The End of Bitcoin (Has Been Postponed)

Posted On Dec 27, 2017 By Dave Gonigam

  • Uhhh… Doesn’t Friday’s crypto freakout look foolish now?
  • Five year-end tax tips (for some, it’s your last chance ever)
  • Why we hope “tax bill Jesus” goes unpunished
  • Readers hate on fellow readers simply because of where they live

“We deserve better from you folks.”

After a holiday break, your editor opened The 5’s inbox this morning for the first time in five days. The oldest unopened email came in shortly before noon EST on Friday — when cryptocurrencies in general, and bitcoin in particular, were experiencing one of their periodic momentary crashes.

“What a relief,” he wrote mockingly — “no comment yet from any of your bitcoin experts — whatever that means.

“You guys are in the investment advisory business, and I understand why you thought you had to jump on the mania wagon, but your credibility suffered when you got past your initial comments about risk and embraced this fools’ game wholeheartedly.

“As long as some greedy moron is willing to pile on at some ridiculous price, money can be made, but there is no inherent value in cryptocurrencies because they are not being used as currency in any meaningful fashion — just a get-rich mania.”

The implication seemed to be that bitcoin’s 20% spill in 24 hours signaled the end of the cryptocurrency phenomenon.

With the benefit of five days’ hindsight, and with apologies to Mark Twain, we daresay the death of bitcoin is an exaggeration…

Looks Plenty Alive to Us...

So no, James Altucher did not blast his crypto-aware subscribers with a bunch of hand-holding emails. They knew what they were getting into, and he respects their intelligence. Here at The 5, we have a broader audience and we did lead Friday’s episode with bitcoin’s drop. But we touched on it only briefly — with a reminder about the inherent volatility of any early-stage investing phenomenon — before moving on to other business.

Did bitcoin get a little ahead of itself at $20,000 a week ago yesterday? Absolutely. Did the tumble to $12,000 on Friday mark the popping of a bubble? Here we are on Wednesday; if your answer is yes, there’s nothing we can say to convince you otherwise.

[Ed. note: Days ago, James Altucher spotted something in the crypto markets that blew him away — a line of computer code that signaled a massive jump in the price of an up-and-coming cryptocurrency.

How did he know? Because he’s seen it before. James explains all at this link — in a brand-new presentation we’re releasing to The 5’s readership for the first time today.]

To the more conventional markets, where the major U.S. stock indexes are making up for ground lost yesterday. The Dow is 25 points away from 24,800.

Retail stocks are giving up some of the gains they notched yesterday, but hopes are still running high that holiday sales were strong. Apple, however, is adding onto yesterday’s losses driven by rumors of underwhelming iPhone X sales — rumors not yet confirmed, we hasten to point out.

Crude jumped past $60 yesterday for the first time since mid-2015 after someone blew up a pipeline in Libya. (The war there, launched by the Obama administration, is about to drag into its eighth year.) At last check, a barrel of West Texas Intermediate has pulled back to $59.57.

Gold’s steady march higher the last 2½ weeks continues today, with the Midas metal now at $1,286.

You have five days left in which to bag some substantial tax savings this year — possibly for the last time.

“With the new tax laws now going into place, this is an especially important topic,” says one of Agora Financial’s newest contributors, Nilus Mattive.

Nilus grew up working-class in northeastern Pennsylvania. He worked hard and studied hard… and got himself a gig on Wall Street as a young adult. Then, as sometimes happens when accomplished people become disillusioned with Wall Street culture, he took up the life of a newsletter editor — hightailing it with his wife and young daughter to California’s Central Coast, where he can indulge his passion for surfing.

Nilus’ remit here at Agora Financial is a little off the beaten path. Yes, he comes up with great investment ideas. But that’s only part of a bigger picture: “Looking back, I always had my own definition of what it meant to be ‘rich’ — it was as much about unique experiences and a quality life as it was about money.”

And so his Rich Life Roadmap e-letter features not only investment guidance but also a bit of financial planning and even ideas to help preserve that most precious commodity of all, time.

Today, though, the focus is on taxes. Nilus has five ideas worth your consideration — and you have five days in which to execute them. There’s no time to waste…

Idea No. 1: Pull forward your 2018 charitable contributions into this year.

“Remember,” says Nilus, “rates are going down in 2018 and you’ll have fewer reasons to itemize — including a higher standard deduction plus caps on SALT (state and local tax) deductions.

“If you have physical items like clothing or household goods, take them to your favorite drop-off and be sure to get a dated receipt. Or send a check or other monetary contribution to whatever organization you like.”

If you don’t have the ready funds to pull this off, don’t despair. Nilus has some other ideas…

Idea No. 2: Tax-loss selling in your portfolio.

“Hopefully, you made a lot of money this year,” says Nilus. “But if you happen to have any positions that are underwater, now is a great time to sell them and book the losses. Those losses can be used to offset any gains you booked come tax time.

“Plus, if you have losses that exceed your realized profits, you can use up to $3,000 to offset ordinary income. Have more losses than that? Then you can carry the losses forward to future years. All of this is done on Schedule D.”

Nilus says you should consider doing this even if you want to keep holding a losing position for the long term: As long as you wait at least 30 calendar days before buying again, you steer clear of the IRS’ “wash sale” rule.

Idea No. 3: Sink some more money into your retirement.

