June 18, 2008

SPECIAL ALMOST-LIVE OPEN THREAD FOR THE NEXT HOUR - WHAT'S ON YOUR MIND?



Thought we'd try an open chat for a bit, see how it goes

Fire away


81 comments:

Roccman said...

Enjoy the die off!~~!!

Anonymous said...

GREG SWANN AND BLOODHOUNDBLOG CAN GO FUCK THEMSELVS

keith said...

Stocks crashing again

DOPES

Anonymous said...

Well it's nice that here in Laguna Beach and other nearby beach towns that people are finally admitted what has been obvious... that real estate is screwed and prices on houses are dropping 10K-30K monthly everywhere. People are finally beginning to accept this. And the roads are more quiet and the restaurants have open tables if not almost dead, retail shops are closing everywhere, the malls (including Fashion Island.... dead dead dead.) Ha Ha. Now you'll have to make yourselves useful you Realtards.

keith said...

Seriously, short term on stocks I'm worried. But when blood is in the streets, and everyone's selling...

I read recently that the serious money is made during bear markets.

Could also apply to housing soon. That foreclosed house you saw today with the graffiti? If you could buy for 80% off and fix it up, you're probably gonna do just fine

Nice to see Richard as murst

keith said...

On SoCal, love the weather, love the beaches, love the vibe in certain places, but overall, turning into the American Nightmare.

I think it was Mark who said if you can see the ocean you're OK. If not, you're in hell

Not for me

Meanwhile, I've got an amazing view of the sea here in England. I'm addicted now

Anonymous said...

You should do a live chat once a week

Anonymous said...

Market will rebound for options expiration. Never fails, except January. Hopefully we go up 400 points and give a nice shorting entry for the next leg down to March lows and lower.

Remember, everyone was pessimistic in mid-2000 and 2001. Didn't mean the market was going up. Recall 2002. Or, better yet, recall 1929-1934!

Anonymous said...

Do you think that is an Illuminati hand signal Mozilo is sporting while being "sworn" in?

keith said...

Short term I feel blood in the streets. Long term I feel great buys - especially overseas

$200 oil changes everything

And inflation is even killing companies like Chiquita now, with their costs soaring while they can't raise their end-product prices to match

Green is feeling great, the oil majors are all-time highs, and countries like russia and brazil and the entire middle east are now printing money

You want to see inflation? Go to an oil producing country right now

I'll let you know how russia looks in 2 weeks.

keith said...

I seriously think Mozilo is about to be frog-marched. I can feel it in my bones.

It's not MoziloGate that'll get him first. No, it's simple mortgage fraud and insider stock trading, and I'm sure the incumbents want to see a frog-marched scapegoat (besides themselves) before November

Day 4 tomorrow. I think it goes to Day 60 max

Anonymous said...

It will probably take $10 per gallon before Americans start to wake up.

But even then, gasoline is not that expensive. It's just that we've gotten used to very cheap fuel.

As Chuck Butler, the Everbank Daily Pfennig guy said today: "...blaming evil-eyed Middle Eastern potentates or bloodless speculators is attributing blame in the wrong direction. If you want to hit the right target, start with the fiat currency system which has systematically reduced the purchasing power of the U.S. dollar and all of its similarly un-backed peers to the level of Monopoly money."

I think that's right on.

Dummy Action said...

SoCal is fine in and of itself, the problem is the people here. I have lived here my whole life and nowadays there are just a superabundance of idiots (who knows maybe it is all of America, but I can't make that claim).

I've got my fingers crossed that this housing mess send a bunch of these morons packing to other places. I am a proud renter living it up in someone elses depreciating debt trap. But in the end I'd like to have my state back, and eventually buy a place when prices are actually reasonable. Maybe next year.

And as for the ocean comment it's true. But you really have to have the big bucks to live there.

DA

Anonymous said...

No frog march for Mozilo.

