The U.S. Constitution and its amendments has 7,591 words, the Bible about 800,000 words, and the U.S. Tax Code has an estimated 4,000,000 words. If the average adult reads at a speed of 300 words per minute, it would take about 25 minutes to read the entire U.S. Constitution, 89 hours to read the Bible, and over 222 hours to read the U.S. Tax Code. Tax planning is complicated to say the least, but it can add thousands even tens of thousands of dollars of value over time.
We have been extremely busy the past 6 weeks related to reviewing the tax scenarios for all of you. It has been a primary focus. However, our focus is changing rather quickly to this current market environment. From the time we started in earnest on tax planning in early November, the markets are down about 9% and the news has weakened. We have not seen a year quite like this since 2011.
The market does not like uncertainty and this has clearly been the seeds of this current episode of market mania. What will earnings be next year? What will happen with a divided government? What will happen with global trade (in particular) China, what will happen with the White House? What will happen with the Federal Reserve interest rate policies? What will happen with “Brexit”?
We could go on from here, but I think you are getting the point.
So, this uncertainty has created a “good old fashioned” correction. We do not see a recession next year and believe the markets will ultimately move higher in the new year since the fundamentals are still in place for continued earnings growth and positive GDP growth. The markets are now bottoming on 5-year low valuations. Translation, we are seeing some better value in adding to selectively adding to equity positions.
December 2018
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. All investing involves risk including loss of principal. No strategy assures success or protects agains loss.
