The iEconomy: As Boom Lures App Creators, Tough Part Is Making a Living


Daniel Rosenbaum for The New York Times


Shawn and Stephanie Grimes’s efforts have cost $200,000 in lost income and savings, but their apps have earned less than $5,000 this year.







ROSEDALE, Md. — Shawn and Stephanie Grimes spent much of the last two years pursuing their dream of doing research and development for Apple, the world’s most successful corporation.




But they did not actually have jobs at Apple. It was freelance work that came with nothing in the way of a regular income, health insurance or retirement plan. Instead, the Grimeses tried to prepare by willingly, even eagerly, throwing overboard just about everything they could.


They sold one of their cars, gave some possessions to relatives and sold others in a yard sale, rented out their six-bedroom house and stayed with family for a while. They even cashed in Mr. Grimes’s 401(k).


“We didn’t lose any sleep over it,” said Mr. Grimes, 32. “I’ll retire when I die.”


The couple’s chosen field is so new it did not even exist a few years ago: writing software applications for mobile devices like the iPhone or iPad. Even as unemployment remained stubbornly high and the economy struggled to emerge from the recession’s shadow, the ranks of computer software engineers, including app writers, increased nearly 8 percent in 2010 to more than a million, according to the latest available government data for that category. These software engineers now outnumber farmers and have almost caught up with lawyers.


Much as the Web set off the dot-com boom 15 years ago, apps have inspired a new class of entrepreneurs. These innovators have turned cellphones and tablets into tools for discovering, organizing and controlling the world, spawning a multibillion-dollar industry virtually overnight. The iPhone and iPad have about 700,000 apps, from Instagram to Angry Birds.


Yet with the American economy yielding few good opportunities in recent years, there is debate about how real, and lasting, the rise in app employment might be.


Despite the rumors of hordes of hip programmers starting million-dollar businesses from their kitchen tables, only a small minority of developers actually make a living by creating their own apps, according to surveys and experts. The Grimeses began their venture with high hopes, but their apps, most of them for toddlers, did not come quickly enough or sell fast enough.


And programming is not a skill that just anyone can learn. While people already employed in tech jobs have added app writing to their résumés, the profession offers few options to most unemployed, underemployed and discouraged workers.


One success story is Ethan Nicholas, who earned more than $1 million in 2009 after writing a game for the iPhone. But he says the app writing world has experienced tectonic shifts since then.


“Can someone drop everything and start writing apps? Sure,” said Mr. Nicholas, 34, who quit his job to write apps after iShoot, an artillery game, became a sensation. “Can they start writing good apps? Not often, no. I got lucky with iShoot, because back then a decent app could still be successful. But competition is fierce nowadays, and decent isn’t good enough.”


The boom in apps comes as economists are debating the changing nature of work, which technology is reshaping at an accelerating speed. The upheaval, in some ways echoing the mechanization of agriculture a century ago, began its latest turbulent phase with the migration of tech manufacturing to places like China. Now service and even white-collar jobs, like file clerks and data entry specialists or office support staff and mechanical drafters, are disappearing.


“Technology is always destroying jobs and always creating jobs, but in recent years the destruction has been happening faster than the creation,” said Erik Brynjolfsson, an economist and director of the M.I.T. Center for Digital Business.


Still, the digital transition is creating enormous wealth and opportunity. Four of the most valuable American companies — Apple, Google, Microsoft and I.B.M. — are rooted in technology. And it was Apple, more than any other company, that set off the app revolution with the iPhone and iPad. Since Apple unleashed the world’s freelance coders to build applications four years ago, it has paid them more than $6.5 billion in royalties.


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Israel Steps Up Aerial Strikes in Gaza





GAZA — Israel expanded its four-day assault on Gaza on Saturday, broadening its airstrikes from military targets to the civilian political infrastructure, leveling the headquarters here of the Hamas prime minister and striking police and security buildings.




Hamas continued to fire rockets at Israel, including a pair intended for the city of Tel Aviv. One landed harmlessly, probably at sea; the other was thwarted in midair by Israel.


In Cairo, the leaders of Hamas, Turkey and Qatar gathered to try to broker a truce. Hamas officials were in indirect contact with Israel through Egyptian intelligence intermediaries, an official of Egypt’s Muslim Brotherhood said.


