Sunday, August 2. 2009
Well, this last week has been an emotional roller coaster at work due to the Yahoo Microsoft deal. I have to say, the night before the deal was announced, I was reading the rumours from various tech websites, and I didn't like what I was seeing. There was obviously some anxiety over how much longer I would be able to stay in Silicon Valley, and whether my job would still be here. The idea of becoming a Microsoft employee wasn't very palatable either.
Day break came, and the deal was announced super early in the morning (4:30am ish?). My immediate reaction was, oh my goodness, the stock price is sinking like a rock. I should have seen it coming though, speculators were piling into the stock, driving the price up to $17/share which wasn't sustainable. When the deal finally came, these people were piling out of the stock. It seems like investors in general didn't like the deal because Yahoo didn't get cash upfront for the deal. I have to admit that the deal is fairly complicated. The next two days, I spend several hours sitting through meetings that explained the deal, and its implications. I understand what the deal entails now, but the merits of the deal were definitely not apparent at first glance.
In either case, I was glad to hear that my job wasn't going to be transferred to Microsoft. I will continue be fighting on the side of Yahoo, and my job should be safe. My team should be unaffected by the deal, so I thank God for that.
Anyway, I'm still digesting this deal, and pondering what the future holds, and what change shall come.
Tuesday, April 7. 2009
So, this is the first year that I've done a US tax return by myself. I did mine online this year with TurboTax. Overall, it worked but I do have some gripes over it.
User Interface It was hard to navigate to specific parts of my tax return. They start you off with five tabs, Home, Personal Info, Federal Taxes, State Taxes, etc. Under each tab, there's sub-tabs, but the sub-tabs are far too generic. For example, under Federal Taxes, you get Wages/Income, Deductions & Credits, Others. If I wanted to modify my donations, I would have to go through Deductions & Credits, and scroll through a bunch of questions that I already answered. There's no way to jump directly to donations, and edit that number.
Price Hike It seems that TurboTax charges a certain rate for people who file before March 28th, and they charge a higher rate for after March 28th. I had my taxes mostly done, but not submitted yet, but when I found out that they were increasing prices, I rushed to get them done before midnight. It feels like price gouging when you jack up prices a few weeks before taxes are due.
Editions TurboTax has several different editions, Basic, Deluxe, and Premier. Each one costs more than the last. I initially didn't know which edition I needed, so I filled out their questionnaire. Based on their questionnaire results, they recommended that I use the Premier version because I had stocks and mutual funds. After filling out all the forms, I realized I didn't need the Premier version because none of my stock transactions this year triggered a tax event. I could have done my taxes with the Basic version which would have cost a lot less. So, I tried to downgrade my TurboTax to Basic, but there's no way to do it. The only solution is to delete all your data, and start again. That's pretty bad.
Payment At the end of the whole process, you have to pay in order to get your tax return. I was going to pay by credit card but I ran into problems. They needed me to fill in the address that I use for the credit card, but that address is tied to an international address. Unfortunately, there's no way to enter an international address into the system because it will not validate.
My second gripe with payment was, you can tell them to take the payment out of your tax return. The problem with this is, they charge a $20 fee for this service. This service doesn't seem to be worth $20 in my opinion
Random Thoughts On a completely separate note, there's something kind of scary about TurboTax. It seems like every employer has an EIN (employer identification number). If you punch that in, TurboTax can query a database, and fill in all your income information. The paranoid in me thinks it's not cool that third parties have a way of querying some database for my employment income information.
In either case, I'm debating whether I'm going to use TurboTax next year. Intuit (the makers of TurboTax) seems kind of evil at this point. In addition, I really prefer the online tax filing systems like UFile which I used for my Canadian taxes. Also, Canadian taxes are so much easier to deal with, I miss doing them. /tear
Monday, March 16. 2009
With each passing day of this recession, I find myself increasingly annoyed by these bankers and money men of Wall Street who basically ruined the economy for the rest of us. The latest outrage of course is A.I.G. trying to pay out $165 million in bonuses to its executives.
