CommenTerry

Yet Another Problem with Our Tax Code

One of many headache-causing quirks in our tax law is the rule concerning "wash sales" (not to be confused with "wash trades", which are illegal corporate transactions). The law was created to prevent people from being able to sell shares in a given stock or mutual fund at a loss then almost immediately buying them back.

Basically, the idea was to keep people from having their cake and eating it too, i.e., getting their capital loss tax write-off for the year but holding on to the stock or mutual fund as well. This is called a "wash sale" and you are not allowed to take the capital loss if you buy back the same stock or mutual fund within 30 days of the sale. Fair enough, but like many other things in life, this law has produced some unintended consequences.

The major drawback is its effect on traders, who constantly buy and sell the same stocks or mutual funds over and over again at various quantities and prices. In this case, the law gets so complicated that many accountants don't understand it or even recognize some wash sales when they see them. It even drives IRS employees crazy. Many traders have difficulty resolving which and how much of any losing trade can be written off as a capital loss. Yet another reason tax reform is so badly needed.

What Kind of Prize Do They Get?

I have to wonder about drivers who ride my bumper, completely ignore the speed limits, and mash on the accelerator as soon they spot a yellow light up ahead. These same drivers can also be seen cutting back and forth from one lane to another, always having to pass the car that was ahead of them. They seem downright irritated because no one else seems to understand their need for speed.

The entire world appears to be part of one giant conspiracy to slow them down. Why, how dare we do the speed limit or move along at a speed only slightly above it? How dare we start slowing down when we notice a yellow light? How dare we get in their way on their roads? What's wrong with us?

But the real question is: What kind of a prize do they get for being the first to arrive at their destination? I hope it's something really nice for all the chances they are taking in order to get it. When my brothers and I were kids, we were very competitive. We would try to race each other at everything, from getting dressed in the morning to eating our meals. Each wanted to say, "I [did whatever] the fastest. I beat the rest of you guys. Na, na,na, na, I won!" This would tickle my mother, who would respond by asking, "What kind of prize do you you get?"  Obviously, it was nothing more than bragging rights, which meant very little in the long run. I suppose those impatient drivers get the same "prize."

Guns Save Lives?

This morning I saw a bumper sticker with the words "Guns Save Lives." Now, I've always been an ardent supporter of Second Amendment rights and have generally been opposed to gun control legislation, but I find that statement ridiculous. It is typical of the hardcore in any advocacy group to make statements like that and turn everyone else off. To say guns save lives is like saying sex prevents HIV.

A Childish Way to Think

If you're not 100% for us, you are against us. What a childish way to think! But that's how some extremely dogmatic people and organizations actually feel, though they may never come out and say it that way. To be accepted as "one of them," you must think and act in lockstep with them.

To some conservatives, a person who is 99% conservative is liberal. Likewise, to some liberals, a person who is 99% liberal is conservative. And even some libertarians will consider some someone either conservative or liberal for not toeing their political line. I've lost count of how many times I've been called a bleeding heart liberal by conservatives and a heartless right-winger by liberals. And from libertarians, I often get the "... and you call yourself a libertarian" retort.

Is Fun Possible Without Alcohol?

There's currently a debate raging in my local newspaper as to why the city of Richmond, Va. is not considered a fun place to live. The writer of a recent letter to the editor seems to think it's because of Virginia's alcohol laws. These laws, according the writer, result in a lack of classy and sophisticated bars and other establishments that serve alcohol.

Bust as a local radio talk host always used to say, "If you begin with an erroneous assumption, you'll arrive at an erroneous conclusion." I think that can be applied here as the writer is obviously starting with the assumption that it is impossible to have fun without alcohol. How sad! One would think that, in the 21st century, this idea would have been discarded long ago. And what kind of message does it send to children and teenagers.

Random Rants and Raves #100

Never toss out a plastic grocery bag until you have balled it up in your hands to try to detect the presence of small items it might still contain.         

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If you know someone whose calculation "errors" are 100% of the time in their favor, then you can rest assured that these are not errors -- they are deliberate attempts to cheat. The law of averages would dictate that honest mistakes would go the other way about half the time.

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We all know that, over the long term, the general direction of the stock market is up, even though it may go up or down in any short period of time. However, once a person reaches adulthood, the general direction of his or her life begins to head down, although it too may get better or worse in any short time frame.

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Here's a simple response most Christians could use when confronted by someone for doing something that might seem hypocritical or contrary to their faith: "Hey, I said I was a Christian -- I didn't say I was a good one."

