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James huntsman (jon's brother) sues church for 'fraud'


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47 minutes ago, webbles said:

So the total income is supposedly around $8 billion.  And $1 billion is supposedly put into the investment fund.  That means that $7 billion is spent on all of the other church programs.  Am I missing something?  How is it possible that "more goes into increasing the size of the hedge fund than all other church programs combined"?  How is $1 billion more than $7 billion?

My understanding is that as-of 12/31/2019, the Church had about $140 billion invested in the EPA and its for-profit businesses (the $100 billion number was just the stocks and bonds in EPA. The additional $40 billion is all of the land and for-profit real estate and businesses). And I'm guessing that the total income that generates is on the order of $8 billion. That is a 5.7% yield.

So, if the tithing and other donation income was $8 billion, and the investment income is another $8 billion, then total income is $16 billion.

If the Church spends a total of $7 billion on its primary mission, then $1 billion of tithing money is left over and added to the rainy day fund. Using these numbers:

$1B/$8B = 12% of tithing going to commercial purposes.

If we add the investment income to the numerator and denominator:

$9B/$16B = 56% of total revenue is going to commercial purposes.

I think that is what James Huntsman is upset about--$5 million dollars held indefinitely in his own brokerage account will do just as much good in the world as transferring it to the church's brokerage account to be held there indefinitely. 

Edited by Analytics
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7 minutes ago, JustAnAustralian said:

So investing money is "commercial purposes"? Just having it in the bank would also earn money and thus be investing it. Is having a bank account a "commercial purpose" now?

It depends upon why you are saving the money. Are you saving it for a vacation? Are you saving to be able to pay your taxes? Are you saving it as an emergency fund? Are you saving it for your retirement?

Or are you saving it with the objective of financing commercial businesses because that is what you like to do with money? If this is the reason you are saving, then you are saving for "commercial purposes."

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7 minutes ago, Analytics said:

It depends upon why you are saving the money. Are you saving it for a vacation? Are you saving to be able to pay your taxes? Are you saving it as an emergency fund? Are you saving it for your retirement?

Or are you saving it with the objective of financing commercial businesses because that is what you like to do with money? If this is the reason you are saving, then you are saving for "commercial purposes."

Well the church says it's an emergency fund. So it should be good then.

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2 hours ago, Analytics said:

My understanding is that as-of 12/31/2019, the Church had about $140 billion invested in the EPA and its for-profit businesses (the $100 billion number was just the stocks and bonds in EPA. The additional $40 billion is all of the land and for-profit real estate and businesses). And I'm guessing that the total income that generates is on the order of $8 billion. That is a 5.7% yield.

So, if the tithing and other donation income was $8 billion, and the investment income is another $8 billion, then total income is $16 billion.

If the Church spends a total of $7 billion on its primary mission, then $1 billion of tithing money is left over and added to the rainy day fund. Using these numbers:

$1B/$8B = 12% of tithing going to commercial purposes.

If we add the investment income to the numerator and denominator:

$9B/$16B = 56% of total revenue is going to commercial purposes.

I think that is what James Huntsman is upset about--$5 million dollars held indefinitely in his own brokerage account will do just as much good in the world as transferring it to the church's brokerage account to be held there indefinitely. 

Ah, you are including investment income and you are saying investment growth is commercial.  That explains the disconnect.  I can see what you are saying.  If James Huntsman is paying tithing just so that he can contribute to charity, then he is definitely not getting his money value.  Any one who is paying tithing to contribute to charity should probably rethink why they are paying tithing.  I don't recall tithing ever being taught as a means to contribute to charity (when I talk about charity, I'm talking about clothing the naked, feeding the hungry, etc, not about the three-fold missions of the church).

I'd like to go over the numbers, just to make sure we are on the same page.  Per the whistleblower, he says that EPA was managing about $81.2 billion in investments in the beginning of 2018.  Liquid assets was $7.3B and real estate was $17.1 B for a total of $105.6 in the EPA Universe (Exhibit A in the letter).  They then estimated that the value in 2019 would be around $124 billion.  So the number is slightly lower than what you said but not by much.

