Headline in yesterday’s New York Times: G.O.P. Is Moving to Slow Action on Tax Loophole. The story begins: ‘Republican leaders in Congress are using procedural tactics like walking out of committee hearings to keep Congress from voting on measures to close the so-called Bermuda loophole in the federal tax code, measures that would almost certainly pass overwhelmingly if given the chance. The loophole allows big companies to pretend legally that they are based offshore (Bermuda has been the country of choice) and then filter profits through a third country (most often Barbados), avoiding American income taxes.’

To the Republicans – always sensitive to the plight of the rich – this is just good old fashioned Yankee ingenuity. ‘The Bush administration,’ the Times reports, ‘while saying in a Treasury Department report last month that the Bermuda deals should not be allowed, has called for further study, which may take several years.’

It is a grand time to be rich and powerful in America.



Picking up the thread from yesterday, Michael Rutkaus contributes the second and, apparently, concluding chapter of The Longest Book Review Ever Written:

Chapter 2 – APPLY AGAIN IN 500 YEARS

Never seen or heard from again in THAT universe, anyway.

John was an emissary from Zeta Reticuli determining whether we were worthy to join the federation.

Unfortunately for us, this one rude passenger tipped the scales, and as John’s bodily information was reassembled at home he began his report: ‘Given several hundred more years Earth may be ready, however now the general level of human achievement has not reached acceptable status for including them in the Federation. Respectfully yours, John.’

[The End]


Well, of course not all of Nevada is west of Los Angeles – but Reno and Carson City are. But thanks to the several of you who pointed this out. (And to Steven Rubin for reminding us that it is FARther west, not FURther west – further is reserved for abstract distances, not measurable ones, I believe.)

Also, there seems to be some doubt about that heads-heavy penny. Stephen Gilbert: ‘I saw a report on CNN or someplace like that of a study done by a European physicist (is this vague enough?) which involved spinning a coin which came up tails more than half the time. It was mentioned that this effect is only seen when the coin is spun, not flipped.’

John Seiffer: ‘I don’t know about the heads being heavier but I know that professors in probability class often give a homework assignment to toss a penny 100 times and record the results on a chart. I am shocked, SHOCKED, to learn that students often fill in the chart without actually doing the flipping. However, it turns out this is easy to detect. In an actual flipping of 100 times a run of 4 or 5 heads or 4 or 5 tails is to be expected once or twice. However, such a pattern often looks fake to a student who is actually faking it, so the professor suspects any chart where no such run is in evidence. The point? People often give meaning to patterns (in places like the stock market) where the explanation is actually randomness.’


Item 22: The Insignificance Of News

The impact of news on a stock is grossly exaggerated. Much of the news is routine and mostly forgotten over time. The only news that has long term significance is news that represents basic, fundamental change. Such news occurs rarely and when it does, the basic change usually cannot be determined except in retrospect Almost all other news, regardless of its short term impact, is usually no more than a blip in the long term picture. In the majority of cases, after the initial reaction, the stock will resume the course it was on before the news was released. History tell us that if news is in conflict with the market’s, or a stock’s primary trend, it will cause a temporary detour at most. If news conforms with a stock’s primary direction, that news will be used to explain the move, but it would likely have happened anyway, sooner or later. Obviously, news on earnings, the economy, interest rates, inflation, etc. matters. It matters a lot. It shapes the long term direction of stocks and the market. But it is the totality of the news, when one news story, let’s say an earnings report, is confirmed or negated by the next news release and then the one after that, that we begin to get a trend with some possible long term significance. Almost no news story, in and by itself, requires immediate action by the long term investor.


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