Remember, the only choice is optimism, the pessimists never get it right.

Corporate earnings are impressive, GDP is growing as the Covid-19 restrictions ease and the unemployment rate is still dropping. Many analysists are upping their forecast for the S&P 500 earnings per share and their estimates for the for the index year-end potential.

With the rapid rise in equity prices stocks may take a breath and absorb the rise so don’t be surprised if we see a market correction. (Remember, market corrections are -10%, bear markets are down 20%). Equity valuations are driven by two issues, interest rates and corporate earnings. The Federal Reserve board continues to indicate its desire to keep interest rates low, although the 10-year treasury bond rate may increase. And earnings, to quote one analysist, “are staggering and justify every bit of this rally”.

One big storm on the horizon is that the war on capitalism coming out of Washington is in full motion. I have been saying for quite some time that, historically, we are living in a relatively low tax environment. The tax and spend recommendations tsunami heading our way may change all of that.

I have attached an article from the Wall Street Journal that suggests taking funds out of IRA accounts and converting it to Roth IRAs may be a strategy to look into. (I’m not a fan of Roth IRAs, I use life insurance and accomplish pretty much the same thing as the Roth does in addition to a death benefit that helps with the taxes on the balance of the IRA.) I do have some very powerful software that thoroughly analyses tax returns with some corresponding suggestions and potential tax planning strategies. Should you like more information on this, please call or email and we can schedule a time to meet, either virtual or in-person.

Finally, the weather has certainly turned for the better and in a couple of months we may be complaining about the heat. But right now, Jean & I are certainly enjoying it. Hope you are too.

Have a super week.

Doug Alden

Link to article one…
Link to article two…

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PS: This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

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