And per Exhibit F.1, it has $7B tithing income and $1 billion surplus.  So my $8 billion is higher.

The whistleblower is saying that the EPA funds (the $81.2B in 2018) was having an annual return of about 7.4% (Exhibit Q.1).  So, if the EPA fund had the exact same annual return for all of 2018 and 2019 and the church contributed $1B each year, then it should have increased to $95.74 B (assuming that $81.2B is the value at the beginning of 2018 and doesn't include the 2018 $1B contribution from the church).  Exhibit Q.1 says the number would be around $99.1B because it is assuming the church contributed $2.68B and $2.96B those two years (which doesn't fit with the surplus so I'll stick with the $95.74B).

With an annual return of 7.4% on $95.74, that comes out to $7 billion.

So plugging those numbers into your calculation, that would be $1/$7B = 14% goes to "commercial purposes".  If we add the investment return, it is now $8B/$14B = 57%.  Basically the same thing, correct?  Are these numbers ok?

The only other thing I would disagree is saying the investment income is for "commercial purposes".  There is no proof that it has been used for any "commercial purposes".  The only thing we really know is that it just sits there and grows.  Growing an investment is not "commercial purposes" especially when the people who manage it actually believe that it will be used for the church (per the whistleblower, some of his higher ups think it will be used during the second coming).

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On 3/26/2021 at 8:17 PM, ttribe said:

Does the law care about how devout he was?

ABSOLUTELY!  Once Huntsman claims devoutness, then the court has to inquire into the nature of tithing for fraud.  But they can't do that, because tithing is a matter of faith.  In other words, by claiming devoutness, Huntsman admits that he did not reasonably rely on any statement of anyone about the funds' particular uses.  Rather, he did it as a principle of faith.  And because that's the case, there can be no fraud (which requires an element of reasonable (or justifiable) reliance).  He's absolutely killed his own case.

Edited by PacMan
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On 3/23/2021 at 8:03 PM, ttribe said:

I'm well aware of the requirements to prove fraud.  The "act of faith" element is clearly believed by the Plaintiff to be something other than that.  

No, no, no.  He's the one claiming devoutness.  If he's devout, he paid as an act of faith--not reliance on a misrepresentation.  Said another way, if he truly paid in reliance of statements made as to the funds' uses, then he wasn't really devout.  Huntsman can't have it both ways.  By calling himself devout, he already painted himself into a corner.

Edited by PacMan
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3 hours ago, ttribe said:

What kind of 'emergency' could possibly require that size of fund?

Invasion of gigantic alien killer crabs, needing to buy the whole state of Missouri, God commanding the Church to buy every member a pony, God needing every member to own a jet pack as part of their 72 hour kit to escape danger, and launching our plan for world domination. That is just off the top of my head.

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8 hours ago, webbles said:

So plugging those numbers into your calculation, that would be $1/$7B = 14% goes to "commercial purposes".  If we add the investment return, it is now $8B/$14B = 57%.  Basically the same thing, correct?  Are these numbers ok?

The only other thing I would disagree is saying the investment income is for "commercial purposes".  There is no proof that it has been used for any "commercial purposes".  The only thing we really know is that it just sits there and grows.  Growing an investment is not "commercial purposes" especially when the people who manage it actually believe that it will be used for the church (per the whistleblower, some of his higher ups think it will be used during the second coming).

Yes, you understand where I'm coming from. I hadn't looked at those reports since they first came out and apparently misremembered them (or I subconsciously grew them for interest?).

According to the whistle blower, money has only left EPA twice--once to help fund the mall construction, and once to bail out the insurance company.

It appears that the Church is operated on the algorithm that it should live on 90% of its donation income and save the rest. That made a lot of sense while they first needed to build up cash reserves and then build up some endowments to help fund the Church into perpetuity. But it makes less sense now, and as far as I can tell they've never had the inspiration, faith, or vision to put any of the savings to use for any purposes other than perpetual commercial growth.

