Reviewing how changes to the capital gains tax rates have affected the past & future markets with Wealth E&P
May 24, 2021
Welcome to Wealth Enhancement & Preservation’s Market Minute, where we get to update you on everything that happened in the markets this past week.
Today I am going to talk to you about capital gains rates and how that may affect market conditions, but first, let’s take a look at last week where the 3 indices kind of diverged again.
We saw the S&P and the DOW each drop about 0.25% to 0.5%, while the NASDAQ was up almost 0.75%. You can see our Managed Growth Portfolio was around flat for the week, which is pretty good considering all things and all conditions.
I mentioned I was going to talk about the capital gains rates. Here is a chart that really tells it all:
There were 19 times in history where capital gains rates were either increased or decreased; anywhere from a decrease of about 8% to an increase of about 10%. Actually, what this data tells us is: there is no statistical correlation between a change in capital gains rates and stock market performance.
So, while it is hot in the news and a big topic, and while it may cause chaos in the markets, the reality is we don’t have to worry about it in the long run. In the short run, we are paying attention and we will monitor and make adjustments. But you: just sleep well at night and don’t worry about it.
At Wealth Enhancement & Preservation, we are here to serve as your financial advisor and source of support. Our advisors are dedicated to simplifying the complexities of the financial world and as your advocate, we strive to learn about your most valued goals and dreams. From individual investors to entrepreneurs, our services are designed for your success.