Monday, November 2, 2009

8.6% Return on Investment!

I was at Costco this week and noticed that the price of garbage bags has gone up. It's almost like garbage bags are made of oil. Go figure.

Garbage bags were purchased at $9.99 + 8.9% sales tax = $10.88.
Garbage bags now cost $10.79 + 9.5% sales tax = $11.82.

ROI = ($11.82 - $10.88) / $10.88 = 8.6%

I feel SO much richer now that Costco has raised its prices on garbage bags AND sales taxes have gone up. Win win! You can't see it in the picture but there are actually 12 boxes there. That's a capital gain of $11.28 that I will never have to pay taxes on.

Compared to the current 0.05% yield on 3-Month Treasury Bills, isn't hoarding wonderful?

That said, it's been a while (at least 2 years if memory serves) since I've seen an increase in garbage bag prices. I do not consider it to be part of an alarming trend. Overall, the prices of the items in the picture are fairly stable. Let's reserve "alarming trend" for if and when I'm circling the whole picture each and every month.

10 Easy Ways to Reduce Your Petroleum Dependence

7. Replace your plastic garbage bags with biodegradable cornstarch-based bags, like those made by BioBag Garden. They are available at Whole Foods, or you can order them online from stores like Gaiam.

I seem to have found an 11th option. While it may not be the "green" way to do things, it is certainly the far cheaper way.

11. Hoarding plastic garbage bags in bulk now will also reduce my petroleum dependence. I'll simply have less need to buy garbage bags in the future.

The government is walking a fine line these days. They want us to spend money but they don't want us using it to hoard goods. As seen in the picture above, their efforts have been pretty much a failure with me.

As I left Costco, I was told that I certainly made good use of the coupons. I laughed and said that I was preparing for the apocalypse. He said he understood. I turned a bit serious and said I was only half-joking. He said he wasn't joking at all. I followed up by saying that the economy was really struggling and he nodded in agreement.

I'm reminded that all of the people cannot be fooled all of the time.

You can fool some of the people all the time, and those are the ones you want to concentrate on. - George W. Bush

Speaking of which...

Dividend Stripping

Guys-I have been stripping two dividends a month using PHB-HYG-JNK for about a year now. It has worked for about 10 months with the X-dates set right for this method of income. I have done this for years with utilities common but the ETF's with the large dividend has been working better. Please be careful and have patience, and set some limits too remember a 40 cent divi can not off-set a 90 cent cap loss. Just hold for the next dividend and don't worry about only one dividend in 30 days. Even successful 4 months a year with JNK and PHB will increase your return to about 20%.

Re: Dividend Stripping

Now that is an interesting concept. I do just the opposite.
I trade between PHK, and JNK for the capital gain, and seldom get a dividend in either one, unless trapped into it.
I buy after the dividend, and sell just before the dividend.
to get the cap gain. for instance, I sold my PHK just before divvy of .12 this month at 10.49, and the rebought it at $10.20 for a net gain of .29. Of course I lost the $.12 divvy so netted out at $.17 on each share after subtracting the divvy, and commission of $13.00 each way. Since I do this in my ROTH, no taxes no bookeeping. Two methods of working the divvy date, as long as both work that is great.

If that isn't proof that bull markets make geniuses out of everyone, I don't know what is. One guy day trades for the dividends and avoids capital gains like the plague. The other guy day trades for the capital gains and avoids dividends like the plague. It will be curious to see how their two "gambling" systems work if and when junk funds start going back down again. The first guy plans to ride it on down ("just hold for the next dividend") and the second guy will be paying "$13 each way" to concentrate on pure capital losses.

Neither seem to grasp the concept that passive buy and hold investors were up 31% YTD on JNK (and will also lose big if the junk funds head back on down of course).

Meanwhile, here I sit quite comfortably in... garbage bags, lol.


mab said...


An 8.6% return on investment is outstanding. That's equal to a 14.3% return in a taxable investment, assuming 40% state & federal taxes.

It's also quite remarkable in a world of diminishing real returns. For comparison, let's look at Berkshire Hathaway's annualized returns for the past 5, 10 and 15 year periods:

15 yr = 11.3%
10 yr = 4.3%
5 yr = 3.1%

It's area 5.1 for the win!

Q: If the world's greatest investor is having trouble making money from money, what chance does joe sicks pack have?

A: Less than zero! Literally!

W.57th said...

a shout-out from NYC (no, I'm not
a crook !):

You're a Maestro !

Stagflationary Mark said...


How's this for twisted logic? The Fed wants lower real yields to encourage savers to spend. However, the lower real yields go the more money I actually have to save (or I will risk outliving my nest egg).


Maestro? I cringe at the thought! I suppose I could fill Greenspan's shoes in a pinch though. I've also hoarded socks. ;)