Patrick’s Rants

What is it with CEOs that makes them think they should get more and more pay? Millions of dollars each and every year even as they drive their companies into the ground doesn’t sound very sustainable does it? AIG finance division employees received “retention bonuses” while the hand is out to the government to infuse the company with cash. Give me a break! You fire people who lose your company money setting it on the brink of financial collapse so big it would take down the entire world, you don’t pay them more to stay.

Forbes lists the average CEO pay at $12.8 million. $12.8 million. That’s a whole lot of zeros. And the problem is that the more they get paid, the greedier they get and then you end up with Enron, Worldcom, AIG and Bear Stearns. The usual argument for more pay is along the lines of, “if we don’t pay more then we won’t attract the best CEOs”, especially when those companies need a turnaround. But that argument is crap. Steaming, stinky crap. Look at Iacocca. He took a $1.00 per year salary until Chrysler was turned around. Further look at Warren Buffett. His salary is listed as $100,000. Add $75,000 from director’s fees that he receives from companies he has invested in and the indirect (but still taxable) benefits of $315,709 for personal and home security services. Now, the $100,000 is less than Joe the Plumber claimed he would be making if he bought the plumbing business. And Warren is listed as the world’s second richest man. So, if you want to attract intelligent people to run the biggest companies in the world maybe the pay package should be smaller instead of bigger? I mean, if you aren’t successful enough to have other income and assets why should you be given free rein to steer the company to benefit you by maximizing your stock options?

Silence Is Golden
Duct Tape Is Silver

We’ve had to spend a decent amount of time at the malls lately. My brother-in-law is getting married in a couple of weeks so there is the need to purchase a little bit of clothing. At the Flagstaff Mall people were everywhere. I don’t know how many were actually making purchases, but the mall was pretty full.

Saturday was the bridal shower which I and J definitely were not going to attend. We went to the Arizona Mills Mall and shopped for wedding attire for him while we waited out the shower. We found pants and shoes, both of which would be usable for school next year.

After making our purchases and walking through the busy stores and the busy mall thorough fair we stopped in at the Rain Forest Cafe for dinner. Meals average about $20.00 per plate and the place was busy. The food took a little while to get to the table and I started to wonder if the kitchen was short staffed. Once it arrived it was delicious. I had the three item plate, steak, ribs and shrimp, J had the appetizer buffalo wings. The steak was tender and tasty. The ribs fell off the bone and were perfectly seasoned. My shrimp were on skewers, breaded with a little bit of coconut and were just barely on the dry side. Next time I may give in and order the paella.

I find it interesting that a restaurant that attempts to promote ecology and preservation would have regular flushing urinals and handled faucets on the bathroom sinks. The Rain Forest Cafe’s web site (and that of the parent company) rely almost exclusively on Flash technology. I was attempting to find information on their conservation positions but the site, crippled by forcing Flash on its users, did not appear to have conservation information in my brief tour.

When we first started discussing the idea of growing a large number of our own vegetables there were three couples present. My wife and I, J&A and T&L. I originally thought I was the resident expert but soon found out that everyone has an opinion and advice.

When I was a kid I read the newspaper front to back – except the sports section – and Ann Landers once wrote that advice should be offered when asked. Otherwise, she said, keep your big mouth shut. Apparently not everyone read that column in the late 80s. Before we even dug our first shovel full of dirt I was told that sheep manure was better than horse manure by T with L backing up his opinion stating, “he knows what he’s talking about.” Well, T&L get to make their own garden if they feel like, but they’ve only tossed a couple of shovels full of dirt in our garden mostly out of novelty it seems. Now, I’ve heard the manure declaration a few times. Sheep manure is better than horse manure, and even that we should find llama manure because that’s even better. And when I called to find out if we could haul manure the guy on the phone told me that I wanted cow manure and that I should wait until late spring to early summer to get it from them. Here’s the thing. We’re ready to start now, not in the spring. I know where the horse manure is, I don’t know where the other types are – they are mostly privately owned. And the boarding center is about 1/4 mile away and will gladly give us the nearly trailer full that we can haul any day that we want it. Convenience, availability, and the fact that it can be used as a fertilizer are all important factors. Sure, if we can get any of the other manure types we would probably jump at using them. But I’m not sure that we could get sheep or llama manure in anywhere near the same quantities. For now, we’ve dug three deep rows that we’ve managed to fill with the 6″ layer of fresh manure – three trailers full of the stuff.

We have the potential problem of prairie dogs and the very real problem of rabbits. We bought rabbit fencing that we dug in 6″ down and 6″ folded over into an L-shaped barrier. It then sticks above the garden about a foot. Good ol’ T stopped by and said our fences were too low. What did Landers write again? For now, we are leaving the fencing alone, but we may find that the larger holes in the top half of the fence are too large and make some changes later. My wife and A both said something about fencing the whole garden in. J and I looked at each other and decided “no”. The thing is we would want to trench in the bottom edge of any fence and it’s really a beast to dig around that much ground. I’m thinking that T needs to keep his mouth shut.
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The economy is hurting and many people are feeling the pinch. I work for the school district and my wife works in an industry heavily dependent upon public funding. My own job seems to be fairly secure (I do have a “job review” upcoming) as does my wife’s. But due to the dependency upon public funding she is waiting for the other shoe to drop. Her employer already took the step to completely eliminate overtime. They went in on a Monday and cut every extra shift that people were working and gave it to a salaried employee.

