Although I was vaguely aware that the LED light bulbs have been dropping in price I was still a bit startled recently when I saw a package of 4 60 watt equivalent (9 actual watts producing 800 lumens) LED light bulbs on sale for $2.88 at my local Walmart. This low price was due in part to a rebate program sponsored by the state of New Jersey. Other local stores like Home Depot and Smith's Ace Hardware (but apparently not Target for some reason) are also participating in this program but the savings are not as dramatic.
I picked some up and installed them in my basement where some of the ceiling bulbs were burned out or missing. In theory this shouldn't save much because I rarely use my basement but in actual practice I sometimes accidentally leave the lights on (several bulbs are controlled by a single switch at the top of the stairs) and then don't notice for an extended period of time. I recently did this and it appears to have raised my latest electric bill by about $20 (implying several bulbs were on for several weeks). So there is a potential savings especially if I replace the still working incandescent bulbs also.
It appears that CFL (compact fluorescent) bulbs are now obsolete. The newer LED bulbs are superior in a number of ways. They are a bit more efficient, age better, light immediately, don't contain mercury and now appear to be cheaper. It is interesting (and a little sad) how brief (perhaps 10 years or so) the period of dominance of CFL bulbs was. I still have a bunch of them (and will for a while as they last for a long time) but can't remember when I last bought one. I doubt I will ever buy another. I have bought incandescent bulbs fairly recently (and may continue to do so) because I have a couple of fixtures which seem to require them. One is on a dimmer switch which causes LED (or CFL) bulbs to flicker or buzz in a very annoying way. Another is a decorative outdoor fixture. It seems like it should be possible to use LED bulbs in it but when I tried some they didn't work for some reason.
Friday, May 3, 2019
Saturday, April 20, 2019
2018 Income Taxes
I mailed in my 2018 US and NJ income tax returns last Friday, a whole 3 days before the Monday deadline. They had been more or less done for several weeks but because I owed money this year I didn't feel any great urgency to complete the process. However on the preceding Tuesday my phone and internet went out with Verizon giving a repair estimate of the following Tuesday. The lack of internet left me with time on my hands which I used to get the returns done a little early. It also meant I couldn't submit them electronically and had to mail them but I am inclined to do that anyway when I owe money because I am a little nervous about allowing them to pull money from my bank account.
I owed money primarily because I had a large involuntary capital gain (from CVS buying Aetna) last year and I hadn't increased my estimated taxes by quite enough to cover the additional capital gains tax. The lower federal withholding rates also contributed but the new law did provide me a tax cut. I ran my 2018 income though the 2017 program and discovered my federal tax was about 6.5% less because of the new law. Similarly running my 2017 income through the 2018 program showed my 2017 federal tax would have been about 9% less if the new law had taken effect a year earlier. In both cases the general pattern was the same, my ordinary income tax and the net investment income (or Obama care) tax went up because of the new limit on deducting state and local taxes but I still saved money because I no longer had to pay the Alternative Minimum Tax (AMT). The AMT doesn't allow deductions for state and local taxes so I hadn't been benefiting from those deductions for some time.
I didn't have any particular issues with Turbo Tax Deluxe which I used again this year perhaps because I am getting use to its annoying features. It still tries sell you upgrades but they aren't really needed.
I owed money primarily because I had a large involuntary capital gain (from CVS buying Aetna) last year and I hadn't increased my estimated taxes by quite enough to cover the additional capital gains tax. The lower federal withholding rates also contributed but the new law did provide me a tax cut. I ran my 2018 income though the 2017 program and discovered my federal tax was about 6.5% less because of the new law. Similarly running my 2017 income through the 2018 program showed my 2017 federal tax would have been about 9% less if the new law had taken effect a year earlier. In both cases the general pattern was the same, my ordinary income tax and the net investment income (or Obama care) tax went up because of the new limit on deducting state and local taxes but I still saved money because I no longer had to pay the Alternative Minimum Tax (AMT). The AMT doesn't allow deductions for state and local taxes so I hadn't been benefiting from those deductions for some time.
