Word to the wise, don’t mess with Reddit. Over the last week, perhaps the most interesting storyline in financial markets was not Elon Musk changing his Twitter bio to Bitcoin, or Q4 economic data starting to roll in. No, it was Gamestop. The company notorious for shortchanging gamers when selling their used copies of videogames became the darling of Reddit-traders earlier this week. What started as a search for undervalued companies on Reddit evolved into a coordinated effort to punish hedge funds that have heavily shorted the stock for years. In other words, betting against a decline in share price. The result was a skyrocketing stock price and a lesson in how commission-free trading and social media may impact financial markets going forward.
"The difference between death and taxes is death doesn't get worse every time Congress meets."
Will Rogers, American actor
As most business managers and tax professionals know, the 2017 Tax Cuts and Jobs Act ushered in significant changes to the tax code. Some good. Some bad. The $10,000 cap on state and local taxes certainly was not a fan favorite, while the changes in marginal tax rates were welcomed. Of course, some of the more important business deductions were protected.
For example, the IRS allowed a junkyard owner to deduct the cost of cat food as a business expense. The taxpayer claimed that the food was necessary to attract feral cats, who kept rats and snakes from infiltrating the property.
2020 has been a year to forget, and tomorrow is certainly going to another one of those days. I’m sure you are just as disappointed as I am that Tuesday’s episode of The Bachelorette will be bumped to Thursday for election coverage. We’ll have to wait a couple extra days to find out the tumultuous end of Clare Crawley’s season. It’s also likely that we’ll have to wait a few extra days to find out the results of the 2020 Presidential election.
Recent polls show Democratic nominee Joe Biden leading President Trump both nationally and in key battleground states. With high numbers of mail-in ballots to process, there are signs that counting may not be complete until later this week. This week is certainly set up to be politically contentious with a high probability of volatility in financial markets. With the election in mind, here are four things we know and four things that we don’t.
This isn’t a shot at Dave Ramsey. If you’ve ever tuned into the nationally syndicated radio show, the lead coming out of the break usually goes something like: “Where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice.” Dave has certainly helped millions all over the world as the de facto budget guru and debt’s greatest adversary. But this StonebridgeFOCUS is not about debt, rather why is cash not always king?