Estate Tax to be Repealed in 2011

In 2011, the Estate Tax is to be repealed.

I can hear it now:

"Hey Sis! What do you say we buy Grandpa skydiving tickets for Christmas!"
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Windfall

Here's a dividend check I got this week. Any thoughts on how I should spend it? Any guesses on how much it cost the company to send it to me? I specially enjoyed the word ONLY in the amount.

One Night Stand?

I just sold ten shares of my fave stock this morning to help pay for our new kitchen. While processing the on-line sale, two of the selections for payment included "check," and "overnight" (for a $20 extra fee.)

I have the luxury of waiting for the check, plus I didn't want to reduce my gain, so I selected "check." After the transaction, I saw this disclaimer:

If you have elected an overnight check, it will be mailed 3 business days from the trade date for delivery the following business day.

Can someone please tell me how mailing a check three days after a transaction qualifies as an overnight delivery??
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Someone paid off our mortgage

We got two interesting pieces of mail this week from our credit union:

1) A waiver of all miscellaneous fees because our balance is greater than $100K.

That's right, our credit union states that because our cumulative balance is greater than a hundred thousand, they will now waive fees such as non-Credit Union ATM fees, stop-payment orders, overdraft service charges, etc. Cool! The only problem is that we don't have over $100,000 at the credit union. We don't even have over $20K there.

So I said to myself, OK, I am willing to let this ONE mistake slide, but the NEXT TIME this institution makes some kind of mistake on my account, Man! I am gonna be all over them!

2) A statement indicating the balance of our mortgage has been Paid In Full.

Yes, you read that right. We got our monthly statement that showed TWO payments instead the usual one. One with the regular monthly payment, and one showing a payment that equals the remaining balance on our mortgage, leaving a balance of zero dollars and zero cents. This represents a change of well over a hundred grand.

It occurred to me that I may have been a bit hasty in my resolve to jump on my credit union if they made more than that one mistake. I'm feeling more forgiving now, and I think I'll let this one slide, too.

But I swear, if they make THREE mistakes, they will definitely be hearing from me.

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UPDATE - 04/21/2007:

Here's what the original statement looked like. My first theory was that it was some kind of April Fool joke. Look at the Due Date!







Now look what we got in today's mail:







No offer of any kind of explanation - no apology, just a new statement. Oh, well, for a few weeks we had "documentation" that we paid off our mortgage. Such a relief! (Though only temporary - *sigh*)
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What would YOU do?

OK, here's the circumstance. You tell a friend you're headed to Las Vegas for a week of fun and excitement. He pulls a dollar from his pocket and says, "Great! Will you put this into a slot machine for me and give me whatever winnings that slot pays for my dollar please?"

You say, Sure, why not, and put his dollar in a specific pocket of your wallet or purse.

You go to Vegas and have a great time. You see some shows, gamble a little, and eat way too much.

On your last day, you remember your promise. So you reach into the special pocket where you find the dollar your friend gave you and put it into a slot. You pull the handle, the wheels quickly turn, and one by one they stop as follows:

• Cherry
• Cherry
• Cherry

Bing Bing Bing! Twenty thousand dollars. On your return, what would you do?

(For the purposes of this discussion, please disregard tax consequences.)

Would you ...

1. Hand your friend two dollars and say, "You doubled your money!"

2. Give him ten thousand and keep ten grand for yourself.

3. Give him some other amount and keep an amount for yourself. How much?

4. Tell him you won $20K with the dollar he gave you and declare how much he's getting. How much?

5. Tell him YOU won $20K while in Vegas and would like to share some with him, because he's been such a good friend. How much?

6. Give him the whole $20,000, but hint like crazy that he should give you some for the effort.

7. Give him the $20,000, and make no attempts to receive anything in return. (Bonus if you make a fuss over accepting such a gesture.)

8. Give him a heartfelt pat on the back, saying "better luck next time," and spend the entire wad on yourself. After all, who can prove who's dollar it was?

