First Chartstravaganza of the year … hoping for a better 2021!

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Every Sunday, twenty charts, let’s go.

20. Investment Banking

(@ft)

19. Emerging Markets Flows

(@exantedata)

18. Population Growth

(@wellsfargo)

Just did an assessment of our #health #finances. After a ten-year personal experiment with a health savings account (#HSA) and our employer's high risk insurance option: GOOD CHOICE. I'm definitely not an expert, but if you're curious, here's our experience (a thread):

Our life situation made us right for an HSA. I was single for half the first 5 years, married for the 2nd, when married, both of us on HSA. No children, overall pretty healthy. Here's an article about who an HSA is good for:

I deducted the maximum savings every year from my employer (which I believe was about $6,000). This went into our HSA. For medical expenses, if we had the extra cash, we used it rather than our HSA (as the HSA grows exponentially tax-free, which is a freaking good deal).

Due to the HSA, my hubby and felt free to pursue alternative health care options and therapies that would NOT have been covered under typical medical insurance (invisalign, chiropractor, contact lenses). We ended up skipping or get the cheapest dental/eye coverage.

It also made me think twice about expensive medical procedures: when I had gastro issues several years ago, my doc recommended a colonoscopy. I saw the price & thought, heck, I'm going to try a food elimination diet first. Voila! Problem solved and no need for the procedure.

Insights of a noob:

10 things I've learned from 18 months in the financial services industry.

👇🧵

1/ The financial industry is set up to extract value from you - the key is to learn how to extract value from it.

2/ An understanding of compounding is essential - it can be your best friend, or your worst enemy.

Negative compounding is a thing, it occurs from the buildup of fees and taxes over time (there is a link to an article which explains this in more detail in point 9).

3/ Behaviour is everything - you are an emotional creature not a robot.

@MavenAdviser summed it up perfectly in a recent podcast, 'financial success takes place between your ears, not on a computer screen'.

4/ Behaviour is everything - familiarise yourself with @behaviourgap.

Over the long term markets do not lose money, however investors do.

A study found that over a 20 year period ‘the average investment return was 11.81%. The average investor return was 4.48%.’

1. Year End Tax Tips:

Yes, there is still time to save money on taxes for 2020....even today.

Here is a list of some of your top options:

A) You can pay your kids up to age 18 up to $12,400 and if they have no other income, they owe NO federal taxes, but YOU get the deduction

2. Next up, you can prepay your expenses up to 1 year, using the IRS Safe Harbor:

This allows cash-basis taxpayers to prepay and deduct qualifying expenses up to 12 months in advance without challenge, adjustment, or change by the IRS.

3. Qualifying expenses include, among others:

-lease payments on business vehicles

-rent payments on offices and machinery

-and business and malpractice insurance premiums

4. Buy Office Equipment

With bonus depreciation now at 100 percent along with increased limits for Section 179 expensing,

buy your equipment or machinery and place it in service before December 31 and get a deduction for 100 percent of the cost in 2020.

5. Qualifying bonus depreciation and Section 179 purchase examples

-new and used personal property such as machinery, equipment, computers, desks, furniture, and chairs (and certain qualifying vehicles).

I'm picking up a stand up desk since someone went and filled my bin.

https://t.co/nWSFLFFnte

2/ Regarding A. I'm long $TSLA, believe it isn't a bubble and the naysayers are shortsighted and wrong.

Only time will tell about A, but B we already know - $TSLA joined at an ATH of $695 then fell - but it's now at $763, so it ADDED value, not detracted.

BUT..

3/ But the question of whether $TSLA brings risk to the S&P is WRONG by itself. The whole idea of an INDEX FUND like S&P500 is to be passive, and it's THE ACTIVE MANAGER DECISIONS that introduce risk

Being profitable and large TSLA should have been added ON Q2 EARNINGS.
..

4/ Before we analyze implications, consider this:

DataTrek Research estimates that if on Jan 1 2020 an investor had put $5 of every $100 invested in an S&P 500 ETF into $TSLA, their return by Dec 11 2020 would've increased by roughly 31%!
(more by

5/ But that's hypothetical bc $TSLA didn't qualify for S&P at Jan 2020, and 5% is more than its share today.

Tesla DID qualify on Q2 earnings but was admitted after Q3. Comparing 12/21 price ($695) to 9/21 price ($449) is wrong bc by 9/21 price fell after news of not including.

1/ We have already considered some protocols with their own systems for maintaining token values at the $1 peg. Let’s look at @fraxfinance and speak about the price stability of its token.

@BORIS_WATCH @Joe_Mayes Non-tariff barriers are other conditions/criteria which, even though are not tariffs, may end-up having a tariff-like effect, that is an increase of costs and, thus, of the price paid by the buyer (e.g. a theoretical example, a requirement that all beer exported to Belgium) 1/

@Joe_Mayes 2/ In the theoretical example, a beer exporter would be forced to change his supplier of bottles or to invest in a separate bottling line for its production deemed for export to Belgium. Hence, the extra costs that will have to be covered (usually by the end-customer).

