What the experts say
The good old tax days
Did the biggest earners of the 1950s—Hollywood stars—really pay taxes at the then-going top rate of 91 percent? asked Joe Nocera in Bloomberg.com. Not so much. Thanks to a tax code that was “full of loopholes,” the top 0.01 percent—which then meant entertainers like Bob Hope and Bing Crosby rather than hedge fund managers—actually paid half that. One dodge was to defer income, as William Holden did when he made The Bridge on the River Kwai, taking his percentage of the gross, which totaled millions, in annual $50,000 increments. Many actors received fees through temporary corporations, taxed at around 50 percent. And a law reducing rates on income generated by oil wells turned many an actor into an oil investor, including Jimmy Stewart, Gene Autry, and Frank Sinatra, “who fittingly titled his first oil well ‘Crooner No. 1.’”
Looking for value stocks
“It’s a lot harder than you might think to invest in a portfolio of pure value stocks,” said Mark Hulbert in The Wall Street Journal. “Groundbreaking” recent research found that over the long term, these stocks—those trading for the lowest ratios of price to book value—have significantly outperformed so-called growth stocks. From 1926 through 2018, “the 20 percent of stocks at the value end of the spectrum have beaten the quintile at the growth end by 3.6 annualized percentage points.” But investors who want to pinpoint such stocks face a hurdle. Many “value” stocks got that way from years of getting beaten down, and are deeply unpopular with investors. Researchers found that of thousands of mutual funds they analyzed, only two consistently followed the value criterion.
Locusts of the retail Amazon
There’s a new breed of micro-entrepreneurs who “raid clearance aisles and resell it all online for a profit,” said Rachel Siegel in The Washington Post. It’s become known as “retail arbitrage,” and the engine behind it is Fulfillment by Amazon, or FBA. The program lets resellers ship their goods to Amazon’s warehouses, then resell them for a profit. The stacks of special deals that big-box stores use to get people into the store are a favorite target. There are now even apps that let you track clearance sales. One reseller rushed around multiple Walmarts to score 218 packages of lightbulbs. Another filled his trunk with 182 Monopoly games from 17 Walmarts, flipping most of them in a day for a profit of $2,500.