The talks were reported to be deadlocked on Saturday evening, while continued attacks in Gaza and Israel, and Israeli preparations for a possible ground invasion, suggested that neither side was ready to end the fight.


The air raid that struck the office of the Hamas prime minister, Ismael Haniyeh, came about 4 a.m., reducing the four-story building where weekly cabinet meetings were held to a huge pile of rubble.


Three Palestinian flags that used to hang over the entryway were draped across the dusty mess, with datebooks and personnel records scattered about. Mr. Haniyeh’s gray-bearded face beamed from a page  of a Hamas booklet promoting “the government’s achievements despite the obstacles.”


A security official, who asked to be identified only as Abu el Abed, took one of the fallen flags and replanted it upright. “We will rebuild this place as we have rebuilt others,” he said. “Every structure that is demolished or destroyed is a big loss, but the blood of anybody wounded is more important than any structure. This place will be rebuilt and the occupation will go and we will stay.”


Mark Regev, a spokesman for Prime Minister Benjamin Netanyahu of Israel, said government buildings had been targeted because Hamas “makes no distinction between its terrorist military machine and the government structure.”


“We have seen Hamas consistently using so-called civilian facilities for the purposes of hiding their terrorist military machine, including weapons,” Mr. Regev said.


The Israeli military said that it had struck more than 200 targets overnight, including underground rocket launchers and smuggling tunnels in Rafah, on the Gaza-Egypt border. The military also said that it struck the police and homeland security headquarters of Hamas, as well as the house of a Hamas commander, Ahmed Randor.


Hamas’s military wing, the Qassam Brigades, claimed responsibility for firing an Iranian-made rocket at Tel Aviv.


Israel appeared to be keeping up the pressure on military targets as well.


Hamas said seven of its members were killed Saturday morning in two separate attacks — four in Rafah, and three in the Al Maghazi refugee camp, in the middle of the Gaza Strip. The deadliest airstrikes today were reported in the southern town of Rafah, which borders Egypt, where six people, including four Hamas fighters, were killed in separate raids.


Israeli F16 airplanes hit a house for a commander of the Qassam Brigades in southeast Gaza City, but the house was empty at the time, Hamas officials said. The Israeli military also released video of what it said was an attack Saturday on the house of the Hamas northern brigade commander, Ahmed Randor, and said that it showed the secondary explosions that took place because of ammunition stored under the commander’s house.


The Palestinian Health Ministry in Gaza said that 40 Palestinians had been killed in the fighting so far, and more than 385 people wounded. Three Israelis have been killed.


This latest battle between Israel and Hamas, the Islamist militant group that controls Gaza, began Wednesday, when Israel launched airstrikes on Gaza in retaliation for a surge of rocket attacks in recent months from Gaza. The assault has drawn comparisons to Israel’s invasion of Gaza in late 2008, but so far Israeli ground forces have not entered Gaza.


Last week, Israel shifted infantry brigades, authorized the calling up of 75,000 reservists and blocked roads near Gaza, indicating an invasion of the coastal territory was possible.


The region’s political landscape has also shifted since the war four years ago, with Hamas gaining crucial allies in Egypt, Turkey and Qatar, as well as longer-range, apparently Iranian-made, missiles.


Israel’s Iron Dome missile defense system appears to have successfully intercepted many of the rockets from Gaza. After an attack on Tel Aviv last week, Israel deployed an Iron Dome anti-missile battery near the city, which became operational on Saturday.


The missiles intercepted one of the Hamas rockets on Saturday evening in the sky above the city, Israeli authorities and witnesses said.


In Cairo, a senior official of the Muslim Brotherhood confirmed that President Morsi was working furiously to secure a cease-fire but insisted that the Israeli side of the talks remained the “sticking point.” The official did not identify a specific issue.


While the regional leaders met in various combinations around Cairo, foreign ministers of members of the Arab League met in an emergency closed door meeting to discuss responses to the situation, Egypt’s Foreign Ministry said.


President Obama, who has asked President Mohamed Morsi of Egypt to try to mediate the crisis, called Prime Minister Recep Tayyip Erdogan of Turkey on Friday to press for a solution, the White House said. Mr. Erdogan was among the regional leaders meeting in Cairo.


