Founding Principal and Managing Director, Craig Robson
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Recent events in our country and around the world have left me asking myself, where do we go from here? I’ll start with the markets.
The S&P 500 achieved its 52nd record high of the year on Friday, August 27, and even if there are no additional record highs this year, that would be the 6th most since 1950.1 I periodically hear from various people who are convinced the markets can't go higher, after the eight months we just experienced (as of August 27, the S&P 500 was up 19.58%).2 My response to them: perhaps, but with history as our guide, the markets certainly can.
For example, since 1945 there have been seven years where the S&P 500 was up 20% YTD through the end of August, and the median returns for the rest of the year were 5.33%.3 So, there is a strong probability the markets still have some upside between now and the end of the year.
And, what about the Biden Administration’s proposed tax increases? According to a recent Charles Schwab report, tax initiatives in the The American Families Plan include:
- Raise the top individual tax rate back to 39.6% - after previously being reduced to 37% by the Tax Cuts and Jobs Act of 2017.
- Tax long-term capital gains and dividend income at ordinary income tax rates for individuals earning more than $1 million annually.
- End the step-up in cost basis at death, which adjusts the cost basis of inherited assets to the fair market value at the time of inheritance when calculating capital gains taxes.4
However, this plan will need the approval of Congress. So, please realize for now, it's just a proposal. My suggestion is to not make wholesale changes to your situation until legislation has been passed. The plan may look very different coming out of Congress, compared to what the administration has introduced.
Now, to the events in Afghanistan. Just like many of you, my thoughts and prayers go out to both our military personnel and the United States citizens impacted by the recent events we have all watched unfold. I am personally distraught with what I have recently witnessed. It's a subtle reminder that most of our problems pale in comparison to other places around the world.
I was recently speaking with a colleague and we were reminiscing on our careers. She had mentioned that her mentor had once told her to think of her career in this way:
- We learn in the early years
- We earn in the middle years
- And we return in the later years
This career advice really resonated with me. While I don't consider myself in the later years of my professional career, I do intend to "return" some of what I have earned to our U.S. military and citizens who still remain in Afghanistan.
I’ll close this Craig’s Corner with a quote from General George S. Patton, “Success is how high you bounce when you hit bottom.”
Founding Principal and Managing Director