or may not agree with the fine details of the guidelines (I suspect it probably doesn’t agree, but I’m not going to spend time looking something up to disagree with the Dr./Mrs. – I know better than that.) So, some physicians will prefer Lovaza. The indications will be broader for AMRN’s drug. The great thing about these drugs is that there’s a selling point for each one, so probably the class as a whole indeed expands, and a price war is unlikely. As an investment… Lovaza is on track for $1 bil in revenue. AMRN’s product is going to be more broadly indicated, and the class will grow. AMRN’s valuation is easily justified here. I agree with guru’s investment thesis. ☞ Please note that I’m not suggesting you buy AMRN at $16.20 – just that if you bought it last month at $7.10 you not necessarily rush to sell all of it.
Updates: AMRN, YMI, EMIS April 20, 2011March 24, 2017 But first a quiz. Alan S.: “I got 20 and Bob got 26 on this. Out of 30. I think I need a brush-up course (LOL).” ☞ I should say so! (Not that I’m competitive or anything.) And now . . . AMRN AGAIN John: “The research you quote says, ‘very solid effect sizes at both the 2g and 4g doses, which was even better than our “big fish in a big ocean” scenario.’ Well, 2 grams is approx 1/2 teaspoon MOL. That’s a large dose of anything. Getting people to take a full teaspoon of an oil-based medicine could be a neat trick. Those are considered ‘horse pills.’ Even 1000 mg fish oil caplets are only about 1/4 tsp. If a person were to take two or four fish oil caplets, one should expect an effect similar to AMRN, and unfortunately, a similar rate of patient compliance. Hey, if they succeed in business, I’m all for it. Based on their research, I’ll just start taking two caplets in the morning and two at night and see what happens.” Guru responds: “Most fish oils look like Lovaza (which looks to do $1 billion in sales this year) with significant amounts of DHA and EPA. But Lovaza has quite a different effect from Amarin’s drug: Lovaza raises LDL cholesterol (the bad cholesterol), whereas Amarin either does not raise it (2 mg) or lowers it (4 mg). People with high triglycerides would do better to lower their bad cholesterol than to raise it! So you can’t obtain these benefits just by taking over-the-counter fish oil. AMRN has patents on how to formulate the product so it is more than 96% EPA. They go out 15+ years. Thus, AMRN should have a strong franchise: the only drug that lowers triglyceride (for patients >500 and 200-500) AND lowers bad cholesterol. No one in the US will have that claim but them for a long time. Here is one site that shows about an even amount of EPA and DHA in one brand of fish oil caplet. Here is a site that shows the EPA and DHA content of Lovaza. You’ll see it is very similar to the fish oil caplet (and still on track to sell $1 billion), but remember that this combination of EPA and DHA caused INCREASED LDL.” YMI, EMIS UPDATES While we have Guru’s attention: YMI (suggested in December at $1.65, $2.96 last night). Guru writes: “The lead investigators at the Mayo clinic yesterday updated their results at their center from when they first reported them in December. They continue to see a 58% ‘anemia response’ which is very good and not seen with the leading candidate for MPF from INCY. Data from other centers encompassing an additional 80 patients will be presented at ASCO in June. So the story continues to play out. Price targets range from 4 to 6.” EMIS (suggested last August at $1.25, $1.52 last night). Guru: “Novartis announced on their first quarter call today that the second trial in osteoarthritis is still ongoing, but that the ‘strategy’ in osteoarthritis is ‘under review.’ In January, Novartis said they expected to file for approval in osteoarthritis this year, so the announcement today certainly indicates that they are less certain they will do so – but I suppose they haven’t decided one way or another. The problem is that the trials were designed to see if calcitonin could build cartilage and bone so that the spaces in the osteoarthritic joints got smaller (i.e. bones got bigger). In December, they announced that the European trial missed that “co-primary endpoint” but succeeded in demonstrating efficacy on the other ‘co-primary endpoints’ of pain and function. No details have been provided. I’m guessing the data for the US trial – which is ongoing, but should be out in the next several weeks – will look the same. If so, they have two trials that missed this ‘joint space’ endpoint, but showed efficacy on the other two endpoints. They ‘could’ get FDA approval in Europe on this data, but would probably have a hard time getting it in the US. . . . Meanwhile, what Novartis DID reaffirm today is that the osteoporosis trial (the one we’ve always believed in – we were always cautious on osteoarthritis) will be done in 3Q 2011 and they reaffirmed their plan to file for approval. A win on either of these should make the stock go much higher.” SKIN CELLS TO HEART CELLS Ryan Troseth: “I should have mentioned yesterday, the experiment was done with mice.” ☞ Ah. Well, mice, humans – we both like cheese, so this will probably work. Tamara Hendrickson: “I hadn’t seen the Nature Cell Biology paper Ryan highlighted. The really cool thing about heart cells is that they beat in sync with each other just like a natural human heart. I’ve now skimmed this paper, and, as Ryan noted, they were able to convert skin cells to inducible pluripotent stem cells, which they then converted to heart cells. I’ve watched one of their videos, where you see the cells beating – a cell colony (lots and lots of cells) on a solid support that contains media to help the cells stay alive. It blows my mind that they started out as skin cells!!!! Unfortunately, you need a subscription to the Nature journals to see the video (or you can buy a copy for $32).”
