Your Questions About Money Making Stocks For 2011

Daniel asks…

Ayn Rand or Janice Schakowsy Who Is Smarter for USA in 2011?

Ayn was the great simplifier, and it did work, in the areas of Ontology and Epistemology. She cut through Descartes, Kant, Hume, Berkeley like a hot knife through soft butter.

We humans think that anybody that knows anything about anything must of course know everything about everything.

So now suddenly Ayn Rand being listened to on the matter of politics and economics (which are quite different areas than epistemology and ontology).

The great simplifier just adopted the Austrian School (Von Hayek) lock stock and barrel. You want to make it simple just make it Laissez Faire Capitalism all the way — like in the Hong Hong Luna as described by Robert Anson Heinlein.

Yes, Ayn, that is simple. But is it workable, does it make sense? Can it help America in 2011?

Janice says, no not so much. Janice feels that the function of government is to take from the very rich and give to the very poor. The pyramid see is a little out of shape. It has a huge base. and then a very very small step up from the base, and then it swoooches way up into the stratosphere in a very thin and extremely tall spike, like a Hershey’s Kisses, except the spike is much thinner and taller.

The Pyramids at Giza had about a 45 degree angle all the way up. They have been there for a long time. Very stable. The early step pyramids were even flatter, and they went up in 3 or 4 steps.

Anyhow Janice, no Marxist, although she is from Chicago, feels that take it off the top pump it back in at the bottom makes the most sense.

That way capitalism is workable. The richie richie richies keep pumping the money back up into their own hands, and the government, by progressive taxation, keeps skimming some of it off and pumping it back in to the poor, and the desparately poor, and the poorest of the poor.

It’s like a cycle.

Is Janice the first person who ever saw this idea.

Henry Ford saw it.

He knew that if his workers weren’t paid well ($5.00/day) they could not buy his cars. If all capitalists paid just the going wage per the Iron Law of Wages, capitalism would eventually grind to a halt, because subsistence wages do not create consumers, and capitalists need consumers to have somebody to sell to. Henry paid about three times the going rate for labor so that he could sell his cars to somebody.

Somebay handy and near by — his employees.

That was the first last and only time that anybody thought carefully about Economics. The rest has been blather — the Iron Law of Wages blather, the Comparative Value Theory Blather, all leading to Globalism in which countries where the workers eat fish heads and rice need to worry about losing jobs to countries where the workers will eat fish tails and sawdust.

The Laissez Faire Capitalists have now created a world of total global Recession where no worker dares to spend a penny and no capitalist dares to take a step (for fear of crossing a picket line).

Nice job — *ssholes!

I’m with Janice Schakowsky on this one, and with Learned Hand who said that taxes are the price we pay for living in a civilized society. Eisenhower was no marxist, but in his time the top marginal tax rate was well over 90%. Some people feel the economy did quite well in the 1950’s.

Take off at the top pump it back in at the bottom. The top sucks it back up, it’s like a fountain but in reverse.

Yes, government does have an economic function.

Yes that function does relate to distribution of money.

Bernanke has been operating it in reverse, grabbing ahold of taxpayer money, and sending it all to Goldman Sachs, first a Trillion, then Two, then Four and now another $600 Billion.

This is the lunacy of reverse economic policy.

If you lose your house and have to eat at the food kitchen, you could blame the lunacy of reverse policy.

Janice has it right — what’s missing is demand — and you can only create demand by pumping money in at the bottom not at the top.

I say that Janice Shakowsky is the Albert Einstein of economics in USA in 2011. People would be smart to follow her lead.

What do you think [Keep in mind that the slightest sign of disrespect toward me will get you barred. You will never see another one of my questions or answers, so play nice, with me].

John answers:

“Janice, no Marxist,” you write, “although she is from Chicago, feels that take it off the top pump it back in at the bottom makes the most sense.

“That way capitalism is workable.”

Yes, that is the way it works, and if capitalists didn’t do it naturally and automatically capitalism never would have gotten off the ground. It doesn’t take a government gun to “take it off the top”. It takes government getting out of the way so that the capitalist can do just what you are advocating–without a gun pointed at them.

That is the sticking point. The only way to make such a system work is through force. Laissez fairre requires no force, but the concomitant principle is that “Laissez fairre shall not use any force.” When it does, that is clearly illegal. Don’t talk about greedy capitalists taking more than they deserve; talk about the government taking our money, to give to dairy farmers and peanut farmers and oat farmers and corn farmers to keep the prices high so that we have to pay twice—for something that would rise or fall to its natural price if the market was allowed to “act naturally”.

John asks…

Is the Austrian School (Friedman, Von Hayek, Heinlein) Really Right for USA in 2011?

Ayn Rand or Janice Schakowsy Who Is Smarter for USA in 2011?
Ayn was the great simplifier, and it did work, in the areas of Ontology and Epistemology. She cut through Descartes, Kant, Hume, Berkeley like a hot knife through soft butter.

We humans think that anybody that knows anything about anything must of course know everything about everything.

So now suddenly Ayn Rand being listened to on the matter of politics and economics (which are quite different areas than epistemology and ontology).

