Broker Check

March, 2018

529s Expanded By Tax Law 

          Prior to the new tax law, distributions that included gains from IRC 529 Plans in order to not be taxable had to be for payments for tuition and other qualifying expenses to Qualified Higher Education Institutions, generally colleges.

          The new law expands the category for distributions to elementary and secondary schools.  This means that if you are planning to send your children or grandchildren to a private elementary or secondary school you have now received some financial relief.  

          This is important because some elementary and secondary schools can cost as much or more than college.

          If you are interested in increasing your 529 contributions or even creating such please call us.

Beware of Sleeping Giants

          Prior to December 7, 1941, the United States was selling steel to Japan while at the same time complaining that Japan was invading China and should cease its military operations.  Then came the Japanese surprise attack on Pearl Harbor, which was beautifully portrayed in the movie Tora Tora Tora.  At the conclusion of the attack, the head of Japanese naval forces, Admiral Isoroku Yamamoto was asked his view.  He replied, ¡§I fear all we have done is to wake a sleeping giant.¨  The rest is history.

          Today, there is much discussion about the Trump Administration proposed implementation of tariffs targeted against China and other bad actors.  Doomsayers say there will be a worldwide trade war.  Others say the rhetoric is overblown and this is merely the first move in a chess game.  We do not know how it will turn out, but I do believe as did Admiral Yamamoto that America, the sleeping giant has been aroused by this new administration and will ultimately prevail, probably in ways that cannot yet be foreseen.

          With this change in economic policy, we have been reviewing all portfolios that we manage in order to try to avoid being hurt by the commotion and to try to find areas of opportunity. 

Stamp Collecting

          When I was young almost everyone I know had a hobby, most collected something.  Of course, we did not have any money to buy anything, so we had to be creative.  I collected coins and stamps.  Collecting coins meant taking 50¢ and going to the bank and buying a roll of pennies; checking each penny for its date and markings.  I would hope to find some that I needed and then replace those pennies with some others and going back to the bank to get another roll and repeat the process.  Then we would take the pennies we had just obtained and placed them in the open spaces in the blue coin books made by Whitman Publishing Co.

          Stamps were collected by reviewing parents¡¦ mail for cancelled stamps and asking relatives to save stamps for us.  If we were especially flush we might send $1 to $3 to a company and obtain a bag of hundreds or thousands of used stamps, which were then scrutinized and, if needed, were placed in a stamp album over a facsimile of the stamp.  
          I never saw any child in the generation of my children collect coins or stamps.  We were always aware that the most famous US collector was President Franklin Roosevelt who was often pictured looking at his collection with a magnifying glass.  Stamp collecting was intellectually valuable to me because most stamps commemorated something so you would learn about the event, person, animal or thing.  I know I learned world geography from collecting.  I especially remember learning where Bosnia-Herzegovina was and learning how countries came into being seeing stamps over-stamped with a notation, which denoted a change in the country's status.

          Now, arguably the greatest private US stamp collection in the world is going to be auctioned off and when the first part of the collection comes up for auction this September the entire field of philately (stamp collecting) will feel the effect.  Bill Gross gained fame as the bond king of PIMCO.  Now he rules the market for collectible stamps.  His collection was valued at $42 million as part of court papers filed in October as part of his divorce settlement.

          Collecting stamps has cooled on popularity in recent decades and part of the problem allegedly is that so many of the most sought after specimens are in museums or private collections.  Gross has amassed so many of the best examples that he has effectively cornered the market. Once in a generation a great collection comes up for sale, and it gives new collectors a chance to buy something special.
 The collection will be sold over the next two to three years.

           Gross himself amassed the core of his U.S. collection in 1993 when important stamps owned by a Japanese bank chairman came up for auction and Gross bought more than $2 million at that event.

          As always, if you have any questions about these or any other matters, do not hesitate to call us.