Category Archives: Investing/Financial Planning

All About the ETF (Exchange Traded Fund) The Dangers (Part 3)

Earlier here in the first part of our ETF Post from our coming Q2 Newsletter, we spoke of the creation and massive growth.

In the Second Part here of our ETF Post we showed the large number of different asset classes the ETF’s are now available …. and growing fast….

Here is a reminder, of just how many Assets ETF’s now encompass..

etf-universe-aum-large

The NAV or Net Asset Value – Discount, Premium and Mismatch

NAV Or Net Asset Value is the true value of the underlying assets… recall the ETF is a basket of assets, originally the first, SPY or “Spider” the S and P 500 Stocks (US large company stocks)….

The SPY is easily tracked, rarely deviates from the underlying value (NAV) and trades very liquid (constantly).

Far away from core indexes, there are now ETF’s that currently trade instantly but have holdings that in some cases may take days, weeks, or even months to liquidate the underlying asset.

Logically… A mismatch of this magnitude can lead to a miss pricing of the asset, especially during stress.

Examples include, floating rate funds, high yielding (low quality) or synthetic types of ETF’s.

As a best practice, staying away from unique and small ETF’s is a good idea.

Have a Great “Which ETF’s to Avoid” Day!

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

Lucky Three it Was (Corrected 1099), Green Light for Early Filers… Tax Update… Child Tax Credit Delayed Filings and Refunds

Down from hundreds just a few years ago, on Friday, as mentioned in the break in announcement, there were only THREE Corrected 1099’s in the initial corrected run.

We have touched base with you lucky ones and as a side note the corrections were small.

Green Light for Early Filers

Green Race Flag

Ok to File !

For those early filers that have patiently waited for our Green Light to file…

Green Light! You may go forward and file!

Fraud Causes Possible Delays

Earned Income Tax Credits and Child Credits can frequently result in an extra Refund…

In recent years, fraudsters have taken notice and the IRS has initiated laws to prevent this abuse.

Due to the abundance of fraud and the laws fighting these fraudsters, the IRS has issued a statement that refunds and filings will be delayed.

No need to rush your filing if you have multiple child credits or earned income credits… Early to Mid March is the quickest it will be processed…

Coincidence from Q2 2020 Newsletter

Our editor has a long article that deals with the IRS, and Audits which we previewed here.

The following graph seemed confusing to us, so we left it out … of no coincidence now, given the above notification, the largest number of Audits, and successful audits, have dealt with the Earned Income Tax Credit…

EIC Audit 2017 and 2018 Filings

Needless to say if you have Child Tax Credits or EITC’s make darn sure you dot the i’e and cross the t’s … bad folks in front of you have created concern for the IRS!

Have a Great “Green Light” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

Corrected Tax Forms Update, First Round Due Today, Then Every Two Weeks – Friday

Break In – We had three (you lucky ones have already been notified) corrected’s as of this writing, and Corrected’s appear to have been dropped first thing this AM… those waiting the Green Light, we will update first thing Monday- but so far so good!

 

Later today, maybe even tonight, the first round of Corrected Tax forms, (1099 Misc) will occur… Our biggest correction year, about eight ago, led to over half receiving corrected Tax forms.

Steadily over the past years, this Corrected percentage has fallen (Hopefully not jinxing us!)

Those of you that have contacted us, and are idling at the finish/starting line, we appreciate your patience, but hold off just yet, as the number/% of actual Corrected Tax Documents will give us confidence in moving forward!2019 1099 Consolidated snapshot

New to the Corrected Schedule is an every two week Friday Corrected’s Drop! Nice… Prior years were randomly scattered and left us clamoring for the day… especially as we neared the April filing date.

Behind the scenes we can electronically check everyone at once throughout the day….in year’s past, while due today, they may not post until very late in the day or even tonight, leading to a delayed victory lap until tomorrow!

Fingers crossed for a small number corrected’s!

Here is a link to the 2019 Consolidated 1099 Handbook explaining the 1099 in great detail, for those so inclined…. using the diary feature here of our post for future reference.

Those of us lucky ones, we will reach out to you immediately!

Today is a Friday, and as we log another Rainy Cold Week for the record books… Spring, We Welcome You!

Have a Great Weekend and Talk to you Next Week!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

All About the ETF (Exchange Traded Fund) The Proliferation (Part 2)

Earlier here in the first part of our ETF Post from our coming Q2 Newsletter, we spoke of the creation and massive growth.

The original Index ETF, was called by its ticker, SPY AKA Spider!

If They Buy, Wall Street Will Build – Beginnings of a Problem

Wall Street is just like many other businesses, in that if someone will buy it, they will build it. Recall the rush to bring “.com” companies public in the late 90’s, due to the insatiable appetite by investors, who were also experiencing the newly minted power of the internet itsself.

The following, again from IShares and Visual Capitalist shows the proliferation of various types of ETF’s.

etf-universe-aum-large

Dangers in the Making

Once a single Index ETF, now a plethora of over 6000 and counting different ETF assets.  Given the fact that investors do not need duplicate index ETF’s, many new ETF’s do not track anything, and can even get into the woods in uncharted, unique and illiquid types of assets.

US Exchanges are currently logging a shrinking number of public companies due to cost, liability, red tape, and mega mergers.

There are only about 5000 US Traded companies on the exchanges, with a much larger, but very small capitalization of international companies. With this in mind, there must be tons of overlapping ETF holdings.

There are also fledgling ETF’s that will likely never gain traction.