9. Another choice?
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Modern Technology

I was checking my credit card transactions on-line the other day and marveled at how fast they are posted after the fact. In the old days, you got your statement and it showed charges you made last month. The newest charge would still be about a week old, and any charges you made after that would be on the next month's statement.

Today, you can see the charges rack up on the same day you incurred them - maybe even within hours - I've never checked. This made me imagine the following scenario.

A man comes home from work and sees a note from his wife that she's gone shopping with a friend. He thinks, Oh, no - she always overspends when she shops with this particular friend. Later, while looking at the budget, he happens to sign onto his account at the bank and looks at his credit card transactions.

He sees a rather large charge from a department store, and sees that it was made that day. He sighs, and continues his work. Later on, he needs to go back to that account, and sees yet another somewhat expensive purchase, this time at a shoe store.

He thinks, Oh my god, my wife's going nuts with the credit card. He calls his wife's cell phone, but gets her voice mail, so she must be talking to someone. About a half hour later - another charge - this time at a hair salon. He calls again - instant voice mail - and leaves her a message.

Then he has a thought. It occurs to him he might be able to follow her path through the shopping mall by tracking her charge purchases. By plotting her activity, and considering her habits, he calculates that she should be right around the intimate apparel shop. So he calls there.

"How may I help you?"

"Yes, I'm looking for my wife. I'm wondering if you happened to have seen a woman - tall, blond, wearing a red leather jacket - probably talking on her cellphone?"

"Yes! She actually just left."

"Did she make a purchase?"

"She sure did! Two hundred and two dollars worth!"

"AAAAARGHHH!!"

This scenario may be far-fetched, but as modern-day technology improves, we may find more novel ways to use the real-time information that such technology can provide. In this case, a man tracking his wife's whereabouts by following her up-to-the-minute credit card purchases. How would YOU use new technology?

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Auto investment

One thing I learned once I had a hand in investing in the stock market for the first time was auto-investments.

Auto-investment, or Direct Deposit, is having your investment in a stock come automatically from a bank account, such as a savings account. You fill out a form acquired from the holder or manager of your stock account, and they will regularly automatically deduct the amount you specify from your savings or checking account and directly deposit said amount into your stock account towards the purchase of shares of stock in that company. Presumably, if you regularly invest a fixed amount towards the purchase of stock, you can take advantage of something called "dollar cost averaging." In other words, when the stock cost is low, your regular deposit is buying more shares than when the cost is high, at which time you're purchasing a lesser number of shares.

Anyway, at first, I thought they held the balance until such time as it would have reached a sufficient amount to purchase one share. For example, if Sears were going for $50 per share, and you were depositing $25 per month, they would hold your $25 until the second month, and then credit you with one share.

Well, that's not how it works. In fact, if Sears were going for $50 per share, and your monthly auto-deduction were twenty-five bucks, you would be credited as having purchased .5 shares the first time a deduction was applied to your account. More likely, the figure would be accurate to the thousandths of a share, like 0.500 shares. Accountants like to deal with tiny fractions. Like that would matter to a first time investor.

Anyway, for me it was quite a hassle to start up Direct Deposit. It's not like Sears did not want my money. Far from it. The problem was trying to get the Direct Deposit account properly set up. For whatever reason, in the Direct Deposit world, your savings account number is not the seven or so digits you write on the back of your check from Aunt Bessie for your birthday, nor what you write on the deposit slip at the bank.

No. Instead it's some brazillian-digit number that's BASED on your seven digit account number that the stock manager needs. You also need something called a "bank routing number," another number that takes longer to write out than to say.

After about the third attempt to sign up for Direct Deposit for Sears, I decided to call my bank directly and ask for the proper numbers.

"Wachovia Bank of Charlotte, formerly Union Bank of Delaware, formerly Merchant's Bank of South Carolina, how may I help?"

"Yes, I am trying to set up Direct Deposit for a stock account and I need my routing number and my account number please?"

"May I have your account number please?"

"Sure, it's four two four, one nine six."

"Four two four, one nine six?"

"That is correct."

"OK, for Direct Deposit, you need to add the following to the front of the number. Have you got a pen?"

First of all, this teller obviously has WAAAAY too much faith in my abilities to write down numbers without making mistakes. I grab a pencil.

"Yes, I have a pen. Go ahead," I said.

"Zero zero zero, zero zero zero, zero zero two."

"Let me repeat that," I beg, "Zero zero zero, zero zero zero, zero two."

"No, it's zero zero zero, zero zero zero, zero ZERO two."

"Zero zero zero, zero zero zero, zero two," I attempt again.

"No. It's ..." she begins, "Hold on." I can hear her counting in the background. "OK. It's eight zeroes and then a two.

"Ahhh!" I exclaim. "Now I've got it. So it's eight zeroes, followed by a two, followed by my account number. Is that right?"

"Yes, but you also have to add digits AFTER your account number."

Oh, brother. I was beginning to wonder whether it was worth it at this point. Sears stock might have plummeted $6 by the time I got this right.

"OK," I sighed, "lay it on me."

"You have to add zero one to the end."

That's it? I asked myself.

"That's it?" I asked her.

"That's it. So altogether, the number you need to tell them is zero zero zero, zero zero zero, zero zero two, four two four, one nine six, zero one."

"Got it," I presumed. "Is that all I need?"

"No," she proceeded, "you also need the bank routing number."

"How long is THAT?" I cringed.

"That's only nine digits!" she laughed. I honestly think bank tellers get a charge out of rattling off numbers over the phone. "Pen ready?" she patronized.

"Pen ready," I fibbed.

"Two seven six ... (pause) ... three one four ... (pause) ... five nine six."

I could tell she added these pauses intentionally to mock my short term memory issues.

"OK, I think I got it. 276-314-596. Right?"

"Yay!" she said. Now it was clear she was basking in superiority.

"Thanks," I began, "Now all I gotta do is get all this to the stock manager before they close at five o'clock." It was 10:30 in the morning. Silence greeted me at the other end. "Hello?" I queried.

"I'm sorry, I was typing something." Sure. "Is there anything else I can help you with today?"

No, I thought, you have done more than your share of making me feel totally incompetent, thank you.

"No," I began, "you have been more than helpful," was what came out instead. "Thank you."

"Thank YOU for calling Wachovia Bank of Charlotte, formerly Union Bank of Delaware ..."

The rest just kind of dropped off the radar.

"Bottom line, once I got the proper digits loaded up on the stock manager's tabulator card, (carefully printing the digits in the microscopic boxes, and then darkening the proper circles in rows beneath each digit,) and had sent it off, I was on my way to take full advantage of "dollar cost averaging."

*** Read from the Beginning *** Next Article ***

Coca Cola

"Coke? or Pepsi?"

Which are you? It seems you are either one, or the other. Nobody likes both. If you DO drink both, you still prefer one over the other.

My wife and I are at a restaurant. The server says, "Care for something to drink?" My wife says, "Coke, please." The server says, "Is Pepsi OK?" She asks, "What else've you got?" She will NOT drink Pepsi. Just doesn't like it. Me? I will drink both, but I prefer Pepsi.

Opposites attract, I guess.

We were at one of those hundreds of festivals they have in Northern California a few years ago. They had the little booth set up with the Coke versus Pepsi challenge. (I know they used to do that in the mid 70s; I was surprised they were still trying to settle that debate decades later.)

Though they want you to believe that the challenge is unbiased, the bias comes in after you have made your selection. I walked up to the stand and the woman poured two small plastic cups with the caramel colored soft drinks from bottles that were enclosed in hoods so you couldn't see the brand names.

I took a sip from the cup on the left, swished it around a bit, and swallowed. Then I took a sip from the cup on the right, swished and swallowed. "Which do you prefer?" the woman asked cheerfully. "The one on the right," I proclaimed. She lifted both hoods simultaneously, revealing that my soft drink of choice was the Pepsi, and she trumpeted, "PEPSI!!" for all to hear. She applauded me on my selection, and others who were standing around joined in. She replaced the hoods.