What he has gotten away with pales in comparison to the other criminal activities in today's world of rotten-to-the-core finance.

Watch for a new expose' web site to be put up by the venerable and wise Jim Puplava (the Financial Sense guy).

Anonymous said...

I read recently that the serious money is made during bear markets.
------------------------------

I agree but I think what is important that in order to "get ahead" you need to be able to make money when the market goes up and make money when it goes down. Most only make money on the way up.

keith said...

You have to have the big bucks to 'BUY' on the ocean. You don't have to have big bucks to rent from the f*cked 'owner'

keith said...

Good tribute to Russert on msnbc live right now

Guy really was a saint, in addition to the best political journalist of all time

Anonymous said...

I agree but I think what is important that in order to "get ahead" you need to be able to make money when the market goes up and make money when it goes down. Most only make money on the way up.

_______

The wisest time-tested tradecraft involves intelligent long-short hedging with closely correlated trading instruments and interest/swap accumulation.

Anonymous said...

I could not believe it when I looked at a house last week the buyers was in the house it was still being built. He said he got 30,000 for being a first time home buyer What we had to save and now there giving 30,000 free I don't get it anymore.

Anonymous said...

We need to schedule these!

Anonymous said...

I'm not wearing pants

Nick said...

I'm a loan officer in Seattle and I get in daily debates with realtards who think we've reached our bottom. They still don't understand the fundamental economics. I tell all my clients that if you insist on buying right now, then you need to offer 20-40% below the listing price. Some listen and others listen to the REALTARDS and gladly jump off the cliff...fucking monkeys.

Anonymous said...

It's not MoziloGate that'll get him first. No, it's simple mortgage fraud and insider stock trading, and I'm sure the incumbents want to see a frog-marched scapegoat (besides themselves) before November

________

Maybe it'll pan out this way.

But if Mozilo is the kind of sleaze-bag I think he is, he's got plenty of dirt on people in high places, in case of that rainy day.

It's raining, and I'll bet some of these guys know he could undo them with a phone call.

Anonymous said...

Higher oil and higher interest rates will doom the stock market and the housing market. This dubble hit will cause alot of hurt unless you are storing cash.

With interest rates going up you'll do better with cash than stocks as dividends will continue to decline.

Anonymous said...

Two words

Wealth Destruction

keith said...

Loan Officer - you seriously see 20% to 40% falls in "it's different here" Seattle?

LibVet said...

Funny thing about housing. I have kept an eye on the local market for over a year. I haven't seen much I cared for. The more stucco boxes you see, the less attractive each one becomes.

On the other hand, I have become increasingly fond my money.

keith said...

Can that one guy (or girl) please put some pants on

The children!

And yes, Greg Swann can go f himself

Anonymous said...

Higher oil and higher interest rates will doom the stock market and the housing market. This dubble hit will cause alot of hurt unless you are storing cash.

With interest rates going up you'll do better with cash than stocks as dividends will continue to decline.


_______

Don't forget higher taxes, what with Obama coming on board.

Replace "cash" with "silver", and you've got it right.

Anonymous said...

September 2008 - I predict that is when the shit finally hits the fan.

Bank of Scotland seems to agree:

June 18, 2008:

"The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.

"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.

A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.

RBS warning: Be prepared for a 'nasty' period Such a slide on world bourses would amount to one of the worst bear markets over the last century.

"I do not think I can be much blunter. If you have to be in credit, focus on quality, short durations, non-cyclical defensive names.

"Cash is the key safe haven. This is about not losing your money, and not losing your job," said Mr Janjuah, who became a City star after his grim warnings last year about the credit crisis proved all too accurate.

RBS expects Wall Street to rally a little further into early July before short-lived momentum from America's fiscal boost begins to fizzle out, and the delayed effects of the oil spike inflict their damage.

"Globalisation was always going to risk putting G7 bankers into a dangerous corner at some point. We have got to that point," he said.

