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Perhaps that last $1,100 of your $98,000 income is investment income that you don't currently need. If so, you might reduce your marginal tax rate to 28 percent by switching from that income-paying investment into a growth investment that generates minimal dividend income, like an equity index fund. You wouldn't owe taxes on the increase in the value of your index fund shares until you sold them-at which point, if you'd held the fund for a year or more, you'd owe a long-term capital gains tax, now capped at 20 percent. Throughout the history of capitalism employment generation has been powered by rapid growth in Industry. The reason is that ever since 1820, from when adequate data became available, productivity in industry has grown at three times the pace of productivity in the services sector. As a result one has needed three additional workers in the services sector to clear away and sell the product of one additional worker in industry. On the other hand, if your marginal tax rate is low, investing in tax-exempt municipal bonds doesn't really make sense for you. If your marginal tax rate is 31 percent, earning 5 percent interest tax-free is like earning 7.25 percent in a taxable investment. If your marginal rate is only 15 percent, a tax-free 5 percent is worth only as much to you as 5.88 percent in a taxable investment. You might earn more in Treasuries, which are free of state and local taxes-and safer than municipal bonds. To see just how much the market covets these stocks, look at two institutional indices of stable-growth companies. In early February, a Merrill Lynch portfolio of more than three dozen stable-growth stocks traded at 36 times earnings and about 11 times book value, or net worth. Morgan Stanley's index of 30 consumer-oriented stocks was valued at 30 times earnings and 6 times book.




Smart Questions to Ask Your Financial Advisers Smart Questions to Ask Your Financial Advisers Smart Questions to Ask Your Financial Advisers Stability is not growth

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Choosing individual stocks without an idea of ??what youre looking at like walking through a dynamite factory with a burning match. Survive you but youre still an idiot Joel Greenblatt

What makes this group of stocks so interesting at this point in time is that they perform especially well when the economy is slowing. An economic downturn was precisely what many investors were betting on from 1995 through 1997. Consequently, Kim's portfolio of stable-growth companies rose 44 percent in 1995, 26 percent in 1996, and 42 percent in 1997, outpacing the S&P 500 in all three years. Various statements made by Vajpayee and President Abdul Kalam show that this will be done by lowering drastically the interest burden on the public debt by refinancing loans at lower rates of interest; by rationalising the tax system and introducing a nation-wide, uniform Value Added Tax and, regrettably, by making further drastic cuts in the central government's Plan expenditure. He is also likely to signal profound structural reforms that will simplify bureaucratic procedures drastically at every level of government, lower and retarget subsidies better, and take up the so far utterly neglected areas of health care, education, shelter, sanitation unemployment insurance and old age insurance in partnership with the private sector. What makes this group of stocks so interesting at this point in time is that they perform especially well when the economy is slowing. An economic downturn was precisely what many investors were betting on from 1995 through 1997. Consequently, Kim's portfolio of stable-growth companies rose 44 percent in 1995, 26 percent in 1996, and 42 percent in 1997, outpacing the S&P 500 in all three years. Why the turnaround in investor attitude? Low unemployment, minimal inflation, solid wage growth, and a friendly stock market all combined last year to fuel consumer spending. Whether that trend will continue is a hotly debated point; indeed, many economists now view the consumer as a wild card. If the stock market fails to shower investors with double-digit gains, Americans might make fewer trips to the mall, dampening economic growth. The U.S. economy may not have to nosedive for stable-growth stocks to come back in vogue. A slight change in investors' perception could do the trick. The economy grew 3.8 percent in 1997 and 4.1 percent last year. Most Wall Street economists expect about 2.5 percent growth this year. Though this is a reasonable level by historical standards, it could be enough of a change to alarm investors. Chicago Fed president Michael Moskow refers to this possibility as the Sammy Sosa syndrome. "For years, Sammy Sosa hit 30 to 40 home runs, a good performance," Moskow said in a speech this January. "Last year, he hit 66-an extraordinary performance. If he hits 40 this year, some will say he had a bad year. It's a case of unrealistically high expectations." After three years of underestimating the economy's strength, in 1998 investors stopped gambling on a slow-growth scenario. Instead of purchasing shares of companies with steady and dependable profits, many investors turned to fast-growth companies in the technology and retail sectors, groups that generally do well in a fast-growing economy.

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Let me give you some advice bastard. Never forget what you are because since then the world will not forget. Make it your best weapon so it will never be your weakness. Use it as armor and no one can use it to hurt you.

To see just how much the market covets these stocks, look at two institutional indices of stable-growth companies. In early February, a Merrill Lynch portfolio of more than three dozen stable-growth stocks traded at 36 times earnings and about 11 times book value, or net worth. Morgan Stanley's index of 30 consumer-oriented stocks was valued at 30 times earnings and 6 times book. Smart Questions to Ask Your Financial Advisers Various statements made by Vajpayee and President Abdul Kalam show that this will be done by lowering drastically the interest burden on the public debt by refinancing loans at lower rates of interest; by rationalising the tax system and introducing a nation-wide, uniform Value Added Tax and, regrettably, by making further drastic cuts in the central government's Plan expenditure. He is also likely to signal profound structural reforms that will simplify bureaucratic procedures drastically at every level of government, lower and retarget subsidies better, and take up the so far utterly neglected areas of health care, education, shelter, sanitation unemployment insurance and old age insurance in partnership with the private sector.

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The future has many names: for the weak it is unattainable for the fearful it is the unknown For the brave the opportunity.

What's my marginal tax rate? This transformation is to some extent reflected in the overall performance of the economy. Inflation has remained below 3 per cent during the past two years (the current 4.5 per cent reflects mainly the impact of the poor crop year and the severe frost of January on vegetable prices). Exports have grown by more than 20 per cent. The balance of payments is in surplus for the second year running. This is the reason why foreign exchange is flooding into India and our reserves are at an all-time high. The Indian economy is thus remarkably stable, but stability is not growth, and poor countries need growth far more than stability. China is the perfect example of a country that has systematically placed growth ahead of stability for the last twenty years. As a result it is faced today with monumental problems of over-capacity even in its modern industry, a dying public sector, rapidly growing unemployment in the cities, a slackness of demand and a slowdown of GDP growth. But it is well on the way to becoming the fourth economic superpower of the world. Once we begin to look at India's performance from the perspective of growth, every shred of reason to feel complacent drops away. India's 6 per cent growth rate of the nineties, which the government keeps trotting out as one of the fastest in the world, is made up of a period of explosive growth for four years followed by a mere 5 per cent growth after 1997. On the other hand, if your marginal tax rate is low, investing in tax-exempt municipal bonds doesn't really make sense for you. If your marginal tax rate is 31 percent, earning 5 percent interest tax-free is like earning 7.25 percent in a taxable investment. If your marginal rate is only 15 percent, a tax-free 5 percent is worth only as much to you as 5.88 percent in a taxable investment. You might earn more in Treasuries, which are free of state and local taxes-and safer than municipal bonds.

Real Time Economic Calendar provided by Investing.com.