Final Two Trading Days of 2017

Final Two Trading Days of 2017

2017 was a great year for the markets.  I show the Russell 3000 up 21% and the Nasdaq, Dow and S&P 500 were all up similar amounts.  My MFI portfolios are up 28%.  The laggards are GARIX (up a bit more than 10%) and my MFI Index (not even 7%).

Not sure what 2018 will bring.  But I think more likely good than bad.  I really, really believe people are underestimating the stimulus effect of the new tax law.  Putting politics aside,  my view is it will bring cash on shore, M&A will boom, new companies that used to start offshore will start here and even companies that have left the US may consider coming back.

I do not believe most people understand how much worse the US corporate tax structure was than the rest of the world.  Companies ran from it.  For a reason.  That will be reversed and will really be a stimulus.  I know many people complain about the majority of tax cut being at the corporate level - but corporation can "renounce" US citizenship much easier than individuals.  It had to be fixed.  Even Obama floated a lowered corporate tax rate during his presidency.

And a corporate tax cut, per Econ 101, should be shared by the buyer and the seller.  As after tax margins increase, competitive pressures should force companies to pass some of those savings to the consumer.  So the consumer, along with a direct tax cut, will also enjoy an indirect tax cut (again, in my view).

I have made some material changes to the way I track my portfolios for 2018.  I am also going to change my benchmark for my MFI formula.  I started taking the 50 stocks over $100m.  I did bump that to top 50 over $111m.  Now I will bump that to top 50 over $125m.  I am basically indexing my filter as markets go up.

My huge investment in dividend stocks/income securities should really begin spinning of major income in 2018.  I expect it to be almost 2x the 2017 and to be enough to live on. I do think that interest rates will ratchet up in 2018... so many income portfolios will struggle on the total return side.  That is a big reason I have created a dividend index to better measure against.

I'll publish a ton more this weekend.  Will have a reconstituted MFI Index. i will close out another tracing portfolio.  I will be closing a mfi formula tranche and readying to buy a new one january 2nd.  so stay tuned.