- It seemed like a great idea in 2012
- 685 pages of red tape strangle budding entrepreneurs
- But there’s still a way you can latch onto the hottest startup of the 2010s
- Here it comes: The Medicare premium increase of 2017
- Negative rate fallout: Norway steps out on the risk curve
- Clearing an earnings-season hurdle… inflation numbers, real and bogus… war drums’ pounding grows nearer… and more!
OK, we were wrong. Well, a bit optimistic, shall we say. And we did hedge ourselves at the outset.
Fortunately, our misplaced hopes didn’t cost anyone any money. And in a way, it doesn’t matter… because we’ve uncovered an investment vehicle just as lucrative as the one that’s not panning out.
[Reader scratches head: “Geez, Dave’s finally losing it. Must be the election. What on Earth is he talking about?”]
On Oct. 30 of last year, we published an episode of The 5 titled “America’s Revival Begins Today (We Hope).” That day, the Securities and Exchange Commission voted to approve new rules paving the way for something called “equity crowdfunding.”
Equity crowdfunding means you can “be your own venture capitalist,” as our executive publisher Addison Wiggin put it in 2013.
That is, you could invest in a new coffee shop around the block. Or you could invest in that neighbor kid’s garage startup — the kid you always suspected might be the next Bill Gates or Steve Jobs.
For decades, that was the exclusive province of the rich — or, in government parlance, “accredited investors” with a net worth of at least $1 million or a family income of at least $300,000. Ordinary peons were shut off from such investments — for your own good, the government said.
But equity crowdfunding got the green light under the Jumpstart Our Business Startups (JOBS) Act, signed into law in April 2012.
Government being what it is, the SEC took 3½ years to draw up the regulations implementing the law. On the day the SEC approved those regulations, we dared to express hope the rules had “the potential to liberate small business… unleash the American spirit of innovation anew… and maybe even drag the nation out of its eight-year economic funk.”
Yeah, well, forget all that.
In fairness to ourselves, we did say the devil would be in the details. And it turns out Satan’s grubby fingerprints can be found throughout the regulations’ 685 pages.
Sure, in theory, you can invest up to $2,000 or 5% of your annual income or net worth — whichever is greater — in that neighbor kid’s tech venture.
But really — will the neighbor kid be inclined to file a “Form C” with the feds? It runs 20 pages. Here’s a sample paragraph from the instructions on Page 3:
The SEC has helpfully come up with an estimate of the costs to comply with its regulations. A startup looking to raise between $500,000 and $1 million will have to fork over as much as $94,000 upfront for lawyers and accountants… and up to $13,000 each year after.
It’s enough to make your neighbor kid give up his entrepreneurial dreams and go back to chasing girls and playing video games.
But the fact equity crowdfunding is a bust isn’t enough to drive a dagger into the American spirit of entrepreneurship.
Startups are still raising money the old-fashioned way — prostrating themselves in front of bankers, handing over a stake in their company to venture capital investors before they ever get off the ground.
That’s no consolation to you if you’re not involved in venture capital or private equity or a hedge fund… but it doesn’t mean you’re shut out from opportunities to profit before startups go public on the stock market.
That’s what our small-cap guru Louis Basenese has been working on all week — an opportunity so unique, so lucrative, that he badgered us to send out a special edition of The 5 on Sunday.
We’re still not at liberty to reveal everything. But as we suggested yesterday and the day before, we’re talking about access to the fastest-growing private technology company of all time — even faster than Facebook.
Lou is still scrambling to prepare for a special event he’s hosting tomorrow night… but he scribbled out a few thoughts to lay out the stakes. Oh, and we have a signup link available, too. Scroll down for today’s Overtime briefing from Lou to get the latest developments…
Like yesterday, nearly every asset class is getting bid up — and it’s not a function of dollar weakness.
The major U.S. stock indexes are all in the green as we write; the Dow is up 70 points at 18,232. Gold has tacked on nearly $10, the bid now $1,271. The big gainer is crude, up more than 3%, to a 15-month high of $51.89; the Energy Department’s weekly inventory numbers indicated a surprisingly high drawdown.
Treasury yields are holding steady, the 10-year at 1.75%. And relative to other major currencies, the dollar is little changed from 24 hours ago: The dollar index rests at 97.8
In earnings-land, the last of the major banks reported: Like the others, Morgan Stanley turned in better-than-expected numbers, thanks to improved trading revenue. Finally, later this week, we’ll be able to move on to numbers from companies that actually do stuff as opposed to just shuffle money around.
And now the downside to the Social Security cost-of-living increase.
Yesterday in the course of discussing the government’s inflation numbers, we mentioned Social Security recipients will get a whopping 0.3% cost-of-living adjustment for 2017. Whopping compared with no COLA at all this year.
But for about 30% of Medicare recipients, it will mean a substantial increase — we don’t know how much yet — in their Part B premiums.
As we mentioned last year, the trouble goes back to a law enacted in 1987: If there’s no COLA like this year, or a very low one like next year, about 70% of Medicare recipients don’t have to pay the usual premium increase; they are “held harmless” under the law.
That means the other 30% are stuck with covering all of Medicare’s rising costs. They are…
- People with higher incomes: We’re talking people with an adjusted gross income plus tax-exempt interest of $170,000 or higher ($85,000 single)
- People who didn’t pay into the Social Security system, mostly teachers and other government workers. They pay their Medicare premiums directly instead of having them withheld from a Social Security check
- People old enough for Medicare but who haven’t started collecting Social Security. Maybe they just turned 65 and their full retirement age is 66. Or maybe they’re waiting to file until age 70 so they can collect a higher monthly benefit. Either way, they also get hosed, because they pay their Medicare premiums directly
- People with lower incomes on both Medicare and Medicaid. For these folks, it’s state Medicaid programs that will foot the higher bill.
As we said, we don’t know exactly how much the increase will be; don’t expect any announcement until after Election Day — heh.
Conceivably, a lame-duck Congress will perform some accounting tricks to take the sting away. That’s what happened last year when a looming 52% increase in Part B premiums became “only” 16%. But that came at a severe cost for many Social Security recipients — Congress killed the “file and suspend” technique for maximizing benefits.
[Ed. note: Then as now, we strongly recommend a different technique to secure your retirement — “piggybacking” Canada’s version of Social Security. There’ve been some new developments on this front in the past year. You can see for yourself right here.]
Sign of the times: Norway’s enormous investment fund will add more stocks and dial back on fixed income.
The Norwegian government holds one of the biggest sovereign wealth funds — $874 billion. It holds about 60% stocks. Yesterday, a government commission recommended raising that to 70%. Blame it on low if not negative interest rates around the globe.
“A higher share of equities increases the expected return,” said the commission, “and the contribution to the fiscal budget, but also entails more volatility in the value of the fund and a higher risk of a decline in its long-run value. The majority is of the view that this risk is acceptable.”
For the majority’s sake, we hope so…
“Went to the same Home Depot I’ve shopped at for years,” reads a frontline dispatch from the War on Cash.
“Went through the same self-checkout lane I’ve always used. But he machine informed me it only took credit and debit sales. Cash buyers must find another checkout. Oy…”
“We keep hearing about inflation being nonexistent,” writes someone who appears to be a newer reader. “However, it seems, many are aping government-produced numbers.
“Our government has a vested interest to report low inflation. Is it possible that inflation is here and not reflected in the government numbers?
“I am referring to the Chapwood Index, which seems quite plausible. Your thoughts?”
The 5: Agora Financial has been calling BS on the government’s inflation numbers during our entire 12-year existence.
The feds started monkeying around with the inflation numbers in the early ’80s to keep a lid on the aforementioned cost-of-living adjustments for Social Security. We’re partial to the work of John Williams at Shadow Government Statistics, mentioned here yesterday. He uses the same methodology to measure inflation that the feds did before those machinations began in the early ’80s.
“You guys noted yesterday,” writes one of our regulars, “that ‘the U.S., Russia and Iran are on the brink of war in Yemen and Syria, with shots being fired by all sides.’
“As you know, the Obama admin has been threatening Russia with cyberwarfare, which would not only considered internationally to be an act of war, but would also impact the command-and-control structure of the Russian military, which could even lead up to a nuclear ‘event.’ All this to prevent leaks about Hillary’s corruption, lies and filth by Russia — i.e., the left has no problems playing nuclear brinkmanship with the lives of you and your children to win the election.
“Yes, really. I may not be the biggest Trump fan, but when it comes to a forced, binary choice, the issue is clear.
“Further, where is the leftist media with their usual anti-war position? Truth is maybe Trump is against nuclear brinkmanship. Maybe Putin just doesn’t like Hillary (remember her stupid ‘reset’ button!?), as she is a warmonger and wants to subordinate Russia (I am not a Putin fan either, but IMHO, Hillary is about identical morally).
“I suspect we will probably be fine. But the fact is that the left is certainly willing to take a risk up to nuclear war, all for their satanic (yes, satanic) lust for power. And if that makes me partisan with your whiny leftist readers, then they can write me back from their bunkers as they spend the next month waiting for the gamma rays from the nuclear war to elect Hillary die. WWI started with the exact same idiot brinkmanship.”
The 5: Jill Stein, the Green Party presidential candidate, recently tweeted that “Hillary Clinton’s foreign policy is much scarier than Donald Trump’s, who does not want to go to war with Russia.”
