Go to Jeff Salisbury LWGate Home Page.From: persfin-digest <owner-persfin-digest@shore.net>
Subject: persfin-digest V4 #74
Date: Thu, 14 Aug 1997 21:53:32 -0400 (EDT)
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persfin-digest Thursday, August 14 1997 Volume 04 : Number 074
IN THIS ISSUE:
ADVERTISEMENT: MCI FAX REPLY SERVICE [Oppenheimer Software <Connect-Sale]
Land Contract Dangers / Homesteading [BOB FORD <BOB_FORD@compuserve.com>]
WW1 Pictures? [BOB FORD <BOB_FORD@compuserve.com>]
Re: If we all bought Index Funds [Avrum Lapin <avrum113@cyberg8t.com>]
Home Loan Potential of Roth IRAs [Brian James <bjames@rocketmail.com>]
Re: What Happened When I Notified My Credit Card Company of My Trip [Davi]
Re: "Double Taxation" of Car Sales is Not Unconstitutional [David Meyers ]
First Time Home Buyer Seeks Advice ["Robert Loeser" <Robert_Loeser@medec.]
RE: Efficiency of New vs. Used Home Appliances? ["Schafer, Rick" <schafer]
bid and ask: limit strategy ["Dalmia, Bipin K." <DALMIABK@phibred.com>]
tax treatment of loan assumption fees? [ANDREA WELCH <ACE.AWELCH@MEMO.ACE]
Independent Cheque Printing Companies? ["Ajay Saigaonkar" <ajay@esq.com>]
Bid & Ask sizes: what do they meaning? [hehozou@rosevax.rosemount.com (He]
A word of warning about Montreal [publix@quebec.net]
Collection Agency and Fraud? [Clayton Rogers <CROGERS@STEWART.com>]
Spread between the ask and the bid... ["Satish Kethineni <satishk@paul.ru]
Government coercion ["Mark Hamann" <hamann@myk.ilc.or.jp>]
Re: Role of government [horton@pasta.enet.dec.com]
Re: Limit Order Strategy? ["Ken Meinken" <kmeinken@one.net>]
Canadian answers Available [publix@quebec.net]
Re: Homesteading [BOB FORD <BOB_FORD@compuserve.com>]
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Date: Thu, 14 Aug 1997 21:27:32 -0400 (EDT)
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------------------------------
Date: Thu, 14 Aug 1997 21:29:53 -0400 (EDT)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: Land Contract Dangers / Homesteading
>From: "Holly ;-D" <hollyd@informix.com>
>Subject: "Real Early" Retirement Question
>SNIP
>What with all the tax changes being bandied about, I'm no longer
>sure of the best way to handle this. I was thinking of going
>land contract...........
>Holly ;-D
(THE USUAL WARNING)
I am not an attorney and the following is not legal advice. It is just
my opinion. It is based on my experience in California. The laws of
other states may be different.
A land contract is the most dangerous way to buy property. Please
contact a real estate attorney to help you buy anything on a land
contract. The problem with a land contract is that you do not own the
land. You just have a contract to buy it.
What happens if the land owner dies?
>By the way, for the person asking about homesteading (I haven't
>been following the list, only saw the one reply in this newsletter)
>here are a couple of homesteading links:
>http://www.homestead.org/
>http://www.webfirst.com/homestead/
>As far as I know, the Federal Homestead Act was repealed in the
>70's, although I've been told that there is still a state
>sponsored program in Alaska.
This a case of the word homesteading having more than one meaning. Most
people think of homesteading as meaning the government will give you land
if you live on it. In California, homesteading means protecting a home
from the claims of creditors.
BOB FORD
BOB_FORD@COMPUSERVE.COM
------------------------------
Date: Thu, 14 Aug 1997 21:31:05 -0400 (EDT)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: WW1 Pictures?
I was the administrator of an estate that had several pictures of scenes
from World War 1. They are on post cards that were brought back from that
war by the husband of the person that is now dead. None of the heirs
wanted these pictures. They asked me to donate them to a charity or
historical society.
Does anyone have any idea who might want these pictures.
