Daily Commentary

Providing succinct, entertaining and savvy thinking on global capital markets. Our goal is to provide discerning investors the most essential information and commentary to stay in tune with what's happening in the markets, while providing unique perspectives on essential financial issues. And just as important, Fisher Investments MarketMinder aims to help investors discern between useful information and potentially misleading hype.

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The IRS Is Going to Know If You Sold Taylor Swift โ€˜Erasโ€™ Tickets

By Anne Steele and Ashlea Ebeling, The Wall Street Journal, 9/22/2023

MarketMinder’s View: Or if you resold tickets to just about anything, from concerts to sports events, if your proceeds were at least $600. Starting this year, the IRS is requiring ticket reselling platforms to file form 1099-K for users who sell at least $600 worth of tickets, ensnaring individual resellers into tax reporting that was once reserved for professional brokers. Similar to the rules kicking in for people who receive money via online payment systems, the goal is to catch more unreported taxable income, but the reality is it is more likely to cause confusion and headaches over what is and isn’t taxable—and how to report it. So if you sold tickets this year and are among the 44 million people expected to receive a 1099-K, here is some helpful info in advance of more formal IRS guidance to follow: “Sellers will only need to pay taxes if they made a profit—if they sold a ticket for more than they paid for it. If an individual sells tickets at a loss, that loss isn’t deductible, and resellers can’t offset gains on some transactions with losses on others. Sellers may still have to report the loss on their tax return if they receive a 1099-K.” Additionally: “Users will have to rely on their own records to calculate what they paid for tickets and what they earned from reselling them. … The tax individual resellers pay will depend on factors including the price they paid, the sale price minus selling fees, the time period between the purchase and resale, and their tax bracket.” If you read this and suspect the IRS treats this income as a short-term capital gain, you are correct. Your gain is your sale price minus seller’s fees minus what you paid. “Happy” filing. Happy. Harrumph.


Private Equity Wonโ€™t Diversify Your Portfolio

By Allison Schrager, Bloomberg, 9/22/2023

MarketMinder’s View: Indeed it won’t. Diversification means having exposure to a sufficient number of securities as well as types of securities and assets. In other words, not just owning a lot of stocks, but having exposure to various countries, regions, sectors and industries. Or owning a blend of stocks, bonds and other securities that has a strong likelihood of delivering the returns you need to reach your goals with a level of expected short-term volatility that matches your comfort with ups and downs (and your cash flow needs). As the article explains, owning private equity usually doesn’t accomplish this. “Often private equity simply adds leverage to a portfolio without much diversification. This can increase expected returns, but it does not reduce risk. Private equity funds can include investments in venture capital, real estate, infrastructure and, lately, private debt. If these funds contain investments that can’t be found in public markets, they can potentially provide diversification. But often ‘private equity’ funds are just buyout funds, which accounted for 28% of the market in 2022, measured by assets under management. These funds collect money from investors, take on debt (leverage), then buy a significant stake in a company — either taking a public one private or buying an existing private company.” You can’t really diversify a stock portfolio by adding leveraged exposure to stocks. Add in that private equity usually also comes with higher fees, opaque pricing and illiquidity, and the risk ratchets up further. Always know what you are buying and what its tradeoffs are, and think critically about whether this actually matches your goals and needs.


US Auto Workers Strike Escalates as UAW President Calls on 38 More Plants to Join

By Michael Sainato, The Guardian, 9/22/2023

MarketMinder’s View: With negotiations between the United Auto Workers and the Big Three US automakers continuing, the union looks set to expand the partial work stoppage from 3 plants to 41. As always, MarketMinder is neutral on labor disputes and politics, which is increasingly intertwined with this strike—we favor neither side nor any political party and assess this situation for its potential economic and market impact only. To that end, while expanding the strike will broaden the impact to more communities—and we empathize with those directly affected—the broader economic impact still looks minimal to us. The Big Three alone run over 250 plants in the US, per the American Automotive Policy Council, and international automakers add a bunch more. So it will still be true that only a fraction of domestic production is going offline, which likely won’t be enough to move the needle on inflation or factory output—especially because auto strikes tend to be short. For more, see last week’s commentary, “Into Perspective: The US Auto Labor Dispute and Recession Worries.”


