Broker Check

December 31, 2008

I Do Not Know Bernie Madoff!

           No monies were invested by me with Bernie Madoff.

We Have Moved!

          It only took a proposed 70% rent increase, litigation with a recalcitrant landlord and a proposed real estate tax hike by Mike Bloomberg of $5,000 for us to see the light and relocate to Wall Street West in Jersey City amid our high rise neighbors Goldman Sachs, Merrill Lynch, Deutsche Bank, Morgan Stanley, and numerous Hedge funds.

          We are about 1½ blocks from PATH in Exchange Place and two blocks from the Hudson River.

          The cost of doing business for a small independent firm in Manhattan was becoming untenable.

          We look forward to seeing you here.  Directions are on our website.

Beware the Bear

          For the past two years those who came to my office saw a big white bear sitting in my office and when I was asked why the bear, I responded “Beware the Bear” and then suggested two strategies I had developed to accommodate the then described “coming bear market”.  Much literature was sent out and too few followed up and executed the strategy.

New York v. South Carolina

          The New York economy has grown employment by 3.3% in the past five years.  It is dwarfed by the five year growth of employment in South Carolina of 8.1%.  Recently, the Tax Foundation published its estimate of 2008 state and local tax burdens.  New York came in second with the total tax burden (income, sales, property) in America of 11.7%.  Only New Jersey did worse at 11.8%.  South Carolina came in 37th at 8.8%.  Do you think there is a reason why people are leaving these two states and going to the Carolinas?

IRA to ROTH Conversion

          2009 may be a good year to consider converting your IRA. See the September, 2006 and March, 1998 newsletters for details.

Contribute to Your 401(k)

          House Democrats are considering eliminating the tax deduction and the contribution altogether.  They are considering a $600 annual inflation adjusted subsidy from the government and the workers will be required to invest 5% of their pay into a guaranteed retirement account administered by the Social Security Administration.  The money would in turn be invested in special government bonds that would pay 3% a year adjusted for inflation.

Employee Reclassification

          If the IRS reclassifies your contractors as employees after an audit, you can get relief on the extra Social Security taxes and withholding that you owe according to a recent private letter ruling.

          Reduced penalties apply when the misclassification is unintentional.  Income tax withholding is only 1.5% of wages, which is far below the normal level; the tax rate for the employees’ share of FICA tax is 1.53% instead of 7.65%.  These percentages are doubled if Form 1099 forms were not filed.  There is no relief for the employers’ share of FICA.

          And no interest is due on the reduced penalties for income tax withholding and the employees’ share of FICA tax.  Interest is owed on the firm’s share of FICA.

100 days ago

As of 12/15/08

  • The price of oil was $106.23 per barrel.  Now $46.28
  •  Nationwide average price of a gallon gasoline was $3.67.   Now $1.66.
  • 9 Wall Street equity strategists predicted where the S&P 500 would finish the year 2008.  The average year end forecast was 1363.  Now it is at 880.
  • The S&P has produced 26 days with a gain or loss of at least 4% in the previous 7626 days (21 years).  In the last 100 days the S&P 500 had 26 days with a gain or loss of at least 4%.
  • “I made a mistake”.  Alan Greenspan was widely viewed as a successful fed Chairman.  His “halo” was tarnished when he was grilled before a House committee and admitted he had opposed efforts to regulate credit default swaps as far as 1998.

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