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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • Social Security C.O.L.A. for 2025 at 2.5% increase/ADDED calculations
    This is an example of an economic concept called Baumol’s cost disease. "It explains why barbers make more in San Francisco than in Cleveland and why services such as health care and education keep getting more expensive. "
    https://www.vox.com/new-money/2017/5/4/15547364/baumol-cost-disease-explained
    In a nutshell, as technology increases productivity in some areas like manufacturing, they become cheaper relative to labor-intensive areas like education where productivity can't rise much. Consider too how few farmers we have today producing more than ever.
    From the cited piece:
    image
  • Cambria TAX ETF may launch in December
    Thanks @hank for doing the legwork and posting this. From what I gather from rapidly reading from the links provided, most of those who participate on this board may not qualify for the new ETFs. The strategy appears aimed at people who have north of $500,000 invested in a limited number of highly appreciated stocks and who could « seed » a new ETF for the purpose of avoiding CG taxes. This does not appear to be a DYI mechanism, nor does it pass my whiff test.
    It sounds like something that cobbles together lots of different tax and investing rules to make it seem new, legitimate, and "democratizing". I agree that one should tread very carefully here.
    Start with the second line in the prospectus's description of principal investment strategies:
    Utilizing its own quantitative model, the Fund’s investment sub-adviser, Cambria Investment Management, L.P. (“Cambria” or the “Sub-Adviser”) selects value stocks with lower dividend distributions, which are generally taxed as ordinary income.
    Say what?? My dividends are taxed as cap gains, how about yours?
    The Bloomberg/Yahoo piece quotes Faber as saying that you exchange cap gain bearing securities for shares of the ETF in a tax free exchange. Bloomberg then goes on to say that this works like an "exchange fund" aka "swap fund" by way of explaining how your security exchange can be made tax free.
    Here's a good primer on "exchange funds".
    https://usecache.com/companion/what-is-an-exchange-fund
    In short, a bunch of investors pool their appreciated assets into a partnership (the exchange fund). Since that's done as a tax-free swap, each investor retains their original cost basis and gets a pro-rata share of the partnership. Voila, instant diversification.
    There are lots of government restrictions on exchange funds, including a seven year holding period and being limited to accredited investors. The $500K min does not appear to be a legal requirement, just a pragmatic one. The entity running the show doesn't want to deal with a lot of small potatoes in constructing the portfolio. It looks like that portfolio remains static (not sure about that).
    Where the magic comes in (I think): once seeded, the partnership is converted into an ETF. This is the part that to me looks suspicious. It has the effect of removing the holding requirement on fund seeders and possibly some restrictions on the exchange fund portfolio composition.
    I don't see how this "seeding" process (swapping securities for ETF shares) can continue once the ETF is up and running. The prospectus describes a conventional ETF where only Authorized Participants can buy and sell shares via creation units. To the rest of the world, this should look like any other ETF, including being open to all comers on the open market.
    From that perspective, I would evaluate it like any other fund that hasn't launched yet.
  • Social Security C.O.L.A. for 2025 at 2.5% increase/ADDED calculations
    From linked article:
    ”But the index tracks a range of goods and services that are purchased primarily by younger working people, not by retirees, who often spend more of their income on housing and health care. The costs experienced by Americans over age 62 tend to outpace the index, Ms. Ghilarducci said, making the annual adjustment fall short of what retirees actually need.
    “The adjustment is often mostly eaten up by the increase in Medicare Part B premiums, which are automatically deducted from Social Security checks. Some experts, including Ms. Ghilarducci, say Social Security beneficiaries also need an increase in their base-line benefits to maintain their buying power.”

    What becomes clear with the medical issue is if you live long enough costs increase at a faster and faster rate.
    d
  • Social Security C.O.L.A. for 2025 at 2.5% increase/ADDED calculations
    Maybe @msf could check my math and simplify further
    Eyeballing (mentally multiplying $12K by yogi's 1.3+x to get approximately $15.6K+), things look about right.
