Fahrvergtaxen

Every once in awhile, some knucklehead in a position of power at one of the world’s biggest businesses does something so incredibly stupid, you wonder how they can remember to put their shoes on before they head to work in the morning. Bernie Madoff did it for decades by running a classic Ponzi scheme out of his New York office. The folks who ran Enron did it for years when they lied about their earnings. And right now in West Virginia, the former CEO of Massey Energy is on trial for covering up safety violations that led to the deaths of 29 coal miners. Stupid, stupid, stupid.

Volkswagen became the latest corporate villain when they came clean about selling 11 million cars with a secret feature they didn’t advertise on the window sticker. Along with leather-trimmed seats, German-engineered sport suspensions, and fancy navigation systems, buyers who chose a “Type EA 189” diesel engine also took delivery of a “defeat device,” buried deep in the car’s software, designed explicitly to cheat emissions tests. Researchers from the International Council on Clean Transportation discovered that the cars were emitting up to 40 times more nitrogen oxide than allowed.

Naturally, environmental regulators are up in arms. VW’s CEO has resigned, the company’s stock has tanked, and the carmaker is looking at up to $18 billion in fines in the United States alone. But the devices apparently did more than just cheat pollution monitors. It looks like they also cheated the IRS. Uh oh.

Here’s how it worked. The Energy Policy Act of 2005 gave taxpayers credits for buying certain alternative fuel vehicles, including lean-burn vehicles running on diesel fuel. Manufacturers have to swear on a stack of bibles that their cars meet the standards to earn the credits, which naturally make them more attractive to buyers. For 2009, VW pinky-swore that their Jetta 2.0L TDI sedan and Jetta 2.0L TDI SportWagen models qualified for a $1,300 credit. 39,500 people bought those cars, making the total tax fraud $51 million.

On October 6, Senate Finance Committee Chair Orrin Hatch and Ranking Member Ron Wyden sent VW a letter posing a blunt question: “Did Volkswagen make false or misleading assertions in any of the materials submitted to, or communications made to, the U.S. government regarding eligibility of Volkswagen vehicles for the lean-burn technology motor vehicle credit?” They letter also requested any marketing material alerting buyers to possible tax credits for their cars.
VW has until October 30 to reply. It’s unlikely that buyers will have to repay credits — they didn’t do anything wrong, and VW’s pockets are deeper anyway. Sure, VW will recall as many of the vehicles as they can. (Of course, some of those buyers will prefer the performance they get from the dishonest engines.) So the tax offense will probably get rolled up in whatever settlement VW winds up negotiating with the government. The company has put aside $7 billion to handle the fallout. Sure hope that’s enough!

You’d like to think the boneheads who decided to cheat the emissions tests at least worried about the civil and criminal risks they were taking. But smart money would bet they didn’t consider the tax consequences, either. While that wasn’t their biggest mistake, it’s still likely to push the ultimate cost of the scandal even higher. That’s why it’s so important to have a plan that helps you anticipate the tax costs of everything you do. So call us for your plan and avoid running off the road!

In The Headlines

Microgrids and Energy Storage Products Give Solar Energy a Boost

Energy StorageThe first World’s Fair, held in Chicago in 1893, showcased products that shocked and delighted, but one dazzled like no other: the revolutionary scientific invention that lit up the night, with over 100,000 light bulbs creating the largest illuminated display yet seen—and drawing a record amount of power.

Today, solar and other renewable forms of energy are changing the way we generate power. That revolution, while young, is well underway. Within five years, many experts expect the falling price of solar will rapidly approach grid parity, achieved when the cost of solar is equal to or lower than that of traditional sources of power such as coal. Solar will then begin claiming a rapidly expanding share of the overall electrical generation portfolio.

Beyond that, solar is also gaining new applications that will dramatically strengthen its impact, thanks to new technologies and interfaces that work in tandem with solar systems. Called technology convergence, it is cited as an important trend in the U.S. Solar Market Insight Report for Q1 2015, produced by the Solar Energy Industries Association (SEIA) and Greentech Media, which notes that small but increasing numbers of solar companies are combining and bundling their systems with ancillary products and services. As components and technologies become more cost-effective, integrated offerings will become more common.

