Newsletter for the End of November, 2017

The market continued upward this month and almost all of you have significant gains.

I have two main points to discuss. The Dow is not the market and don’t sweat the tax bill.

Over the last two months the Dow Jones Industrial Average (the “Dow”) has gone up 8.3%. It is now at an all-time high. The S&P 500 average went up just over 5% and the small cap indexes went up 3% plus change. The Dow is made up of only 30 big stocks. If three or four have big wins, the whole index is distorted up. The S&P 500 has 500 companies. One or two or ten big companies cannot influence the average as much. The S&P still has primarily big companies, just not as big.

So, what happened right now. A tax bill is being pushed through that benefits big corporations. The Dow is made up of big corporations. In hindsight, we should have all switched to Dow type investments two months ago. But then again, if the tax bill fails, the Dow will plummet. No one can predict what will happen with the tax bill. It still could fail to pass after conference. Risk is real. Also, timing is a very dangerous game.

It is fun and easy to look at the Dow every day and see how the market is doing. Just remember the Dow is a very small sample of the thousands of stocks available.

As for the tax bill, it is too soon to reach conclusions. My world is about the little fine print, the footnotes at the back. The senate bill is 478 pages and has many moving pieces. I have read every summary I can find and the longest has been 2 pages. My organizations will be sponsoring 8-hour seminars with 300-page handouts by this summer.

As for the tax bill, it is too soon to reach conclusions. My world is about the little fine print, the footnotes at the back. The senate bill is 478 pages and has many moving pieces. I have read every summary I can find and the longest has been 2 pages. My organizations will be sponsoring 8-hour seminars with 300-page handouts by this summer.

It also does not matter yet. The senate bill has to go to conference with the house bill (also some 500 pages or so). The differences have to be resolved and then everything has to be voted on again by both the senate and the house. I would rather wait until the final legislation to puzzle out what it means. Also, both bills are not effective until January 1, 2018. This coming tax season, where I complete the 2017 returns, is under the old rules.

There will be winners and losers with the new tax rules, if they pass. The political arguments are starker than is warranted. It will not be a complete give away to the rich on the backs of the middle class. It will also not be the cause of a huge and sudden economic boom. Those are both political exaggerations to score points. The reality will be in between on both arguments. Stick to the plan and you will be fine.

Dan


Investment Fee Schedule

Rate Assets Under Management
1.44% Below $125,000
1.00% Between $125,000 and $750,000
.85% Between $750,000 and $1,250,000
.80% Between $1,250,000 and $1,750,000
.75% Between $1,750,000 and $2,500,000
.70% Between $2,500,000 and $3,250,000
.65% Between $3,250,000 and $4,250,000
.60% Above $4,250,000

A single rate is applied to the whole account. Compared to my old fee structure, under the new fee structure the cost for a $1 million account would be $500 lower per year and the cost for a $1.5 million account would be $1,500 lower per year. I will still waive personal tax return fees for accounts over $1 million. All services stay the same. I am just lowering my upper end fees. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.


As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

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