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    Markets "In a Nutshell" for December 19, 2017

    Dec 19, 2017

    Investment Week at a Glance

    Stocks were up last week. The Dow Jones Industrial average was up 1.3%, the S&P 500 rose 0.9%, the New York Stock Exchange Composite (2,000 stocks) gained 0.4%. The “average investor’s index” (Value Line index) rose 0.3%. Foreign stocks (DJ Global ex U.S.) were up 0.2% and bond prices (Barclays Aggregate Bond index) gained in value last week as the 10 year Treasury yield ended at 2.35%. (Data sources: Barron’s Financial, Wall Street Journal)

     

    2017 another up year for investors

    2017 will end up a good one for many investors. It has paid to be more aggressive this year as stocks have had an above average year. Broad stock indexes such as the Value Line (with a mixture of small, large stocks as well as commodity stocks) are up 10% while large company stock indexes such as the S&P are up even more at 19%. Bonds, the safe haven investment, have returned 4% for the year. Commodities have lagged with the CRB index down 4%.

     

    What kinds of returns should you expect at 2017 year end?

    If you are a conservative investor expect returns in the mid digits. Those with moderate risk high single to low double digits and higher risk investors in the mid to high double digits. Of course, returns should be considered in light of your long term investment and financial goals. Generally, younger investors or those with longer to go until retirement can be more aggressive.

     

    Is Bitcoin the new Gold?

    Digital currency Bitcoin is the latest investment speculation craze zooming up nearly 2000% in 2017. But according to the billionaire venture capitalist Winklevoss brothers Bitcoin could go from its current $17,000 price level to $350,000 if Bitcoin replaces physical gold as the traditional store of value  (as the Winklevoss’ believe).

     

    Tax Overhaul and you

    The new tax plan would cut $1.5 trillion in taxes over the next decade ($1 trillion in corporate taxes and $500 billion in individual taxes). Other features are being able to use 529 plans for K-12 in addition to college. The plan does slip in more tax brackets but lowers most current brackets for individuals.

     

    Quiz:

    The new tax plan cuts the top income tax rate from 39.6% to 37%. What was the all time high tax rate in the top income tax bracket? a. 58% b. 63% c. 77% d. 81% e. 94%. Answer is below…

     

    Have a good week!

     

     

    Answer to quiz:

    e. During World War II there was a 94% tax rate on incomes above $200,000 ($2.5 million in today’s dollars).