The Muslim Brotherhood, Egypt’s powerful Islamist group, called for Mr. Morsi to expel Israel’s ambassador and freeze relations with Israel. Mr. Morsi, a former Brotherhood leader, had already recalled Egypt’s ambassador to Israel.


In Gaza City, Ghazi Hamad, the deputy foreign minister of Hamas, said Israel’s shift in strategy, attacking Hamas government buildings, would not significantly change the dynamic of the current fighting.


“Israel has the capacity to destroy all buildings in Gaza, all homes,” he said. “They destroyed our government buildings before many times, but we rebuild again. It’s a long struggle, a long story. It will not stop today or tomorrow.”


Jodi Rudoren reported from Gaza, and Isabel Kershner from Jerusalem. Reporting was contributed by Fares Akram and Tyler Hicks from Gaza City, and Mayy El Sheikh and David D. Kirkpatrick from Cairo.



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Lady Gaga tweets some racy images before concert

BUENOS AIRES, Argentina (AP) — Lady Gaga's tweets were getting a lot of attention ahead of her Buenos Aires concert Friday night.

The Grammy-winning entertainer has more than 30 million followers on Twitter and that's where she shared a link this week to a short video showing her doing a striptease and fooling around in a bathtub with two other women.

She told her followers that it's a "surprise for you, almost ready for you to TASTE."

Then, in between concerts in Brazil and Argentina, she posted a picture Thursday on her Twitter page showing her wallowing in her underwear and impossibly high heels on top of the remains of what appears to be a strawberry shortcake.

"The real CAKE isn't HAVING what you want, it's DOING what you want," she tweeted.

Lady Gaga wore decidedly unglamorous baggy jeans and a blouse outside her Buenos Aires hotel Thursday as three burly bodyguards kept her fans at bay. Another pre-concert media event where she was supposed to be given "guest of honor" status by the city government Friday afternoon was cancelled.

After Argentina, she is scheduled to perform in Santiago, Chile; Lima, Peru; and Asuncion, Paraguay, before taking her "Born This Way Ball" tour to Africa, Europe and North America.

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Well: Meatless Main Dishes for a Holiday Table

Most vegetarian diners are happy to fill their plates with delicious sides and salads, but if you want to make them feel special, consider one of these main course vegetarian dishes from Martha Rose Shulman. All of them are inspired by Greek cooking, which has a rich tradition of vegetarian meals.

I know that Greek food is not exactly what comes to mind when you hear the word “Thanksgiving,” yet why not consider this cuisine if you’re searching for a meatless main dish that will please a crowd? It’s certainly a better idea, in my mind, than Tofurky and all of the other overprocessed attempts at making a vegan turkey. If you want to serve something that will be somewhat reminiscent of a turkey, make the stuffed acorn squashes in this week’s selection, and once they’re out of the oven, stick some feathers in the “rump,” as I did for the first vegetarian Thanksgiving I ever cooked: I stuffed and baked a huge crookneck squash, then decorated it with turkey feathers. The filling wasn’t nearly as good as the one you’ll get this week, but the creation was fun.

Here are five new vegetarian recipes for your Thanksgiving table — or any time.

Giant Beans With Spinach, Tomatoes and Feta: This delicious, dill-infused dish is inspired by a northern Greek recipe from Diane Kochilas’s wonderful new cookbook, “The Country Cooking of Greece.”


Northern Greek Mushroom and Onion Pie: Meaty portobello mushrooms make this a very substantial dish.


Roasted Eggplant and Chickpeas With Cinnamon-Tinged Tomato Sauce and Feta: This fragrant and comforting dish can easily be modified for vegans.


Coiled Greek Winter Squash Pie: The extra time this beautiful vegetable pie takes to assemble is worth it for a holiday dinner.


Baked Acorn Squash Stuffed With Wild Rice and Kale Risotto: Serve one squash to each person at your Thanksgiving meal: They’ll be like miniature vegetarian (or vegan) turkeys.


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Drug Shortages Are Becoming Persistent in U.S.


Paul Davis, the chief of a rural ambulance squad in southern Ohio, was down to his last vial of morphine earlier this fall when a woman with a broken leg needed a ride to the hospital.


