May 2024

Our main article for this quarter is suggesting a very optimistic outlook for our investment style. As the article discusses, there are favorable trends and there are things that could happen to disrupt those trends. A recent Wall Street Journal article highlighted “some good news” in areas that are more commonly treated as problem areas.[1] World population increased by 70 million in 2023, adding to available human capital with consequences for increases in family, relationships, friendships, innovation and prosperity. The global economy, mainly due to the use of fossil fuels, grew 3% in 2023 and is expected to grow almost as much in 2024, with consequences for reducing poverty, increasing available health care and more opportunities for “personal growth.”

How many investors reading their asset statement in mid-October of 2022 would have believed that 50% percent appreciation in the S&P 500 was possible over the next two years? Our statement reader had just absorbed a 25% meltdown in the S&P 500 over the previous ten months and was being bombarded by negativity on many fronts. One “talking head” after another tried to outdo the other with a bearish economic forecast or a dire outlook for Federal Reserve interest rate policy. But since October 13, 2022, the S&P 500 has risen from 3,492 to 5,261—up 50.7% on an intraday basis. It has been a nice, nearly two-year upcycle but additional upside potential awaits. This article discusses the reasons for such optimism.

We suppose that there is now a consensus that the “largest corporate tax reduction in the history of the United States” in 2017 was a big success. “The results of the Trump corporate tax reform were more business investment, more growth, more wages for workers, and little impact on government revenue as lower corporate rates were offset by an expanding economy.