BOB FORD
BOB_FORD@COMPUSERVE.COM
------------------------------
Date: Thu, 14 Aug 1997 21:31:40 -0400 (EDT)
From: Avrum Lapin <avrum113@cyberg8t.com>
Subject: Re: If we all bought Index Funds
>
>> .... Even the largest holding in the Index 500 is only 2% of the
>> total holding. As long as there is a recognised index there is no problem.
>
>No true!!! The S&P Index is capitalization weighted and the biggest
>companies account for a significant percentage. I don't remember the
>exact numbers, but the largest 20 stocks account for 40-50% of the
>S&P index. So essentially you are investing in a very small number
>of companies (I think GE accounts for 5% of the S&P)
>
I apologize for using an older edition of Morningstar. I just checked the
Library's copy of Morningstar. As of 3/31/97 the top 5 holdings in
Vanguard Index 500 were
GE @ 2.79%, Coca-Cola @ 2.37%, Exxon @ 2.29%, Intel @ 1.95% and Microsoft @
1.88%
SubTotal 11.3 %
The 10th largest holding is IBM @ 1.21%, the top ten holdings total 18.76&
The 15th largest holding is AT&T @ 0.96%, the top 15 holdings total 24.04%
The 20th largest holding is Pepsi @ 0.87%, the top 20 holdings total 28.58%
The 25th largest is GTE (my sleepy local phone co) at 0.77%.
I seem to remember reading that 15 stocks are enough to give you diversity
but I can't remember the source.
Avrum Lapin
Upland., CA
------------------------------
Date: Thu, 14 Aug 1997 21:32:14 -0400 (EDT)
From: Brian James <bjames@rocketmail.com>
Subject: Home Loan Potential of Roth IRAs
Unless i am mistaken, can't the new Roth IRAs be uses as a vehicle to
sock away money tax-free provided that it is held for five years and
the proceeds used for paying off a home?
I'm no CPA, so can anyone tell me the pitfalls of this? My girlfriend
and i are currently house-hunting, and i'm in charge of researching
ways to finance us. We make roughly $64,000 (before tax) and have
nothing but student loans ($14,000 apiece) to pay off. Could a Roth be
a good option for us?
TIA,
Brian James
------------------------------
Date: Thu, 14 Aug 1997 21:33:43 -0400 (EDT)
From: David Meyers <dmeyers@panix.com>
Subject: Re: What Happened When I Notified My Credit Card Company of My Trip
Georgene, thanks for posting this. I'm the one who was
contacted by Citibank about some out of state charges.
>After reading this original post, and since I was planning a
>three-week trip, I called my credit card (MBNA Bancard Services) to
>warn them that I'd be on an extended trip and to expect some unusual
>charges. The friendly lady seemed a bit startled that I'd call for
>that reason, but in their usual nice manner said of course she'd make
>the notation on my account.
Did you ask if they check over the charges to look for
suspicious ones? I'd imagine that if they _don't_ make
checks like that, then it would do them no good to know
that you are travelling. I've never called Citibank in
advance of a trip either, so I have no idea how they'd
react, but since I know that they do check, if the folks
there seemed surprised by my calling, I could at least
explain it in terms of their own program.
> What she _failed_ to do, and it's a bit
>alarming to me -- is ask for any identifying information, such as my
>mother's maiden name, my ssn, or anything to verify that I was indeed
>me.
This would be disconcerting if, indeed, they did have a
suspicious-charge check system, since this would get
around it -- all you'd have to do is call in first.
However, if you didn't do anything which could affect
your account, or get information about the account, I
guess there is no reason for them to ask for ID. Still,
I'd have preferred some sort of means of checking it,
even if it had no effect.
If I remember correctly, and it has been quite some time,
the folks at Citibank asked me to identify some recent
charges before they accepted my okay on the out of state
ones.
