Unraveling a new tax idea... [TradeSmith Daily]( Checking in on the U.S. governmentâs debt problem… Bidenâs unrealized capital gains tax and the âtrickle downâ effect… How itâs inspiring the biggest trend in Big Tech… Use this tool to find the marketâs best dividend plays…
By Michael Salvatore, Editor, TradeSmith Daily Breaking news: The U.S. government has a debt problem. At the latest reading, public debt was equal to 121% of U.S. GDP. Nominally speaking, itâs over $34 trillion and accelerating. Higher interest rates are making the debt harder to pay off, too... and naturally lending to the acceleration problem. The chart over the past 20 years looks like the start of a parabola upwards.
There are two simple options for fixing any debt problem: spend less and earn more. Ideally, you do both at the same time. Spending less is clearly not a priority for Washington. A $95 billion foreign aid package for Israel, Ukraine, and Taiwan â alongside, bizarrely, a de facto ban of popular social media app TikTok â was just approved. That tracks with the current rate of debt rise â about $1 trillion every 100 days. So the other option is to earn more. Yet another problem. The U.S. government can only earn more money by raising taxes. But itâs not earning enough. In 2023, it earned $4.5 trillion in tax revenue while spending $6.2 trillion. Modern problems require modern solutions, or so they say. So hereâs what theyâve come up with... RECOMMENDED LINK [âA.I. is far more advanced than most people realize...â](
According to this billion-dollar fund manager, A.I. is way more advanced than most people realize... And, thanks to a radical new development, the folks who arenât positioned correctly are about to get blindsided.
[Click here to learn more]( ❖ The White House wants to tax the ultra-wealthy for money they havenât yet made...
With a novel âunrealized capital gains taxâ proposal, individuals with more than $100 million in net assets will be taxed on their unrealized capital gains at a rate of 25% per year. How does this affect you? Well, unless youâre one of less than 10,000 centi-millionaires in the United States, it doesnât. At least, not directly. The issue with taxing unrealized capital gains on centi-millionaires goes back to an old Reaganism. The effect would âtrickle down.â If this goes into effect â and to be clear, it probably wonât unless Democrats sweep both this coming election and the next midterms in 2026 â ultra-wealthy investors will be directly incentivized not only to not hold U.S. stocks, but to sell what they have. If just 5,000 centi-millionaires decide they donât want to tolerate a 25% unrealized capital gains rate and sell, say, $20 million worth of stock each, thatâs $100 billion in stock market value erased. Even that conservative estimate of the ultra-wealthyâs reaction to this policy is a big chunk. More than that, it weighs on stock prices all the way down. As stocks fall, more investors will sell... possibly causing a cascading effect downward. Soon, there wouldnât be much unrealized capital gains to tax in the first place. Like I said, the likelihood of this policy actually being implemented is low. It seems more to us like posturing â a way for President Biden to show Democratic voters how willing he is to aggressively raise taxes on the ultra-wealthy. But low is not zero. And should this come anywhere close to actually going into effect, you can expect the reaction in stock prices to be swift and severe. How can you protect yourself from something like this happening? Simple: Diversify your portfolio. U.S. investors overwhelmingly own U.S. stocks. So if youâre 100% in U.S. stocks, youâre exposed to the brunt of what this policy entails. Buying real assets like precious metals, land, real estate, or foreign-market stocks helps insulate you from this. ❖ Another Big Tech âgraduationâ to celebrate...
