Business cycles demonstrate that previous presidential elections have not had lasting effects upon stock market performance. We learn this each presidential election. 

October 2020 Newsletter

Presidential Elections

Business cycles demonstrate that previous presidential elections have not had lasting effects upon stock market performance. We learn this each presidential election. 

Warren Buffet says, “If you mix politics with your investment decisions, you’re making a big mistake.”

A piece from Nick Murray discusses how nothing makes sense right now – just like a century ago, when America was emerging from a pandemic, where a quarter of the population was infected, 675,000 died, and people were battered from a depression of wholesale prices falling 20%. In 1920-21, after experiencing war-induced, economic crippling inflation…and while nothing made any sense…it all turned around becoming a great economic boom which has lasted through today and current lockdowns. Is today a brief slowdown during the continuing boom? Can we know? Did a short recession in March and April 2020 signal hard times ahead? Or, does the bright future continue with technological improvements and positive spirits? Time and again we have seen good occurring when we were expecting the worst… so let’s all vote!  I think it makes some kind of a difference!

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Positive Signs Today

We have had a V-shaped economy since May.

The economy has done remarkably well; profits not down as much as year over year predicted.

A housing boom is occurring.

Large amounts of money are on the sidelines waiting to go in.

Growth has led the way recently.

There is “The Forgotten $1Trillion Supporting the Economy.”  Tim Day, economist, University of Oregon. Cash balances have accumulated during the pandemic and a steep drop in consumer credit has left Americans placed to boost consumer spending next year. Many of you have reported this.

When consumer default rate declines (mortgages, bank cards, auto loans), discretionary stocks rise.  The recent default rate of 0.67% is just above its all-time low of 0.66% set in June 2020. You own discretionary stocks in growth and income funds along with the S&P. Your accounts enjoyed the rise!

This list could go on. Or, you could write a negative list. Today is more similar to past years than it is different.  Life and business are a mixture of positives and negatives. Look for the turnarounds.

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Tax Analysis: Estate Taxes

The current high estate tax allows $ 11,580,000 to pass to a person’s beneficiaries with no estate tax.  If portability is timely elected by a surviving spouse, a couple can pass on $23,160,000 estate tax free, not necessarily income or capital gains tax free. These numbers are slated to increase or decrease in future years as politicians discuss. 

You can give up to $15,000 per person each year if you want to help children or other beneficiaries now.  There is no tax on this amount of cash, but accountants may warn you about including small gifts in that total number.  If you are comfortable with your own income, giving these gifts while you are alive has both an enjoyable and practical purpose. Your spouse can also give $15,000 gifts.  Keep it at $15,000 or below per person yearly and you are not using your lifetime gift and estate tax exemption.

A good way to help people with medical or educational costs is to pay the fees directly to the school or medical facility. There are no taxes for the student or recipient and the gifts do not count against the $15,000 exemption.

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We like hearing from you when you need us.  We like looking after your portfolios when you are busy with everything else.  Our number is 608-514-1044.

 

Sincerely yours,

Louise P. Googins, Principal and Writer

Michael Googins, Administration

Carson Bieber, Registered Asset Manager

Kim Rankin, Accountant

Brady Peat, University Student Assistant

Mason Buss, University Student Assistant