December 1987 For the past 5 years I've been feeling foolish for not getting in on the stock market boom. After the whipsawing that the Dow took in October, I'm beginning to feel a lot smarter for having been invested in real estate. I entered this world just after the crash of 1929 in time to experience a decade of depression which was only ended by WWII. Now I can lay claim to having experienced a market crash which was almost twice as great in terms of percentages and perhaps 100 times as great in terms of monetary losses. In the interim between late August and mid October about $1,000,000,000,000. in the value of stocks was lost to investors. That's almost enough to run the country for a year!

Continue reading “‘For They Have Sown The Wind, And They Shall Reap The Whirlwind.’ (hosea, Viii,7)”

November 1987 Aerodynamically, science can prove that the bumblebee's wings can't support it's heavy body - but nobody told the bumblebee. According to all the pundits, real estate won't be able to fly either in the face of all the changes brought about by TRA-86. But nobody told real estate. Before you become too despondent over the current state of your tax shelter, look at the benefits which remain intact for owners of SINGLE FAMILY HOUSES:

Continue reading “Bumblebees Can’t Fly!”

October 1987 When Walt Kelly's Pogo comic strip originated that remark, I doubt that he was talking about the American tax payer, but he may have been. He may also have included those who rely on credit and leverage to an excessive degree. Or those who rent property that isn't maintained to meet local requirements. Even those who invest in mortgages or short term notes might have been in his thoughts along with depositors in foreign banks. Speculators in the bond, stock and commodity markets may eventually join this throng. All of them share a common trait - the ability to shoot themselves in the foot even though they are aiming at much more lofty goals. Hopefully, this issue will make things better.

Continue reading “‘I Have Met The Enemy And He Is . . . Me!”

September 1987 Somewhere along the road to happiness a gap has appeared between the American Dream and reality! The American family is in the process of self-destructing under the incentives provided by the Welfare system, tax laws, permissive society and liberal values promulgated by our educational system and media. The work ethic has been damaged by the perception that success is more the result of guile and luck than patience, prudence and thrift. We continue to consume more than we produce in spite of knowing that every dollar of credit used by ourselves or by our government will have to be repaid. And this repayment will be at the cost of life style, liberty, opportunity and growth either in our lifetimes or that of our decedents.

Continue reading “Once Upon A Time In America . . .”

August 1987 Depending upon whose point of view you're reading, things are either looking up or looking bleak for investors. The stock market is either ready for a 15% - 30% drop, or a spurt ahead to 3000 on the Dow. Real estate is either poised for new growth or ready for a crash. Banks are either going to finally admit that they are no longer solvent or they're going to 'bookkeep' their bad loans off the books. Foreign balance of payments and trade deficits are either turning around or the dollar must continue to drop another 15%. Every time I get ready to plunge into the fray and invest some money in something a little voice stops me. Maybe its the voice of reason. Maybe fear.

Continue reading “When Does A Light Bulb Burn Brightest?”

July 1987 Over the past 10 years investors have been whipsawed by everything imaginable. In 1977 we had 8½% 30 year fully assumable loans with 4% inflation under Gerald Ford. By 1979 the Carter inflation had begun taking interest rates and price appreciation into double digits. Suddenly, even at 17%, leverage was in. The 'Nothing Down' school was in full swing. With house prices appreciating in excess of 2% per month in some areas, interest costs became NEGATIVE compared to inflation. SPECULATORS WERE MAKING FORTUNES OFF THE SAVINGS OF INVESTORS which were being loaned out by mortgage companies.

Continue reading “Even A Stopped Clock Is Right Sometimes . . .”

June 1987 At about this time every year, with the income tax calculations all tucked into the mail, it's not a bad idea to take a long look at where you are and where you're going. Rockefeller is purported to have said that the difference between rich and poor people was not so much their intellect as their ability to see and plan in longer segments of time. For instance, it's not uncommon to be able to hire general laborers by the hour and to pay them at the end of the day. For working hard all day, they might earn between $50 and $100 dollars most places. On the other hand, the truly rich people have been known to work for average salaries, but to have stock options accrue worth millions of dollars at a point in the distant future. There's a reason why this is a topic in this month's letter.

Continue reading “Far-sight Beats Hind-sight Everytime . . .”

May 1987 There seems to be a lot of confusion surrounding the use of corporations under the new tax act. Aside from tax considerations, incorporating a business - or becoming a CONTRACTOR rather than an EMPLOYEE in your present occupation and being paid as a corporation - can have a major impact upon your net profits, estate planning, retirement, liability and exposure to creditors. While it's easy to explain some of the benefits of a corporate life, the subject can be quite complex. Consequently, the more you understand, the better you'll become at extracting both short term tactical and long term strategic benefits from it.

Continue reading “Incorporation – A Mixed Bag Of Goodies . . .”

April 1987 It's a transition year. The tax laws are in transition. That means there will be phase-ins of various portions of the tax increases and decreases, phase-outs of many of your deductions, phase-ins of different tax rates for corporations after July, brand new limits on what you can and can't do, plus a new Speaker of the House, Jim Wright, who as the Congressional Leader is already establishing a record as a CAN'T DO person. He's already announced for new and higher taxes which may be passed before this year is out.

Continue reading “This Is Your ‘year Of Living Dangerously’!”

March 1987 Think about that for a moment. Who'd sell it to you? What would they rather have than the gold itself for currency? Why would you give gold that had already been mined in exchange for gold that had yet to be mined? The same principle is true of advice on getting rich quick! If the people who gave it could use it, they wouldn't sell it on TV would they? Over the past year I've been building a file of nationally known gurus who are being charged with fraud, filing for protection either personally or in the name of their corporations under the Bankruptcy statutes, being sought by the authorities for a variety of transgressions, or who have suddenly switched to different lines of work. They all shared a common flaw: they sold an eager, unsuspecting public a map to a gold mine.

Continue reading “You Can’t Buy A Map To A Gold Mine!”