We Need a Stronger S.E.C. April 15, 2014April 14, 2014 In addition to your 2013 income tax, your first quarterly estimated 2014 tax payment is due today, if you have appreciable taxable income from which taxes are not withheld. Have a nice day. And speaking of nice . . . WHO ARE NICER THAN THE THAIS? No one, I think. (And I was actually there for three days 20 years ago, so I should know.) Click here to start your day. Three minutes. S.E.C. NO EVIL From Bloomberg News: A trial attorney from the Securities and Exchange Commission said his bosses were too “tentative and fearful” to bring many Wall Street leaders to heel after the 2008 credit crisis, echoing the regulator’s outside critics. James Kidney, who joined the SEC in 1986 and retired this month, offered the critique in a speech at his goodbye party. . . . The SEC has become “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors,” Kidney said, according to a copy of his remarks obtained by Bloomberg News. “On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.” Kidney said his superiors were more focused on getting high-paying jobs after their government service than on bringing difficult cases. The agency’s penalties, Kidney said, have become “at most a tollbooth on the bankster turnpike.” His March 27 remarks drew applause from the crowd of about 70 people, according to witnesses. In an interview, Kidney said he hadn’t heard any blowback from SEC officials. . . . His speech bemoaned the lack of SEC enforcers who “believe in afflicting the comfortable and powerful.” . . . In his speech, Kidney also hit the agency for using misleading statistics to showcase its enforcement efforts. The SEC should focus on the quality of its actions, rather than try to file as many as possible just to tout its record to lawmakers and the media, he said. “It is a cancer,” Kidney said of the agency’s use of numbers. “It should be changed.” Kidney said in the interview that he will always be an SEC loyalist and was trying to offer constructive criticism that could help the agency. He said he wasn’t singling out any specific cases or officials in his comments. . . .
The Blanket April 14, 2014December 27, 2016 You’ve gotta feel good for Big L.C., as he’s known. Watch this! The only thing that remains is to figure out how society might better serve those in tough straits who don’t have such blankets. Some think the solution is to get rid of the estate tax on billionheirs, squeeze the social safety net, shutter drug treatment programs,* and shrink the minimum wage by not adjusting it for inflation. Others think the solution runs more to raising the minimum wage and investing in the future, putting people back to work revitalizing the national infrastructure and providing our kids with terrific schools, pre-K, and after-school programs. But whether you’re a Republican or a Democrat, L.C.’s is still a really nice story. *As governor, Jeb Bush got rid of the one tax that affected only Florida’s wealthy, cutting it to zero . . . while slashing the state’s drug treatment programs and fighting efforts to reduce classroom overcrowding.
The Stop Hillary PAC April 11, 2014 If there’s a primary, I will be neutral. Until then, I’m a proud contributor to READY FOR HILLARY. Has the country ever had a potential candidate more prepared and qualified? Of course, not everyone feels this way. Just as there are folks who see President Obama as a weak (yet over-reaching) Kenyan Marxist Muslim who secretly wanted Bin Laden to succeed (despite killing him) and capitalism to fail (despite rescuing it) and the country to be overrun with aliens (except for two million deported) and the world’s greatest health care system to be brought low (even as he expanded it on the Romney model) and gun policy crafted by the likes of Gabby Giffords and Mark Kelly (proud gun owners themselves) . . . not to mention bureaucrats destroying “Government Motors,” now thriving; “deficits soaring,” now plunging; “confiscatory tax rates” on wealthy investors, lower than the rates Reagan signed into law . . . . . . so are there folks who misperceive Hillary. Do you get the same STOP HILLARY emails I do? I thought I would share one, with my comments interspersed in blue, like this. This is the sort of thing Hillary will be up against if she runs: Fellow Patriot,My name is Congressman Matt Salmon. You know me as one of the most conservative members of Congress. The Club for Growth recently gave me their highest award for having a 100% lifetime conservative voting record. You may also know me as a straight talker — I tell it like it is. My friend, America is at a crossroads. I’ve spent my entire life fighting for the conservative values of Faith, Family and Freedom. I fought tooth-and-nail against Obamacare and continue to be one of President Obama’s fiercest critics. I don’t WANT everyone having access to affordable care at the expense of a higher tax rate on wealthy investors; I don’t WANT insurance companies to have to pay out at least 80% of premiums for health care; I don’t WANT healthy people subsidizing those with pre-existing conditions — it’s survival of the fittest baby. That’s what we call freedom! I have stood toe-to-toe fighting Nancy Pelosi and her efforts to raise taxes and spend our country into bankruptcy. Really? You’ve been in Congress less than two years — what efforts has the