I'll leave this bonus chapter for getting up to 25 power stones.
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"The money is liquid," Jake explained, closing the laptop with a satisfying snap. "But if you spend a dime of it right now, you trigger the tax event. We have to wait for the settlement period to clear, and then we have to wait for October 9th to buy the blue chip stocks and take out the SBLOC loan."
"More waiting?!" Alan groaned from the floor. "Jake, my blood pressure can't take this! I want to buy a BMW! And one of those Massaging chairs! Oh and those-"
"Dad, you and I just cleared three hundred and sixty thousand dollars in pure, untaxed profit, and Grandma just made almost three million," Jake interrupted his father, grabbing his lunchbox from his backpack. "You can wait fifteen days to become a king."
October 9th, 2002 was the exact bottom of the post dot-com bear market — the single best buying opportunity of the decade.
The Dow would close at 7,286 points, a number that would look incomprehensibly low from the vantage point of any year after 2010.
Every dollar they put into blue chips on that specific day would triple within five years.
Jake walked toward the door leading into the house, but stopped and looked back at his stunned, millionaire parents.
"So my Lexus is still tied up in the stock market?" Judith asked, her voice rising in panic. "Jake, I can't drive a stock to the grocery store!"
"You won't," Jake said patiently. "Once the money is safely parked in those stable assets, we go to the brokerage and ask for a Portfolio Line of Credit, or an SBLOC. We borrow against our own money. They'll give us a loan for fifty percent of our portfolio's value at a tiny interest rate."
Alan blinked, his chiropractic brain struggling to process high finance.
"Wait... we borrow our own money?"
"Yes," Jake said. "Because a loan is debt, and debt is not taxable income. You get a million dollars in cash to buy the cars, remodel the kitchen, and pay next year's tax bill, all while our actual millions sit in the market, growing tax-free and paying off the loan's interest with their dividends.
The poor pay taxes. The rich pay accountants, Dad. "
Just then, the cordless phone on the workbench beeped loudly. It was the speakerphone.
"I heard all of that," Evelyn's voice rang out, crisp and sharp. "And it is the most beautiful thing I've ever heard a Harper man say. However, Arthur has an objection."
"Who is Arthur?" Judith asked, glaring at the phone.
"My Certified Public Accountant," Evelyn replied. "Speak, Arthur. Tell the boy genius why you are sweating through your cheap polyester suit."
A nervous, reedy voice crackled through the speaker. "Uh, hello. Yes. Mrs. Harper—both Mrs. Harpers, and Alan. And... Jake. Listen, this SBLOC strategy is incredibly dangerous. You are talking about catching a falling knife! No one can predict the growth of the market. If you dump three million into equities and the market drops another ten percent, the bank will issue a margin call on your line of credit! You'll be wiped out! It's a terrible idea. You need to pay the tax and put the rest in a fixed-yield CD—"
"Arthur," Evelyn interrupted, her voice dropping to a terrifying, icy octave.
The accountant instantly stopped talking. "Yes, Mrs. Harper?"
"I don't pay you for your vision. I pay you to make sure the IRS doesn't look too closely at my offshore accounts," Evelyn said smoothly. "My grandson just turned ten thousand dollars into a small empire in less than a week while you were advising me to buy Treasury bills. If I wanted the financial advice of a man who drives a 1996 Honda Accord and brings a bruised banana to work for lunch, I would ask for it."
"But Mrs. Harper, the fiduciary risk—"
"Arthur," Evelyn snapped. "Shut up and do your job. Draw up the paperwork for the Joint Venture's Portfolio Line of Credit, or I will fire you, buy the accounting firm you work for, and reassign you to the mailroom. Are we clear?"
Jake said nothing.
Normally he would actually agree with Arthur on the technical merits — the SBLOC strategy carried real risk if the market didn't cooperate.
His only mistake was thinking Jake was gambling. He wasn't. He was doing something the SEC didn't have a rule against yet: investing with a perfect information advantage from the future/parallel world.
A heavy swallow echoed over the speakerphone. "Yes, Mrs. Harper. I'll get the paperwork started."
Click.
That's just brutal, Jake thought.
He had once calculated his Grandma networth, and it was at least over 20 million dollars, so buying an accounting firm wasn't a far-fetched thing.
She worked as a real estate broker for over three decades, selling exclusively to ultra-wealthy international clients, earning very high commissions. She maintained an office, a sizeable home, designer clothes and jewelry, went on expensive cruises, could afford cosmetic surgery, and once lent Alan money for a Ponzi scheme without hesitation.
Evelyn's voice returned to a purr. "Good boy. Now, Jake, darling, I'll have the bank ready for October 9th. Judith, if you're getting a Lexus, don't get the beige interior; it stains if you look at it wrong. Buy the black leather."
Evelyn hung up.
Judith looked at the phone, then at Alan, then at Jake. The anger was completely gone, replaced by a terrifying, absolute clarity.
"Black leather it is," Judith said. She leaned down and kissed Jake on the forehead. "Mommy is going to go make a vision board for the new kitchen. Finish your Fruit Roll-Up, sweetie."
As Judith marched out of the garage with the energy of a conquering general, Alan slowly slid down the side of the workbench until he was sitting on the concrete floor.
"Jake?" Alan whispered.
"Yes, Dad?"
"I think you just created a monster."
Jake looked back at the glowing green numbers on his screen. "I didn't create her, Dad. I just gave her funding"