Special Relativity and the Law

Just had a brief conversation with a friend involving time dilation, and on a complete tangent, I came up with a couple questions that seemed interesting. If ever in the future we are able to travel at ridiculous fast speeds such that time dilation becomes a real factor, then these questions might become relevant.

For those that are unfamiliar with time dilation, it is basically an effect of traveling very fast (we're talking about speeds like one-quarter the speed of light). The effect is that those traveling at the very high speed will age slowly as compared to those that aren't.

Say I hop into a super fast space shuttle and fly away from the Earth maintaining my high velocity for a year and return back to Earth. I've aged a year, but everything/everyone on Earth would have aged much more depending how fast I was going... they might end up aging 30 years, for example.

Anyway, enough of the basic background information. Here are two legal cases that I thought would be interesting for you philosophical and lawyer types.

1) A man, 40, has worked for about 20 years, paying enough in Social Security making him eligible for Old Age Social Security benefits when he is 67. He now hops into his special spaceship that allows him to travel very fast. He ages 6 months, but the Earth has aged 27 years. He is now 67 years old based on his birthdate. Should he be allowed to collect the Social Security benefits?

2) A male high school student, 15, is pursued by his high school teacher. They wind up having a secret relationship. She is much older than him, and thus any sexual relationship between them is clearly unlawful and she would be charged with statutory rape if their secret relationship were known to authorities. They both hop in their special spaceship and they each age 3 weeks, but the world around them has aged 3 years. To the world, he is now 18 (but, clearly he's only a 15 year-old kid). Should their relationship now be considered a legal one?

Roth IRA Conversion Question

We know that starting this year income limits on converting a Traditional IRA into a Roth IRA have been lifted. This means that while income limits exist on contributing to the Roth IRA, a loophole is now available -- we can simply put post-tax dollars into the Traditional IRA and immediately convert them to the Roth IRA, which would not have tax consequences as it would be done without any delay, so there would be no gains to be taxed.

My question is this... must we go through the motions of setting up a Traditional IRA, then go through the immediate conversion process, or can we just contribute directly into the Roth IRA, implicitly taking advantage of the loophole?

I asked one of my brokerages, and they said that we would be allowed to contribute directly without having to go through the motions. But, everything else I'm reading does not seem to agree. Maybe I need to call the IRS help line.

Anyone know the answer?

Edit: After quite a wait, I was able to speak with an IRA-specialist at the IRS. His answer conflicts with what the brokerage representative had told me. His short answer is: Yes, you need to go through the motions of establishing a Traditional Non-Deductible IRA, funding it, and then converting it over to the Roth IRA. If you make a direct contribution to the Roth IRA (assuming you are ineligible due to the AGI limit), you will be notified at some point of this error and forced to take that money out, which can have additional tax consequences and penalties.

Really inefficient if you ask me. So, now I probably need to re-contact my brokerage and inform them of their error, and start the process of creating and funding the Traditional just so I can pump money into my Roth. Ugh.

Murder and the Penal Code

So, the recent shooting at the Democratic HQ in Arkansas got me thinking again about a topic I discussed with others in the past. There were some that shared my view, but I would think that most people do not. It really doesn't have anything directly to do with the killing, but it's a tangent that I'll work from.

I think that our penal system defines two main types of murders, 1st and 2nd degree. I'm not 100% sure, but I believe that 3rd degree murder is more like a manslaughter charge. In any case, 1st degree murders, which are the pre-meditated kind generally carry a stiffer punishment than 2nd degree murders, which often are 'crimes of passion' -- spur of the moment types of killings due to a burst of rage or what not.

Anyway, what I have a problem with our penal system is that those murders that are of the passion category seem a whole lot scarier than those that are pre-meditated. And, I don't mean to include random pre-meditated murder, as would be the case for serial killers and their ilk.

Ask yourselves the following... Would you feel safer with the guy that has had a violent outburst in the past that resulted in someone's death, or the calm collected guy that murders his business partner, because he felt that he was being cheated. Do you prefer to put back on the street a guy that drank a bit too much and got in a bar fight resulting in someone getting killed or the guy that carefully planned the killing of someone he hated or has caused him pain?

I just think that anyone who has shown the propensity to lash out in violence all of a sudden is a lot more dangerous to our society than someone who has carefully planned and carried out a murderous plot. Now, I'm not necessarily saying that the 1st degree murder types should be granted leniency, but I am definitely saying that the 2nd degree guys don't need a break whatsoever.

I understand that it's always going to be a case-by-case thing, but when speaking of generalities, I stand by my view that the passion murder types are a hell of a lot worse for our society than their more cold-blooded counterparts.

Anyway, that's just my semi-rant I guess. Just wanted to get it all out while it was still bugging me and on my mind. Also wanted to say that I really didn't have any specific purpose in mind when I wrote this up just now. It's just a post sharing my view.

Market Dump and Black Friday

Here's today's pop quiz.

Q: When can I be pleased watching the Long-Term Portfolio lose nearly 1%?

A: When the major averages are down quite a bit more.

So, we took a beating today... a continuation of last week's sell-off. We see the Nasdaq fall 2.2%, and both the S&P and Dow down about 1.3%. The dollar is weakening, oil prices are being pushed higher after an attack of an oil facility, and Black Friday sales didn't bring all that much cheer.

What saved the port somewhat today is the Amazon.com (AMZN) short position and also the favorable Supreme Court ruling in the Price case (better known as the 'lights' case) for Altria (MO). While the ruling didn't push MO up today, it definitely played a role in keeping it at an even keel on a strong down day.

Enough of the market talk... so, I went to Circuit City at 5am on Black Friday. I wasn't there for any of the big ticket items, so there wasn't any need for me to stand out in the cold. I picked up a few XBox360 games for $18, some DVDs for $3-4, and also a couple of DVD Box Sets for $13.

I got Season One sets for House and Monk. Both are great shows that I only get to catch once in a while. Anyway, QB and I spent a ton of hours this weekend watching House. I think we have another 8 episodes to finish off the season. If you've never seen it, check it out.

Poker and Stocks

Been incredibly busy all day... no time to post anything.

Anyway, the quick news on the Long-Term Portfolio today is that Altria Group (MO) benefitted from the issuance of a formal stay on the Schwab (Light Cigarettes) class-action suit. Also, Form Factor (FORM) will not be called away as it fell enough today to close below the $40 strike price. I will probably sell another round of the $40 calls for December, but I'm not 100% on that yet. In the Trading Portfolio, Broadcom (BRCM) will get called away, and so I should have a large infusion of cash that will need a home come Monday.

Well, last night I gave the $5-200 spread-limit game another try. It was a bit of a roller coaster, but it worked out well. I'll talk about a few of the bigger hands that took place.

Early on I lost my initial $200 buy-in with 99 vs TT. By the turn, the board was Q high with 3 undercards to my pair. I read him correctly as not having the queen and made a largish all-in bet on the turn. This was probably a real amateur mistake... I'm really still learning this game, and I am definitely feeling my way around right now. He thinks for a bit, and he really looks ready to muck. But, at the last minute, he says, "OK, let's just do it." He makes the call, and I'm drawing to two outs, which I miss. I rebuy and tell myself that I will try not to do stupid things like that going forward.

Then, after a few hours of what I felt was pretty solid play on my part, I slowly worked up to a profit of a few hundred dollars. Things were looking good, and I was feeling quite a bit better about my play. Anyway, after stagnating for a couple more hours, I get totally outplayed on a hand.

So, I've got AK on the button, and I smooth-call a $25 raise pre-flop. Anyway a few of us see the flop come Ad Kd X. The raiser bets out $50, I make it $150 and after he makes the call, it is heads-up. The turn brings another diamond, and he checks. I go ahead and bet another $100, and again he calls. The river brings a low diamond, and I'm defintely not liking it. He bets $200 straight, and I think about it a bit, and I can't justify a call. Anyway, after I muck, he shows his AK for the same hand. Played like a fiddle.

So, that knocked me back down into slightly negative territory. I get KdQx in late position, and we see a flop 6-handed for $15 apiece. The flop comes J T 9, all diamonds. Some kid bets out $50, another guy calls the $50. I go ahead and raise it enough to get both of them all in (each of them had roughly the inital max buy-in of $200). They both call, and I'm up against JTo and 8d9x. I'm in pretty good shape, and the turn and river were bricks, and I scoop up the pot.

After building up a bit more with routine play, I hit a biggie with QQ. I flop QJT and get two others to go all-in with me after a series of raises. The turn is an Ace, and my heart sinks. I'm pretty sure I'm dead. Anyway, the river doesn't pair the board, and to my amazement, I'm up against JTs and some other hand I never got to see (but, a hand that I beat). That was a big pot and from there after a little more build-up, I leave a solid winner. Yay, for being a luckbox.

Certified Pain

This one headline says it all, and all of us holding shares in big tobacco companies are sharing in the pain...

Federal judge certifies tobacco suit as class action

Altria Group (MO) is down over 3% at the moment. It's tough for the portfolio to have a nice showing when the largest holding gets the smackdown.

*** Edit #1 ***

Altria is now hosting a conference call on the decision to certify the class action. I haven't got the time to listen right now, but what is being said must not be too good. Shares of MO have fallen even more after the start of the call. MO is now down over 7% on the day.

MO has announced that it will appeal this decision, and it will likely get overturned. But, perhaps a delay of the intended break-up of the company is now imminent.

Luckily, the rest of the market is up nicely.

A Victory For Big Tobacco

One headline says it all...

08/17/2006 4:39pm

Tobacco Avoids Major Financial Payments In DOJ Suit -- Dow Jones Newswires

Cha-Ching!