• Borrowing to invest just adds to market volatility read here

US tax code overhaul

 

US tax code overhaul

With Donald Trump’s inauguration just around the corner and tax reform a top agenda item for both the new administration and the Republican-controlled Congress, it is important for investors to consider the implications of the Republicans’ proposed overhaul of the US tax code.

Daniel Wu is a Research Analyst at Montgomery Global Investment Management. Prior to joining Montgomery in June 2016, Daniel was an analyst in the investment banking divisions of UBS and Goldman Sachs, where he covered the Infrastructure, Utilities, Technology and Media sectors.

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This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564) and may contain general financial advice that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking advice from a financial advisor if necessary.

Comments

  1. G’day Daniel,

    I hope you had a good break and it’s good to have you all back.

    The next few years are going to be interesting and it’ll take some time to see whether the Trump administration’s changes will be beneficial or not. One thing I will say is that it’s good to see some change in strategy as the plan in place more or less worldwide since 2008 has just loaded up debt without productive investment and for what? As to whether Trump will be successful with his plans as currently stated … well, we’ll see what happens. Certainly, with a Republican controlled Congress, there are no excuses for Trump and by the time the next Presidential election is held, the results will be known and I’d expect that to determine the outcome.

    My reasonably uneducated opinion is that there will be real winners and losers and that creates opportunity for the forward looking (if you calculate correctly). In particular, I think that some areas that have enjoyed the protection of government policy up to now will be severely affected on the downside. Also, I think that there will be significant volatility over the next 18 months or more. The changes that the new administration put in place will probably take some time to make a tangible difference, during which time emotion and sentiment could sway the market significantly in either direction. Furthermore, legacy issues like the huge debt and rising interest rates could also create some big waves. That is not Trump’s fault, but it has become his problem. I think there could be some significant ups and downs.

    Long/short funds could do extremely well over the next couple of years if they get their selections right.

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