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Beware: Growing Auto Thefts of Kias, Hyundais

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Brazen TikTok-led social media car theft challenge is targeting certain Kia and Hyundai models

The surge of Kia and Hyundai vehicle thefts across the U.S. have been fueled by TikTok-led social-media challenges targeting certain models of the cars because they are so easy to steal. The stolen vehicles typically are used for joy riding or to commit other crimes.

The issue affects some models of Kia built between 2011 and 2021 and certain models of Hyundai between 2016 and 2021.

Police departments from Atlanta to Seattle have warned about increases in thefts of Kia and Hyundai vehicles. The thefts are affecting Hyundai and Kia models because crooks only need to break in and use a USB cable to drive the vehicle away. Making the situation worse, there are videos on social media demonstrating how to pull off this crime.

The affected vehicles allegedly don’t have engine immobilizers, according to Automotive News. This makes it possible to plug the cord into a certain spot and start the powerplant without needing the key or fob.

A group of lowlifes going by the name “Kia Boys” on TikTok social media is reportedly posting videos of stealing the affected Hyundai and Kia models. They then show themselves joyriding in these vehicles.

In Chicago, 601 Kias and Hyundais were reported stolen in August, compared with 58 in August 2021, according to data released by the Cook County Sheriff’s Office.

In St. Louis, 3,970 motor vehicles have been reported stolen this year through Aug. 29, up from 3,784 for all of last year, according to the St. Louis Metropolitan Police Department. Of the cars stolen this year, 48% were Kias or Hyundais.

The companies are facing numerous lawsuits seeking class-action status by owners in several states, alleging that the cars are defective. Hyundai Motor Co., based in Seoul, owns about a third of Kia Corp.

Hyundai and Kia say they are aware that social-media campaigns are targeting certain years and models of their cars. They say more recent versions of the models are equipped with a device called an immobilizer matched to a key with a chip that makes them harder to steal.

To learn more about how you can protect your vehicle against theft, you are encouraged to reach out to your vehicle’s manufacturer or local police departments.

Manufacturers request that you have your vehicle identification number (VIN) readily available, which can be found on your vehicle’s registration.

Hyundai customers who have questions can contact the Hyundai Consumer Assistance Center at 800-633-5151.

Kia customers with questions regarding their Kia vehicle should contact the Consumer Assistance center directly at 1-800-333-4542 (Kia).

References:

  1. Joe Barrett, “Police, Car Owners Wrestle With Growing Thefts of Kias, Hyundais”, The Wall Street Journal, Sept. 8, 2022. https://www.wsj.com/articles/police-car-owners-wrestle-with-growing-thefts-of-kias-hyundais-11662638401
  2. https://www.motor1.com/news/602283/some-hyundai-kia-models-can-be-stolen-with-just-a-usb-cable/

Inflation Reduction Act and IRS Enforcement

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Inside the Inflation Reduction Act is $80 billion in new funding for the IRS over the next 10 years. More than half of that new funding is slated for increased enforcement, including 87,000 new agents.

The president and IRS Commissioner say they won’t go after anyone making less than $400,000 a year with the increased enforcement. But, in reality, they won’t go after any wage earners making less than $400,000 on a W-2.

Yet, small business owners don’t appear to be included in this limitation. Thus, many law-abiding small business owners and high-net-worth individuals will find themselves the target of increased scrutiny, enforcement and costly audits.

If Congress were accurate, this bill would be called the Small Business Disruption Act, writes Tom Wheelwright, CPA, CEO of  WealthAbility, and the bestselling author of  Tax-Free Wealth: How to Build Massive Wealth By Permanently Reducing Your Taxes.

Bottomline, high net worth individuals, growth-minded entrepreneurs, small business owners and strategic investors need a plan for the IRS pending increased enforcement.

Here are three ways, according to Wheelwright, to protect yourself from the upcoming onslaught of audits.

1. Get a CPA Who Isn’t Afraid of the IRS

The question isn’t will you get audited by the IRS; it’s when. The IRS has been getting more aggressive in how it approaches certain types of taxpayers for years. Rather than make an effort to root out actual tax cheats, the IRS has been challenging legitimate tax incentives.

