Admin, Author at RiddlerThis https://riddlerthis.com/author/admin/ Official Site of RiddlerThis Fri, 26 Feb 2021 15:32:26 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.2 126345908 Rising Home Prices https://riddlerthis.com/2021/02/26/rising-home-prices/ Fri, 26 Feb 2021 15:32:23 +0000 https://riddlerthis.com/?p=136 In New Zealand, monetary policy will now take into account housing prices, due to their rapidly rising prices. Something the Federal Reserve refuses to do. Rising home prices are not included in the Consumer Price Index calculation, which instead uses a system of “imputed rents” to figure the cost of housing and accounts for almost…
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In New Zealand, monetary policy will now take into account housing prices, due to their rapidly rising prices. Something the Federal Reserve refuses to do.

Rising home prices are not included in the Consumer Price Index calculation, which instead uses a system of “imputed rents” to figure the cost of housing and accounts for almost one quarter of the CPI.

The rise in residential real-estate according to the imputed rent measure used by the BLS, is up by about 3% annually.

Median sales prices of existing homes were up 14.1% in January when compared to January of 2020, and 12.6% when compared to prices in December 2020.

The central bank continues to push its short-term interest rate to near zero, and continues to purchase $120B of securities each month, including $40B of agency mortgage-backed securities.

One thing to keep in mind is that mortgage rates are going up

And mortgage rates are closely tied to the yields on 10-year Treasury bond

Were beginning to see mortgage rates climb as the 10-year Treasury bond rate, as well as the 30-year yield increase.

If the trend of rising yields and subsequently mortgage rate increases continues, we may see a slow-down in the real-estate markets, especially with residential home sales.

Let’s not forget the impact rising bond yields have on stocks – larger institutions will sell-off their equities holdings in favor of capitalizing on the yields from bonds and other fixed income assets like Treasuries. Not only will they sell off equity holdings as a caution against risk, they will direct future funds that would have gone into equity holdings, towards bonds with climbing yields.

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Cryptocurrency and Taxes https://riddlerthis.com/2021/02/26/cryptocurrency-and-taxes/ Fri, 26 Feb 2021 15:00:01 +0000 https://riddlerthis.com/?p=143 Cryptocurrencies are treated as property by the IRS. Tax rules that apply to stocks, also apply to cryptocurrencies. So, if you have a profit from the sale of cryptocurrencies, you will pay a capital gains tax. The amount of capital gains tax you pay is dependent upon both your income and the time duration you…
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Cryptocurrencies are treated as property by the IRS. Tax rules that apply to stocks, also apply to cryptocurrencies. So, if you have a profit from the sale of cryptocurrencies, you will pay a capital gains tax. The amount of capital gains tax you pay is dependent upon both your income and the time duration you held the cryptocurrency for. Any cryptocurrencies bought and sold within a year are treated as short-term capital gains and will have a higher capital gains tax, possibly as high as 20%. Cryptocurrencies held for a year or more are treated as long-term capitals gains and will have a lower tax rate of around 15%. Again, the realized tax you pay on capital gains is dependent not just on how long you held the cryptocurrency for, but also your stated income. Generally speaking, the higher your income, the more you will pay in taxes. Short-term capital gains are taxed as ordinary income, which includes wages.

If you’re a single filer earning under $40,400, or a married couple making under $80,800, you have a 0% capital gains rate for any sale of a cryptocurrency that’s been held for at least a year (long-term capital gains).

Now, if you sell a cryptocurrency at a loss, you can claim a capital loss deduction. If your yearly annual loses exceed yearly annual gains, you can deduct up to $3,300 per year. Any excessive losses beyond that can be carried over to future tax years.

The same logic applies to paychecks. If you receive payment in bitcoin or any other cryptocurrency, it’s counted as ordinary income.

If you’re an independent contractor and receive payment in the form of cryptocurrency, it will count as self-employment income.

The IRS ask specifically about cryptocurrency transactions on the first page of the 1040 this year. You have to mark “yes” if you received any cryptocurrency, purchased a cryptocurrency, traded a cryptocurrency, spent a cryptocurrency, etc. By checking “yes” on the 1040 form you’re acknowledging you had some sort of financial transaction with a cryptocurrency – but this doesn’t mean you will necessarily be taxed. You’re only taxed if you sold cryptocurrencies for a profit. If you simply bought a cryptocurrency and held it, without exchanging it for another cryptocurrency or selling it, then you are not taxed. It’s no different from a stock in that respect.