This one’s especially easy to take advantage of if you don’t have ready cash right now. “You can fund IRA accounts (traditional, Roth, etc.) for this year all the way through April 18, 2018,” Nilus says.

As long as you qualify under IRS rules, you have an easy “above the line” deduction of up to $5,500 — $6,500 if you’re over 50. And you can save up for it over the next 3½ months.

Idea No. 4: Prepay your property taxes.

“Since SALT deductions will be capped at $10,000 in 2018 for people who itemize,” says Nilus, “you might want to see if it’s possible to prepay your property tax bill for next year before Jan. 1.”

This one’s in the news a lot this week. Much of the coverage is centered on taxpayers in high-tax states like New York and California. (Go figure, that’s where the major media centers are located.) But really, this advice applies to anyone who typically itemizes deductions. You might not have that option next year with the higher standard deduction of $12,000 for singles and $24,000 for couples.

For best results, take a check in person and get a receipt. You’ll have to do it by Friday. Alas, not every jurisdiction will let you do so.

(Sorry, you can’t prepay your state/local income tax: Congress expressly forbade that in the new law.)

Idea No. 5: Defer income if you can.

“Maybe you’re expecting a big year-end bonus,” says Nilus. “Or perhaps you freelance and can control when a couple checks come through. If you have any flexibility in terms of payments you collect before year-end, you might want to hold off on getting them… especially if they will make a substantial difference on your overall taxable income.

“Again, that’s because rates will be lower next year … so even more income in 2018 might result in less money owed to Uncle Sam.”

So there you have it — a quick year-end plan. But before you pull the trigger on any of these moves, you should also know about one of Nilus’ most exciting research projects: Last month in Massachusetts, thousands of Americans cashed checks from one of the fastest-growing “retirement programs” in the country, a little-known way to collect $597–6,189 a month in investment income for life!

Nilus says this “program” has no income or age restrictions. And it’s available in all 50 states. It could be the best-kept secret out there.

Click here to find out how to collect your first check. Note that you must act by a specific date to do so.

Which date? Go here now for all the details.

“It was the only thing I could think of to do that was nonviolent,” says tax protester Robby Strong.

Over the holiday weekend, someone sent a gift-wrapped box of horse manure to the Los Angeles home of Treasury Secretary Steve Mnuchin. Naturally, because people with political power take themselves way too seriously, the bomb squad was called out. LA’s helicopter-happy TV newsrooms added to the sense of pandemonium…

Suspicious Package Investigation

But no, it was horse manure. (We realize you can make a bomb from fertilizer, but c’mon, really?) Accompanying the package was a card that said, “Misters Mnuchin & Trump, We’re returning the ‘gift’ of the Christmas tax bill,” and was signed, “Warmest wishes, The American people.”

Since then, the aforementioned Mr. Strong has come forward to claim he’s the one who did it. Rightly or wrongly, he believes the tax bill will be bad for poor people. As he explained it to public radio station KPCC, “What I did, I would like to compare to what Jesus did when he went into the temple and overturned the tables of the money-changers, who were exploiting the people financially in the name of religion.”

OK, so Mr. Strong also has an inflated sense of his own importance.

Fortune cites the LAPD as saying there was nothing criminal in the package and the investigation is closed.

The Secret Service and other federal agencies, however, might have other ideas. For the sake of everyone’s liberty, yours and mine too, we hope they also drop the case. When you read our year-end 2015 episode of The 5, you’ll understand why.

Back to the mailbag, where our ongoing tax discussion has taken a disturbing turn.

“The Californian who complained about his taxes going up should look to Sacramento and his local government for help,” a reader writes. “You in California have voted for big-spending, fiscally irresponsible Democrats for too many years. Get your house in order. Keep being a deep-blue state and you reap what you sow.”

Says another: “This commenter made three huge mistakes in his life:

  1. “Lives in the liberal, communism-inspired taxation wonderland of California.
  2. “Brought us the lunatic elected officials that have done their best to destroy California AND America.
  3. “Ensured that above-mentioned officials had a lifetime to carry out their mission.”

The 5: We picked up on some of this sentiment in early November when the House version of the bill proposed killing the SALT deduction altogether. God help us, some readers actually cheered at the notion that their fellow Americans’ taxes might go up as “punishment” for living in the “wrong” place.

To the present case: Aren’t you projecting a heavy load onto this one guy? How do you know he voted for “big-spending, fiscally irresponsible Democrats”? How do you know he doesn’t live in California’s far north — where the politics are nearly indistinguishable from those of, say, Idaho? Or do you expect all those folks to move before they too can enjoy a lower-tax existence? (There’s a halfhearted secession movement for a State of Jefferson incorporating far northern California and southern Oregon, but it never goes anywhere.)

But hey, if you’re really serious about shunning people and businesses because they’re located in a “liberal, communism-inspired taxation wonderland,” you’d better cancel your subscriptions with us: Through a quirk of historical circumstance, Agora Financial headquarters and the vast majority of its personnel are located in the People’s Republic of Maryland.

Best regards,

David Gonigam

Dave Gonigam
The 5 Min. Forecast

P.S. Of course, if you really wish that Agora Financial would cease its existence… there’s a 42-day window starting next month that does threaten our business model. You can follow this link for more details. Do it now, because this information will be removed from the internet on Jan. 1 at midnight.


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