BNCC - 4 Last Calls For 2023

2023-12-29 10:00:00 ET

Summary

• Maximizing profits / minimizing taxes.
• Giving, expensing, saving, and investing.
• Consider strategic investments and research expenses, and Here’s what I’m doing before it is too late.

Compounding

I’ve never had an employment contract or been particularly concerned with a base salary; instead, my personal finance focus has always been on compounding my after-tax wealth over the long term. To that end, there’s a few moves left in 2023.

Saving

Top off your 529 – If you’re married with kids, each spouse can immediately put $500k in a Vanguard Nevada 529 plan invested in the SPDR® S&P 500 ETF Trust ( SPY ). It charges 13 bps and is tax efficient. You can also invest another $34k per year (half from each spouse) per kid in their account. The benefit is tax-free compounding. The cost is the inflexibility of the plan’s investment (no brokerage option) and the limitations of how the money is eventually spent. That limitation is trivial to me. I never spend tax-advantaged dollars anyway because they are worth a premium to taxable dollars. Also, it is all too easy to find academic expenses for this money.

But approved uses are likely to be expanded over time. Worst comes to worst, their penalty is so small that you’ll come out ahead as long as you can first compound tax-free for a long (think decades not years) period first.

Investing

Failing to max out each of your available tax-advantaged accounts is stealing from yourself. I contributed $66k to my SEP-IRA as I have for years. But where should one allocate such funds? I take big swings. I tend to be hyper-concentrated in my individual account and those of my family members. I disclosed My One Stock , SHF Holdings, Inc. ( SHFS ) last quarter.

My son’s individual account is almost as concentrated in Tidewater Inc. ( TDW ).

But the most interesting trade for the next few days could be BNCCORP, Inc. ( BNCC ) because of recent tax loss selling . As I mentioned last week:

BNCCORP ((BNCC)) is down this year. It is reasonable to expect them to return a significant amount of capital next month, making January a doubly promising month for this stock. It is a cheap stock of a good bank with activists firmly in control of the board. They had a harder and longer job than any of us expected cleaning it up but did and await next steps. Regulators are careful about bank capital but they will return what they can after regulators sign off. I wish this and everything else went faster but I’ve gotten all of my original invested capital returned while I waited.

It is worth at least $30 on its own or $35-40 per share to a strategic acquirer. It is a gift under $30 and could abruptly rebound as soon as next month.

Expensing

If you have any research expenses such as StW and StW Special Purpose Research , then now is the best time to use that research budget.

I spend a huge amount of time and money on research and find it a worthwhile expense. Everyone should have a non-profitable LLC to run such expenses through.

Giving

There’s a lot that you can’t control. But you can manage expenses generally and taxes in particular. So, facing a big tax bill in 2023, I’m amping up my giving for the next few days, matching gifts to my favorite non-profit Watsi . You get 3x the impact on every dollar you give. If you, like me, live in a blue state with confiscatory taxes, you could be getting 5-6x the impact on the after-tax cost to you relative to the benefit from your gifts.

Caveat

There’s a lot to do in the next two days, but trading volume could be lower than average.

Conclusion

Pay every $0.01 of taxes that you owe but not $0.01 more so that you can compound as much as possible over the long term.

TL; DR

I own BNCC, SHFS, and TDW as well as SPY in a tax-advantaged account; you might want to as well.

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