Fast Facts

From Hoops to Hallways- LeBron James has left Cleveland, but he’s still a hero to Ohioans. The newly minted Los Angeles Laker opened a public school for 240 at-risk third- and fourth-graders—some with learning disabilities, some from broken homes—in his hometown of Akron. Funded by James’ Family Foundation, the I Promise School aims to help students thrive academically and emotionally, and will offer support to their parents, including job placement assistance. For LeBron, who grew up poor and without a dad, the project is personal. “I know exactly what these kids are going through,” he says, “because I’ve been there.”

Lookout Below! – A Chicago Cubs fan escaped a serious injury at Wrigley Field last week because he was wearing a plastic bucket on his head. Kyle McAleer, 20, was sitting underneath the centerfield scoreboard when a 4-pound, 8-inch metal pin fell from the board and struck him on the head. Fortunately, McAleer and his friends had donned their “rally” buckets just minutes earlier, after the Cubs fell behind. McAleer suffered a big cut, but says he could have been killed without his protective headgear and considers himself very lucky. “If the Cubs weren’t losing,” he said, “I would not have been wearing that bucket.”

An Apple a Day- Apple is the first to hit $1 trillion! Just what does that actually look like? Well first, it’s a 1 with 12 zeros…1,000,000,000,000…wow! If Apple was a country they would be the 27^th richest, just behind Pakistan and Malaysia according to the CIA World Factbook. Apple could also buy the world’s most valuable sports team, the Dallas Cowboys, for $4.8 billion, which might as well be pocket change. They don’t have to stop there. They could buy every team on Forbes’ list of the 50 most valuable teams, all for a bargain price tag of less than $140 billion.

Weekly Focus – Think About It

“The changes in our life must come from the impossibility to live otherwise than according to the demands of our conscience, not from our mental resolution to try a new form of life.”
–Leo Tolstoy, Russian writer

The Markets

Capital gains tax reform comes with a big price tag: $100 billion over 10 years.

A capital gain is any increase in the value of an asset, such as an investment, a home, land, etc., between its purchase and its sale. The amount of a gain is determined by subtracting the purchase price from the sale price.

Last week, the White House proposed capital gains be adjusted or ‘indexed’ for inflation before they are taxed. Princeton Professor Alan Blinder explained the idea in The Wall Street Journal:

“Why index gains? Suppose you own a stock for many years, during which time overall prices have doubled because of inflation. Over the holding period, the value of your stock also has doubled. When you sell, the proceeds have precisely the same purchasing power as the original purchase. There’s no gain, no loss. But under current tax law, you owe taxes on the phantom ‘gain.’ Worse, if your stock went up by less than the cumulative inflation, you’ll still get taxed despite your loss. This is unfair and dysfunctional.”

While the suggestion is appealing to many investors, it’s not without controversy. For example, the White House suggested the Treasury Department change the tax code without Congressional approval by modifying enforcement regulations. However, the legislative branch – Congress – is constitutionally responsible for tax law.

In addition, adjusting capital gains for inflation without doing the same for interest expense and depreciation may allow some taxpayers to be able to generate significant losses on paper. Current tax law includes provisions that limit this kind of tax strategy, but indexing capital gains would reopen the door, reported the Tax Policy Center.

Another consideration is the impact of the change on the deficit and the national debt. The Congressional Budget Office estimates suggest 2017 tax reform will increase “…the total projected deficit over the 2018-2028 period by about $1.9 trillion.” Adjusting capital gains for inflation could increase the shortfall by about $100 billion over a decade, reported Naomi Jagoda for The Hill.

THE MILLENNIAL WAY. From social media to housing options to banking, every generation has had its own preferences. Today, millennials (individuals between the ages of 18 and 34) are having a profound influence on lifestyle and culture. Here are three trends to watch:

Millennials are moving to smaller cities. “Mid- or second-tier cities, loosely defined as those under a million people that aren’t regional powerhouses like Austin or Seattle, are increasingly seen as not just places to find a lower cost of living, easier commute, and closer connections with family, but also a more approachable, neighborhood-oriented version of the urban lifestyle that sent many to the larger cities in the first place,” reported Patrick Sisson for Curbed.com.
Millennials like point-of-sale loans. Point-of-sale loans are catching on. The Economist reported, “Consumers who might previously have financed big-ticket purchases such as furniture, electronics, or home-improvement projects with a credit card are now opting to borrow at the checkout, often with an initial 0 percent interest rate. These short-term credit products were once the domain of big banks…[and] store-branded credit cards. Now tech startups are entering the market with innovative techniques for underwriting and approving potential borrowers, often in seconds.”
Millennials tend to prefer healthier lifestyles. “For millennials, wellness is a daily, active pursuit. They’re exercising more, eating smarter, and smoking less than previous generations. They’re using apps to track training data and online information to find the healthiest foods. And, this is one space where they’re willing to spend money on compelling brands,” reported Goldman Sachs.

Best regards,

John Klevens, CFP

Sources: The Week Magazine, NBCnews.com
Portions of this newsletter has been prepared by Peak Advisor