chinacat
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AAPL Long since 2006
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Post by chinacat on May 10, 2021 5:49:22 GMT -8
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Dave
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"It's tough to make predictions, especially about the future." Yogi Berra
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Post by Dave on May 10, 2021 6:02:01 GMT -8
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Dave
Member
"It's tough to make predictions, especially about the future." Yogi Berra
Posts: 4,097
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Post by Dave on May 10, 2021 6:09:47 GMT -8
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Post by archibaldtuttle on May 10, 2021 7:06:40 GMT -8
The whole market could take a dive if the capital gains tax changes, unless they make it retroactive to cover 2021, which is the obvious move. If it’s retroactive then there’s no reason to sell stocks now, so the cap gains tax changes will have no effect on the market at all.
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4aapl
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Post by 4aapl on May 10, 2021 10:15:58 GMT -8
The whole market could take a dive if the capital gains tax changes, unless they make it retroactive to cover 2021, which is the obvious move. If it’s retroactive then there’s no reason to sell stocks now, so the cap gains tax changes will have no effect on the market at all. It seems unlikely it will be retroactive, unless really trying to be vindictive. The change to LTCG rates during Obama's years was a little different in that the change was already set to occur (ie lower rates were only lower for x number of years), so no new vote had to occur to raise the rates. I think there still should be a discount for LTCG rates, no matter the income level, in order to help incentivize long term investmentsl. But maybe that's just a 5% discount off of the normal rates? If LTCG rates, plus the extra addition, are more than short term or normal income rates, it changes the whole thing. But obviously different people see it different ways. At some point I want to diversify part of my holdings, and this would be a disincentive to doing that, since I could avoid or at least delay the higher tax by holding on longer. But there have been several known sidesteps that have been changed over the past few years. Some were on Social Security, such as being able to change you start date, and thus increase your payout rate, by retroactively changing it and paying back what you had been paid so far. Others have been more tax/IRS related. I like the idea of getting a stepped up basis on someone's death, both partly for the benefit in fringe cases like a family house, business, or farm, but also for the ease of use so you don't have to try to figure out the cost basis from potentially decades earlier. But it is a way to sidestep taxes. For instance, my parents rent out the home I grew up in, now having owned it around 40 years. If they sold it now, they'd owe taxes on it. If they pass it along at their passing, current law would have there be no taxes. On first glance that seems great. But when looking from an outside view, is it right that anyone skips taxes on anything completely? Personally I am for everyone paying at least some federal tax, aside from maybe on the level up to the poverty line. 5% minimum? But if everyone pays, then everyone has some skin in the game, and maybe we can be a little more careful of how we as a country spends our money. Instead, everyone pays through other taxes, including sales tax and property tax. And there's social security, though I don't really count that since it's really just a forced retirement plan, and in that case those that put in the least get the most as a percentage. But if nearly everyone paid some federal income tax (instead of just roughly half of the households), and maybe if there were a few less deductions or at least nothing that brought someone below that more realistic minimum tax percentage, then we'd potentially have more people working together instead of all sides thinking they are getting a bum deal. Oh well. I guess if I buy out an island and start a new country, I can do whatever I want. Until then, it's pretty much just trying to play by whatever the current rules are, while hoping they won't change too much.
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Post by duckpins on May 10, 2021 10:25:06 GMT -8
Apple and OLED are both selling off after great earnings. This makes 3 quarters in a row. There is now 2 trillion in the crypto currency market and no telling how much in the CryPTO ART so called market. The amount of energy consumed by these items is staggering. But somehow environmentalists seem to be totally unfocused on this. Tomorrow you could wake up and Apple might be at 40 a share. But it would still have earning ability and intrinsic value. If you wake up and your crypto "My neighbbor alice" is down to .001 per "supply unit" it is still worth the same as it was the day before. Nothing. The Crytos could be setting the banks up for the next bank crash. Bank values are going thru the roof and both Citi and GS are "investing" in Cryptos. coinmarketcap.com/all/views/all/ this is mind blowing.
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Post by hledgard on May 10, 2021 11:34:17 GMT -8
Fascinating duckpins ! I was not aware of this. Sounds like crypto is stealing some from gold as a common standard.
