- The Dow is composed of more value stocks than growth stocks. Value stocks are positioned for continued growth. Also, 40% of the S&P company income comes from offshore business activity.
- There are 7 billion people on earth and 3.5 billion are under 30 and who must buy the products and services they need and want for their families. If you read books by economists with a focus on Demographics such as Harry Dent, you will learn how population affects projected growth of stocks.
- Interest rates are at all time lows for housing, credit cards, car loans and more and may stay that way for years. This low interest increases disposable income and saving.
- Cheap money from the Fed allows new companies to grow without the burden of high interest. This money and benefit is baked into stock prices.
- The Biden administration will probably raise taxes on corporations. While this is bad in many ways for workers and customers, it tends to boost stock prices as companies reinvest money, do not repatriate offshore money, or invest in assets using “no tax” strategies. Thus, companies strategically adapt to tax and spend administrations.
- More government spending in the next 1-4 years may increase disposable income for companies, charities, and people who receive government aid.
- While Schwab analysts say that the US did well domestically over the last 5 years, analysts predict better growth in international stocks over the next decade. Many of these stocks are also listed on the NASDAQ, NYSE and included in vast numbers of ETF Exchange Traded Funds that Americans own.
- The dollar is coming down from its recent highs. A lower dollar generally makes U.S. products, services, and stocks cheaper to invest in.
- COVID Stimulus money and loans will have a lasting effect. Many small businesses borrowed a lot of money to invest and the interest rates are low. Thus, companies may invest the borrowed money or spend it.
- S&P and DOW Jones Technology and Internet companies with “work from home focus” may have a long term boom and garner much offshore revenues which can boost prices of stocks.
Bonus Reason #1 - An increase in online sales may reduce inventory costs, cost of theft, cost of insurance, cost of retail space and more which would increase bottom lines and profits.
Bonus Reason #2 – Moderna, Pfizer, and many other companies such as J&J Johnson and Johnson seem to have effective vaccines. Further, China and Russia may have had a head start on vaccines which will boost international productivity.
Bonus Reason: #3 – If any student loans are forgiven, that will just subsidize spending by younger Americans.
- According to Unesco, at the beginning of 2012, the world population surpassed 7 billion with people under the age of 30 accounting for more than half of this number (50.5%). According to the survey, 89.7% of people under 30 lived in emerging and developing economies, particularly in the Middle East and Africa.
- In 2018, the percentage of S&P 500 sales from foreign countries decreased, after slightly increasing last year, and declining the prior two years. The overall rate for 2018 was 42.90%, down from 2017's 43.62% and 2016's 43.16%. See Reference.
George Mentz JD MBA CWM Chartered Wealth Manager ® is a licensed attorney and CEO of GAFM ® global education, which is an ISO 29990 Certified professional development company operating in over 50 nations. Mentz is an award-winning author and advisory board member to several companies around the world in education, charities, and FinTech Companies.
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