People who manage assets like these are trained to constantly measure the duration of the assets and make investment decisions based upon the timing or economic scenarios of when the funds will be needed. For example, will the Church need to withdraw $750 million in an economic recession? Will they need to withdraw $500 million a year for 10 years when Generation Z is going to college? Will they need to withdraw $100 million a year, in 2020 dollars, every year into perpetuity, starting in 2035, to fund temple maintenance? With information about how and when the funds will be used, the managers can make investments that will best meet those objectives.

As an example, a big chunk of the BGEA assets are in "The Cove Endowment Trust Fund." According to their report, the fund's purpose "is to provide an ongoing source of funding for supporting, maintaining, and improving the facilities and ministry at the Billy Graham Training Center at The Cove. The primary investment objective of this fund is to preserve and protect assets by focusing on conservation of principal and long-term growth of capital and income. This objective is generally attained by investing in a diversified portfolio of high quality securities. The spending plan for this fund has been based upon the capital and operating needs of The Cove. Funds of approximately $1,357,500 and $1,407,000 were transferred to support the ministry of The Cove for 2019 and 2018, respectively." That is an example of best practices.

But according to the whistle blower, the investment managers at EPA have received absolutely no such guidance other than vague guidance to keep the money pretty liquid. Comments about saving the money until the second coming might be a prophetic statement of when they plan on actually using the money, but to me it sounds like a cynical quip made by investment managers who are frustrated at the lack of objectives they are given and the observation that the funds are actually never used.

I realize this is partly subjective on my part, and I realize I'm not privy to the insider information. But from my seat, it seems that although the leaders of the Church have admirably dodged the temptation of "claiming ownership of God's gifts", the Church has fallen to the temptation of "acquiring assets as their lasting goal." Avoiding those two temptations are two principle reasons of financial transparency, and I am suggesting they have avoided one but fallen for the other.

Judging their actions, it is clear to me that other than vague, hypothetical pronouncements of maybe needing the money for something someday, they are accumulating it for the commercial purpose of having commercial assets, and that that is an end unto itself. That is why I say money that is invested and investment returns that are reinvested are being put to commercial use.

You don't have to agree with me. I'm just suggesting that James Huntsman isn't the only tithe payer who shares my sensibilities on this.

Edited by Analytics
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7 hours ago, PacMan said:

No, no, no.  He's the one claiming devoutness.  If he's devout, he paid as an act of faith--not reliance on a misrepresentation.  Said another way, if he truly paid in reliance of statements made as to the funds' uses, then he wasn't really devout.  Huntsman can't have it bother ways.  By calling himself devout, he already painted himself into a corner.

You seem to think being "devout" requires blind faith without any expectation that funds would be used in a way the church claimed. Is that really an argument the church would want to make? 

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20 minutes ago, HappyJackWagon said:

You seem to think being "devout" requires blind faith without any expectation that funds would be used in a way the church claimed. Is that really an argument the church would want to make? 

Once again we see accusations of faithfulness which are based on prophetic infallibility.

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11 hours ago, ttribe said:

What kind of 'emergency' could possibly require that size of fund?

Maybe the Church is planning on needing to provide significant supplemental aid to aging members when Social Security invariably fails.

Even an apparently huge sum of money can disappear pretty quickly - it just depends on the situation. 

 

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24 minutes ago, Amulek said:

Maybe the Church is planning on needing to provide significant supplemental aid to aging members when Social Security invariably fails.

Even an apparently huge sum of money can disappear pretty quickly - it just depends on the situation. 

 

So, you're thinking the Church's massive savings/investments could be used to stave off a US Centric financial problem?

The rest of the world can take care of themselves.

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4 minutes ago, HappyJackWagon said:

So, you're thinking the Church's massive savings/investments could be used to stave off a US Centric financial problem?

The rest of the world can take care of themselves.

US-centric does not mean limited to the US, especially given the position of the US in the global economy. The government can borrow to cover for Social Security when the fund fails, so Social Security will only ever truly crater when the US government exceeds its capacity to pay interest on its debt and defaults. That is a global financial problem. 

In any case, I fail to see your point. There are a lot of members in the US who would be hit by that, why should the Church not be concerned about that? 

