Below is a synopsis of this investment report:
For full access to the investment report titled “What Will the Market Do This Year?”, please contact us.
On December 22 the new tax bill was signed into law. I have received a number of calls on the this topic and I want to discuss what we know and what we don’t know.
We know that things will be changing. But the impact is still unclear. Mostly because once a bill is signed into law, the agency responsible (the IRS) has to interpret the new rules and determine how they will be implemented.
Areas of interest for savers and investors are:
The tax brackets have changed along with the standard deductions. This may result in lower tax brackets for some but higher for others. For retirees, it is important to understand how the new brackets and deductions impact your household. This will impact how much and when you should withdraw money from your qualified accounts.
The law slashes the corporate tax rate from 35% to 21% and gives business owners a 20% deduction on business income.
For taxpayers, the law nearly doubles the standard deductions to $12,000 for individuals and $24,000 for couples, which means itemizing deductions may help lower the standard tax load.[8]
The new tax brackets are 10%, 12%, 22%, 24%, 32%, 35% and 37%, which are slight decreases from previous categories. However, many workers will move into lower tax brackets under the new law. A couple making $76,000, for example, would pay 12% in income taxes as opposed to 25%.
What Does the New Plan Mean for Individual Investors?
For those of you who are still saving for retirement. Most of the 401(k) and IRA rules remain unchanged. There were some modifications to the rules regarding converting IRAs to Roth IRAs. But the real impact is yet to be determine. We are going to wait until we have a clearer picture of these new rules before recommending any IRA to Roth conversions at this time.
Capital gains tax brackets have changed. This may provide opportunities for re-positioning some assets. Again, we need to wait until the rules are interpreted before making any recommendations. This will be most helpful for those of you with highly concentrated positions which couldn’t be re-allocated because of tax cost concerns.
Those of you who make significant charitable contributions on an annual basis may want to reconsider your strategies. Under the new rules you may not have enough deductions to get the tax benefit of the donation. It has been suggested that by making two or three years of donations in a single year through the use of donor advised funds, you may be able to take advantage of the tax deduction under the new rules.
While the estate tax wasn’t eliminated, the plan raises the federal exemption from $5 million to $11 million per person and to $22 million per couple
Please keep in mind that everyone’s situation is different and it is important to consult with a competent tax advisor before making any changes to your current tax strategy.
I will continue to try and keep you up to date of the most recent developments in the coming months.
My best,
Mark
Below is a synopsis of this investment report:
For full access to the investment report titled “Easy Money”, please contact us.
Below is a synopsis of this investment report:
For full access to the investment report titled “Are High Yield Bonds the Canary in the Coal Mine?”, please contact us.
Another week, another round of positive market performance. The 3 major domestic indexes again ended the week with gains and new record highs. The S&P 500 rose 0.23% and marked a 7th-straight week of increases – its longest string of weekly gains in almost 3 years.[1] The Dow added 0.45%, and the NASDAQ grew by 1.09%.[2] Meanwhile, international stocks in the MSCI EAFE slipped slightly, losing 0.35% for the week.[3]
On October 25, we learned that September home sales were higher than anticipated and durable goods orders grew by 2.2% in the same month. This data provided more evidence that the economy is on solid ground. However, two other occurrences last week contributed even more to the continuing market gains: 1) Q3 GDP numbers and 2) tech companies’ corporate earnings reports.[4]
What Drove Markets Last Week?
We received the first 3rd-quarter Gross Domestic Product (GDP) readings, and the results strongly beat expectations. Despite hurricanes Harvey and Irma causing billions of dollars of damage, the U.S. economy grew by 3% between July and September.[5] Combined with the 3.1% growth in Q2, the economy has now experienced its best 6 months since 2014.[6]
Last week, 180 companies in the S&P 500 released their 3rd-quarter earnings data – marking the busiest week of this earnings season.[7] Among the releases, several major tech companies reported much higher-than-expected earnings, contributing to the NASDAQ’s biggest daily gain since 2016. With approximately 30% growth so far this year, the tech sector has grown at around twice the rate of 2017’s overall market.[8]
Now that we are 8 years into the economic recovery, we understand that people are looking for reasons to doubt how long this stage will go on. As we saw last week, earnings growth and solid economic data are continuing to emerge, contributing to positive market performance.[10]
If you have any questions about what you are reading in the headlines or experiencing in your own financial life, we are always here to talk
Below is a synopsis of this investment report:
For full access to the investment report titled “Assets vs. Investments”, please contact us.
