Nobody wants to pay capital gains tax. It reduces your total return and takes away investing capital that could otherwise grow and multiply over the years. But especially with capital gains tax, you have to be careful not to let your tax considerations dominate your decision-making process with your investment portfolio. Otherwise, you could easily find that your efforts to avoid capital gains tax are successful only because the capital gains themselves disappear. Let's take a look at a couple of instances in which capital gains tax considerations can lead you to make huge mistakes with your portfolio.

Source: Phillip Ingham, Flickr.

Scenario 1: Trying to make it to the one-year mark
One aspect of capital gains tax avoidance involves holding on to your stocks or other investments long enough to qualify for beneficial long-term capital gains tax treatment. If you hold a stock for a year or less, then any gains you realize when you sell will get taxed at your ordinary income tax. Under current law, that means losing as much as 39.6% of your gains to tax, along with an additional 3.8% in net investment income surtaxes that further increase your overall tax burden. But if you extend your holding period to at least a year plus a day, then the long-term capital gains tax rate that applies is much more beneficial. Low-bracket taxpayers actually pay 0% in capital gains tax, while those in middle brackets pay a maximum of 15% and top-bracket taxpayers get a 20% rate.

Obviously, with the opportunity to cut your capital gains tax by half or more, the temptation to hang on to a winning stock longer is greater. But there's no guarantee that the stock price will cooperate with that strategy.

For instance, over the past couple of months, investors have seen an exodus away from former high-flying momentum stocks. Many companies that had seen huge share-price advances over the past year have suddenly reversed course and fallen dramatically. If you had bought those stocks almost a year ago and were waiting to get better capital gains tax rates, you would have seen a lot of your paper gains go up in smoke.

Scenario 2: Holding on to fading businesses all the way down
The one-year rule for long-term capital gains tax is important for shorter-term traders. But even if your ideal holding period is forever, the capital gains tax trap can strike and lead you to make bad decisions about stocks whose best days are long behind them.

Two very common examples in many older investors' portfolios are tech stocks Microsoft and Intel . Both of those stocks hit their all-time highs during the tech boom of the late 1990s, and ever since, Microsoft and Intel have struggled to regain their former glory. In the case of Intel, the slow but steady move away from PC-based computing devices toward tablets, smartphones, and other mobile devices over the past decade has threatened Intel's core business, and Intel's efforts to move aggressively into the mobile-device space have been late in coming and haven't had the impact that long-term investors have wanted to see. Microsoft similarly coasted on its dominance in PC operating systems and office software throughout the 2000s, and it allowed competitors to take the lead in adapting to the mobile world. Microsoft has recently rebounded sharply on hopes that it will successfully foster its offerings in high-growth businesses like cloud computing. But neither Microsoft nor Intel have a certain future, and for those who foresaw competitive pressures but held onto their shares to avoid capital gains tax, their holdings of Intel and Microsoft shares have essentially been dead money since 2000.

Paying capital gains tax always seems like a waste of money. But sometimes, it's the best way to preserve your investment gains. If you're too stingy with the tax man, you might end up missing out on those hard-earned gains entirely.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of World Wrestling Entertainment  were crying uncle today after tumbling as much as 48% as investors weren't pleased with a new TV deal and outlook it announced.

So what: The professional wrestling organization said it signed a new deal with NBCUniversal for undisclosed financial terms, but based on analyst estimates, the deal is not worth nearly as much as investors had expected. Benchmark analyst Mike Hickey said revenue would increase just 50% whereas World Wrestling Entertainment had previously said that the value of the contract would double or triple. Investors also seemed worried about the company's outlook for its new WWE network, which it said would require 1.3 million to 1.4 million subscribers to offset the cannibalization of its pay-per-view business. 

Now what: In the outlook, WWE said the subscriber rate "could vary materially based on a variety of factors," and said having 1 million subscribers by the end of this year would lead to a net loss of $45 million to $52 million. While that projection seemed to scare investors away, the company's outlook for 2015 was much more favorable as a subscriber base of 2 million to 2.5 million would drive a net income of $57 million to $105 million. WWE is clearly taking a risk with the move to its own network and Wall Street dislikes uncertainty, but that decision could pay off handsomely in the long run if the network takes off. Given that, today's slide may offer a chance to pick up shares on the cheap before they recover.

Singles, couples, families -- at some point almost everyone turns their financial attention to buying a home. But how much do we really need to save the first time out? How much is enough to handle the typically steep curve of down payments and closing costs?

