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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120807  
Subject: Tales from the trenches Date: 3/4/2009 7:48 PM
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It's high time to recount another tale. I haven't done one in a while.

Harold (not his real name) is a retired engineer. I have no idea how his bosses and co-workers put up with him, but his work was probably perfect. He is slow and methodical.

As an example, he writes up, line by line on a pad of notebook paper, everything that may need to go on his tax return. It's in no particular order. Then he fills out my organizer. If he's not sure about where to put something in the organizer, it will show up in multiple places. He separates the cost of eye glasses from the cost of the eye doctor's exam, because they are listed on separate lines in my organizer. Lots of details, it's all there, but only Harold knows how it's organized.

And Harold always comes in with his box. It's a small, portable file box. Nowadays, you see plastic ones in the office supply stores. His is steel. With a lock. That's always locked. Inside this box are Harold's records. He has an unusual filing system. For example, he has a savings account. And every year he gets a 1099 from the bank. So every year, he puts the current 1099 with all of the previous 1099s. The newest one is always at the back. So when I ask for his 1099, he has to dig though the box, find the envelope with the 1099s for that bank account (everything is kept in envelopes) then page through the folded stack to get to the last one, reminiscing about every page as we go. ("The interest was higher in 1992, we were saving up some money to help our son with a down payment.")

Did I mention Harold is slow and methodical?

So I was a little worried when he mentioned that he sold a portion of his mutual fund. He called me in December to ask about that. You see, he had never sold any of this fund. Ever. He first invested in the fund in ... wait for it ... 1957. So I told him that I'd need to know all of his purchases and dividend reinvestments since 1957. Of course, he said that he had all of those records. The funny thing is that I actually believed him.

But since he is thorough and methodical, he also called up the broker and the fund to try to get the back records. And they did a good job giving him something going back to 1971. They apologized that they didn't have records from the transfer agent they used before then. But they did give him the amount of his original 1957 purchase.

So I sat down with Harold to do his taxes today. And one of his first concerns was to take a look at the records for the mutual fund. So what does he pull out of his metal file box? Fifty years worth of individual purchase confirmations. One quarterly reinvestment at a time. In chronological order - oldest on top, of course. And then came 50 years worth of quarterly and annual statements. And finally, the package from the broker.

So I dutifully scanned it all up (thank God for a recently purchased and very fast scanner). And it didn't take too long to punch all of the data into a tool I have to calculate basis in mutual funds. I was able to account for every fractional share, down to the last .001 share!

Perhaps some statistics are in order. His original purchase was for $500. The last purchase was in 1966. He invested a total of just over $1100. That has compounded to be worth over $70k at the end of last year. And judging from the share prices I saw, it was probably close to $150k before the market crashed.

How's that for a testimony to the power of compounding?

--Peter
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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 104955 of 120807
Subject: Re: Tales from the trenches Date: 3/4/2009 9:09 PM
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Good one, Peter.

I think I know Harold's sister. She keeps her records in a suitcase.

But when she sold a couple of mutual funds, it was the same exact experience.

It sounds like you might have a better "tool" for mutual fund basis, though. Mine's an improvised spreadsheet I got off the internet, that actually works pretty well.

Bill

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Author: bacon Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 104963 of 120807
Subject: Re: Tales from the trenches Date: 3/5/2009 8:42 AM
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How's that for a testimony to the power of compounding?

This tale certainly is a testimony of something....

Eric Hines

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Author: synchronicityII Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 104971 of 120807
Subject: Re: Tales from the trenches Date: 3/5/2009 4:39 PM
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That's a good one.

FWIW, I have a friend who has AT&T stock that was first purchased somewhere in the early 1960's. Of course he held on to it, although (thank god!) he did not reinvest the dividends.

So, back when Vodafone acquired Airtouch for stock and cash (I believe those were the companies, all I remember was that it was a taxable to the extent of boot transaction, I posted it on the boards in a couple of places including those old stock boards so you could search for it if you wanted to) and when he later sold his holdings in...something, I forget which one it was, maybe Lucent, he wanted to know what his basis was.

Yes, I had a spreadsheet that broke out the basis for EVERY ONE of those AT&T and baby bell transactions. IIRC, someone from the boards asked if he could post it (with attribution and caveats) at his website somewhere. Unfortunately for any of you out there with AT&T issues, I stopped updating the thing a number of years ago.

But as bad as your story was, imagine if dear Harold had bought AT&T in 1957. And DRIP'd it (and babies) ever since....

-synchronicity, run screaming

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 104975 of 120807
Subject: Re: Tales from the trenches Date: 3/6/2009 3:45 AM
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It sounds like you might have a better "tool" for mutual fund basis, though.

Mine is one of the tools in a program called Tax Tools. They've got tons of handy little gadgets in it. Dependent and filing status flowcharts, auto lease valuation and inclusion calculators, loan amortization, various forms that generally are NOT part of a 1040, things like that. Probably 100 or more handy tools in the program.

The Mutual fund basis tool only does single category average cost. But it's not hard to manually use the printout to do FIFO calcs. Of course, for Harold, I definitely wanted to use average cost rather than FIFO. Those early shares were less than 1/2 the average cost.

His printout was almost 4 full pages - about 50 lines on a page, I'd guess.

--Peter

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 104976 of 120807
Subject: Re: Tales from the trenches Date: 3/6/2009 5:29 AM
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Mine is one of the tools in a program called Tax Tools. They've got tons of handy little gadgets in it. Dependent and filing status flowcharts, auto lease valuation and inclusion calculators, loan amortization, various forms that generally are NOT part of a 1040, things like that. Probably 100 or more handy tools in the program.

I was reminded of both how much things have changed and how much I've aged just the other day. I had to multiply something along the line of 176 x 16.9 without a calculator! It took me forever to find the brain cells where that process was stored in, I think, 4th grade.

Flashback to 1971, when I was the freshly spawned knuckledragging apple of Uncle Sam's eye. The first portable calculators were still in the future, and there we were computing (thank God 6% simple) interest to 9 decimal places by hand. Progress is a wonderful thing. Now if they'd only make a linament that doesn't smell gawdawful.

Phil

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Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 104977 of 120807
Subject: Re: Tales from the trenches Date: 3/6/2009 8:17 AM
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I was reminded of both how much things have changed and how much I've aged just the other day. I had to multiply something along the line of 176 x 16.9 without a calculator! It took me forever to find the brain cells where that process was stored in, I think, 4th grade.

Flashback to 1971, when I was the freshly spawned knuckledragging apple of Uncle Sam's eye. The first portable calculators were still in the future, and there we were computing (thank God 6% simple) interest to 9 decimal places by hand. Progress is a wonderful thing.


One thing I'm glad I've done over the years is force myself to do a fair amount of math in my head or with pencil and paper. I think it's a great way to keep my aging brain cells active. Don't get me wrong. I love calculators and computers. I have no desire to go back to those days in college when we used slide rules and logarithm tables in chemisitry and physics. But I wish kids today would learn the basics before they hand them a calculator of everything. Ever notice how many cashiers get that confused expression after the cash register tells them how much change to give and they have to figure for themselves how to count it out to you?

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Author: MarinBMWZ4 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 104983 of 120807
Subject: Re: Tales from the trenches Date: 3/6/2009 8:25 PM
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You really should go to this link and listen to the guy, a math teacher I believe, try to explain to Verizon the math error they made on his bill. Hilarious and pathetic at the same time. These people walk and talk yet don't understand English and basic math concepts, all the while having control over aspects of your life......

http://failblog.org/2009/02/04/verizon-math-fail/?cp=5

MZ4

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