A highly promising area is energy storage, a rapidly developing sector that is benefiting from innovations in battery technology. These advances apply to both large format batteries as well as battery systems used in portable devices being configured to work at larger scale. Reliable and efficient energy storage allows commercial solar owners to optimize solar generation and save money, while giving residential customers a source of electrical backup during grid outages; many solar installation companies already provide it as an option. Energy storage is also fueling the installation of microgrids—even so-called “nanogrids”— very small, independent, often private, electrical systems across the country and in emerging nations.

These advances are signaling “a huge paradigm shift,” says Lisa Salley, Vice President and General Manager of Energy & Power Technologies at UL (Underwriters Laboratories). “Historically, electricity generation has been pretty much controlled through utilities. Now, we’re getting an opportunity for a totally distributed model.” UL has to be on top of emerging technologies: It has been setting product and system safety standards globally for 121 years, since its founder was asked to test the electrical systems at that Chicago World’s Fair. The company certified the first solar collector in 1980, and today, among more than 1,500 current standards, 20 are applied to the solar industry.

By 2020, Salley expects energy storage will be fully integrated into solar photovoltaic systems large and small that will also be embedded with smart technology, like meters that allow for load control, which optimizes energy consumption. Smart services also enable a two-way flow of information—and money—between power companies and solar owners, who essentially sell excess power generated by their systems back to the utility for bill credit. Photovoltaic (PV) solar farms will continue to proliferate; entities like hospitals and data centers that cannot afford to lose power will own their individual grids.

This distributive energy model has some waging a bet against solar and other renewables. The next few years may show even the holdouts may have to embrace hybrid models. In the end, technology is driving the next revolution, forming the new electrical grids of the future.

Citations

1. http://for.tn/1RD7YbU – Fortune

Amazon Spawns a Boom in Warehouse Robotics

Amazon WarehouseIn a mock warehouse stocked with granola bars, breakfast cereal, sponges, and other household goods, a worker plucks items from shelves and places them in a plastic bin. The bin is set atop a small wheeled robot that follows the employee’s every step like a puppy. When the container is full, the robot darts off with it to a packing area; a second robot with an empty bin then picks up where the first left off, allowing the worker to keep gathering items without pausing or having to push around a heavy cart.

For now, this demonstration is just that: a beta test of human-robot teamwork. It is in the San Jose office of Fetch Robotics, one of a handful of startups working on warehouse robots aimed specifically at e-commerce companies. With the holiday season approaching, the roboticists are pitching the machines as a way to speed up packing without having to hire extra workers.

As with most things in the world of online retail, Fetch exists because of something Amazon.com did. In 2012, Amazon paid $775 million for warehouse robot maker Kiva Systems; shortly after, it stopped Kiva from selling its machines to anyone else. “When Amazon drops nearly $1 billion on something just to keep it out of the hands of competitors, it sends a really strong message to the market,” says Bryce Roberts, managing director of seed investor O’Reilly AlphaTech Ventures, which has invested in Fetch. “It left a big hole that’s still wide open.”

In stepped companies such as year-old Fetch in San Jose and six-year-old Harvest Automation in Billerica, MA, both say their robots can keep up with a briskly walking person for about eight hours on a fully charged battery. Fetch says its basic models can carry as much as 150 pounds; Harvest, 50. Tim Barrett, the Chief Operating Officer of shipping company Barrett Distribution Centers, says that with eight Harvest prototypes moving goods around its Massachusetts warehouse, the company did not need to install a pricey conveyor belt. Fetch has raised $23 million from investors led by Japanese telecommunications giant SoftBank, and has been selling its robots since April for about $25,000 apiece. Harvest, which has raised about $25 million in venture funding, says it will begin selling its version next year for $15,000 each, or $1,000 to rent one for a month, according to Chief Executive Officer John Kawola.

