ftp.xmission.com/2014.06.ftp.xmission.com.tar/ftp.xmission.com/pub/lists/persfin/archive/v05.n048

Internet Message Format | 1998-09-03 | 16KB

From: [e-mail] (persfin-digest)
To: [e-mail]
Subject: persfin-digest V5 #48
Reply-To: persfin
Sender: [e-mail]
Errors-To: [e-mail]
Precedence: bulk
Content-Transfer-Encoding: quoted-printable
X-No-Archive: yes

persfin-digest        Friday, September 4 1998        Volume 05 : Number 048



In this issue of the Personal Finance Digest:

       Re: Are Drips Worth It?
       3-year Rule
       Rd: Re: purchase of one share
       Re: Re: Investing
       Re: Investing
       re:  Stocks in IRA accounts
       Re: Stocks in IRA accounts

The messages posted to the Persfin-Digest are opinions and are not
intended to substitute for qualified professional advice.  Subscribers
should seek the services of qualified professionals for such advice.  The
publisher, Internet provider, and Digest contributors cannot be held
responsible for any loss incurred as a result of the application of any
of the information provided here.

To ask questions or provide answers, send your email to
"[e-mail]".  Also, you can "reply" to the
persfin-digest and your email tool should fill in the same address.
However, if you "reply", be sure to edit the subject field in your email
to reflect your topic.

Copyright (c) 1998, Jeff Salisbury

POSTED SUBSCRIPTION FEE:  $20/year.  Payment is optional.  You will not
be billed.  The Digest is available to all subscribers, whether or not
they pay.  I do not discriminate either in favor of paying subscribers
or against nonpaying subscribers.  If you feel that the information
presented here is worth the fee, and you feel comfortable paying it,
send cash, check, or money order (U.S. funds), payable to "Jeff Salisbury",
to:

       Jeff Salisbury
       65 North 1300 East
       Logan, Utah  84321

Payment will be acknowledged by e-mail if you include an e-mail address.
Subscribe: e-mail [e-mail], text: subscribe persfin-digest
Unsubscribe: e-mail [e-mail], text: unsubscribe persfin-digest

----------------------------------------------------------------------

Date: Tue, 01 Sep 1998 18:24:23 -0400
From: Derrick Cole <[e-mail]>
Subject: Re: Are Drips Worth It?

I had Intel as well.

First, I opened a brokerage account (I chose Waterhouse; I'm just a
satisfied customer).  Second, I informed each of my DRIP Plan
Administrators that I wanted a stock certificate issued for all whole
shares, a check from the sale of the fractional share, and my DRIP
account closed.

Over the next 2-4 weeks, I began receiving the certficates and checks.
I then simply endorsed over the formers and deposited the latters into
the brokerage account (and of course signed up for free reinvestment of
dividends for all stocks/funds held in the account).  Voila!

As I stated in my previous, I utilized DRIPs to enmass equity a little
at a time (from nothing), without being swamped with commissions on such
small contributions.  I, too doubt I'll need to use them again myself,
now that I've established a brokerage account from same.

Derrick

[e-mail] wrote:

>      On Aug 27 Derrick Cole wrote
>      "... I've since consolidated my DRIPs into a single
>      discount brokerage account with free dividend reinvestment, and
>      can "enjoy" the improved liquidity, single statement, etc."
>
>      How did you do that?  I have Intel as a DRIP that I probably
>      should consolidate in the same way to make it easier to sell,
>      etc.  With the advent of discount brokers I don't think I will
>      ever do a DRIP again.  I have enough paperwork in my life.
>
>      [e-mail]
>
>
> -






- -

------------------------------

Date: Tue, 01 Sep 1998 18:17:53 -0500
From: "Harold R. Justice" <[e-mail]>
Subject: 3-year Rule

I have been told anyone can give anyone else up to $10,000 per year with no gift or
estate tax consequenses. However, the accountant doing my father-in-law's estate tax
forms says  any gift, even if it is under $10,000, that was given within 3 years of
death, must be included in the gross estate. Is this correct. Please site an IRS
publication to support your answer.

Thanks,

Harold


- -

------------------------------

Date: Tue, 1 Sep 1998 20:38:06 EDT
From: [e-mail]
Subject: Rd: Re: purchase of one share

Date: Sun, 30 Aug 1998 13:02:18 EDT
From: [e-mail]
Subject: Re: purchase of one share

In a message dated 98-08-29 22:22:54 EDT, you write:

> Bertrand wrote:
>  Date: Tue, 18 Aug 1998 14:46:34 -0400
>  From: Bertrand Horwitz <[e-mail]>
>  Subject: purchase of one share
>
>  I wish to purchase one share to give to a child as a birthday present.
>  Where is the least expensive place that this can be done?

I recently did this through Ameritrade.  I paid the normal $8.95 for the
trade, but then had to pay another $30 to transfer the name on the certificate
and have that certificate mailed.    I'm not sure how these costs may differ
elsewhere, but it was very easy.

Scott
>>>>>>>>>>>>>>

I havn't done it, but there is a racket starting with Merrill Lynch (ed) for
issuing certificates. I just got Waterhouse materials and they claim that
there is no charge for delivery ( the name of issuing stock in paper form ) I
don't know if they are unique, but Scott charges 25 bucks on a $7 trade for
delivery. If any others are "free delivery" I'd be intersting in knowing who.

I havn't tried them, Waterhouse, but it would be worth a call/e-mail to
confirm. I believe that they trade for 12 bucks up to more shares than I have
money for.

duke

- -

------------------------------

Date: Wed, 02 Sep 1998 11:30:11 -0400
From: Randy Barnes <[e-mail]>
Subject: Re: Re: Investing

>
> Date: Mon, 31 Aug 1998 00:31:06 EDT
> From: "Michael Kurela" <[e-mail]>
> Subject: Re: Investing
>
> >Date: Wed, 26 Aug 1998 23:15:29 -0400
> >From: "Steve Foulks" <[e-mail]>
> >Subject: Re: Investing
>

> Stock markets are efficient ONLY in the broadest sense of the terms.

Michael, Steve, and others,

What a great dialog. Thanks for sharing your views, and thanks
especially for the depth of your discussion. I find validity in both
your posts and agree completely with both of you on many aspects of your
arguments, given the proper contexts and situations.

Many people can and do make a fine living my trading the short term
inefficiencies in the markets. The last month has been especially good
for traders. More have probably been wiped out.

I have studied the markets academically, and as a hobby, since 1982, and
hope to someday sit on my butt and successfully trade my own account for
my livelihood.  As a word of warning to many on the list that think this
way of trading is a road to riches, please realize that most people that
pursue trading as a career end up far worse off than they were before.
I takes a great deal of money to get started, and under capitalization
is probably the top reason for failure. (Or second, right behind greed,
and just ahead of inexperience.)

The SOES (level II) trading offices that are opening on every corner
these days are the perfect place to see this activity in action. Within
2 weeks of opening accounts 80% of the traders are history. It takes a
long time and deep pockets to become an effective trader and is
definitely a full time career. For those that succeed the rewards are
great, but the markets are very efficient at devouring the weak. Watch
your back, front, and sides.

Most of us are far better advised to make regular investments into index
funds, SPYders, or simple index-beating strategies and letting the
EFFICIENCIES of the market and the magic of TIME do their thing. A young
person with a little discipline can pack away a 7 figure nest egg
without winning the lottery or attempting a career of a market trader.

Best wishes to all you traders and investors alike.

- -Randy

- -

------------------------------

Date: Wed, 2 Sep 1998 13:50:48 -0400
From: "Steve Foulks" <[e-mail]>
Subject: Re: Investing

Michael Kurela stated:

>Stock markets are efficient ONLY in the broadest sense of the terms.  In
>the short-term, they are not efficient.

This is a nonsensical statement about capital market efficiency.  Here is
the efficient market hypothesis once again:

STOCK MARKETS PRICES REFLECT ALL INFORMATION WHICH COULD EFFECT A
STOCK, INSTANTLY, AND CORRECTLY.

It is an instantaneous concept, not a short or long term concept.
Information comes out, and the market instantly adjusts prices to reflect
that information.  The information could be news about a company, the
economy, rumors, methods of analyzing investments or strategies for making
abnormal returns, psychology about investors, etc.   Either the market is
efficient at this moment, or it isn't.  If you told me that the market is
inefficient, I can accept that as a rational proposition, or perhaps what
you are saying is that there are times when it is inefficient, and times
when it is efficient - that's a logical proposition also.  Each proposition
could be tested empirically, but given that this audience probably isn't
interested in such a debate, I think I can demonstrate in terms that
everyone can understand, why it is likely that most markets are efficient.

I don't know how many can remember the Arab oil embargo, but as soon as the
Arabs announced they were not going to ship oil to the US, lines formed
instantly at gas pumps in the US, even though tankers in transit continued
to deliver their oil, and there were normal oil supplies in the US.  Even
though there was not a shortage on that day, people realized that they had
to act quickly to take advantage of this information.   Sometime later, I
was watching national TV news and they showed people in Japan fighting over
toilet paper, because their was a shortage.   The reporter then said  that
unless their was an increase in capacity in this US, this shortage would
affect the US in a few years.  I went to the store to pick up some food a
few days later, and I thought maybe I should pick up some toilet paper.
There was no toilet paper, no paper towels, napkins, not even any paper
plates!!

