We’ve been doing some de-cluttering at my house, adapting to life as empty nesters. During a review of some long-forgotten storage bins, I found the very first tax return I ever filed. It listed income of less than $2,000, earned lifeguarding and shelving books at the campus library.
As it is for people, so it is for business cycles, which can become more vulnerable as they continue. This theory will certainly be tested in 2018. The global economy enters this year with considerable momentum and lots of policy support.
The economic news this year could scarcely have been better. Strong growth, low inflation and rising asset prices in major markets will make 2017 one of the most successful years in recent memory.
There has been no let-up to the economic news cycle this year. Even the approach of the holiday season has failed to offer a respite, with tax reform deliberations ongoing through the holidays.
Equity investors appear to have voted in favor of US tax reform. But the optimism may need to be tempered. We believe that the impact of the tax overhaul on individual stocks will be mixed and will depend on several factors.
Times have changed, in more ways than one. This December has been especially hectic, with the transition in Brexit negotiations, U.S. tax reform debate and Bitcoin setting new highs every few minutes.
One of the things I teach in my history course about the history of financial fraud is that, interestingly, the fraud cycle tracks the financial cycle but with a lag. And the longer that you have a bull market, the more and more specious companies begin to float, to go public...
In reading Larry Swedroe’s article, Slaughtering the High-Dividend Sacred Cow, it strikes me that high-dividend stocks are far from “sacred cows” and need not be slaughtered. Instead, his value-advocacy piece ignores the enhanced risk-adjusted returns and the much lower drawdowns that can be found in a diversified basket of high-dividend stocks.