US Federal Reserve and the European Central Bank both face a Hobson's choice as workers start to lose their jobs in earnest and lenders cut off credit.

The authorities cannot respond with easy money because oil and food costs continue to push headline inflation to levels that are unsettling the markets. "The ugly spoiler is that we may need to see much lower global growth in order to get lower inflation," he said.

"The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets," he said.

Kit Jukes, RBS's head of debt markets, said Europe would not be immune. "Economic weakness is spreading and the latest data on consumer demand and confidence are dire. The ECB is hell-bent on raising rates.

"The political fall-out could be substantial as finance ministers from the weaker economies rail at the ECB. Wider spreads between the German Bunds and peripheral markets seem assured," he said.

Ultimately, the bank expects the oil price spike to subside as the more powerful force of debt deflation takes hold next year.

Got Gold?

Anonymous said...

What's up HP! Great idea Keith! Maybe once a week? I am starting to get the feeling about now how big this problem really is at this time. Would you consider life changing? cultural changing? a problem this is with housing and oil? America hates to change anything? We are based on cheap gas and tradition!

Rich in fl

keith said...

I'm against Obama's "soak the rich" formula. Taking back the Bush tax giveaway is fine. But resuming the entitlements tax at $250,000 is nuts. That's a 15% raise in taxes on top of the 4%, and will have the rich doing anything and everything they can to shelter their incomes, while reducing total US tax receipts dramatically

Stupid, stupid, stupid.

Anonymous said...

I miss Casey Serin

Anonymous said...

Got Gold?

_______

Silver is even more betterest.

Soon we will see the mother of all short squeezes on silver, as more than 100 times as much paper silver exists as does physical silver. This means that people can take unlimited short positions against silver that does not exist.

If you don't understand what this means, that's okay. You'll get to see the spectacular effects of it.

keith said...

I haven't deleted a comment yet -

Oh crap, I just jinxed us

No swearing, no threats, and we can do this type of thing

Maybe once a week, Wednesdays at 9pm GMT? I think that's 5pm EST

Anonymous said...

...and will have the rich doing anything and everything they can to shelter their incomes...

_______

They already do.

gutless and lazy senses a big sell off said...

I concurr with Anon at June 18, 2008 10:32 PM.

My intuition tells me something big is about to go down in the markets. I've had a strange nagging feeling for a few weeks now, that we're about to hit a big sell off. Like over 1,000 pts in a couple days. Either that, or Keith is about to take another trip and log off the blog for a few days.

Still, markets feel very, VERY strange.

keith said...

Springsteen is doing the Russert tribute proud right now with Thunder Road

Wow

keith said...

I haven't told anyone yet but I'm shutting the blog down from July 3 through July 8 when I'm in Russia

There's your window for everything to fall apart

I might even load up a short for a few days myself

Anonymous said...

Still, markets feel very, VERY strange.

_________

They should.

There are naked shorts and oversized invervention positions and all kinds of other garbage.

hac's biggest fan said...

"shutting the blog down from July 3 through July 8"

NO!!! i dont want independence from UK based-HP!!

hac's biggest fan said...

i got some free time next week and live in dc.
got any ideas for something i can write on a picket sign?
i was thinking "vote every incumbent out" for the back

keith said...

"Investigate Dodd and Mozilo" would make a good sign

Anonymous said...

Two traders from Bear Stearn's hedge funds from last year, which were the first sign of trouble may be indicted for fraud. Morgan Stanley has suspended a trader in UK for a 120 million mistake, and is warning of trouble..Royal Bank of Scotland is warning of coming bad times. Telegraph has article warning of crash coming.LEAPEurope/2020 is issuing alert of trouble for July -December. John Paulson who runs a successful hedge fund says only 1/3 of necessary write-downs have been written down.It feels like the truth is settling in and those in the know know they have a responsibility to speak up now.

Next Monday expected to be
volatile due to meeting this weekend re oil.

