Investing during a world wide economic downturn

[AllIWantIsLove]

<snip> The ACA might tend to undermine patient-doctor relationships because of the way it encourages shopping your policy each and every year. <snip>

ALL insurance undermines the patient-doctor relationship because the doctor is being paid, mostly, by the insurance company. So he's highly motivated to keep the insurance company happy at the expense of his motivation to keep the patient happy. Worse, I suspect that the doctor has to follow insurance company rules that the patient is not even aware of.

Bob.

[Dickhead]

The US medical system is highly adversarial. You have an adversarial relationship between the patient and the insurance company, and between the doctor and the insurance company. By extrapolation that leads to an adversarial doctor-patient relationship. Then you have the pharms who have nobody's best interests at heart, and the downright meretricious relationship between the pharms and the docs. The ACA might tend to undermine patient-doctor relationships because of the way it encourages shopping your policy each and every year. I imagine that will stabilize over time to some extent (because new entrants are a large part of the premium fluctuations), but not completely.

[Tiny12]

There are zero coupon muni's.

Off topic but a little related to your second point, my allergist used to prescribe some high dollar antihistamine, even though it didn't work any better than Allegra or Zyrtec generics, which are now available OTC, because she either thought she was doing me a favor (because she thought medical insurance would cover it) or because the drug company was buying her off. So I ended up spending $100 for something that should have cost $10 until I figured what was going on. This is representative of how screwed up our health care system is. It's crony capitalism at it's worst. Obama isn't any more culpable here than many other politicians, but it chaps me that so many people think the ACA is the best thing since sliced white bread. It didn't fix the system. Instead it made it more complicated and inefficient.

[Dickhead]

Yeah, if you buy a bond at a discount and hold it to maturity, the discount is ordinary income and you have a phantom income element. On zeros all the income is phantom, so I guess that'd be a reason. I don't think I have ever seen a muni that was a zero, though.

Those HSAs did get a little bit less advantageous when non-prescription meds became non-qualified expenses. So that meant that for example Prilosec 40mg requires a prescription but 20 mg does not. So everybody started asking for scripts for 40s and cutting them in half. So then the insurance companies started requiring doctors to write letters as to why the patient couldn't just take two 20s instead of a 40. The answer was, allegedly, that the 40s are time release but the 20s aren't, or some such thing. There's a few drugs like that out there that you used to be able to run through the HSA but now can't. I don't really see why the eligible expenses should not be exactly the same as for the medical expense deduction. I don't get all that bullshit about bandaids and such. Oh and cough drops are okay but not cough syrup cuz it has dextromethorphan or guafenisin or both and those can be had with a script. Give me a break.

I thought HSA-eligible plans couldn't cover prescription drugs. I have a hard time thinking a plan that didn't could be all that good. Am I missing something? I can't qualify for an HSA right now, as it turns out.

[Tiny12]

Good point about the munis. The only reasons I can think of to put them in a retirement account would be if you intended to actively trade them and were expecting to realize capital gains, or if you're buying munis at significant discounts to par. If you buy at a discount to par and hold to maturity, I believe the difference between par and cost basis is taxable income. But admittedly in most situations people would be much better off buying taxable bonds if using funds from a retirement account.

Thanks for the info about depreciation and REITS, I didn't know that.

I actually have an HSA and very good health insurance, the only caveat being that it has a $3,000 deductible.

[Dickhead]

And under #1, or even #0.5, are TIPS, since they give off phantom income. I believe REITs are best held in retirement accounts and would properly be a #2 in your scheme. The REIT structure, unlike MLPs, does not pass depreciation through directly, although of course the REIT itself can use it. REITs have got a pretty high payout ratio by law (90%) so I'd especially want them in tax-deferred accounts during my high earning years. MLPs I would say the exact opposite because of the pass-through depreciation.

I'm trying to think of a reason to put munis in a retirement account. Single tax frees in a high state income tax state? Never really seen it done. I did once have a situation where a Prudential "financial counselor" had set my friend up with a fixed annuity in her IRA. I would say that was way stupid but he knew exactly what he was doing to her; fixed annuities are insurance products by law and not securities and he, of course, was not licensed to sell securities. So, it was intentional malpractice. She sued them and got a pretty fair settlement, which unfortunately I was by law precluded from taking a percentage of. Strangely, however, my hourly fee closely approximated the percentage I had in mind.

I really do think a lot of advisors have not adjusted their thinking to "permanently" reduced capital gains rates and are not getting a lot of this stuff right. It's got major estate planning implications, and also major implications for college financial aid.

Lately I've been looking at using HSAs as pseudo-IRAs. You can put I think it is 3,300 a year (plus 1,000 if over 50) into these and it grows tax deferred like a traditional IRA. You don't have to match the withdrawals with the contributions and once you're 65 you can take the money out without penalty whether you use it for medical expenses or not. This last is a pretty goodly loophole. You have to have shitty health insurance to qualify, but I think it would work for a lot of ex-pats. Stateside, young people could put away quite a bit of deferred money. One member of a couple could have a shitty plan and an HSA while the other half has good employer insurance that covers the spouse.

Oh yeah and the contribution to the HSA reduces income for the purpose of calculating the ACA subsidy!

[Tiny12]

Big Boss Man, To avoid hijacking the American Politics thread, I'm posting a response here to your post about what should go into a tax deferred account, like an IRA.

I suspect it would make sense to keep everything in a tax deferred acccount. But if a person already has maxed out his contributions and has money left over to invest, then this might be a reasonable ranking, for what should go into the tax deferred account first. There's a big advantage to holding "1" below in the tax deferred account, and the advantage decreases as you go down the list.

1. Interest bearing instruments, taxable at up to 43.4% tax rates, with little or no potential for capital gains. Examples: certificates of deposits; investment grade bonds.

2. Interest bearing instruments and stocks that pay nonqualified dividends, that do have potential for capital gains, and for which there are no foreign withholding taxes. Examples: Singapore and Hong Kong stocks; junk bonds (Singapore and Hong Kong dividends are nonqualified and there is no dividend tax in those countries, thus no tax withholding).

3. Stocks that pay qualified dividends, for which there is no tax withholding, and for which there is capital gains appreciation potential. Most U.S. Common stocks would fit into this category.

4. Foreign stocks that pay qualified dividends for which there is withholding tax (and thus a tax credit). Examples would be most European stocks.

5. Municipal Bonds.

I don't know a lot about MLP's and REIT's. They're tricky animals. On one hand you may be largely sheltered from current tax on income by virtue of depreciation deductions. But then when you go to sell the shares I think you have to pay tax on recaptured depreciation. Where they'd fit would depend a lot on the particular MLP or REIT, and also on whether you intend to sell during your lifetime or pass on to heirs.

[Miami Bob]

Trading or investing

[Aqualung]

El Cid!

He was the best!

Cranky old S. O. B and good friend of "Ours."

Over 3500 posts or something like that.

I am going to break his record Boys.

Never met a better poster child for mongers!

He lines them up and fucks them!

3 Dominicans per day!

Breakfast, lunch and dinner with a T. L. N included Boys!

Plus he is older than your father!

Where does that shit come from?

He is "OUR" god!

TL

Cranky old git, reminded me of my father! Hahaha I miss his crusade against taxi drivers! Hahahahaha

[TejanoLibre]

Glad to hear he's fine, where he belongs. Never had the pleasure to meet him in person but I liked his comments a lot so when he left I felt something was never the same in the forum. If I remember correctly he had more than 3000 contributions by the time he closed his account. I read some comments by aqualung and Toymann recently but that's it. Good to know from you and I promess to contribute as much as possible. Cheers!

El Cid!

He was the best!

Cranky old S. O. B and good friend of "Ours."

Over 3500 posts or something like that.

I am going to break his record Boys.

Never met a better poster child for mongers!

He lines them up and fucks them!

3 Dominicans per day!

Breakfast, lunch and dinner with a T. L. N included Boys!

Plus he is older than your father!

Where does that shit come from?

He is "OUR" god!

TL

[Whiskas]

Since Sid loved him dominicans in Baires, why not move to the island. I trade emails with him and he seems happy and a bit cranky, but that's the Sid we all know and love.

I feel like a cheer leader-trying to get some posting out of you guys.

Please add something? I am starting to feel like an ass-hole, but it is great to see some posting from some formerly active members. Did you catch dickhead and aqualung?

If you want a more detailed update, Toymann was down to party with sid recently. I'm in miami so I can't really see myself going to the / Dominican Republic to get away.

There is some great mongering in miami in the us$150 to $200 range with latinas.

Glad to hear he's fine, where he belongs. Never had the pleasure to meet him in person but I liked his comments a lot so when he left I felt something was never the same in the forum. If I remember correctly he had more than 3000 contributions by the time he closed his account. I read some comments by aqualung and Toymann recently but that's it. Good to know from you and I promess to contribute as much as possible. Cheers!

[Whiskas]

Whiskas. Glad to see that your alive and doing well. Post more often. Will pm you about our little friend of long ago.

Thank you so much, I would love to post more, but to be honest if I can't make a serious contribution to the forum I prefer to listen (read in this case) , I haven't been in Argentina in years so not much to contribute, but still loyal to the forum. I will be glad to hear from you and that little friend. Best regards!

[Miami Bob]

Since Sid loved him dominicans in Baires, why not move to the island. I trade emails with him and he seems happy and a bit cranky, but that's the Sid we all know and love.

I feel like a cheer leader-trying to get some posting out of you guys.

Please add something? I am starting to feel like an ass-hole, but it is great to see some posting from some formerly active members. Did you catch dickhead and aqualung?

If you want a more detailed update, Toymann was down to party with sid recently. I'm in miami so I can't really see myself going to the / Dominican Republic to get away.

There is some great mongering in miami in the us$150 to $200 range with latinas.

[Mbronzini]

Whiskas. Glad to see that your alive and doing well. Post more often. Will pm you about our little friend of long ago.

[Whiskas]

Where is Exxon123 when you really need him. Thank god I didn't listen to him and hold exxon as my major energy position

Too bad Sidney quit the forum, I remember how much talk we had in the forum during the 2008 crisis and 2009 rally about investing and finances. I miss that man's knowledge, believe it or not I learned a lot since that time and had my ups and downs but mostly ups since then. Who knows something about him guys?