Thomas Jefferson Also Said . . . (But first a few words about AMRN) April 19, 2011March 24, 2017 In this space three weeks ago: AMRN – about $7.10 a share. “Data could be out in April,” Guru writes, “but for sure second quarter. I’ve checked all the studies and there is a remarkable consistency: its product lowers triglycerides, especially in conjunction with statins, and it lowers LDL (the bad cholesterol). If this trial doesn’t work, it will be the first time. The beauty is that even if it doesn’t work, the stock is still worth comfortably more than 7. I hate to say ‘can’t lose’ because there always seems to be some way, but this looks as close to a can’t lose as I’ve seen since, say, INCY.” ⒀ INCY brought us a triple. “Can’t lose” always scares me. Even so, how could I resist? The stock closed at $17.10 last night, up 140% in three weeks. Proving yet again that Guru is often, albeit not always, right. His current view: “AMRN met all endpoints. Leerink Swann’s analyst thinks fair value under this scenario is 25. (‘Bottom line: The ANCHOR study of AMR101 in patients with mixed dislipidemia met all primary and secondary endpoints with very solid effect sizes at both the 2g and 4g doses, which was even better than our “big fish in a big ocean” scenario. We reiterate our Outperform rating and raise our 12-month fair value estimate to $25 from $15. This appraisal does not include an M&A premium which we believe could provide significant additional upside.’) Seems like an obvious candidate to be bought out, since Glaxo bought the competing company, Reliant, for $1.7 billion in order to market Lovaza (on track for about $1 billion in sales) and AMRN’s product will now become the first product that lowers triglycerides and lowers LDL cholesterol in patients at all levels of triglyceride (above 500 and 200-500). It could/should reach the high teens/20s in the next few days. We are buying more today [at $14.73].” ☞ I sure didn’t buy more yesterday – but I didn’t sell, either. I put in a good-til-canceled order to sell some shares I hold in in my tax-deferred retirement account at $18-and-change. John Leeds: “Shortly before Guru recommended this stock, I kept seeing a ‘FISHGURU’ NY license plate on the pier here, where the Spring Hudson River estuary fishing season is well under way. I’d always think of the investing Guru and wonder what, if any, was the connection. Now it seems prescient as AMRN is fish oil. Of course, humans are good at creating patterns where none exist – such as lower taxes for the rich mean a booming economy and everything will just trickle down to the little guy. Send my thanks to Guru. I owe him a buckskin pouch to hold his hoard of gold. The offer is sincere, and the buckskin is made by me (usually from roadkills, though not always.)” Ryan Troseth: “I really appreciate your Guru updates, advice that little guys normally couldn’t afford. I took some time to analyze his picks over time and found that he has a great success ratio. I feel pretty comfortable jumping in when I see his recommendation (only with play money) and today had fun watching Amarin go through the roof. . . . Separately, I’ve picked up on your interest in stem cell research and the great benefits that we hope develop from it. I wanted to send you some news that comes out of one of the labs I work with at the Scripps Research Institute in La Jolla, California. As you probably know, Californians voted in 2004 to approve $3 billion for stem cell research. Recently, the professor I work for was able do something pretty amazing: In 11 days he turned regular skin cells into heart cells, which were actually beating! This research isn’t completely new, however the speed in which the cells were transformed is a great improvement. Here’s a link if you are interested.” THOMAS JEFFERSON ALSO SAID . . . Russell Turpin: “Yes, Jefferson wanted the industrious to enjoy the rewards of their efforts, and objected to the leveling of that. But he also worried about excess concentration of wealth. While observing France in 1785, he wrote the following in a letter to Madison: The property of this country is absolutely concentered in a very few hands, having revenues of from half a million of guineas a year downwards. These employ the flower of the country as servants, some of them having as many as 200 domestics, not labouring. They employ also a great number of manufacturers, and tradesmen, and lastly the class of labouring husbandmen. But after all these comes the most numerous of all the classes, that is, the poor who cannot find work. I asked myself what could be the reason that so many should be permitted to beg who are willing to work, in a country where there is a very considerable proportion of uncultivated lands? These lands are kept idle mostly for the sake of game. It should seem then that it must be because of the enormous wealth of the proprietors which places them above attention to the increase of their revenues by permitting these lands to be laboured. I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree is a politic measure, and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise. Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. “Note the direct call for a progressive income tax! The full letter is here. The modern right-wing wants our founders to be as ideologically minded as they themselves are. They do not realize that the great past thinkers they pretend to admire looked at questions from multiple angles and held in mind the tensions of conflicting goals, without succumbing to the naive notion that there is one right answer, to be scried from what was handed down on high.” ☞ Amen, Russell – whose own blog can be found here.
