Figure the odds of a BIG negative event risk vs. the 15% cap gain tax. Sell at least enough to take out ENTIRE cost. Pay the tax and diversify away from any single event issues.

All of these collars and switch programs and everything else is a bunch of bullsh*t.  Have the sack to tell your clients that if you’re paying an ass-load of tax, there’s only one reason–you made an even bigger ass-load of money.  Then, get on with the rest of your life and theirs, and do the right thing.  I consider myself a pretty smart guy, but kind of a simpleton at times.  Maybe my clients are drawn to me for that reason.  I would not spend years and months screwing around and dancing with the same problem.  I went out for Chinese today with one of my clients.  My fortune cookie read, “Today is the first day of the rest of your life.”  Good advice for someone with an overly concentrated position.

Sooth in the past regarding HRB "I'll maintain my short position for clients and my own account, Thank You Very Much!"

How is that short working out for you and your clients, Sooth?

[quote=Soothsayer]All of these collars and switch programs and
everything else is a bunch of bullsh*t.  Have the sack to tell
your clients that if you’re paying an ass-load of tax, there’s only one
reason–you made an even bigger ass-load of money.  Then, get on
with the rest of your life and theirs, and do the right thing.  I
consider myself a pretty smart guy, but kind of a simpleton at
times.  Maybe my clients are drawn to me for that reason.  I
would not spend years and months screwing around and dancing with the
same problem.  I went out for Chinese today with one of my
clients.  My fortune cookie read, “Today is the first day of the
rest of your life.”  Good advice for someone with an overly
concentrated position.[/quote]



Sometimes that works and sometimes it does not.  Considering many
of these situations arive to us via referral from other professionals
such as CPA’s and Attorney’s, I think it would not be effective to tell
this client/prospect  "you’re paying an ass-load of tax, there’s
only one reason–you made an even bigger ass-load of money. " 
Just a thought…

[quote=Soothsayer]All of these collars and switch programs and everything else is a bunch of bullsh*t.  Have the sack to tell your clients that if you're paying an ass-load of tax, there's only one reason--you made an even bigger ass-load of money.  Then, get on with the rest of your life and theirs, and do the right thing.  I consider myself a pretty smart guy, but kind of a simpleton at times.  Maybe my clients are drawn to me for that reason.  I would not spend years and months screwing around and dancing with the same problem.  I went out for Chinese today with one of my clients.  My fortune cookie read, "Today is the first day of the rest of your life."  Good advice for someone with an overly concentrated position.[/quote]

Tax-prep business--down.  Digital business unit--down.  Financial advisory business--still bleeding red-ink all over the place.  However, (start applauding now) we made up for all of these underperforming units and then some through our SUB-PRIME LENDING BUSINESS.  It was a painful short on the QQQ with the NASDAQ at 4000 in 1998, too.  But, I didn't have to be perfect.  I just had to be right.  Time to double down?  Maybe not yet.  But, I will if the market momentum swings this dog to $29 split adjusted.  My thesis is playing out to perfection.  HRB keeps caving in to the The Street's expectation for churning out a number through a rather risky business built on the foundation of a real estate fantasy fueled by a sea of liquidity.  When the piper gets paid, I wll too.  I'm siding with the piper.

[quote=da public]

Sooth in the past regarding HRB "I'll maintain my short position for clients and my own account, Thank You Very Much!"

How is that short working out for you and your clients, Sooth?

[/quote]

I got my responses transposed.  So, this is my response to Rightway.  I appreciate your very tempered response.  I was trying to be inflammatory, and I always repsect your posts in these forums.  I think you're a real pro.  My point was that I think so many of us try to be too perfect.  We try to please the lawyer, the accountant and whoever else.  However, I haven't met a lawyer or accountant that I'm all that impressed with in the last couple of years.  I get tired of all of those a-holes getting to second, third, and fourth guess my work, without the same reciprocal professional courtesy.  Like I tell them all the time, "Lots of firms are hiring right now if you think that I have an easy job."

We all like to make analogies about our profession and doctors all the time.  Suppose you find out you have cancer.  Doctor #1 says: "I am going to recommend a course of chemo, followed by a course of radiation.  You need to modify your diet to whatever, and begin this herbal therapy.  I am also going to recommend a massage therapist, an aroma therapist, and a grief counselor for both you and your loved ones."  You ask, "What are my chances, doc?"  He says, "50/50."  Doctor #2 says, "I'm going to go in and cut the son-of-a-bitch out.  And, we'll go from there."  You ask, "What are my chances, doc?"  He says, "I got my chips on you, kid."  Some patients will prefer doctor #1.  Those are not my type of clients.  I'm more of a doctor #2 type.  And, a certain number of clients respect that approach.  At the end of the day, I work for the client--not their freaking lawyer or accountant.  I know, I know.  We're replaceable.  Go pick up a yellow pages.  Their lawyer and accountant are replaceable, too.  

[quote=Soothsayer][quote=da public]

Sooth in the past regarding HRB "I'll maintain my short position for clients and my own account, Thank You Very Much!"