There was a lot of denial going on, and now this is all coming out at once, not that it wasn't in the works, but that tells me something big is about to be dumped at our collective doorstep. Sort of like the cheating husband who tells you lots of little bad details and it seems like they are spilling the story, but they haven't even hinted at what's really going on: the girl friend is expecting triplets, he's packed this afternoon and moved his stuff, and oh, the bank account is empty because they will need the money. You and the kids will be able to apply for food stamps and your parents can help you. ONLY BIGGER.

Uh.Oh. grandma pkk

hac's biggest fan said...

yea that works, but hopefully by then that wont need to be said

dwr said...

"I'm against Obama's "soak the rich" formula."

Remind us again what you actually do agree with Obama on.

Anonymous said...

I'm listening to Anita Baker right now on my iTunes. If you tell anyone, I'll kill you.

keith said...

Social and foreign policy trump his stupid housing and tax ideas

America needed Ron Paul. Failing that, the choice between McCain and Obama is obvious

Hopefully the GOP can block Obama's social security stupidity, and simply raise the retirement age to 70+

Get used to President Obama though. This one will be a landslide.

Mammoth said...

Kinda off the housing topic, but...

Back a few months ago when the Govt. awarded the aerial tanker contract to Northrop-Grumman & EADS, I posted here that this decision would be reversed.

Well, whaddya know - in today's news the Govt. decided to 'reconsider' the award going to NG/EADS.

Boeing WILL get the tanker contract!

Now...back to housing!

-Mammoth

Anonymous said...

Yeah, President Obama.

A return to Herbert Hoover economic policies.

Obama will not make anything better. He'll simply layer his own ruinous policies on top of Bush's ruinous policies.

Great Depression II will hit us on Obama's watch.

Anonymous said...

My main concern about Obama is his idea of getting rid of the capital gains tax cut. Do you have any idea of how much money everyone will lose in their retirement accounts? Not only that, people forget that every time there's a sale, the mutual fund has to pay capital gains. That will affect every person who holds mutual funds in their IRA, 401(k), SEP, etc, regardless investors sell shares or not.

keith said...

Anyone else get the feeling McCain is trying to throw the election

Nice job losing Florida today, and making sure he loses California by 20% or more

Monkeys I tell ya.

Not too late for the GOP. McCain can still have a health scare, like Rudy against Clinton in '00

Romney would put up a good show. Even Gingrich could mount a credible campaign

Anonymous said...

Gimme Ron Paul's brain, Romney's looks, Reagan's optimism, and Hillary's balls.

Now THERE'S a President.

keith said...

Last anon - funds held in retirement accounts are tax deferred and thus not impacted by cap gains. When you withdraw you're taxed at your income tax bracket, not cap gains.

And you've just shown how ignorant Americans are of important financial issues like this one

I don't really blame people though - it's too damn complex. So toss the ENTIRE income tax, go with consumption tax, have no deductions, and fix this mess

Or not

Owner Earnings said...

Keith, I'd enjoy a list of bad real estate quotes from the last few years. How about a post?

keith said...

Just go to Bloodhoundblog and RealtyTimes for a bunch of stupid quotes

Seriously, here's the best source:

http://realestaterecord.blogspot.com/

keith said...

OK folks you had your chance, 11:30 out here and done for the night

Maybe we'll schedule something next week, live chat is great, wish we could do it all the time

Nick said...

Yep 20-40% here in "it's different land", becuase I have a brain that I can use to apply the fundamentals. Median home price vs. Median Income. Affordability is out of wack. Sure we have some uber wealthy folks but there's not enough of them to buy up all of the over inflated houses. How many houses can millionaires live in at the same time? There was a 15k decline in the last week of May and all the Ramen eaters can't figure it out. They think it was a random event that will never happen again. Clueless schmucks.

Anonymous said...

