ST. CROIX INSIGHTS
BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
As I write this, we have about 49 days until the next President of the United States is elected. Those of you reading this are Democrat, Republican, Independent, Conservative, Liberal, and my list could go on. Yet one major commonality we all have is our money:
We’re all concerned with things like planning for our retirements, managing our investments and 401k plans, and funding our kids’ college.
We have two choices this next election. How will this outcome impact us, our money, and our investments? As of this writing, here’s what I’ve been able to decipher, along with my overall thoughts for the end of 2020 and the beginning of 2021. Keep in mind that I have no idea who is going to win (but I sure wish I did—it would make my job a lot easier!).
The markets have demonstrated it can perform well under both Democratic and Republican administrations.
No matter who wins the next Presidential Election, here are some of the common threads I see in the future we face:
- Telemedicine was already growing and has now hit overdrive due to the coronavirus.
- We strive for faster internet, and 5G will impact all of us.
- Green/clean energy (e.g., electric cars) will continue to become more common, right down to autonomous driving.
- Let’s not forget about the increase in automation.
- Are you receiving more packages at home than ever these days? I don’t see that changing.
If Vice President Biden wins, these are some potential market sectors to own:
- Solar and Wind.
- Infrastructure companies that focus on roads, bridges, and airports (assuming people start flying again).
If President Trump wins, these are some potential market sectors to own:
- Heavy equipment companies.
- Heavily sales-driven internet companies.
- Social media companies (Twitter loves him!).
- Overall US-based manufacturing companies.
Under Vice President Biden’s tax plan (versus President Trump’s):
- Capital gains tax would move to 39.6% on the wealthy.
- Step-up in cost basis would be eliminated.
- 1031 exchanges would be eliminated.
- Corporate tax rate would increase to 28% (from 21%).
I’ve seen slightly different figures, but the Federal Reserve has printed over $3,500,000,000,000 in a matter of months. I don’t know what comes after a trillion—do you? I haven’t talked to anyone who hasn’t asked how this is going to get paid back.
Today, over 1,000 people a day are moving to Florida from the Northeast alone. I suspect income tax-free states will continue to see an increase in their populations thanks to newcomers from high-tax states.
Finally, here’s a reminder you’ve heard me stress: having some amount of cash on hand continues to be a solid strategy.
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Ask yourself- can my portfolio support my lifestyle in my retirement?