Tuesday, August 30, 2011

Should Philanthropy Be Purposeful or Public?

Dealbook's Andrew Ross Sorkin takes Steve Jobs to task for his lack of public philanthropy. There is no "hospital wing or an academic building with his name on it." See The Mystery of Steve Jobs Public Giving and the comments thereon.

One comment, from AB, cites a 1985 interview: Jobs indicated that the practice of philanthropy was more demanding than most billionaires would tolerate. There's more to it than giving a sum sufficient to get your name on a building.
Interviewer: You could spend all of your time disbursing your money.
Jobs: Oh, you have to. I'm convinced that to give away a dollar effectively is harder than to make a dollar. 
Want a Steve Jobs building? Here's the amazing spaceship come to earth that will become Apple's new campus. I'm guessing that Cupertino will consider it a contribution to the civic good.

Friday, August 26, 2011

Something to cheer you up

Responding to JLM's post below, here's the best summary post I've found so far about Steve Jobs, a collection of video highlights:


I haven't looked at all of them, but don't miss the fourth one, his 1983 conference presentation that ends with the "1984" ad for Macintosh.  As great as that ad was, it was even more powerful, and emotional, in the context of his presentation.  I'd love to see the rest of that program.

There's conjecture that the Jobs resignation was less about his health and more about locking in the services of Tim Cook as the successor CEO. I'd like to believe that.

Thursday, August 25, 2011

Ten Reasons You May Need to “Cheer Up”

Negative real, after-tax yields on Treasury bills and notes. Investors must pay the government to hold their money.
Stock market full of sound and fury, signifying nothing.
Likelihood of double-dip recession said to grow.

Congress plans return to work. Prospect causes citizenry to cringe in fear and loathing.
Republican refusal to raise income tax rates triggers renewed interest  in consumption tax.
Gap between very rich and the rest of us expands, making future of estate tax hard to predict.
Unemployment remains stuck around 9 percent.
Banks foreign and domestic waver. Even Warren Buffett cannot save them all.
Seemingly endless supply of foreclosed homes kills demand for new ones.
Steve Jobs, the man who changed the world, resigns as Apple CEO.

A tip of the freshly-brushed fedora to Rob Bamberger, who played this recording on Hot Jazz Saturday Night.

Monday, August 22, 2011

Investment Yields: Back to the Fifties?

Ancient investment folk wisdom: because stocks are risky, they must reward investors with dividend yields higher than the interest paid by bonds.

For generations that rule of thumb endured, weakening only when stock-market madness exploded in 1929. Crash and Depression restored the traditional order. Not until the late 1950s, as the notion of growth stocks took hold, did stock yields dip below bond yields. And there they stayed. By 1961, when Chemical Bank ran the ad shown here, well-chosen stocks seemed so reliable that Chemical could promise "investment growth with peace of mind."

Fifty years later, that selling proposition might get you committed.

How wary have investors become? Well, according to today's charts from multpl.com, stocks once again yield more than bonds.

Friday, August 19, 2011

Stock Market Volatility = Gift Tax Saving

Stock market gyrations may be causing you gastric distress, but volatility does have an estate planning upside. The Wall Street Journal points out that higher than normal volatility may justify a steeper than normal discount when gifting shares in a privately-held business.

(Clients will be able to transfer publicly traded shares pretty cheap, too, if the market keeps plunging.)

Monday, August 15, 2011

Stop the Mutual Fund Merry-Go-Round?

Photo: Wikimedia Commons
Once upon a time, a Merrill Lynch broker made a pitch for the company 401(k) plan. Could we see the prospectuses for the proprietary funds he proposed to use? Of course, he said.

Did we ever see a prospectus? Of course not.

In theory, regulations required that an investor receive a prospectus before purchasing fund shares. In practice, brokers selling high-expense, low-performing funds could not comply. They were schooled to use Plan B: Make the sale first, deliver the prospectus later.

That memory cropped up as I read David Swensen's tirade against The Mutual Fund Merry-Go-Round.  Yes, "investors should take control of their financial destinies, educate themselves, avoid sales pitches and invest in a well-diversified portfolio of low-cost index funds." But asking fund salespeople to hand out more informative prospectuses, offer index-fund alternatives and generally act like fiduciaries? I fear that's still not practical.

