OT: Stock and Investment Thread

[T2Kplus20]

Go Cramer Go!

- CNBC’s Jim Cramer said investors are unnecessarily selling stocks on reports that President Joe Biden could raise capital gains taxes.
- “The idea that Biden has 50 senators who’ll vote for this is just fanciful, frankly,” the “Mad Money” host said.
- “Be ready to buy stocks that are getting crushed by tax fears that have nothing to do with the fundamentals,” he said.

https://www.cnbc.com/2021/04/22/jim...capital-gains-tax-are-discounting-stocks.html

 

[rurahrah000]

They better beat them! I think growth projections for the next 12 months is only 1-2%. This was mentioned on CNBC (not sure if this is T projections or an analyst's projections). I will try to find a video clip.

AT&T much like IBM has a legacy business that is dying or stagnant and is trying to incorporate a high growth business. Unfortunately, both companies are late coming into the game and have a lot of catching up to do.

1-2% growth in a low interest environment is horrible. They could grow their cash faster in bonds.

Both companies need to rethink their business model. Cut dividends and use the money to invest and buy other companies. I don't know. Telecommunications is not my forte, but all I know is that these companies need to start thinking outside the box.

 

[T2Kplus20]

Cut dividends and use the money to invest and buy other companies.

BINGO! Dividends are handcuffs to innovation. Use that money more wisely.

 

[rurahrah000]

BINGO! Dividends are handcuffs to innovation. Use that money more wisely.

I understand why oil and gas companies like Exxon and Chevron refuse to cut dividends. There is not much else they can do with the money, but AT&T and IBM can do so much more. Stop sitting on all this cash. I wonder if AT&T can buy Roku. I don't see how Roku can compete without original content and AT&T could use Roku to distribute content. I don't know if AT&T would want to take on additional debt. They would need to sell off Directv.

 

[RUDead]

Hate to even get into the politics here but...

But like the corporate tax, I think Biden set a level fully knowing it would be negotiated down, or perhaps up in this case, as per the $1 mil level.

Now do I think CEO billionaire's like Bezo's and Musk whose wealth was almost wholly made holding company stocks(while the companies themselves pay very little tax) should see a rise in capital gains tax rate? Yeah I do.

I think they should lower all taxes and cut spending.

 

[rurahrah000]

I think they should lower all taxes and cut spending.

The problem is that when the Republicans lowered taxes, even they didn’t have the courage to cut spending. Tax cuts without corresponding spending cuts are meaningless. Once they did that, we were set on a path of eventual tax increases.

 

[RUDead]

The problem is that when the Republicans lowered taxes, even they didn’t have the courage to cut spending. Tax cuts without corresponding spending cuts are meaningless. Once they did that, we were set on a path of eventual tax increases.

Agree about republicans, but don't agree tax increases are inevitable. Unfortunately neither party appears to be interested in cutting spending any time soon.

 

[rurahrah000]

Agree about republicans, but don't agree tax increases are inevitable. Unfortunately neither party appears to be interested in cutting spending any time soon.

If no one is going to cut spending, tax increases are the only way out. No way are the Democrats going to be outspent by the Republicans. They can’t so much money that it looses all value.

 

[mdk02]

Fast money heads thinking this tax passing, at least at that level, is very unlikely.

It will be interesting to see if all these network who were so quick to interview Warren Buffett in 2008 and endlessly replay his comments will do so again. To refresh memories, Buffett was asked if a rise in the LTCG rate from 15% to 20% would trigger a sell off. Buffett said no, which they showed continuously, including the latter part of his comment which I'm sure they are vigously deleting from their records. To wit, he said that while 20% was not a problem, jacking the rate to 28% or higher could well create a market sell off and downturn.

To quote an earlier thread that has been moved to the CE board: "Shhhhh, be very, very quiet" And they ain't hunting rabbits.

 

[T2Kplus20]

Bullish on the big value tech names, major earning reports next week:

https://www.cnbc.com/2021/04/23/two...ng-favorites-ahead-of-earnings-next-week.html

 

[patk89]

The problem is that when the Republicans lowered taxes, even they didn’t have the courage to cut spending. Tax cuts without corresponding spending cuts are meaningless. Once they did that, we were set on a path of eventual tax increases.