How is that short working out for you and your clients, Sooth?

[/quote]

I got my responses transposed.  So, this is my response to Rightway.  I appreciate your very tempered response.  I was trying to be inflammatory, and I always repsect your posts in these forums.  I think you're a real pro.  My point was that I think so many of us try to be too perfect.  We try to please the lawyer, the accountant and whoever else.  However, I haven't met a lawyer or accountant that I'm all that impressed with in the last couple of years.  I get tired of all of those a-holes getting to second, third, and fourth guess my work, without the same reciprocal professional courtesy.  Like I tell them all the time, "Lots of firms are hiring right now if you think that I have an easy job."

We all like to make analogies about our profession and doctors all the time.  Suppose you find out you have cancer.  Doctor #1 says: "I am going to recommend a course of chemo, followed by a course of radiation.  You need to modify your diet to whatever, and begin this herbal therapy.  I am also going to recommend a massage therapist, an aroma therapist, and a grief counselor for both you and your loved ones."  You ask, "What are my chances, doc?"  He says, "50/50."  Doctor #2 says, "I'm going to go in and cut the son-of-a-bitch out.  And, we'll go from there."  You ask, "What are my chances, doc?"  He says, "I got my chips on you, kid."  Some patients will prefer doctor #1.  Those are not my type of clients.  I'm more of a doctor #2 type.  And, a certain number of clients respect that approach.  At the end of the day, I work for the client--not their freaking lawyer or accountant.  I know, I know.  We're replaceable.  Go pick up a yellow pages.  Their lawyer and accountant are replaceable, too.  

[quote=da public]

Sooth in the past regarding HRB "I'll maintain my short position for clients and my own account, Thank You Very Much!"

How is that short working out for you and your clients, Sooth?

[/quote]

I wanted to follow-up on this topic a little bit.  It is a perfect "Exhibit A" of herd mentality surrounding a widely held stock where only the "good news" is given consideration.  What was HRB's good news for Q4?  First, the business services unit (by far the smallest piece of the overall business at less than 5% of total revenues) was up.  No, make that way up--about 55%.  Second, mortgage origination volumes were up just short of 50% year over year.

Everything else pretty much sounded like bad news to me.  The number of tax returns done was almost identical to a year ago.  The average fee received per return was up slightly, but HRB signed more than 1000 new leases to the do the same number of returns?  Earnings on the company's mortgage portfolio fell almost 30% year over year due to the flattening yield curve.  HRB experienced a 6% loss of customers in its digital tax business.  And, it illustrious financial services unit (the one that started this discussion) "only" lost $13 million for the quarter.  Finally, if you look at HRB's guidance for 2006 of $4.35 to $4.65 per share, there's only one road to get there--another whopping increase in mortgage originations for 2006.  In fact, it looks to me on the surface that the mortgage business is projected to provide more than half of the earnings increase.  Please keep in mind that HRB does not loan money to the most creditworthy group of people.  That group is more likely to borrow from a well-known bank.  The real estate market looks about like the stock market in late '97 or '98.  It's overheated in a lot of the wrong areas, (Remember those cast-off "old economy" companies like Proctor & Gamble that did not participate in the run up?) but has not quite yet come to a mind-bogglingly foolish crescendo. Think about it.  When did Joe six-pack pile into the stock market?  When the money had already been made.  But that extra push of dollars gave the market most of its fuel in '99.  So, what's going on now?  Six-pack is stretching again.  Spending that last buck on real estate to make a killing.  He's so tapped out that Wells Fargo won't loan him money at 5.25%.  But HRB will step up at 8.125% to make the dream possible.  Go ahead, Da Public.  Invest in HRB now while the getting is good.  I'll call your bluff, and am prepared to match you chip for chip until you finally have to drop your cards.  That's how shorting works.  Like I said, you don't have to be perfect, you just have to be right.  But, do you really believe that "investing" in people with bad credit is a good investment.  I don't.  I think once bad credit, always bad credit.  And, surely our society has never seen anything even approaching the amount of money loaned in the past 3 years.  If HRB is going to be a sub-prime mortgage originator, then the P/E of the company should look something more like Countrywide, New Century Financial, Golden West, or Accredited Home Lenders--not a blue-chip growth engine.  Let me ask again: "Of the more than 50 analysts covering WorldCom just one year prior to coming clean, how many had sell ratings on the stock?  And what about Enron?"  My-oh-my what spectacular shorts those would have been.  I'm not suggesting anything of that magnitude will happen to HRB.  What I am suggesting is to look a little deeper into the numbers.  Think for yourself.  And don't just look at the numbers with your eyes, and reaffirm your expectations through glowing reports with your ears.  Get a little closer and take a good sniff, too.  Does it pass the smell test?

I have been using a lot of closed-end funds recently for income investors.  They seem to be giving good yields.  And, there are funds out there that are rated by firms as being appropriate for conservative investors (you’re typical retiree or bond investor).