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For those who. hate Elon Musk

Discussion in 'Tesla' started by bwilson4web, Aug 15, 2024.

  1. fuzzy1

    fuzzy1 Senior Member

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    Reading that link closer:

    "... The maximum loan is typically capped between 50-70% of the investment account’s value, which can fluctuate. ... An SBLOC may allow you to stay invested during a bear market and wait for the stock market to rebound before closing out equity positions."

    So during market crashes, or non-diversified holdings caught by corporate bankruptcy or other implosion, these loans could be subject to the same sorts of margin calls as those investing on margin loans, and short sellers caught in short squeezes. I've seen these margin calls wipe out the nest eggs and finances of some people around me during the post-Y2K crash, and again at the later Great Housing Recession. Seeing those cases made me glad to have never used margin loans or derivatives, and to be debt-free before those bear markets appeared.The pain of our battered nest egg did not reach over to the needs of ordinary daily life. While mass layoffs did interrupt paychecks, those were brief.

    As mentioned earlier, relevant to this "Buy, Borrow, Die” investment plan, my preference is to repeal the tax benefit occurring at the "Die" part.
     
  2. bwilson4web

    bwilson4web BMW i3 and Model 3

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    It a better practice to spell out what it is and then enclose the term in caps. For example, in my humble option (IMHO).

    I have no idea what IRMAA is.

    Bob Wilson
     
  3. fuzzy1

    fuzzy1 Senior Member

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    ... says the guy who didn't spell out what FICA means earlier in this thread. ;)

    But based on other portions of that same post, I believe he won't be getting close enough to IRMAA to have need to know more about her.

    When I put that term into my usual search engine, the entire first page of results point to a single topic. No disambiguation needed.
     
  4. bwilson4web

    bwilson4web BMW i3 and Model 3

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    My paychecks listed FICA as a deduction during my 50 years of working.

    Good point! I hadn't discussed Medicare even though it is a significant cost avoidance.I have Medicare Parts A&B and it covers 80% of my medical care. It works great. BTW, I use generics instead of over priced, Part D, meds.

    My late wife had Part D and what she went through convinced me Part D is a scam. For example, she had a prescription for 7.5 mg and was turned down. Yet 10 mg and 5 mg were on the formulary. Nurse Ratched types would be proud.

    Bob Wilson
     
    #84 bwilson4web, Aug 24, 2024
    Last edited: Aug 24, 2024
  5. hill

    hill High Fiber Member

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  6. Trollbait

    Trollbait It's a D&D thing

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    "Every security has a lendable value (e.g., the amount you can borrow using that security as collateral), which is an amount less than the market value of the security. So $100 in stock may have a lendable value of $65. A drop in the value of pledged collateral may trigger a “maintenance call” because the lendable value of the securities in the collateral account has fallen below the amount borrowed. This means the borrower may have to deposit more collateral, sell securities to raise cash or pay down some of the outstanding debt. If the borrower doesn’t meet the maintenance call in the allotted time frame (usually 3 business days), the lender may take action to sell some securities in the pledged account. A sale of pledged securities could trigger trading costs as well as a potential tax liability."
    https://www.welcome.gsselect.com/content/gsSelect/us/en/insights/understanding-the-risks-of-SBLOCs.html

    A risk for you and I, but for those with hundred of millions to billions in securities can easily follow the tips listed there to avoid a maintenance call. Musk got his $44.9 billion in stocks pay. Will he ever actually have the full amount of $20 billion line of credit withdrawn? Then if things did go south, There are the rest of his Tesla holdings, plus holdings elsewhere to cover things.
    I'd support it, but I think it is less likely to happen than a wealth tax.
     
  7. fuzzy1

    fuzzy1 Senior Member

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    Not all employers listed it that way. Not all employees even looked at the details on their pay stubs.

    And now my nieces don't even get pay stubs. It is all electronic and automatic and out of view, they have to go specially look for it. Failure to go look at the details is how one missed an HR error seriously overcharging her medical for over a year. Now in process of attempting to get it retroactively fixed and refunded.

    Their mother indicates that HR errors seem a lot common today than when she was that age. Another error had state tax withholding for the wrong state, because she worked an internship there during one college summer break some years ago, under the same parent company. At least that was easily refunded at tax return time.
     
    #87 fuzzy1, Aug 24, 2024
    Last edited: Aug 24, 2024
  8. fuzzy1

    fuzzy1 Senior Member

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    I've been around the stock markets long enough to see news of many individual stock slides or collapses big enough to trigger “maintenance calls," a.k.a. margin calls, on loans with LTVs of 65%, or 50%. Just after Y2K, even on 10%. And broad bear markets triggering them on diversified baskets of stock, not just individual stocks. And market crashes when this happens to many big boys, not just the little guys, driving brief but painful power dives.

    And worked alongside formerly wealthy guys (compared to me, not to the company execs) wiped out by these calls. At least they were still on the payroll and drawing paychecks. (I was a contractor, having chosen a pewter parachute from my prior employer when its industry was running mass layoffs, and electing to not be an FTE anymore.)

    Those bigger LTVs should also carry significant interest rates, high enough to exceed any tax savings if held more than a few years. Not good for the "until you die" plans for folks with decent remaining life expectancies. From that link:

    "Tip: SBLOCs are best used for shorter term funding needs (generally anything from a few months to a few years in duration). Longer term financing needs (e.g., purchasing a home) are generally done differently, ..."

    Even really big boys like him occasionally get out over their skis, when borrowing to fund other ventures. Unlike the little people, they generally don't have any worries about a roof over their heads or their next meals, but do spread around a lot of pain to their newly-ex employees.
     
  9. bisco

    bisco cookie crumbler

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  10. bisco

    bisco cookie crumbler

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  11. bwilson4web

    bwilson4web BMW i3 and Model 3

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    Yea, Musk is a clueless poster but manages excellent engineering accomplishments. I've been monitoring his Twitter/X posts and found:
    • Technical content - excellent
    • Political content - appalling
    But this seems to be a common practice in some wealthy people like the Koch brothers and Putin.

    Bob Wilson
     
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  12. bisco

    bisco cookie crumbler

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    i can't imagine the koch brothers or putin engineering anything but death
     
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  13. fuzzy1

    fuzzy1 Senior Member

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    Don't forget the great wealth accumulation. For insiders and favored friends only.
     
  14. bwilson4web

    bwilson4web BMW i3 and Model 3

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    I got a taste too by converting my 401k into TSLA.

    Bob Wilson
     
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  15. fuzzy1

    fuzzy1 Senior Member

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    That is what they want you to think. But the numbers you have posted, look like you were not invited onto the gravy boat. If you were an invitee, you would have asked your staff accountants and tax attorneys this question, not those of us here on PC.

    I wasn't born on or invited to anyone's gravy boat either, and don't have any reason to hire an accountant or tax preparer, but am sufficiently independent to be aware of that question.
     
  16. bwilson4web

    bwilson4web BMW i3 and Model 3

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    Occasionally when alone in the car, I talk to myself. In public, I hold a cell phone to my ear which is why there are so many mental people wandering around.

    Bob Wilson
     
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