I agree with you that Republicans, greatly assisted by Dems in Congress, have become much less fiscally conservative, especially under Trump. But tax cuts spur economic growth. Not meaningless at all. Getting corporations to repatriate cash sitting overseas by cutting the tax rate was great for the US economy. Even if that money was used to buy back stock, it put cash in the hands of investors to re-invest or spend. Companies should pay dividends to their investors if they do not see attractive investment opportunities. Finally, as proposed, and it will not pass so just theoretically speaking, the higher cap gains tax will be paid on every dollar of income above the proposed limit of $1 million. So, if you are skilled enough to earn salary/bonus of north of $1 million, every penny of cap gains will be subject to the higher rate.

 

[patk89]

No one holds onto investments just because they don't want to pay taxes. If I think a stock has peaked and have high degree of convictions that it go down 30-40%, I will gladly pay taxes on the capital gains even if it is 39.6%.

It greatly impacts investment decisions on the margin. Plenty of people hold onto stocks longer to avoid paying taxes. If they need cash, they sell less appreciated securities. And history has shown selloffs in the period before a tax increase becomes effective. How often do you wait until you have "high degree of convictions that it will go down 30-40%"? That never happens. If you are sitting there and feel that the stock will decline in value, you sell it. No one waits until they know it will decline as much as you imply. That is not real world. No one gladly pays taxes.

 

[mdk02]

It greatly impacts investment decisions on the margin. Plenty of people hold onto stocks longer to avoid paying taxes. If they need cash, they sell less appreciated securities. And history has shown selloffs in the period before a tax increase becomes effective. How often do you wait until you have "high degree of convictions that it will go down 30-40%"? That never happens. If you are sitting there and feel that the stock will decline in value, you sell it. No one waits until they know it will decline as much as you imply. That is not real world. No one gladly pays taxes.

Stock is going down 30-40%? Of course you sell. But that's nothing but a strawman set up to back a 39.6% + 3.8% tax on the basis of cherry picked facts.. How about the other 99.44% of the times where an investor believes a stock might not be heading for the stratosphere but is NOT declining 30-40%?

I believe the highest tax rate on long term capital gains over the last 60 years is 28%. So this would be an almost 50% increase on that.

Still waiting for the oft quoted Warren Buffett to comment on this.

 

[RUTGERS95]

I think they should lower all taxes and cut spending.

absolutely

 

[RUTGERS95]

I agree with you that Republicans, greatly assisted by Dems in Congress, have become much less fiscally conservative, especially under Trump. But tax cuts spur economic growth. Not meaningless at all. Getting corporations to repatriate cash sitting overseas by cutting the tax rate was great for the US economy. Even if that money was used to buy back stock, it put cash in the hands of investors to re-invest or spend. Companies should pay dividends to their investors if they do not see attractive investment opportunities. Finally, as proposed, and it will not pass so just theoretically speaking, the higher cap gains tax will be paid on every dollar of income above the proposed limit of $1 million. So, if you are skilled enough to earn salary/bonus of north of $1 million, every penny of cap gains will be subject to the higher rate.

there are no true republicans any longer which is why we're fked

 

[Frida's Boss]

there are no true republicans any longer which is why we're fked

This is true. Trump has hijacked what was once the Republican Party, turning the current group into RINOs.

 

[T2Kplus20]

This is true. Trump has hijacked what was once the Republican Party, turning the current group into RINOs.

The decline started with GWB and passage of the asinine Medicare Part D program. I'm happy that the R's still are dedicated to cutting taxes, but we desperately needs spending cuts. And massive ones!

 

[Frida's Boss]

The decline started with GWB and passage of the asinine Medicare Part D program. I'm happy that the R's still are dedicated to cutting taxes, but we desperately needs spending cuts. And massive ones!

I’ll make this comment and then avoid further political statements so as not to derail this thread, but any change that occurred under GWB was still within the confines of the legacy Republican Party. Trump has destroyed that, and what exists today bears very little resemblance to the party under GWB.