Warren Buffett Wants Multimillionaires to Pay More Tax

From Buffett's op-ed in today's NY Times:
I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.

But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.

My friends and I have been coddled long enough by a billionaire-friendly Congress.
 Back in the day, the federal government sometimes imposed a surtax when the going got rough. Wouldn't a 10% surtax on millionaires and a 20% surtax on decamillionaires be the simplest way to tax the richest?

Friday, August 12, 2011

“We Want to Hold Your Hand . . .”

Investment firms have learned they must communicate with clients in a time of crisis. (Even a small T. Rowe Price investor like this blogger recently received two e-mailed advisories.) Most clients don't expect advisers to offer solutions; they simply want reassurance that their adviser is paying attention.

Check out Deal Journal, which has used Wordle to convert various firms' 'don't panic" letters into something like art.

Thursday, August 11, 2011

“Family Offices” For the Rest of Us

George Soros intends to turn his hedge fund into a family office managing billions and billions. Lesser wealth, in the hundreds of millions, also may justify setting up a free-standing family financial services firm. For the rest of us, Bloomberg reports, multifamily offices now seek clients with as little as $5 million.

Wednesday, August 10, 2011

Good Grief, They're Slashing EVERTHING!

Here's how my new issue of The New Yorker arrived in the mail today. Wall Street's tremors must be shaking the whole city.

Four Hundred Years of Bubbles

From SmartMoney, a crash course on financial crashes. There were more bubbles where these came from, notably the stock market bubble, fueled by buying on margin, that burst in 1929.

Monday, August 08, 2011

The Great (Delete Recession) Contraction

Anyone turning to The Times business section this morning – "On Wall Street, traders and strategists trekked to their offices on Sunday in scenes reminiscent of the fateful weekend before Lehman Brothers collapsed in 2008" – knew this wasn't going to be a good day.
 Double-dip recession ahead? No. Don't call it a recession. What we have, as Ezra Klein in The Washington Post illustrates with a chart, is something special. Economist Kenneth Rogoff, co-author of "This Time is Different,"  calls it the second Great Contraction.

A lot of deleveraging remains to be done before we put the second Great Contraction behind us. As for the stock market, the next saros cycle isn't expected to start for another seven years or so. (Well, maybe a bit sooner, if you believe Warren Buffet's guesstimate). Meanwhile, the hordes of Boomers hoping to retire towards the end of the decade may have several years to load up their portfolios with bargain stocks.

The challenge for investment pros? How to convince their Boomer clients that Wall Street's bad news is their good luck.

I watched President Obama on MSNBC today . . .

. . . and it appeared to me that the Dow broke through the 11,000 barrier while he was talking.

I did not get a sense that any new ideas are on the horizon.

Form 8939 was released on Friday

Here is the announcement.

This is the Form for opting out of the 2010 estate tax, choosing the carryover basis instead, and telling IRS what the asset values are in the estate.  Only the very largest estates need be concerned--I'm looking at you, executor for George Steinbrenner.

The due date is November 15, 2011, and extension opportunities will be limited.  That's because, even though it's a short filing window, it's an overly long window since the date of death for all affected estates.

The budget deal

Robert Samuelson offers a spin-free review.

Wednesday, August 03, 2011

A Reverse Mortgage By Any Other Name . . .

View from Malaga villa

Danske Bank sales pitch to Scot living in Malaga, Spain: Borrow against your house with our equity release plan. You'll get income for life, and your daughters will pay less Spanish inheritance tax when you die.

Reality: Bad idea.

How bad is this recession?

Derek Thompson at The Atlantic highlights four shocking graphs. We are far, far from real recovery.

Monday, August 01, 2011

How to Sell Performance

As the stock market surged in the 1980s, even the staid house of Morgan joined the ranks of banks and trusts that launched ad campaigns. This Morgan ad from 1986 offers a classic definition of "performance." (Note that a quarter century ago, a mere $2 million made one wealthy enough to gain Morgan's attention.)

Does the dashing gent in the photo look familiar? James Goodfellow now serves as chairman of Fiduciary Trust International.

Related post: A Classic Ad from 1985