Getting Educated Oct 21, 2017
By Michael Master (author of Save America Now, Rules for Conservatives, The Birth Famine)
A life long friend of mine, Paul, called me. Among other things, we discussed his IRA and the stock market. He is a liberal Democrat .. life long. His father was a career government employee in the State Department. Life long. Deep state. Paul hates Trump.
I asked Paul how his IRA is doing. He said he couldn't believe how much it has grown since the election of Trump.... 22% (more market growth after an election than for any other president in history).
Then I asked Paul if he thinks his portfolio is inflated or not. Paul said that he thinks it is inflated after discussions with his financial advisor at Schwab. His advisor pointed out that average P to E ratios in his portfolio are about 23 when the historical average is about 18. So that means that his portfolio could be inflated about 30%.
Move money into bonds? Stupid. Bonds will suffer as the Fed increases interest rates.
Then I asked him how much would the P to E ratios be if Trump gets his tax reductions for corporations? After more discussion, our combined estimate was that they would decrease to 16. That means that if the Trump tax cuts for corporations is implemented, then his portfolio is undervalued by 10% to reach the historical average P to E of 18.
Paul got it. If the Trump corporate tax plan is not implemented, then his IRA could fall 30%. If it is implemented, then it will grow at least another 10%, not including economic and business growth. And bonds are not an option. Cash would be better than bonds.
Our next conversation was about what else would happen if the Trump tax cuts are implemented. Would 5 trillion dollars of corporate money outside of the USA come home? Would more manufacturers return to the USA?
Paul agreed that good things would happen which means that P to E ratios would then be understated even more and that his portfolio would grow much more than another 10%, probably more like 10% per year for the next 5 years.
If the pre-tax deductions for head of household and spouse and dependents are increased as much as Trump wants, then what happens? More money in the hands of middle class Americans. No marriage tax penalties. More marriages. More child birth for those who can afford children. A younger population. Lower average healthcare costs. More consumption. Higher GDP growth. More corporate profits. More taxes collected. More Social Security revenues collected. Higher stock values. More value in retirement accounts.
And if deductions for state and local taxes and mortgage interest are eliminated from federal taxes, then what happens? The rich pay more in taxes. People will pay more attention to state and local taxes and will get them lowered. … Lots of good stuff that helps the economy and helps stop the growth of state, local, and federal governments.
Who objects? state and local governments, Real Estate agents, banks, mortgage companies.
Paul got it. While he wouldn't say that he now supports Trump, he is now supporting the Trump tax plan. He wants his IRA to continue to grow. He wants the economy to continue to grow more than the measly 1.5% compounded average per year of Obama. He wants more state, local, and federal government accountability to “we the people.”
Lots of Americans are learning quickly ... big league. They are getting educated. Go Trump. Make America great again.
Next, Paul and I are going to discuss 1. why eliminating the trade deficit will help the economy and his portfolio even more, 2. how reducing immigration will increase wages for Americans, 3. how increasing the birth rate will help the economy and the future of America.
Made in the USA (products and children). Higher pay for US workers. National pride. Higher stock values. No more globalist agenda at the expense of working Americans. And an end to supporting 3rd world countries through the trade deficit as a tax on Americans.
If Paul is an example, Americans are getting educated.
No comments:
Post a Comment