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6 hours ago, HappyJackWagon said:

So, you're thinking the Church's massive savings/investments could be used to stave off a US Centric financial problem?

The rest of the world can take care of themselves.

I don't see why an increased welfare need caused by government mismanagement is any less real than a similar need resulting from unemployment, natural disaster, or any number of other things.

And my presumption would be that the Church would need to maintain what it is currently (and plans to continue) doing in the rest of the world as well - not that everyone else would be left to themselves. 

 

Edited by Amulek
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52 minutes ago, Amulek said:

Maybe the Church is planning on needing to provide significant supplemental aid to aging members when Social Security invariably fails.

Even an apparently huge sum of money can disappear pretty quickly - it just depends on the situation. 

 

Should such a financial calamity occur, it is my personal and professional opinion that investments in stocks and bonds are unlikely to hold their value, so such savings would not be particularly helpful. 

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12 hours ago, ttribe said:

What kind of 'emergency' could possibly require that size of fund?

Perhaps the leaders of the Church believe the following is actually going to happed, and they’re therefore diligently preparing for the prophesied day when God’s judgements are going to be poured without measure upon a world ripened in iniquity? Or do some see the Church through a lens of such cynicism that they can’t even imagine the leaders are sincerely, wisely and diligently preparing for the day when these dire prophecies are going to be fulfilled?

87 For not many days hence and the earth shall tremble and reel to and fro as a drunken man; and the sun shall hide his face, and shall refuse to give light; and the moon shall be bathed in blood; and the stars shall become exceedingly angry, and shall cast themselves down as a fig that falleth from off a fig tree.

88 And after your testimony cometh wrath and indignation upon the people.

89 For after your testimony cometh the testimony of earthquakes, that shall cause groanings in the midst of her, and men shall fall upon the ground and shall not be able to stand.

90 And also cometh the testimony of the voice of thunderings, and the voice of lightnings, and the voice of tempests, and the voice of the waves of the sea heaving themselves beyond their bounds.

91 And all things shall be in commotion; and surely, men’s hearts shall fail the. (Doctrine and Covenants 88)

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9 minutes ago, ttribe said:

Should such a financial calamity occur, it is my personal and professional opinion that investments in stocks and bonds are unlikely to hold their value, so such savings would not be particularly helpful. 

So long as the government continues to service its foreign debt, I think the market could survive SS being dismantled - especially if it is done over time, as everyone in the workforce shifts to saving/investing for their own future. 

I know it's a lot more complicated (and harder to predict) than that, so I don't want to get too far into the weeds on it.

The point I was making is that even what appears to be a significant amount of money can go pretty fast given the right circumstances.

 

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2 hours ago, Analytics said:

the Church has fallen to the temptation of "acquiring assets as their lasting goal."

An interesting "accusation" (perhaps more inflammatory than you intended, but I'm using it anyway). Everywhere I see the Church's rain day fund discussed, I see people asking something like, "why so much?" I don't know that I need the "transparency" of financial statements, but some transparency regarding goals and purposes philosophy of having such a large rainy day fund would be useful to know.

So far, the official word from the Church seems to be, "we are doing the same as we teach our members -- live within your budget and save for the future."  If this is the only explanation even for those at the very top, then it seems that the Church has not, yet, even considered the question of "when is it enough?" Until the Church brings up the question, then there seems like no difference between that explanation and "acquiring assets as [our] lasting goal." "Stick to a budget and save for the future" is good advice for 99-99.5% of individuals, but, even applied to individuals, there comes a point where an individual can be excessively accumulating wealth for no purpose other than creating wealth. A very few of us as individuals will need to wrestle with the question of when is it enough. It seems to me that "when is it enough?" is a question that the Church should be asking itself (if it isn't already). My idea of transparency is to tell us what the Church thinks "enough" is, and why (at current estimates 15-20x of annual budget) the large amount that the Church has apparently settled on (as described for large charitable endowments in Aaron Miller's essay https://publicsquaremag.org/editorials/the-100-billion-mormon-church-story-a-contextual-analysis/ ) is more appropriate than the 1-3x (maybe 5x at the outside) that your sources recommend.