When it comes to saving for a home, there are some helpful rules of thumb. But then, there are also alternatives for buyers who need a leg up. Let's look at the basics and some workarounds when considering approaches that first-time buyers can take to getting through the front door of their first house.

Buying your new home: Savings and expectations
Most real-estate experts will tell you to have at least 5% of the cost of a house on hand in savings to account for the down payment. But that's only a minimum, and expectations can differ by community.

In a city like New York, for example, minimum down payments are almost always 20%. And even if you're able to secure a mortgage by putting down less than 20% of the selling price, you're almost certainly triggering mandatory mortgage insurance as a consequence. Mortgage insurance, however, doesn't have to be a major stumbling block.

• Mortgage insurance terms: In general, home buyers who pay less than 20% in their down payment have to pay mortgage insurance until their loan-to-value ratio is 80%. So, if you borrowed $270,000 on a $300,000 home -- in other words, your down payment came to 10% -- your LTV ratio (that is, the loan amount, $270,000, divided by the price of the house, $300,000) would be 90%. Your monthly payments on that policy would continue until you paid your mortgage down by another $30,000 to a balance of $240,000, or 80% of the full price.
• Mortgage insurance premiums: The amount of your mortgage insurance premium depends on your credit score and the size of your down payment. In many cases, when it comes to private loans, mortgage insurance runs in the 0.3%-1.15% range. In our previous example, your monthly insurance payment would be some $68-$259.

And so, on a 30-year mortgage, our homebuyer, given an excellent credit profile, would take on approximately $1,762 in monthly payments (at a 5% interest rate, including 78 mortgage insurance payments of about $113 at 0.5%, and blending property tax into the payments at 1.25%). That's based on an initial savings of $30,000, used as a down payment on a $300,000 house.

Note that if our home buyers had saved $60,000 for the down payment, their monthly bill would drop to some $1,600, eliminating the need for mortgage insurance. But in our model, mortgage insurance accounts for just $1,356 annually over 6.5 years in the $60,000-down-payment case -- or $8,800 total. Turns out that's a lot less than saving the additional $30,000 to hit the 20% down-payment mark. And so, if savings are an issue, first-time buyers might take on the insurance in exchange for a lower down payment.

Closing costs: First-time buyers beware
Closing costs typically include fees for commissions, appraisals, and surveying; inspections and certifications; tax and title services, government record changes, and transfer taxes. You'll also pay an origination fee to your mortgage lender, and a charge for specific interest rates.

Other factors can also come into play. In a major city co-op, you may be required to have a year or more of maintenance fees in the bank. And finally, remember that the tail end of every home buyers' experience is the move -- meaning even more bills.

First-time home-buyers are sometimes surprised when they see how closing costs can add up. The average amount is 3% to 6% of the price of the home. Given that range, it's a wise idea to start with 2%-2.5% of the total cost of the house, in savings, to account for closing costs. Thus our $300,000 first-time home buyer should sock away about $6,000-$7,500 to cover the back end of their buying experience. Tallying the recommended savings so far, the amount comes to $36,000-$37,500.

And don't leave out one all-important consideration: the home buyer's buffer.

To your initial savings for a $300,000 home, it's also wise to add enough to ensure that any unexpected twists and turns are accounted for after you move into your new house. A sensible goal is to think of that buffer as a half-year of mortgage payments. That would be $10,572 for the buyers in our initial $300,000-at-10% model -- a total of $46,572-$48,072 in the bank before closing a deal.

Home buyer alternatives for first-timers
If saving for a first home seems a hill too steep, take heart: Assistance programs can help. Starting with plans at the federal level, these can cut the initial savings needed by a dramatic amount.

• FHA loan: Depending on property location and other, personal factors, you could qualify for a home loan from the Federal Housing Administration. In most cases, you'd be expected to make a down payment of approximately 3.5% (with a 1.75% insurance premium, and at a 4.25% interest rate). A down payment on our $300,000 model: $10,500. Together with closing costs and a buffer, savings required would be $26,916-$28,416. Notice, however, that you're paying a great deal more than in the non-FHA model when it come to the higher mortgage-insurance premiums -- some $43,485 over 103 months. Still, the FHA plan may be more manageable for some, as the initial down payment is smaller and insurance payments are spread out.

• VA and USDA loans: Certain veterans, active members of the military, and qualifying residents of designated rural areas can qualify for a 0% down-payment housing loan -- mortgage-insurance free as well -- from the Veterans Administration or the U.S. Department of Agriculture. In this case, first-time home-buyers could walk into a $300,000 house for just the closing costs, plus the suggested six-month buffer.

What's clear is that home buyers have options, and while the savings required to get a first home can climb to the neighborhood of $50,000, they can also come in around the mid-twenties. There are also assistance plans available from Fannie Mae and Freddie Mac, featuring 3%-5% down payments, and each comes with it own pros and cons. First-time home-buyers should also look into state and local plans. The research you invest in your process ahead of time can greatly affect what you have to save up before turning the key to your new front door.

Millions of Americans use both Social Security and Medicare. But how do the programs affect each other?

In the following video from our Social Security Q&A series, Dan Caplinger, The Motley Fool's director of investment planning, answers a question from Fool reader Larry, who asks whether registering for Medicare is a requirement when you sign up for Social Security because he wants to keep using a Health Savings Account. Dan notes that the link between Medicare and HSAs is strong, because having Medicare coverage doesn't qualify as a high-deductible health plan that's necessary for HSA coverage. But if you're not yet of Medicare age, you should be able to take Social Security and still contribute to an HSA. Moreover, if you don't take Social Security, you can decline Medicare after age 65, but doing so rarely makes financial sense because of the protection that Medicare offers. Dan concludes that it's smart to consider all your Medicare and Social Security options before making final decisions about your finances.

Have general questions about Social Security? Email them to SocialSecurity@fool.com, and they might be the subject of a future video!

Teva Pharmaceuticals recently lost its latest bid to block the FDA from approving generic versions of its blockbuster multiple sclerosis (MS) drug, Copaxone. The drug, which accounted for 21% of Teva's top line and half of its profit in 2013, will lose patent protection in the U.S. on May 24.

Source: Wikimedia Commons.

A U.S. district court dismissed Teva's case, stating that it was premature because the FDA has not yet approved or rejected any applications for generic Copaxone. Teva has filed six petitions at the FDA over the past six years with the same demand -- to not approve any generic versions of Copaxone without requiring a full set of clinical trials.

Mylan , India's Natco Pharma, Momenta Pharmaceuticals, and Novartis' Sandoz unit all plan to launch generic Copaxone when Teva's patent expires. Those four companies are split into two teams -- Mylan is partnered with Natco, and Momenta is partnered with Sandoz.

What does generic Copaxone mean for Teva?
With a week left before Copaxone's patent expires, it's clear that Teva is running out of options. Teva had previously forecast that every additional month that Copaxone maintains market exclusivity would be worth an additional $78 million in sales.

In a previous forecast, Teva stated that net sales in 2014 would come in between $19.8 billion to $20.8 billion if Copaxone maintained market exclusivity, but if sales could fall to $19.3 billion to $20.3 billion if it faces generic competition.The outlook for Teva's bottom line is similar -- it expects full-year operating profits between $5.35 billion to $5.65 billion if Copaxone remains protected, and profits of $4.8 billion to $5.1 billion if generics hit the market.

A $550 million reduction to the bottom line definitely hurts, but it wasn't as bad as some investors had feared. Last November, The Marker published leaked profit forecasts from Teva which claimed that generic Copaxone could cause profits to fall by 42%. Teva dismissed the forecast as "outdated" and "incomplete".

While the recent ruling is good news for generics manufacturers, investors should remember that Copaxone is a very high margin product for Teva. Copaxone currently costs more than $60,000 per patient per year -- a price which has been raised several times in the past and can't be replicated by generic competitors. That high price fueled Copaxone's record global sales of $4.3 billion in 2013.

What does generic Copaxone mean for Mylan and Novartis?
Mylan can expect a smooth launch, since it signed a deal with Natco in 2008 to commercialize its version of generic Copaxone, which was previously only available in India.

Mylan has been increasing its footprint in India in recent years -- it launched a generic version of Roche's blockbuster breast cancer drug Herceptin with Biocon last November, and signed an exclusive deal with Gilead Sciences to distribute its antiviral drugs in January. Those moves were aimed at diversifying Mylan's generics business away from North America, which accounted for more than half of its generics revenue in 2013.

Launching generic Copaxone would also be an interesting move for Novartis, which already sells a leading oral MS drug, Gilenya, through its branded pharmaceuticals business. Last year, sales of Gilenya climbed 62% year-over-year to $1.9 billion.