Then my wife stepped up. The woman drew the hooded bottles beneath the table, (presumably to possibly switch them, or not,) and returned them to the table top, where she proceeded to pour out two cups. My wife drank from the left cup, then from the right, and put both cups down. "Which do you prefer?" the woman asked cheerfully. "The one on the right," stated my wife.

Without saying a word, the woman raised the hood on the right bottle just enough for us to see that she had chosen the Coke, and then lowered it again. I also seem to recall her giving my wife quite a GLARE, however perhaps I was mistaken. Anyway, the reaction you get from your choice really seems to depend on whether or not you choose the "right" product.

Anyway, I digress.

Taking stock of Coke

One day I asked my wife what company she'd invest in if she were to want to buy stocks. She said, "I don't know. Probably Coke."

I asked why, and she said, "Why not." That's one of the things I love about her - she doesn't hold back.

So I asked myself, well, why not? The Coca Cola company has been around since the 1880s. They make a great, popular product, and you see it everywhere. It's not going out of business any time soon, so let's invest in it.

Coke, but which one?

When I started my initial investigation into Coke, I discovered an interesting thing. There were TWO companies available - the Coca Cola Company, and Coca Cola Enterprises. Which is which, and what's the difference? Turns out that Coca Cola Enterprises is the bottling company that packages Coke soft drink products, and Coca Cola Company is everything else, (the marketing, research and development, advertising, etc.) So which did we want? When I thought about what made Coke such an exciting candidate, my thoughts were not so much about the actual soft drink, and certainly not about how it got into the bottles. Rather, when I think of Coke, I think of the ads we grew up with.

Who could forget these slogans?

1963 Things go better with Coke.
1970 It's the real thing.
1971 I'd like to buy the world a Coke.
1976 Coke adds life.
1979 Have a Coke and a smile.
1982 Coke is it.
1988 Can't beat the feeling.
1989 Can't beat the real thing.
1993 Always. Coca-Cola.

I knew that the Coca Cola "wave" was more than just the carbonated beverage in the odd shaped green bottle, it was the image. Coke was everywhere. Do a search on eBay for Coke or Coca Cola and you'll find tens of thousands of items for sale that have the Coke logo. For us, the Coca Cola Company was about more than just the cola, and that was what we wanted to invest in.

By this time in our lives, my career was taking off, and I was in a position to buy more than just ten shares of a company. Coke was selling for about $70 a share, so I figured 15 shares should be a good initial investment. In the summer of '97, my wife and I became proud shareholders in the Coca Cola Company.

It was time to ride the "wave."

*** Read from the Beginning *** Next Article ***

Turner Broadcasting

Something new

In 1987, I was looking for additional interesting companies in which to invest. It was time for something new, in more ways than one. I had already started investments in Sears, Kodak, and Kmart. In previous posts describing my experiences with choosing those companies, you may have noticed a trend. If a company had been around for several generations, there was little reason for me to believe they would not be around for several more. Therefore, in my novice investor's enthusiasm, company longevity became my primary criteria. (In a future post, I'll let you know how that worked out for me.)

The FOX Network

On April 6, 1987, a new primetime television network premiered. The FOX network became the fourth national network after the "Big Three" (ABC, CBS, and NBC,) of the nation's most popular TV networks, excluding PBS.

I thought about that. Wow. A fourth network. The "Big Three" had been around at least as long as I had, and now there was a fourth. There was something magical and mysterious about a company's ability to get so large as to be able to position itself with such a distinguished group as the three biggest broadcasting companies in America such as those the FOX Network was joining. That would have been like an American automobile company joining the "Big Three" carmakers of Detroit fame, Ford, Chrysler, and GM.

But that's what FOX did, and I was impressed. I said, any company who can pull off a deal like that one must have something going for it, so I am going to invest in it.

Let's buy stock

So in the Fall of '87, I walked into my local discount stock broker, fully prepared to pay an odd lot differential, with the intent of buying shares in the FOX Broadcasting Company.

"How can I help you?" asked the broker who greeted me.

"I'd like to invest in the FOX Broadcasting Company!" was my proud exclamation.

"Hmmmm," the broker began, "Do you know what Exchange that is on?"

Exchange? I asked myself.

"Exchange?" I asked the man.

"Yes. Is it on the New York Stock Exchange, the American Stock Exchange, NASDAQ?"

Nazz Dack? No, I was not going there. I've already exhibited investor ignorance in the past. I was going to try to bluff this time.

"I'm uncertain," was my casual response.

"Let me try to find it for you," he offered.

After a few minutes of digging in books and on his computer, he asked a colleague. "Hey Frank. What do you know about the FOX Broadcasting Company?"

"FOX Broadcasting?" he began, "Is that anything like Turner Broadcasting?"

"Is that anything like Turner Broadcasting?" my guy asked.

"I don't THINK so ..." I stumbled. Of COURSE it wasn't anything LIKE Turner Broadcasting. Haven't these guys HEARD of FOX Broadcasting?? Haven't they watched Married with Children, or The Simpsons? Well, maybe not.

"I'm not sure we are going to be able to help you. There is a possibility they may not yet have gone public."

To say I was disappointed was apparent. Now, after all those stock picks based on longevity, I chose one that was too new. It hasn't even been made available to relatively poor investors such as myself. I was dejected. I came in to buy stock in an exciting new company, and I feared walking out empty handed.

TBS

Then a thought occurred to me. Turner Broadcasting Company. Wasn't that that OTHER Broadcasting wonder that was taking over the TV experience in recent years? As I recalled, this really rich guy in Atlanta, Ted Turner, was churning out network after network on cable. Everywhere you turned, you saw a new Turner channel on TV. Big names. Common names, such as CNN, TNT, and TBS.

Though I walked in to buy FOX, my desire was to acquire interest in an exciting new television venture. It might have been too early to buy FOX, but apparently Turner Broadcasting was established enough to be made available to the public. After all, these guys have heard of it, and no doubt they are wealthy financial advisors. So why not. Let's buy Turner Broadcasting.

"How much is Turner going for?" I asked, too late to realize I sounded like I was asking some guy what he's looking for for an old Chrysler.

"Let me check," he started. After tapping a series of keys on his computer, he comes back with, "Turner 'A' or Turner 'B'?"

Here we go again.

"What's the difference?" I queried, resigned that my ignorance was probably old news at this brokerage.

"Turner 'A' pays dividends, and 'B' does not."

He explained, in typical brokerese, what that meant. I was still trying to absorb the whole investing experience, so I'm not sure if I recall how he explained it. I think it meant that the 'B' company reinvests what they would have paid out in dividends back into the company, or something like that.

"Turner 'B,'" I requested, wanting to put as much into investing as I could. I had no need for the small amount of dividend I would have gotten from this tiny purchase anyway.

A few more taps on the keyboard yielded a response. "Turner 'B' is presently trading for eight and three eighths," came back the professional reply.

Eight and three eighths? Dollars?? Eight dollars a share? That didn't even sound like a price for something you invest in. I was used to paying share prices in dollar amounts of 30s, 40s, and 50s. I can't even buy a pair of gym shoes, ('athletic footwear' if you're under 25) for less than thirty dollars. But I figured, OK Turner's new, so maybe that's why the price is so low.

I looked at the amount I was prepared to pay for FOX, did a quick calculation, and said, "OK, give me 25 shares of Turner 'B.'"

A few taps of the keyboard later, and I walked out the proud share holder of twenty five shares of Turner Broadcasting Company.

Little did I know that that purchase, and a later purchase of 50 more shares, would turn into the most prolific of all my investments. At one point, after several stock splits and mergers, my stake in Turner was worth over $13,000. Helped us put a down payment on a house. A real head turner.

*** Read from the Beginning *** Next Article ***

Sears

In my previous post, I stated that my first foray into the stock market was a ten share purchase of Sears and Roebuck. (For those born after the 70's, that's what Sears was called.)

But why Sears?

