Quote from PiggyBank:
I'll think about it, but it needs to be established fact.. not some opinion piece from huffington post. And just to be clear, you are saying that he placed an artificially deflated asset into his IRA which afterwords was valued at a much higher price?
Also, lets say he did that, but it only accounts for a small % of the total value of the IRA, is that a push? This could get complicated in like a thousand ways, like.. what if the asset was just low priced (compared to now) like gold or something and then exploded after it was already in his IRA? There would be nothing even arguably wrong/immoral/unethical/illegal about that, but would you still win?
So what are the terms you want, and what would we be betting?
oh, and as an aside, I was simply saying that according to the only actual evidence presented in this thread (by Max, and me) that it is definitely possible that Romney's IRA is completely legal and ethical. Of course i don't know for sure but neither does anyone else on here.
I assume you know what this means (from the Ritholz arty above):
Letâs start with the WSJ article. Among its key findings:
⢠$1.1 billion invested generated $2.4 billion in gains for its investors over 16 years;
⢠22% of the companies either filed for bankruptcy reorganization or closed their doors;
⢠An additional 8% ran into so much trouble that Bain lost 100% of client money invested in each deal;
⢠Bainâs returns came from just a small number of investments. Ten deals produced more than 70% of the total dollar gains. (4 of the 10 of these businesses later ended up in bankruptcy court).
⢠Several of Bainâs biggest successes became household names: Staples, Dominoâs Pizza Inc. and Sports Authority.
The Journal analysis shows that in total, Bain produced about $2.4 billion in gains for its investors in the 77 deals, on about $1.1 billion invested. This is before fees, which typically run in the range of 2% annually plus 20% of profits (widely known as â2+20â); Some newer Bain funds run 1 & 30, while some older funds ran 1.5 + 20.
If not, let me make it real simple: if you wanted to generate 2.40 for every 1.10 invested, over 16 years, your rate of return would only have to be 5.6%.
Now, we know the 1.1 bil wasn't all invested upfront, which is why someone has to sit there and do the work of analyzing the ins and outs. And when the WSJ got done, as the Ritholz article shows, the returns were very much to the south of 88%. The only way you get returns that are in excess of the bull market in force at the time using the returns Bain actually made, which were, once again, far less than 88% overall, as they showed, is through leverage.
Leverage isn't available, except in a very limited way, in IRAs and 401k's. So it's far more likely that without any weird shit, Mitt would have made market returns or, if he was really really good, maybe a bit more.
Now, I have known two people who made large sums in their retirement accounts. What they did was to put 100% of their money into their own company's stock when it was teetering on bankruptcy. It didn't actually go bankrupt, so they wound up making 30:1 returns on their money.
That's the only way I know of to turn the kind of money you can contribute to an IRA, SEP-IRA, 401(k), or any other defined contribution retirement account you can name, into the kind of serious money we're talking about here.
So yes, he did artificially deflate the value of the assets he placed in his accounts, and having done that, he was able to make the kind of money that allowed it to grow to 103 million dollars. If you know math and you know investing, there is no other way.
Anything else is bullshit. Pure, unrefined, probably Texas, bullshit.