Gilenya is one of three approved oral MS drugs, along with Biogen Idec's Tecfidera and Sanofi's Aubagio, which -- due to being oral instead of injected -- are easier to use than drugs like Copaxone. UBS expects these oral drugs to cause Copaxone's market share of 37% to decline to 25% by the end of 2014.

Although these drugs are cheaper and more convenient than Copaxone, they are still expensive. Gilenya costs $58,000 per year, Tecfidera costs $54,900, while Aubagio costs $45,000. Therefore, it's a smart move for Novartis to also add generic Copaxone to its Sandoz division, which accounted for 16% of the company's revenue in 2013.

The Foolish takeaway
In conclusion, generics makers like Mylan and Novartis will slightly benefit if they are able to get approval for generic Copaxone, but the drug would just play a smaller part in advancing larger strategies at both companies.

The clear loser here is Teva. Since demand for Copaxone is expected to wane as new oral drugs take the lead, Teva will need to rely more on growing drugs like Azilect (Parkinson's symptoms) and Treanda (leukemia) to soften the blow. Those two drugs posted double-digit sales growth with combined sales of $1.08 billion in 2013 -- not enough to replace Copaxone, but still a good place to start.

As oncology has become the hottest space within pharmaceuticals and biotech, the annual American Society of Clinical Oncology (ASCO) is pretty much now the Super Bowl for companies in this space. Meetings like ASCO certainly do lead to companies releasing important data on pipeline candidates, as well as often hosting meetings/presentation to explain their pipelines and development strategies in more details. It's worth remembering, though, that a lot of what is presented is early stage, includes limited number of patients, and often focuses on metrics like response rate that are ultimately less significant than metrics like overall survival.

All of that said, with the abstracts for the meeting now out, it looks like incrementally good news for Roche and Merck , and encouraging news for AstraZeneca and Lilly . For Bristol-Myers Squibb the reaction is likely to be far less positive from investors, though it is early to make any sweeping pronouncements.

Roche comes through
For Roche the news was pretty positive. The company's PD-L1 drug showed a 50% response rate in bladder cancer. More than 70% of the patients had received two or more prior treatments and the historical ORR rates in those patients is typically less than half of what this study has shown. If these results hold up through pivotal testing, this could be an indication worth $2 billion or more in revenue.

Roche also presented impressive data in a combination study of Rituxan and the Bcl-2 inhibitor known as GDC-0199 and ABT-199. As that latter name might have suggested, this drug was partnered-in from AbbVie and in refractory CLL the combo showed a complete response rate of 39%-an impressive result that compares quite well to the Johnson & Johnson/Pharmacyclics drug Imbruvica. Importantly, the MRD negative rate of 28% suggests a a potential cure of CLL in a meaningful number of patients.

Roche also presented early stage data on its anti-CSF1R drug, which has so far shown a partial response in seven of 10 patients treated for PVNS.

Merck is going to be a player
Merck isn't presently all that much this year in terms of breadth, but the quality of lead drug MK-3475 (an anti PD-1 antibody) appears to be significant. As a first-line treatment for non-small cell lung cancer, the drug produced a 36% overall response rate and a 67% response rate in PD-L1-positive patients. That's on par with Bristol-Myers' nivolumab, suggesting that MK-3475 is a valid and competitive drug at this point.

AstraZeneca scores a few points
AstraZeneca's ASCO abstracts didn't look like home runs, but they did get a few solid hits in this year. The company's PD-L1 monotherapy candidate looks effective in terms of response rates across a variety of tumor types. Potentially even more important is the good early signs regarding tolerability of the combination of the anti-PD-L1 drug and tremilimumab in comparison to combo therapies of nivolumab and Yervoy. AstraZeneca is also presenting data that suggest AZN-9291 offers similar efficacy in second-line lung cancer to Clovis' CO-1686.

Mixed news for Lilly
Lilly's major ASCO abstracts were a little more mixed, but positive on balance relative to expectations. The data on necitumumab in lung cancer wasn't very impressive (a 1.6-month benefit to overall survival), but there was no particular expectation that it would be. On the other hand, the results from CDK 4/6 inhibitor abemaciclib (LY2835219) looked pretty good. In a heavily pre-treated group of NSCLC patients, 51% showed complete/partial response or stable disease.

