I'd build a big tall house with rooms by the dozen, Right in the middle of the town.
A fine tin roof with real wooden floors below.
There would be one long staircase just going up,
And one even longer coming down,
And one more leading nowhere, just for show.
I'd fill my yard with chicks and turkeys and geese and ducks
For the town to see and hear.
And each loud "cheep" and "swaqwk" and "honk" and "quack"
Would land like a trumpet on the ear,
As if to say "Here lives a wealthy man."
Not many better musicals than Fiddler on the Roof. I always get a lump in my throat as they leave Anatevka.
Not that I am a Rich Man, but I have been doing some reading on Roth IRAs. Congress passed a bill that allows traditional IRAs to be converted to Roth IRAs in 2010. It made my head hurt a bit, but it seems that if you pay taxes on (1) funds contributed to traditional IRA that have never been taxed and (2) gains in the traditional IRA you can make the conversion. Then post-conversion, when you withdraw $ from the converted Roth, the withdrawals are tax-free and you can shelter $ in there longer. It sounds like a great deal, except it is a fair chunk of cash you need to pay the taxes (can be spread over 2 years).
Example: Say you have $200,000 in IRA and $175,000 are (1) & (2). Then you would pay say 35% x 175,000 spread over two years or $61,250. Now assume that you stay with the IRA for 20 more years at 10% per year. You would have $200,000 x (1.1)^20 = 1,345,500. The future value of the $61,250 tax bill (remember spread over 2 years) would be $357,600 so the amount you'd have net of the pre-paid taxes = $987,900.
Now scenario 2, suppose you do not convert. The $200,000 would grow to $1,345,500 at which time it would be withdrawn and subject to taxes. The first $25,000 (your basis) would not be subject to taxes, so taxes = (1,345,500 - 25,000) x 35% = 462,175. The net amount after taxes = $883,325.
Hmm, it is complicated. On one hand, a lot depends on what the tax rate will be in 20 years. One argument would be that the effective rate for me would be lower than 35% as I won't be working. The other argument is that it'll be higher than 35% as we all know our grandchildren will be paying off our deficit. On the other hand, the Roth is superior as it is simpler and you are not required to begin taking distributions at age 70. So you could shelter from taxation onger if you didn't need the money. On the other, other hand, cash flow should be considered. It might be easier to pay the $462,000 tax bill in 20 years as I can pay it from IRA withdrawals. Paying the $61,000 in 2011/2012 might be difficult with kids going to college etc.
Sorry for the diversion, it helps me to think out loud. Wow, CNBC today is actually talking about ANF (as did Cramer last night). I'll have to re-read the earnings release, I guess they were better than I thought at 1st blush last night. The other big news item this morning is CPI release. I suppose should CPI be "high" there is still a slight chance of another BB rate hike. I know I am not losing sleep over it, but they gotta talk about something I suppose. Enough rambling, off to work!
Here is the most recent top 50 over 50m from JG website. I like to publish from time-to-time in the event someone wants to find some history.