The rental option should help attract early adopters by lowering upfront costs, says Dan Kara, practice director for robotics at analyst ABI Research. Similar leases have proved effective for healthcare and security robots designed to keep watch over patients or corporate perimeters, he says. Harvest’s monthly $1,000 per robot would translate to $1.40 an hour if customers kept the machines working nonstop. Melonee Wise, the CEO of Fetch, says her company is considering renting its robot for $4 an hour, adding that the full $25,000 purchase should pay for itself in about six months.

The cost of greater automation, of course, is fewer jobs. The rise of online shopping created one of the relative bright spots in the U.S. job market: The warehousing industry employed 778,000 people in September, up 22.5% from the same month five years earlier, according to the Department of Labor. As the job market tightens, companies seeking to cut prices and speed delivery are looking to replace people with machines. “In the not-too-distant future, robots will be more commonplace in e-commerce,” says Rich Mahoney, executive director of robotics at research nonprofit SRI International.

For now, executives at Fetch and Harvest say, their robots are meant to be mechanical pack mules, supplementing humans who have the vision and dexterity to quickly recognize and retrieve the desired products. Fetch, however, is developing a robot with cameras and clawed arms that it says will eventually be able to grab items from the shelves, too.

Citations

1. http://bloom.bg/1MJhLc4 – BusinesWeek

The Good News Is . . .

Good News• In a surprise upturn boosted by domestic demand, the Purchasing Managers Manufacturing Index (PMI) is signaling monthly strength, coming in at 54.0 for the October flash for the best showing since May. New orders are at a seven-month high and are described as strong despite only a modest contribution from export orders. Production this month is also at a seven-month high. Manufacturers remain cautious about inventories which decreased for a third straight month. Input costs are down due to the strong dollar and falling raw material prices.

• Royal Caribbean Cruises Ltd., the world’s second largest cruise company, reported earnings of $2.84 per share, an increase of 29.1% over year earlier earnings of $2.20 per share. The firm’s earnings topped the consensus estimate of analysts by $0.13. The company reported revenues of $2.5 billion, an increase of 5.6%. Management attributed the company’s results to booking volume growth and pricing strength.

• Western Digital Corporation announced that it had agreed to acquire the memory chip maker SanDisk Corporation in a cash-and-stock deal worth $19 billion. Under the terms of the deal, SanDisk investors would receive $86.50 a share in cash and stock for each share they hold. The acquisition is the latest in a flurry of deal making this year as suppliers of semiconductors and other computer components face greater pressure on pricing from device makers.

Citations

1. http://bloom.bg/1Dl6vPO – Bloomberg Economic Calendar
2. http://cnb.cx/1gct3xa – CNBC
3. http://bit.ly/1ZMMkan – Royal Caribbean Cruises, Ltd.
4. http://nyti.ms/1XkFneB – NY Time Dealbook

Planning Tips

Ways Your Brain Can Undermine Your Investing

Brain CoinIt does not matter how rational we think we are. The chemicals in our brains often lead us to make irrational decisions. This affects all of our decisions, whether in our social life or our investment portfolio. Behavioral Finance is the booming field of study aiming to reconcile the discrepancy between rational valuation and irrational market pricing. Below are some of the common behavioral biases that can lead to bad investment decisions.

Anchoring: Investors are bad at processing new information – Anchoring is related to overconfidence. For example, you make your initial investment decision based on the information available to you at the time. Later, you get news that materially affects any forecasts you initially made. But rather than conduct new analysis, you just revise your old analysis. Because you are anchored in the old thinking, your revised analysis will not fully reflect the new information.

Representativeness: Investors connect the wrong things to one another – A company might announce a string of great quarterly earnings. As a result, you assume the next earnings announcement will probably be great, too. This error falls under a broad behavioral-finance concept called representativeness: You incorrectly think one thing means something else. Another example of representativeness is assuming a good company is a good stock.

