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Links from Today’s Episode
For Public Housing Residents That Deaunna Mentioned at the beginning of the episode.
hud.gov
Special Application Center for HUD
312-353-6236
https://www.hud.gov/program_offices/public_indian_housing/centers/sac/homeownership
https://www.endslaverynow.org/learn/slavery-today/bonded-labor
Bonded labor, also known as debt bondage and peonage, happens when people give themselves into slavery as security against a loan or when they inherit a debt from a relative. It can be made to look like an employment agreement but one where the worker starts with a debt to repay – usually in brutal conditions – only to find that repayment of the loan is impossible. Then, their enslavement becomes permanent.
Show Notes
Introduction
- Podcast: Drink, Smoke, Stocks, Crypto Podcast
- Host: Antonio
- Guests: Kenneth, Otis, Deanna, Grace
- Topic: Real estate and stock trading discussions
Beverages Discussion
- Antonio's drink:
- Starbucks black hazelnut
- Butterscotch (like grandma candy)
- No vodka because it’s 11:02 a.m. and not on the breakfast menu
- Deanna's drink:
- Folgers Classic Roast with caramel macchiato creamer
- Otis' drink:
- Black Crown Smooth and Coke (what he would like to say)
- Reality: Sweet tea (day drinking not on the breakfast menu)
- Ken's drink:
- Water
- Last night: Hot toddy
- Grace's drink:
- Nothing currently, under the weather (cough drops)
Institutional Precision Intraday Trading Advisor
- Development update:
- Antonio finalized the code for his Institutional Precision Intraday Trading Advisor on October 17th
- The tool is private, for invite-only stock students
- Link in show notes for those interested in stock class and advisor access
- The tool answers all trading-related questions and provides status updates
- Antonio's employees:
- 40 employees, with this trading advisor being one of them
- Future plans: Employees that will trade automatically for the users (still in development)
- Testing feedback:
- Grace has tested the advisor and successfully received answers to her questions
- Otis hasn't tested yet but plans to
Question: Should We Create a Business for Our Investments?
- Grace’s question:
- Should an investment firm be created to align with the five tiers from the credit and business funding class?
- How does this align with a holding company and trust?
- Should it be a specialty LLC or operational?
Detailed Answer
- Otis’ response:
- If you create a business for investments, you’d be considered a professional trader.
- Requirements: Maintain at least $25,000 in your account at all times to hold this designation.
- There's significant paperwork involved.
- Benefits: You can write off many expenses related to trading, such as:
- Cable subscriptions (if used for market research)
- Magazine subscriptions related to investments
Additional Comments
- Antonio’s note: He plans to expand on Otis’ answer with additional insights from his experience
Business Setup and Financial Strategy
- Software costs:
- Software for trading and business can be expensive but offers benefits in the long run.
- Time is required to meet the qualifications for professional trading or business setup.
- Recommendation: Start personal trading until you reach a minimum of $25,000, ideally $30,000, before considering business formation.
- Income allocation:
- Push income from trading towards real estate investments once you've built sufficient capital.
Understanding Money Laundering (Three Phases)
- Phase One: Acquisition and Infusion
- Most risky phase of money laundering.
- Example: Acquiring illegal funds and infusing them into legitimate systems (e.g., Al Capone's laundromat).
- The initial transaction of receiving the illegal money is the most traceable and where legal protections focus.
- Phase Two: Changing Hands
- Shift the responsibility of the money from one person to another.
- Example: Otis receives $10,000 and is asked to send $600 to a third party (driver) to disperse the money and reduce the risk.
- This step is crucial for distancing the original transaction from the illegal source.
- Phase Three: Legalizing the Money
- Multiple movements and transactions to legitimize the funds.
- Example: Splitting money, sending portions to different people, and turning it into legitimate income.
- The money eventually comes back as legally clean, with taxes paid and a new transaction trail.
Practical Example: Stock Trading and Income Shifting
- Scam example:
- Spam emails requesting to transfer money through PayPal or cash a check are forms of money laundering.
- Personal example: Antonio couldn’t get a Wells Fargo account due to being scammed as a teenager.
- Steps in the laundering process:
- Step One: Acquire illegal funds and infuse them into the system (high risk).
- Step Two: Shift responsibility by changing hands, moving the money to different accounts or people.
- Step Three: Push the money into an ecosystem where it becomes legitimate, legal, and clean.
Capitalism and Money Laundering
- Wealth-building analogy:
- Every investment strategy is similar to money laundering—legally turning one form of capital into another income-producing asset.
- Step One: Acquire stock money and income from trading.
- Step Two: Infuse the stock money into real estate or other investments quickly to avoid heavy tax liabilities.