| Name (in alphabetical order) | Ticker | Market Cap ($ Millions) | Pre Tax Earnings Yield | Pre Tax Return on Capital | Price From | Most Recent Quarter Data |
|---|---|---|---|---|---|---|
| Aduddell Industries Inc | ADDL | 59.93 | 27% | > 100% | 08/15 | 03/31 |
| Aldila Inc | ALDA | 88.75 | 27% | 50 - 75% | 08/15 | 06/30 |
| American Bank Note Holographics Inc | ABHH | 59.31 | 16% | 75 - 100% | 08/15 | 03/31 |
| American Science and Engineering Inc. | ASEI | 417.70 | 14% | 75 - 100% | 08/15 | 06/30 |
| Aspreva Pharmaceuticals Corp | ASPV | 790.45 | 17% | > 100% | 08/15 | 06/30 |
| Barrett Business Services Inc | BBSI | 231.98 | 12% | > 100% | 08/15 | 06/30 |
| Biovail Corp | BVF | 2,528.83 | 19% | > 100% | 08/15 | 06/30 |
| Block (H&R) Inc. | HRB | 7,375.12 | 12% | > 100% | 08/15 | 04/30 |
| CallWave Inc | CALL | 68.03 | 41% | 75 - 100% | 08/15 | 03/31 |
| Career Education Corp | CECO | 1,833.38 | 21% | 75 - 100% | 08/15 | 06/30 |
| Cavco Industries Inc | CVCO | 199.35 | 16% | > 100% | 08/15 | 06/30 |
| Cellstar Corp | CLST | 53.90 | 17% | > 100% | 08/15 | 05/31 |
| Chaparral Resources Inc | CHAR | 218.56 | 42% | 75 - 100% | 08/15 | 06/30 |
| Cryptologic Inc | CRYP | 323.28 | 11% | > 100% | 08/15 | 06/30 |
| Deb Shops Inc | DEBS | 364.50 | 14% | > 100% | 08/15 | 04/30 |
| Delek US Holdings Inc | DK | 960.80 | 21% | 50 - 75% | 08/15 | 06/30 |
| Deluxe Corp | DLX | 885.11 | 12% | > 100% | 08/15 | 06/30 |
| Fording Canadian Coal Trust | FDG | 4,329.15 | 18% | > 100% | 08/15 | 06/30 |
| Freeport-McMoran Copper & Gold Inc. | FCX | 10,140.33 | 21% | 50 - 75% | 08/15 | 06/30 |
| FreightCar America Inc | RAIL | 710.46 | 25% | > 100% | 08/15 | 06/30 |
| Harvest Natural Resources Inc. | HNR | 425.90 | 31% | > 100% | 08/15 | 06/30 |
| Heidrick & Struggles International Inc | HSII | 615.82 | 10% | > 100% | 08/15 | 06/30 |
| Herbalife Ltd | HLF | 2,158.85 | 10% | > 100% | 08/15 | 06/30 |
| Intersections Inc | INTX | 158.88 | 20% | 75 - 100% | 08/15 | 06/30 |
| Intervideo Inc | IVII | 132.87 | 22% | > 100% | 08/15 | 03/31 |
| K-Swiss Inc | KSWS | 987.08 | 13% | 75 - 100% | 08/15 | 06/30 |
| Kinetic Concepts Inc | KCI | 2,069.08 | 14% | 75 - 100% | 08/15 | 06/30 |
| King Pharmaceuticals Inc. | KG | 4,023.16 | 18% | > 100% | 08/15 | 06/30 |
| Korn/Ferry International | KFY | 774.58 | 12% | > 100% | 08/15 | 04/30 |
| Labor Ready Inc. | LRW | 870.48 | 14% | > 100% | 08/15 | 06/30 |
| Mannatech Inc | MTEX | 360.47 | 15% | > 100% | 08/15 | 03/31 |
| Net 1 Ueps Technologies Inc | UEPS | 1,041.82 | 10% | > 100% | 08/15 | 03/31 |
| New Frontier Media Inc | NOOF | 186.14 | 11% | > 100% | 08/15 | 06/30 |
| OmniVision Technologies Inc | OVTI | 947.10 | 18% | > 100% | 08/15 | 04/30 |
| PW Eagle Inc | PWEI | 365.80 | 36% | > 100% | 08/15 | 06/30 |
| Palm Inc | PALM | 1,556.17 | 12% | > 100% | 08/15 | 05/31 |
| Patriot Scientific Corp | PTSC | 279.47 | 25% | > 100% | 08/15 | 02/28 |
| Peerless Systems Corp | PRLS | 66.97 | 11% | > 100% | 08/15 | 04/30 |
| Pinnacle Airlines Corp | PNCL | 139.33 | 47% | > 100% | 08/15 | 06/30 |
| PortalPlayer Inc | PLAY | 301.53 | 36% | > 100% | 08/15 | 06/30 |
| Programmer's Paradise Inc | PROG | 56.48 | 10% | > 100% | 08/15 | 06/30 |
| Reliv International Inc | RELV | 113.68 | 13% | > 100% | 08/15 | 06/30 |
| Security Capital Corp | SCC | 117.96 | 21% | > 100% | 08/15 | 03/31 |
| Southern Copper Corp | PCU | 13,115.25 | 18% | 50 - 75% | 08/15 | 06/30 |
| Systems Xcellence Inc | SXCI | 56.13 | 999% | > 100% | 08/15 | 06/30 |
| Vaalco Energy Inc | EGY | 479.27 | 15% | > 100% | 08/15 | 03/31 |
| Valassis Communications Inc. | VCI | 953.68 | 12% | > 100% | 08/15 | 06/30 |
| ViroPharma Inc | VPHM | 598.85 | 22% | > 100% | 08/15 | 06/30 |
| Williams Controls Inc | WCON | 89.38 | 13% | 75 - 100% | 08/15 | 03/31 |
| World Air Holdings Inc | WLDA | 176.88 | 34% | > 100% | 08/15 | 03/31 |
I have to laugh, I wish I could find the link. The WSJ this morning quoted some market expert. He essentially said about the CPI info this morning (beofre it was released) that it could only hurt the market, the market has already priced in good inflation news. Thenof course, as soon as good news was released, the market futures popped up about 0.5%. I laugh as how is anyone qualified to say what the market has priced in and what it has not priced in? I felt it had not priced in good news because when the fed paused last week, the market stayed flat... that told me they were still perhaps waiting for another shoe to fall.
I had to come home early today, so I am catching a little financial news. Looks like another strong day for my MFI stocks, led by ANF, which is up by close to $7,or about 12%! In a single day, it has moved back into the green. They just had a guy come on the box and suggest that $30 of the price of oil is due to a weak US dollar. He said the "common denominator" between the spike in all commodities is the weaker dollar. Didn't make any sense to me. The common denominator as far as I can tell is that China, India etal are starting to really ramp up their economies and economics 101 says prices will rise when demand exceeds supply. I don't know where they get these people from... do they get paid for these opinions? The other one several months ago that was hysterical was some guy trying to apply TA to interest rates looking at rate changes over the past 20 years. C'mom, get a life... I can show a graph that a city with more clergymen tends to drink more beer... but it doesn't mean the priests are drinking the beer!
It is the end of the day. The benchmark IWV has blasted back to the black. My MFI had a great day led by ANF (+14%), while TGIS, OVTI & TRLG were all up more than 7%. The table below show where I am at:
| Stock | Cost | Current | Gain |
| NCOG | $19.39 | $27.05 | 39.5% |
| UST | $39.36 | $51.35 | 33.3% |
| MGLN | $38.34 | $47.28 | 23.3% |
| FTO | $28.76 | $35.29 | 22.8% |
| PCU | $78.13 | $90.50 | 21.9% |
| TRLG | $17.02 | $19.60 | 15.2% |
| MTEX | $13.11 | $13.95 | 7.0% |
| NSS | $45.89 | $48.26 | 5.2% |
| CHKE | $37.55 | $38.47 | 4.0% |
| ANF | $61.13 | $63.40 | 4.0% |
| PGI | $7.71 | $7.92 | 2.7% |
| RAIL | $58.18 | $58.75 | 1.0% |
| TGIS | $10.34 | $10.07 | -1.5% |
| PTEN | $27.74 | $27.04 | -2.2% |
| MSTR | $94.36 | $90.08 | -4.5% |
| KG | $17.31 | $16.50 | -4.7% |
| ISNS | $13.17 | $12.24 | -7.1% |
| FDG | $34.03 | $30.03 | -9.1% |
| PNCL | $6.68 | $5.99 | -10.3% |
| IVII | $10.93 | $9.68 | -11.4% |
| ELX | $17.85 | $15.74 | -11.8% |
| PACR | $32.53 | $27.73 | -13.8% |
| TBL | $34.50 | $26.93 | -21.9% |
| EZEN | $2.84 | $2.20 | -22.4% |
| ORCT | $11.83 | $9.15 | -22.7% |
| PONR | $32.97 | $24.45 | -25.8% |
| DLX | $26.36 | $17.68 | -31.4% |
| OVTI | $27.79 | $18.96 | -31.8% |
| PTSC | $1.31 | $0.80 | -38.9% |
| HW | $37.42 | $22.02 | -41.2% |
| Total Gain/Loss | -$15,933 | ||
| Benchmark Gain/Loss | $2,519 | ||
| Annual IRR | -16.0% | ||
| % Gain/Loss | -5.23% | ||
Table
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