Bristlecone Blog

In his recently-published annual letter to shareholders, Berkshire Hathaway CEO Warren Buffett lamented a dearth of attractive acquisition opportunities in 2017

Dory, a character created by Pixar Animation and played by Ellen DeGeneres in the movie Finding Nemo, is a wide-eyed, blue tang fish who suffers from short-term memory loss. At one point in the movie, she finds herself lost and gets out of trouble by not panicking and telling herself to just keep swimming.

Global capital markets appreciated virtually across the board in the 4th quarter, capping off a strong year for investor returns which saw domestic stock indexes once again close near record highs—boosted by U.S. tax reform legislation passed in late December.

As 2017 comes to a close, investors have much to be thankful for. At the time of this writing, US stocks are up more than 20%, international and emerging markets stocks up even more in the 25% to 30% range, and bond funds are also in positive territory with low to mid-single digits returns year-to-date.

Earlier this month, Congressional Republicans unveiled the details of their much-anticipated tax reform plan. Ostensibly, their goal is to simplify the tax code by eliminating a host of loopholes, broaden the tax base, and lower average tax rates for both individuals and corporations. The premise is reasonable enough—the execution is where it gets tricky.

If you feel like “déjà vu all over again,” to quote Yogi Berra, you’re not mistaken: US and international stocks rose during the 3rd quarter, bringing returns in the high teens over the past year, including dividends. Here at home, the stock market’s performance is underpinned by favorable fundamental factors: interest rates and inflation remain low, and growth in per-share earnings remains robust, at about 10% to 12%, year-over-year.