@Joe_Mayes 3/ Even though it might seem ridiculous, there are many real examples of such „disguised restrictions”. Under the EU Law they are prohibited in the relations between the EU member states because they hamper the free movement of goods.

@Joe_Mayes 4/ Coming back to the confusion created by the foggy official communication, this comes probably from the terminology used (sometimes incorrectly), insufficiently explained and superimposed on the promises made in 2016 (we will have the same conditions like we were in the SM etc)

@Joe_Mayes 5/ So, in international trade, charging import/export tariffs is the norm. There are also quotas and contingents (e.g. the quantities of a given product the exporters from country A are allowed to export to country). The quotas are also used by the EU.

Nearly time to bid farewell to 2020. Never been prouder to be a @FT science writer - nor more grateful to be able to carry on working. A short, indulgent (sorry!) thread on writing covid...

Starting on Jan 8 with a mystery pneumonia https://t.co/d21b1e3gr4 via @financialtimes

A realisation at the end of Jan that this could be ‘the

...and that healthcare might need rationing. Except I thought this would be a one-off in the spring first wave. Never dreamed we’d be in a worse place nearly a year later.

Remember, we have yet to pay the ‘Xmas mixing’ dividend

But at least a vaccine was in the works. The road was shorter than I thought 😂...free to

...but, until it arrived, we had to learn to operate in a new landscape of risk (free to read)

I can't believe this is my first tweet for 2021, but it hits home really hard so lemme share my thoughts and begin by saying that in dating
FINANCIAL CAPACITY IS OFTEN CONSIDERED, specially if you don't come from privilege

A THREAD

(1/X)

Don't get me wrong, money isn't the sole basis of love, but if you live in a country like ours where most are underpaid and inequality is bad, it is pretentious to say that finances are not considered in choosing a partner. So let's try to explore some scenarios:

(2/x)

Scenario 1

Person A meets Person B. They like each other big time. However, because of financial stability, person B wants to fly abroad for better opportunities. Person A can't do LDR.
LOVE STORY ENDS.

(3/x)

Scenario 2:

A wants to climb the corporate ladder. B loves his entry level job, finds meaning in it, wants a frugal life, & spends accordingly. Person A meets person B, they click. They like each other. However A thinks B is mediocre. A lets go. LOVE STORY ENDS.
(4/x)

Scenario 3:

A is in IT (one of the top paid jobs in the country atm). B is in the service sector (which society doesnt reward well) A wants to travel a lot, B has financial limitations. A & B computes travel expenses using a ratio based on their salaries. LOVE STORY WORKS

(5/x)

I don't always like that freedoms are enshrined in process; checks & balances. It's not perfect; sometimes those processes are used to oppress (voting in the South). The principle though is freedom that goes through process prevents passions of mobs (yesterday's domestic terror)

Can process be misused? Yes, absolutely, thus the need for well-informed voters/participants in civic life. But are the people who attacked the Capitol oppressed by misused process? Even many other Republicans say, no; by end of day that number had grown.

Their sense of grievance is real - and preyed upon. For other circumstances in their lives it's possible sense of grievance is justified; rust belt poverty is brutal for instance. But feeling wronged & being wronged are different.

There isn't evidence of the will of the people being suppressed in this election. It is a nauseating twist to witness, that a group of people carrying Confederate flags into the Capitol building claim oppression by broken process.

In the C-Span livestream & photos yesterday, & the footage that emerged shortly after, it was apparent the crowd was a mix of near-tourist rural supporters, known white supremacists, & militia-like aggressors. At least 1 of those groups isn't interested in sharing fair process.

How'd funds fare in 2020 when viewed through an ESG lens? We assign Globe Ratings, w/'High' (ie 5 globes) going to funds whose holdings court less ESG risk and vice versa for 'Low' (1 globe). Tldr: Funds w/higher ESG ratings beat their M* idx more often than those w/lower ratings

Given this, it's not too surprising that higher ESG-rated funds generated larger avg. excess returns (vs. M* cat. index) in 2020 than lower ESG-rated funds, meaning there was a better payoff to investing in funds that courted less ESG risk. That said, caveats apply...

1st caveat: When we look at success rates by 'intentionality' (ie, is strategy intentionally aiming to incorporate ESG, etc), we find success rates don't vary much by rating. In other words, success didn't depend as much on whether fund was actually *trying* to minimize ESG risk

Along those lines, there was a better payoff to minimizing ESG risk among non-intentional than intentional ESG funds. That is, there was a wider spread in the avg. excess return of higher- and lower-ESG rated non-intentional funds than there was among intentional funds. Nuanced.