The IRS Is Going to Know If You Sold Taylor Swift โ€˜Erasโ€™ Tickets

By Anne Steele and Ashlea Ebeling, The Wall Street Journal, 9/22/2023

MarketMinder’s View: Or if you resold tickets to just about anything, from concerts to sports events, if your proceeds were at least $600. Starting this year, the IRS is requiring ticket reselling platforms to file form 1099-K for users who sell at least $600 worth of tickets, ensnaring individual resellers into tax reporting that was once reserved for professional brokers. Similar to the rules kicking in for people who receive money via online payment systems, the goal is to catch more unreported taxable income, but the reality is it is more likely to cause confusion and headaches over what is and isn’t taxable—and how to report it. So if you sold tickets this year and are among the 44 million people expected to receive a 1099-K, here is some helpful info in advance of more formal IRS guidance to follow: “Sellers will only need to pay taxes if they made a profit—if they sold a ticket for more than they paid for it. If an individual sells tickets at a loss, that loss isn’t deductible, and resellers can’t offset gains on some transactions with losses on others. Sellers may still have to report the loss on their tax return if they receive a 1099-K.” Additionally: “Users will have to rely on their own records to calculate what they paid for tickets and what they earned from reselling them. … The tax individual resellers pay will depend on factors including the price they paid, the sale price minus selling fees, the time period between the purchase and resale, and their tax bracket.” If you read this and suspect the IRS treats this income as a short-term capital gain, you are correct. Your gain is your sale price minus seller’s fees minus what you paid. “Happy” filing. Happy. Harrumph.


Private Equity Wonโ€™t Diversify Your Portfolio

By Allison Schrager, Bloomberg, 9/22/2023

MarketMinder’s View: Indeed it won’t. Diversification means having exposure to a sufficient number of securities as well as types of securities and assets. In other words, not just owning a lot of stocks, but having exposure to various countries, regions, sectors and industries. Or owning a blend of stocks, bonds and other securities that has a strong likelihood of delivering the returns you need to reach your goals with a level of expected short-term volatility that matches your comfort with ups and downs (and your cash flow needs). As the article explains, owning private equity usually doesn’t accomplish this. “Often private equity simply adds leverage to a portfolio without much diversification. This can increase expected returns, but it does not reduce risk. Private equity funds can include investments in venture capital, real estate, infrastructure and, lately, private debt. If these funds contain investments that can’t be found in public markets, they can potentially provide diversification. But often ‘private equity’ funds are just buyout funds, which accounted for 28% of the market in 2022, measured by assets under management. These funds collect money from investors, take on debt (leverage), then buy a significant stake in a company — either taking a public one private or buying an existing private company.” You can’t really diversify a stock portfolio by adding leveraged exposure to stocks. Add in that private equity usually also comes with higher fees, opaque pricing and illiquidity, and the risk ratchets up further. Always know what you are buying and what its tradeoffs are, and think critically about whether this actually matches your goals and needs.


US Auto Workers Strike Escalates as UAW President Calls on 38 More Plants to Join

By Michael Sainato, The Guardian, 9/22/2023

MarketMinder’s View: With negotiations between the United Auto Workers and the Big Three US automakers continuing, the union looks set to expand the partial work stoppage from 3 plants to 41. As always, MarketMinder is neutral on labor disputes and politics, which is increasingly intertwined with this strike—we favor neither side nor any political party and assess this situation for its potential economic and market impact only. To that end, while expanding the strike will broaden the impact to more communities—and we empathize with those directly affected—the broader economic impact still looks minimal to us. The Big Three alone run over 250 plants in the US, per the American Automotive Policy Council, and international automakers add a bunch more. So it will still be true that only a fraction of domestic production is going offline, which likely won’t be enough to move the needle on inflation or factory output—especially because auto strikes tend to be short. For more, see last week’s commentary, “Into Perspective: The US Auto Labor Dispute and Recession Worries.”