minority leader made to raise taxes or spending? And what fight would be required? Republicans control the House. I fought against Obama’s proposal to raise the debt ceiling even though most of that debt was incurred by Reagan-Bush-Bush to cut taxes for the wealthy and invade Iraq. I believe America should NOT pay the bills the Republican Congress has incurred. America should default on its full faith and credit, whatever global chaos that might cause, because we shouldn’t pay our bills if we don’t want to, and I have opposed every one of Obama’s bankrupting budget proposals. [The budget shortfall has fallen dramatically since Bush handed Obama a $1.5 trillion deficit; Obamacare was scored as cutting the deficit modestly; and the bills your party has opposed, like the American Jobs Act, would have put people back to work rebuilding America (via private contractors) so they could pay taxes rather than collect food stamps.] I have fought to defend our 2nd Amendment gun rights and our 4th Amendment rights to privacy. No universal background checks! Crazy people have rights too! And, as a Congressman from a border state, I have defended the rule of law against those in both parties who would give amnesty to law breakers.It’s these fights that have earned me the distinction as one of the most conservative members of Congress.Today, I want to tell you about a new fight, and I hope you will find it as important as I do.You see, I’m convinced that without a massive effort starting right now, Hillary Clinton will be the next President of the United States. I think there’s a 40% chance of this: a 75% chance she runs; an 80% chance that, if she does, she’s our nominee (75% x 80% = a 60% she’s our nominee) and a two-thirds chance that if she’s our nominee she wins. Thus (two-thirds of 60%) a 40% chance she’s our next president. That’s why I’m asking you to support the only organization whose only goal is stopping Hillary Clinton from becoming President: STOP HILLARY PAC. Stop Hillary PAC’s mission is clear — Stop Hillary Clinton from ever becoming Commander in Chief. And while the mission is simple, it’s going to take every freedom loving American coming together to succeed. Will you please click on this link and sign your name to the “Pledge to Defeat Hillary” campaign today?And after you sign your pledge, will you please chip in at least $5 to help us fight Hillary Clinton across America? Your gift could not come at a more important moment. You see, Stop Hillary PAC has set an ambitious goal of immediately organizing 1 million American Patriots who stand ready to defeat Hillary Clinton’s run for the presidency. Stop Hillary PAC has a plan, and with your help they will stop Hillary from becoming president. But you and I must start today. So I’m asking you right now — before you do anything else —follow this link and sign your name to the Pledge to Defeat Hillary campaign today. You and I both know that if Hillary Clinton is able to complete Barack Obama’s legacy then America is in trouble. Yes! The stock market, at record highs, could more than double yet again! The Supreme Court, now with THREE justices who are not men could have four or even – God forbid – five. We actually might put Americans back to work modernizing our crumbling infrastructure. The deficit would continue to fall! Loose nukes would continue to be secured! Fuel efficiency standards might continue to be raised! The list of horrors just goes on and on. Stop Hillary PAC has put together just a glimpse of what is to come under a Hillary Clinton Presidency. >>> Obamacare expanded into Hillarycare: Hillary will be the ultimate implementer of Obamacare, resulting in sky rocketing taxes [nope], health-care costs [nope; they’re now finally rising slower than at any time in decades], and rationing of care [nope; as now, rich people would be able to get all the care they wanted; and far fewer ordinary people would have their health care rationed because they couldn’t afford their medication or couldn’t afford their co-pays or couldn’t get coverage because of a pre-existing condition or because their lifetime cap had been reached or because, though healthy, they just couldn’t afford coverage]. >>> Open Borders and Permanent Amnesty: Hillary will finish what President Obama and Harry Reid have started — an immigration policy that rewards law breakers. Though it may be worth noting that Obama has done more than his Republican predecessor ever did to secure those borders and enforce current law, even as he has pushed for the comprehensive reform most Americans favor. >>> A Bigger, more Over-reaching Government: Hillary will continue Obama’s oppressive assault on free markets [come again? corporate profits are at record highs and he’s taking heat for the trans-pacific FREE TRADE agreement; do we really want to go back to the inadequate pre-crash financial regulation?] and plot to gut conservative and Tea Party groups that was hatched by a Bush appointee and targeted “occupy” left-wing groups as well — there was no plot and the President wasn’t born in Kenya and the moon-landings were not faked. Will the IRS start targeting all conservatives under President Hillary Clinton? No, it won’t. >>> A Foreign Policy that leaves America Weak and Vulnerable: Does anyone really believe America is stronger in the world since Hillary Clinton and Barack Obama