    It's been a looong time since I graded math papers. I'm not restarting now :-)
  • Cambria TAX ETF may launch in December
    Hi Ben. Thanks for the comments. Faber spoke in terms of “small investors” in the interview I watched, so the mention of $500,000 surprised me. Fortunately, the video is already available on Bloomberg. Scroll ahead to 16:00 if anyone wants to view. It’s the last of several segments on etfs.

    I suspect Meb is a bit of a publicity hound. I’ve been listening to a trove of his old podcasts going back several years (The Meb Faber Show) for a month on a regular basis. These consist mostly of hour-long interviews with different money managers. 1 is 3 is pretty good. I don’t need to tell people that Cambria has more losers than winners. Or that it is very small player in a field of giants. That said, I like their global allocation fund (GAA) and have owned it a while - primarily for the exposure it provides to foreign markets, precious metals, commodities and bonds - although it is broader than just that.
  • Cambria TAX ETF may launch in December
    Thanks @hank for doing the legwork and posting this. From what I gather from rapidly reading from the links provided, most of those who participate on this board may not qualify for the new ETFs. The strategy appears aimed at people who have north of $500,000 invested in a limited number of highly appreciated stocks and who could « seed » a new ETF for the purpose of avoiding CG taxes. This does not appear to be a DYI mechanism, nor does it pass my whiff test.
  • Why Stay in Medigap Plan F?
    Zero or low costs for all our meds too (Optum, Costco, CVS)
    The good news is that starting in 2025, drug costs will be capped at $2,000, so exposure isn't unlimited.
    I am learning (first year of Medicare) that there are payment phases with Part D.
    The Premium - (in my case, it is embedded in my Medicare Advantage Premium)
    The Deductible - (Full out of pocket Cost of the RX up to a specific $...in my case $200)
    The Co-payment - (A percentage of the RX cost based on the tier of the drug up to a $ Amount... in my case, $2000).
    I assume my deductible and my copay are additive ($200 +$1800 = $2000). At that point the cost of meds are fully coverage by my plan...whoopie!
    For 2025:
    All must pay for:
    Medicare Part B - which looks like it will be about $185/M (plus IRMAA adjustments)
    Next select between:
    - A Supplemental Plan (Some may include benefits for hearing, eye care... maybe even dental?) or
    - Medicare Advantage Plan (Hearing, Eye care , Dental or Part D may be included)
    Select a Part D Plan (Costs = Premium + as much as $2K of deductibles and co-pays)
    Some Non - required Coverage I plan on having:
    - Dental (My local Dentist offers an in house care plan) - $280 - Covers basic Care - 2 cleanings, x-rays, exams
    - Hearing (Hearing Tests and Hearing aid allowances) - I found that Costco or Easter Seals in our area offered affordable services
    - Eyecare (Eye Tests and Eye glass allowances) - I found that Costco offered affordable services
    Snapshot of maximum Health care costs for 2025:

    Part B= ($185*12) = $2,220
    Medicare Advantage = $1200 (Includes Part D Premium) + Max $2000 Medical Deductible + Part D Potential out of Pocket Max cost of $2000
    Dental Plan - $280 (50% discount of other procedures)
    All of the above costs are close to $7700
    In years where I have mostly Wellness visits I would have costs close to $3700
    Most of this is HSA eligible for reimbursement so I will have decisions to make on how I manage that account going forward.
    Lots to continue to learn and do.
  • Why Stay in Medigap Plan F?
    The good news is that starting in 2025, drug costs will be capped at $2,000, so exposure isn't unlimited.
    Good to know! Great information. My Part D is a Wellcare Plan. Going to a ZERO premium in 2025. I use the plan for most of my oodles of 'scripts. The expensive ones, I order from North of the border. It does not count toward deductibles and out-of-pocket maximums, but that Plan is designed to drive you into poverty before coverage kicks-in, in the old 80/20 standard sense. They play word games. ... So, I call Winnipeg. The drugstore might be in Mauritius. And it gets sent to me via the Danish Mail? I dunno how they make that work, but I still come out ahead.