It hasn’t been discussed that I know of, but the school district could do like they do elsewhere around the state and outsource the busing department – or tell kids they have to find their own way to school. I just keep doing my job and believe that I do it well enough to keep it.

With all of this turmoil we decided to go in with another couple and start a sort of community garden. We’ve spent the last month trying to get a jump start on the garden rows. If we had started last fall we would have done these steps a little differently but now that it’s almost spring we’ve really had to get the jump on making the beds. I’m unofficially the garden expert of the group. I have a copy of an organic gardening book and some time to read and research.

I ran down the location of free mulch here in town and a willing horse lodging place for all the free manure that we can possibly haul. J has access to a trailer and a work truck so the first weekend our mission was to grab a load of mulch, dig a big hole and then haul a trailer full of manure. We are using fresh manure so it has to be dug in really deep to prevent burning. We drove out the the public works yard where the mulch is free for the taking 24/7 as long as there is a pile there. I made S go with us to dig and shovel the mulch. It was packed down and took a bit of time to get a trailer full of it. Then we drove back to the house to unload it. Mulch really is what we wanted last, so we just piled it off to the side out of the way. We then started digging the first row. I didn’t realize how difficult it was going to be, we were digging down between 12″ and 18″. The layer of fresh manure is supposed to be the poor-man’s heated row. It adds a little bottom heat and warms the soil higher than just sun light. The row ended up being 4′ x 18′ and we dug down around 18″. The soil was actually fairly deep which surprised me due to the volcanic cinders covering the entire town and where it didn’t blow out of the stacks of our dormant volcanic beasts it was laid down by builders to level the ground.

This row ended up being a little short because the far end ended up being rocky. Rocks from two inches to a foot across really slowed down the end of the row. We also ended up putting some wire caging down to protect what appeared to be a cable tv line that ran too close to the surface. Once we had the trench dug down we filled it from the trailer with 6″ of fresh manure and then put the pile of dirt back into the hole and finished by leveling it out. It took all of this first Sunday from around 10:00am until dark to accomplish this first row.

Next up: Everyone has advice.

Investment tips really. Here’s how to save a little bit of money on your taxes if you hold stocks in a taxable investment account (not a retirement account) First you have to have a little bit of cash, a little bit of patience and a belief that the stocks you own are worth owning. It also helps to use First In First Out(FIFO) accounting or sell specific shares but that’s not required.

I’m going to use Intel (INTC) as an example. Intel is trading at or near a 5 year low at $12.65 (at the very moment that I’m writing this). If you own INTC that was purchased at any time before the middle of 2007, you’re in the red. I want to add that you haven’t lost anything, that is unless you have sold. You only lose when the stock becomes worthless or you sell. Back to INTC. If you held it through the downturn, you probably like it – or you got caught off guard by the near free fall in the price and aren’t sure what to do next.

What you can do depends on how much cash you have. If you have enough cash to purchase an equal number of shares of INTC, then that’s what you do. If you had 100 shares, buy another 100 shares. That’s around $1265.00 plus commissions. Now you leave those 200 shares alone for the next 30 days – to be safe give it 35. Then you sell 100 shares using the cash for the next stock in your portfolio. Because you sell shares using FIFO or designate specific shares (this usually requires talking to a human broker and might cost you more in trading costs, but it’s worth it if you don’t use FIFO) the shares you sell are the ones that cost $25.00 giving you a per share loss of $12.00 to $13.00. I’m assuming that the price stays the same as today. But even if it moves around a bit the reason you owned INTC in the first place was because you liked the stock, right? In a taxable account you have a $1200.00 to $1300.00 loss to use against any gains you might have. $3000.00 can be applied to other income on a yearly basis and carries forward until used up.

If you don’t have enough cash you are almost betting that the stock stays around where it is now, or even goes down. Without the extra cash in your account you will have to look over your holdings a little more closely. Sell the 100 shares INTC today and sit on the cash for the 35 days and maybe earn a touch of interest. Then you buy 100 shares INTC. You still get the same loss as above, but with less certainty about your new purchase price.

The reason I give the 35 day figure is due to what the IRS calls the Wash Sale Rule. This basically means that you can’t claim you lost money on a capital transaction (the most familiar of which is stocks) if you buy the same or “substantially similar” stocks within a 30 window before and after the sale at a loss (this means approximately 62 days)

Of course, if you have many holdings this is a technique that can be “cascaded” over your entire holdings. If you hold five or six stocks you might look over them to see which companies look the “worst” to you ie. what will take the longest to recover? If you have no cash in your account, sell the “worst” of your holdings to purchase the stocks you eventually want to have. Sale of stock a gives you the cash to double up on stock b, then the sale of stock c gives you the cash to double up on stock d. You still have to watch the wash sale clock, but once the time is up, lather, rinse repeat until you have banked a decent carry-over.

Oh, and whatever you do talk to your Enrolled Agent, CPA, and stock broker if you have any questions about how this will and can affect you. And whatever you do, don’t leave your tax preparer in the dark unless you really understand what this does for your 2009 taxes.