If part of the reason is, as some have said, "the calamities foretold" for the end times, then part of me wonders if we have a secret revelation telling us how imminent those end times are. It's fairly well known that the Church began accumulating this wealth around 1970, so it only took 5 decades to get to where we are now. Assuming that such an excessively large fund is needed for the Church to survive the end times, we have shown that we only need a decade or three to build up a very large fund. If our sense of "imminence" is still the same as that in St. Paul's day, perhaps a better use of our resources is to maintain a 1 to 5x fund (more in line with @Analytics sources) and trust that -- in keeping with our usual prooftext of Amos 3:7 -- God will warn us when the calamities foretold are a few decades in the future and we can start saving for those calamities at that point. And, if that revelation has already been received, again, in keeping with our prooftext of Amos 3:7, perhaps the Church ought to make that revelation public so we all know.

I don't think that a financial report helps me feel like the Church is more transparent. I think something that explains the Church's current philosophy/theology/revelations around the accumulation of wealth would be much more useful. Why 15-20x of budget rather than 5-10x or even 1-5x? Is it really about end times calamities? Are we still simply following along with Elder N. Eldon Tanner's recommendations and have not revisited those strategies now that we are so far removed from insolvency? Are Church leaders even thinking about and talking about these kinds of questions?

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8 minutes ago, MrShorty said:

An interesting "accusation" (perhaps more inflammatory than you intended, but I'm using it anyway). Everywhere I see the Church's rain day fund discussed, I see people asking something like, "why so much?" I don't know that I need the "transparency" of financial statements, but some transparency regarding goals and purposes philosophy of having such a large rainy day fund would be useful to know.

So far, the official word from the Church seems to be, "we are doing the same as we teach our members -- live within your budget and save for the future."  If this is the only explanation even for those at the very top, then it seems that the Church has not, yet, even considered the question of "when is it enough?" Until the Church brings up the question, then there seems like no difference between that explanation and "acquiring assets as [our] lasting goal." "Stick to a budget and save for the future" is good advice for 99-99.5% of individuals, but, even applied to individuals, there comes a point where an individual can be excessively accumulating wealth for no purpose other than creating wealth. A very few of us as individuals will need to wrestle with the question of when is it enough. It seems to me that "when is it enough?" is a question that the Church should be asking itself (if it isn't already). My idea of transparency is to tell us what the Church thinks "enough" is, and why (at current estimates 15-20x of annual budget) the large amount that the Church has apparently settled on (as described for large charitable endowments in Aaron Miller's essay https://publicsquaremag.org/editorials/the-100-billion-mormon-church-story-a-contextual-analysis/ ) is more appropriate than the 1-3x (maybe 5x at the outside) that your sources recommend.

If part of the reason is, as some have said, "the calamities foretold" for the end times, then part of me wonders if we have a secret revelation telling us how imminent those end times are. It's fairly well known that the Church began accumulating this wealth around 1970, so it only took 5 decades to get to where we are now. Assuming that such an excessively large fund is needed for the Church to survive the end times, we have shown that we only need a decade or three to build up a very large fund. If our sense of "imminence" is still the same as that in St. Paul's day, perhaps a better use of our resources is to maintain a 1 to 5x fund (more in line with @Analytics sources) and trust that -- in keeping with our usual prooftext of Amos 3:7 -- God will warn us when the calamities foretold are a few decades in the future and we can start saving for those calamities at that point. And, if that revelation has already been received, again, in keeping with our prooftext of Amos 3:7, perhaps the Church ought to make that revelation public so we all know.

I don't think that a financial report helps me feel like the Church is more transparent. I think something that explains the Church's current philosophy/theology/revelations around the accumulation of wealth would be much more useful. Why 15-20x of budget rather than 5-10x or even 1-5x? Is it really about end times calamities? Are we still simply following along with Elder N. Eldon Tanner's recommendations and have not revisited those strategies now that we are so far removed from insolvency? Are Church leaders even thinking about and talking about these kinds of questions?