Disappointment for Bristol-Myers, but only to a point
That investors seem to be so disappointed with Bristol-Myers really speaks more to how expectations have grown for this company's immuno-oncology program than the actual quality of the data. The data on the Yervoy/nivolumab combo were disappointing - a 22% overall response rate and pretty high toxicity (three treatment deaths and 48% grade 3-4 events), but this is early stage data and the response rates may improve. On the other hand, more mature data in a monotherapy study of nivo in lung cancer showed a two-year overall survival rate of 45% at the 3mg/kg dose - an exceptional result for a disease that typically has a 15% 5-year survival rate. It's also well worth noting that the data on the nivo/Yervoy combo in renal cancer were quite good, with response rates above 40%.

The bottom line
This year's Big Pharma ASCO abstracts make at least two things quite clear. First, investors have gone absolutely head-over-heels for immuno-therapy. Second, in many cases the data from these drugs supports a lot of that optimism. It really does look like PD-1/PD-L1 antibodies are going to reset expectations for response and survival rates in many cancer types and fuel the next round of multibillion-dollar drugs for Big Pharma. Competition is going to be fierce, though, putting a premium on clean data (high efficacy and high tolerabilty is the ideal), skillful clinical management, and good marketing efforts.

Housing starts jumped 13.2% for April to a seasonally adjusted annual rate of 1,072,000, according to a Commerce Department report (link opens a PDF) released today. After clocking in at a revised 947,000 for March, this latest report came as a pleasant surprise for analysts, who had expected a smaller 3.5% rise. The gains reported today were driven by a 42.9% jump in the construction of apartments and condominiums. The rate of building single-family homes rose just 0.8%.

Source: Census.gov. Housing starts seasonally adjusted annual rate.

Housing permits also increased, up 8% to a seasonally adjusted annual rate of 1,080,000. As with starts, analyst expectations of a 1,020,000 rate for permits proved overly conservative. Housing completions, on the other hand, finished off the month down 3.9% at an annual rate of 847,000. 

Across the country, gains were far from equal. While starts soared 42.1% in the Midwest and 28.7% in the Northeast, the West increased 11.1% and the South edged up just 1.5%. 

Over the last year, housing starts have increased 26.4%, permits are up 3.8%, and completions have gained 21.2%. 

Today's news comes a day after a report revealed that homebuilder confidence took a dip for May. But with National Association of Home Builders Chief Economist David Crowe saying that "builders are waiting for consumers to feel more secure about their financial situation," this report's coinciding increases for both starts and permits might point to sustainable expansion.

-- Material from The Associated Press was used in this report.

Source: Flickr/Clinton Steeds.

Oil and gas master limited partnerships pay enormous distributions to their investors. Atlas Resource Partners , for example, pays a gigantic 11.6% distribution to its investors. Meanwhile, Memorial Production Partners' units currently yield 9.8% while Legacy Reserves' current payout is 8.6%. What has been interesting to watch this year is the overhaul these companies have undergone in an effort to maintain and grow these already-enormous payouts.

For example, Atlas Resource Partners recently spent $420 million to buy some very low-decline oil properties in Colorado. While that sum represents a pretty big deal for Atlas Resource Partners, however, what was an even bigger deal was a much smaller natural gas acquisition that added substantial reserves. Meanwhile, Memorial Production Partners also spent a lot of money as it made three deals, including one where it forked over $935 million to pick up some oil properties in Wyoming. Finally, Legacy Reserves went in the other direction after it announced a game-changing strategic alliance where it acquired natural gas reserves.

Each deal represented a slight shift in direction for these high-yielding energy companies. To help investors gain a better understanding of what these shifts mean, I've created the following slideshow. The presentation shows what these companies were like before the deals, as well as how each has changed since the deal. By comparing the before and after snapshots, we can see which companies improved and which might still have work to do. 

The worldwide leader in sports isn't ditching the cable bundle anytime soon, but ESPN may soon offer some of its content over-the-top.

Walt Disney's ESPN is reportedly considering a Netflix style streaming service that would allow users to stream MLS soccer games over the Internet -- no cable subscription required. Earlier this year, ESPN made a deal with DISH Network that allows the satellite TV provider to stream its channels over the Internet as part of a bundle.

As ESPN continues to move more toward Internet streaming services, it opens up additional revenue opportunities. It comes with the risk, however, of angering the pay-TV providers that are expected to pay out over $6 billion in affiliate fees this year.

Remember when Netflix cannibalized itself?
Every Netflix investor remembers the Qwikster debacle. The company got rid of its $9.99 per month unlimited DVDs-by-mail and unlimited streaming package, and separated them out into two $7.99 packages. As a result, the company lost a few subscribers and the share price tanked.