  • Why Stay in Medigap Plan F?
    Zero or low costs for all our meds too (Optum, Costco, CVS)
    Drug plans often get little attention when comparing MAPD plans. For most people there's little difference - generics, preferred or otherwise, are either "free" or dirt cheap on most plans. But when it comes to brand name drugs, the difference between plans can be huge.
    Over the past few years, drug plans, both Part D and MAPD, have been moving from copay (flat amount per item) to coinsurance (percentage cost). Brand name drugs with four (or more) digit costs are becoming way more expensive.
    Consider Prolia, a brand name drug used by many for osteoporosis. (I know a few people using it.) Plans typically list it as a tier 4 (brand name, non-preferred) drug. The manufacturer gives its list price (wholesale acquisition price) as $1,786.12. It is injected twice yearly.
    Tufts Preferred Access PPO charges 50% for tier 4 drugs. That would come to $1,786 yearly. (Medicare.gov says $1,62x).
    BC/BS Blue SaverRx charges 49% copay for tier 4 drugs. That comes out about the same as Tufts. (Medicare.gov says $1,59x.)
    Or you could get a BC/BS PPO plan that charges just $285/dose ($570/year), but it comes with an $87/mo premium. The all in cost is about the same, at $1,614.
    One point here is that what looks like an obvious candidate can instantly become dubious depending on one's individual situation.
    Another point is that drugs can shift the whole landscape, even tilting it toward MA plans.
    Medicare.gov shows no Part D policy charging under $1,900 in Boston when one includes Prolia. But it reports that Mass General Brigham PPO's all in cost, including Prolia, is "just" $600/year. That's a $1,300 difference.
    One might be willing to pay the cost of a Medigap plan for the peace of mind that comes with Original Medicare. Many people are. But adding yet another $1,300 on top of that due to Part D costs could give one pause. The good news is that starting in 2025, drug costs will be capped at $2,000, so exposure isn't unlimited.
  • The Week in Charts | Charlie Bilello
    Blog - https://bilello.blog/2024/the-week-in-charts-10-14-24
    Item 4 discusses the cumulative increase in major CPI categories over the past 4 years and shows Medical care at 8% and Auto insurance at 60%. Why are we measuring Medical care, rather than Medical insurance? My medical insurance probably went up 60%. I already know my next year medical premium increase is 15%. CPI probably has measurement problem.
    Item 8. US HY Credit spreads at 2.89% is the lowest since 2007. SPY dividend yield at 1.27%(tied with Q4 2021) is the lowest since 1999. Nothing to see here?
  • Social Security C.O.L.A. for 2025 at 2.5% increase/ADDED calculations
    @catch22 - Using your Calculator
    Timeframe
    2014 - 2024
    No COLA
    ($1000/M *12) = $12K in 2014 is still $12K in 2024
    With COLA
    ($1000/M *12) = $12K in 2014 adjusts to $15,984 in 2024
    I think you adjusted the non-COLA pension ($670*12) to get $8040 which is the buying power, not the actual 2024 pension payment of $12K.
    Remember, with the COLA adjusted pension of $15,984, you would maintain the buying power of $12K while the non-COLA loses to inflation every year.
    In other words, in 2024:
    A COLA adjusted pension maintains its 2014 buying power of $12K ($15,984 in today's dollars), while a non-COLA adjusted Pension lost 33.2% of its buying power making ($12K in today's dollars) "worth" only $8040.
    Maybe @msf could check my math and simplify further
  • Social Security C.O.L.A. for 2025 at 2.5% increase/ADDED calculations
    The SSA COLA uses CPI-W, not the common CPI (really, CPI-U). The SSA even publishes quarterly averages for CPI-W and Q3 averages are used in COLA calculations.