While thinking of which companies I would like to invest in, I asked myself what criteria I should use. After all, there was plenty of advice available regarding Earnings Ratios, etc. Did I want to learn what all that was, and research company portfolios, to determine into which companies I should invest?

I decided that since I was investing so little initial funds, I would just go with my gut. One of the first criteria that came to mind was longevity. I asked myself, of the big companies, which have been around for a long time? For whatever reason, Sears came to mind. Sears has been around since the late 1880s. It seemed that a company that had been around that long must be doing something right, so perhaps I had my first candidate.

I told my Mom I was thinking of getting into the stock market.

She said, "Really? Which company are you thinking of investing in?"

I said "Sears!"

And she said, "Oh! I shop at Sears all the time!"

Normally such a statement by itself would have been sufficient to ensure I had picked a winner, but she had more.

"Did you know your Grandpa used to buy chickens from Sears?"

I did not know that. My Grandpa was a farmer in Minnesota during the early 1900s, and it seems that at the time, Sears and Roebuck was quite a supplier of choice for farmers of the day.

The Sears Catalog

So Grandpa ordered chickens from, get this, the Sears Catalog. A week or so later, a crate would come to the farm with live chicks from Sears.

Ahhh, yes. The Sears Catalog. For those of you born in the late 80s, that was a really thick catalog you used to get for free at Sears - all you had to do was ask for it. The Sears Catalog. This book was so big and heavy, Mom used to use it, (along with the Phone Book,) to hold items she was gluing down with Elmer's Glue . And when my sister could not reach the dinner table, Mom would say, "Run and get the Sears Catalog so your sister can reach the table." Yes, the Sears catalog had a special place in our family history.

How could Sears be a bad investment?

*** Read from the Beginning *** Next Article ***

Just jump right in

Long before the days of E-Trade and Ameritrade, you had to go to the offices of an actual stock broker if you wanted to buy a few shares of stock.

Around the mid-80s, when the MBA boom was in full swing, followed by the stock market boom of the 90s, discount brokerage services were the rage.

They boasted low commissions to lure new investors to trade for the first time. ("As low as $35!")

Around that time, I was starting to do well in my career, and found I had a few bucks to spare. I had always wanted to get started investing in the stock market, but didn't know where to begin. The discount brokers seemed a good bet.

I figured the best way to begin my investing "career" was to just jump right in, however small my initial investments. I decided to pick a few companies and buy ten shares each. That would get me started.

I chose my first company in which to invest, Sears, I believe. Then I visited the branch of a local discount trader in my town.

"How can I help you?" asked the broker who greeted me.

"I'd like to invest in Sears and Roebuck!" was my proud exclamation, knowing that I had taken that first step.

"I'd be delighted to help. How many shares would you like to purchase?" he asked, professionally.

"Ten shares!"

The broker dropped his pencil. I could sort of feel his eyes rolling in his head, as if to say, "My last sale was 1000 shares of Ford Motor Company, and this guy wants ten shares of Sears."

"Of course, you realize that there will be an 'odd lot differential' for this purchase," he said dryly.

An odd what?? I asked myself.

"An odd what??" I asked the broker.

"An odd lot differential. Since you would like to purchase less than 100 shares, there is an additional charge."

So I had my first lesson in investing in the stock market. The expectation is that if you're going to buy stock, you're going to buy at least a hundred shares. A hundred shares! Let's see. Sears is selling for 34 3/8 ... 100 shares would be $3437.50 ... and I am thinking of spending a tenth of that.

Well, I thought, I came in here to buy stock, I learned my first lesson, and I am not going to let that affect my decision. I said, "Let's go ahead."

He placed the order, I paid the man the cost, plus the differential, plus the commission, and walked out of there a shareholder of ten shares of stock in the Sears and Roebuck company!!

About a week or so later, I received the stock certificate in the mail. There it was, all fancy with the scrolled borders and my name and all, but most important, the indication of how many shares I now own:

00010 shares

And to ensure no foul play, there was a bold statement on the certificate: "Good for less than one hundred thousand shares."

I was in my glory.

*** Read from the Beginning *** Next Article ***