All the headlines for the past few days have been focusing on the potential government shutdown which takes place at midnight tonight. It doesn't appear that either side is willing to back down at this point and the best case to avoid a shutdown may be another short term deal. But I'm not here to talk about politics and the politicians inability to compromise and find middle ground. We have to consider what the shutdown means to our clients' investment portfolios.
Back in 2013, China's President Xi Jinping announced the One Belt One Road (OBOR) initiative to modernize infrastructure along the ancient Silk Road trading routes. This policy is poised to reshaped the 21st century economy. The project is a potential win win for China and its surrounding neighbors. For China, it seeks to create trade and investment opportunity in infrastructure and construction providing China with a new channel to broaden its export market. For its neighbors, they will benefit from modernized roads and power plants which will help their economies flourish and grow. This rising tide should lift all boats!
Warren Buffett believes that the corporate tax reform is very bullish for the US stock market, and more importantly, isn't fully priced in to stock prices.
"The tax act is a huge factor in valuation," he said on CNBC's "Squawk Box" on Wednesday. "You had this major change in the silent stock holder in American business who has been content with 35 percent... and now instead of getting 35 percent interest in the earnings they get a 21 percent and that makes the remaining stock more valuable."
Over the last few days, I've been listening to Wall Street firms talk about their expectations for the year ahead. Almost all of them have a positive view but it is the same standard presentation over and over. Most of them conclude that they prefer international stocks over US stocks because of valuation. While Europe is certainly trading at a lower multiple than the US, their growth is also expected to slow in 2018. Also note that European markets significantly underperformed US markets in the 2nd half of last year.
For Runnymede, we are certainly intrigued by the long-term opportunities in emerging markets because they have better fundamentals and lower valuations. In terms of the developed markets, we believe that investors aren't bullish enough on US markets. As I wrote a couple of weeks ago, Wall Street strategists have a target of 2848 for the S&P which I believe will be too conservative especially if interest rates stay low. Here are a couple of reasons why investors aren't bullish enough.
While the media is caught up in crpytocurrency mania, the true game changing technology that investors should be focused on is artificial intelligence. From self-driving cars to Dr. Robot, AI is going to change our lives in profound ways in the near future. Russian President Vladimir Putin says, “Artificial intelligence is the future, not only for Russian, but for all of humankind. It comes with colossal opportunities, but also threats that are difficult to predict. Whoever becomes the leader in this sphere will become the ruler of the world.” Many people worry about the risks like robots deciding to destroy humans like in the Terminator or the potential for huge job losses. But I love this quote from futurist Ray Kurzweil:
On behalf of Runnymede Capital Management, we wish you a Happy and Prosperous New Year! We're so thankful for such a great community of individuals, families, companies and organizations.
As we near December 31st, many people are making their New Year's resolutions. I've never been a fan of resolutions, but last year my pants were getting tight in October and weren't helped by so many holiday treats. I made the decision to get in better shape. It was really more of a goal than a resolution but I digress. I bought a $20 Groupon to try out CKO Kickboxing for 6 classes and after my first class, I was totally hooked. I loved hitting the heavy bag and have been going twice a week ever since. In conjunction, I also focused on eating clean and enjoy having salad during most weekday lunches. I'm happy to report that after a year, my pants are no longer tight around the waist. The funny thing is that I've actually gained weight over last year but it is now muscle instead of fat. This year I'm tempted to write out more formal resolutions and goals to see what I can accomplish.
Since I write mainly about financial topics, today I will focus on 3 actionable tips to help you get financially fit in 2018. I know that many of you are worried that I'm going to go into budgets, planning, emergency funds, 401ks and other boring crap. But worry not, I won't mention any of these terms. I promise. Let's jump into the good stuff!
This is one of my favorite posts to write every year as we get to look back on Wall Street predictions and see how they panned out. We have done this in 2014, 2015, 2016 and 2017 so it is becoming a tradition to see which strategists did well and which missed the mark.
Last year, the strategists predicted a bull market for 2017 with an average target of +5% for the S&P 500. Needless to say, they badly missed the mark as the S&P 500 has returned over 20% and blew all predictions out of the water. The most bullish was John Stoltzfus but his target was for just 2450 and today the S&P is 2682. The worst miss was the surprisingly bearish Tom Lee who historically was the most bullish on the street almost year in and year out -- he picked a bad year to lose his bullish mojo. He expected the market to have a bad first half and basically end flat at 2275. Now let's take a look at their thoughts on 2018...
While most of us are busy with holiday parties, we don't want to be bogged down by more things to add to our to-do list. But today the GOP takes its next step in its rush to pass sweeping tax reform to give 'great Christmas gifts' to the middle class (The bad news for us in the tri-state area (NY, NJ, CT), many of us are facing a potential tax increase thanks to the $10k cap on real estate or state and local tax deduction). It is therefore important for taxpayers, both personal and business, to be aware of the potential effect on their finances. Here are 3 actionable tips to take before year end to put you in a better position for the coming tax code changes.
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