If the stock market could sing, it would probably sing, “All I want for Christmas is a tax bill signed.” The odds of some form of a tax bill signed into law is “extremely high,” according to our Washington Policy analyst, Ed Mills. The question is, how will the final terms be negotiated? 1 We believe investment decisions should be based on much more than just the amount of taxes a company pays. However, one of the economic sectors with the highest effective tax rates, and therefore the most potential to benefit from a tax cut, is energy. The market seems poised to benefit from a potential combination of tax relief, less regulation, and a growing economy.1
As our Market Strategist, Andrew Adams, points out: “Considering the S&P 500 is generally shown to be at the top of most charts these days, it can almost appear that ‘it can’t possibly go any higher.’ However, when we remove this psychological barrier and leave plenty of space on the upside (see chart below), the current level of the index doesn’t look quite as extended. In fact, all the index has done to this point is return to the general midpoint line of the last 40+ years, and if the index maintains a similar trajectory over the next 20 years or so, hitting milestones like 5,000, 10,000, and 15,000 doesn’t seem that ridiculous.”2
Gleanings, November 22, 2017
As “chestnuts roast on open fires and Jack Frost nips at our nose”, the ebullient month of Christmas is underway. We have learned that it’s tough to get markets “down” when spirits are so “high”. That doesn’t mean it can’t happen, but historically it is rare. And so…”although it’s been said many times, many ways…Merry Christmas…to you.”
Most sincerely,
Malcolm C. Tarver, III
Senior Vice President, Investments
Certified Investment Management Analyst ®
1Investment Strategy, Andrew Adams, December 5, 2017
2Andrew Adams November 29, 2017
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