Loss aversion: Investors absolutely hate losing money – Loss aversion, or the reluctance to accept a loss, can be deadly. For example, one of your investments may be down 20% for good reason. The best decision may be to just book the loss and move on. But you can’t help thinking the stock might come back. The latter thinking is dangerous because it often results in you increasing your position in the money-losing investment. This behavior is similar to the gambler who makes a series of larger bets in hopes of breaking even.

Regret minimization: Investors have trouble forgetting bad memories – How you trade in the future is often affected by the outcomes of your previous trades. For example, you may have sold a stock at a 20% gain, only to watch the stock continue to rise after your sale. And you think to yourself, “If only I had waited.” Or perhaps one of your investments falls in value, and you dwell on the time when you could have sold it while in the money. These all lead to unpleasant feelings of regret. Regret minimization occurs when you avoid investing altogether or invest conservatively because you don’t want to feel that regret.

Frame dependence: Investors like to go with the flow – Your ability to tolerate risk should be determined by your personal financial circumstances, your investment time horizon, and the size of an investment in the context of your portfolio. Frame dependence is a concept that refers to the tendency to change risk tolerance based on the direction of the market. For example, your willingness to tolerate risk may fall when markets are falling. Alternatively, your risk tolerance may rise when markets are rising. This often causes the investor to buy high and sell low.

Citations

1. http://bit.ly/1k390CG – Investopedia
2. http://lat.ms/1jhWjT5 – Los Angeles Times
3. http://read.bi/1MM3uLG – Business Insider
4. http://bit.ly/1H3dH4q – InvestorsInsight.com
5. http://onforb.es/1GASofJ – Forbes

Please don’t hesitate to give us a call if you need help with any component of your financial planning.

Amazon Spawns aMicrogrids and Energy Storage Products Give Solar Energy a Boosthouse Energy StorageThe first World’s Fair, held in Chicago in 1893, showcased products that shocked and delighted, but one dazzled like no other: the revolutionary scientific invention that lit up the night, with over 100,000 light bulbs creating the largest illuminated display yet seen—and drawing a record amount of power.

Today, solar and other renewable forms of energy are changing the way we generate power. That revolution, while young, is well underway. Within five years, many experts expect the falling price of solar will rapidly approach grid parity, achieved when the cost of solar is equal to or lower than that of traditional sources of power such as coal. Solar will then begin claiming a rapidly expanding share of the overall electrical generation portfolio.

Beyond that, solar is also gaining new applications that will dramatically strengthen its impact, thanks to new technologies and interfaces that work in tandem with solar systems. Called technology convergence, it is cited as an important trend in the U.S. Solar Market Insight Report for Q1 2015, produced by the Solar Energy Industries Association (SEIA) and Greentech Media, which notes that small but increasing numbers of solar companies are combining and bundling their systems with ancillary products and services. As components and technologies become more cost-effective, integrated offerings will become more common.

A highly promising area is energy storage, a rapidly developing sector that is benefiting from innovations in battery technology. These advances apply to both large format batteries as well as battery systems used in portable devices being configured to work at larger scale. Reliable and efficient energy storage allows commercial solar owners to optimize solar generation and save money, while giving residential customers a source of electrical backup during grid outages; many solar installation companies already provide it as an option. Energy storage is also fueling the installation of microgrids—even so-called “nanogrids”— very small, independent, often private, electrical systems across the country and in emerging nations.

These advances are signaling “a huge paradigm shift,” says Lisa Salley, Vice President and General Manager of Energy & Power Technologies at UL (Underwriters Laboratories). “Historically, electricity generation has been pretty much controlled through utilities. Now, we’re getting an opportunity for a totally distributed model.” UL has to be on top of emerging technologies: It has been setting product and system safety standards globally for 121 years, since its founder was asked to test the electrical systems at that Chicago World’s Fair. The company certified the first solar collector in 1980, and today, among more than 1,500 current standards, 20 are applied to the solar industry.

By 2020, Salley expects energy storage will be fully integrated into solar photovoltaic systems large and small that will also be embedded with smart technology, like meters that allow for load control, which optimizes energy consumption. Smart services also enable a two-way flow of information—and money—between power companies and solar owners, who essentially sell excess power generated by their systems back to the utility for bill credit. Photovoltaic (PV) solar farms will continue to proliferate; entities like hospitals and data centers that cannot afford to lose power will own their individual grids.

