In Search of the Perfect Investment

Javelin (JMI) will start trading today. It’s a new mortgage REIT managed by the people at ARR. It still has to buy its portfolio and borrow the money for leverage (juicing up the return). I’m guessing it will trade under $20, its offering price. At which price it’s worth buying. Yield should eventually be 14%. The prospectus is here.

First presidential “debate” tonight at 9 PM eastern time The debate is on domestic policy (like jobs and taxes). It will be moderated by Jim Lehrer. CEO or law professor? From the New Yorker:

Renting cars in Europe is very, very pricey. Figure at least twice as much as here. And there’s the gas in Europe. You don’t want to know about the price of gas — or actually diesel, since that’s what everybody uses.

China wages escalate. Friends report 18% overnight wage increases in some Chinese factories. the increase changes the economics of manufacturing  some things in China. It’s forcing many manufacturers to look at ways to bring some of the jobs home. It depends a lot on productivity improvements through the use of new high-tech machinery. This is good for Germany, and potentially for us. Our jobs number will be out on Friday morning.

Tax decision time for some  of us. From the Wall Street Journal two days ago:

Decision Time for Estate Planners As Tax Exemption Is Set to Expire

By CHARLES PASSY

For those weighing what to do with the assets they have accumulated over a lifetime, the next few weeks may be time to make the final call.

That’s because the current federal tax exemption on estates and gifts is set to roll back on Jan. 1, 2013, from $5.12 million to $1 million—the same level it was at in 2002, before tax cuts passed during the George W. Bush era went into effect.

And just as banks and mortgage brokers often encourage clients to “lock in today’s low rates,” estate attorneys and other financial professionals are telling people to take advantage of the high exemption while it is still in effect, often by making sizable gifts under the current limits so that they can reduce the size of their estate—and the potential tax hit—at the time of their death.
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Just as important, say the pros: If an individual waits too long to begin the process, there is a good chance they won’t be able to complete the paperwork before year’s end.

Of course, estate attorneys and other financial professionals have sounded this alarm before when estate and gift taxes were up for review—and Congress hasn’t always played into expectations. For the calendar year 2010, for example, the estate exemption was basically eliminated, meaning taxes weren’t automatically imposed on the estate of anyone who died that year. (The exemption rules changed yet again when a new tax act was approved later in 2010, although the no-tax rule still applied in some instances.)

But financial experts warn that today’s political and economic climate could make it difficult for Congress to kick the can down the road and maintain the current exemption policies, even though many Republicans, including presidential contender Mitt Romney, have advocated eliminating the “death tax” altogether. (President Barack Obama has proposed a $3.5 million exemption.)

In other words, a $5.12 million exemption may be a deal worth taking, especially when weighed against the likelihood of a full repeal of the estate tax going into effect by year’s end—or ever, for that matter. “My guess is that these are the best rules you’re going to get in your lifetime,” says Steve Kunkel, a managing director at CBIZ MHM, one of the nation’s largest accounting firms.

Mr. Kunkel echoes the point about timing: If you believe 2012 is the year to map out your estate, the real deadline to begin planning is, well, now.

The reason: Estate planning involves many interlocking parts—and each demands a degree of time and attention. For example, for gifts that include assets other than cash, such as real estate, appraisals are required. But because of the end-of-year planning rush, an appraisal could take up to two months, say estate attorneys.

That alone makes putting off a decision until the end of the year in hopes of getting some clarity from Washington a risky bet.

“December is far too late,” says California estate-planning attorney Janet Brewer, who is affiliated with the legal-advice Website Avvo.com. “Even if a lawyer has time to meet with a client, it’s simply too difficult to finish the process in three or four weeks.”

 Recent favorite New Yorker cartoons:

Neat play: Cyrano de Bergerac at Roundabout. Saw it last night. Roundabout Theatre Company does great work. We have a subscription and support them. We see all their plays. Check out their web site– here.

Looking for an article on the New York Times or the Wall Street Journal? Or anyone else. don’t use their web site’s search engine. Use Google. It’s much better.

Harry Newton who has bought a little more Apple recently. Once the idiocy with Maps blows over, iPad 5 sales remain buoyant and the mini-iPad are introduced (later this month), Apple stock should bounce back.