The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year. [...]
The payment of so much money at a company at the heart of the financial collapse that sent the broader economy into a tailspin almost certainly will fuel a popular backlash against the government’s efforts to prop up Wall Street. Past bonuses already have prompted President Obama and Congress to impose tough rules on corporate executive compensation at firms bailed out with taxpayer money.
A.I.G., nearly 80 percent of which is now owned by the government, defended its bonuses, arguing that they were promised last year before the crisis and cannot be legally canceled. In a letter to Mr. Geithner, Edward M. Liddy, the government-appointed chairman of A.I.G., said at least some bonuses were needed to keep the most skilled executives.
“We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” he wrote Mr. Geithner on Saturday.
It's just infuriating that a company who recklessly bet the house on housing mortgages and failed could even consider rewarding its executives with bonuses.
I think it's also quite remarkable how the mistakes of this sector has such massive ramifications on all of us. I mean, a lot of us did nothing to deserve this, yet somehow, I find my salary being frozen because businesses are in cost-cutting mode. I see round after round of layoffs from companies all around me. I have friends struggling to get enough work in order to pay the bills. A quick look at my retirement and investment accounts will reveal something synonymous to a large impact crater. I looked at my savings account, and interest rates have come all the way down to 1% which makes holding cash a pretty poor return on investment, even though it's one of the few safe havens left (it's practically a disincentive to save). All of this is happening to everyday people, and yet we're rewarding those who engineered this financial disaster.
And so, I salute Wall Street for creating such a glorious housing bubble, and making off with a ton of cash, and then having the balls to pat themselves on the back with bonuses after they burned down that house. Kudos.
/end rant.
Tuesday, February 24. 2009
This weekend, I watched PBS Frontline's - " Inside The Financial Meltdown." (Link takes you to the full video).
Here's an excerpt from the introduction:
On Thursday, Sept. 18, 2008, the astonished leadership of the U.S. Congress was told in a private session by the chairman of the Federal Reserve that the American economy was in grave danger of a complete meltdown within a matter of days. "There was literally a pause in that room where the oxygen left," says Sen. Christopher Dodd
"I think that the secretary of the Treasury could not fully comprehend what that linkage was and the extent to which this would materialize into problems," says former Lehman board member Henry Kaufman. [...]
Paulson was thunderstruck. "This is the utter nightmare of an economic policy-maker," Nobel Prize-winning economist Paul Krugman tells FRONTLINE. "You may have just made the decision that destroyed the world. Absolutely terrifying moment."
In response, Paulson and Bernanke would propose -- and Congress would eventually pass -- a $700 billion bailout plan. FRONTLINE goes inside the deliberations surrounding the passage of the legislation and examines its unsuccessful implementation.
"Many Americans still don't understand what has happened to the economy," FRONTLINE producer/director Michael Kirk says. "How did it all go so bad so quickly? Who is responsible? How effective has the response from Washington and Wall Street been? Those are the questions at the heart of Inside the Meltdown."
I really enjoyed watching this documentary because they presented this complex problem in a very easy to understand manner. The documentary provides some incredible insight into former treasury secretary Paulson. Secretary Paulson is this wall street guy who used to work at Goldman Sachs. There's this incredible moment where he seems to put his personal agenda for vengeance ahead of the public good. He seemed intent on letting one of his former competitors in Wall Street fail, and he makes an example out of his competitor. It seems to be partially based on personal animosity towards this former adversary. This act sends shockwaves across the stock market.
I think the other remarkable thing is just how quickly these financial titan corporations fell in a matter of days. Billions of dollars of market capitalization literally evaporated over night.
The Dow Jones Industrial hovering over 13,000 seems like such a distant dream these days. We're barely holding onto Dow 7,000 right now.
Monday, October 27. 2008
I've been hearing a lot of rhetoric in the news about how bad the current financial crisis is. A common phrase being thrown around is that this is a once in a century event. The New York Times has a very informative chart which illustrates how bad the stock markets are going, and how they compare to other bear markets.