- --D
------------------------------
Date: Thu, 14 Aug 1997 21:34:19 -0400 (EDT)
From: David Meyers <dmeyers@panix.com>
Subject: Re: "Double Taxation" of Car Sales is Not Unconstitutional
>From: Francesca Pardo <fp10@cornell.edu>
>>Mark Coulter <coulter@csonline.net> wrote
>>I couldn't agree more on the comment about sales tax being paid
>>multipule times on an auto. This is by definition "double taxation"
>>which is constitutionally forbiden. If a car changes hands twice a
>I can't find anywhere in the U.S. Constitution anything forbidding
>"double taxation" and in any case sales tax is administered by the states.
>Perhaps your state constitution forbids "double taxation"?
That's only half the argument. The other half is that the
taxation isn't "double taxation" by any stretch, either.
The tax is not a "car" tax. The _car_ is not being taxed
twice. The _sale_ of the car is being taxed - once per sale.
Property taxes, perhaps, make a better case of multiple
taxation - you are taxed on the same property each and
every year. But each sale of a car, or sale of a property
is separate and individual.
>The government provides the framework within which contracts can be formed
>and upheld. Each time the car changes hands there's a new party who has
>access to the legal system if something goes wrong with the deal. From the
>standpoint of taxes being used to pay for government service, I think
>charging sales tax on every sale is one of the more sensible charges.
That would only be true if the sales tax was used for only
things directly relating to the sale, like contract enforcement
and the part of the court system related to it. Unfortunately,
state governments look on sales taxes as means for general
revenues, and sometimes for specific revenues which have nothing
whatsoever to do with the sales. Just for example, in Atlanta,
there is a 1% sales tax (on top of the state sales tax) which is
used to pay for their public transit system.
Nevertheless, I agree with you that taxes _ought_ to relate to
the thing being taxes -- kind of like insurance -- sales tax
for enforcement of contracts and prevention of fraud, property
taxes to pay for the property protection parts of government,
perhaps including national defense, etc. etc. Unfortunately,
such a system, while rational, would be absurdly unwieldy, and
you have remaining areas of current government which have no
appropriate thing to tax to support them. For example, what
exactly would you tax to pay for welfare? How about social
services? Or the parts of the law enforcement system which
are used to protect us from and prosecute the folks who commit
crimes like murder or rape?
- --D
------------------------------
Date: Thu, 14 Aug 1997 21:34:44 -0400 (EDT)
From: "Robert Loeser" <Robert_Loeser@medec.com>
Subject: First Time Home Buyer Seeks Advice
I think I'm about to take the plunge and buy my first home. Stupid
question, but any advice?
------------------------------
Date: Thu, 14 Aug 1997 21:35:12 -0400 (EDT)
From: "Schafer, Rick" <schaferr@eng1.otis.com>
Subject: RE: Efficiency of New vs. Used Home Appliances?
If you can't get the real numbers, you'll have to estimate. One way to
do this is to look at the most efficient replacement model for the units
you want to replace. These of course do have stickers estimating the
annual cost to operate. If you assume a number for efficiency
improvement, then you can work the numbers for an estimated ROI.
For example, I just bought a large Carrier room air conditioner for $525
w/tax. The sticker says the average annual cost to operate is $128.
Let's be very generous to technology and assume the improvements are so
great that the old one (if I'd had an old one) cost 50% more/year to
operate, or $192/year. I'm then saving $64/year. 525/64 = 8.5 years to
recover the investment. Will it still be running in 8.5 years or will
it need replacement itself?
This reminds me of the oil embargos of 1973 & 1979, when gas prices shot
up to $1/gallon. People sold their gas guzzlers and spent thousands to
buy cars that got maybe 10 miles more MPG, but if you only drive 15k
miles per year, you're really trading a weekly gas bill for a monthly
car payment.