In fact, last week, markets posted one record high after another – and the S&P 500 had its longest streak of record closes since 1997.[2] At the markets’ close, the S&P 500 added 1.19%, the Dow gained 1.65%, and the NASDAQ grew by 1.45%.[3] International stocks in the MSCI EAFE lost 0.07%.[4]
These domestic gains came despite stocks stumbling slightly on Friday in reaction to disappointing jobs numbers. After 7 years of monthly growth, the September jobs report indicated the first labor market contraction since 2010, with 33,000 jobs lost. The decrease was largely due to the aftermath of Hurricanes Harvey and Irma. Despite this unexpected contraction, however, the unemployment rate fell to its lowest level in 16 years, and average hourly earnings increased by 2.9%.[5]
We also began the first trading week of the 4th quarter last Monday, so we will review Q3’s performance and what lies ahead for Q4.
How did the markets perform in Q3?
If we had to pick one word to describe performance in Q3, it would be: positive.
Throughout the quarter, all four indexes we track in this weekly update had solid showings and hit a number of record highs. The S&P 500 was up 3.96%, the Dow rose 4.94%, the NASDAQ jumped 5.79%, and the MSCI-EAFE gained 4.81%.[6] Both the Dow and S&P 500 marked their 8th straight quarter of gains, and the NASDAQ was not far behind with its 5th positive quarter in a row.[7] The S&P 500 even had its least volatile September in over 47 years.[8]
Globally, European and emerging markets posted their 3rd straight quarters of impressive gains.[9] In September, Chinese manufacturing experienced its fastest growth since 2012.[10]
What drove the markets in Q3?
Rather than last quarter’s growth rallying around a few sectors, markets advanced broadly in Q3, with 10 of the 11 S&P 500 sectors gaining.[11] This positive performance reflects solid corporate earnings, stronger oil prices, and impressive core capital goods orders – though inflation remained below the Fed’s target of 2%.[12]
What is on the horizon for Q4?
By most accounts, betting against a strong 4th quarter seems like a bad idea: The S&P 500 has grown during Q4 in 7 out of the past 8 years.[13] Americans remain generally bullish on the economy and continue to increase their spending as their incomes grow and inflation remains low.[14]
In addition, manufacturing, services, and housing all seem to be supporting economic expansion.[15] This growth is not limited to the United States; globally, 94% of countries are experiencing year-over-year economic growth.[16]
Of course, the coming weeks will give us an even clearer understanding of Q3 performance – and Q4 expectations. If you have questions about how the markets are affecting your portfolio and future, please let us know. We are here to provide the guidance you need and help clarify your investment process.
[2] https://www.cnbc.com/2017/10/06/us-stocks-jobs-report-sp-winning-streak.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
[4] https://www.msci.com/end-of-day-data-search
[5] https://www.cnbc.com/2017/10/06/us-stocks-jobs-report-sp-winning-streak.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
https://www.msci.com/end-of-day-data-search
[7] https://www.cnbc.com/2017/09/29/stock-markets-wrap-up-solid-third-quarter.html
[8] http://money.cnn.com/2017/09/29/investing/dow-longest-quarterly-win-streak-20-years/index.html
[12] http://money.cnn.com/2017/09/29/investing/dow-longest-quarterly-win-streak-20-years/index.html
https://www.cnbc.com/2017/09/28/oil-mixed-but-set-for-weekly-gain-on-improving-market-outlook.html
Below is a synopsis of this investment report:
For full access to the investment report titled “Will There Be Another Black Monday”, please contact us.
Below is a synopsis of this investment report:
For full access to the investment report titled “The Death of Active Management”, please contact us.
Below is a synopsis of this investment report:
For full access to the investment report titled “Can North Korea Impact Your Nest Egg?”, please contact us.