Thomas Jefferson On Taxes and Wealth April 18, 2011March 24, 2017 BRAVE NEW WORLD Nothing immediate, but I’m tellin’ ya . . . if we don’t screw it up, these next few decades are going to be amazing. Latest example: “Solar Power Without Solar Cells: A Hidden Magnetic Effect of Light Could Make It Possible.” DC HAS NO REPRESENTATION? Lyn B: “You’re slipping, Andy. Democrat Eleanor Holmes Norton represents D.C. in Congress, as probably hundreds of others have told you by now. I’m sure you meant that they don’t have representation in the Senate. In light of all of the pressures related to tax day that we are all feeling, I’ll let it slide this time.” ☞ LOL. Well, the only thing is, the Rep. Holmes Norton has no vote in Congress. In that sense, it surely is taxation without representation. By the way, today IS tax day – don’t forget to file Form 4868 for an extension, if you need one, and Form 1040-ES for your first 2011 quarterly estimated tax payment if you’ve had appreciable taxable income this year on which no tax was withheld. TAX ME MORE Steve: “Found this quote and thought of you and quite a few of my other liberal friends. ‘To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it.’ – Thomas Jefferson.” Thanks, Steve. We all admire Thomas Jefferson. I paid $5,000 for a Thomas Jefferson letter (penned December 1, 1803, to a Doctor Eustis, thanking him for a fish). Still and all, is it your view that everyone should pay the same amount of tax? And that those who can’t should be eliminated somehow? If not, then it’s just a question of balance, fairness, and empirical common sense. The Clinton-era Nineties worked a lot better for us, prosperity-wise, than the decades that preceded or followed. No? But wait: I’m not being fair to you (or Jefferson). And you are perhaps not being fair to your liberal friends. I think we can actually all agree with Jefferson here: It would be a bad idea to tax a billionaire more than a janitor because “it is thought his own industry and that of his fathers has acquired too much.” If that were the reason we did it, it would be a bad reason! But the rationale for the progressive income tax – and for taxing the dividends and interest that wealth generates – is not that the best-off have “acquired too much.” Rather, it’s that they are best able to afford the sacrifice. We can applaud the billionaire’s wealth as well-earned and the outsized contribution he makes, through his taxes, to the common good. And by the way? Not all wealth is acquired through admirable industry and skill. Not every billionaire is a Steve Jobs. Jefferson’s and his father’s wealth was acquired largely through the industry and skill of their slaves. The wealth of many others, certainly including lottery winners, is acquired through pure luck. And of still others, through cheating and stealing, much of it technically legal. So I think quotes like this don’t get us very far. We have practical problems to solve different from those of the Eighteenth Century; they require resources; we need to find fair effective ways to come up with the resources. Taxing billionaires at a lower effective rate than their groundskeepers doesn’t strike me as fair or effective.
You Know What Today Is? April 15, 2011March 24, 2017 NOT TAX DAY . . . . . . because it’s Emancipation Day in the District of Columbia, and – though the taxpayers there are denied representation in Congress – their holiday is honored by the IRS. Monday your taxes are due. If you can’t complete your return by Monday, file Form 4868 for an extension. Monday is also the day your first 2011 quarterly estimated tax payment is due, if you have had appreciable taxable income this year on which no tax was withheld. That’s Form 1040-ES. TOGETHER FOREVER Steve Baker: “Thought you might be interested in this story from the Toronto Star about a couple celebrating their 50th year together.” (“In a life rich with famous friends and dazzling diamonds, Toronto socialites Alan Hanlon and Andy Body have one priceless treasure — each other.”) ☞ When the time comes, they want their cremains to rest in side-by-side stainless steel martini shakers. These two items are related because if you’ve been together for 50 years – or even just 50 days – and you’re legally married in Iowa or Massachusetts (say) and you’re gay, then you have three more days to decide . . . IS IT OK TO LIE TO THE IRS? IS IT MANDATORY? The federal government does not yet recognize your marriage – must you lie on your Federal Form 1040 (under penalty of perjury) and say you are single? As a practical matter, I’d say not: The IRS is not likely to come after you for telling the truth. But you can learn more of the pros and cons, if you’re curious about them, on the Refuse to Lie site and from this excellent New York Times report. AND SPEAKING OF MARRIAGE Did you see that the right-winger who organized last summer’s national bus tour against same-sex marriage – who actually drove the bus – has changed his mind? On his tour, he wound up actually meeting the gays who were following his bus in protest. Once he came to see them as nice people like him with the same kinds of hopes and fears as anyone else, he decided they should have the same rights and respect as anyone else. Go figure. FINALLY Might criminal prosecutions be looming for some of the folks who were involved in the housing bubble and Wall Street’s collapse? Goldman Sachs (and others) in the hot seat? Hats off to Senator Carl Levin for pursuing this. If no one did anything wrong, no one should be prosecuted. But it’s high time we took a look. Have a great weekend.