Morale of this story - markets react instantly to new information, they
don't wait for shortages.  If you want to make abnormal profits in the stock
market you need to pick winners at the right time.  If you were the only
market participant you wouldn't have to be in a hurry to analyze new
information to determine when to buy or sell.  But if you had just one
competitor, you would have to act before they do.  Given there are millions
of investors, many of whom are very adept at analyzing data in the
marketplace, it is logical that the time frame from data decimation to
market reaction become extremely close to instantaneous.  This is the logic
behind the efficient market hypothesis.

Mike claims that the stock market is inefficient and he is able to make
tremendous abnormal profits due to this inefficiency.  I presume that it is
inefficient in his mind because it doesn't  take advantage of his strategy
for becoming infinitely wealthy.  If this strategy truly worked, then I
would use it, the managers of mutual funds would use it - in fact everyone
would use it because we all want to become infinitely wealthy.  Since so
many people are now using this strategy, the speed at which you must
implement this strategy becomes very short until you have an infinitely
short period of time to implement it.  In other words, it potential success
makes it worthless.

I applaud Mike's efforts because I benefit from it - he is helping to make
the market efficient for me.  If the market is efficient,  I can't make
extra money by analyzing stocks, so why not just buy a diversified portfolio
of stocks, earn the normal return which is very satisfactory, and spend my
extra time doing something I like?   There are inefficient markets out
there.  Occasionally we hear about someone going to a yard sale (a market)
and buying a Rembrant for a $1 from an unsuspecting owner.  Most publicly
held company's, because they are small, seldom traded, and closely held,
have almost no one following their progress.  These markets are likely to be
inefficient, but because there are tens of thousands of these companies, the
cost of analyzing which are over, or undervalued, would probably outweigh
the benefits.

Steven M. Foulks, CPA, CFP, PhD
<http://www-instruct.nmu.edu/business/sfoulks/>

Northern Michigan University <http://www.nmu.edu/home.shtml>





- -

------------------------------

Date: Wed, 02 Sep 1998 23:09:28 -0400
From: Fred Schiff <[e-mail]>
Subject: re:  Stocks in IRA accounts

>I am thinking about opening a Roth IRA with a broker and purchasing
>individual stocks with the contributions.  The broker who told me that I can
>contribute $2000, but my actual stock purchases cannot be for the whole
wrong!
get a new broker.  period.  If they can't give you accurate information
get somebody else.  If he can't give you correct information about putting
money into an IRA, what about when you want to know something about
distributions.  Passing the series 6 & 7, licenses isn't that hard and
doesn't mean that a broker is qualified to give good advise.  Only that they
can *sell* stocks and mutual funds.

For you IRA, you might want to look into either direct purchase plans
buying stock directly from the companies) some of whom allow you to have
the plan setup as an IRA.

Also check out the NAIC, National Association of Investor Corp.
http://www.better-investing.org  Not only do they have several
different low-cost stock purchase plans but they also have an investment
method to pick stocks based on fundamental analysis.

Remember, there is no law that says you need to have all of your brokerage
accounts with the same broker.  Shop around.  You could have your
retirement accounts with a different broker. And if you're doing you're own
reseach you may not need a full service broker anyway.

my two dubloons.

Fred
Fred Schiff ([e-mail])

- -

------------------------------

Date: Fri, 4 Sep 1998 09:47:09 -0400
From: Rich Carreiro <[e-mail]>
Subject: Re: Stocks in IRA accounts

[Disclaimer: this is my opinion, not advice.  I am not a professional.]

>I am thinking about opening a Roth IRA with a broker and purchasing
>individual stocks with the contributions.  The broker who told me that I can
>contribute $2000, but my actual stock purchases cannot be for the whole
>$2000 since I have to include the commissions in the basis.  This doesn't
>make sense.  With my mutual fund IRAs, I purchased $2000 in fund shares and
>sent a separate check for the annual maintenance fee.  If I were to make

Your broker is correct.  You cannot pay IRA trading commissions from
outside of the IRA.  If you do, the payment will be treated as an IRA
contribution.  You'll note that if you buy load funds, the same things
happens if you try to pay the load with non-IRA funds.

Annual custodial fees are an entirely different animal than commissions.
If you don't like it, blame Congress for writing the tax law the
way it did.

I note that even in taxable accounts, commissions and account fees
are treated differently.  Account fees can be deducted currently as
a miscellaneous investment expense, subject to the 2% AGI floor.
Commissions may not be deducted currently and instead are capitalized
into the basis of the security.

Rich Carreiro
[e-mail]
P5-100/RedHat Linux 4.1

- -

------------------------------

End of persfin-digest V5 #48
****************************

-
To unsubscribe to persfin-digest, send an email to "[e-mail]"
with "unsubscribe persfin-digest" in the body of the message.
For information on digests or retrieving files and old messages send
"help" to the same address.  Do not use quotes in your message.