Ringing In The New Year

As I wait for the last three dividends of 2017 to post to my account, my final accounting report will delayed into next week.  Sure I could just accrue said dividends and release the report but where would the fun in that be?  Especially since I can lay claim to being the first official victim of the new tax plan, aka the Tax Cuts and Jobs Act of 2017.  As it’s not even effective yet, I guess this is the first – of probably many – unintended consequences to emanate from this bill.  This week I’ll also cover my last minute 2017 moves and my first 2018 activity.  But first …

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BATON ROUGE, La., Dec. 27, 2017 (GLOBE NEWSWIRE) — Lamar Advertising Company announces that as a result of changes in the tax code due to the recent passage of the Tax Cuts and Jobs Act of 2017, its board of directors approved changing the payment date of its fourth-quarter dividend on its Class A common stock and Class B common stock to January 2, 2018. The dividend was previously scheduled to be paid on December 29, 2017. Management and the board determined that, as a result of such changes to the tax code, it was prudent to delay payment of the dividend until calendar year 2018.

The first question is prudent for whom?  My guess is the top dogs (management and board) is the answer.  It certainly isn’t this lowly little shareholder as this dividend will be taxed at a higher rate in 2018 for me.  As the benefits of the new plan accrue from the top, I guess it’s only fitting that the wealthy continue to change the rules of the game – at the 11th hour – to their benefit.

This was only the beginning as this dividend was credited (inappropriately) to my account on December 29th.  The broker uses a platform owned by Bank of New York Mellon (BK) so my assumption is it is a BK error.  Now the cause needs to be identified (costs), the transaction reversed (more costs) and reapplied effective January 2nd.  Further, since it is year end a potential reversal is required for pending 2017 tax reports.  BK will likely take a 2018 earnings hit on this error (albeit minuscule) due to either greed or a gaming attempt on the system.

I suspect this is the first – but not the last – potential gotchas which in turn will reduce anticipated benefits triggered by the bill.

My End Of Year Activity

My efforts to game the system were twofold:

  1. Made an early mortgage payment (billed but not due) to ensure the full deduction.  I have some uncertainty as to whether the mortgage interest is within or in addition to the new standard deduction
  2. Maxed out the IRA contribution.  It appears this was a overly cautious move but wanted to ensure any possible retroactive move regarding 2017 contributions made in 2018 were not applicable (bird in hand, so to speak).

The one move not made was accelerating property tax payments.  Although a possible move, in our case we are eligible for beneficial treatment due to age and disability.  The benefit is quarterly (rather than annual) payments which is essentially an annual interest-free loan for thousands of dollars.  In my opinion, the risk of losing this (or angst in reinstating) outweighed any short-term benefits derived.

Front Loading 2018

I ended the year with three open limit orders:

  1. Royal Bank of Canada (RY) – an addition to the IRA which (broker confirmed) is an issue exempt from Canada’s 15% tax withholding via tax treaty.  Once executed (and post ex-dividend) I will eliminate my taxable (subject to withholding) RY holding.
  2. Compass Group plc (CMPGY) – a new portfolio addition, UK based with some US exposure.  I believe there will be some ongoing residual weakness in regards to Brexit.
  3. Nexeon MedSystems, Inc. (NXNN) – my current speculative toy.  Extreme volatility is the game here so perhaps a low ball offer may get executed to further reduce my cost basis.

My intention is not to significantly add positions this year although I have 12 more that I am watching.

My goals remain the same (as usual), to exceed the performance of the S&P index (whether up or down) and beat the dividends earned in 2017.  All else is icing on the cake!  On deck (Jan/Feb in no particular order) will be the annual review, geographic diversity assessment, sector allocation and a review of the results (so far) of my thematic investing.

I wish you all a successful and prosperous New Year!




10 thoughts on “Ringing In The New Year

  1. Ha … assuming you knew the right moves 🙂 This indeed was a weird one and I would presume many didn’t even try. One could easily get a headache trying to play the game as to the individual circumstances; W2 or not, high tax state or not, homeowner or not, real estate investor or not … and the list goes on. And these are just the ones we know at this point.

    Happy New Year to you as well.


  2. You’re probably right, but I need something to do as a hobby 🙂 Anyway, I’ve always said I’d consider alternatives if I failed to beat the index. I define failure as two consecutive years of missing the goal. I’ll go ahead and front run next week’s post by announcing I beat the index in 2017 for the 33rd year of 37 as an investor.

    You have yourself a wonderful 2018 as well!


  3. Smart to take advantage of last minute tax moves. That is usually my goal. And see if it is possible to drop down a lower bracket. But wasn’t really able to this year. Especially with a big tuition bill due by year end, I couldn’t put extra into the portfolio or tax break accounts. At least I was able to max out my Roth during the year so that helps. Looking forward to seeing what 2018 brings you!

    Liked by 1 person

  4. Hey – at least you did what you could! And tuition should be considered an investment as well (in theory). Unfortunately it’s doubtful that my strategy – which has been very adept at tax avoidance – will produce the same tax avoidance results in 2018 so I’m bracing for a tax hit. The question for me becomes will the US dollar weaken enough for my foreign dividends to rise via the exchange rate to offset my increased US tax rate.

    Hope you have a prosperous 2018!


  5. This was one year that – depending on your personal situation – doing nothing could be the right answer. I never got into LEAPs myself – I’m guessing yours are on the ETF side – hedging or speculating?

    And a Happy New Year to you as well!


  6. Yeah, I’m wondering how’s it’d be beneficial to shareholders to received it 2017 vs 2018 unless it’s for the board members who received hundreds of thousands, and it could swing from 39 to 35%?

    Would you do an analysis on nxnn? I’m not very good at swing trading, I need to learn from you. Mr. W also like you a lot. Hihi.

    Liked by 1 person

  7. That was my guess (and that of my broker). The issue has been confirmed as a Bank of New York Mellon (BK) pass through and the investigation is now centered on whether LAMR revised the payment date (and instruction set) in accordance with market rules (generally a 10 day lead time). If not, costs incurred (and penalties) could be assessed back to LAMR (which could hurt worse than the tax savings they were trying to obtain).

    On NXNN, swing trading relies on chart trends and is not a long term strategy (usually no more than a two week hold). So I am not a swing trader. However, this issue does trade on the “wild-west” OTCQB market. The way I played this was to initiate an initial position (limit order at $1.49 which was a 25% discount to the initial listing). My current limit order is just above the all-time low. Even though the price dipped briefly below my offer, the order was not filled as it is a market maker choice not a computer. I’m happy with the shares I got but would like to average down while expanding my holdings tenfold. I could present my full thought process if you like, but my ability to perform a critical and detailed analysis (particularly numbers) was one of the parts of my brain swept into the black hole (although logical and what if analysis remains intact).

    And tell Mr. W thanks and he’s a lucky man 🙂


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