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I hate to admit this, but I must be the only person in the world who can't eat a meal without getting food and/or drink on his eyeglasses. That sounds like something that might qualify me for the "you might be a slob if ..." list. 

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Whenever you notice that banks are paying lower rates of interest on one and two year CDs than they are on six-month CDs, it is a clear indication that they believe interest rates will be going down.

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Message to the entertainment and modeling industries: there's nothing perfect about being skinny. 

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Good things often come to those who can manage to hang around long enough.

Know Your Weaknesses

It's generally a good idea to know your own weaknesses and mitigate accordingly. For example, I don't do well when I'm being hurried or rushed. Therefore, one of the many things I do to mitigate this problem is to write my checks for groceries ahead of time, filling in everything but the price. That way, when I go to the grocery store, writing a check is one less thing I have to hurry up and do when I go through the line.

The Netflix Model vs. the HBO Model

It's hard to believe, but Netflix has now been around for nearly eight years. Since its debut in 1999, it has built its inventory of titles to more than 80,000. In addition, similar services, such as Blockbuster's online rental business and Intelliflix have become available. I believe these services compare favorably with premium movie services, like HBO, which have been around for 30 years.

All of the online DVD rental services have a similar business model: They allow their customers to rent DVDs by mail for a monthly fee, which includes all the necessary postage. The amount of the monthly fee is determined by how many DVDs the customer would like to have out at one time. This could range anywhere from just one movie out at a time, with a limited number per month, to eight movies out at a time, unlimited per month. Each customer must use the respective service's Web site to browse its selection of titles and build his or her queue of desired DVDs. They are sent out to each customer in the order that they appear on that customer's queue. When the customer returns a DVD in the postage-paid envelope that is provided, the next one from his or her queue is sent.

On the other hand, the HBO business model is completely different. Premium subscription services utilizing this business model offer a number of movies, programs, specials, and sporting events on one or more channels (delivered via cable, satellite, or phone line) each month to their subscribers for a monthly fee. The subscription fee covers all items playing on that service's channel(s) for the given month, regardless of whether the subscriber watches any of them. In addition, subscribers do not get to choose what movies or programs they would like to have from those services.   

I used to subscribe to several of the premium subscription services at the same time. However, when I began by subscription to Netflix, I dropped all of them. That's because the Netflix business model offers two distinct and important advantages over the HBO business model.

First, it offers many more choices. In general, the number of movies and programs offered per month by the premium subscription services represents only a small subset of the choices offered by the online DVD rental services. In addition, almost every movie or program that appears on a subscription service is or will eventually be available via the online DVD rental services. However, there are thousands of movies available on DVD (and therefore available via the online rental services) which have never played and will never play on the premium subscription services.

Second, with the Netflix model, subscribers pay only for the movies and programs they want to see. When I subscribed to the premium services that use the HBO model, there were many months in which I could not find a single movie or program I wanted to view, yet I still had to pay the full subscription price. The problem is that these services choose their offerings based on what the majority of their subscribers want. If you are not in the majority, i.e., you have specialized tastes and/or are only interested in niche entertainment, you are generally out of luck with these services. On the other hand, Netflix carries almost every movie and program that has ever been released on DVD in the U.S.

So, does this mean that HBO, Cinemax, Showtime, The Movie Channel, and Starz will soon be going the way of the dinosaur? I don't think so. There are still many people who are mainly interested in the most popular movies and programs and not much else. For those people, the HBO model is still the best.

Tell Me Again, Who Can Go on Strike?

It seems strange to me that a person has to be a union member to legally go on strike. I also think it's totally ridiculous that people can be threatened by the courts with jail time for going on strike. Anyone, at any time, should be allowed to go on strike, regardless of his or her union affiliation status. At the same, an employer should be allowed to fire any employee for going on strike, regardless of union affiliation status.

Corzine the Hypocrite

I'm glad to hear that New Jersey Governor Jon Corzine has started down his long road to recovery from the serious injuries he sustained in a recent traffic accident. Like they say, even a journey of 1000 miles begins with the first step. However, I must say that it'll likely take him even longer to get over the fact that he played the hypocrite.

In typical rich liberal do-gooder fashion, he has been a strong advocate of the government nanny-state, which attempts to protect its citizens from themselves by mandating the use of seat bests, motorcycle helmets, etc. But now, lo and behold, we learn that the esteemed Gov. Corzine was not wearing his seat beat when someone crashed into the SUV he was riding in. And the driver of his vehicle was doing 91 to boot!

What a delicious development! He just gave libertarians everywhere an excuse to gloat for a while. We couldn't have found a better example of the do-as-I-say-not-as-I-do mentality. Thanks, Governor Corzine!