have been in charge? I sure do. Our military is no longer overstretched, Bin Laden is quite dead, most of the world’s countries respect our leadership and motives again, we got rid of Qaddafi for a $1 trillion less than it cost to get rid of Saddam, our finances have strengthened. And Benghazi will be swept under the rug and forgotten once and for all by America’s so-called “leaders.” It sure won’t be forgotten by Hillary. She lost a good friend in that tragedy. Why would Congressman Salmon say such a stupid thing? Does he think George W. Bush has forgotten the deaths of not just four but four thousand Americans on 9/11 that could have been prevented if he had read his Daily Briefing and/or heeded the CIA’s plea at his first major briefing, at Blair House, a few days before his inauguration? >>> Jimmy Carter style Joblessness and Unemployment: From the big banks to the taxpayer-funded government takeover, a Hillary Clinton Administration will be a dangerous, anti-capitalist government that will destroy our economy. Kinda like the last Clinton administration, that gave us the greatest boom in history, lifting everyone, from poor to rich? Give me a BREAK! But the scariest part is: Hillary is even closer to the presidency now than when she was living in the White House. That’s why I’m asking you, before you read any further, please click on this link and sign your name to the Pledge to Defeat Hillary campaign. And please make a generous gift of at least $5 to the campaign too. My friend, if there is one thing I’ve learned during my years of defending our conservative values against Nancy Pelosi and Barack Obama, it’s that having an army of freedom loving citizens fighting with you is essential. What exactly are they fighting? Affordable health care? The universal background checks that even a majority of NRA members support? Social Security? Investments in our national infrastructure? That’s why our immediate goal is to collect over 1 million signatures — a grassroots army of Americans committed to doing whatever it takes to defeat Hillary. Will you join this fight by clicking here to sign your name on the Pledge to Defeat Hillary campaign today? Once Stop Hillary PAC has built this grassroots army, Stop Hillary will enact its action plan to ensure we defeat Hillary. They will start with an all-out media blitz to expose Hillary’s left-wing record of failure. They will then target precinct-by-precinct with a coordinated hard-hitting TV, radio and digital effort in every swing county that Hillary needs to win the presidency. One more important thing — Stop Hillary PAC simply cannot achieve these goals without your financial support as well. We need to ensure Stop Hillary PAC has the resources it needs by contributing today. Please, in addition to signing your Pledge to Defeat Hillary, I urge you make your most generous contribution of at least $5 to help Stop Hillary PAC do whatever it takes to ensure Hillary Clinton never becomes President. I assure you that your contribution of $5 — or $25, $50 or even as much $100, if you can afford it — will go directly to building our army and exposing Hillary Clinton’s failures to every voter in America. Together, with your help, Stop Hillary PAC will make certain she never becomes President of the United States. My friend, as I already said, America is at a crossroads. That much is true. The actions you take could determine the fate of our great nation. That, too. It’s up to you. Please send help if you can. Very Sincerely Yours, Congressman Matt Salmon Arizona, 5th District ☞ This is exhausting. But there you go. We need to take the House back from presumably sincere, but deeply misguided, guys like Congressman Matt Salmon.
The Court: Too August To Be Televised April 10, 2014 THE COURT How one longs for the days of nonpartisan Justices making wise decisions. Very hard to see Bush v. Gore as having been such a decision. And once Bush was installed and moved the Court further right, we got this: Five minutes from Jon Stewart guaranteed to make you laugh and cry. EXPENSIVE DRUG Would it be in some way death-panelish to suggest that we shouldn’t be paying $28,000 for vials of a drug that, according to Forbes, cost $50 when first approved in the 1950s? CHEAP STOCK Tom Martel: “Is there something going on with BOREF that is driving down the price? Or is the lack of (good) news allowing it to slip?” ☞ Patience is hard to sustain. I am only good at it because I’m wildly diversified (so there’s always something going on) and because of my Friendly’s Ice Cream experience, where I held on for a couple of years — an eternity to a 25-year-old — only to sell days before it was acquired at a higher price. Scarred for life. And because I’ve seen it rewarded. I bought 1,000 shares of TPL (Texas Pacific Land Trust) in 1995 at $4.35 — a stock that could hardly be more different from BOREF, except that it was pretty obscure and seemed to represent a lot of potential value. The only piece of the story relevant here is that I sold some of it yesterday at $125. I have others like this — and of course lots that are worthless. But if you’ve bought BOREF with money you can truly afford to lose, whether you paid $3 or $21, I would just wait. E-Taxi of some kind strikes me as inevitable; WheelTug seems to have the best solution; why is that not potentially worth a lot of money?
