January 2012 archive

A Primer on Valuing Options

When used with financial instruments, options are a contract between two parties in which one party has the right, but not the obligation, to do something.  Usually, the option involves buying or selling an underlying asset.  Having rights without obligations has financial value, so option holders must purchase these rights at a price, called a …

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California’s business judgment rule offers no protection for officers

My firm is regularly asked to investigate and comment on business losses. Although we never provide legal opinions as to viable causes of action, we routinely are informed by competent legal counsel that the business judgment rule protects both officers and directors, unless the actions of the business person rise to the level of gross …

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Do we really need a second AMT?

The famous Yogi Berra quote, “It’s déjà vu all over again”, is certainly appropriate for the wasted effort President Obama and the press is placing on the tax returns of a very few people. Since one of those few Americans is a presidential candidate (Mitt Romney), we will continue to hear about it, if for …

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Five Questions You Must Ask Before Allowing Your School District to Use e-Textbooks.

One thing about following Apple is that once you understand a few things about their corporate culture and business model, they become extremely predictable.  Shortly after Apple announced their January 19th event regarding publishing, I stated the following in a reply on another blog: Apple would announce that they had re-invented textbooks. You would need …

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Kim Kardashian could teach the Courage Campaign to be more revealing

The Courage Campaign has made Kim Kardashian and her wealth the face of California’s high income earners.  One of the group’s aims is to “Ask Kim to support the Millionaire’s Tax of 2012.”  Until she does so, the campaign is highly critical of how much Ms. Kardashian and other high income earners pay in California …

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Is Apple Really Worth More than Greece?

On January 25, Apple’s stock reached a record high of $454.45 per share, meaning the company is worth more than $420 billion based on its market cap. CNNMoney commented on the current valuation with a story entitled, “At $400 Billion, Apple is Worth More than Greece.” The provocative title was no doubt written to pique …

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About that tax rate increase, is it “two percentage points” or “21.5 percent”?

“Two percent” and “two percentage points” have totally different meanings. When politicians push tax increases, they characterize the increase in terms of “percentage points”. When they push tax cuts, they prefer “percent”. The language difference is subtle and, arguably, perfectly vague, especially when written as a number, as in “2%”. But the practical differences are …

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Government Entity Uses High-Tech Audit Tools

The Supplemental Nutrition Assistance Program (“SNAP”) is being closely watched with high-tech audit tools.  The SNAP program is commonly referred to as the food stamp program.  The program began in 1939 in order to assist low income Americans during the Great Depression.  The program was overhauled in 1964, 1977 and more currently in 1990s.  In …

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Applying Behavioral Finance to Personal Investing

Behavioral economics (aka behavioral finance) use social, cognitive and emotional factors in understanding how economic decisions may be irrationally limited by one’s focus. The following concepts are most important: Heuristics – When an exhaustive search is impractical, people make decisions based on approximate rules of thumb, not strict logic. Framing – Anecdotes and stereotypes provide emotional …

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The Forensic Implications of Microsoft’s New File System

Microsoft has announced that the server version of Windows 8 will include a new file system called the Resilient File System (ReFS).  The ReFS attempts to stay ahead of the curve of the extremely large data storage systems needed for cloud services.  Currently all versions of Windows use NTFS, a generally well regarded system that has enjoyed a …

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