Worth noting there are relatively few 'intentional' ESG funds. Of 4,000+ funds I examined, ~460 were classified 'Sustainable Investment--ESG Overall' as of 12/31/19, the starting point for the study. So, non-intentional funds drive the results.

Looks like an interesting house, right?
And hey, it’s reasonably priced. $157K, on 2/3rds of an acre.
High speed cable broadband should be available.
Lots of light, parking, deck...

https://t.co/8TEyzhNi8E

Not a murder house, not even a little!

Uh... maybe... wait...
That’s an interesting trim choice.
Door’s a little dated but not too bad.

Oh, shit.

More. Shag.
In. The. Kitchen.
WHY?
Have you never cooked??

(And we will talk about the seam from Cocoa Beach Blue to Violet Vale later.)

@BrentBeshore I made my first SMB acquisition last Spring. Here are a few things I learned from the introduction until now:

1. Understanding the financial statements of a small business can be very different than what is taught in an MBA program

2. The seller isn't telling you nearly the whole story. Sometimes they don't even know the story. Account for that.

3. The business is often worse than the seller will admit and can be improved more than the seller realizes.

4. The employees that have been there the longest don't want to change and don't give a rip about your acquisition. They simply want to continue receiving a paycheck without much hassle.

5. The company competitors have been waiting on a chance to pounce on your key customers. Change of ownership presents that.

6. You'll lose sleep and won't even be able to identify the problem. It's just the pain of owning a business that keeps you up.

7. It's easy to wake up one day and realized you've been around your family but haven't been emotionally engaged in months. You'll drive down to a park during lunch last week and cry your eyes out. Did I just say that out loud?!

Reading the IFR about PPP second draw and it's got me thinking about who qualifies for second draw. Might be so many thoughts I need like several tweets in a row or a thread if you will. Warning I don't get to the real point of this until like a dozen tweets in #taxtwitter

Need 300 or less emp and a 25% decline in revenue 2020 vs 2019. There are rules about what's an employee and what's gross receipts so I don't really have any questions or deep thoughts about that part. I think we all understand how you document gross receipts went down.

Nice of them to define the gross receipts in a footnote of page 8 and on page 23. PPP loans would not be included so that's helpful and logical. These rules are not always helpful and logical so nice to see that.

Another requirement is that PPP first draw was received and has used the full amount of the PPP first draw on "eligible expenses" on or before PPP second draw is disbursed. That's interesting to me. It doesn't say that the PPP first draw will be entirely forgiven.

Eligible exp for PPP first draw are referenced back to the other new IFR on PPP first draw and it's the whole list of payroll, rent, PPE, supplier costs etc. Certainly to achieve 100% forgiveness you needed to spend 60% on payroll and spend all of it in the CP.

1/ Some people on the left have this magical thinking problem when it comes to why our ideas don't often carry the day within the Dem Party. We act like it's all "big Pharma money" etc. And yes, that money is corrupting. But it's not magic...

2/ If a Rep knew the majority of THEIR constituents (not Dem voters from other parts of the country but THEIR constituents) supported more left policies *and would actually show up & vote against them if they didn't vote for those policies* they would vote for them, obviously.

3/ A major goal of a Rep is to keep being one, so no one would go against the wishes of the majority of their constituents just to get contributions, if that would cost them the job. But it WON'T. Either bc the folks who could punish them don't bother to vote, or, more likely...

4/ bc most voters are savvy enough to care about more than one issue, so even if a Rep doesn't fight for M4A, they might be good on other things voters care about and much better than the GOP alternative. Now, if these are progressive districts where the D is sure to win..

5/ ...it's different. THERE it makes sense to push hard for those Reps to do the left thing. But that means running good candidates in primaries, so those Reps feel the heat. Twitter shaming them or forcing floor votes to "expose" people means nothing w/o a viable alternative...

Senate Democrats just killed the push today for $2000 checks.

A few Senators--namely Sanders and Markey--wanted to hold up the NDAA as leverage to push for a vote on $2000.

Democratic leadership rejected this--including Vice President elect Harris.

Let’s be real: McConnell is the one at fault for refusing to put a vote for the $2000 on the floor in the first place and being fifty shades of hypocritical along the way.

But Democratic leadership has, once again, folded to Republicans without attempting to fight for us.

If Democratic leadership is actually serious about getting $2000 checks to people, they would do one of two things:

a.) Find another leverage against McConnell and Senate Republicans

b.) Take McConnells offer on the combined bill of $2000 checks and Trump wishlist items

McConnell has made it clear today that he is not interested in putting a vote for $2000 checks on the floor unless it’s through his bill—which includes repealing Section 230 and putting together a committee to study “election fraud” in the 2020 election.

The argument that Dem leadership will make is that getting this NDAA through is vital, and can't be held up as leverage.

This is precisely why Sanders & Markey wanted to hold it up as leverage.

Dem leadership better have a Plan B if they are serious about helping people.