Rick Schafer
------------------------------
Date: Thu, 14 Aug 1997 21:37:01 -0400 (EDT)
From: "Dalmia, Bipin K." <DALMIABK@phibred.com>
Subject: bid and ask: limit strategy
hello all:
it seems like deja vu all over again. i used to think exactly the same
way as many posters described: split the bid/ask and place a limit
order. felt i had more control over what i am buying. i lost a trade on
ABTX a few months ago when it was at $2 and my order at 1 15/16 never
went thru. the stock is at $9 now (i did manage to get in at around $6).
i think it is a natural progression in investing skills to go thru this
kind of reasoning until you lose buying a good stock. if it is worth
buying at $X then it is probably worth buying at $1.01X.
btw, in case you are interested, check out ABTX (www.agribiotech.com) as
an investment. the stock is headed to $50 in my opinion.
thanx, bip
------------------------------
Date: Thu, 14 Aug 1997 21:37:43 -0400 (EDT)
From: ANDREA WELCH <ACE.AWELCH@MEMO.ACEHARDWARE.COM>
Subject: tax treatment of loan assumption fees?
Hello All:
I am in the process of getting a simple assumption on my mortgage
for the purpose of releasing a co-borrower. The mortgage is on a
2-flat residence, I reside in one unit of and rent the other out.
I'm wondering about the income tax treatment of the assumption fee
that I have to pay. I've downloaded IRS publication #17 and the
only reference in it to "assumption fee" is that they can't be
included in the "basis of the property".
Do any PERSFINERS have knowledge as to how I should treat the fee
on my income taxes?
Thanks much in advance.
Andrea
------------------------------
Date: Thu, 14 Aug 1997 21:38:00 -0400 (EDT)
From: "Ajay Saigaonkar" <ajay@esq.com>
Subject: Independent Cheque Printing Companies?
Hello Folks,
I had been following the digest from outside the US for the last little
while. Now that I have moved to the US, I will be reviewing with a new
perspective few of the back issues of the digest that discussed "national"
topics.
I have found several sources to get the best credit cards, autos, banks,
and real estate.
Could one of the members please provide me with a list of companies that
prints personal cheques?
- -- ajay
ESQ Systems Integrators
ajay@esqsi.com
Tel: 408 366 1080
Fax: 408 366 1116
------------------------------
Date: Thu, 14 Aug 1997 21:39:15 -0400 (EDT)
From: hehozou@rosevax.rosemount.com (Hehong Zou)
Subject: Bid & Ask sizes: what do they meaning?
Every time when you read stock quotes, you will see last trade,
current bid and ask, you will also see bid size and ask size.
What do these bid and ask size mean? And most importantly how
do they impact the direction the particular stock is heading?
Thanks.
------------------------------
Date: Thu, 14 Aug 1997 21:39:58 -0400 (EDT)
From: publix@quebec.net
Subject: A word of warning about Montreal
Sadly, my home town, Montreal, is also the North American center of
fraudulent teklemarketing.
One of my clients has been taken for a few thousands, but a lot of people
in the US are ripped-off daily. Here is some info from the client. And
remember - if it sounds too good to be true, it is. One company offers
you a boat, a car etc for a few $ - the boat is 25 feet allright, but
inflatable. The car is an old beater...
- ------------------
>They got my momto send them $3000 in certified check and then they said that
they were
>going to release $25000 US cash bond which is fully matured and the $3k was
>research fee but after 6 months and much arguments, they sent us this bond
>which is $25k in canadian money and also will mature in 31 years, not the
>original agreement. Now I need to know if the bond that they DID send us is
>even valid then I need to find out what I can do legally to prosecute them
>for the fraud that they have committed.
- -----------------
If you receive such a phone call, don't send the money and don't
reveal personal financial information to the caller, such as credit
card or bank account numbers. Instead, find out to whom the check
should be made and the address to which you are to send it. Then,
call Project PhoneBusters, the Canadian telemarketing fraud
taskforce, at 1-888-495-8501 and NCL's National Fraud Information
Center at 1-800-876-7060. You can also use an online forms
[http://www.fraud.org ] to file a report.
Pat St-Arnaud
FMD Brokerage
Investors Jump Point
http://spike.quebec.net/~publix/FMD/
------------------------------
Date: Thu, 14 Aug 1997 21:43:39 -0400 (EDT)
From: Clayton Rogers <CROGERS@STEWART.com>
Subject: Collection Agency and Fraud?
I am being harrassed by a collection agency about a bad check to
Dominoes Pizza for $30. After some research and getting a copy of the
check, I found that it was against a credit union account I used to
have with my ex-wife of 2 years. The account had been closed for a
better part of that two years and I guess she had some old checks.
