Trump's Tax Plans; Melinda Gates Focuses on Gender
TAX PLANS FROM TRUMP
Trump proposes a flat 20% capital gains tax. He proposes three tax rates for individuals. He also proposes a flat 15% corporate tax and, for corporations, the ability to deduct expenses in a single year, instead of amortizing over many years.
All of these plans are bullish for business and stock market investors; they are good news.
I do not pretend to understand whether the government can afford these tax cuts. I don't trust the forecasts from any of the sources. Democrat sources likely have a reason to exaggerate how much larger the deficits will be. Republicans have the opposite incentive and are likely going to downplay the costs and exaggerate the benefits.
I believe this is likely good news for our investment portfolios. Tax cuts put the wind in the sails of consumers, who buy more goods. Tax cuts increase the profits, and therefore the value, of our companies.
Interest rates may rise. This is not news, actually, and you've seen interest rates rise fairly quickly since the election. The reason, barring any other (and there are many), is that the deficit of the government will increase, and thus the riskiness of the government increases. Let's leave interest rates alone for a bit--because the other reasons they rose are so powerful, and complex, they are likely to distract us.
Focus instead on these two ideas: likely higher profits and likely higher interest rates. If nothing else changes, what will that do for (or to) your portfolio?
1. Ask your wealth manager.
2. The gains since the election are not evenly dispersed among all companies or all investors.
3. These are the times when having a real-life expert at your side makes all the difference.
Worth reading: Here's an interesting Wall Street Journal article on the world's largest foundation and its aim to help women and girls the world over--Melinda Gates Focuses on Gender.