A year prior, Netflix started offering stand-alone streaming subscriptions, which immediately began cannibalizing the DVD-by-mail business. Today, DVD-by-mail subscribers continues to decline quarter after quarter. That's not a bad thing, either. Netflix has grown much larger than it likely would have if it stuck to DVD-by-mail and never offered a streaming service.

ESPN could do the same thing
ESPN may be heading down a similar path. It already offers live streaming of all of its channels as well as additional content to cable subscribers through its WatchESPN website and app. An over-the-top trial with MLS soccer is a clever way to test the waters of offering a direct-to-consumer product.

The risk of continuing down this path, however, may be far greater than Netflix's move toward streaming. ESPN only has so much control over how much pay-TV providers will pay in affiliate fees. If ESPN offers a lot of premium content over-the-top, it could diminish the value of the content broadcast on the television network. As a result, those affiliate fees may be cut.

What's more, there are about 100 million ESPN subscribers through cable. That's significantly more to lose than the 17 million subscribers Netflix had before offering a streaming-only subscription.

How ESPN might successfully eat itself
Disney's deal with DISH Network is notable from a technology perspective, but from a consumer perspective, it's going to look a lot like cable when the final product rolls out. Disney's deal requires ESPN (and its other networks) to be part of a bundle of television channels offered for live streaming over the Internet. This way, Disney can maintain its high affiliate fees with the other cable companies.

It will also build up a large customer base that's used to streaming sports programming over the Internet. The infrastructure will be built out to support more streaming from ESPN. Additional trials like the one with MLS soccer will help prove demand for over-the-top services from ESPN.

It may only be a matter of time before ESPN starts offering premium content directly to consumers. It needs to determine the demand curve first, however, in order to find out if it's worth abandoning the excellent economics of the cable bundle.

The future of television
With more and more people subscribing to over-the-top services like Netflix, cable companies are working hard to prove the value of the bundle and prevent cord cutters. Sports is a big part of that value proposition, so ESPN will face a lot of resistance from companies with a lot of power over the network's revenue.

If ESPN doesn't do it, however, someone else (with less reliance on cable operators) might.

Photo credit: Flickr/Roy Luck.

Railway operators like Berkshire Hathaway's BNSF, CSX , and Genesee & Wyoming are all profiting from carrying oil from America's oil boom. There's just one problem: This boom is becoming way too literal, as several oil trains have derailed over the past year and exploded. It's a growing risk that has the potential to derail America's oil boom.

I've created the below slideshow that details some of the recent train derailments involving oil. The presentation takes a look at the Berkshire Hathaway-owned BNSF fireball derailment last December in North Dakota, Genesee & Wyoming's explosive derailment in Alabama in November, as well as the most recent derailment of a CSX train in Lynchburg, Virginia. In addition to that,I'll take a look at several other notable train wrecks involving oil in the U.S. as well as the tragic oil train disaster in Canada last year.

What's worrisome is that many of these disasters are happening hundreds of miles away from booming oil production basins. We're seeing trains overturn and explode in both rural areas and cities, and while the U.S. has been spared a major disaster, there's always the risk that the next oil train explosion will be the big one that derails the oil boom until permanent pipelines are finally built. 

The first season finale for HBO's Silicon Valley airs tonight with the team competing at TechCrunch Disrupt. Credits: TechCrunch, HBO.

Each September in San Francisco, TechCrunch hosts its signature Disrupt conference in which start-ups quite literally battle it out to impress an audience of code jockeys, builders, investors, and luminaries. To me, it's the ultimate Silicon Valley spectacle. Tonight, the season finale of HBO's sitcom Silicon Valley replicates the real-world chaos. Will the fiction live up to the reality? Here's a by-the-numbers history of the now seven-year-old event that TechCrunch calls "Startup Battlefield":

• More than 400 companies have participated.

• As a group, they've raised more than $2.4 billion in funding.

• Only 2% to 6% of "Battlefield" applicants are accepted.

• 85% of companies that make it to the stage either get acquired or persist as independent companies.

Note that last bullet again. No matter what happens on HBO's Silicon Valley tonight, appearing at TechCrunch Disrupt offers an imprimatur of success. Dropbox, FitBit, and other alumni now on the IPO path ... these are the companies that deserve our attention as tech investors.

