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Highlights of House Tax Proposal

Yesterday members of the House of Representatives announced their version of income tax reform.  The Senate is expected to offer its own version as early as next week. Assuming each passes without changes (and that’s a big assumption) there will still likely be changes as the legislation moves through the reconciliation process before being presented [...]

An Apolitical View of the Tax Reform Debate

Much is being made of the Administration’s tax reform proposals.  It’s the usual politicized rhetoric.  Democrats argue it’s a tax cut for the rich.  Republicans argue a small percentage of taxpayers pay a large percentage of taxes so, logically, the largest portion of a tax cut will benefit those paying the most taxes. Been there, [...]

Warren Buffett Reminds Us Smart People Can Do Stupid Things

In an interview with CNBC the Oracle of Omaha disclosed that his investment vehicle (Berkshire Hathaway) is delaying taking profits in anticipation of a tax cut. Right now we're sitting and watching because within three months, actually less than that, we'll know the answer on it . . . I would feel kind of silly [...]

Tell Them What They Want To Hear

Should a financial relationship be about doing what’s right or feeling good?  The former, right?  Not so fast. A survey by index zealots DFA found the #1 thing valued in receiving financial guidance is a “sense of security / peace of mind.”  Not that that’s a bad thing of course but at 35% of respondents [...]

Intra-Year Market Drops vs. Year-End Results

Although investors claim to accept market fluctuation as normal we find precipitous selloffs overwhelming.  Why? . . . because they happen rapidly and randomly. Lost in the sea of emotion is that equity market annual returns have been mostly positive despite significant market declines in each year.  Since 1980 the average intra-year pullback in the [...]

Irrational Exuberance – Bull Market vs. Investment Mania

Semantics?  No! Bull markets end when the smart money (i.e. buying based upon fundamentals) changes its perception of earnings growth.  Markets “crash” when the dumb money (i.e. buying based upon recent performance) will no longer chase prices higher than already inflated levels. Where has the smart money been?  It’s followed businesses benefiting from increasing earnings, [...]

401(k) Company Match on the Rise for Wrong Reasons

As companies shift away from defined-benefit retirement plans (i.e. we’ll pay you $x per year for the rest of your life) towards defined-contribution plans (i.e. you contribute x% per year) an inducement for employee participation is the company match.  It’s that free money 100% ROR of which we’d be foolish not to take advantage. One [...]