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Happy Hour: iPad Nano And Facebook Drama

November 16, 2012

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Jon

Welcome to the end of the week and another edition of Happy Hour! Just sit back, relax, and enjoy your end of the week roundup of all things interesting in the land of money.

iPad Nano

A look into the new iPad mini TV Ads show where Apple is heading. Is Apple becoming too obvious. What’s next for the iPad, iPad Mini, then iPad Nano?

In the past Apple used the software approach to its device upgrades. Just add one or two big changes each year with minor tweaks (bug fixes), call it 2.0 or 3.0 and charge its customers full price for the new product. Technology advances over the past decade made it easy as computer chips got smaller, hard drive memory grew and both got cheaper. It was an easy sell. The iPod evolution explains this concept well. It also provided a hint of where Apple was heading. First came iPod, then the iPod Mini, and finally the iPod Nano.

It may have worked for the iPod, but can you really call a smaller version of the iPad, innovative? It hasn’t introduced any mind-blowing products or upgrades in a year. Which was a regular occurrence in the past. So, has the well run dry? Or is the Apple TV its saving grace? Continue Reading…
What Is A Trailing Stop Order?

November 15, 2012

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Jon
One of the hard parts of investing is knowing when to sell once you have a profit. Another is selling too early and missing out on more profit. And, of course, through all that, you still want to protect your profit so it doesn’t become a loss. Which all sounds complicated, but a trailing stop order covers all of this and more.

Define Trailing Stop Order

A trailing stop order is just a stop order with a built-in trigger or trailing price. Unlike a stop order that has a specific, fixed activation price, a trailing stop order has a moving activation price based on a stop parameter. Once triggered, the trailing stop order becomes a market order and the stock is sold at the next best available price. That stop parameter can be set one of two ways:
- By Price –as a dollar amount.
- By Percentage – as a percentage of the current price.
Please don’t confuse price with percent when placing an order. There is a big difference between 10% and $10. And can lead to lower profits or even a loss. Continue Reading…
What Is The Wash Sale Rule?

November 13, 2012

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Jon

The tax code is constantly changing. Sometimes you can get a leg up on next year’s tax changes by taking advantage of any current favorable tax code.

In this case, it involves selling losing investments for a tax deduction. The goal, of course, is to lower your tax bill at the end of the year. Right or wrong, this strategy can fail if you don’t know the wash sale rule.

The Wash Sale Rule

The concept is fairly simple. You own a stock (bond or fund) that drops in value. The tax code may allow you to deduct that loss, but only if you sell the stock. Which is the problem, because you really want to keep it. So you come up with this diabolical scheme to sell the stock for the tax deduction and then buy it back. Continue Reading…
Happy Hour: 100% Tax On The 1% And Best Investment Ever

November 9, 2012

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Jon

Welcome to the end of the week and another edition of Happy Hour! Just sit back, relax, and enjoy your end of the week roundup of all things interesting in the land of money.

100% Tax On The 1%

The single biggest reason we are in this Fiscal Cliff mess is the tug of war between the President and the House. The House wants to keep tax rates low for everyone. The President wants to keep taxes low for everyone except those in the top tax bracket.

Why the difference of opinion? The excuse is that if the top tax bracket folks “pay their fair share” all will be right with the world, the government can finally balance the budget and pay off trillions in debt.

There’s just one little problem, the math doesn’t add up. Even if we take it to an extreme with a 100% income tax on millionaires, there would be a shortfall. This class warfare smokescreen is a waste of time and just draws everyone’s attention away from real problems.

Best Investment Ever

Peyton Manning is now the proud owner of 21 Papa John’s restaurants in Colorado. Should it really be a surprise that just two weeks later Colorado voters legalized marijuana? A coincidence. Or did Bronco fans find a way to thank their star QB through this nicely timed derivative play. I can already see new advertising in the works: Nothing cures the munchies like Papa John’s does! Continue Reading…
To The Fiscal Cliff…And Beyond

November 8, 2012

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Jon

The markets came back to reality this week. Many blamed it on the election results. Despite your political leanings, there’s been this fiscal cliff to deal with all year. And apparently Europe still has problems too. The concern going forward lies with the possible effects of expiring tax cuts. You can read all about the potential tax rate changes here.

This fiscal cliff, as it stands, leaves a big question mark on our economic future. Actually, it’s pretty specific about what happens. What throws a wrench into things is Congress and the President are finally addressing it now. And the market, in its infinite wisdom, can’t survive long on predictions and hearsay. The market needs facts. And this fiscal cliff is a big steaming pile of uncertainty as it stands today.

The Fiscal Cliff

The biggest concern is taxes and how much you’ll owe next year. So I’ll clear it up now. You will still pay taxes. How much is the question. So what exactly does the market and investors need to know?

The fiscal cliff currently stands to raise taxes across the board and enact forced budget and spending cuts by the government to reign in debt. Overall it looks something like this: Continue Reading…
Bond Market Forecast: The Interest Rate Paradox

November 6, 2012

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Jon

For the past four years investors have been on a quest for higher yield as the Fed has pushed rates lower to spur economic growth. It’s been a double-edged sword. With savers being gouged by lower rates, investors have thrown risk out the window in search of higher yield. Since 2007, over $1 trillion has poured into bond funds.

That’s a healthy sum of money. And investors have been rewarded, thanks to Fed policy. But how long will it last? Is now the best time to continue that trend? At some point interest rates will rise. Maybe next month. Or next year. The 30 year bull market in bonds will eventually end. And savers will rejoice in higher interest rates. That’s if their bond over allocation doesn’t hurt them in the process.

Until then, should investors really keep putting good money into an overpriced asset? When bond prices and yields move in opposite directions, common sense would tell us no.

The Bond Market Flood

Nothing has fueled bonds more than fear in the stock market. Since the financial crisis, more money has poured into bond funds than equity funds. Call it the great equity exodus. Continue Reading…