More Millionaires

[nixuzer]

Re: More Millionaires

"Yet with federal income tax receipts at 1959 levels, two-thirds of every dollar that you pay in federal income taxes goes just to the Military Industrial Complex and interest on the Reagan/Bush federal debt. Proof positive that starving the overall government does nothing to limit the real problems."

Actually I've worked at government installations before and yes, the waste is phenominal. And with all due respect I'd say that government is far from starving. Most of the starving that is put up on the political bullhorn, like cuts in important programs which help real people such as disabled or people that are unable to go out and earn an income, is caused by the Feds inability to experience some real pain and get their finances in order. It is the same pain that I experienced when getting out of debt.

[VJW]

Re: More Millionaires

Actually it wasn't a 'selective pick' it is what I use. Can only speak to what I use right?

No, not if you are promulgating a scheme that is supposedly applicable to the general populous.

Okay, what was the real return from 1923-1928, 1950-1965 and 1987-Present?

It doesn't really matter, does it ? The entire point seems to have escaped you. If the stock market has returned less than 1% for more than 60% of the past century, and returned large negative losses in this century then just HOW is an "average person" supposed to become a "millionaire" by living below their income and investing the remainder ?

I'm investing for the long haul. Lets look at something a little more realistic for people who don't jump in and out of the market.

Again, that's the point. It's now been shown that it cannot happen with a "buy and hold" strategy. The only possible way would be to "jump in and out of the market" at the right times, which most experts cannot do, let alone "average people".

The 20-year bull markets in shares

Again, there's part of the problem. The experts have found NINE '20 year' periods over the last century where the stock market has lost money.

if you're in for the long haul then stay involved no matter what the market performance is until it makes sense for you.

If you're in for the long haul with a "Buy & Hold" strategy, you're likely to be disappointed.

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[VJW]

Re: More Millionaires

You accused me of the above when talking about people living below their income to which I responded I'd be open to hearing your recommendations.

My recommendations are that living below one's income is both admirable and a good idea. Particularly in regards to not piling up credit card debt and being able to ride out temporary job losses and other disasters.

However, living below one's income with the hopes of investing the rest and becoming a millionaire or even amassing a large sum of money is folly for the vast majority of people.

My 'baseless theory' was based on meetings with individuals/families who showed an interest in changing their financial lives

The "baseless theory" I was referring to was your reference to the "Millionaire Next Door" concept.

please help us to understand your formula for finances. Don't just pop-off with I'd say, don't fall for pie-in-the-sky propaganda. give people here something more since you're providing statistics to say that the market is a low to negative investment.

There is no magic "formula", which is why I wrote "Don't fall for pie-in-the-sky propaganda". Look how "Buy & Hold" used to be the stalwart of conventional wisdom, until it didn't work anymore.

give people here something more since you're providing statistics to say that the market is a low to negative investment.

Well, if you're really interested in my thoughts:

A) If one is going to be in the market, yes the 'S&P 500 INDEX' funds are far and away the best vehicle for the bulk of one's investment for all the stated reasons.

B) However, you should not always be in the market. I sold the bulk of my stock market holdings, which were in the S&P 500 INDEX fund, at 1431.87, the day before the election on November 7, 2000.

Why ?

Initially, it was just because it was so close, and that Barron's, Forbes, and others have documented that the stock markets do much better with a Democrat in the White House than with a Republican in the White House. I had originally intended it to be short-term, but it turned out I side-stepped some rather large losses over the past five years.

I have still done special situations, like IPOs (Google and others), short sales (Kodak and others), and M&As (Novell and others), and start-ups (Convera and others).

C) There is a technique to safely do some very risky investing, if that's what one is interested in. You can take say 30% of your investment assets and buy a Target Maturities Fund for the year you turn 70. Since these are purchased at a discount, you can invest the difference in a MICRO INDEX fund, or other high risk area, and even if you lost it all, you would still end up with the same base amount when you turn 70.

D) I also like Peter Lynch's advice about buying what you know. Purchased a really inovative or just downright terrific product lately ? Buy the company's stock.

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[VJW]

Re: More Millionaires

Actually I've worked at government installations before and yes, the waste is phenominal. And with all due respect I'd say that government is far from starving.

Then why are so many police and fire stations all over the country now so understaffed, with some just closing down completely ? Why is the administration cutting heating assistance to the poor and elderly ? Why are so many states having to raise taxes to make up for the federal program cuts ?

