Tag Archives: stocks

Wealth Tax Weirdness

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I’m confused. Which won’t surprise anyone who knows me very well.

Elizabeth ‘Has a Plan For That’ Warren is reviving her wealth tax proposal.

“Ms. Warren’s wealth tax would apply a 2 percent tax to individual net worth — including the value of stocks, houses, boats and anything else a person owns, after subtracting out any debts — above $50 million. It would add an additional 1 percent surcharge for net worth above $1 billion.”

Three in five Americans support the proposal. Cue my confusion. Why does 99.9% of the 40% oppose the proposal when the tax will never come close to applying to them.

“Ms. Warren estimated her initial proposal during the 2020 campaign would raise $2.75 trillion over a decade, which she proposed spending on education and child care, based on estimates from the University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman.”

Maybe the answer to my question lies within that dastardly sentence. Maybe the “anti-wealth tax forty percenters” have the backs of the ultra-wealthy because they know how just how bad things could turn out if people of modest means are able to provide their children improved childcare and schooling.

Personally, just to be safe, I’m going to do everything possible to keep my net worth under $50m.

What to Do When Stocks are Pricey

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Insightful blog post by Carl Richards titled “You’re No Coward If You’re Keeping Some Money Out of Stocks”.

What should “some” be as a percentage? Conventional investment wisdom is subtract your age from 110 or 100 and invest that much in stocks.

Better yet, think about risk like Richards:

“You see, I hate losing money in investments that are outside my control. It ties me up in knots and distracts me from just about everything. So awhile ago, when I moved some money out of a 401(k) plan into my retirement account after a job change, I left it in cash.

I told myself that I was fine with missing out if the market continued to go up. But I wasn’t fine with investing this pile of cash just in time to get my head taken off in a big, scary market drop. And guess what? That was and still is true. So, I’m fine sitting in cash earning 0.16 percent or whatever the rate might be. I just don’t want to lose.

This decision has cost me in paper gains that I might have achieved, given how well the stock market has done since that decision, but I don’t care. I don’t see it as a real cost. Instead, I see it as an investment in my sanity and my human capital.

The fact that I didn’t have to worry about losing money in that area of my life allowed me to feel comfortable taking risks in other areas. I’ve started two or three new businesses and moved my family to New Zealand. The risks I have taken have provided, and will continue to provide, a much higher return than what I might have received if I remained fully invested in the markets.”