I remember a couple months back, I was pondering if I was being bearish and pessimistic enough. Basically I wasn't. The scary thing is, it appears I'm still not bearish enough when you look at the chart. We've lost 50% of the stock market so far; however, during The Great Depression, the stock market lost 80% of its value.
Of course, there is a silver lining in all of this. A market crash is actually a boon if you're investing for retirement, ie you need your money in 40+ years. In the long-run, this is the ultimate play on "buy low, sell high" if your time horizons are long enough. That is why, I'm still doing some buying for my retirement fund.
Friday, October 10. 2008
With a full blown financial armageddon upon us, I pondered to myself, what stocks could possiblely be up after massive drops everyday? It turns out there are stocks that actually move up. Observe the UltraShort S&P500 ProShares (SDS)
This is a fund that makes money whenever the markets go down. This is known as shorting which is where you're betting that the market is going down. If you read the chart, this fund has been doing extremely well this month. Today it was up more than 10%. Looks like the bears are winning big time.
Note: I am not advocating shorting the market or investing in the UltraShort fund. I'm merely highlighting that whether the market is up or down, someone is making money in the market.
Thursday, October 9. 2008
I got this article from Myron entitled, " The party's over for Iceland, the island that tried to buy the world." I was kind of shocked by this article because it was completely off my radar and it's not being covered by any of the mainstream media down here.
Iceland is on the brink of collapse. Inflation and interest rates are raging upwards. The krona, Iceland's currency, is in freefall and is rated just above those of Zimbabwe and Turkmenistan. One of the country's three independent banks has been nationalised, another is asking customers for money, and the discredited government and officials from the central bank have been huddled behind closed doors for three days with still no sign of a plan. International banks won't send any more money and supplies of foreign currency are running out.
People talk about whether a new emergency unity government is needed and if the EU would fast-track the country to membership. On Friday the queues at the banks were huge, as people moved savings into the most secure accounts. Yesterday people were buying up supplies of olive oil and pasta after a supermarket spokesman announced on Friday night that they had no means of paying the foreign currency advances needed to import more foodstuffs.
This North Atlantic volcanic island, which is the size of Cuba, with a population of 320,000 - the size of Coventry's - is an unlikely player on the global financial stage. It is famous for its fish, geysers and for winning the UN's 2007 'best country to live in' poll. But Iceland built its extraordinary wealth on the crest of the worldwide credit boom and now the crunch is sweeping it away, bankrupting a people for whom the past eight years have been, for most of them and by their own admission, one long party.
The nation's celebrated rags-to-riches story began in the Nineties when free market reforms, fish quota cash and a stock market based on stable pension funds allowed Icelandic entrepreneurs to go out and sweep up international credit. Britain and Denmark were favourite shopping haunts, and in 2004 alone Icelanders spent £894m on shares in British companies. In just five years, the average Icelandic family saw its wealth increase by 45 per cent. [...]
Outside the city's Hofdahollin car showroom, looking a little rumpled for men trying to sell new and used cars for £35,000 and up, owner Runar Olafsson and his top salesman are sharing a Marlboro. They are not expecting any customers today. 'A few years ago we couldn't get enough top-end cars and we started importing them. We were selling 120, 140, a month. But it turned around so fast,' says Olafsson. 'It's so dramatic, just in one month. We have already seen two dealers go down.
'Customers would come in and we would apply for credit online for them, a 100 per cent loan, and they can drive away in their new Range Rover. It took ten minutes, it was very easy. But 60 to 70 per cent of those loans were in foreign currency, Japanese yen or Swiss francs, and they have gone up 90 per cent as the krona burns. A car worth 5 million krona now has a 9 million loan on it; how are people going to make those payments?'
I think it's quite remarkable how quickly this credit crisis has spread all around the world. The shockwaves are being felt everywhere. If you need proof, anyone see the Toronto Stock Exchange plunging 11% on Monday? In either case, I don't even bother looking at my RRSP/stock account balance anymore, it's too scary.
Bjork! Save your country!
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