    So,
    2014/Q3 234.242
    2014/Q3 308.729
    10-yr ratio 1.3179916
    So, 1,000/mo in 2014 will become 1,317.99/mo (to be paid from January 2025). That is close to $1,332/mo from the common CPI calculator.
    https://www.ssa.gov/oact/STATS/avgcpi.html
  • BONDS The week that was.... December 31, 2024..... Bond NAV's...Most positive. FINAL REPORT 2024
    It is reasonable to reduce equity risk in light of high valuation and many uncertainties. Bonds got complicated with stronger employment number than expected. Is it a one off or not?
    Now that the generous 5% yield in Monet market, CD, and T bills have disappeared since the FED cut rate in September. So either the investors accept lower yields or take a bit more risk to invest in short term bonds. @catch's bond data reported above point to where one can invest in.
  • The Great Government Transfer-mation
    @bee I'm not sure I like the wording, "government transfers." I take it as a gift from the gov., which most of it isn't. VA Benny's all earned as is my SS monthly check.
    It's a very interesting topic and can appear convoluted. Couldn't an argument be made that we (the public) transfer more of our money to the government than we did years ago?
    Take the lottery for example. I see this as both public/government transfer. Wish I was on the winning end of the these transfers.
    Taxes are public transfers to the government that hopefully become government transfers to build bridges and roads, fund public safety and education, arm the military. Let's not forget the government transfers that pay for a growing number of government salaries.
    Others:
    SS= runs partially on (earned income) public transfer - it needs to balance out with future public transfers = or > government transfer to SS recipients.
    Medicare = Pooled Public transfers "in" by way of premium payments...shared payment out by way of government payments and public co-payments for medical services.
    Medicaid = Appears a one way Government Transfer out, but there must be a public funding source for medicaid, right?

    How does Medicaid financing work?
    Medicaid financing is shared by states and the federal government with a guarantee to states for federal matching payments with no pre-set limit. The percentage of costs paid by the federal government varies for specific services and types of enrollees and depending on whether the costs are for medical care or program administration.
    The federal share of spending for services used by people eligible through traditional Medicaid, which includes individuals who are eligible as children, low-income parents, because of disability, or because of age (65+), is determined by a formula set in statute. The formula is designed so that the federal government pays a larger share of program costs in states with lower average per capita income. The resulting “federal medical assistance percentage” or “FMAP” varies by state and ranged from 50 percent to 78 percent for FFY 2023 (Figure 5).
    States can use provider taxes and IGTs (intergovernmental transfers) to help finance the state share of Medicaid. States have some flexibility to use funding from local governments or revenue collected from provider taxes and fees to help finance the state share of Medicaid within certain limits and rules. Provider taxes are an integral source of Medicaid financing, comprising approximately 17% of the nonfederal share of total Medicaid payments in SFY 2018 according to the Government Accountability Office (GAO). All states (except Alaska) have at least one provider tax in place and many states have more than three (Figure 8). The most common provider taxes are on nursing facilities (46 states) and hospitals (44 states). As of July 1, 2022, 32 states including DC also reported at least one provider tax that is above 5.5% of net patient revenues, which is close to the maximum federal safe harbor or allowable threshold of 6%. Federal action to lower that threshold or eliminate provider taxes, as has been proposed in the past, would therefore have financial implications for many states.
    The most common Medicaid provider taxes in place in FY 2022 were taxes on nursing facilities (46 states), followed by taxes on hospitals (44 states), intermediate care facilities for individuals with intellectual disabilities (33 states), and MCOs7 (18 states).
    https://kff.org/report-section/medicaid-budget-survey-for-state-fiscal-years-2022-and-2023-provider-rates-and-taxes/
    Bottom line, we pay more today in public transfers to local, county, state, and federal governments so they can orchestrate these transfers out.
    I might imagine that years ago a larger proportion of these transfers and services happened between the public and private organizations - churches, non-profits and philanthropy.
    IMHO we have grown governments along with the growth of these government transfers.
    Maybe its time to review the role of government regarding both sides of these transfers.
  • Social Security C.O.L.A. for 2025 at 2.5% increase/ADDED calculations
    The source link for these rough calculations is below. If anyone has another method of calculation; please let us know. The calculator uses a standard CPI government number. Whether you agree or not; this is the method used for various COLA's to the best of my knowledge. Having a COLA for a pension or SS is valuable. For those fortunate enough to have a pension, let alone a COLA; you should be 'happy'.
    I'll use 10 years looking back, to present, as a sample; with $1,000 as a base number.
    YES, there numerous types of CPI; including formulas that do not use government methods.
    IF one had SS or a pension paying $1,000/month in 2014, then the following numbers seem to apply:
    --- Pension, no COLA: One still has a $1,000 monthly payment, but the 'purchasing power is NOW $670 from 10 years ago .
    --- Pension w/COLA: One's monthly payment may now be in the range of $1,332.
    *** A very large gap in those two numbers in 2024, eh?
    Annual in 2024:
    Pension w/o COLA = $8,040
    Pension w/COLA = $15,984
    Compounding operates in two directions !!!
    HEY, I/we need to know if there is a large mistake with this math.
    Calculator source
  • Why Stay in Medigap Plan F?
    @msf Appreciate the detailed explanation. All of the gory details and granular ins-and-outs and contingencies and add-ons and options, etc. only show what a broken non-system we have. Thanks for the corrections, too. Yes, Single-Payer, gummint-operated stuff will be, no doubt, a cluster-flop, too. ... Dental is not included, though. And I still do better getting some of my 'scripts via Canada.
    I am so confused to read complaints like this from someone in Massachusetts and others about costs and screwups. Depending on Mass. county, Tufts and BCBS alike (nonprofits, or so they say) offer MA policies that are zero-premium, include (at least Tufts) serious, meaning $1500, dental prepaid card, modest eyeglasses and less-modest ($240) OTC benefits, and on and on. No referrals, huge network (or so it seems for our many docs).
    My wife and I switched to Tufts Access PPO a year ago and have never given any care a second thought, even after I was hit by a car and needed all sorts of expensive care. BCBS has something similar and competitive.
    Zero or low costs for all our meds too (Optum, Costco, CVS).
    I am studying 2025 details to see what is going to get worse. But anyone in Mass. who has not delved at least Tufts Access PPO may be missing out bigtime.
  • BONDS The week that was.... December 31, 2024..... Bond NAV's...Most positive. FINAL REPORT 2024
    I saw an S&P target of 8,000 by the end of the decade from a perma bull. While that number looks big, it is only about 33% over the next six years. That comes to about 5% per year or 6% inclusive of dividends and an equity risk premium of only 2% at the current 10 yr yield of 4.10%. I am tempted to reduce equity exposure in favor of high yield corporate bond fund(s) yielding at 6+%.
  • Why Stay in Medigap Plan F?
    At this point, I have chosen peace of mind with no medical bills over lowest cost.
    As I said, as I get older, one thing less to worry about in my life might be worth the extra $372 a year.
    Same here. That amounts to the current combined amount I collect monthly from my bond funds. And we live beneath our means already, so... It's not missed.
  • Why Stay in Medigap Plan F?
    @msf
    My wife and I have been with Traditional Medicare and a medicare supplemental plan over 7 years and have never had to communicate an appeal, request authorization, denied coverage, or received a bill during that time. I can see any doctor who accepts Medicare anywhere in the country.
    I choose the peace of mind that I’ve experienced with Traditional Medicare and Supplemental plan even though it costs me more in the short term; and even though the supplemental plan increases each year, I know there will be no surprises with accessing the health care, I or my wife needs.

    Well said, exactly the same reasons why I chose to stay in Original Medicare Plan F.
    May I also add that I just spoke to a friend of mine who is a retired NYC schoolteacher. He told me that when the City first rolled out its Medicare Advantage Plan, the retirees were assured that any doctor who accepts Original Medicare would also accept the City's new Advantage Plan. However, all of my friend's doctors told him that they do not accept any Advantage Plan, period. They most frequently mentioned the onerous procedure they would have to follow of obtaining access to critical medical care for their patients through pre-authorizations.