The great simplifier just adopted the Austrian School (Von Hayek) lock stock and barrel. You want to make it simple just make it Laissez Faire Capitalism all the way — like in the Hong Hong Luna as described by Robert Anson Heinlein.

Yes, Ayn, that is simple. But is it workable, does it make sense? Can it help America in 2011?

Janice says, no not so much. Janice feels that the function of government is to take from the very rich and give to the very poor. The pyramid see is a little out of shape. It has a huge base. and then a very very small step up from the base, and then it swoooches way up into the stratosphere in a very thin and extremely tall spike, like a Hershey’s Kisses, except the spike is much thinner and taller.

The Pyramids at Giza had about a 45 degree angle all the way up. They have been there for a long time. Very stable. The early step pyramids were even flatter, and they went up in 3 or 4 steps.

Anyhow Janice, no Marxist, although she is from Chicago, feels that take it off the top pump it back in at the bottom makes the most sense.

That way capitalism is workable. The richie richie richies keep pumping the money back up into their own hands, and the government, by progressive taxation, keeps skimming some of it off and pumping it back in to the poor, and the desparately poor, and the poorest of the poor.

It’s like a cycle.

Is Janice the first person who ever saw this idea.

Henry Ford saw it.

He knew that if his workers weren’t paid well ($5.00/day) they could not buy his cars. If all capitalists paid just the going wage per the Iron Law of Wages, capitalism would eventually grind to a halt, because subsistence wages do not create consumers, and capitalists need consumers to have somebody to sell to. Henry paid about three times the going rate for labor so that he could sell his cars to somebody.

Somebay handy and near by — his employees.

That was the first last and only time that anybody thought carefully about Economics. The rest has been blather — the Iron Law of Wages blather, the Comparative Value Theory Blather, all leading to Globalism in which countries where the workers eat fish heads and rice need to worry about losing jobs to countries where the workers will eat fish tails and sawdust.

The Laissez Faire Capitalists have now created a world of total global Recession where no worker dares to spend a penny and no capitalist dares to take a step (for fear of crossing a picket line).

Nice job — *ssholes!

I’m with Janice Schakowsky on this one, and with Learned Hand who said that taxes are the price we pay for living in a civilized society. Eisenhower was no marxist, but in his time the top marginal tax rate was well over 90%. Some people feel the economy did quite well in the 1950’s.

Take off at the top pump it back in at the bottom. The top sucks it back up, it’s like a fountain but in reverse.

Yes, government does have an economic function.

Yes that function does relate to distribution of money.

Bernanke has been operating it in reverse, grabbing ahold of taxpayer money, and sending it all to Goldman Sachs, first a Trillion, then Two, then Four and now another $600 Billion.

This is the lunacy of reverse economic policy.

If you lose your house and have to eat at the food kitchen, you could blame the lunacy of reverse policy.

Janice has it right — what’s missing is demand — and you can only create demand by pumping money in at the bottom not at the top.

I say that Janice Shakowsky is the Albert Einstein of economics in USA in 2011. People would be smart to follow her lead.

What do you think [Keep in mind that the slightest sign of disrespect toward me will get you barred. You will never see another one of my questions or answers, so play nice, with me].
Thanks Meg, I stand corrected on that detail, now how about you add to your answer and work on the gist of my question. I’ll keep you in mind if I need a fact checker, which is often, much to the consternation of my very patient editor. Gist, crux, try a bite of that — like in Alice with the cake “this makes you bigger” (or was that the draught).

John answers:

Steal from the rich; give to the poor. Doesn’t matter who you give the money to; you’re still stealing it.

Donna asks…

Paying taxes on investments and how can we avoid them?

Your supposed to pay some 10-15% capital gains tax if you make profit off stocks etc right ? Now does your Broker AUTO-DEDUCT these off your profit or you have to file them EOY @ tax submission time. Also ONCE you paid these off, let us say immediately i.e. say you paid some capital gains tax then will you be Double Taxed again on this money because you make some $100K plus and hit a high income bracket or once money is taxed for Cap Gains or whatever other exuse it cannot be taxed again .
e.g. My Annual is $90K for 2010 and I make $50K in stocks. Cap Gains is at 10% . So I pay my $5000 . Now will I be taxed again on the rest of the $135K or just the $90K how does it work.

How do U minimize ur tax liability ? Esp SO I HAVE HEARD that come 2011 , thanks to some brilliant work by the D’s they are going to reverse the tax cuts in place now. IS THAT TRUE ? so next year would we be giving like 40% of what we earn to the govt ?
If ur single how do U avoid paying so much money – thats like the govt taking away half ur salary

John answers:

Wow, you should hire a tax professional if you cannot figure out how to use TurboTax Premier. NOBODY pays 40% of their income.

I’ll tell you about the injustice of the American tax system. Members of the working class pay more in taxes than the investment class.

Workers pay a marginal rate of 32.6% (combined 25% federal, 7.6% Social Security and Medicare)

The wealthy investment class pays a marginal rate of 15% (15% capital gains taxes, near 0% Social Security and Medicare).

Why are workers taxed at more than double the rate of investors?