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[nixuzer]

Re: More Millionaires

It doesn't really matter, does it ? The entire point seems to have escaped you. If the stock market has returned less than 1% for more than 60% of the past century, and returned large negative losses in this century then just HOW is an "average person" supposed to become a "millionaire" by living below their income and investing the remainder ?

Actually it would matter because if someone was in it for a longer timeframe (which should be longer than 20 years) if the years on either side of the timeframe you gave were large earning years (20% +) then they would have some gains on lets say the 10 years before/after the timeframes you gave.

Again, that's the point. It's now been shown that it cannot happen with a "buy and hold" strategy. The only possible way would be to "jump in and out of the market" at the right times, which most experts cannot do, let alone "average people".

Agreed about average people jumping in and out of the market. Most 'average people' I've seen jump in when the market is about to change in a bad way and out when they're losing money.

[nixuzer]

Re: More Millionaires

My recommendations are that living below one's income is both admirable and a good idea. Particularly in regards to not piling up credit card debt and being able to ride out temporary job losses and other disasters.

However, living below one's income with the hopes of investing the rest and becoming a millionaire or even amassing a large sum of money is folly for the vast majority of people.

This could be partly due to the timing of the market (which they probably wouldn't know until after they've gained or loss). For example someone who retired and moved most/all of their investments to something with a low return but 'secure' in 1998 - 2000 timeframe would say the market was the only way to play it and would have acquired significant gains in the tail end of their investing cycle.

The "baseless theory" I was referring to was your reference to the "Millionaire Next Door" concept.

Okay fair enough, my misunderstanding of the information in front of me.

There is no magic "formula", which is why I wrote "Don't fall for pie-in-the-sky propaganda". Look how "Buy & Hold" used to be the stalwart of conventional wisdom, until it didn't work anymore.

Well, if you're really interested in my thoughts:

A) If one is going to be in the market, yes the 'S&P 500 INDEX' funds are far and away the best vehicle for the bulk of one's investment for all the stated reasons.

B) However, you should not always be in the market. I sold the bulk of my stock market holdings, which were in the S&P 500 INDEX fund, at 1431.87, the day before the election on November 7, 2000.

Why ?

Initially, it was just because it was so close, and that Barron's, Forbes, and others have documented that the stock markets do much better with a Democrat in the White House than with a Republican in the White House. I had originally intended it to be short-term, but it turned out I side-stepped some rather large losses over the past five years.

I have still done special situations, like IPOs (Google and others), short sales (Kodak and others), and M&As (Novell and others), and start-ups (Convera and others).

C) There is a technique to safely do some very risky investing, if that's what one is interested in. You can take say 30% of your investment assets and buy a Target Maturities Fund for the year you turn 70. Since these are purchased at a discount, you can invest the difference in a MICRO INDEX fund, or other high risk area, and even if you lost it all, you would still end up with the same base amount when you turn 70.

D) I also like Peter Lynch's advice about buying what you know. Purchased a really inovative or just downright terrific product lately ? Buy the company's stock.

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Good, thanks for the information. That was a problem I had with our interaction, you were critisizing the information presented but no offering an alternative so you were leaving a vaccuum Your discussion about pulling out of the market at decline times is a good point which I'd love to learn more about. Contrary to how I may seem during parts of this discussion I love to learn more and maximize my return on investments. Do you have more recommended reading?

[nixuzer]

Re: More Millionaires

Then why are so many police and fire stations all over the country now so understaffed, with some just closing down completely ? Why is the administration cutting heating assistance to the poor and elderly ? Why are so many states having to raise taxes to make up for the federal program cuts ?

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Again, as I mentioned before, these are examples that are very valid however the government doesn't usually cut in areas where the waste really is occuring. In one department I worked at I'd say there was atleast a 50% overstaffing issue (with a department of about 300 people) with many people spending all day surfing the web or reshuffling papers. When asking someone that was in management there why they didn't remove some of those people they replied they knew and agreed but getting people fired there was nearly impossible. As I was an employee at the time I actually had a boss tell me that I was in the top 1% of workers there but didn't want to show that on my review because due to policy he couldn't do that year after year (whether it was true or not) so he would rather get me a positional move in the next two years and then put me up for the 1% 'bonus' This was when I decided to leave as an employee and pursue consulting work, as I stated earlier the change in income was huge (as was the risk but that was my choice so I'm responsible for it either way).

As we've discussed there have been massive misspending which becomes even more apparent in some of our war efforts like the example you gave while at the same time these greedmongers deny our soldiers critical, lifesaving items due to 'budgetary considerations.' Whether I agree with the war or not should not have anything to do with the protection and safety of our men and women involved in it. We have bureaucrats that have lost touch with the people and when they see a shortage go after more money from the taxpayers instead of fixing the system.

[VJW]

Re: More Millionaires

But we know that government CAN be efficient and serve the populous at the same time.

* Between '93 and 2000, the Federal civilian (non-military) workforce was reduced by 377,000 (nearly a fifth), and was lower than any time since 1960.

* Federal spending dropped from 22.2 percent of GDP in 1992 to 18.5 percent of GDP in 2000 (the lowest since 1966).

* Between '93 and 2000, Poverty, Unemployment, and federal deficits dropped every year, along with the longest economic expansion in history.

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[VJW]

Re: More Millionaires

Actually it would matter because if someone was in it for a longer timeframe (which should be longer than 20 years) if the years on either side of the timeframe you gave were large earning years (20% +) then they would have some gains on lets say the 10 years before/after the timeframes you gave.

But that’s the point. It is POSSIBLE, but ONLY if you chose correctly when to be in the market and when to be out of the market. With almost no gain occurring more than 60% of the time, it’s worse than flipping a coin. Few experts can correctly make these calls, how is the “average person” supposed to do it ?

Agreed about average people jumping in and out of the market. Most 'average people' I've seen jump in when the market is about to change in a bad way and out when they're losing money.

But that’s the ONLY possible way to not lose money over the long term. The "Buy & Hold" strategy only worked when the markets were rising.

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[VJW]

Re: More Millionaires

This could be partly due to the timing of the market (which they probably wouldn't know until after they've gained or loss). For example someone who retired and moved most/all of their investments to something with a low return but 'secure' in 1998 - 2000 timeframe would say the market was the only way to play it and would have acquired significant gains in the tail end of their investing cycle.

Exactly. And since very few experts can correctly time the market, it is foolish for “average people” to attempt to do so.

Good, thanks for the information. That was a problem I had with our interaction, you were critisizing the information presented but no offering an alternative so you were leaving a vaccuum

Cannot one dissect propaganda without necessarily having the ultimate solution at hand ? For instance, I may not know the exact directions between two cities, but I can still know if someone else’s directions are wrong.

Your discussion about pulling out of the market at decline times is a good point which I'd love to learn more about.

Well, as I mentioned, I read this from Barron's Mag:

“Conventional wisdom states that Wall Street and American business likes Republicans, but the smart money knows better. Since 1960, across five Democrat and five Republican administrations, the S&P has performed much better under Democrat White Houses for both the first year and the full term”:

S&P 500 POST ELECTION SINCE 1960

+11.8% - Democrats (1st Year)

+03.0% - Republicans (1st Year)

So, I got out the day before the election. I originally did not expect to stay out, but the markets just keep staying down.

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[VJW]

Re: More Millionaires

BTW, from the recent DAVID CAY JOHNSTON article:

"The people at the top of America's money pyramid have so prospered in recent years that they have pulled far ahead of the rest of the population, an analysis of tax records and other government data by The New York Times shows. They have even left behind people making hundreds of thousands of dollars a year."

"The share of the nation's income earned by those in this uppermost category has more than doubled since 1980, to 7.4 percent in 2002. The share of income earned by the rest of the top 10 percent rose far less, and the share earned by the bottom 90 percent fell."

"Under the Bush tax cuts, the 400 taxpayers with the highest incomes - a minimum of $87 million in 2000, the last year for which the government will release such data - now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000. Those earning more than $10 million a year now pay a lesser share of their income in these taxes than those making $100,000 to $200,000."

http://tinyurl.com/cvyeu

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[nixuzer]

Re: More Millionaires

Cannot one dissect propaganda without necessarily having the ultimate solution at hand ? For instance, I may not know the exact directions between two cities, but I can still know if someone else’s directions are wrong.

However if you're in the car trying to drive to the city then yes, not having a solution in hand would be a problem Or in the discussion we're having if you're trying to invest and being told that how you're doing is not correct without offering a solution most people will continue on their current path without a viable alternative. Since you seemed to be educated on the subject I was hoping you'd offer people some solutions from your perspective instead of keeping all that goodness to yourself

Well, as I mentioned, I read this from Barron's Mag:

“Conventional wisdom states that Wall Street and American business likes Republicans, but the smart money knows better. Since 1960, across five Democrat and five Republican administrations, the S&P has performed much better under Democrat White Houses for both the first year and the full term”:

S&P 500 POST ELECTION SINCE 1960

+11.8% - Democrats (1st Year)

+03.0% - Republicans (1st Year)

So, I got out the day before the election. I originally did not expect to stay out, but the markets just keep staying down.

Can you give me title of this article so I can take a look at it? If you read it online could you offer up the URL?

[nixuzer]

Re: More Millionaires

BTW, from the recent DAVID CAY JOHNSTON article:

"The people at the top of America's money pyramid have so prospered in recent years that they have pulled far ahead of the rest of the population, an analysis of tax records and other government data by The New York Times shows. They have even left behind people making hundreds of thousands of dollars a year."

"The share of the nation's income earned by those in this uppermost category has more than doubled since 1980, to 7.4 percent in 2002. The share of income earned by the rest of the top 10 percent rose far less, and the share earned by the bottom 90 percent fell."

"Under the Bush tax cuts, the 400 taxpayers with the highest incomes - a minimum of $87 million in 2000, the last year for which the government will release such data - now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000. Those earning more than $10 million a year now pay a lesser share of their income in these taxes than those making $100,000 to $200,000."

http://tinyurl.com/cvyeu

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There are a few points in that article I'd like to respond to but will take me a day or two since I need to do a little research.

Let me ask you a couple of questions:

1. Do you feel the government is better at handling your taxes that you would be if you were given that money to dispurse to different government entities?
2. Since I'm not sure how much (or what tax bracket) you're in a year I'll ask you to answer a question from the mindset of a top income earner $500,000+. Do the wealthy people who support higher tax rates (or not passing tax cuts for people in their income range) currently take deductions on their taxes to reduce their tax base OR do they pay taxes on their full income without deductions. Since you're part of an organization that interacts with these type of wealthy people I'd love to hear some actual responses.
3. Do these same wealthy people have the maximum amount taken from their paychecks to offer the government interest free loans?

[VJW]

Re: More Millionaires

Can you give me title of this article so I can take a look at it? If you read it online could you offer up the URL?

It was published in the print edition. I believe it would have been in 2000, but definitely prior to the election.

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[VJW]

Re: More Millionaires

1. Do you feel the government is better at handling your taxes that you would be if you were given that money to dispurse to different government entities?

The idea is terrific in the abstract, but can you imagine the PR campaigns that would be ginned up to get the American people to allocate funding one way or another ? It would make the farce used to convince the American people to invade Iraq look like a puppet show. And who would have the advantage in those PR campaigns ? The very same people with the money and resources.

2. Since I'm not sure how much (or what tax bracket) you're in a year I'll ask you to answer a question from the mindset of a top income earner $500,000+. Do the wealthy people who support higher tax rates (or not passing tax cuts for people in their income range) currently take deductions on their taxes to reduce their tax base

I personally know a number of wealthy people who hold both positions, that they are undertaxed and that they did not need the recent repetitive rounds of tax cuts.

Numerous wealthy people have publicly expressed these views as well. For instance, six of the wealthiest members of the Senate: Senator Lincoln D. Chafee (R- RI), Senator Jon Corzine (D-NJ), Senator Herb Kohl (D-WI), Senator John Rockefeller (D-WV), Senator Edward M. Kennedy (D- MA), and Senator John F. Kerry (D- MA).

Also, Bill Gates Sr, Warren Buffet, Paul Volker (former Fed Chairman), Larry King, Felix Rohatyn, Alan Dershowitz,, George Soros, President Clinton, Senator Hillary Clinton, John Edwards, Paul Newman, Robert Redford, Ted Turner, Frank Greenberg (retired Chairman and CEO of Burlington Industries), Katherine Pillsbury, Barbra Streisand, Richard Dreyfuss...

Here is a list of more than 160 (and counting) American business owners who have signed a statement against the repeal of the Estate & Inheritance Tax:

THE LIST

OR do they pay taxes on their full income without deductions.

The only two that I have personally heard adopt a position similar to that are Larry King and Alan Dershowitz. Both have stated on the air that they have instructed the people who handle their taxes to only take the standard deduction, even though they could pay far less taxes utilizing the long form.

However, your query is really a Straw-Man Argument, in essence, that anyone who advocates higher taxes should not take any deductions. Several NBA players have advocated that the official height of all basketball rims be raised. By your standard, only the teams who have team members that want the baskets raised would have them raised during games, while their opponents basket would remain at the current height. They can advocate that the height of the baskets be raised, yet play under the current regulations until they are raised.

Since you're part of an organization that interacts with these type of wealthy people...

?????

3. Do these same wealthy people have the maximum amount taken from their paychecks to offer the government interest free loans?

Why would they ?

Do the Bushies, the Cheneys, the Wolfowitzs, the Pearles, insist that their children join the military and fight on the ground in Iraq ?

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