Author Topic: So Stupid!  (Read 11320 times)

rkbabang

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Re: So Stupid!
« Reply #30 on: November 17, 2017, 07:30:08 AM »
To all the Gung-ho Liberals on this website who keep on calling others stupid and not getting anything done (let`s not ask for their investment results or value that they are delivering...), here is Congress approving the Tax Bill:

https://www.washingtonpost.com/business/economy/house-poised-to-pass-its-tax-bill-as-senate-plan-suffers-setbacks/2017/11/16/62d92fa4-cad7-11e7-8321-481fd63f174d_story.html?utm_term=.f4c40e1d6b9a

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Weren't you talking about fiscal responsibility on here not so long ago? Do you care to explain what is fiscally responsible about a tax cut that increases the deficit by some 1.5 trillion over 10 years?

Edit: Or for that matter when was the last time that Republicans were fiscally responsible when they were in power?

If you never cut taxes because you don't want to increase the deficit, when budget time comes around you don't have to cut spending because taxes weren't cut.  You need to push for tax cuts when doing tax bills, and then you need to push for spending cuts when debating spending bills.  I would agree that it is foolish to do one and not the other, but since these are never in the same legislation you need to do both of them whenever you have the chance.



cobafdek

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Re: So Stupid!
« Reply #31 on: November 17, 2017, 08:12:26 AM »
Yes this sounds like every CEO I've ever met.

I thought we were all cynical about CEOs, believing they all try to finagle down expenses by capitalizing them as long term investments, which would accelerate the vesting of their stock options.  It's good to know you're not a cynic.

So all those CEOs were sitting there, deep in thought, wondering whether the additional capital provided by federal tax cuts would be re-invested in their business, and whether that would flow thru the income statement or investing cash flow section, and whether to classify it as R&D or SG&A.

You also seem to like mindreading, practicing it alongside value investing.  I've never been good at it.  Maybe you can help me.  Let me try again:

John Bussey, WSJ:  "How many of you plan to increase business investment as a result of this tax bill?  Raise your hands."

CEO's inner thoughts:  "Bussey has no clue how to run a business.  I'm not going to raise my hand at a stupid question."

Do I have potential?

LC

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Re: So Stupid!
« Reply #32 on: November 17, 2017, 10:03:01 AM »
You also seem to like mindreading, practicing it alongside value investing.  I've never been good at it.  Maybe you can help me. 
I'm simply trying to summarize the argument you have made so far. For example:

The CEOs are also aware that wages and employment expenses, strictly speaking, belong in Operating Cash Flow on the Cash Flow Statement, and not in the Investing Cash Flow section.  The CEOs may have other things in mind, such as deploying the tax break in Investment Cash Flows that do not involve direct benefits to workers in terms of wages and jobs.

And I'm mind-reading?


You're made two arguments as I see it:

-You argued that more CEOs didn't raise their hand because salaries paid are not 'investing cash flows'. Or because they plan on 'investing' in non-employee related areas. And then you argued that perhaps R&D is an 'investment' despite GAAP considering it an expense. So in other words, they will be making 'investments' but they are not technically characterized as 'investing cash flows' therefore they refused to answer the question. That seems a little farfetched to me.

-And then you've argued that perhaps these CEOs didn't answer the question because the WSJ editor 'has zero business experience'. Which is insulting not just to the WSJ editor but also to the CEOs, who are apparently such @ssholes that they refuse to even acknowledge someone with a different background or skillset?

I mean, you seem to be looking for more complicated, alternative explanations to avoid the simpler, more straightforward explanation: that perhaps they just don't plan on investing any more!
« Last Edit: November 17, 2017, 10:05:59 AM by LC »
"Lethargy bordering on sloth remains the cornerstone of our investment style."
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cobafdek

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Re: So Stupid!
« Reply #33 on: November 17, 2017, 12:11:48 PM »
Damn!  I told you I wasn't good at mindreading.  Thanks for your correction.

perhaps they just don't plan on investing any more!

Predicting the future is also amazing.

I mean, you seem to be looking for more complicated, alternative explanations to avoid the simpler, more straightforward explanation

CEO decisionmaking is simple and straightforward?  Simpler and more straightforward is usually more right in the complex business world?  I hope you're not John Bussey.  If so, I apologize for the insult.