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4aapl
Moderator
Posts: 3,628
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Post by 4aapl on May 10, 2021 11:52:30 GMT -8
Apple and OLED are both selling off after great earnings. This makes 3 quarters in a row. There is now 2 trillion in the crypto currency market and no telling how much in the CryPTO ART so called market. The amount of energy consumed by these items is staggering. But somehow environmentalists seem to be totally unfocused on this. Tomorrow you could wake up and Apple might be at 40 a share. But it would still have earning ability and intrinsic value. If you wake up and your crypto "My neighbbor alice" is down to .001 per "supply unit" it is still worth the same as it was the day before. Nothing. The Crytos could be setting the banks up for the next bank crash. Bank values are going thru the roof and both Citi and GS are "investing" in Cryptos. coinmarketcap.com/all/views/all/ this is mind blowing. All things are only worth what someone else is willing to pay for them. Some might have other uses too, like industrial use of silver or gold, transportation or chemicals with oil, or housing with housing. But at the end of the day, it's all based on what someone else is willing to pay. Crazy things happen. Oil went negative last year for a few hours. No one wanted it, and thus they were paying people to take it. The trust we manage has a royalty check for part of the production, where the well got pennies for the 100 barrels that month, as opposed to the $6500 (split many ways) that they would get at current prices 11 months later. Various cryptos are the same, but without a physical product behind it. I personally wouldn't value it the same, but at some level it's not that much different than other things, where a change in supply or demand, or most anything else, could change pricing dramatically. Diamonds are pretty, and do have a few industrial uses, but at the end of the day it's supply and demand, especially when compared to many other pretty jewelry that it might take a specialist or at least a close inspection possibly requiring magnification to differentiate. Is a bed of lawn an asset or a liability? It depends on how you use it or view it, and the upkeep cost. It's different in Phoenix vs Seattle. But investing turns to a mania when the underlying is not valued, and the increasing price is bought in hopes of it increasing further, and the purchasing gets out of control often with the aid of cheap and available leverage. How many tulip bulbs, or houses in Las Vegas, do you really need? Or if not for need, then how do you value them, or do you even care how it's valued as long as you expect someone else will be willing to pay more in the future? While I think AAPL should be valued higher, the same is true for it. Why do we feel its PE should be 40 now, when only a couple years ago the peak was 25? Just from a comparison to another company, which is equally on an increased PE? There is some value there, at some level, but there is also a lot of wiggle room. As for crazy valuations, look at Oil wells. Often they are valued at 3-5x annual earnings, even if they have produced strongly for 100 years. Like anything, there is risk there. But that's like getting a 20-33% dividend ever year!!! AAPL will come around. But, at least in my eyes which may be overinflated, it seems to be somewhat rare that AAPL seems fairly valued. At the same time, the PE of 25-30 that used to be the top end is now what I would consider undervalued. Is it the stock's fault, the market's fault, or is it maybe my fault for inflating my "fair market value" expectations? Riddle me that.
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Post by Lstream on May 10, 2021 12:07:47 GMT -8
Although the current discussion is about raising the capital gains rate in the US, I feel that it is only a matter of time before politicians here in Canada do the same thing. Most of them think they are entitled to more of our money. This has me thinking of starting a disposition of my Apple shares in an orderly fashion. Before the tax situation gets worse.
I am also involved in an angel investing group that primarily invests in US startups. This will be a serious threat to startups trying to raise early stage money. These types of investments are high risk, and the last thing they need is higher taxes on the few that deliver serous returns to people who back them early on.
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Post by nwjade on May 10, 2021 12:44:29 GMT -8
There's zero support to raise the capital gains tax from the GOP side.
To get it through reconciliation it takes all 50 Dem senators and they're not all on board.
I think some believe they'd run the risk of stepping on economic growth.
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Post by silkstone on May 10, 2021 13:32:27 GMT -8
There's zero support to raise the capital gains tax from the GOP side.
To get it through reconciliation it takes all 50 Dem senators and they're not all on board.
I think some believe they'd run the risk of stepping on economic growth. Maybe, but it could have the opposite effect if investors sold trillions in stock gains to avoid a future hike. I’d like to know how huge stock sales has impacted the economy in the past.