I didn't have any particular issues with Turbo Tax Deluxe which I used again this year perhaps because I am getting use to its annoying features. It still tries sell you upgrades but they aren't really needed.
Wednesday, April 17, 2019
Norm Thompson RIP
Norm Thompson is a mail order clothing brand which is being discontinued. Apparently their parent company Bluestem Group announced this back on January 31, 2019 but I didn't get the word until a few days ago when I received in the mail their "Final Sale" catalog. I was a bit sad to learn they were closing because I have been wearing their "Shikari" shirts for many years. Judging by old photos my mother started giving them to me in 2003. I like shirts with front pockets to help hold some of the junk I carry around and the Shikari shirts have two so they quickly became my favorite shirt. Although I continued wearing other shirts for some time as my mother was only giving me a few shirts a year. In fact I was a little surprised to find a photo of me wearing a different shirt as late as 2013. However in recently years I have worn the Shikari shirts almost exclusively.
Norm Thompson mostly sold women's clothing but they did have a small men's section in their catalogs. Some of their offerings are being picked up by Appleseed's, a Bluestem brand which sells women's clothing exclusively. Perhaps another Bluestem brand which sells men's clothes (such as Blair or Haband) will pick up the Shikari shirts. If not I do have about 40 of them at this point which is enough to last me for some time.
The photo was taken July 2007 in a sleeper compartment on an Amtrak train in Florida. Around the time the train ran into a flatbed truck someone had managed to get hung up on the rails at a grade crossing. Fortunately no one was seriously injured but we had to finish our trip by bus. It shows me wearing a short sleeved (there is also a long sleeved version) Shikari shirt.
Saturday, April 6, 2019
Phishing
I sometimes receive emails pretending to be from a legitimate business such as a bank trying to get me to divulge sensitive information such as account numbers or passwords. This fraudulent practice is called "phishing". Such emails are easy to recognize when they purport to be from a business that you do not have a relationship with. However if you are sending out millions of such emails you don't need a high response rate. You just need to get lucky a few times with recipients who for one reason or another find the email plausible enough to get past their guard.
This happened to me. I have a corporate credit card with American Express which I rarely use but had recently used on a business trip. I had also recently filled out an online form with a financial institution which has moved to a mandatory 2-factor authentication system. So when I received an email purportedly from American Express (similar to this) asking me to update my authentication information I accepted it as genuine without much thought.
It is a well known psychological phenomenon that people prefer to incorporate new information into an existing world view rather than rather than use it to overturn previous beliefs. So once I had accepted the email as genuine I didn't revisit this question as I filled out the attached form despite some in hindsight red flags. Even when the form asked for my email password (which I refused to provide) I didn't question that the email was genuine believing instead that American Express was being unreasonably nosy. It wasn't until I was driving to work the next day that the penny dropped and I realized I should consider the possibility that the email was fake. Still I was a little reluctant to abandon my preexisting belief even as I added up the considerable evidence favoring fake.
Fortunately my mistake will apparently have no serious consequences. I am not sure any of the information I provided actually got back to the sender as I didn't complete the form and submit it (whereupon according to the link above I would have been redirected to a genuine American Express page). In any case I notified American Express that evening who told me they hadn't been any recent activity on my card and that I wasn't responsible for fraudulent charges. All in all they didn't seem very concerned but did give me an email address to forward the fake email to. I did so and received an acknowledgement so I think I am covered.
I was a little concerned that the email might have ill intentions besides eliciting sensitive information (like for example encrypting my hard drive and requesting ransom to decrypt it) but the link above seems to discount any such possibilities.
This happened to me. I have a corporate credit card with American Express which I rarely use but had recently used on a business trip. I had also recently filled out an online form with a financial institution which has moved to a mandatory 2-factor authentication system. So when I received an email purportedly from American Express (similar to this) asking me to update my authentication information I accepted it as genuine without much thought.