An Easy Action Step That Could Help April 9, 2014April 8, 2014 Most of us are too busy just trying to get our Outlook syncing properly or making ends meet to be able to feed the kids and get them to the dentist to accept responsibility for the future of humanity. And yet . . . Panel’s Warning on Climate Risk: Worst Is Yet to Come. A United Nations report warned that climate change is already having sweeping effects on every continent and is likely to grow substantially worse unless greenhouse emissions are brought under control. To give that a little more pizzazz, watch this trailer for “Years Of Living Dangerously” starring Arnold Schwarzenegger, Jessica Alba, Matt Damon, Harrison Ford, Don Cheadle, Michael C. Hall (“Dexter!”), and Lesley Stahl, among others. If it grabs you, watch the first episode. If we all took an hour to vote November 4 — even though most Americans usually don’t vote in mid-term elections — we could at least wrest the climate-change gavel out of the hands of a climate change denier by flipping the House blue. That would be a start.
Magic April 8, 2014April 7, 2014 MAGIC TRICK Ricky Jay is a genius. (I have a great Ricky Jay story to tell you, but you’ll have to beg for it.) Jimmy Fallon is fantastic. And here they are together. I love this three-and-a-half-minute clip. (If you have another five minutes, watch the interview that precedes the trick. Fun!) MAGIC FORMULA Ali Dadd: “You have mentioned The Magic Formula system of Joel Greenblatt. Has this system beaten the stock market indexes over the last five years?” ☞ Yes, actually. According to the company, the managed accounts — where they picked the best 24 stocks and then updated the list once a year, keeping some, replacing others — were up 175% from their May 1, 2009, inception until they were shut down March 31 (and rolled into GENIX for those who wished). The S&P 500 was up 138%. For do-it-yourself-ers, magicformulainvesting.com remains open and free. FNSAX was number 1 of 347 funds in its peer group, and FVVAX, the other domestic Formula Investing fund, was in the 5th percentile, before both were merged into GENIX. In the two international funds, FNAAX and FNVAX, the magic was more like a curse. Apparently, in those, they allowed humans to override the magic formula, out of prudence, which, ironically, killed performance. It was about breakeven. Not a disaster, but a disappointment. SUGAR: BAAAAAAD! Theo Kent: “Yep, sugar: baaaaaad — along with salt and fat (the cornerstones of the Standard American Diet – which explains a LOT). Did you know that all oils (including olive) are 100% fat? Take some time to watch “Forks Over Knives.” We watched it a year ago, and starting that day, never looked back at the S.A.D. Neither will anyone who wants to eat to live, vs. live to eat.” ☞ No way am I cutting out salt. But, yes: life with very little meat is way better us and our planet. Eating more fruit and vegetables lowers the death rate 42% and makes for local jobs says the Optimistic Futurist. And — given the way we raise them — carrots probably suffer less than chickens. NADER / PEROT Ken Doran: “You implicitly conceded, and so reinforced, an erroneous argument. Nader almost certainly changed the 2000 outcome, given the closeness of Florida and New Hampshire. Perot did not change the 1992 result.” ☞ According to that analysis, Perot may have cost Clinton more votes than he cost George H. W. Bush. David M.: “I think you should read some analyses such as this one to re-evaluate your blaming Nader for Bush’s victory.” ☞ I did but am not persuaded. It’s hard for me to believe that Nader voters’ second choice was as likely to be Bush as Gore. Or that Ralph thought they would be equally bad for the world. Or that if Ralph had urged his supporters to vote for Gore in swing states like Florida and New Hampshire, they would have voted for Bush instead. (New Hampshire would have been enough to give Gore the win as well.) And there’s this: as much as I’d like to see Bernie Sanders (whom I admire) not risk throwing the White House to a Republican by running until the bitter end, what I’d most like not to see is liberal voters in swing states risk voting for Bernie, if the election promises to be close. If third-party candidates have not learned the Nader lesson, at least, I’d love to hope, idealistic voters have: as bad as they may think the Democrat is in 2016, I guarantee you the Republican will espouse a future they would like much less. Did you watch the Ricky Jay clip?
Health Care Sign-Ups April 7, 2014April 6, 2014 Following up on the Fox News chart that showed 6 million sign-ups as falling roughly two-thirds short of goal, esteemed reader Dennis King sends along what he calls this “Updated Chart from Faux News” (actually, he just dummied it up himself): ☞ Here’s a site that seems to specialize in tracking the signups. It suggests that uninsured Americans really do want health insurance — why is that such a surprise to free-market Republicans? — and that, when it is made affordable, they will buy and pay for it. Why do Republicans assume Obamacare can’t work in America when it has worked in Massachusetts, launched there eight years ago by their own 2012 presidential standard bearer? How can making health care available to our fellow citizens — based on a plan from the conservative Heritage Foundation — inspire such venom? But it does, and that says a lot about today’s Republican leadership, Fox News, and the nearly inexhaustible coffers of the Koch brothers.
Sugar: Baaaaaad! April 4, 2014 HEALTH INSURANCE Want to feel good? Take three minutes to watch this overview. All Americans should feel proud of, and heartened by, the progress we’ve made. WEIGHT LOSS Bill Merkel: “I’ll second Gray Chang’s recent advice, particularly about the sugary drinks. I’m not generally one to send links to others, but this video from Dr. Robert Lustig called “Sugar: the Bitter Truth” was a real game changer for me and my family. It’s hard to watch evidence that giving your kid a can of Coke is, nutritionally, the same as handing her a Budweiser and not be affected. Getting added sugar our of your diet (or perhaps just being fully aware of where it hides and what it does to you) should be the goal of everyone, particularly parents. Ninety minutes so worthwhile I’ve watched it several times.” MY DOG, YOUR HOTEL Grant K.: “This seems to be a very right wing-site you’ve directed us to!” ☞ Oops. Well, the letter itself is fun. I hadn’t looked at the rest. “Abducted By Demons! The Terrifying Truth Behind What They Do, and Their Sinister Plan For Humanity! (Real Video Footage).” Avert your eyes! NADER AND REAGAN Carl: “I totally agree with you what you said yesterday about the Supreme Court’s decision and the elimination of contribution limits. And we totally agree on the harm done by Bush 43. However, the blaming on Ralph Nader is unrealistic and not fair. Republicans blame Clinton’s win on Ross Perot and that is not fair either.” ☞ I disagree. Ralph had a clear, easy, realistic path that a great many of his advisers were begging him to take – just issue a statement a few days before the election asking his supporters in swing states to vote for Gore. It would have been so much better for the country and the world — and for Ralph himself, who’d have had more influence on the Gore Administration than the Bush Administration to move our shared goals forward. Republicans can blame Perot for Clinton. I have no problem with that. Though it would be way harder for them to argue that Perot’s actions had tragic consequences, as Nader’s surely did. Rather than needless war, a near Depression, and a wrecked national balance sheet, under Clinton, arguably thanks to Perot, we had peace, unprecedented prosperity, and, by the end, a balanced budget. Also, I think it should have been clear to Nader that Bush 43’s agenda would be much worse for the country than Gore’s. I’m not sure it was so clear to Perot that Clinton would be worse for the country than Bush 41. But yes: If it was, then he, too, should have urged followers in swing states to vote to reelect Bush. Carl continues: “Democrats mostly fear attacking the Republican messiah, Reagan. Sure Reagan was a nice guy and had a winning personality yet almost every promise he made about Reaganomics has proven wrong. He promised many times that his policies would balance the budget and it did the opposite. He promised his policies would help spread the wealth more equitably and it has done the opposite. He promised business and institutions would better succeed without government oversight and that has proven wrong with the S&L crash, the real estate crash, and more. Dems are so afraid of tarnishing this Republican god (it doesn’t have to be done disrespectfully) that even Obama said he was his earliest hero. If we are afraid to name the root cause of the rich becoming richer and getting bailed out when they screw up then we have our hands tied behind us.” ☞ Well, yes; but rather than “relitigate” all that, I think we might even better run against today’s Republicans, who make Reagan look like a moderate. For example, Reagan’s cut in the tax rate on investment income to 28% is nothing like today’s Republicans’ cut to 15% and goal of cutting the estate tax on billionheirs to zero. And the new Republican budget? The one that would cut $5.1 trillion over ten years by cutting deeply into programs for the middle class and those who are struggling? I’d rather make the point that Reagan would have been appalled.