 

[rurahrah000]

The decline started with GWB and passage of the asinine Medicare Part D program. I'm happy that the R's still are dedicated to cutting taxes, but we desperately needs spending cuts. And massive ones!

In this current environment spending cuts is not going to happen. The rich keep getting richer and poor are relatively poorer. It will be difficult for anyone to cut safety net programs. In fact we are headed towards guaranteed incomes.

The stars were all aligned when the Republicans passed their tax cuts and they did not have the guts/courage to do it.

 

[BellyFullOfWhiteDogCrap]

I think they should lower all taxes and cut spending.

Should we cut social security, military spending, or medicare/medicaid?

 

[RUDead]

Should we cut social security, military spending, or medicare/medicaid?

There are thousands of ways to cut spending, but I am going to respectfully decline to answer because I don't want to derail the thread. (and possibly get it deleted).

 

[T2Kplus20]

Nice Friday to end the week. Up, up, and up for the big 3!

 

[BellyFullOfWhiteDogCrap]

There are thousands of ways to cut spending, but I am going to respectfully decline to answer because I don't want to derail the thread. (and possibly get it deleted).

If you seriously want to cut spending, it must come from those 3.
Anything else is like taking the parsley garnish off your plate because you're on a diet.

 

[rurahrah000]

Nice Friday to end the week. Up, up, and up for the big 3!

Next week is a big week for tech. Facebook maybe the big winner, followed by Alphabet.

 

[rurahrah000]

There are thousands of ways to cut spending, but I am going to respectfully decline to answer because I don't want to derail the thread. (and possibly get it deleted).

If you seriously want to cut spending, it must come from those 3.
Anything else is like taking the parsley garnish off your plate because you're on a diet.

You‘re right. We should stop talking about politics. It will be just a matter of time before the nut jobs come into the thread and ruin.

 

[WhichReligionIsRight]

It greatly impacts investment decisions on the margin. Plenty of people hold onto stocks longer to avoid paying taxes. If they need cash, they sell less appreciated securities. And history has shown selloffs in the period before a tax increase becomes effective. How often do you wait until you have "high degree of convictions that it will go down 30-40%"? That never happens. If you are sitting there and feel that the stock will decline in value, you sell it. No one waits until they know it will decline as much as you imply. That is not real world. No one gladly pays taxes.

I personally have no issue if Biden and congress increase short term capital gains - I think that's a good thing and might put a reign on some of the dumb short-term trading. Maybe trade that for a lower long term capital gains rate. I'm not in charge, but I if I were I would want to greatly favor buy and hold investing.

 

[WhichReligionIsRight]

The decline started with GWB and passage of the asinine Medicare Part D program. I'm happy that the R's still are dedicated to cutting taxes, but we desperately needs spending cuts. And massive ones!

Zero chance of happening. Trump didn't even pretend to cut spending and racked up record deficits. Why are Republicans going to now cut benefits or the military?

 

[WhichReligionIsRight]

It greatly impacts investment decisions on the margin. Plenty of people hold onto stocks longer to avoid paying taxes. If they need cash, they sell less appreciated securities. And history has shown selloffs in the period before a tax increase becomes effective. How often do you wait until you have "high degree of convictions that it will go down 30-40%"? That never happens. If you are sitting there and feel that the stock will decline in value, you sell it. No one waits until they know it will decline as much as you imply. That is not real world. No one gladly pays taxes.

There is little evidence tax cuts spur growth. Clinton raised taxes and the economy flew. Go and look at the GDP growth numbers under Obama and Trump. Very little difference between the two. Same for employment. I just suggesting to be a little more cautious with being so confident about cause and effect.

 

[WhichReligionIsRight]

The decline started with GWB and passage of the asinine Medicare Part D program. I'm happy that the R's still are dedicated to cutting taxes, but we desperately needs spending cuts. And massive ones!

I get that some folks may dislike expansion of government programs. The problem with this line of thinking is that government programs are broadly popular. Exhibit A: Obamacare is very popular.

 

[RU05]

So anyways.

CNBC noted that there were 100+ new spacs in March and 500+ for the year, but only 10 thus far in April. So the influx of supply which brought down the entire group, has dried up.