It is a well known psychological phenomenon that people prefer to incorporate new information into an existing world view rather than rather than use it to overturn previous beliefs. So once I had accepted the email as genuine I didn't revisit this question as I filled out the attached form despite some in hindsight red flags. Even when the form asked for my email password (which I refused to provide) I didn't question that the email was genuine believing instead that American Express was being unreasonably nosy. It wasn't until I was driving to work the next day that the penny dropped and I realized I should consider the possibility that the email was fake. Still I was a little reluctant to abandon my preexisting belief even as I added up the considerable evidence favoring fake.
Fortunately my mistake will apparently have no serious consequences. I am not sure any of the information I provided actually got back to the sender as I didn't complete the form and submit it (whereupon according to the link above I would have been redirected to a genuine American Express page). In any case I notified American Express that evening who told me they hadn't been any recent activity on my card and that I wasn't responsible for fraudulent charges. All in all they didn't seem very concerned but did give me an email address to forward the fake email to. I did so and received an acknowledgement so I think I am covered.
I was a little concerned that the email might have ill intentions besides eliciting sensitive information (like for example encrypting my hard drive and requesting ransom to decrypt it) but the link above seems to discount any such possibilities.
Wednesday, February 20, 2019
2018 Portfolio Review
In 2018 my brokerage account performed slightly better than the market. As usual I will use the Vanguard S&P 500 ETF, VOO, as my benchmark. VOO was down 4.37% (6.31% capital loss partially offset by 1.93% of income). My account was down 4.21% (6.67% capital loss partially offset by 2.46% of income). Unlike last year I had some transactions during the year which makes breaking down my overall performance a little more complicated. Aetna (AET) was bought by CVS near the end of 2018, I will figure the performance for the year by taking the year end value of the cash and CVS stock I received. I also made four stock purchases in the fourth quarter, I will figure yearly performance by assuming I had set aside the cash needed for these purchases at the beginning of the year. I will continue to ignore the interest earned on dividends I received during the year. I included the (approximate) interest paid on the cash assumed to be set aside for investment but ignored the interest paid on the cash I received for AET.
At the beginning of 2017 I had 46.59% of the value of my account in VOO, 12.76% in other ETFs, 31.48% in individual stocks and 9.17% in cash (of which 4.50% was used near the end of the year to buy some more individual stocks). VOO of course matched the market. The other ETFs collectively underperformed (mostly because of the poor performance of the energy ETF, VDE) and contributed -.31% to my overall relative performance. My individual stocks collectively outperformed despite the fact that most (11 out of 17) of them lagged the market. This was because of AET a big holding which was my best performer (up 11.92% even after accounting for the later drop in the CVS stock I received for it as most of the purchase price was paid in cash). They added .44% to my overall relative performance. My stock purchases (BLK, MET, TD and some more CVS) were largely poorly timed coming just before the year end market drop. Collectively they contributed -.28% to my relative performance. My remaining cash of course outperformed a down market contributing .31% to my relative performance. This all adds up to .16% of outperformance as expected.
As noted above my individual stocks collectively outperformed the market even though many did poorly. Only two (AET and BBL) outperformed by at least 10% while 8 (ALL, BNS, CAT, CM, IBM, WBK, WFC and XOM) underperformed by at least 10%. The remaining 7 (ED, INTC, JPM, NSC, PEG, SOUHY and TGT) were within 10% of the market performance. Fortunately the outperformance of AET (whose good performance in previous years had led to it becoming an oversized position) was enough to bring the collective performance above that of the market.
As noted I purchased some stock during the year. But not enough to use up the cash I received from the AET forced sale. So my cash position increased to 13.19% at year's end. I have a general intention to keep this account fully (or nearly fully) invested but in practice this requires more effort than I have been willing to devote to selecting and purchasing stocks. As it was my buys were not all that carefully researched. I bought the CVS to bring the share count up to match what my AET share count had been. I have an account with TD (TDBank) and feel more comfortable investing in companies I have some sort of positive (or at least neutral) relationship with. AET is my health insurance provider and did very well so I bought MET (MetLife) which provides my dental insurance (both through my employer). BLK (Blackrock) was my pick in an out of favor sector (which promptly got a lot more out of favor). I considered other investment management companies like IVZ (Invesco), LM (Legg Mason) or FII (Federated Investors Inc.) which were cheaper in terms of earnings yield but seemed more dependent on high fee active funds (which don't in my opinion have a promising future).