I wonder if this weekend's conference might do a little of what you're suggesting, hopefully.

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12 minutes ago, MrShorty said:

An interesting "accusation" (perhaps more inflammatory than you intended, but I'm using it anyway). Everywhere I see the Church's rain day fund discussed, I see people asking something like, "why so much?" I don't know that I need the "transparency" of financial statements, but some transparency regarding goals and purposes philosophy of having such a large rainy day fund would be useful to know.

So far, the official word from the Church seems to be, "we are doing the same as we teach our members -- live within your budget and save for the future."  If this is the only explanation even for those at the very top, then it seems that the Church has not, yet, even considered the question of "when is it enough?" Until the Church brings up the question, then there seems like no difference between that explanation and "acquiring assets as [our] lasting goal." "Stick to a budget and save for the future" is good advice for 99-99.5% of individuals, but, even applied to individuals, there comes a point where an individual can be excessively accumulating wealth for no purpose other than creating wealth. A very few of us as individuals will need to wrestle with the question of when is it enough. It seems to me that "when is it enough?" is a question that the Church should be asking itself (if it isn't already). My idea of transparency is to tell us what the Church thinks "enough" is, and why (at current estimates 15-20x of annual budget) the large amount that the Church has apparently settled on (as described for large charitable endowments in Aaron Miller's essay https://publicsquaremag.org/editorials/the-100-billion-mormon-church-story-a-contextual-analysis/ ) is more appropriate than the 1-3x (maybe 5x at the outside) that your sources recommend.

If part of the reason is, as some have said, "the calamities foretold" for the end times, then part of me wonders if we have a secret revelation telling us how imminent those end times are. It's fairly well known that the Church began accumulating this wealth around 1970, so it only took 5 decades to get to where we are now. Assuming that such an excessively large fund is needed for the Church to survive the end times, we have shown that we only need a decade or three to build up a very large fund. If our sense of "imminence" is still the same as that in St. Paul's day, perhaps a better use of our resources is to maintain a 1 to 5x fund (more in line with @Analytics sources) and trust that -- in keeping with our usual prooftext of Amos 3:7 -- God will warn us when the calamities foretold are a few decades in the future and we can start saving for those calamities at that point. And, if that revelation has already been received, again, in keeping with our prooftext of Amos 3:7, perhaps the Church ought to make that revelation public so we all know.

I don't think that a financial report helps me feel like the Church is more transparent. I think something that explains the Church's current philosophy/theology/revelations around the accumulation of wealth would be much more useful. Why 15-20x of budget rather than 5-10x or even 1-5x? Is it really about end times calamities? Are we still simply following along with Elder N. Eldon Tanner's recommendations and have not revisited those strategies now that we are so far removed from insolvency? Are Church leaders even thinking about and talking about these kinds of questions?

Outstanding post!

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31 minutes ago, teddyaware said:

Perhaps the leaders of the Church believe the following is actually going to happed, and they’re therefore diligently preparing for the prophesied day when God’s judgements are going to be poured without measure upon a world ripened in iniquity? Or do some see the Church through a lens of such cynicism that they can’t even imagine the leaders are sincerely, wisely and diligently preparing for the day when these dire prophecies are going to be fulfilled?

87 For not many days hence and the earth shall tremble and reel to and fro as a drunken man; and the sun shall hide his face, and shall refuse to give light; and the moon shall be bathed in blood; and the stars shall become exceedingly angry, and shall cast themselves down as a fig that falleth from off a fig tree.

88 And after your testimony cometh wrath and indignation upon the people.

89 For after your testimony cometh the testimony of earthquakes, that shall cause groanings in the midst of her, and men shall fall upon the ground and shall not be able to stand.

90 And also cometh the testimony of the voice of thunderings, and the voice of lightnings, and the voice of tempests, and the voice of the waves of the sea heaving themselves beyond their bounds.

91 And all things shall be in commotion; and surely, men’s hearts shall fail the. (Doctrine and Covenants 88)

Once again, should those calamities come to pass, I suspect Apple stock will be worthless.  YMMV.

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