Quote of the Week

“May your holidays be full of warmth and cheer. We wish you a new year full of peace and joy.” – Larry, Stephanie, Tom, Sue, Jill, & Bucky

Please note: this is 2017’s last weekly commentary. We will be back in 2018!

Technical Corner

It looks like the Tax Cut/Tax Reform Bill is a runaway train heading towards becoming law. I will comment on the subject when the President signs the bill.

However, I want to comment on the “Swamp,” which is Washington politics. This will probably make you sick about our elected representatives. President Trump promised to “drain the swamp” in Washington. It looks to me that the alligators are multiplying at an almost unbelievable rate. I do not think you have to be a cynical person to be outraged about the backroom dealing that is going on to pass this bill.

Get this – Republican senator Bob Corker, who has a reputation as a deficit hawk, meaning that he is one who really cares about our current deficit problem of $20 trillion, sold his vote for his personal enrichment. Senator Corker is reported to be the third wealthiest member of the Senate. He was the only Republican Senator to vote against the bill before it went to the Conference Committee. He hates federal deficits, and yet he has made his reputation on the deficit issue.

Real estate makes up most of Senator Corker’s fortune. There is a new provision in this bill that benefits pass-through Income. This type of income applies to income that a corporation earns and is then “passed through” and taxed on the personal tax return of the owner of the business. My business is classified as a pass-through entity because it is a Limited Liability Corporation, otherwise known as an LLC.

Most service companies such as financial planners, accountants, lawyers. etc., are generally structured as pass-through entities. They do not qualify under this new tax bill for this pass-through benefit. Some businesses that do qualify under this new law get preferential tax treatment for the owner by only paying a 25% tax rate on income, rather than the current 39.6% as the top personal tax bracket. For a large company with high income that qualifies, this is a huge tax benefit for the owner.

Potentially needing Senator Corker’s vote, suddenly real estate ownership was included in the type of business that would receive this tax benefit. Surprise, surprise.

When asked about this turn of events, Senator Corker said, “I haven’t read the bill yet, I have just read a two-page summary.”

What in the hell are you doing? Are you now voting for the bill? You, being the deficit hawk of the Senate, have now changed your mind and you are now voting for a bill that you have not even read? You are voting for a bill that will add 1.5 trillion dollars to the deficit. I have said enough. I am now going to the bathroom to throw up.

The UPI on the S&P 500 remains at 24 out of 100. The allocation for most clients remains the same: 85% equities, 0% bonds, 10% alternatives, and 5% cash.

One final thought. The investor class should do extremely well if the bill is passed. If you own stocks, bonds or real estate you are a member of the investor class.

Tom’s Thoughts


Since 2009 and especially during 2017 the subject of Bitcoin and the technology (BlockChain) that supports it has been a common topic in the financial news. Bitcoin is one of a growing group of cryptocurrencies. The concept has piqued my curiosity. So, I read some articles and books on the subject.

I thought the following high-level summary by Tal Yellin, Dominic Aratari, Jose Pagliery / CNNMoney would be of interest to other curious folks. For simplicity, I have copied it and included the article in its entirety for your convenience. The link also follows at the end. Have fun ….

What is Bitcoin?

Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions are made with no middle men – meaning, no banks! Bitcoin can be used to book hotels on Expedia, shop for furniture on Overstock and buy Xbox games. But much of the hype is about getting rich by trading it. The price of bitcoin skyrocketed into the thousands in 2017.

Why Bitcoins?

Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Small businesses may like them because there are no credit card fees. Some people just buy bitcoins as an investment, hoping that they’ll go up in value.

Acquiring Bitcoins

Buy on an Exchange
Many marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Coinbase is a leading exchange, along with Bitstamp and Bitfinex. But security can be a concern: bitcoins worth tens of millions of dollars were stolen from Bitfinex when it was hacked in 2016.

People can send bitcoins to each other using mobile apps or their computers. It’s similar to sending cash digitally.

People compete to “mine” bitcoins using computers to solve complex math puzzles. This is how bitcoins are created. Currently, a winner is rewarded with 12.5 bitcoins roughly every 10 minutes.

 Owning Bitcoins

Bitcoins are stored in a “digital wallet,” which exists either in the cloud or on a user’s computer. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money. Unlike bank accounts, bitcoin wallets are not insured by the FDIC.

Wallet in cloud: Servers have been hacked. Companies have fled with clients’ Bitcoins.  Wallet on computer: You can accidentally delete them. Viruses could destroy them.


Though each bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed – only their wallet IDs. While that keeps bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them. That’s why it has become the currency of choice for people online buying drugs or other illicit activities.

 Future in question

No one knows what will become of bitcoin. It is mostly unregulated, but some countries like Japan, China and Australia have begun weighing regulations. Governments are concerned about taxation and their lack of control over the currency.

Because of the highly speculative nature of investing in bitcoins, Lof Advisors recommends that clients not buy bitcoins in their investment portfolios.

Yellin, Tal; Aratari, Dominic;  Pagliery, Jose  CNNMoney Retrieved on December 18, 2017 from http://money.cnn.com/infographic/technology/what-is-bitcoin/

By the Numbers

PERSONALIZED MEDICINE – 10 years ago, it cost $10 million and took several weeks to “sequence a genome,” i.e., mapping out a person’s entire genetic code. Today, the work can be completed for $1,000 in just a few hours (source: Financial Times). Michael A. Higley, BTN 12-18-2017

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These are the opinions of Larry Lof and Stephanie Mayoral and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.The S&P 500 is an index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly. Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.

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