The Democrats' New Tax Plans are a Big Risk to Clients

(August 2020)

Advisors with high net worth clients—which serve as a large majority—need to be very mindful of numerous Democratic tax proposals. Not only would Biden's proposed tax plan raise income taxes to over 65% in California, and at least 52% everywhere in the US, but California has just proposed a wealth tax of 0.4% per year on all wealth over $30m per couple. The proposal seems likely to be passed because of Democrats' super-majority in the state's legislature. While Biden and the Democrats are still months away from the possibility of entering the White House, they are leading in the polls, which means advisors need to be aware of how these changes could affect advisors.

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Why Financials Will Outperform

(August 2020)

Are you worried that FAAMG stocks might see a correction which causes underperformance of your clients' portfolios? Many are. With that in mind one idea is to look at financial funds, and particularly midcaps, to find some outperformance. Financials, like many other sectors, have lagged the performance of the handful of sectors that have thrived recently, but interestingly, there are some very good buys available. We mean there are many stocks with solid fundamentals, decent recovery pictures, and P/E ratios from 3x to 8x. One particularly good area is in midcap financials, where you encounter insurance companies, asset managers, and lenders that have strong underlying businesses, but are currently out of favor.

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