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Heads Up!

October 24, 2017 | Weekly Commentary

During the last few days, the U.S. Congress took steps to move toward the passage of the very important tax reform legislation. Its passage is a plus for the stock market but will probably be a negative for bond investors. While passage is not assured, we estimate the probability of passage has increased to higher than 50%.  And, if Congress is able to pass the tax reform bill, it is likely to have the power base necessary to pass an infrastructure spending bill which could authorize as much as $1 Trillion – another plus for the stock investors and a negative for bond investors.

Investors whose risk tolerance is aggressive or moderately aggressive or moderate will have their portfolio rebalanced to their long term portfolio model as soon as possible. For investors whose risk tolerance is preservation minded, conservative, or moderately conservative, we will wait to see if tax reform passage actually occurs before rebalancing to their long term portfolio model.

Note also that we have already structured the bond portion of the portfolio to reduce the negative effect of rising rates.

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