Phantasmix Stock Blog

Despite Recession Fears, VC Investments Show Confidence in Hot, New Ideas

…In 2001, venture capitalists were actually curtailing their investments after the dot-com economy pushed the U.S. economy into its last recession.

Although many experts believe another recession is imminent, venture capitalists say there is little reason to believe their investment pace will slacken this year…

Source: Wired Magazine

We watched “Stranger Than Fiction” a few weeks ago, I really liked it and keep coming back to it. I give it 10/10 and will buy it on DVD. End of movie review.

Here’s a sort of funny dialog from “Stranger Than Fiction” that resonated with me:

Harold Crick: It says, in the file, that you only paid part of your taxes for last year.
Ana Pascal: That’s right.
Harold Crick: Looks like only 78 percent.
Ana Pascal: Yep.
Harold Crick: So you did it on purpose?
Ana Pascal: Yep.
Harold Crick: So you must’ve been expecting an audit.
Ana Pascal: Um, I was expecting a fine, or a sharp reprimand.
Harold Crick: A reprimand? This isn’t boarding school, Miss Pascal. You stole from the government.
Ana Pascal: No I didn’t steal from the government. I just didn’t pay you *entirely*.
Harold Crick: Miss Pascal, you can’t just not pay your taxes.
Ana Pascal: Yes, I can.
Harold Crick: You can if you want to get audited.
Ana Pascal: Only if I recognize your right to audit me, Mr. Crick.
Harold Crick: Miss Pascal, I’m right here auditing you.
Ana Pascal: Listen, I’m a big supporter of fixing potholes and erecting swing sets and building shelters. I am *more* than happy to pay those taxes. I’m just not such a big fan of the percentage that the government uses for national defense, corporate bailouts, and campaign discretionary funds. So, I didn’t pay those taxes. I think I sent a letter to that effect with my return.
Harold Crick: Would it be the letter that begins “Dear Imperialist Swine”?

I find myself thinking more and more that I don’t want to pay taxes, or rather not “entirely” As most people who give it a thought, I at least partially disagree with how the tax money is spent.

Here’s where the Canadian tax dollar goes

Category descriptions in the chart are kind of vague, but they’re explained in detail here: http://www.fin.gc.ca/TaxDollar/text/html/pamphlet_e.html

My web search skills may suck but it was a lot harder to find a clear picture of where the American money goes. Canadian government websites seem to be more straight-forward, like they have less to hide

Here’s where the American tax dollar goes

Note: I put this chart together, therefore the way it’s colored is obviously biased. The big bright blocks comprise 75% of the budget.

The budget should be a reflection of the people’s priorities, whether that’s true or not is a separate question. The major differences are in Defense and Health care allocations. Even if the Healthcare diff. may be due to how federal and state/provincial governments handle things (maybe individual provinces take on more than the states do, for example), but the Defense is clearly a federal expense.

Canadians get offended when people say “they’re just like Americans”, and rightly so, at least our budget is a reflection of the peaceful nation that we are. With this, I end my very much delayed bash of the American-Iraqi war.

Tax spending is a topic for another time, when I start breaking my New Year’s resolutions and go back to my complaining self.

The general consensus is – yes, they are. As a group they probably are, but if you treat microcaps just like any other company and get to know them before investing, learn the basics of their business, what their prospects are, then these companies are not much riskier than “blue chip” stocks. The only difference remaining will be the microcap’s unproven track record.

Lengthy track record is usually looked upon as the measure of safety. Though history never guarantees future performance, we still fall for the track record trap.

In July I observed that a lot of Canadian bloggers just looooved bank stocks, both American and Canadian, mainly for good history of increasing dividends. (I’m somewhat an anomaly in that I don’t chase after the dividend yet, but instead want aggressive growth through penny stocks.)

I started investing in April 2007, so this will be my starting point for performance comparison. Since April 2, 2007 Bank of America stock is down 24%, Citibank down 44%, Washington Mutual – 63%, average – 44%. (Canadian bank stocks are doing much better, they’re actually slightly higher than they were on Apr 2.) Nonetheless, the point of this exercise is that even such seemingly stable and prestigious stocks like American banks with very long history are prone to failures.

For the record, my Canadian portfolio overall currently stands at -35% with some stocks being near break-even.

“Safe investment” remains an oxymoron.

Oxymorons list: SAFE ABORTION – SAFE AND SANE FIREWORKS – SAFE INVESTMENT – SAFE SEX – SAFETY GLASS – SAFETY HAZARD

Much-quoted advice from “Confessions of a Shopaholic”:

“There are two solutions to money troubles. C.B., or M.M.M. — Cut Back, or Make More Money.”

Yes, there is such a thing as good tax news!

In addition to lowering GST rate from 6% to 5%, effective January 1, 2008:

The GST/HST threshold for quarterly instalment payments will be increased from $1,500 to $3,000. If you are an annual filer whose net tax for a fiscal year is less than $3,000, you will not need to make quarterly instalment payments throughout the next fiscal year. – Revenue Canada

Don’t let the word “increased” scare you. This is actually good news! Our GST payable (after deductions) is typically between $3-5K, which easily exceeded the $1,500 threshold. We were forced to either do one big prepayment before filing the GST return so the tax payable would be under $1,500, or suffer through the quarterly instalment payments.

Instalments are not a problem, really, but they are a hassle. And if you’re late with one of the instalments, you’ll be penalized. You’re potentially setting yourself up for 3 penalty occasions a year. I always opted for the prepayment option, which is a much smaller hassle: just 1 extra check and 1 extra form to fill out.

This year we have a bunch more ITC’s (input tax credits), so the GST payable may very well be right under the $3,000 threshold.

In conclusion, while this change doesn’t directly mean tax savings, this little change has the potential to make lives a bit easier.