Can My Dog Stay At Your Hotel? April 3, 2014December 27, 2016 But first . . . PLUTOCRACY With yesterday’s Supreme Court ruling, the $123,200 you were planning to contribute to federal candidates and committees this 2013-2014 cycle goes from being “all you can legally do” to “chickenfeed.” The limits on giving to individual candidates or committees remain unchanged; but the aggregate limits ($48,600 to all candidates combined, per two-year election cycle; $78,600 to all committees) have been struck down. So now you can contribute $5,200 to each of 468 House and Senate candidates (more, if you back more than one primary candidate) plus any number of Presidential candidates — roughly $2.5 million per cycle . . . . . . plus $10,000 a year to the federal accounts of each of the 50 state Democratic or Republican parties, which adds another $500,000 per year, bringing you up to $3.5 million for the cycle . . . . . . plus $32,400 to each of the national committees each year (the DNC, the DCCC, the DSCC), lifting the budget to around $3.7 million for the cycle . . . . . . plus $5,000 a year to as many federal Political Action Committees as you want — the Sierra Club PAC, the Human Rights Campaign PAC, the Goldman Sachs PAC, but also the PACs federal candidates have been setting set up themselves — so maybe another $2.5 million a year, for a grand total of $8.7 million for the cycle . . . compared to $123,200 now. A sad day for democracy. Thank you, Ralph Nader, for giving us the George W. Bush corporate plutocrat Court. (I’m sorry, but if we’re going to win, we must never forget the lesson: the perfect is the enemy of the good. Effective idealists — who actually want to make the world better — take reality into account in order to make as much progress as possible toward the ideal.) As a practical matter, some donors who gave the full $123,200 may now actually give less, as there’s no obvious specific goal to stretch for. Others will give more (and I’ll be asking them to, if they haven’t maxed out to the DNC!) But the real change comes for that relative handful of truly rich, for whom $8.7 million every couple of years is chump change. Most of them care more about lowering the tax rates on rich people than, say, raising the minimum wage. There are certainly liberal billionaires; but they tend to be appalled rather than thrilled by the influence of money in politics — and by decisions like Citizens United, and, now, McCutcheon v F.E.C. — and so are much less inclined to give, even though logic suggests they should. PLUTARCH I don’t normally repeat a quote two days in a row, but in light of the above? “An imbalance between rich and poor is the oldest and most fatal ailment of all republics.” – Plutarch, Greek historian, first century AD HEALTH CARE Rich Rand: “After reading your ‘Sarcasm Is Unavoidable‘ piece, I keep wondering why more isn’t made of the removing of lifetime caps by our Democratic friends. I think this is a huge step forward.” ☞ We’ve done such a bad job selling the Affordable Care Act. (Until President Obama’s remarks Tuesday, linked to here yesterday — watch!) And the other side, frequently unfettered by the facts or a sense of fair play, has done such a good job of weakening and demonizing it. But, yes: prior to Obamacare — and unbeknownst to many of them, 105 million Americans with health insurance were subject to lifetime caps. Now, you might say that’s only a third of the country, but when you consider that another roughly 50 million each had no coverage at all or Medicare or Medicaid — 150 million with no lifetime caps because they had no private insurance policies — then that 105 million number looks to be more like “most people” with employer-provided or individually-purchased health insurance. Which only matters, of course, if you get really sick or badly injured. But isn’t that what we most want protection against? Something like 62% of the more than 1 million personal bankruptcies each year are significantly related to medical costs. In fairness, only a fraction of those involve people who’ve hit the caps — which are generally $1 million or more (often higher). But Obamacare will also help many at the low end, as well, by capping their co-pays and closing the prescription drug loophole, and — over time — bending down the cost curve from what it would otherwise be. SARCAST, IT TURNS OUT, IS A WORD I was wrong. Thanks, Stephen. Here. CAN MY DOG STAY AT YOUR HOTEL? I always get in so much trouble when I am less than fully pro-cat. Out come reader claws. But the truth cannot be denied: I am way more of a dog person. (Real dogs, not the kind that fit in handbags or appear to be stick figures or poodles.*) Some of my best friends have been golden retrievers, as long-time readers may recall. Well, hurray for dogs! Click here! *Oh, God, oh, God, oh, God. Don’t kill me; I’m just being honest.