- Capitalist perspective:
- Taxes on income are seen as a "penalty" on wealth accumulation. The goal is to minimize tax exposure by shifting income to assets like real estate or other investments.
Practical Application to Stock Trading and Investments
- Trading taxes:
- Stock income is taxable, and the tax liability rests on the individual (e.g., 15%–45% tax rate depending on circumstances).
- Action: Move stock money out of accounts immediately after cashing out to avoid heavy taxation and reinvest quickly.
- Example with Otis:
- Long-term trader can leave funds in stocks as long as needed (still in Phase One).
- Upon cashing out, funds should immediately be moved into another asset (Phase Two).
Capitalism and Income Taxes
- Antonio's belief:
- Earning income through labor and taxable sources is seen as economically disadvantageous.
- Trading time for money or earning taxable income at high rates (15%–45%) is compared to being "illegal" within a capitalist framework.
- Advice:
- Shift money earned from stocks or labor into income-producing assets like real estate to legally minimize tax liabilities and increase wealth.
- General statement:
- The process of acquiring, shifting, and legitimizing income (through investments like stocks or real estate) is key to financial success and reducing tax exposure.
Tax and Income Strategy
- Antonio's stance on taxes:
- Advises listeners to stop paying excessive taxes.
- Income tax: Antonio often emphasizes the burden of income tax and how it impacts wealth.
- Example with stock market income:
- Deanna’s stock market earnings are considered income, which is subject to income tax.
- The government taxes income heavily because it views it as the primary source of revenue.
Process of Obtaining Income
- Personal Income Process:
- Ken (hypothetical example): To obtain income, Ken must fill out numerous forms (job applications, IRS forms, etc.).
- Details required: Name, social security, address, job history, GPA, dependents, and more data points.
- Business Income Process:
- Otis (hypothetical example): For business income, the process is much simpler—answering a few questions about the business’s EIN, name, and state of incorporation.
- The system requires far less oversight for generating business income compared to personal income.
Asset Rich, Cash Poor
- Capitalism's setup:
- The system aims to keep individuals either asset-rich or cash-poor, but never both.
- If individuals have cash, they won’t have assets and vice versa.
- Example: If given cash, individuals can’t have assets unless they pay for them with the cash, leaving them without liquidity.
Stock Trading Strategy and Tax Implications
- Otis' strategy:
- Currently holding options that expire in March 2025.
- Plans to close the position on the first working day of January to avoid 2025 taxes.
- Currently up 414% on his investment.
- Tax avoidance:
- Antonio advises against paying excessive taxes and suggests that Otis "launder" his income by reinvesting it into income-producing assets.
Money Laundering as a Wealth Strategy
- Money laundering analogy:
- Antonio emphasizes that wealth-building strategies in capitalism mirror the steps of money laundering.
- Step One: Acquisition and infusion of money (e.g., acquiring illegal funds or stock income).
- Step Two: Changing hands of the money (e.g., investing in real estate or assets to shift tax liability).
- Step Three: Legitimizing the money (e.g., turning it into legally clean money with taxes paid and no further liability).
Legalization of Formerly Illegal Practices
- Antonio’s example:
- Drugs: Selling drugs (illegal) becomes legitimate if done through pharmacies with proper certifications.
- PhD (Phenomenal Drug Dealer): Antonio humorously explains that doctors with prescriptions are essentially "legal drug dealers."
- Wealth-building analogy:
- Congress has legalized what was once illegal (e.g., drug dealing, money laundering) under different names and regulations.
- Wealth-building is just a legal form of money laundering when it comes through Congress.
Earning Income vs. Building Wealth
- Earning income is penalized:
- Income from labor is taxed heavily (15% to 45%).
- Antonio views earning income through labor as financially disadvantageous in capitalism.
- Wealth-building strategies:
- Take income from trading and immediately shift it into assets to avoid high taxation.
- Real estate and stocks are examples of income-producing assets that can shield individuals from excessive taxes.
Becoming a Professional Investor
- Professional trader requirements:
- Otis considers becoming a professional investor to maintain $25,000 in his account.
- Antonio explains that this would allow Otis to start money laundering from the beginning through an investment firm, which allows for different tax treatments.
Business Income vs. Personal Income
- Investment firms:
- Starting an investment firm allows individuals to shift responsibility for taxes to the business, reducing personal tax liability.
- This mirrors the money laundering process by allowing income to be shielded and reinvested legally.
- Business setup advice:
- Antonio recommends setting up an investment firm to shield income from heavy taxation.
- This strategy eliminates Step One of money laundering (the risky part) and allows income to flow into assets more easily.
- Capitalism’s design:
- The system is designed to protect businesses and penalize individuals through heavy taxation on income.