This distributive energy model has some waging a bet against solar and other renewables. The next few years may show even the holdouts may have to embrace hybrid models. In the end, technology is driving the next revolution, forming the new electrical grids of the future.

Citations

1. http://for.tn/1RD7YbU – FortuneRobotics

Amazon WarehouseIn a mock warehouse stocked with granola bars, breakfast cereal, sponges, and other household goods, a worker plucks items from shelves and places them in a plastic bin. The bin is set atop a small wheeled robot that follows the employee’s every step like a puppy. When the container is full, the robot darts off with it to a packing area; a second robot with an empty bin then picks up where the first left off, allowing the worker to keep gathering items without pausing or having to push around a heavy cart.

For now, this demonstration is just that: a beta test of human-robot teamwork. It is in the San Jose office of Fetch Robotics, one of a handful of startups working on warehouse robots aimed specifically at e-commerce companies. With the holiday season approaching, the roboticists are pitching the machines as a way to speed up packing without having to hire extra workers.

As with most things in the world of online retail, Fetch exists because of something Amazon.com did. In 2012, Amazon paid $775 million for warehouse robot maker Kiva Systems; shortly after, it stopped Kiva from selling its machines to anyone else. “When Amazon drops nearly $1 billion on something just to keep it out of the hands of competitors, it sends a really strong message to the market,” says Bryce Roberts, managing director of seed investor O’Reilly AlphaTech Ventures, which has invested in Fetch. “It left a big hole that’s still wide open.”

In stepped companies such as year-old Fetch in San Jose and six-year-old Harvest Automation in Billerica, MA, both say their robots can keep up with a briskly walking person for about eight hours on a fully charged battery. Fetch says its basic models can carry as much as 150 pounds; Harvest, 50. Tim Barrett, the Chief Operating Officer of shipping company Barrett Distribution Centers, says that with eight Harvest prototypes moving goods around its Massachusetts warehouse, the company did not need to install a pricey conveyor belt. Fetch has raised $23 million from investors led by Japanese telecommunications giant SoftBank, and has been selling its robots since April for about $25,000 apiece. Harvest, which has raised about $25 million in venture funding, says it will begin selling its version next year for $15,000 each, or $1,000 to rent one for a month, according to Chief Executive Officer John Kawola.

The rental option should help attract early adopters by lowering upfront costs, says Dan Kara, practice director for robotics at analyst ABI Research. Similar leases have proved effective for healthcare and security robots designed to keep watch over patients or corporate perimeters, he says. Harvest’s monthly $1,000 per robot would translate to $1.40 an hour if customers kept the machines working nonstop. Melonee Wise, the CEO of Fetch, says her company is considering renting its robot for $4 an hour, adding that the full $25,000 purchase should pay for itself in about six months.

The cost of greater automation, of course, is fewer jobs. The rise of online shopping created one of the relative bright spots in the U.S. job market: The warehousing industry employed 778,000 people in September, up 22.5% from the same month five years earlier, according to the Department of Labor. As the job market tightens, companies seeking to cut prices and speed delivery are looking to replace people with machines. “In the not-too-distant future, robots will be more commonplace in e-commerce,” says Rich Mahoney, executive director of robotics at research nonprofit SRI International.

For now, executives at Fetch and Harvest say, their robots are meant to be mechanical pack mules, supplementing humans who have the vision and dexterity to quickly recognize and retrieve the desired products. Fetch, however, is developing a robot with cameras and clawed arms that it says will eventually be able to grab items from the shelves, too.

Citations

1. http://bloom.bg/1MJhLc4 – BusinesWeek

The Good News Is . . .

Good News• In a surprise upturn boosted by domestic demand, the Purchasing Managers Manufacturing Index (PMI) is signaling monthly strength, coming in at 54.0 for the October flash for the best showing since May. New orders are at a seven-month high and are described as strong despite only a modest contribution from export orders. Production this month is also at a seven-month high. Manufacturers remain cautious about inventories which decreased for a third straight month. Input costs are down due to the strong dollar and falling raw material prices.

