Benmosche: AIG Paid America Back, But We Still Have To Consider Suing – Forbes

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Let me get this straight. AIG was going bankrupt and out of business. The federal government, with our taxpayer dollars, bailed AIG out and in return received 79% of a company that would have been worth less than $0 without intervention. Now AIG is considering suing the government because 79% represents a “wrongful taking” of the company? And the execs have and will continue to get their bonuses regardless?
I propose the largest possible boycott of anything related to AIG. If you have insurance with any AIG related company, switch to another company. If you own any AIG stock, sell it. If you have a mutual fund with any AIG holdings, sell it. http://www.forbes.com/sites/steveschaefer/2013/01/08/benmosche-aig-paid-back-taxpayers-but-we-still-have-to-consider-suing-them/

NYT: Too Much Wishful Thinking on Middle class taxes

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As you read this New York Times piece keep the following in mind:

  1. What about non wage income, that is, financial income from stocks, bonds, and other investments? Of the top 1 or 2 % wage income can be insignificant compared to the financial income. How many ceos “sacrifice” and receive salaries of $1?
  2. Stating the top 1% pay a larger percentage of taxes is incomplete. What percentage of total income does the top 1% receive? If you receive 50% of all income shouldn’t you pay 50% of all taxes?
  3. The author is a Harvard professor and advisor to the losing campaign of Mitt Romney. The fiscal cliff will cost Mitt Romney more dollars than any of us.
  4. No discussion on corporate welfare programs that are likely orders of magnitude larger than the social welfare programs criticized in the article.

http://mobile.nytimes.com/2012/12/30/business/on-middle-class-tax-rates-too-much-wishful-thinking.xml

Was Benjamin Graham Skillful or Lucky? | Anirudh Sethi Report

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This is an interesting article that points out something that has been in print for roughly 40 years: Benjamin Graham’s success as a portfolio manager is likely due to one lucky stock purchase.  The implication is that a passive strategy probably did just as good or even better than Mr. Graham’s approach once you remove the one lucky stock (apparently the predecessor to GEICO).  Also note that one lucky stock was not purchased on the open market.  Rather, it was purchased directly from one of the founders.  How many of us get to purchase at a low price directly from founders?

Here is the article:

http://www.anirudhsethireport.com/was-benjamin-graham-skillful-or-lucky/

Here are the actual pages from Benjamin Graham’s The Intelligent Investor book:

Intelligent_Investor_Postscript

By the way, the notion of Benjamin Graham applying his “rock solid” approach to investing and getting lucky on one stock is consistent with the Charles Schwab “Core and Explore” approach.  In “Core and Explore” you place 75% of your holdings in passive index funds.  The remaining 25% is where you take your gambles.

Food for thought…

Innovation types and economic growth

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Nice article brought to my attention by the dean.  I particularly like the suggestion of no taxes on investments held in a company more than six years.  That could reduce “flipping” of stocks.

http://www.deseretnews.com/article/765617333/The-new-church-of-finance.html?pg=all

LA Times – Sale of last AIG shares brings U.S. bailout profit to $22.7 billion

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Let me see if I understand the order of events: 1. AIG takes risky bets and the generate big compensation packages for executives 2. This big bets fail in a big way and taxes from hardworking U.S. Citizens are used to bail AIG out (government send cash to AIG in exchange for pieces of paper representing an equity interest) 3. The executives continue to receive big compensation packages during the bailout while lower level workers at AIG are laid off. 4. A conditions stabilized the government sold their pieces of paper to investors in exchange for cash. Wait a second! Does that set of investors, who transferred cash to the government, include the company AIG or their executives? I suspect not. I suspect it was your mutual funds and pension funds buying those pieces of paper from the government. So AIG receives our taxpayer dollars, pays executives bonuses, lays off workers, and then more money from working class America is used to buy pieces of paper with the AIG name on it from the government. Tangible advice: eliminate as much of your investment and interaction with AIG as possible. http://touch.latimes.com/#section/-1/article/p2p-73653959/