Wealth Actually

Housekeeping: Podcasts should land generally land on Thursdays. You can subscribe to the podcasts on major podcast networks. HAVEN PELL’S Blog can be found here: PUNDIFICATOR On this week’s podcast, we have some back and forth on the emerging prevalence of public relations and its increasing importance in corporate strategy. Discussion outline below . . . The Dangers of the “Spindustry”. The use of avatars to represent climate change- are they created or natural occurring representatives. Naomi Seibt- as the counterpoint to Greta Thurnberg on climate change- is she a “created” representative. NYPOST: GRETA vs NAOMI The Potential Damage to Unwitting Avatars (especially those pulled out of central casting) Coronavirus- Catastrophists vs. Slow Adopters. How did views change so quickly? (This was recorded before the Rudy Gobert news and the cancellation of the major sports events) The Innovation of Adoption Lifecycles- Innovators, Early adopters, Early Majority, Late Majority, Laggards. “Abundance of Caution” vs “Self Quarantines Don’t Work in Democracies.” How does one project calm and competence (before having proved these traits)? What happens when people have to actually rethink their lives? Is there a consequence to being over-confident? The Tylenol case- a good example of PR driving the corporate strategy. Crisis Management: Doing the right thing, being smart legally and defending the brand and the business. The tension between the PR strategy and the legal strategy . . . Strategy by Avatar may not work- I can’t remember Naomi Seibt’s name!!! ESG investing and Public Relations- how is reputation/PR scored? Is it reputation well understood in the investment world? Significant? https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT

The Impact of Fanboys, Haters and Cancelling on Social Media and Internet Culture- Haven and I hit these topics . . . . Fanboys and Haters in Wealth Management and Financial Twitter Hater Culture in Politics Creating Adversaries as a Marketing Strategy (Us vs. the World) Do Presidents make Markets or Economies (The Head Coach Analogy) The “New News Cycle” and what it does to the markets Brady, Belicheck and the Patriot Effect Recessions and Economies in Political Cycles Moneyball for Politics (Michael Lewis, Bill Clinton and other examples) Binary politics and the destruction of nuance https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT

A quick reminder to subscribe on iTunes, Google Play and Android! Podcasts normally drop on Thursday mornings before the EST commute. Haven’s blog can be found here: PUNDIFICATOR Nothing on the blog or podcast is investment advice The Democratic Party is in full swing with Bernie Sanders making an early run in Iowa, New Hampshire and Nevada. However questions about his ideas and electability persist. Joe Biden has stumbled out of the blocks. Elizabeth Warren tries to re-establish her initial leap forward. Mayor Pete, Tom Steyer, and Amy Klobuchar are trying to build additional momentum as the make their case. And Michael Bloomberg lurks with the great political equalizer . . . money. Lots of it made as he built his media empire. He also has a record of achievement as the Mayor of New York and as a poor debater after his performance in Nevada. After watching Donald Trump sweep through a traditional Republican slate in 2016 and shock the world by beating Hillary Clinton in the general election, what should we make of this? What will happen in South Carolina, Super Tuesday and beyond? Check out the latest polling at https://www.realclearpolitics.com/ HAVEN AND I TAKE A LOOK AT THESE ISSUES: – The Democratic Party’s tension between the need to “Beat Trump” vs. the negatives of “Buying the Election.” – What is the coming DNC dilemma with Bernie Sanders? – Is the debate format counterproductive? – What would be the advice to Mayor Bloomberg at this point? – Without having the benefit of talking to him, what is Trump’s reaction to all of this?  Bloomberg’s Presence Would Soon Be Felt . . . https://www.axios.com/newsletters/axios-am-bc324364-4a0f-47e6-9302-d32f7a37647a.html?chunk=0&utm_term=emshare#story0 https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT

Haven and I reached back into the archives (December) as we discuss GLOBALIZATION: (To reiterate we are NOT providing investment advice, just a discussion of international relations issues that we find interesting) We heavily reference the below presentation from Ken Mehlman’s group. It is worth opening up in a new tab. https://mehlmancastagnetti.com/wp-content/uploads/De-Global-2019.pdf 1) The World: Leadership & Direction Up for Grabs 2) Major Economies: Aging Fast 3) Internet Policy: Regionalism Replacing Globalism 4) Populism: The New Path to Power 5) U.S. Politics: Anti-Globalists Ascendant 6) U.S.-China: The Great Decoupling 7) Business: Evolving Strategies for Braving the New World 8) Government Economists: Fewer Fiscal / Monetary Tools 9) Leadership: New Global Players Emerging 10) Super-Disruptors: Climate, Debt, Technology & Urbanization Other interesting issues pop up around our discussion of China as the news of the CORONAVIRUS was in its infancy and nowhere near the level of publicity that is occurring right now. Another concept that we touch on throughout this presentation is “Are things better than we think?” Stephen Pinker has written a book on that topic . . . https://stevenpinker.com/taxonomy/term/4265?page=1 We also discuss Sarah Chase and the impact on the regression of trust in governmental institutions. . . https://en.wikipedia.org/wiki/Sarah_Chayes Enjoy . . . and don’t forget to subscribe! https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT

This week we have a special interview with Peter Goodrich on the tax ramifications of working with crypto-currencies. We packed a lot of information and debate in this quickly evolving field. PETER GOODRICH is a Manager in the Tax Department of Prager Metis CPAs, a member of Prager Metis International LLC.  He specializes in tax planning, consulting, and structuring with domestic and international businesses, whether they are mature or startups, high net worth individuals, and trusts and estates tax planning. He assists and advises on complex business transactions.  He has expertise in several industries including blockchain/ cryptocurrency, entertainment, manufacturing, defense contracting, technology, hedge funds, automotive, hospitality and real estate.  Here is a brief outline of what Peter and I covered: INTRO 1)  Peter, how did you got into accounting and where did your interest in the crypto-space come from? 2)  What we are talking about when we say “crypto”? 3)  What makes the taxation of crypto currencies interesting/controversial?  Is it a currency? Is it property? Is it a security? Is it a collectible? What rules apply? Are there meaningful differences between the different currencies? 4)  The IRS decided that Crypto is essentially property with capital gains implications.  Is there any nuance around that?  Do the same “Long Term/Short Term” concepts apply? 5)  Is there a difference in trading between crypto-currencies vs transacting for goods?  I.e. if I buy a painting with bitcoin and sell it in bitcoin, how is that treated? 6)  Everyone’s situation is different, but if someone has a big gain, how should they think about it from a tax perspective?   7)  We always worry about the gains, but can you take losses? The IRS determined that Crypto incorporates “property” tax concepts, but are there wash sales (which would be more of a “security” tax concept)? 8)  Crypto-Currencies are supposed to be “off the grid”? Is this really the case? What about penalties for non-reporting!  It looks like there is a disclosure box in this year’s forms? 9) What are the state implications for crypto-taxation? How does one determine and deal with nexus for state tax purposes? 10)  Vision for the future?  Will the government eventually accept payment in crypto? Or adopt their won?  Any other trends? 11)  What’s the best way to stay up to date on what you are doing and the direction of crypto-taxation? OUTRO ADDITIONAL READING: Here are a couple of notices on cryptocurrency and taxation from the IRS and a good article from the American Bar Association (written by PARKER TAYLOR and his team from Hughes Hubbard and Reed) on the trustee and fiduciary issues related to cryptocurrencies and estate planning: FREQUENTLY ASKED QUESTIONS ON VIRTUAL CURRENCY TRANSACTIONS REPORT NO. 1433: IRS REPORT ON CRYPTO_CURRENCY ESTATE PLANNING ISSUES WITH CRYPTO-CURRENCY For more on this and other wealth topics, check out my book “Wealth, Actually” here: https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT

Another reminder that the “Wealth, Actually” podcasts come out on Thursday morning before the EST commute. You can subscribe on most major podcast platforms . . . and now on with the show! Remember Todd Marinovich? He was on the cover of Sports Illustrated as the archetype for early specialization and “guaranteed success” in sports . . . his story started out nicely, but ended in a horrible flame out. Here is a recent update on his progress from Rick Telander . . . https://chicago.suntimes.com/2019/1/15/18386050/todd-marinovich-story-is-a-cautionary-tale-for-parents In this Episode, Haven and I engage our society’s thirst for sports success, the pressure it puts on early sports specialization and the damage it can cause. We tackle: The role of sports in social mobility How colleges and the admissions process have played a role in sports machine The benefits of team activities in overall development The lottery-like odds of success The nature of injuries and the risk of specialization The benefits of specialization and the risk of being left behind Let us know what you think! https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT

HOUSEKEEPING: Podcasts are scheduled to post every Thursday morning just before the EST commute . . . and now for this week’s podcast. Occasionally, you get to look at someone’s vision for the future and it fires one’s intellectual synapses. In this case, we came across a post at the beginning of the year that fit the bill. It comes from New York venture capitalist, FRED WILSON. In this podcast, we take each of his prognostications in turn . . . his list of ten themes and the full (and interesting) post is linked below. Enjoy and let us which themes we should all be thinking about. https://avc.com/2020/01/what-will-happen-in-the-2020s/ Fred Wilson: What Will Happen In The 2020s 1/ The looming climate crisis will be to this century what the two world wars were to the previous one. 2/ Automation will continue to take costs out of operating many of the services and systems that we rely on to live and be productive. 3/ China will emerge as the world’s dominant global superpower leveraging its technical prowess and ability to adapt quickly to changing priorities. Conversely the US becomes increasingly internally focused and isolationist in its world view. 4/ Countries will create and promote digital/crypto versions of their fiat currencies, led by China who moves first and benefits the most from this move. 5/ A decentralized internet will emerge, led initially by decentralized infrastructure services like storage, bandwidth, compute, etc. 6/ Plant based diets will dominate the world by the end of the decade. Eating meat will become a delicacy, much like eating caviar is today. Much of the world’s food production will move from farms to laboratories. 7/ The exploration and commercialization of space will be dominated by private companies as governments increasingly step back from these investments. 8/ Mass surveillance by governments and corporations will become normal and expected this decade and people will increasingly turn to new products and services to protect themselves from surveillance. 9/ We will finally move on from the Baby Boomers dominating the conversation in the US and around the world and Millennials and Gen-Z will be running many institutions by the end of the decade. 10/ Continued advancements in genetics will produce massive wins this decade as cancer and other terminal illnesses become well understood and treatable. “ SUBSCRIBE AND TELL A FRIEND ABOUT THE PODCAST . . . https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT

It didn’t take long for Haven and I to reach back across the pond for a topic to chew on . . . and this week we wrangle over the mess of the potential “departure” of Prince Harry and his wife Meghan (and son, Archie) from the official royal duties of the British Monarchy. NY TIMES: The Crisis . . . . after the Crisis https://www.nytimes.com/2020/01/15/world/europe/harry-meghan-megxit-brexit.html Page Six opines! https://pagesix.com/2020/01/13/meghan-markle-reportedly-pushed-for-megxit-prince-harry-heartbroken Canada Shrugs: https://www.wsj.com/articles/megxit-causes-global-uproar-canada-shrugs-11579136511 We take some time to go over The implications of this kind of move to the families, the institution of the monarchy and Britain in general. The risks of a “Sussex Royal” brand The poor Queen Mum having to deal with this . . . Some of the potential motivations behind it, And the likely chaos that could be coming in it’s wake . . . We also put on our family governance hats and mused as to what we would do if we were dropped into the family situation and could advise the Royals on a course of action. Hopefully it would produce some short term successes, lay the groundwork for future harmony and, finally, restore some stability and long-term planning and structure for the Crown and its relationship to the country. Enjoy! And if you like the podcast, like, subscribe, comment and refer it to friends. https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT

Haven (https://pundificator.com/) and I (frazerrice.com) took on 2019/2020- here is a quick summary Spring Forward, Look Back . . . FRAZER’S WINNERS: Amazon- the category 5 hurricane in American Consumerism- AMZN continues to charge forward. Kylie Jenner- She sold 51% of her company for $600mm to Coty- this could be the apex of influencer branding. FRAZER’S LOSERS The Federal Reserve- With the patina presidential intervention (and long term low rates), the independence of the institution is up for debate. Online Privacy – Facebook, Google, Alexa Financial Institutions have called into question the public’s trust and opened the door to gov’t regulation. (Extra Credit- I’m convinced that there will be a “Deepfake” incident that takes down a major public figure. When it turns out to be debunked (a la the movie “Rising Sun”), there will be a fundamental shift in the way people view the social media and the “trustworthiness” of video. FRAZER’S PREDICTIONS Nuclear Power will have a renewed place in the climate change debate The Tokyo 2020 Olympics will shine a glaring light on the China/Hong Kong tensions Marvel/Star Wars will take a big breather after a big and “climactic” 2019. . . . And the Knicks will continue to break my heart. . . HAVEN’S WINNERS And Washington Sports in general The Stock Market +29% HAVEN’S LOSERS Populism both Right and Left Political Industrial Complex and their new challenges HAVEN’S PREDICTIONS Political Industry Makes a ton of money in 2020 Longer from Journalism may start to come back . . . Rumsfeld- Knowing about the unknown unknowns will be even more important AND, FINALLY, MY POOR KNICKS . . . https://www.theringer.com/nba/2019/12/9/21002375/an-11-point-plan-to-save-new-york-knicks-david-fizdale-fired My Poor Knicks https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT