Don’t panic – now’s the time to buy! (just kidding)

Why I Don’t Watch TV News About the Economy

While winnowing our Blog Roll, we revisited Bill Conerly’s Businomics Blog. It’s not a particularly active blog, but this video alone made today’s visit worthwhile.

Today’s drop of more than 350 points in the DJI really IS pretty scary, but this truly is a good opportunity to take some profits, get rid of some weaklings, abolish the stocks you are saying, “I can’t believe I fell for that one!”

There’s not much bad about a constantly rising market, such as the ones we’ve been enjoying since IFO began this blog almost five years ago, except one thing: we begin to think we are investing geniuses.

Of course, we all know better. We know that correlation is not causation, but we just can’t keep from patting ourselves on the back as we see our net worth increasing on a regular basis. So let today be the beginning of a new modesty.

We admit we are not as smart as we wanted to be, but we firmly resolve to become much smarter by reading, learning, trying new strategies, buying and selling, with the now- refreshed recognition that we still have a lot to learn.

Actually, if you follow my conservative strategy, all you have to do to “beat the market” is to stick to it, trading as little as you possibly can.

Remember: you will still get the dividends. If you are nervous about that, check in Yahoo! Finance and see how much money your companies earn per share and compare that to how much they pay out in dividends per share. That should tell you all you need to know.

A British investor who posts often on one of IFO’s favorite blogs said this weekend that, in view of the coming Greek economic crisis, he had sold almost all of his stock and returned to 80% cash! In view of taxes on capital gains, IFO wonders if that was a good idea.

On that blog, we never share actual dollar amounts of money we invest or intend to invest, so there is no way of know what he actually may have to pay. However, it looks like a potentially good idea.

It also looks as if our systems are similar, although the British website is MUCH easier to understand than the IRS website. Probably fewer lobbyists to gum up the tax code.

What kind of capital gains tax does the British government levy on its citizens? After a generous deduction of 11,100 British pounds, or USD $17,460, from the total amount of money you gained from selling your stocks (including subtracting any losses you received), you get taxed at the regular income tax rate of 18% to 28%, depending on your total income.

Now, get that smile back on your face and start reviewing your portfolio. Maybe tomorrow we’ll share with you whether ours beat the Dow and by how much.

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About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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