Others are watching even if we won't. Six of the biggest names in tech have acquired more than one Startup Battlefield participant. Of those, Microsoft has been most acquisitive with three deals while five others have acquired two start-ups each: Facebook , Google , Intuit , salesforce.com , and Yahoo! .

Source: TechCrunch.

I take two things from this list:

1. Startup Battlefield is a showroom as much as anything else. TechCrunch says there have been 55 acquisitions out of the 400-plus to appear on stage. Less than 14% but still a remarkable number when you consider the volume of entrepreneurial activity in Silicon Valley. A recent Fenwick & West survey found that overall U.S. venture capital investment is at its highest since 2001. Disrupt's Startup Battlefield is separating the wheat from the chaff.

2. Pied Piper's fictional (but fascinating!) compression tech would kick off a bidding war. Facebook's Battlefield acquisitions have been largely about data management (i.e., consolidation, archiving) while Salesforce's deals have focused on making the cloud a more productive environment. Pied Piper's tech, were it real, could help with both.

Of course, as fun as it is to speculate about what might happen tonight, the takeaway for us as investors should be that we don't need HBO's Silicon Valley to get a glimpse of the Next Big Thing. We'll see it for ourselves soon enough at a future Startup Battlefield.

Amazon.com  might soon join the increasingly crowded music streaming business. Members of Amazon Prime will reportedly have access to curated music from certain labels. That's a limited selection compared to Pandora Media , Spotify, or even Beats Music, which was purchased by Apple last week. So why would Amazon bother joining the streaming fray with such a neutered service?

Source: Amazon.com.

Buzzfeed reported on Friday the as-yet-unnamed streaming service, citing unnamed sources in the music industry. The service would start this summer and include music that's at least six-months old and belonging to a small group of labels that have struck licensing deals with Amazon.

But why would Amazon want to offer a streaming product that is clearly limited when compared to the competition? 

Avoiding the content acquisition paradox
The labels teaming up with Amazon on this project will offer the online retail goliath a discount on the songs chosen for the service. Pandora, Spotify, and Beats Music all attempt to offer as much music as possible. And that model has hurt Pandora financially. 

As I've discussed in-depth, Pandora loses money as listener numbers increase thanks to high per-listen content acquisition costs. The company has started to improve its advertising revenue to compensate, but it's still an imperfect model when streaming is the only aspect of business. Apple also faces content acquisition costs with its iTunes Radio, but it's less of an issue because streaming is far from its primary focus. Apple simply wants to attract more customers to its iTunes store. And while they are there, perhaps they will purchase music, apps, and other media.

Amazon has similar motivations but doesn't want to deal with the content acquisition cost problem. Thus, a limited number of songs struck at a discount. But will that model really entice any new Prime members? 

Fleshing out the Prime family
The music streaming service wouldn't attract a crowd if that were the only benefit offered in the Prime service. But Amazon has spent the past year increasing Prime's offerings -- and bumped the price up from $79 to $99 per year. 

Amazon Prime memberships currently include: 

• Free expedited shipping on millions of products through Amazon.com
• Instant streaming of thousands of movies and television shows 
• A Kindle Owner's Lending Library that allows borrowing a title per month from around 500,000 titles
• Instant streaming of select, older HBO content 

Several of those perks have limitations to how much is offered but combining a wide range of benefits helps offset that weakness. And enticing more people to use the Prime service has the potential to create more customers who depend on the Amazon infrastructure for everyday shopping and entertainment needs. That group can further boost sales of products such as the Kindle Fire or new Fire TV, which in turn can boost the sale of content for those devices. 

And around and around it goes. 

Market reaction
Last week ended with the rumor of Amazon's streaming service. But Apple's $3 billion purchase of Beats (maker of high-end headphones and owner of Beats Music) complicated the music streaming industry. Shares of Amazon and Apple didn't react much to either story because neither service is a make-or-break issue for the companies. And Pandora barely budged because it should remain at the top of the music streaming business, despite increased competition. 

Does that mean the music streaming story and the Beats acquisition don't matter? No, it simply means that these stories should serve as only a small piece of the bigger picture when analyzing these companies. 

Foolish final thoughts 
Amazon's music streaming offer won't impress the masses if it proceeds as rumored. But the service could serve as a tipping point for some considering the overall value of a Prime membership, allowing the company to become a lifestyle brand such as Apple. And Amazon gets away from the content acquisition cost vortex that's nearly swallowed Pandora in the past.