Next Up, The Dangers and What To Avoid…

Have a Great “Proliferation of ETF’s” Day!

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

All About the ETF (Exchange Traded Fund), The Creation and Growth (Part 1)

(Those on the edge of your seats… this post accidentally set for 10:30 PM… such the delayed email today… carry on)

Working on the Q2 Newsletter and with a fabulous article about ETF’s (Exchange Traded Fund) in the making, as promised from last week, wanted to share in short version, here in this format, in advance….

ETF Index SPY is Born

This first Index ETF, traded (s) on the exchanges as SPY can be purchased just like a stock, during market hours and even after market hours in the much less stable and liquid extended market hours. Today just like when it was established, trades at 1/100 of the actual index value.  I.e. Index 3300, SPY 330.

This Index ETF allowed investors the ability to purchase one asset, under the ticker SPY, just like an individual stock, but hold 500 stocks, in this case the Standard and Poor’s 500, generally known as the largest US public companies in the world all at once and have throughout the day ability to buy or sell.

Prior to the SPY, there were certainly Mutual Funds (and still are today) that represent the same index, but were only tradable at the end of each day, also called end of day settlement.

In an ever faster moving world, the ETF has gaining appeal and continued money flows through low cost purchase.

Time Flies When We Are Having Fun – National Quote 1.5 Decade Ago Still Pertinent

Oddly, the following quote in 2006, actually still hits to the heart of an important topic of this article today…

Managers Look Ahead To Era Of Rate Declines

BY MURRAY COLEMAN

INVESTOR’S BUSINESS DAILY

Posted 10/6/2006

“The interim period while we’re not raising or lowering rates is a time to build ETF watch lists,” said John Kvale, a Dallas- based adviser. “If it’s a soft landing for the economy, then our belief is that we’ll gravitate much more toward higher-quality stock funds.” He’s moving clients away from small-cap ETFs. The funds he favors now include S&P 500 tracker SPDRs. (SPY) “We’re holding off right now on investing in more sector-specific ETFs,” Kvale said.

Fast Forward to the Growth of ETF’s

From Ishares/Black Rock and Visual Capitalist

HIstory of ETF

As long as there is demand, Wall Street will Build!

Next up, beginnings of Danger!

Have a Great “ETF Creation” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

Did Elon Musk, Founder of Tesla, Get the Last Laugh? Maybe! The Short Squeeze

Elon Musk, Tesla founder and SpaceX Explorer garnered our attention with several interesting charts which we highlighted here and here on how he brought the electric car to fruition.

Musk, so controversial, not only in his endeavors, but in his life, went against the grain with his Tesla Automotive, giving rise to the first all electric vehicle (also in very lofty production goals, which were at first not met) and a unique against the grain sale system that bypassed much of the standard mandatory current automobile industry taxes tariffs and payments.

Musk, during a Twitter barrage about a year ago, got himself into trouble resulting in his removal from several important roles at his firm Tesla.

Much of the Twitter trouble came from an attempt to chase short sellers – those investors that actually sell your company stock short (in advance) with the expectation that it will go down there by purchasing it back at a profit. Musk taking issue with the vast community of shorts in a Twitter storm created interest from the regulators.

Five Years of Short Interest

Fast forward to just last week,  neat chart from our new test service, shows exactly what happens when too many people get on one side of the trade and what it can do to the stock.

As, the graph rises, more shorts are piling on … but what happens if they all need to hit the exits at the same time?

2-7-20 Tesla Short Interest

This is What happens, AKA Short Squeeze

While the stock has come back down to earth a bit at the end of last week, there were certainly many investment bodies left behind on the short squeeze roller!

2-7-20 Tesla Graph

We are not recommending Tesla as an investment, or as a purchase for your next car, only somewhat humored by the Lemming like pilings on and off, and what it has ultimately done to Tesla stock.

Did Elon Musk Win? Time will tell!

Have a Happy “No Lemming” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

Tax Forms Update, Reminder EVERYONE Receives a Paper Copy, ETF Preview … Friday

While the unofficial due date, as mentioned last week here, is next Wednesday February 12th, forms are dropping day by day.

As a reminder, EVERYONE will receive a paper copy of these forms, electronic versions will be posted as soon as they are mailed out.

The Whole Enchilada form, AKA Consolidated 1099 which includes the following:

Form 1099-B, Form-DIV, Form 1099-INT, Form 1099-MISC, and Form 1099-OID

This will be the form that is the last to arrive, due to so many moving parts. Donald the Brian spent over a month in the fall last year confirming basis information to help thwart needed corrected forms… but they may still occur as each investment entity may also have a correction, spurring a completely new Whole Enchilada Consolidated 1099.

If there were less than $10 worth of activity, the IRS does not care and as such a 1099 will not be sent. Alert..this could happen easier than you think, even if the account had sizable value, but little interest or dividends and no sales!

Reach out with any questions!

ETF

Working on a deep dive, likely multi-part Article for the Newsletter about ETF’s … the more stats we find, the more interesting the Article is getting… Ya Mrs. Cain, you were right.. we would need to know how to do that extensive research paper…sure it easier with the web… Look for abbreviated posts here in the not too distant future!

Weekend Almost Here

Today is a Friday…. some unusually cold weather this week… maybe nearing the last way down here in the south…

This from a relatives front porch who is actually south of Dallas… we had none here!

20200206_143214712_iOS

Know you guys up north see this constantly, but not so much in our neck of the woods anymore…novelty remains here for sure!

Have a Great Friday and Super Weekend!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents