Happy New Year!

I hope everyone is having a wonderful new year today. We have a beautiful bird on our patio in Waikiki at the courtyard Marriott. Don’t forget to answer marriotts 1k point promotion on twitter if you haven’t already.

Bitcoin Cash – Live on Coinbase with dash of Insider Trading

Yesterday, at around 7pm PST, Coinbase announced it would allow trading of Bitcoin Cash (BCH). A “spin-off” of Bitcoin (BTC).  Bitcoin Cash could be considered a branch of the Bitcoin tree, despite being slightly different code used to write it. Mining the original Bitcoin Blockchain was considered by some to be getting to difficult to create new ‘blocks’ so Bitcoin Cash was created as a remedy for it and would allow more transactions to be processed faster than Bitcoin, while also allowing miners to start mining blocks that would be easier and hence, yield them more profits.

If you owned any amount of Bitcoin on or before August 1st, 2017, and held your coins on a trading exchanges that was going to accept the new Bitcoin Cash, you should have received an amount of BCH equal to the amount of BTC you owned prior. So, if you had 1 BTC on July 31st, but Aug. 1st you should have received 1 BCH.

Unless…

…you had your BTC on an exchange such as, Coinbase. In that case you didn’t receive anything. But, on December 19th, as I mentioned above, Coinbase decided it was time to allow trading of BCH.

Then all hell broke out.

All Coinbase users who did actually have BTC on August 1st received an equal amount of BCH on Dec. 19th. But within minutes, the exchanges owned by Coinbase (Coinbase & GDAX) went down due to a massive amount of traffic and all trading was suspended temporarily. Obviously, this angered a lot of users because the coins they received minutes earlier, could not be bought or sold. A few more minutes later, the price of BCH on Coinbase skyrocketed to an artificial price tag of $9,000/coin, up from $3,000 when it went live on CB. No other exchange was reporting such an astronomical price.

Fast-forward a mere half-hour and thousands of crypto-followers noticed a strange trend in the price of BCH. For days the price of BCH was hovering around $1,800/BCH coin, but then saw a pretty dramatic rise to $3800, only a few days before Coinbase was going to announce trading of BCH. This has alerted everyone in the crypto-world and even Coinbase is launching an internal investigation into it’s own employees for potential insider trading.  So, Coinbase tweeted this…

Screen Shot 2017-12-20 at 1.06.19 PM

Then, a Reddit form was unearthed that seems to show someone with a insider who works at Coinbase, hinting that BCH is “coming in the next few days.”

DRguGURX0AAxAgL.jpg-large

I have no idea if any of this is true or false, but it all is very suspicious and not something you want to hear from a company holding thousands of your dollars or coins.

In another article I will give instructions on how you can move your coins off of the Coinbase platform and into a more secure, “hard” wallet that will be theoretically impossible to have stolen or hacked. I am becoming increasingly nervous of either a hack of Coinbase itself or Coinbase having to dissolve their assets due to SEC intervention (if even possible.) What a wild ride this crypto-business is!

$10k Milestone – Cryptocurrency Update

Anyone who bought into pretty much any of the top 3 crypto coins (by market cap), should have come close to doubling their money over the past month, as Bitcoin/Ethereum/Litecoin have all had outrageous gains. Bitcoin is up 149%, Litecoin is up 419% and Ethereum is up 127% as of this writing (12/18/17).

Today, though I surpassed the $10,000 mark on total value of all of my 5 crypto coins, combined. I started with my first purchase in June, and have amassed nearly $3,000 in capital across 5 different coins over the last few months and just broke $7,000 in profits. If you watch the price of crypto’s, you’ll also know that all of these gains can be wiped away in a matter of minutes, but for now, I’ll enjoy the view from up here!

I don’t have any sense of a timeline as to when I might sell, but 10k is looking mighty easy to reach now. If 2018 can realize even half of what 2017 brought to cryptocurrencies, We all could be sitting on a very nice pile of cash.

Invest on, and don’t go run up your credit cards to go out and buy bitcoin. Although, I admit I may have borrowed some bank money to fund my crypto-piggy bank, but always have the capital to pay off your card before the billing cycle ends. And, no, buying coins at the start of a billing cycle and then selling coins before your credit card is due is a bad idea as the fee’s you’ll incur will probably not be worth the back and forth.

Dividend Increase – T (AT&T)

AT&T (T) increased it’s quarterly dividend by 2% on 12/15/17, bringing its total quarterly dividend to $0.50/share, up from $0.49/share. This marks 34 years of reliable dividend increases. When companies increase their dividends with consistency, you can rest-assured that the company is making a profit and wants to share them with their shareholders.

Senate Tax Plan – Why It’s Bad for US!

The statement below is from an email I received from The Motley Fool that I want to share with you. It’s a very important message that directly affects me and you, as long-term investors.

 

A joint statement from The Motley Fool, LLC, Motley Fool Asset Management, LLC, and Motley Fool Wealth Management, LLC

“The difference between death and taxes is death doesn’t get worse every time Congress meets.” – Will Rogers

What you need to know

Both the Senate and the House have passed their own versions of the biggest tax changes of the last 30 years, and lawmakers are making progress on a joint bill through their committee work (reports from yesterday indicate they have a tentative deal). There is one particular part of the Senate bill that could disadvantage you as an individual investor if it makes it through to a vote — the mandatory FIFO proposal.

Here is a brief primer on what this means and why it’s important.

FIFO stands for “First-In-First-Out.” It is a method for identifying specific tax lots when you have made your total investment over time — using common strategies like dollar-cost averaging, dividend reinvestment plans, buying in thirds, or simply making annual lump sum contributions.

(By the way, senators, many of your constituents invest this way.)

The Senate’s version proposes that all dispositions — including sales, donations, and gifts of investments — be on a first-in-first-out basis (FIFO). This means, if you want to sell, you must sell the oldest lot, which in all likelihood (especially after a very healthy 9-year bull market) has the lowest cost basis and the highest embedded capital gains. The proposal eliminates investor choice.

What does no choice look like?

Here’s an example that might be common to Motley Fool investors.

Say you own 200 shares of Amazon that you purchased twice during the last five years: 100 shares at $300 per share in 2013 and another 100 shares at $700 per share in 2016. Let’s say you want to sell 100 of your shares at $1,100 per share. Under the Senate proposal, you would have to sell your older position and pay capital gains taxes on $800 per share instead of on $400 per share.

Simply, you wouldn’t have the option to choose, for yourself and your family, which of your own stock to sell!

Under current tax rules, individual investors have the choice of which tax lots to dispose of. This allows for such tax-planning strategies as tax-loss harvesting and donating appreciated stock to charities.

It also provides individual investors the flexibility to create sensible financial plans that correspond to their circumstances by having the flexibility to take on a higher tax burden when the situation affords it and being more tax-sensitive when times are tougher.

These tax-management strategies would be severely limited in the new tax world, and that could leave you and charities worse off.

Who could this hurt?

In a word: you.

More specifically, anyone owning stocks in a taxable account will be affected.

Retirees will be especially hard hit, since many will have to sell investments to pay for medical expenses. Retirees typically have very long holding periods, with the oldest investments generally having the most gains built up over decades of buy-and-hold investing. Forcing retirees to recognize unusually high capital gains could increase the taxability of their Social Security benefits and lead to higher income-based Medicare premiums.

Investors that sell stock for a large purchase such as a home or a car are going to be especially hard hit, and the negative tax consequences could have a meaningful effect on consumption habits that would otherwise grow the economy (ahem, again, senators??).

Investors engaging in normal asset class rebalancing activities may place outsized weight on tax implications, resulting in poor investment decisions and an inefficient allocation of capital in our market system. That’s the proverbial “tail wagging the dog” that we try to stay away from.

Investors may be tempted to get out ahead of changing tax rules and sell some later-dated tax lots while they still can. On the flip side, the looming tax bill on old tax lots may dissuade selling a holding when it may be the sensible thing to do.

So what can you do about it? It’s easy and very quick.

Contact your congressional representatives

Let your representatives know how the mandatory FIFO provision in the tax plan will affect your family. Click here for an easy lookup of your representatives, along with their contact information. It will take only a few brief minutes to voice your opinion.

Not sure what to say? Here is the message that Megan Brinsfield, the Director of Foolish Financial Planning for Motley Fool Wealth Management, LLC, left for her senators, Mark Warner and Tim Kaine:

Hello, my name is Megan Brinsfield and I am a constituent located at [address]. I am calling to convey my concern over the mandatory FIFO provision in the tax plan. This provision will increase my tax bill by thousands of dollars every year by eliminating my freedom of choice around investment management. Additionally, my time spent in recordkeeping will increase since my brokerage only has information on stocks acquired since 2011. I implore you to strike this provision from the tax plan on behalf of me and my fellow investing taxpayers.

For more than 20 years, The Motley Fool and our affiliates have stood up for the individual investor, helping millions around the globe make better financial and investment decisions. The proposed Senate FIFO provision handcuffs everyday investors from making the best individual decision for their own, unique circumstance.

We ask that you join us in carrying our message to the halls of Congress by contacting your senator’s office to express your concern with the FIFO provision.

That’s a great way to help the world invest, better.

Thank you for joining us in supporting individual investors!

Fool on,

Megan Brinsfield, CPA, CFP, Director of Foolish Financial Planning, Motley Fool Wealth Management, LLC

Bryan Hinmon, CFA, CIO Motley Fool Asset Management, LLC

Andy Cross, CIO The Motley Fool, LLC

Recent Buy: OHI (Omega Healthcare Investors) – Repurchase at 14% Discount

Recent Buy: 12/5/17

Today, I purchased an additional 55 shares of OHI (Omega Healthcare Investors) for $26.9861/share or $1489.19. in total capital. I had 58 shares of OHI prior to this purchase in my Traditional IRA, bringing my total shares to 113. This increases my forward dividends by $143.00/year. By far my largest increase of forward dividends in a single purchase!

On my last purchase of OHI, I outlined the main reason for the sell off. It seems it’s still an issue that Wall St. doesn’t like. I don’t care, though. Baby Boomers are expected to  equal to about 20% of the population by 2029 and are they aren’t getting any younger.

Pervious guidance for recent stock price discount:  For Q3 of 2017, OHI underperformed what was expected by Wall St. consensus. The company missed their expected revenue figure by $44.4 million, despite being up 4.4% since the same time last year. These troubles stem from tenant, Orianna Health Systems is essentially behind on their rent. Trouble is, with the types of properties that OHI operates, you can’t simply close down and kick out current tenants because a large majority of them are the elderly with longterm care needs.

Invest on! It looks like another dividend growth investor, DivGro, also took advantage of the recent, additional sell off. Great minds think alike!

Total Forward Dividends: $961.98