Market: Initial Thoughts -- January 3, 2023

Investors:

• for those with a 30-year horizon, this is going to be another great year for investing;
• at the rate the Fed initiated and continued the increases in the Fed rate, Schwab data suggests 550 days (range 500 - 650) before the market get back to "where it was";
• start: March 20, 2022; days remaining in 2022 -- 286
• end, "back to where were" range:
• 500 - 286 = 214 = August 2, 2023 (summer doldrums; dog days of summer)
• 650 - 286 = 364 = December 30, 2023 (Santa Claus rally)
• long-term investors can keep investing at least until mid-year, 2023, picking up shares at deep discounts;
• in other words, this "story" -- at best -- is just mid-cycle. There is a lot of time left before we "get back to where we were." 
• universities and other magnets for donations will probably feel the effect the greatest as donors cut back.
  

Two questions:

• the bottom: how low and when?
• does the Fed pivot sooner than expected?

Additional comments:

• for retirees, RMDs are going to be very, very low this year; and will probably remain very low in 2024 if the Fed stays "higher for longer" [confirmed Wednesday, January 4, 2023, when JPow said there would be more rate raises in 2023].
  
• dividend-paying stocks are looking very, very good
• the 15% minimum corporate tax will scare investors; that will be a huge jump for some companies, used to paying $0 in federal taxes, will now have a 15% tax based on "booked income."

Further reading:

• https://www.everycrsreport.com/reports/R47328.html. 
• https://www.sidley.com/en/insights/newsupdates/2022/08/new-15-percent-corporate-minimum-tax.  
• https://www.forbes.com/sites/taxnotes/2021/01/14/which-large-us-corporations-would-pay-bidens-15-minimum-tax/.

From The WSJ:

Last year, 236 companies in the S&P 500 index reported more than $1 billion in GAAP pretax income, and more than 60 of them reported effective tax rates, or tax expense as a share of pretax income, below 15% in 2019 or 2020, according to a Wall Street Journal analysis.

Among them: Amazon, Pfizer Inc., Stanley Black & Decker Inc., Archer-Daniels-Midland Co. and Xcel Energy Inc. Not all of these companies would ultimately be subject to the minimum tax, even if it passes as drafted, thanks in part to the effects of other tax provisions and differences between tax and GAAP accounting.

Again, upon further reading, more bark than bite? 

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The Book Page 

Too Big for a Single Mind: How the Greatest Generation of Physicists Uncovered the Quantum World, Tobia Hürter, c. 12021.

Unless you know everything there is to know about the history of quantum mechanics, this is a must read. 

This book is a joy to read. Very, very readable. One could probably read it in one sitting but that would take the joy out of reading this book.

If your knowledge of quantum mechanics is somewhere between what you learned in middle school and what you learned in your first two years of college, and you want to know more, this may be the best book in which to begin. It's that good and that easy to understand.

I plan to read the book a second time and then follow it up with The Age of Entanglement: When Quantum Physics Was Reborn, Louisa Gilder, c. 2008, which I read some years ago.