The check returned it, "Account closed - UnPaid" to Dominoes.
Anyway, it was in her pretty handwriting -- and I don't eat Dominoes
pizza. Yadda, Yadda, Yadda.
Like a good citizen and consumer, I wrote them a full page letter
explaining all of this -- including her name and where she could be
found. Yesterday, after about three weeks, I got another notice from
them about collecting -- Final notice, in fact -- and that they would
take all kinds of action, Credit Agency filing -- District Attorney
and such -- against me if I didn't pay. So, I called and asked to
speak with a supervisor and demanded they find the letter -- they
didn't bother looking, they just said, "Pay or else" -- nothing
else.
It is for about $60 with the fee on it. I gave it my all and now I
think, let them do their worse (if they dare). I pay all my debts and
this is not a lot of money for the hassle. But there is a principle
to it, right?
To all of you, Do I have anything to worry about?
Thanks,
Clayton Rogers
crogers@stewart.com
------------------------------
Date: Thu, 14 Aug 1997 21:44:06 -0400 (EDT)
From: "Satish Kethineni <satishk@paul.rutgers.edu>"
Subject: Spread between the ask and the bid...
There was a question as to what the difference between the
ask and the spread is; I was reading in a book that, the market
makers (brokers on the trading floor) are the people who really
profit from the difference between the ask and the spread.
The broker buys from the seller (you) at the ask price and sells
to the buyer at the bid price, he then pockets the difference between
the two, this way he always make money in a up or down market.
neat eh ??
satish
------------------------------
Date: Thu, 14 Aug 1997 21:44:44 -0400 (EDT)
From: "Mark Hamann" <hamann@myk.ilc.or.jp>
Subject: Government coercion
> Second, defending one's life and property rights with force is not at all
> the same thing as the coercion involved in unprovoked force. Besides, a
>military can be voluntary (no draft, voluntary funding).
When I first wrote "coercion" I was thinking more along the lines of OSHA
making unprovoked inspections to factories. That fire at the chicken
nugget (not McNugget) processing plant in Hamlet, North(South?) Carolina a
few years ago happened because a maintenance person was welding by a
chemical energy source (I don't remember if it was the gas that ran the
fryers or the oil in the fryers). I believe that this is a violation of
OSHA lockout/tagout rules. The emergency exits were chained and padlocked
shut (the employees apparently took unscheduled breaks). This is probably
a violation of some rule of OSHA but I suspect also of other laws. Many
people died.
I originally posted as a tangent to the tax discussion. What I am saying
is that the government should have the right to create OSHA and empower
OSHA to enforce its rules with threat of fines, plant closure, etc, and
that the American taxpayer should pay for that. The chicken nugget company
should find a different way to do maintenance and prevent its employees'
unscheduled breaks even if it means lower dividends for the investors or
higher chicken nugget prices for the fast food consumer.
It's a bit more expensive, but it makes a better society when the workplace
is required to think about employee safety. It's much better now than in
the days of the "disposable" Irish immigrants. I gather that under a
libertarian system, employees would in fact be protected, but under a
noninterfering government, employees would have to exercise their liberty
to refuse to work in unsafe conditions.
Mark Hamann
------------------------------
Date: Thu, 14 Aug 1997 21:46:13 -0400 (EDT)
From: horton@pasta.enet.dec.com
Subject: Re: Role of government
> This is one of those issues that involves your fundamental
>beliefs about government and society. It usually boils down to either
>"Government has the power to do a lot of good, so it should help out
>as much as possible" or "Government has the power to do a lot of bad,
>so it should help out as little as possible". When I was in high
>school, I was in the first camp. During college, I moved to the second
>camp, and every year, the political and economic events that I observe
>convince me that I am correct. (I am, however, still open to logical,
>fact based arguments on the issue if anyone wants to change my mind.)
Dave,
In a similar vein, here is a sentiment attributed to, I think, Winston
Churchill (can anyone confirm?):
A person who is not a liberal when he is young has no heart,
and a person who is not a conservative when he is old has no brain.
A careful reading of Hayek's "The Road to Serfdom" during high school
rescued me from spending any time in the first camp that you describe
above. And over the years I have been amused by the relentless shift to
the conservative of my long-haired, pot-smoking, licentious college
acquaintances who once so ardently believed that government would save us
all. As the Baby Boomers age let's hope this same trend moves us away from
filling the White House with "I feel your pain" governors of small,
backward Southern states.
- -Jerry Horton
------------------------------
Date: Thu, 14 Aug 1997 21:47:49 -0400 (EDT)
From: "Ken Meinken" <kmeinken@one.net>
Subject: Re: Limit Order Strategy?
Ira,
I've been placing limit order on NASDAQ stocks for years. I would
assume you could do so with OTC stocks too (I assume you mean
bulletin board stocks?) I can't imagine putting in an order for a
thinly traded stock and having no idea what the price would be. I
think limit orders are totally a function of what your broker wants
to offer. (Stop limit and stop loss orders are not as common as
regular limit orders and some brokerage place more restrictions on
them.)
Placing limit orders does not "avoid being victimized by bid-ask
spreads". The spread will be the same whether you place a limit
order or a market order. You just control what price you are willing
to pay.
Whether or not using limit orders is a good strategy depends on the
individual stock and your own investing strategies. Some stocks
fluctuate a lot and most of the time I can get a little better price
with waiting for a certain price. Cisco is a good example of a stock
I would only buy with limit orders. On the other hand, I placed a
sell order for Prime Hospitality a couple of weeks ago and it has
continued to drop since then. I'll probably change the order and
sell it for several points less than if I had put it in as a market
order initially.
How to pick a good price really depends on the particular stock. As I
said with Cisco, it bounces around a lot. OTOH, on some stocks
you'll never get it at a lower price than the bid.
Ken
------------------------------
Date: Thu, 14 Aug 1997 21:49:18 -0400 (EDT)
From: publix@quebec.net
Subject: Canadian answers Available
A reminder to persfin-digest subscribers:
Feel free to forward any questions regarding the Canadian market to:
publix@quebec.net
I will try to provide the best answer possible, or at leats point you in
the right direction. Many answers can directly be found in the
following site - access is absolutely free.
Pat St-Arnaud
FMD Brokerage
Investors Jump Point
http://spike.quebec.net/~publix/FMD/
------------------------------
Date: Thu, 14 Aug 1997 21:51:09 -0400 (EDT)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: Re: Homesteading
>I recently purchased a house in Southern California and have received
>several mailings from firms that, for a $40 service fee, offer to
>"homestead" my property for me.
>I was hoping somebody, perhaps Bob Ford, could enlighten me as to what
>homesteading does for the property owner (doesn't it protect your home
>from legal judgements,etc?). Also, how does a do-it-yourselfer go about
>homesteading on his own without help from these outside firms?
>Thanks, in advance, for any help.
>Mike Broadhurst
(THE USUAL WARNING)
I am not an attorney and the following is not legal advice. It is just my
opinion. It is based on my experience in California. The laws of other
states may be different.
MIKE
Everyone that buys a home in California will probably get a letter like you
have received. Your name is on many mailing list now so be prepared for
all sorts of mail. You can pay someone to file a homestead for you or
you can do it your self.
You can get the forms from most stationary stores and fill in the blanks,
have it notarized and file it with the county recorder for a lot less than
$40. However you must understand what is the LEGAL DESCRIPTION of your
property to put it on the form.
A homestead protects $40,000 of the equity in your home from the judgement
of creditors that do not have a lien on your property when you file the
notice. It has no effect on liens (mortgages and/or trust deeds,etc)
currently on the property.
Also mechanics liens placed on the property after the homestead are not
affected by the homestead.
If you expect to have creditors that you will not be able to pay, a
homestead might protect your equity. The down side is that it will be
much harder to get credit because the creditors know there is$40,000 less
than can attach if you do not pay your debts.
If you need more information, let me know.
BOB FORD
BOB_FORD@COMPUSERVE.COM
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End of persfin-digest V4 #74
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