Of course, the mainstream has long dismissed Stein as a Putin stooge because she took part in a third-party presidential debate sponsored by RT, the Kremlin-funded English-language news channel.
As we said last week, this isn’t just campaign rhetoric. It will live on long past Election Day. Any dissent against a Clinton White House will be greeted with charges of Putin sympathies, if not outright Kremlin collusion.
Not that that’s any reason to vote for Trump, of course. As David Stockman has said, the best possible outcome for this election is that legions of people vote third party or stay home to deny Mrs. Clinton anything approaching a “mandate” to govern…
The 5 Min. Forecast
P.S. Speaking of David Stockman — and the stupid third debate tonight — we look forward to his post-debate comments behind the paywall tomorrow at Contra Corner. We’ll share a choice highlight or two.
There’s still time between now and Election Day to get your free — well, we do ask $4.95 to cover shipping — copy of his new book Trumped!: A Nation on the Brink of Ruin… and How to Bring It Back.
Order through us and your signed copy will come with a bonus chapter describing the No. 1 investment to hold for the next six months. And you’ll get a 30-day look behind the paywall at Contra Corner.
It’s an unbeatable combination, available nowhere else. Take advantage at this link.
Now from Lou Basenese, your personal invitation to join him live tomorrow — one time only. You can reserve your seat with one-click registration below. Lou, take it away…
Dear [%= :subscriberName(E, Reader) %],
Bob asked me not to talk to you.
He said I had too much to do before tomorrow’s live briefing. He’s probably right. I’ve been working 18 hours a day since Saturday and there’s still a lot left before we hit that “LIVE” button tomorrow.
To reserve your seat to this limited, exclusive event… tomorrow at 7:00pm… just click here.
There are a lot of moving pieces. And we’re getting new intel from Greg almost hourly. The situation changes by the day.
So much to get done.
I know I shouldn’t be messaging you.
But I couldn’t help it.
I wanted to get in touch with you before tomorrow.
You know how it goes.
You prepare for something.
Pour your heart into it.
And when it finally comes, you want to share the feeling.
All at the same time.
Excited… because I’ve been predicting the upheaval of the auto industry for years and now it’s finally here in the most amazing, unimaginable, and revolutionary way possible. For a tech investor, this is as good as it gets and I’m going to show you exactly how to position yourself when this new market explodes by 4,900%.
Nervous… because this event is reserved exclusively for our best members and customers. That’s you… so you know that means this is going to be a motivated, smart group of people who demand the BEST. The expectations on me are high tomorrow and I plan on leaving it all on the field.
Thoughtful… because this is a revolutionary way to invest. How to take a stake in the fastest growing private technology company of all time… before it goes PUBLIC. It makes me think of all the possibilities for anyone who takes action and puts themselves one step closer to their dreams of a 7-figure retirement… a college tuition for the grandkids… a new home. Whatever your personal goals are.
Grateful… because it’s moments like this that define what I do, and remind me why I do it. I’m grateful for this job and all the wonderful people it allows me to help. I know… you and I have never met. So maybe it’s hard for you to believe that I truly, genuinely have a real interest in helping you reach your financial dreams. Yet, it’s true. It’s why I left a successful and lucrative career Wall Street. I had enough of the rich only getting richer. Now I work on your behalf. It’s why I get out of bed in the morning.
That’s why this opportunity – for you to invest like a true venture capitalist – is such a big, exciting deal.
For everyone here at WSD.
And for you.
It gives you a chance to level the playing field, feel what it’s like to get behind the velvet ropes to invest alongside some of the most powerful people in the world, and most importantly, to do something great for yourself and those you care about.
Are you as excited… nervous… thoughtful… grateful as I am?
Good! That makes us members of the same team. Committed to making tomorrow a resounding success.
Here’s all you have to do to reserve your seat…
Click the link below and you’ll automatically be registered to attend tomorrow’s live, investor briefing – The $2.3 Trillion Car Crash of 2016 – which starts promptly at 7:00pm
Add it to your calendar and set a reminder right now.
Great! If you clicked the link, you’re all set.
If not, click here to reserve your seat now now (and bank another $125 bonus).
An email with the access link will hit your inbox a few minutes before the event starts tomorrow, so be on the lookout.
I can’t wait to share everything with you.
Now I better go finish my prep and get some rest!
Chief of Technology Investing, Wall Street Daily
PS – Don’t forget to claim your seat to tomorrow’s exclusive, live briefing. You’ll discover the fastest growing private technology company of all time and hear about an upcoming announcement that will kickstart a $2.3 trillion upheaval for the automotive industry. You’ll want to get in as soon as possible, because this company is going to IPO and for a limited time, you can grab your share while it’s still private. It all happens tomorrow at 7:00pm. All you have to do is click here to automatically reserve your seat to this once-in-a-lifetime event.