The trip was 30 minutes, and the patient was in pain. But because of a nationwide shortage, his morphine supply had dwindled from four doses to just one, presenting Mr. Davis with a stark quandary. Should he treat the woman, who was clearly suffering? Or should he save it for a patient who might need it more?


In the end, he opted not to give her the morphine, a decision that haunts him still. “I just feel like I’m not doing my job,” said Mr. Davis, who is chief of the rescue squad in Vernon, Ohio. He has since refilled his supply. “I shouldn’t have to make those kinds of decisions.”


From rural ambulance squads to prestigious hospitals, health care workers are struggling to keep vital medicines in stock because of a drug shortage crisis that is proving to be stubbornly difficult to fix. Rationing is just one example of the extraordinary lengths being taken to address the shortage, which health care workers say has ceased to be a temporary emergency and is now a fact of life. In desperation, they are resorting to treating patients with less effective alternative medicines and using expired drugs. The Cleveland Clinic has hired a pharmacist whose only job is to track down hard-to-find drugs.


Caused largely by an array of manufacturing problems, the shortage has prompted Congressional hearings, a presidential order and pledges by generic drug makers to communicate better with federal regulators.


The problem peaked in 2011, when a record 251 drugs were declared in short supply. This year, slightly more than 100 were placed on the list, and workers say the battle to keep pharmacy shelves stocked continues unabated. The list of hard-to-find medicines ranges from basic drugs like the heart medicine nitroglycerin to a lidocaine injection, which is used to numb tissue before surgery.


A deadly meningitis outbreak caused by contamination at a large drug producer could worsen the situation, federal officials have warned. The Food and Drug Administration said that shortages of six drugs — medicines used during surgery and to treat conditions like congestive heart failure — could get worse after a big compounding pharmacy closed over concerns about drug safety. The pharmacy, Ameridose, shares some management with the New England Compounding Center, which is at the center of a meningitis outbreak that has claimed 33 lives.


“When you can’t treat basic things — cardiac arrest, pain management, seizures — you’re in trouble,” said Dr. Carol Cunningham, the state medical director for the Ohio Department of Public Safety’s emergency services division. “When you only have five tools in your toolbox and three of them are gone, what do you do?”


Dr. Margaret A. Hamburg, the F.D.A. commissioner, said in an interview this week that she was “guardedly optimistic” that the shortage crisis was abating. “I think there’s been an enormous amount of progress,” she said. “We’re seeing real change in the number of shortages that we’re able to recognize early.” More than 150 new shortages have been prevented this year, according to the agency.


But Erin Fox, who tracks supply levels for a broader range of drugs at the University of Utah, said once a drug became scarce, it tended to stay scarce. The university’s Drug Information Service was actively tracking 282 hard-to-find products by the end of the third quarter of this year, a record.


“The shortages we have aren’t going away — they’re not resolving,” she said. “But the good news is we’re not piling more shortages on top.”


In 2011, prompted by emotional pleas by cancer patients and others who said the drug shortage was threatening lives, President Obama issued an executive order requiring drug makers to notify the F.D.A. when a shortage appeared imminent. The agency also loosened some restrictions on importing drugs, and sped up approvals by other manufacturers to make certain medicines.


A law passed this summer contains several provisions aimed at improving the situation, including expediting approval of new generic medicines and requiring the agency’s enforcement unit to better coordinate with its drug-shortage officials before it takes action against a manufacturer.


Ralph G. Neas, the chief executive of the Generic Pharmaceutical Association, said fixing the drug shortage was complex and would take time, but was a top priority. “One shortage is one shortage too many,” he said. “One patient not getting a critical drug is one patient too many.”


Federal drug officials trace much of the drug shortage crisis to delays at plants that make sterile injectable drugs, which account for about 80 percent of the scarce medicines. Nearly a third of the industry’s manufacturing capacity is not running because of plant closings or shutdowns to fix serious quality issues. Other shortages have been caused by supply disruptions of the raw ingredients used to make the drugs, or by manufacturers exiting the market.


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Petraeus Says C.I.A. Saw Libya Attack as Terrorism


WASHINGTON (AP) — Ex-CIA Director David Petraeus told lawmakers Friday that classified intelligence showed the deadly raid on the U.S. Consulate in Libya was a terrorist attack, but that the administration withheld the suspected role of specific al-Qaida affiliates.