LC

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Re: So Stupid!
« Reply #34 on: November 17, 2017, 12:54:14 PM »
Right. Well I'll just leave it off here with a quote:

"Investing is simple, but it isn't easy"
-John Bussey
"Lethargy bordering on sloth remains the cornerstone of our investment style."
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Cigarbutt

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Re: So Stupid!
« Reply #35 on: November 18, 2017, 08:19:33 AM »
"If you never cut taxes because you don't want to increase the deficit, when budget time comes around you don't have to cut spending because taxes weren't cut.  You need to push for tax cuts when doing tax bills, and then you need to push for spending cuts when debating spending bills.  I would agree that it is foolish to do one and not the other, but since these are never in the same legislation you need to do both of them whenever you have the chance."

Is there resolve to reduce government expenditures?

http://tracesofreality.com/2012/12/18/charting-us-debt-and-deficit-since-inception/
http://zfacts.com/p/318.html

Reducing taxes, especially to promote inclusive growth, is good.
But I would put reducing expenses higher up on the to-do list.

The Reagan and Bush(2nd) presidencies tax cuts (based on supply-side principles) were accompanied by sustained fiscal deficits. So the message and results get blurred.

Looking at the graphs, one has to wonder if the best balance occurs when 1- the President is neutralized by various allegations and 2- both houses are controlled by a faction that suggests a "Contract" that imposes a balanced budget and fiscal restraint. Where are you Newt?

Question: What is the backstop for fiscal responsibility these days?
Potential solution (alternative definition to the drain the swamp narrative): replace career politicians with representative citizen legislators.
Optimist, but a lot of work to do.

cobafdek

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Re: So Stupid!
« Reply #36 on: March 30, 2018, 12:32:35 PM »
"According to a new analysis, 84% of S&P 500 companies talked about the new tax law on their fourth-quarter earnings call."

"Of those, 179 said they planned to invest savings in workers or new equipment, the analysis found."

http://www.businessinsider.com/trump-gop-tax-law-poll-worker-bonuses-planned-companies-2018-3

LC

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Re: So Stupid!
« Reply #37 on: March 30, 2018, 02:06:24 PM »
In Q1, investors would expect so see a spike in cash used for investments on the CF statement, I would imagine?
"Lethargy bordering on sloth remains the cornerstone of our investment style."
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Cigarbutt

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Re: So Stupid!
« Reply #38 on: March 30, 2018, 04:12:07 PM »
This is a topic I try to follow by avoiding to be deranged by less than faktual information. ::)

Premises:

-Tax breaks should be assumed to be "good" until proven otherwise.
---)but should be analyzed just like any NPV decisions (ie versus cost of capital, is it creating value?)

-When you end up with more $ at the corporate level (from tax changes or otherwise), it would be reasonable to assume that the cash will be redeployed according to the same decision tree that was applied before. No?

-Under normal circumstances, it would be reasonable to assume that increasing profits should result in higher wages or equivalent BUT that hasn't been the case for quite some time as profit margins and wages as a fraction of corporate income have gone in two different directions (many reasons for that, but mostly, it seems, unrelated to tax rates, effective or not).

The "real" effects may take some time to manifest (some say 10 years...) and show of hands and other similar surveys may not be that reliable at this point but I thought it was worth digging a bit concerning statistics mentioned by cobafdek.

https://www.morganstanley.com/ideas/corporate-tax-savings

It seems that the % of firms planning to increase wages is indeed around 20 to 30%.
If you look at a range of surveys as well as actual absolute and relative $ numbers, it seems that firms, in the aggregate, will put about 10 to 15% of tax savings in additional employee compensation with 5 to 10% of tax savings for the manufacturing sector subset (food for thought here). It seems that firms plan to deploy about 60% of the cash into buybacks, dividends and acquisition activity, pretty much like before. The more it changes, the more it's the same thing.

Increasing profit margins and buybacks have been tremendous tailwinds for us shareholders but too much may be too much.

From a comment in the populace section read today at the end of a relevant article:
"If the CEO of the company gets a tax rebate, I don't expect him to share 50/50."
I think that the trickle down candidates will eventually get it.

 

« Last Edit: March 30, 2018, 04:16:36 PM by Cigarbutt »

Spekulatius

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Re: So Stupid!
« Reply #39 on: March 31, 2018, 06:07:25 AM »
While I agree, the Obamacare mandate is the stupidest thing I have ever seen. Why should I be forced to overpay for healthcare or otherwise be taxed more? It's a complete load of bullshit. The spin is that more people would be without healthcare. Except the people without it would be choosing not to have it, and saving money.

..until they get sick of course. I would save a lot of money if I didnít need homeowners insurance (never had a claim in 18 years) or car insurance.
To be a realist, one has to believe in miracles.