TMB #43: Holy Crypto
A Denver Pastor hawks a crypto-fraud to his followers, plus, is the recent pessimism at Apple really warranted?
Scam From Above
One of the more recurring themes in oddball financial news is that: if it’s too good to be true, it probably is. Of course, that won’t stop people from making poor decisions—the emotional pull of potential riches is usually too great to keep people’s id from taking control.
Too-good-to-be-true schemes, however, usually have one thing in common, and that thing is the fact that legal defenses are usually pretty flimsy. Most of these things are pretty cut and dried, with a defendant having made grandiose promises without highlighting risks for investors.
But how would the grandiose promises stack us if the legal defense was “God told me to do it”?
Speaking to online followers [on] Aug. 22, 2022, Rev. Eli Regalado had a divine message.
“It was last October that the Lord brought this cryptocurrency to me. He said, ‘Take this to my people for a wealth transfer.’ It has been confirmed a hundred times since,” the pastor said, according to a lawsuit filed in Denver this week.
“It is coming, people,” he said. “Part of the making way for His people is to really train them up and teach them how finances work in the kingdom because many of you very soon are going to have more money than you’ve ever had in your life by participating in this crypto.”
Regalado, a Denverite who, alongside his wife Kaitlyn, runs the online-only Victorious Grace Church, is also the creator of the cryptocurrency INDXcoin and the Kingdom Wealth Exchange, the only online marketplace where INDXcoin could be bought and sold. Both INDXcoin and the exchange were shut down on Nov. 1, leaving investors scrambling for answers.
That same day, Regalado said that God had asked him to pass on a message to investors.
“Stay where you’re at. Stay in INDXcoins. Stay with where I’m telling you to go. I’m going to make a way,” the Lord said to crypto investors, according to Regalado. “Just take that word as gospel truth and execute on that word and do not worry about how the money’s going to happen. I really believe you’re going to see a miracle in very short order.”
So, yeah. Of course, I suppose that someone could always push a crypto-coin that’s essentially worthless while at the same time believing that they were acting fully in good faith. I also suppose that if—if!—the business operation of the coin and exchange were all on the up-and-up, then it would matter a great deal less whether or not people lost money.
But, of course, that’s not what happened (from Business Den):
Tung Chan, the state’s securities commissioner, wrote in Tuesday’s lawsuit that the Regalados sold $3.4 million in “valueless” INDXcoins in 2022 and the first half of 2023. Chan, whose office subpoenaed the couple’s bank records, claims that at least $1.3 million of that went directly to the Regalados, who spent it on a Range Rover, jewelry, luxury handbags, cosmetic dentistry, boat rentals and snowmobile adventures, home renovations and an au pair.
Now before you jump to conclusions, would it help you to know that Mr. Regalado says that God directed him and his wife to conduct the home renovations? No? Hm. Well, that’s exactly what he did (click here for a hilarious supercut video of Regalado’s explanation).
This, I think, is the best quote from the video (emphasis added):
“Of the $1.3 million [that was personally taken by the Regalados], half of that went to the IRS, and a few hundred thousand dollars went to a home remodel that the Lord told us to do.
Now, I am a person of faith, so don’t come at me for bashing religious conviction or something like that, but this is… well, just beyond the pale. And while this isn’t a life-advice newsletter, I think that (hopefully) most of you would agree that if a pastor begins talking about crypto, then it’s probably time to move on (and perhaps contact regulators).
Tough Times Ahead For Apple?
It is my totally unscientific opinion that folks have gradually turned bearish on Apple (AAPL) AAPL 0.00%↑. There are a few reasons for this thinking:
The company hasn’t made splashy AI plays like Microsoft (MSFT) MSFT 0.00%↑ or Google (GOOG) GOOG 0.00%↑ GOOGL 0.00%↑.
iPhone sales are flat to down.
The company is embroiled in a patent lawsuit over the Apple Watch blood oxygen reader.
The company’s new headset, the Vision Pro, is expensive, clunky, and people aren’t sure if it will catch on.
Analysts are starting to turn on the stock as well, per Barron’s:
The iPhone remains by far the most important Apple product, accounting for roughly half of the company’s total revenue — and arguably even more considering related sales of the Apple Watch, AirPods, accessories, and services. That helps explain why the stock is off to such a difficult start on the first trading day of the year.
As Barron’s reported earlier, Barclays analyst Tim Long kicked off the year by cutting his rating on Apple shares to Underweight from Equal Weight, with a new price target of $160, down a buck from $161, and well below the Friday (and year-end 2023) close at $192.53.
Long writes in a research note that sales of iPhone 15 have been “lackluster,” and he expects the same will be true with iPhone 16, which will likely debut in the fall. He thinks other hardware categories — the Mac, iPad, and wearables — will remain weak. And Long thinks Apple’s services business isn’t likely to grow more than 10% this year.
Now, without getting too deep into the weeds of analysis here, it seems that a bit of caution might be warranted before jumping on the ‘ditch Apple’ bandwagon. Apple, after all, is something unique among tech powerhouses in Silicon Valley in that they tend to keep things under wraps until they’re released to the public. While this might be good for business, it’s maddening for investors who want to know that Tim Cook and his cadre of executives still have it in them.
However, while I am not an Apple perma-bull (and nothing here is investment advice!), taking a look at Apple’s stock chart reveals a company that has gone through multiple peaks and valleys and still done… quite well.
Yeah, I think that buying Apple at virtually any point in the last 20 years has likely made a lot of investors happy overall, and it is this kind of track record that makes me pause when I read bearish or negative coverage of Apple—it’s easy to say the giant is about to fall, after all. People have been writing it for years! It just seems premature to say Apple has peaked before an actual failure has beset the firm.
Now, if Buffett sells, then we have a different conversation. Just saying.
Final Thoughts…
Texas Roadhouse TXRH 0.00%↑ got an upgrade from Truist with a target price bump from $130 to $137. The problems at Schwab SCHW 0.00%↑ may not be over yet. AMD AMD 0.00%↑ receives a downgrade to Market Perform from Outperform from Northland. CarParts.com PRTS 0.00%↑ announced an extension of its buyback plan. Tesla TSLA 0.00%↑ watch out—BYD has launched a Lambo-esque EV. In one of those “I’m sure that won’t be the subject of a future Michael Lewis book” moments, the SEC is working to force Treasury transactions through a central clearinghouse.
Disclaimer: As always, this is fully a work of opinion and entertainment and in no way constitutes investment advice, nor is it a solicitation to sell securities. Do your own due diligence before investing.