The recently resigned spy chief explained that references to terrorist groups suspected of carrying out the violence were removed from the public explanation of what caused the attack so as not to tip off the groups that the U.S. intelligence community was on their trail.


Petraeus also said it initially was unclear whether militants infiltrated a demonstration to cover their attack.


The retired four-star general addressed the House and Senate intelligence committees in back-to-back, closed-door hearings as questions persist over what the Obama administration knew in the immediate aftermath of the Sept. 11 attacks and why their public description did not match intelligence agencies' assessments.


After the hearings, lawmakers said Petraeus testified that the CIA's draft talking points written in response to the assault on the diplomat post in Benghazi that killed four Americans referred to it as a terrorist attack. But Petraeus told the lawmakers that reference was removed from the final version, although he wasn't sure which federal agency deleted it.


Democrats said Petraeus made it clear the change was not made for political reasons during President Barack Obama's re-election campaign.


"The general was adamant there was no politicization of the process, no White House interference or political agenda," said Rep. Adam Schiff, D-Calif. "He completely debunked that idea."


But Republicans remain critical of the administration's handling of the case. Sen. Marco Rubio, R-Fla., said Petraeus' testimony showed that "clearly the security measures were inadequate despite an overwhelming and growing amount of information that showed the area in Benghazi was dangerous, particularly on the night of Sept. 11."


Petraeus told lawmakers that security at the consulate was so lax that protesters literally walked in and set fire to the facility, according to a congressional official who attended the briefing, leading to Ambassador Chris Stevens' death from smoke inhalation. Petraeus said security at the CIA annex was much better, but the attackers had armaments to get in.


Petraeus, who had a long and distinguished military career, was making his first Capitol Hill testimony since resigning last week in disgrace over an extramarital affair with his biographer Paula Broadwell. Lawmakers said he did not discuss that scandal except to express regret about the circumstances of his departure and say that Benghazi had nothing to do with his decision to resign.


Petraeus testified that the CIA draft written in response to the raid referred to militant groups Ansar al-Shariah and al-Qaida in the Islamic Maghreb but those names were replaced with the word "extremist" in the final draft, according to a congressional staffer. The staffer said Petraeus testified that he allowed other agencies to alter the talking points as they saw fit without asking for final review, to get them out quickly.


The congressional officials weren't authorized to discuss the hearing publicly and described Petraeus' testimony to The Associated Press on condition of anonymity.


Sen. Mark Udall, D-Colo., said Petraeus explained that the CIA's draft points were sent to other intelligence agencies and to some federal agencies for review. Udall said Petraeus told them the final document was put in front of all the senior agency leaders, including Petraeus, and everyone signed off on it.


"The assessment that was publicly shared in unclassified talking points went through a process of editing," Udall said. "The extremist description was put in because in an unclassified document you want to be careful who you identify as being involved."


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Judge grants Miley Cyrus civil restraining order

LOS ANGELES (AP) — A judge has granted Miley Cyrus a three-year civil restraining order against a man convicted of trespassing at her home in Los Angeles.

The stay-away order was granted Friday against Jason Luis Rivera by Superior Court Judge William D. Stewart.

The 40-year-old Rivera was convicted in October of trespassing at the singer's home and sentenced to 18 months in jail.

He is scheduled to be released in May. Authorities said at the time of Rivera's arrest in September that he was carrying scissors and ran into the wall of Cyrus' home as if trying to break in.

Rivera did not respond to Cyrus' petition.

The 20-year-old former star of "Hannah Montana" did not attend the hearing. Her attorney Bryan Sullivan declined comment.

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Change Rattles Leading Health-Funding Agency





Major changes erupted at one of the world’s leading health-funding agencies Thursday as it hired a new director, dismissed the inspector general who had clashed with a previous director and announced a new approach to making grants.







Alex Wong/Getty Images

Dr. Mark Dybul, who led the President's Emergency Plan for AIDS Relief, in 2007.








Dr. Mark Dybul, the Bush administration’s global AIDS czar who was abruptly dismissed when President Obama took office, was named the new executive director of the Global Fund to Fight AIDS, Tuberculosis and Malaria.