You’ll need a CPA who isn’t afraid to stand up to them. As the client, you should never speak with the IRS. That’s what your CPA is for. If your tax advisor seems uncomfortable with this idea, that’s a clear sign that it’s time to make a change.

2. Make Sure Your CPA Is Preparing Your Tax Return in Ways That Minimize Your Chance of an Audit

While you may not be able to avoid an audit forever, there’s no reason to position yourself at the front of the pack. There are choices that your tax preparer makes in creating your return that will either raise or lower potential flags to the IRS. All of these choices are legal options, but the terminology and methodology make a difference.

Ask your CPA for specific examples of how they are reducing your risk of an IRS audit. You want someone who can give you a clear plan and who demonstrates a level of confidence that reassures you they can deliver.

This shouldn’t mean missing out on tax deductions to which you are entitled. Missing out on tax incentives and deductions is like making a voluntary donation to Washington, D.C. No solid tax strategy makes this tradeoff.

3. Invest in Education and Advice

The government offers many compelling tax incentives to encourage investment. One of the keys to tapping into these incentives is ensuring you have the information and guidance you need to maximize your results. Take the time to learn how these programs work and, when needed, bring in an expert.

It’s not enough to have the right technology and equipment at the right price. You need to make sure you’re also structuring and documenting your purchase to maximize the available tax incentives.

With the IRS bearing down on small business owners, now is the time to surround yourself with high-powered tax professionals who will protect your interests.

References:

  1. Tom Wheelwright, What The Inflation Reduction Act Could Mean For You, Worth, August 22, 2022. https://www.worth.com/inflation-reduction-act-irs-80-billion-funding-increase-audits/

I Am What I Choose To Become

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“I am not what happened to me, I am what I choose to become.” – Carl Jung

A happy life is a life with purpose and meaning. If you had in your possession every penny on earth, and all the material possessions you desire, it would still give you no guarantees of happiness, and certainly no meaning.

Money or possessions will not give your life purpose and  meaning – but meaning does

With purpose and meaning in your life you can face the inevitable challenges of life without fear… With purpose and meaning in your life you can let go of the past, because there is always a brighter to work toward, to believe in… tomorrow.

Purpose and meaning give you reason to get up in the morning… enthusiasm to go about your day, purpose and meaning for living.  Kindle a light in the darkness of your being. Discover who you are, develop a life of meaning and purpose, and accept every inevitable challenge that comes your way.

Whatever happens in your life is not reality, but rather your interpretation of reality.

On one of your best days, a challenge appears, and you deal with it, with presence, with confidence, with competence… Then, the challenge disappears, perhaps even turns into a blessing… a new understanding.

On one of your worst days, the same challenge appears, you react angrily, unconsciously, the challenge turns into a bigger issue, a larger problem and consequently affects your life and others in a much bigger, not so pleasant way.

It was the same challenge and it depends how you look at it.

“The least of things with a meaning is worth more in life than the greatest of things without it.” – Carl Jung

 

  1. https://www.fearlessmotivation.com/2021/02/03/carl-jung-i-am-what-i-choose-to-become-must-watch-motivational-video

Exercises for People Over 50

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Physical activity is key to staying healthy as you age.

Regular physical activity is one of the most important things people can do to improve their health. Moving more and sitting less have tremendous benefits for everyone, regardless of age, sex, race, ethnicity, or current fitness level.

The Physical Activity Guidelines for Americans recommends at least 150 to 300 minutes of moderate aerobic activity of exercise—like brisk walking or cycling —each week.

Adults also need resistance training, muscle-strengthening activity—like lifting weights or doing push-ups—at least 2 days each week.

Walking: You can walk virtually anywhere, anytime, and at any age. No matter where you are fitness-wise, you can almost always take a few steps. You can do it alone or with a friend, inside, outside, with music, to a video, in a park, or in your yard. The health benefits of walking are limitless.

Core: Your core muscles, or abdominals, are the muscles around your stomach. Strong abdominals play an important role in good posture, respiratory function, and low back health.