The drying of supply, I would think, should have the reverse effect, or at least will allow those companies which show actual growth to again see positive movements in their stock prices.

 

[rurahrah000]

So anyways.

CNBC noted that there were 100+ new spacs in March and 500+ for the year, but only 10 thus far in April. So the influx of supply which brought down the entire group, has dried up.

The drying of supply, I would think, should have the reverse effect, or at least will allow those companies which show actual growth to again see positive movements in their stock prices.

The problem is that there aren’t enough solid companies for all these SPAC’s to buy. This will mean that a lot of suspect companies will have massively bloated values. It is going to very difficult for the SPAC to return money back to investors.

 

[RU05]

The problem is that there aren’t enough solid companies for all these SPAC’s to buy. This will mean that a lot of suspect companies will have massively bloated values. It is going to very difficult for the SPAC to return money back to investors.

I'm thinking more along the lines of Spacs that have already begun the process or even completed the merger process.

You are right the influx of spacs has led to all sorts of non revenue companies coming public, but not all spac mergers involve non rev companies, but the revenue growing companies have been dragged down by the sheer # of spacs.

I'm thinking now that the pressure of oversupply has alleviated, for the time being at least, those revenue growth companies will break away from the group. The challenge will be finding those companies which deserve to break away.

 

[tom1944]

Tie asset sales to inflation from the date of purchase to the date of sale and tax any gain at the regular income tax bracket rate
The brackets should also be adjusted for inflation every year

 

[mdk02]

Tie asset sales to inflation from the date of purchase to the date of sale and tax any gain at the regular income tax bracket rate
The brackets should also be adjusted for inflation every year

The brackets are already adjusted annually. Basis adjustments theoretically make a lot of sense but are administratively very difficult.

 

[T2Kplus20]

Everyone loves Elon!

https://www.cnbc.com/2021/04/24/elon-musk-to-host-saturday-night-live-on-may-8.html

 

[rutgersal_rivals139582]

AT&T much like IBM has a legacy business that is dying or stagnant and is trying to incorporate a high growth business. Unfortunately, both companies are late coming into the game and have a lot of catching up to do.

1-2% growth in a low interest environment is horrible. They could grow their cash faster in bonds.

Both companies need to rethink their business model. Cut dividends and use the money to invest and buy other companies. I don't know. Telecommunications is not my forte, but all I know is that these companies need to start thinking outside the box.

I worked for AT&T in Bedminster back in the day, and the company today vs yesterday couldn’t be more different. In Bedminster, you had people falling asleep at their desk. It was ridiculous. Today’s AT&T is actually SBC, which bought AT&T, but kept the AT&T name thx to its brand equity. It includes Warner media which includes HBO as well as DirecTV. It’s businesses are mature but I wouldn’t refer to them as dying. Wireless business is growing reasonably. You’re not going to make a ton of money with AT&T but it should do reasonably. Everyone got killed by COViD, so I see that as a one time blip.

 

[RU05]

Everyone got killed by COViD, so I see that as a one time blip.

But for whatever reason T never bounced back. Stock price was pushing $40 Dec of 2019. Maybe this qtr's earnings report gets this thing going again.

 

[Rutgers Chris]

There is little evidence tax cuts spur growth. Clinton raised taxes and the economy flew. Good ahead and look at the GDP growth numbers under Obama and Trump. Very little difference between the two. Same for employment. I just suggesting to be a little more cautious with being so confident about cause and effect.

Clinton also cut capital gains from mid 30’s to 20. Biden helped push that through from the senate floor. Now he’s raising it, or at least pretending to want to. Interesting dynamic.

 

[rutgersal_rivals139582]

But for whatever reason T never bounced back. Stock price was pushing $40 Dec of 2019. Maybe this qtr's earnings report gets this thing going again.

It has been hard for them to grow their Topline, which fell in 2020 due to COViD. I would expect AT&T to rebound once things get back to normal. If you feel confident in T’s prospects, nows the time to accumulate.

 

[Jtung230]

Everyone loves Elon!

https://www.cnbc.com/2021/04/24/elon-musk-to-host-saturday-night-live-on-may-8.html

This will be fun.