Give it a rest with the Russert was a Saint bullcrap already! Sheesh! talk about buying into the media hype. What are you a bunch of sheep?

I've already had to endure bull from people like Tom Brokaw comparing Russert to a holy papal like figure! What should we do, call him Saint Russert from now on?

He might have been better than the average journo but that is not saying much in the day of people like Stephanopolous and Bill O'Reilly.

Here's an article that thoroughly debunks the idea that Russert was a saint-like, objective journalist dedicated to the truth above all else:

The Real Dope on Russert

I don't want to disparage the guy's memory or anything but let's be realistic and stop buying into this media freaking hype for once! There are more important issues at hand than Tim Russert, may he rest in peace.

Anonymous said...

ICEMAN SAYS,

When the torch goes out in China, then the truth will be exposed!!!

Boner Johnsonville said...

I want to "do" Connie DeGroot.

Anonymous said...

To my 5-4 court friends is Bin Laden innocent until guilty by a jury is he a candidate for due process if captured and can he petition the U.S. Courts to challenge his imprisonment if that comes to pass? If yes to the above why are we trying our best to kill him if he may very well be innocent. Your hero Obama wants him dead not just the evil Bush so what do we do my good 5-4 friends of the Constitution which says everybody should have their day in court to petition their government. What a wonderful way to fight a war I mean an invasion of a country.

xxxooo said...

nice to see suzanne screwing dodd in the phone booth! wow!

Anonymous said...

Guns are going to be the next bubble. Now that we know BHO is going to be the next prez to the moon. I will be buying an assault rifle a month from here on out. I would buy more but the state only let me buy one a month. Two areas of free advice buy ammo and high cap mags they will go up the most.

Burn Baby Burn

Anonymous said...

Wealth Terrorist......

vanilla ice said...

stock markets crash when you least expect it. There's too many people looking for a crash right now

Anonymous said...

I'm back in GLD, Keith, I suggest you do the same, ASAP.

The Wizard

Roccman said...

Hey McBrain wants 45 nucs built in amerika...

Bwhahahahahhahahahahahahahahahahahahhahahahahaha!!!!!!

Anonymous said...

I just graduated and am (probably) going into aerospace manufacturing. Will the government still build aircraft for their military if markets get ugly?

-ME grad

Anonymous said...

Keith,

Did you notice how short Mozilo's fingers are?

Just like an Umpalupa!

RayNLA

Anonymous said...

Dummy Action said...
SoCal is fine in and of itself, the problem is the people here. I have lived here my whole life and nowadays there are just a superabundance of idiots (who knows maybe it is all of America, but I can't make that claim).

I've got my fingers crossed that this housing mess send a bunch of these morons packing to other places. I am a proud renter living it up in someone elses depreciating debt trap. But in the end I'd like to have my state back, and eventually buy a place when prices are actually reasonable. Maybe next year.

And as for the ocean comment it's true. But you really have to have the big bucks to live there.

DA

______________________________________________________________________

Not really!!


How about a 2b 2/12 bath townhome for $1700.00 new everything 1 mile from the Ocean in the OC next to Newport!

I love it.

RayNLA

Anonymous said...

The cookie is crumbling before our eyes. AMBAC and MBIC ratings issues are huge. The main stream press ignore it. A bond puddle is going to form within weeks. The housing market is not just moribund, its decaying now. Families are moving in with families. Multi-generational and multi family housing is becoming common. As that happens the available housing stock climbs and prices fall. Check the pump before you fill up next time. How much did the last person buy? Amazing the numbers you see - $10 to $40. Not much gas at all but its what people used to buy and still can only afford. Have you seen the cars running out of gas around you? I have. Look and you'll start to see them and say -- wow, a lot of people seem to be running on empty!

Anonymous said...

Ok Keith,

We won't be friends anymore after you read this, but I hate to tell you bro that not only will Mozillo NOT go to jail... he will testify against others so that they will.

He won't go to jail because the coercion, bridery, winks, nods, handshakes and pats on the ass go so far up the ranks that Bush himself might be implicated.

Jenna Bush and her new hubby bought a 450K house in Baltimore recently. I wonder If they got the "Daughter Of A Friend of Mozillo" deal?

Never mind that, how about the fact that her husband is working for Constellation Energy. You know the company that just happen to have an application with the Nuclear Regulatory Commission to build the first nuclear power plant in America since Three Mile Island. How about fact that the company that wants to build the thing, Bechtel has ties to the Bin Laden family. I know, I know I'm ranting on again but I love to follow the money!



RayNLA

Lost Cause said...

For Sale: Obama Shelters

Room for an eight years supply of canned food and ammunition.

Rugged enough to resist the pathetic scratchings of liberal elites.

Strong enough to protect you gold reserves.

Order online!

Anonymous said...

I am seeing signs of our economy cracking. The neighborhood I live in right now last year had about 375 houses for sale in June. Right now the number is 212. My block has 4 for sale, they all are asking around the same price. It seems to take a year or more to sell one. I don't see people flocking to look at houses anymore. How about the suburban middle class crisis?
My friend paid 1,400 per month to heat his suburban large home last year with Oil. That was before the big run up. Heat will cost about double that this winter. He and his wife are already hard pressed to keep up with the bills. He works 60 hours a week, his wife is doing at least 40. He had a heart attack some time ago and is in bad condition, mid 50s.
What I think is going to happen is that the suburban people who used to drive 50 miles to work with their SUV and live with oil heat will be the first to go. A collapse of house prices will follow with suburban houses leading the pack in falling value. In fact I've noticed that when a house is listed with oil heat it tends not to sell and will end up on the MLS with constantly lowering prices.
Some will be forced to return to the city in more humble quarters, but now expensive ones because speculators bought them all up some time ago. Because they will be close to rail lines that can bring them to work each day.
The gas situation is definitely affecting drivers. The weekends have much less on the road. People are cracking. One lady could not afford to use her car for work but is afraid to lose her parking space where she pays sixty dollars per month. She now takes the train but is still paying for that unused space.
We are seeing the end of the teen driver. They can't afford the gas. Their teen jobs don't pay enough. People are seriously talking at work about buying a Vesper or light motorcycle . (these idiots are going to get themselves killed or seriously hurt) Are they going nuts?
Stocks are going to tank. Inflation is rampant at the stores. Even I was shocked and I am a veteran of skimping. I saw six dollar jars of tomato sauce for pasta the other day, crazy prices on a lot of staples. rice, bread, butter, milk. How can the middle class pay for this stuff and gas as well?
One poster was right. Multi-family living is going on as generations are now living in small quarters together. Six adults in a 2 Bedroom house. Sometimes Son, daughter and one or two kids move back with mom and dad. Really bad.
Now they say we have until September and then the recession will hit. Hell, it has hit already where I am.

LauraVella said...

Anon said:"With interest rates going up you'll do better with cash than stocks as dividends will continue to decline."
-----------

I agree with you. When interest rates go up, its deadly for the stock market, also, company profits are shrinking, making it a double whammy for the market.

The malaise this October will be pretty ugly for the markets. Ben will have to start raising interest rates by the end of the year, or early Spring; at the latest.

Anonymous said...

"The wisest time-tested tradecraft involves intelligent long-short hedging with closely correlated trading instruments and interest/swap accumulation."



These kinds of transactions are what got us in trouble in the first place = hedge betting.

LauraVella said...

" A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets. "



Yes. Think about it. All the large Corporations listed on the stock market are seeing their profits shrink after going through the biggest economic boom of our liftimes, if not this century.

People, keep you money safe, and and out of the way of the market makers.

Anonymous said...

keith said...
Stocks crashing again

DOPES

June 18, 2008 9:47 PM


===========

didn't you post just a week ago that you were buying everything in sight?