Yoga: If you prefer something more meditative, or you’d like to increase your flexibility, balance, and focus with yoga or tai chi.

Strengthening:  Done with fitness equipment, household items, or your body weight. It’s recommended that you perform strengthening exercises at least twice per week and that you target the large muscle groups each time. Always be careful when doing strengthening exercises and monitor your technique to prevent injury. You can also try wall push-ups, bodyweight squats, or hamstring curls with just your bodyweight to build strength.

Sports: Pick your favorite one to do alone or with your partner. Tennis, golf, cycling, running … you name it. Anything that uses your full body and gets your heart pumping will be beneficial.

References:

  1. https://www.myhealth.va.gov/ss20161101-five-exercises-for-people-over-50
  2. https://health.gov/sites/default/files/2019-09/Physical_Activity_Guidelines_2nd_edition.pdf

Labor Day

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Labor Day is an annual celebration of the social and economic achievements of American workers, which is observed the first Monday in September.

Labor Day weekend symbolizes the unofficial end of summer for many Americans. It is celebrated with parties, street parades and athletic events.

The holiday is rooted in the late nineteenth century, when labor activists pushed for a federal holiday to recognize the many contributions American workers have made to country’s strength, prosperity, and well-being.

The first Labor Day holiday was celebrated on Tuesday, September 5, 1882, in New York City. On June 28, 1894, President Grover Cleveland signed a law making the first Monday in September of each year a national holiday.

References:

  1. https://www.dol.gov/general/laborday/history
  2. https://www.history.com/topics/holidays/labor-day-1

Simple Truths about Inflation

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Five simple truths embody most of what we know about inflation, according to Milton Friedman, Ph.D, American economist and a Nobel Prize in Economic recipient:

  1. Inflation is a monetary phenomenon arising from a more rapid increase in the quantity of money than in output (though, of course, the reasons for the increase in money may be various).
  2. In today’s world government determines – or can determine – the quantity of money.
  3. There is only one cure for inflation: a slower rate of increase in the quantity of money.
  4. It takes time – measured in years, not months – for inflation to develop; it takes time for inflation to be cured.
  5. Unpleasant side effects of the cure are unavoidable. 

 

The money supply

The money supply is the stock of money in the economy. It is determined by the roles and uses to which certain physical and financial assets are put.

Money performs a number of roles in our economy. Money functions

  1. as a medium of exchange;
  2. as a unit of account;
  3. as a store of value; and
  4. as a means of making payments inter-temporarily, i.e., over time. Its most obvious role, the one everyone is familiar with, is as a medium of exchange

The Money Aggregates (M1, M2 and M3) are money supply measures are that are meant to reflect differing roles of money;

Money Stock M1 — M1 is made up of notes and coin and several other financial instruments that the general public may not consider to be money. However, the Federal Reserve includes them because they are used as a medium of exchange and thus, on that account, perform a monetary function. Consequently, M1 is composed of currency in the hands of the public, checking accounts at commercial banks, deposit accounts against which checks can be written, and traveler’s checks issued by institutions that are not banks.

Money Stock M2 — M2 is a broader measure of the money supply than M1. It counts as money not only those financial instruments that generally act as a medium of exchange but also act as a store of value, another important function of money. Therefore, M2 includes M1 plus three other types of financial assets. These are (i) savings deposits, including money market deposit accounts; (ii) fixed deposits less than $100,000; and (iii) and retail money market mutual funds.

Money Stock M3 — M3 consisted of time deposits $100,000 and over, repurchase agreements (RPs) larger than $100,000 and longer than one day (called term RPs), and institutional money market mutual fund accounts.

Sometimes, M0 is used to denote central bank money, which consists of coin and currency in circulation, cash in bank vaults, and balances held in reserve accounts at the central bank by commercial banks and other depository institutions. In the U.S., M0 is called the “monetary base (MB).”

MI measures money used as medium of exchange, while M2 measures money used as store of value.

References:

  1. https://corporatefinanceinstitute.com/resources/knowledge/economics/milton-friedman/
  2. https://businessterms.org/money-supply/

Economic Reality of Student Loan Forgiveness

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The Biden Administration’s student loan forgiveness program executive order would generate significant current and future liabilities for taxpayers, and cause college costs to soar.  Brian Wesbury, First Trust Advisors L.P.