Contrary to above, you can check “no” regarding the IRS’ question on the 1040 form if you did have cryptocurrency transactions, but did not have a taxable event such as selling cryptocurrencies or receiving cryptocurrency in the form of payment. If you simply bought and held or transferred a cryptocurrency between wallets, there is no taxable event.

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Cryptocurrency Volatility https://riddlerthis.com/2021/02/23/cryptocurrency-volatility/ Tue, 23 Feb 2021 16:23:39 +0000 https://riddlerthis.com/?p=124 Cryptocurrencies experienced a market-wide crash between last night and today. Bitcoin plunged nearly 20%, many altcoins dropped more than 25%.Why did this happen? Did anyone predict or foresee it? The answer is no on both counts. I spent all morning pouring through various websites, blogs, and forums to see if anyone called this – because…
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Cryptocurrencies experienced a market-wide crash between last night and today. Bitcoin plunged nearly 20%, many altcoins dropped more than 25%.
Why did this happen? Did anyone predict or foresee it?

The answer is no on both counts. I spent all morning pouring through various websites, blogs, and forums to see if anyone called this – because that would have been incredibly impressive and I’d assume they have some sort of insider information or even more likely, that they themselves were behind the crash.
But alas, there was nothing. In fact, quite the opposite. On forums like Reddit, SeekingAlpha, websites such as CoinDesk, CryptoQuant, and others, they were all blindsided. Prior to the sell-off, they were all echoing one another saying how they were bullish on cryptos and that the price would continue it’s upward trajectory.
After the sell-off had begun, everyone was calling this a small “dip”. There was a select few folks who called this a “minor correction” but the overwhelming response to the initial sell-off was that this was a small “dip” and they all recommended folks to continue holding their coin.

I take issue with that because in all of cryptocurrencies history, especially dating back to 2017 when we had the first large crash, folks will rush to the chats, Discord, Reddit, blogosphere, and other places to preach, shout, and spam “HOLD! Continue hodling hodlers!”
Why?
Why tell others to continue holding in the midst of a crash while subsequently calling it a “dip”?
My gripe here is that these folks, and in fact, all folks, do not understand the crypto markets. They panic when seeing the markets decline and their holdings whither away into a meek pile of what they originally believed was pure gold (“It’s gold Jerry, pure gold!).

Don’t listen to them – it’s froth. These folks are panicking and seeking to reassure themselves that things will be alright by hearing from others that agree with them – an echochamber.

The fact is, no one understands crypto markets any more than one can acknowledge that they make less sense than the stock market. And that’s fine. A whale, or large firm may sell off thousands of Bitcoin at any given moment leading to a crash that cascades as stop-losses are reached in hodlers’ accounts and folks panic sell. This is fine.

But don’t hold in the midst of a crash. If you’re losing money, and scared about what may happen over the next hour, sell. Save yourself both the stress of hodling and your wallet. You can still believe that cryptocurrencies, blockchain, and decentralized finance is the future, while selling your holdings. Just buy back in once the crash subsides and prices stabilize.

I’ve heard from a few dozen folks who disagree with me and think we all should just be holding and only adding to our accounts and I cannot stress enough how unwise this is. Cut your losses and buy back in at deflated prices.

As I write this, both the crypto markets and stocks are rising! It’s a new day traders!

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LIBOR https://riddlerthis.com/2021/02/23/libor-sofr/ Tue, 23 Feb 2021 00:33:19 +0000 https://riddlerthis.com/?p=119 LIBOR is the London Interbank Offered Rate – used for many decades in a wide variety of financial products like small business loans and adjustable rate mortgages. LIBOR is being phased-out in favor of the Secured Overnight Financing Rate (SOFR).Why is it being phased-out?Mostly because of it’s volatility and lack of transparency. As a result,…
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LIBOR is the London Interbank Offered Rate – used for many decades in a wide variety of financial products like small business loans and adjustable rate mortgages. LIBOR is being phased-out in favor of the Secured Overnight Financing Rate (SOFR).
Why is it being phased-out?
Mostly because of it’s volatility and lack of transparency. As a result, many industry participants and regulators have been pushing for a replacement for years. By December 31st of this year (2021), firms will no longer be writing new contracts that reference LIBOR, and USD LIBOR settings will cease to exist after June 30, 2023.
What does this mean?
This means that securities and derivatives whose underlying asset is traditionally based on LIBOR (some commercial loans for example) will now be based, or tied to to SOFR. The assumption is that SOFR will help provide greater transparency and subsequently less risk on loans and securities tied to it.

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