Question of the Day: How Much Is Enough?

A household income of $400,000 puts a family in the top 1%. Although, definitely not poor, it’s also not nearly as “wealthy” as those of a certain political party and the mainstream media would have us believe. Were that their taxable income (not factoring in exemptions or deductions), they would pay $107,528 in federal income tax (that’s not including property tax, state tax, or payroll tax).


How much more should they be expected to pay in taxes in order to fund government programs?

Question of the Day: Personal Rate of Return

We have had a good year so far in the stock market.

So, curious minds want to know…

What is your personal rate of return for 2013?

Our personal rate of return through yesterday is 16%.

We are 100% stocks:

401(k) Asset Classes (05-21-2013)

I am not recommending this route to AFM readers. It can make for a very volatile portfolio with pretty big swings. Beware.

OT Question of the Day: Pastimes When You Were a Kid

Contemporary & Traditional Home Plans (Cover)
I was around 16-years old when I purchased this magazine.

I cleaned out my closet over the weekend. While doing so, I came across some of my stuff from when I was a kid. I grew up in the 70s and 80s. One of my favorite pastimes when I was a teen was to draw house plans. I’m not sure why, but that’s what I did for fun. I used to spend hours with graph paper, mechanical pencils, and rulers. I thought I was going to become an architect but the math and rumors that it was hard to make a decent living as an architect scared me into finance.

I also LOVED The Sporting News. This was back when it was a newspaper that came once a week. I used to sit on the porch and wait for the mailman on Sporting News day.

Things just seemed simpler back then, didn’t they? I know they probably weren’t but they sure felt like they were.

What about you? What was your favorite pastime(s) when you were a kid?

Question of the Day: Fixing JC Penney

It was news the other day that JC Penney fired Ron Johnson after only 17 months on the job as their CEO.

I don’t know if you’ve been to a JC Penney lately, but they aren’t very nice. Too much inventory. Too crowded with stuff. The shoe department was a mess with shoes all over the floor due to their self-service policy.

I know there is more to running a retailer than just how the store looks, but…

If you were the new CEO of JC Penney’s new CEO, what would you do to turn around the chain?

I would:

• focus on customer service. The store in my town in horrible.

• wean customers off the incessant gimmicky sales.

• clean up and remodel the stores (inside and out). Get rid of the clutter (I have noticed some of this happening at our store).

I realize those are pretty basic. I have never worked in retail other than in a grocery store when I was in college.

I know I used to like JC Penney but I haven’t shopped there in years. Dillard’s gets most of our clothing money.

What are your thought? Can JC Penney even be saved?

Question of the Day: School Security

One of the local TV Stations posted this question on their facebook page this morning:

Six This Morning Wants To Know : Would You Be Willing To Pay More In Taxes For Additional Security In Public Schools?

The facebook question linked to this article from the Houston Chronicle.

The article doesn’t mention anything about the cost of such a program. To be fair, the proposal doesn’t mention anything about doing this statewide. However, my thoughts went immediately to wondering how much such a program would cost taxpayers.

Let’s see…

There are 8,317 public schools in Texas.

If we put one policeman/guard at each school and paid them $40,000 a year, it would cost…

$333.6 million per year.

Can we afford that? Do we need to afford that?


OT Question of the Day: Your Favorite Christmas Album

Here’s a fun question of the day.

What’s your favorite Christmas album?

I like the older stuff. The classics from the 50s and 60s. That said, it’s hard for me to pick out an absolute favorite.

One that I just bought that is really pretty is

Percy Faith Christmas Is
Percy Faith’s “Christmas Is…”

It’s got a very nostalgic sound to it (probably because it’s from 1966). It’s kind of like elevator music so it may not be for everyone. I love his rendition of “I’ll Be Home for Christmas” and “Silver Bells.”

If rock is more your style…

Chris Isaak Chris Isaak Christmas
Chris Isaak’s “Chris Isaak Christmas”

This is a great disk.

Finally, two more that are excellent are from Andy Williams…

Andy Williams The Andy Williams Christmas Album
Andy Williams – “The Andy Williams Christmas Album”

Andy Williams Merry Christmas
Andy Williams – “Merry Christmas”

I know that’s not just one selection but when you have as many CDs as I do (1,700+), it’s hard to pick out an absolute favorite. Yes, I realize 1,700+ is an excessive number of CDs. It’s my weakness.

Now, it’s your turn…

Question of the Day – Stock Valuation

It’s been awhile since I posted a Question of the Day.

This question is related to the my last post comparing MasterCard’s valuation with Visa’s. Here’s the question:
Is there ever a time when a high P/E ratio is justified for a stock?

There are a couple of ways to look at P/E ratios. Take Visa, for example. It’s trading at around $128 per share and has a EPS of $1.01, giving it a P/E ratio of 127. In order for that P/E to come down to a much more reasonable 20, one of two things must happen (or a combination of the two things):

1. The EPS must come up to $6.41 per share and the stock price stay the same.


2. The stock price must come down to $20.20 per share and the EPS stay the same.


3. Some combination of the two.

Stocks get bid up high like this because investors are optimistic as to the company’s future prospects. Sometimes investors get too optimistic.

Personally, I would not buy a stock with high P/E ratio like this.

What about you?