Biden Administration announced a student loan forgiveness program in late August that is creating significant political and economic debate. And, the more economists and the public learn about the details of the pending Presidential executive order, the worse it looks and smells.

The executive order would generate huge costs and future liabilities for taxpayers, and cause college costs to soar, which already generates negative marginal value-added for both students and our country, writes Brian Wesbury, Chief Economist, First Trust Portfolios L.P.

The Biden Administration says the changes would cost $240 billion in the next ten years.  The Committee for a Responsible Federal Budget says $440 – 600 billion.  A budget model from Wharton says $1 trillion.  But even that $1 trillion figure might be way too low. The key factor driving the extraordinary costs is the cancellation of some student debt that already exists is only a small part of the policy change.

The much bigger change, and the one that the market has finally begun to absorb, is limiting future payments on debts to 5% of income, but only after the borrower’s income rises above roughly $30,000 per year.

For example, if someone makes $70,000 per year, then no matter how much they borrow they’re limited to paying $2,000 per year (5% of the extra $40,000).  After twenty years, any remaining debt would simply disappear.

The perverse incentives for the vast majority of students, choosing this “income-based repayment” system would be a no-brainer. And once they pick it, they wouldn’t care at all whether their college charges $35,000 per year (tuition, room, board, and fees), $85,000, or even $150,000.

In fact, students would have an incentive to pick the priciest college with the best amenities they could find and pay for it all with federal loan money, because their repayments are capped, states Wesbury.

Meanwhile, students would have the incentive to take out loans greater than what they need because they can turn the excess into cash for “living expenses.”  Then they could use it to buy crypto, throw parties, or pretty much anything else. The government would limit their future repayments.

And here’s what might be the worst part: colleges would have an incentive to enroll students even if they have horrible future job and earning prospects.  By enrolling people no matter how poorly prepared they are, a college can charge whatever they want and get huge checks from the federal government.  And the unprepared students won’t care because they really don’t have to pay it back.  In effect, colleges could create massive and perfectly legal money-laundering schemes.

Although, no one can be certain if the new proposal will be implemented fully.  But, if it is: college costs are poised to skyrocket and academia is courting a political backlash of enormous proportions. Meanwhile, the financial market is attempting to digest just how far from economic reality Washington politicians have become. The political allocation of capital is a sure recipe for economic disaster, states Wesbury.

And, don’t forget that a Presidential executive can be expediently reversed by the next president,quickly erasing the benefits of student loan debt forgiveness.

  • Brian S. Wesbury – Chief Economist
  • Robert Stein, CFA – Deputy Chief Economist

References:

  1. Brian S. Wesbury and Robert Stein, Biden’s Student-Loan Fiasco, First Trust Economic Blog, August 29, 2022.   https://www.ftportfolios.com/blogs/EconBlog/2022/8/29/bidens-student-loan-fiasco

The Power of Compounding

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“The elementary mathematics of compound interest is one of the most important models there is on earth. The first rule of compounding: Never interrupt it unnecessarily.” Charlie Munger

Compounding returns for years and even decades without having to pay taxes on interim gains (apart from taxes on dividend income) results in an investment returns advantage, versus earning similar returns in a more typical high-turnover strategy.

When it comes to compounding, more time in the market results in more wealth accumulated. If you wait to contribute to your retirement account until 10 years from now, you may have a lot more money to set aside, but you’ll also have lost 10 years of potential growth. And from the hypothetical example above, you know that extra time could potentially lead to greater returns. Of course, investing always comes with risk. Even with the power of compounding, returns are not guaranteed. 

When it comes to saving and investing for the long term, there is tremendous potential power of tax-efficient compounding when it comes to long-term wealth creation.

taxes and the long-term implications taxes have on wealth accumulation.

The ability to hold an investment for years allows investments to compound in a tax-efficient manner over long periods of time. Unfortunately, the typical retail investor does not capitalize on this opportunity. In fact, the average holding period for investing in equities in the U.S. has declined for decades.