• Royal Caribbean Cruises Ltd., the world’s second largest cruise company, reported earnings of $2.84 per share, an increase of 29.1% over year earlier earnings of $2.20 per share. The firm’s earnings topped the consensus estimate of analysts by $0.13. The company reported revenues of $2.5 billion, an increase of 5.6%. Management attributed the company’s results to booking volume growth and pricing strength.

• Western Digital Corporation announced that it had agreed to acquire the memory chip maker SanDisk Corporation in a cash-and-stock deal worth $19 billion. Under the terms of the deal, SanDisk investors would receive $86.50 a share in cash and stock for each share they hold. The acquisition is the latest in a flurry of deal making this year as suppliers of semiconductors and other computer components face greater pressure on pricing from device makers.

Citations

1. http://bloom.bg/1Dl6vPO – Bloomberg Economic Calendar
2. http://cnb.cx/1gct3xa – CNBC
3. http://bit.ly/1ZMMkan – Royal Caribbean Cruises, Ltd.
4. http://nyti.ms/1XkFneB – NY Time Dealbook

Planning Tips

Ways Your Brain Can Undermine Your Investing

Brain CoinIt does not matter how rational we think we are. The chemicals in our brains often lead us to make irrational decisions. This affects all of our decisions, whether in our social life or our investment portfolio. Behavioral Finance is the booming field of study aiming to reconcile the discrepancy between rational valuation and irrational market pricing. Below are some of the common behavioral biases that can lead to bad investment decisions.

Anchoring: Investors are bad at processing new information – Anchoring is related to overconfidence. For example, you make your initial investment decision based on the information available to you at the time. Later, you get news that materially affects any forecasts you initially made. But rather than conduct new analysis, you just revise your old analysis. Because you are anchored in the old thinking, your revised analysis will not fully reflect the new information.

Representativeness: Investors connect the wrong things to one another – A company might announce a string of great quarterly earnings. As a result, you assume the next earnings announcement will probably be great, too. This error falls under a broad behavioral-finance concept called representativeness: You incorrectly think one thing means something else. Another example of representativeness is assuming a good company is a good stock.

Loss aversion: Investors absolutely hate losing money – Loss aversion, or the reluctance to accept a loss, can be deadly. For example, one of your investments may be down 20% for good reason. The best decision may be to just book the loss and move on. But you can’t help thinking the stock might come back. The latter thinking is dangerous because it often results in you increasing your position in the money-losing investment. This behavior is similar to the gambler who makes a series of larger bets in hopes of breaking even.

Regret minimization: Investors have trouble forgetting bad memories – How you trade in the future is often affected by the outcomes of your previous trades. For example, you may have sold a stock at a 20% gain, only to watch the stock continue to rise after your sale. And you think to yourself, “If only I had waited.” Or perhaps one of your investments falls in value, and you dwell on the time when you could have sold it while in the money. These all lead to unpleasant feelings of regret. Regret minimization occurs when you avoid investing altogether or invest conservatively because you don’t want to feel that regret.

Frame dependence: Investors like to go with the flow – Your ability to tolerate risk should be determined by your personal financial circumstances, your investment time horizon, and the size of an investment in the context of your portfolio. Frame dependence is a concept that refers to the tendency to change risk tolerance based on the direction of the market. For example, your willingness to tolerate risk may fall when markets are falling. Alternatively, your risk tolerance may rise when markets are rising. This often causes the investor to buy high and sell low.

Citations

1. http://bit.ly/1k390CG – Investopedia
2. http://lat.ms/1jhWjT5 – Los Angeles Times
3. http://read.bi/1MM3uLG – Business Insider
4. http://bit.ly/1H3dH4q – InvestorsInsight.com
5. http://onforb.es/1GASofJ – Forbes

Please don’t hesitate to give us a call if you need help with any component of your financial planning.