Strategist: Keep Calm, Tax Reform Is On Its Way
Regardless of its failure to be repealed, tax reform is on its way. Just today, Treasury Secretary Steven Mnuchin reassured Americans that we could still expect “comprehensive” tax reform by August. It’s also worth recalling that, even though he failed to reform health care during his eight years in office, President Bill Clinton still managed to tackle tax reform with the Omnibus Budget Reconciliation Act of 1993.
Charitable Tax Planning Opportunity: Donate Appreciated Stock to Charity
For advisors with philanthropically-minded clients, publicly traded appreciated stock can be among the most tax-advantaged items to donate to charity. Contributing such assets may enable the donor to enjoy a current year tax deduction and potentially eliminate capital gains tax liability on the sale of the asset, while allowing the charities they support to receive the most money possible.
S&P 500 Snapshot: Biggest Loss in Five Months
Today's S&P 500 opened at its daily high and proceeded to tumble throughout the day, ending the selloff with a 1.24% loss, its largest since October.
I know that I am not the only one feeling it. You can see the increasing risk in the markets and uglier action on the tape. Credit is seeing selling even as recession fears are distant. Bank stocks are rolling over even with the Fed raising interest rates.
Households' Equity Ownership Reaches 30%. It's Statistical Noise
Households have 30% of their financial assets in equities, the same proportion as they held at bull market peaks in the 1960s and in 2007. Does this mean another bear market is imminent? No.
On My Radar: A High Probability Way to Forecast Recession (Recession? No Sign Just Yet)
One of the realities we will face is recession. The good news is that we are in the eighth year of a growth phase (the last recession was in 2009) and as you’ll see in my favorite indicator charts below, there are no current signs of recession.
Expect the S&P 500 to Underperform Risk-Free T-Bills Over the Coming 10-12 Years
Presently, based on the most historically reliable valuation measures we identify, we expect annual total returns for the S&P 500 averaging just 0.6% over the coming 12-year period; a prospective return that we expect will not only underperform bonds over this horizon, but even the lowly yields available on risk-free T-bills.
China: Making solid progress on its Five-Year Plan
As the National People’s Congress convenes, we highlight three government priorities to watch.
A Cautionary Tale
The markets have enjoyed a tremendous ride since the election. The Dow Jones Industrial Average has advanced over 2,500 points (a 15.1% total return) since then. Most of this “hope” rally has occurred on enthusiasm for anticipated pro-business policies, such as lower taxes and fewer regulations.
How Do Alternative Investments Perform in a Rising Interest Rate Environment?
The proliferation of liquid alternative mutual funds happened in response to the 2008-2009 recession, which was followed by an extended period of unusually low interest rates.
The Latest Look at the Total Return Roller Coaster
Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $18,453 for an annualized real return of 12.32%.
A Market of Extremes
A number of factors in the U.S. stock market are at historical extremes. We at Smead Capital Management like to look for what we call "well known facts" in the marketplace, also thought of as areas of extreme optimism and pessimism.
How is your bracket doing? Before the ACA Repeal and Replace plan hit the court last week, it already looked like its odds of passage were longer than Mount St. Mary's chance to win the Men's NCAA Basketball Tournament on April 3rd.
Big Machine: Why Large Caps Are Likely to Outperform
Many investors are wondering whether the stock market has come too far too fast. The latest consolidation brought the S&P 500 down only 2%, but the average stock was down more than that.