Tag Archives: Occupy Wall Street

Pay Your Taxes, And Mine While You’re At It

Its tax day. What does that mean? Today is the day when we, the super wealthy, have to write big checks to the government to pay our taxes. We hate it and dread it every year. For most individuals, they get money back. Not us.

Ah, but there is always a catch. Tax write-offs are a glorious thing. While working with my accountant, he informed me that since I am officially in business for myself that I can write-off 30% of my income. Through a special retirement fund for self employed individuals, I can write-off $45,000 or 30% of my income each year by moving that money into the retirement account. Then, of course I have all those “charitable donations” to write-off. Long story short, I end up paying 17% in taxes on the year.

Meanwhile, ordinary Americans are not allowed to use the same retirement accounts that I am. You have Roth-IRAs, 401Ks, and other retirement funds to use. Nothing as powerful as mine as far as write-off possibilities go. Yet, my kind will complain to the high heavens that we end up paying taxes; while most people get money back. We completely disregard the fact that we paid little to no taxes throughout the year. If you’re taking a dime of our money, you must be a socialist. Wall Street thinks that because we sit behind a desk making money that we’re entitled to keep every penny. Likewise, we believe that someone pounding nails all day isn’t “smart enough” to use their money wisely. So why not have them pay taxes? It doesn’t matter that they are struggling just to make rent. We want more perks from the “elite” status we feel entitled to.

So while I write this 17% check to Uncle Sam, I know some of my fellow Wall Streeters are writing a check for an even lower percentage complaining about it. Demanding an answer for why someone who “is the reason there is an economy left at all” has to continue to support the “lazy individuals who refuse to get a job.”

Need another reason why this stock trader is fed up with Wall Street?

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They Bet Against What They Sell You

While Wall Street is calling you advising that you buy a product, they’re betting against that product. Sounds pretty bad, right? Sorry to inform you, but it’s perfectly legal so long as they disclose it in the fine print.

In the early 2000’s Wall Street was selling mortgage backed securities. That was just our fancy way of saying we bundled mortgages together and resold them. To resell them, we had to have them rated by credit agencies. Mind you we, Wall Street, paid those credit agencies for their services. They obviously had incentive to rate things the way we wanted.

Even though we knew those mortgage backed securities were crap, we were able to get them the highest credit rating possible. By doing so, we could sell them for a higher price with the illusion that they were low risk investments. The kicker is that Wall Street was shorting those mortgage backed securities, banks who owned them, and individuals who owned them. Keep in mind that we are the ones who sold them to those people.

So while we set you up for failure, we were betting against those very products we sold you. As long as we told you that somewhere in the small fine print, it was legal. We did it then. We did it with Greek debt. We’ll do it again so long as we can keep making our wallets fatter.

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The Facebook IPO

Facebook is going to be publicly traded in May.  Whether you agree with it or not, it will be the most oversubscribed IPO since Apple first came public.  What does that mean? It means that if Wall Street prices it out at $40 per share, Facebook’s first trade will be around $80-$85 per share.

Now don’t get me wrong, the numbers and projections make this stock still look cheap at that price in five more years.  Actually, I think this is a once in a generation stock offering.  Finally a stock for the every day person to buy, hold for five to ten years, then sell for a hefty profit.  Don’t forget the Wall Street games though.

First, Goldman Sachs has been selling shares of Facebook to their clients in Europe for about a year now.  Meanwhile, you haven’t been able to buy Facebook at all.  How can they do it?  Because the laws aren’t the same internationally.  Goldman Sachs is using it to grow their client base, and charge more fees, while they take advantage of being bigger and more powerful than you.

Also, what I see happening is a bit of a honeymoon period with Facebook’s IPO.  The stock will soar right away.  After a few days, or even a few weeks, you will see a correction downward in the stock price.  Why?  Wall Street knows that the individual investor wants this stock, and they want it bad.  So they will ride some of the move up before pulling the rug and cashing in their profits.  When that happens, the stock will pull back.  When the stock starts to pull back, people will panic sell.  Wall Street will try to explain that the stock is too expensive on current earnings.  The stock could lose upward of 20-30% during this period.

What Wall Street won’t say, until the stock starts bouncing back up, is that they don’t care about current earnings.  They don’t care about current earnings for most companies.  What they care about are future earnings.  With roughly $6 billion in revenue projected for 2012, and $20 billion in revenue by 2014, the stock will be extremely cheap after the 20-30% pullback.  Wall Street will jump on this as hard as they have jumped on Apple in recent years.

Do not be fooled when Facebook starts pulling back.  Its a great company, solid revenue with a limited monetization model, and phenomenal earnings and growth potential.  Ten years from now, you will kick yourself if you didn’t buy this stock.  Wall Street is going to try to make you think that this stock is just a flash in the pan.  Don’t be fooled.  They’re just looking for yet another way to screw you, and allow themselves a chance to make even more money.

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