References:

  1. https://www.osterweisprivateclient.com/insights/Tax_Efficient_Compounding_2021

The Wisdom of Steve Jobs

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“For the past 33 years, I have looked in the mirror every morning and asked myself: ‘If today were the last day of my life, would I want to do what I am about to do today?’ And whenever the answer has been ‘No’ for too many days in a row, I know I need to change something.” ~ Steve Jobs

“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.” ~ Steve Jobs

“Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful… that’s what matters to me.” ~ Steve Jobs

Finally…

“The people who are crazy enough to think they can change the world are the ones who do.” ~ Steve Jobs

“When you grow up you tend to get told that the world is the way it is and your life is just to live your life inside the world. Try not to bash into the walls too much. Try to have a nice family life, have fun, save a little money. That’s a very limited life. Life can be much broader once you discover one simple fact: Everything around you that you call life was made up by people that were no smarter than you. And you can change it, you can influence it… Once you learn that, you’ll never be the same again.” ~ Steve Jobs

References:

  1. https://blog.hubspot.com/sales/steve-jobs-quotes

How to Invest in a Recession

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When GDP declines for multiple quarters in a row, it raises concerns over a possible recession.

An unofficial way to measure recessions is two consecutive quarters of negative real gross domestic product (GDP) growth. Real gross domestic product (GDP) is an official inflation-adjusted version of GDP calculated by the Bureau of Economic Analysis.

Annual percent change in real GDP shows how much higher or lower it is relative to the previous year. The higher that real GDP is, the larger absolute increase required to achieve a certain growth rate, and vice versa.

However, according to the Bureau of Economic Analysis (BEA), this is not an official designation of recession. But determining when the economy is in a recession is more complicated than looking at a single data set such as GDP.

Determining when the economy is in a recession is up to a committee of experts at the National Bureau of Economic Research (NBER). The committee officially designates recessions by monitoring a variety of economic indicators, including GDP. It also uses payroll employment, personal income, industrial production, and retail sales in the effort.

The NBER (National Bureau of Economic Research) defines recession:

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough.

The official designation from NBER of when a recession starts or ends doesn’t happen until months after the recession is over. In other words, NBER looks backward, not at the present moment.

  • Two consecutive negative real GDP quarters is commonly believed to be the definition of a recession. This is a misperception.
  • Despite a negative U.S. GDP growth reading in Q1 and Q2 of calendar year 2022, many of the indicators the NBER monitors when evaluating the state of the economy remain healthy.
  • Coming into 2022, inflation was expected to moderate. Partially due to unforeseen events (including a war), inflation is likely to stick around longer.
  • The Fed has fully achieved the maximum employment half of its mandate, resulting in a sole focus on achieving price stability (cooling inflation).
  • Financial conditions have gone from record easy territory to nearly neutral in a matter of months.
  • Although conditions are not yet restrictive, the Federal Reserve’s dramatic move risks tipping the economy into a recession in the coming quarters.

Historically, there are 12 variables that have foreshadowed a looming recession. A few of those variables include retail sales, wage growth, commodities, ISM new orders, credit spreads and money supply.

During a recession, it’s essential for investors to continue to invest.

What recessions have looked like in the past

The US has gone through 34 recessions since 1857. Thirteen of those recessions occurred after World War II.

From 1857 to 2020, recessions lasted an average of 17 months. In the 20th and 21st centuries, the average length of a recession decreased to 14 months.

Source: Bureau of Economic Analysis (BEA)

The longest recession lasted 65 months, from October 1873 to March 1879. The shortest recession was the most recent, lasting two months from February 2020 to April 2020.

Investing during a recession

You, as an investor, should have an investing process and, and once decided, stick with it to improve your returns.

References:

  1. https://cf-store.widencdn.net/franklintempletonprod/6/7/8/678d815d-fe9c-48b4-9dde-056a19f9653f.pdf
  2. https://usafacts.org/data/topics/economy/economic-indicators/gdp/annual-change-real-gdp/
  3. https://usafacts.org/articles/what-is-a-recession-what-have-recessions-looked-like-in-the-past/