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4aapl
Moderator
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Post by 4aapl on May 10, 2021 15:21:24 GMT -8
There's zero support to raise the capital gains tax from the GOP side.
To get it through reconciliation it takes all 50 Dem senators and they're not all on board. I think some believe they'd run the risk of stepping on economic growth. Maybe, but it could have the opposite effect if investors sold trillions in stock gains to avoid a future hike. I’d like to know how huge stock sales has impacted the economy in the past. Take a look at when they last raised, going from 15 to 20% on the top side. It was known in advance. I believe I sold 2000 shares, and then bought them back the same day. My recollection was that I even bought them back for maybe 50 cents a share less. Buying back the same number of shares you sold shouldn't change anything. But these days if I sold a decent sized chunk to lock in a tax rate, I'd be setting aside some amount for taxes. Maybe that's 20% of the total. But I'd probably also be deleveraging a little, and I would probably be diversifying a little. So if selling shares worth X, I might not be putting them back into AAPL if I felt they were somewhat close to fairly valued, and instead putting 60% of X into some broad index fund that I would be fine holding onto for decades. With so many stocks up significantly over just the past 12-14 months, the question is how broad of a range of investments have decent amounts of LTCG built into them, especially for investors with accounts large enough to care about this potential change. A couple $10k gains on a few stocks is a lot different than the larger investor with a $5M gain. But the same is true on housing, that while the average price across the country might only be $500k, there are places where there are more than a few in much higher ranges. On the lake here on the NV side, it's rare to see one now under $10M, and they go on up from there. That's double from just 2-3 years ago, so there is a lot of LTCG sitting there. Ellison sold his new build a few years back, so not choose to hold it forever even in the group that has so much that it really doesn't move the needle. I'd look back then (wikipedia says it changed in 2013 en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States ). Looking at the S&P, I don't see any change. Looking at AAPL, it did drop, but there were other things going on. My notes have that while 2012 Q1 earnings were up 115%, 2013 Q1 earnings were down 1%, and earnings went down YOY for the next 3 quarters. Nothing is in a vacuum, but that really does make it hard to compare. Don't let the taxes tail wag the dog. My spreadsheet last summer looking at this showed it didn't after a certain number of years, generally 5-6 years out. The rate thrown about now is even higher (new expected max tax rate, plus the previously enacted premium), so it's probably a little bit further out. OTOH, if planning on holding AAPL for the next decade or two, it's best to just keep on holding. And while not known for certain, it seems likely that the rate won't end up quite as high as the number thrown about, and it will likely come back down at some point in the future just as it has in the past. But for those investments that one wants to sell within the next 0-5 years or so, it could very well be worthwhile to sell now, even if just to buy back the same investment. Looking 5 years out is pretty far in some respects. For instance, my first kid will likely be in college, even though he's not yet in High School yet. Time flies, at times. Other times, it crawls.
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Post by duckpins on May 11, 2021 10:54:15 GMT -8
"All things are only worth what someone else is willing to pay for them. Some might have other uses too, like industrial use of silver or gold, transportation or chemicals with oil, or housing with housing. But at the end of the day, it's all based on what someone else is willing to pay." That is a con man's approach I am afraid. If that were the case many things are worth nothing. Try to rent commercial space in Oakland in 1993 during the real estate crash. You could not. So does that mean the space was worth nothing? One freemarketkateer told me my 1500SF space was only worth 50 a month because that is what he wanted to pay and it wasn't rented.
Sometimes you have to wait. Time is involved to get value. If you are in a hurry to sell you take less. that does not mean the value has changed. The tulip bulbs were worth a few cents but priced in the hundreds of dollars...the greater fool theory. They were never worth that much. SO if crypto is like the tulip that is one thing, if it is like a great building that is empty because the economy is slow or the area is undergoing redevelopment...that is another.
The stock market as a whole has value, when cryto things take trillions of dollars away from same the price of the market is down, value will eventually be reached. Value takes time. Same with crypto eventually GS wakes up and sells all that morning, shorts everything and walks away with a 500 billion dollar check. That is a valid concern.
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