Anonymous said...

Last anon - funds held in retirement accounts are tax deferred and thus not impacted by cap gains. When you withdraw you're taxed at your income tax bracket, not cap gains.

And you've just shown how ignorant Americans are of important financial issues like this one


What are you talking about, Keith? Oh my, you don't know the basics about capital gains and how Obama will screw investors by eliminating the lower 15% tax rate. You've just shown how you're the ignorant one. Here, I hope this clarify things:

Mutual funds generate earnings from two sources: dividends and capital gains. A mutual fund is a pass-through investment, which means that the dividends and interest it receives from stocks and bonds are "passed through" to the fund's shareholders.

Similarly, when a mutual fund sells some of its portfolio holdings, it passes along a pro rata share of the capital gains and losses realized on their sale. That means if you own 1 percent of a fund's shares, you receive 1 percent of the capital gains and losses that the fund distributes.

Capital gains are created in one of two ways: If the fund doesn't have enough cash on hand, it sells securities to redeem the shares of departing shareholders. On the other hand, the fund may decide to sell securities simply to lock in profits and boost its investment performance. In either case, you receive a proportional share of those capital gains and losses.

Before you buy into a fund, you may want to ask the fund when it plans to make its next distribution. If the fund is poised to distribute large gains, you may want to purchase shares after it makes the distribution. That way, you won't be unfairly saddled with capital gains (and capital gains taxes) as a brand-new shareholder.

Capital gains earned on the sale of mutual fund shares are taxed at a capital gains tax rate that is lower than the ordinary income tax rate if you've owned the shares for more than one year. If you own the shares for one year or less, the amount of capital gains is taxed as ordinary income.


That's why you should avoid mutual funds with high turnover rates.

Anonymous said...

Last anon - funds held in retirement accounts are tax deferred and thus not impacted by cap gains. When you withdraw you're taxed at your income tax bracket, not cap gains.

The tax bill for your mutual fund can be an unpleasant surprise. Unlike owning individual securities, where you pay a capital gains tax when you sell shares, with a mutual fund you may owe Uncle Sam even if you don't sell any shares.

When a mutual fund portfolio manager sells shares within the fund, it can trigger a capital gains distribution -- that means a tax bill for you. For the most part, it's a good idea to steer clear of funds that rack up big tax bills while you hold the shares.

The Securities and Exchange Commission says more than 2.5 percent of the average stock fund's total return is lost each year to taxes, significantly more than the amount lost to fees. The tax bite varies from zero percent for the most tax-efficient funds to 5.6 percent for the least efficient.

The turnover ratio is the best indicator of how much buying and selling goes on within a fund.

William Harding, an analyst with Morningstar, says the average turnover ratio for managed domestic stock funds is 130 percent.


The impact of capital gain taxes affect the return of you mutual fund. It doesn't matter if it's deferred. If Obama eliminates the lower 15% rate to go back to a regular personal tax rate, that means crappy returns for your portfolio, no matter when you withdraw. So the fact that a fund is deferred or not is irrelevant because your fund is paying capital gains every year and deducting from the entire fund. If you go from 15% to say, 28%, that's a huge hit on your portfolio every year, especially if your fund suddenly has a high turnover.

It seems that you're one of those Obama cultists who are not paying attention to the important issues, such as the elimination of the 15% tax cap on capital gains. This is huge and will impact every person who has a retirement account. Obama said many times that he'll change the 15% cap to a regular personal tax bracket. That means that you Keith will lose a ton of money from your retirement accounts. Perhaps you're rich, so you don't mind going from a 15% cap to 28% or 33%, paying higher capital gains every time any shareholder departs and your mutual fund has to sell shares. But I care about my retirement account. If you're not that rich or just ignorant about Obama's policies and financial matters, you should research it further, Keith. Here, start with Bankrate's site; don't take my word for it:

http://tinyurl.com/4oe9oy