PLUTARCH – HEALTH – GARIX April 2, 2014April 1, 2014 PLUTARCH Thanks to John Mauldin (and Plutarch) for this: “An imbalance between rich and poor is the oldest and most fatal ailment of all republics.” – Plutarch, Greek historian, first century AD Someone should tell the Koch brothers. If today’s Republicans get their way, they will lower the estate tax rate on billionheirs — to zero — freeze the minimum wage, cut tax rates further for the rich and food stamps for the poor . . . and find other ways to continue widening the imbalance — “the most fatal ailment of all republics.” If we pledge allegiance to the Republic, and if Plutarch was right, then today’s Republican Party should really consider reverting to its moderate, reasonable, grand old self. And until it does, my moderate Republican friends should come out in droves this November to elect moderate Democrats. HEALTH CARE Beyond cool. Try to find 20 minutes to watch the President’s remarks on the Affordable Care Act from yesterday afternoon. The law is making all Americans more secure — a couple tens of millions of them very directly, because they have health insurance coverage they never had before; more than a hundred million a little less directly, in that they no longer have to worry about “lifetime caps” or (should they want or need to switch jobs) “pre-existing conditions” or (soon) the prescription drug “donut hole”; and all 320 million of us in the sense that a healthier population with less-rapidly-rising health care costs is more competitive and thus more secure. All this while cutting the projected deficit . . . which was possible, in large part, because the law upped the tax rate affluent investors are asked to pay on dividends and capital gains — albeit not to rates as high as they were paying in Ronald Reagan’s day — which covered the cost of an awful lot of health care security. A good thing that our friends across the aisle tried more than 50 times to repeal, worked hard to undermine, and still seek to disparage at every turn. Watch the way the President talks about this. GENIX, GONIX, GARIX Eric Schoenfeld: “You recommended GENIX and GONIX earlier this month. Just wondering: how would you assess how much of one’s savings to split between those two? And — part 2 — how can the preeminent evangelist of low-expense investing recommend such high-expense vehicles?!” ☞ For now, each has a $250,000 minimum. There’s a chance that may be sharply reduced but in the meantime, I should have told you about GARIX, which is pretty close to what you would get if you blended equal portions of GENIX and GONIX.* I know this sounds a little Goth — were these characters in a Hobbit movie I didn’t see? Or from Game of Thrones? But the basic notion of all three is pretty simple. Namely, what if you had some really, really smart people come up with algorithms that ranked stocks two ways: First, how intrinsically “good” is the business? (Across quite a few metrics, Google seems to be a pretty good business; whereas airlines, by their natures, are horrible businesses — enormous fix costs combined with vicious price competition to fill seats that would otherwise go empty.) Second, how “expensive” is the business? And what if you then bought the least expensive “good” businesses and sold short the most expensive “bad” ones? While weird things could happen in any given year, over time — if you did this really, really well — there’s reason to think you’d have a pretty strong wind at your back. Knowing the guy who heads this all up as I do, my guess is that he and his team have done it really, really well — and (to address Part 2) by more than enough to justify the otherwise horrifying 2.25% annual management fee. (Fundamentally-weighted or value-weighted index funds — which are the stock-market tool of choice I suggest in my book for most of that portion of a person’s money she or he wants in stocks — have much lower expense ratios.) Because these funds are short as well as long, they may very well under-perform when the market is shooting up; but should do less badly when it is tanking. So these funds may be safer than index funds. And because the cheap stocks of good companies are likely to do well and the expensive stocks of bad companies selling are likely to do poorly, my hunch . . . which of course it comes with no guarantee! . . . is that these funds will, over time, meaningfully outperform even my preferred index funds. As a result, I have a good chunk of my own IRA in GENIX and GONIX. One last point: Within an IRA, tax efficiency is not an issue. In a taxable account, it very much is — which is another reason I’ve long leaned so heavily in favor of index funds, which expose you to minimal taxes until you eventually sell with, one hopes, a low-taxed long-term capital gain. But I wouldn’t rule out GENIX, GONIX, or GARIX in a taxable account, because the manager’s team is likely to manage well for taxes, too. You’d almost surely have somewhat higher tax exposure each year. But you might also have higher returns. *If you own equal amounts of GENIX and GONIX, you are effectively 60% long the market, because together the funds will be 145% long and 85% short. GARIX, which is close to a blend of the two, is designed to be 120% long the market and 60% short — again, net 60% long.