Quote of the Week
“People who wonder if the glass is half empty or half full miss the point. The glass is refillable.” Unknown
It looks like the Tax Reform/Tax Cut train will not be stopped. With the Senate passing their version of the plan on Friday, the next hurdle is the final version to come out of the Conference Committee where the Senate and the House work out the differences in their respective bills. This will be good for the owner class in this country, which means it should/will be good for those who own stocks, bonds, and real estate which includes our clients. It should be a good year for investing in 2018.
Last week the Dow was up 2.86%, the S&P 500 was up 1.53% and the NASDAQ was down 0.60%. The NASDAQ experienced a strong decline on Friday and Monday as there was a rotation from technology to manufacturing due to the advantages that will be given to manufacturing in the new Tax Bill. The NASDAQ is rallying today (Tuesday) as the rotation swings back to technology due to bargain hunting the low prices in technology.
The UPI on the S&P 500 remains at 24 out of 100. Our allocation for most clients remains the same: 85% equities, 0% bonds, 10% alternatives, and 5% cash.
As I have stated before, I am not going to comment on the Tax Reform/Tax Cut Bill before a final bill comes out of the Conference Committee. The chart below, courtesy of the Wall Street Journal, shows the difference between the House and Senate bills. If you are a political and economic nerd, you should find this chart interesting.
By the Numbers
DONE THIS BEFORE – The House’s “Tax Cuts and Jobs Act” proposes a 1-time tax of 14% on the estimated $2.6 trillion of profits held in overseas subsidiaries of US multinational firms. The 14% proposed tax rate would replace the existing 35% top marginal rate that may be deterring movement of the funds back to America today. The Senate’s version of tax reform proposes a 1-time tax of 14.5%. A similar tax holiday was utilized in 2005 when a 5.25% one-time tax incentive (also down from a top marginal corporate tax-rate of 35%) motivated American businesses to repatriate $360 billion back to the USA (source: Internal Revenue Service). – Michael A. Higley, BTN 12-04-2017
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These are the opinions of Larry Lof and Stephanie Mayoral and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.The S&P 500 is an index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly. Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.