Why The Big Stock Market Won't Correct Until 2018
Why The Big Stock Market Correction Won't Come Until 2018 in my opinion - The Tax Plan Passed. Profit taking is usually a big reason for end of the year stock market drops. This year those "sell offs" may come after January 1, 2018.
With the new tax plan there are already signs that businesses and individuals understand it - on a scale that is not being reported in many places. Right after it passed, large companies published plans to raise wages and provide bonuses to employees. Where is that money coming from?
Maybe some from the supposed overseas accounts of corporations that is waiting to get back into the US. Maybe some is of those raises and bonuses are designed to be write-offs and expenses for this year under the old tax rates with deductions, because they know that new profits will be available in January with a lower tax rate. On top of the availability of profits around the corner, the taxes to be paid on those profits will be lower in just a few weeks.
So why not wait until the taxes are lower. Your company could then make announcements around Christmas that your company is generous and looking at a bright future, which may increase the public perception of your company and stock positively, and when you do sell off the profit might be even higher. Not to mention the counterbalancing press you can use when it appears that your company makes large profits in stock investments.
In any case, there will be a correction / sell off / fall of stock prices. But as I wrote in an earlier blog, it will probably be a "reasonable" percentage of the market itself. For example, a 1% drop in prices is 250 points. In 1930 that was BIG, HUGE. However, today with a of 250 points, or even 500 points or 2%, the market is still in record territory. I think that some profit taking is coming, and I am not going to be surprised.
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Merry Christmas and Happy New Year