Dr. Dybul, who was selected over candidates from Canada, Britain and France, was backed by the United States, which donates about a third of the fund’s budget, and by Bill Gates, who helped the fund through a cash crisis earlier this year.


He is respected by many AIDS activists in the United States, though there is some lingering controversy about his time in the Bush administration related to abstinence policies and anti-prostitution pledges imposed by conservative lawmakers as well as concerning strict licensing requirements for generic drugs.


The fund, which is based in Geneva and has given away more than $20 billion since its founding in 2002, has been in crisis for more than a year. Some donors shied away after widely publicized corruption scandals, while others, notably Mr. Gates, said the scandals were exaggerated and increased donations.


Its last executive director, Dr. Michel Kazatchkine, quit in January after the day-to-day management duties of his job were given to a Brazilian banker, Gabriel Jaramillo, who was charged with cutting expenses.


By some accounts, 40 percent of the employees soon left, although Seth Faison, a fund spokesman, said the total number of employees declined by only 8 percent. The fund also dismissed its inspector general, John Parsons, on Thursday, citing unsatisfactory work.


Mr. Parsons and Dr. Kazatchkine had privately clashed. Mr. Parsons’s teams aggressively pursued theft and fraud, and found it in Mali, Mauritania and elsewhere. But the total amount stolen — $10 million to $20 million — was relatively small, and aides to Dr. Kazatchkine said the fund cut off those countries and sought to retrieve the money. The aides claimed that Mr. Parsons, who reported only to the board, went to news outlets and left the impression that the fund was covering up rampant theft.


The fuss scared off some donor countries that were already looking for excuses to cut back on foreign aid because of the global economic crisis.


Mr. Parsons did not return messages left for him Thursday.


Dr. Dybul’s appointment was welcomed by the United Nations AIDS program, the Bill and Melinda Gates Foundation, the Elizabeth Glaser Pediatric AIDS Foundation, Malaria No More and Results.org, an anti-poverty lobbying group. By contrast, Jamie Love, an American advocate for cheaper AIDS drugs who works in Washington and Geneva, said he expected Dr. Dybul “to protect drug companies.”


The fund also announced a new application process, which it said would be faster and focus more on the hardest-hit countries rather than all 150 that received some help in the past.


In an interview, Dr. Dybul said he felt the fund was “on a strong forward trajectory” after changes were put in place in the last year by Mr. Jaramillo, and now would focus on “hard-nosed implementation of value for money.”


Both the President’s Emergency Plan for AIDS Relief and the fund spend billions, but in different ways.


The fund supports projects proposed by national health ministers and then hires local auditors to make sure the money is not wasted or stolen. Pepfar usually gives grants to American nonprofit groups or medical schools and lets them form partnerships with hospitals or charities in the affected countries.


The conventional wisdom is that the Global Fund’s model is more likely to win the cooperation of government officials but more vulnerable to corruption — and also spends less on salaries and travel for American overseers.


Dr. Kazatchkine said he did not expect Dr. Dybul to “Pepfarize” the Global Fund.


“I hope that, after a year of turbulence, the fund finds the serenity needed to move forward again,” he said.


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Wealth Matters: Advisers Caution Against Hasty Decisions in Advance of Tax Changes





WITH all the ominous talk of tax increases and a “fiscal cliff” if President Obama and Congressional leaders can’t agree on a plan to avert automatic tax increases on Dec. 31, some investors may be tempted to act soon to take advantage of the current tax rates.




But financial advisers say that in their rush to doing something this year, investors may end up with regrets.


“Any time you make a decision purely for tax reasons, it has a way of coming back and biting you,” said Mag Black-Scott, chief executive of Beverly Hills Wealth Management. “Could you be at a 43 percent tax on dividends instead of 15 percent? The straight answer is yes, of course you could. But what if that doesn’t happen? What if they increase just slightly?”


Various proposals are on the table, but the taxes the wealthy say they worry most about are an increase in the capital gains rate to 20 percent from 15 percent, which would affect investments like stocks and second homes; an increase in the 15 percent tax on dividends; and a limitation on deductions, which would effectively increase the tax bill. For the truly wealthy, there is also the question of what will happen to estate and gift taxes.


In addition, the health care law sets a 3.8 percent Medicare tax on investment income for individuals with more than $200,000 in annual income (and couples with more than $250,000). Taking taxes on capital gains as an example, Ms. Black-Scott, who started her career at Morgan Stanley in the late 1970s, said people needed to remember that the rates were 28 percent when Ronald Reagan was president. “If they go from 15 to 20 percent, is it really that bad?” she asked. “You need to say, ‘Do I like the stock?’ If you do, why would you get rid of it?”


Here is a look at some of the top areas where short-term decisions based solely on taxes could end up hindering long-term investment goals.


APPRECIATED STOCK Many people have large holdings in a single stock, often the result of working for a company for many years. And the stock may have appreciated significantly over that time. But if they are selling now solely for tax reasons, advisers say they shouldn’t. The stock may continue to do well and more than compensate for increased capital gains.


But there is an upside to an increase in the capital gains rate: wealthier clients may finally be pushed to diversify their holdings. “If you have 75 percent of your wealth in one stock, then it’s a really appropriate time to think about this,” said Timothy R. Lee, managing director of Monument Wealth Management. If the increased tax rate “is a motivating factor for some people, O.K. Letting go of that control and the pride that goes with it is a really difficult decision.”


Selling stock now may also make sense when it is in the form of stock options set to expire early next year. “Do you want to take the risk the price will drop in January?” asked Melissa Labant, director of the tax team at the American Institute of Certified Public Accountants. “What if we have a fiscal cliff or a change in the markets? If you’re comfortable, do it now.”


Some investors may also fear that higher taxes will drive all stocks down. Patrick S. Boyle, investment strategist at Bessemer Trust, said there was no historical link between tax increases and stock market performance.


In the most recent three tax increases, he says, “the market has actually gone up in the six months before and after.” He added: “It’s not that tax rates aren’t important. They are. It’s just that there are so many other things going on that are more important than tax policy.”


MUNICIPAL BONDS Bonds sold to finance state and local government projects are tax-free now and will be tax-free next year. That is no reason to load up on them.


Tax-free municipal bonds have always been attractive to people in higher-income tax brackets. Now, advisers fear that individuals just above the $200,000 threshold, people who say they do not feel wealthy but will probably be paying higher taxes on their income and investments, will try to offset that increase by moving more of their investments into municipal bonds.


Beth Gamel, a certified public accountant and executive vice president at Pillar Financial Advisers, imagined a case where people in higher tax brackets, thinking they were acting rationally, sold stocks this year to take advantage of the lower capital gains rates and then, to avoid higher taxes next year, put all or some of that money into municipal bonds. Maybe they outsmart the tax man, but they do so at risk to their retirement.


“It will be very difficult for them to reach their long-term goals,” she said, “because the yield on muni bonds is lower than stocks over time.”


Or as Will Braman, chief investment officer of Ballentine Partners, said of this trade-off: “It’s not about minimizing the taxes but maximizing the after-tax returns.”


He suggested that people use their deductions to reduce what is owed from taxable securities.


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Stars honor Veloso as Latin Grammys person of year

LAS VEGAS (AP) — Juanes, Juan Luis Guerra, Nelly Furtado and Natalie Cole are among the artists who celebrated Brazilian musician Caetano Veloso at a ceremony honoring him as the Latin Recording Academy's Person of the Year.

Veloso's influence as a composer and activist also was the subject of a video featuring Sting and Spanish filmmaker Pedro Almodovar that was shown at the tribute Wednesday at the MGM Garden Arena in Las Vegas.

Veloso said in the video that he never decided to become a musician, but fate and the circumstances of life in Brazil moved him in that direction.

Considered among the most influential Brazilian artists of modern times, the 70-year-old entertainer has recorded more than 40 albums, and won eight Latin Grammys and two Grammy Awards. With his eponymous 1968 album, Veloso launched a new style of music, tropicalia, that saw his Brazilian musical roots mixed with other contemporary styles, including blues, psychedelic rock and the sounds of the Beatles.

The movement comprised a new generation of artists, including Gilberto Gil, Gal Costa and Maria Bethania, who openly expressed political opinion in their music.

In accepting the honor, Veloso said, "It's too much."

The Latin Grammy Awards are scheduled to be presented Thursday at the Mandalay Bay Events Center in Las Vegas. The show will be broadcast live on Univision.

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Online:

www.latingrammy.com

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