There are few ways to generate wealth for society:

1. Sell natural resources, such as food and minerals
2. Labor
3. Intellectual and creative invention
4. Exploit someone else’s efforts from no’s 1-3 above

Of all these, #4 gets treated most favorably by our tax system. Investors create nothing of value. Rather, investors take profits out of a company but they did nothing to actively foster creation of wealth (short of increasing their personal portfolio).

Laura asks…

Are puts a better bet than gold if the market declines?

I got burned in the last six weeks — lost a sum I can’t afford to lose. The saddening and maddening part is that my strategic vision for the economy was 100% correct. I just mis-executed on that vision.

Six weeks ago I figured out that the recession was going to turn into a depression, and get deeper and last a long time, and pull down the whole economy and the stock market. I knew this in the 4th week in May.

So what did I do. I invested in gold futures — call options expiring in Jan 2011 strike price $1,100/oz.

My theory was that this was a way of betting against the market, and it was much safer than shorting stock. See I was trying to play it safe. I figured the market would go down, gold would go up, people would seek the haven of precious monetary metals like silver, gold, platinum.

So what happens? Everything in my vision turns out to be 100% true and correct except gold goes in the toilet along with the market and the economy.

Meantime the Fed starts creating paper money, about $1 Trillion every two weeks. In a regular normal logical world this would make the price of gold go up right?

So what happens?

The paper fiat greenback dollar suddenly becomes the Emperor of all Value in the World — the only thing people want — just more of those paper dollars please. What? Why? How Come?

OK, so now I’m wondering if there might have been a smarter way to execute on my vision. Maybe buying puts on the DIA ETF (Dow Jones Industrials Tracking fund — sometimes called the Diamonds).

So all the complicated features of gold would have been eliminated. It would have been a pure bet on the gist of the vision with no impediments or distractions.

This would have been so much smarter for me. On the same vision.

Puts would have been better than gold.

Trying to play it safe was a mistake. I guess courage of one’s convictions is key to money making. Wall Street chews up and spits out smart people every day. One gains ability to cope with Wall Street by learning the lesson from every painful loss of capital.

Am I understanding any part of this correctly. I really am asking for some help here. There’s nothing rhetorical about this question. I know there are people out there much wiser than I am about investing, so please, if you are one of those, share some knowledge with me now. I stand confused, saddened, and in need of some friendly guidance. Would DIA puts have been better than GLD calls, given my vision, and its time of occurance. If so, can I store this up as my lesson learned from this painful experience, or am I still way off base?
In Weimar when they printed a Trillion marks every two weeks the paper money became worthless.

In Argentina when they printed a Trillion Pesos every two weeks the paper money became worthless.

But in USA, in 2009, for the first time in 3000 years, when they print a trillion dollars every two weeks, the paper dollars just get more and more valuable.

What is this some kind of big trick just to fool me? Is it lile Lucy and the football with Charlie Brown. Do all the rules of the universe have to suddenly change and turn around by 180 degrees just because I make an investment? I admit it, I’m at my wit’s end, so I’m paying 5 points here to see if anybody can help me out.

John answers:

You answered your own question. Don’t complicate things by trading a different market from your analysis. Your analysis involved the economy/business and stocks, yet you traded a metal?
A cursory glance at the different markets will show that EVERYTHING has been going down together for a year. There has been no safe haven and no successful bets to the upside, merely a cleansing of excess in all markets and all countries.
Inflation killed the currencies in Latin America, not printing money. Doesn’t apply yet to the US, but it will eventually.
The next leg down in the markets is just beginning. If this is still your vision, buy the put on the Diamonds or the Spyders. The metals and real estate and oil and corn are all in their own little world. Just be aware the options are a wasting asset. Short the DIA or SPY directly at 2:1 or 4:1 margin, and you can hold until the cows come home.

Nancy asks…

If you are an investor, want to know what to put your discretionary bucks into?

With monitization being done on an unprecedented scale it is not a surprise to see the direct rise of oil prices (and gas prices jumping past 3 bucks a gallon making ethanol from federal subsidized corn likewise attractive investment prospects) and food going up like a rail gun on the side of a mountain. So? what to put your investment dollars into? Here’s some savvy advice from a smart guy I listen to.
Look for an investment crisis in 2011 as inflation makes itself felt on the bond and stock markets. Sell blue chip stocks and all bond instruments. If you want to hold large amounts of cash then do so only in the form of 3-month Treasury bonds. You can always roll those over. You are not losing any income in buying longer term Treasury notes or bonds, just incurring massive risk. Other than money necessary to pay monthly expenses and cover emergencies, I would not keep additional cash in U.S. banks.
Aw shucks… Caught in the act. Posted by a Patriot but not a particularly wealthy one. In the economics department my big bucks were earned before the tech bubble. Now I just price food and energy and post it to http://www912superseniors.org project where we track these items while the thoroughly corrupt gummit posts the cost of living as being in deflation… (Which is only possible because they don’t count energy or food nor the impact of monitization on those two items. Gee you think they are somehow related? 😉

John answers:

Depending on the capacity of your investment, this group may help you. Good luck
http://finance.groups.yahoo.com/group/investorscornerinternational/

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