At the beginning of 2017 I had 46.59% of the value of my account in VOO, 12.76% in other ETFs, 31.48% in individual stocks and 9.17% in cash (of which 4.50% was used near the end of the year to buy some more individual stocks). VOO of course matched the market. The other ETFs collectively underperformed (mostly because of the poor performance of the energy ETF, VDE) and contributed -.31% to my overall relative performance. My individual stocks collectively outperformed despite the fact that most (11 out of 17) of them lagged the market. This was because of AET a big holding which was my best performer (up 11.92% even after accounting for the later drop in the CVS stock I received for it as most of the purchase price was paid in cash). They added .44% to my overall relative performance. My stock purchases (BLK, MET, TD and some more CVS) were largely poorly timed coming just before the year end market drop. Collectively they contributed -.28% to my relative performance. My remaining cash of course outperformed a down market contributing .31% to my relative performance. This all adds up to .16% of outperformance as expected.
As noted above my individual stocks collectively outperformed the market even though many did poorly. Only two (AET and BBL) outperformed by at least 10% while 8 (ALL, BNS, CAT, CM, IBM, WBK, WFC and XOM) underperformed by at least 10%. The remaining 7 (ED, INTC, JPM, NSC, PEG, SOUHY and TGT) were within 10% of the market performance. Fortunately the outperformance of AET (whose good performance in previous years had led to it becoming an oversized position) was enough to bring the collective performance above that of the market.
As noted I purchased some stock during the year. But not enough to use up the cash I received from the AET forced sale. So my cash position increased to 13.19% at year's end. I have a general intention to keep this account fully (or nearly fully) invested but in practice this requires more effort than I have been willing to devote to selecting and purchasing stocks. As it was my buys were not all that carefully researched. I bought the CVS to bring the share count up to match what my AET share count had been. I have an account with TD (TDBank) and feel more comfortable investing in companies I have some sort of positive (or at least neutral) relationship with. AET is my health insurance provider and did very well so I bought MET (MetLife) which provides my dental insurance (both through my employer). BLK (Blackrock) was my pick in an out of favor sector (which promptly got a lot more out of favor). I considered other investment management companies like IVZ (Invesco), LM (Legg Mason) or FII (Federated Investors Inc.) which were cheaper in terms of earnings yield but seemed more dependent on high fee active funds (which don't in my opinion have a promising future).
Thursday, December 13, 2018
CVS Buys Aetna
A couple of weeks ago on Wednesday, November 28, 2018 (almost a year after the deal was announced on December 3, 2017), CVS completed its purchase of health insurer Aetna. This was of particular interest to me because I owned some Aetna shares. I had bought them in late 2012 when I had some money to invest. I had Aetna health insurance through my employer and (contrary to the claim by some that everybody hates their health insurer) was satisfied with their performance. The stock seemed very cheap (in terms of price versus earnings per share) so I bought some. This worked out quite well as I paid less then $50 per share and the sales consideration (a mix of cash and CVS stock) had value in excess of $210 per share. So I have a capital gain in excess of $160 per share. Unfortunately the gain is fully taxable (at capital gains rates) even though part of the purchase price was paid in CVS stock. Fortunately I adjusted my estimated tax payments throughout 2018 to account for this. This wasn't actually required (to avoid a penalty) since you aren't required to predict the future and pay estimated tax for income you haven't received yet but convincing the IRS of this requires filling out a complicated form in which you report your income by quarter (approximately) instead of lumping all 2018 income together. So it seemed simpler to pay in advance although this would have meant getting a large refund if the deal hadn't gone through in 2018.
I held my Aetna shares in a brokerage account. On Thursday (one day later) the position seemed to be in limbo but by Friday (2 days later) I had the CVS shares and money in my account. This beats locating and and mailing in paper stock certificates which I have had to do in the past. CVS initially said (in a statement that appears to have been removed) that the fair market value (for tax purposes) of the CVS shares I received was $79.50 per share (the CVS closing price on Tuesday). However my broker thinks it is $80.715 (the average of the CVS high and low for Wednesday) which seems more consistent with IRS regulations. I suppose I will go with whatever the 1099 (which I haven't received yet) says. My broker valued the fractional CVS share (for which I received cash) at $80.2644 per share. This is close to but slightly less than the CVS closing price on Wednesday of $80.27 (perhaps there was a commission paid when the fractional shares were sold).
In order for the merger to go through CVS had to get various approvals including from the US Department of Justice (USDOJ). The USDOJ approved the deal with certain conditions which CVS agreed to. Usually such agreements are formalized in a legal settlement which a federal judge has to approve. Such approval is usually routine and it is normal for companies to complete a merger (as CVS and Aetna did) before the judge has signed off. However in this case the judge, Richard Leon, has been expressing doubts about the wisdom of allowing the merger. But it is my (layman's) understanding that while the judge may not like the agreement that the USDOJ arrived at, he can't actually block the deal if the USDOJ is willing to allow it since the USDOJ can just drop their lawsuit if the judge doesn't approve the proposed settlement. Since the main condition was that CVS sell part of Aetna's business the USDOJ has little need for a formal settlement agreement once this sale goes through (as I believe it now has). We will see if this is correct.
I held my Aetna shares in a brokerage account. On Thursday (one day later) the position seemed to be in limbo but by Friday (2 days later) I had the CVS shares and money in my account. This beats locating and and mailing in paper stock certificates which I have had to do in the past. CVS initially said (in a statement that appears to have been removed) that the fair market value (for tax purposes) of the CVS shares I received was $79.50 per share (the CVS closing price on Tuesday). However my broker thinks it is $80.715 (the average of the CVS high and low for Wednesday) which seems more consistent with IRS regulations. I suppose I will go with whatever the 1099 (which I haven't received yet) says. My broker valued the fractional CVS share (for which I received cash) at $80.2644 per share. This is close to but slightly less than the CVS closing price on Wednesday of $80.27 (perhaps there was a commission paid when the fractional shares were sold).
In order for the merger to go through CVS had to get various approvals including from the US Department of Justice (USDOJ). The USDOJ approved the deal with certain conditions which CVS agreed to. Usually such agreements are formalized in a legal settlement which a federal judge has to approve. Such approval is usually routine and it is normal for companies to complete a merger (as CVS and Aetna did) before the judge has signed off. However in this case the judge, Richard Leon, has been expressing doubts about the wisdom of allowing the merger. But it is my (layman's) understanding that while the judge may not like the agreement that the USDOJ arrived at, he can't actually block the deal if the USDOJ is willing to allow it since the USDOJ can just drop their lawsuit if the judge doesn't approve the proposed settlement. Since the main condition was that CVS sell part of Aetna's business the USDOJ has little need for a formal settlement agreement once this sale goes through (as I believe it now has). We will see if this is correct.
Tuesday, October 30, 2018
Take Back Day
The DEA periodically (every six months or so) sponsors "Take Back Days" on which people can safely dispose of unwanted prescription drugs. Last Saturday, October 27, was the most recent. I had been unaware of previous days but this time had been alerted by some timely internet advertisements. My local police department had a collection site so I collected up a bunch of my expired prescription drugs and took them in. This seems like a good idea. The DEA is primarily concerned about controlled substances (and I did have some unused painkillers) but expired drugs can also become dangerous. I had not taken this possibility too seriously and have sometimes ignored expiration dates but in collecting my unused prescriptions I saw in one case the pills had undergone some chemical reaction that had cause them to split open and when I (foolishly) opened the pill bottle to take a closer look I was greeted with a pungent odor. Obviously no one in their right mind would take these pills but it seems likely that pills can become dangerous in less obvious ways.
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