The newest, hottest trend in Big Tech isnât a tech trend. Rather, itâs about [âgraduatingâ into dividend-paying, shareholder-friendly stalwarts](... In its earnings report after the Thursday close, Alphabet (GOOGL) initiated a $0.20-per-share quarterly dividend and approved stock repurchases up to $70 billion. This follows [METAâs move]( back in February to initiate a $0.50 quarterly dividend... and has the makings of a powerful attractor for income-hungry investors. Traditionally, Big Tech companies have relied on share repurchases to return value to shareholders. But once again, recent innovative tax ideas from the White House are urging the biggest U.S. corporations to rethink this strategy. (Part of Bidenâs tax proposal is to quadruple the tax rate on share buybacks from 1% to 4%.) Regardless of the reason, dividend initiations are a powerful buy signal. As contributing editor Lucas Downey showed you a few weeks back, stock dividend growers and initiators are quietly some of the stock marketâs best performers:
Of the Magnificent 7 stocks, only Amazon and Tesla as yet do not pay a dividend. Amazon has famously insisted on plowing all of its profits back into the business itself to fund continued growth, and Teslaâs own earnings situation is so volatile that a dividend seems far off. However, Googleâs performance after this announcement might make these firms reconsider. GOOGL traded up nearly 10% on Friday. (Disclosure, I own shares of GOOGL.) If the trend of these widely owned companies initiating dividends catches on, your growth portfolio might suddenly start to look more like an income portfolio â and thatâs a great thing. RECOMMENDED LINK [New Footage from San Francisco will Shock Americans](
A legendary investor just released [this shocking footage from the streets of San Francisco...]( Revealing details on Elon Musk's âProject Apollo.â As soon as Elon flips the switch on this new project... Which could happen at any moment... [It could send this $1 play skyrocketing higher](. ❖ But thereâs plenty more out there to find...
And TradeSmithâs Screener, part of [the Trade360 software bundle]( makes it incredibly easy. Just take this simple screen, one of the defaults loaded into the software. It searches for any company thatâs A) profitable and B) thatâs historically grown its dividend:
And you can get as granular with this as you like. We [showed you on Saturday]( how useful these tools are to get in on the cash flow bonanza in the oil & gas sector. But thatâs just the beginning of what you could do with them. Say youâre particularly confident in the U.S. consumer and want to focus on stocks that will benefit from consumer strength. Instead of just dividend growers, you could screen for mid- to large-cap companies in the consumer discretionary and staples sectors with a dividend yield of higher than 1%, a free cash flow yield higher than 1%, and a P/E ratio thatâs cheaper than the S&P 500 average. Hereâs how you would set that up:
Turns out, itâs a pretty short list. And not all the stocks that fit this criteria are of high quality. Here are the results of that Screener, sorted by Business Quality Score:
And this is just one of myriad ways you can use TradeSmithâs software to find new opportunities ahead of the crowd. To learn how you can start using them, [go here](. To your health and wealth, [Michael Salvatore]Michael Salvatore
Editor, TradeSmith Daily P.S. If you have a spare 15 minutes a day, you have everything you need to [become a better trader](. Because 15 minutes is all it takes for 25-year options trading veteran and Masters in Trading founder Jonathan Rose to show you his top idea... walk you through every step he took to find it... and show you exactly how to trade it yourself. Every day at 11 a.m. ET, Jonathan hosts [a free live trading lesson]( with his followers. These streams have already led viewers to monumental gains... like 179% on QQQ in just one day, 195% on TLT in three weeks, and 193% on PSTG in just six days. Opportunities just like these are yours for the taking, 100% free, every day the market is open at 11am ET. [Go here to get signed up, and join Jonathan's next stream airing later today](. Get Instant Access
Click to read these free reports and automatically sign up for research throughout the week. [25 Doomed Blue Chip Stocks]( [3 Stocks to Build Your Wealth in 2024]( [5 Unapologetically Profitable Stocks for 2024]( [Download now on the Apple Store](
[Get It On Google Play]( [Customer Support: 866.385.2076](tel:+866-385-2076) | support@tradesmith.com
[Request Customer Service](mailto:support@tradesmith.com) ©TradeSmith, LLC. All Rights Reserved. You may not reproduce, modify, copy, sell, publish, distribute, display or otherwise use any portion of the content without the prior written consent of TradeSmith. TradeSmith is not registered as an investment adviser and operates under the publishersâ exemption of the Investment Advisers Act of 1940. The investments and strategies discussed in TradeSmithâs content do not constitute personalized investment advice. Any trading or investment decisions you take are in reliance on your own analysis and judgment and not in reliance on TradeSmith. There are risks inherent in investing and past investment performance is not indicative of future results. TradeSmith P.O. Box 340087 Tampa, FL 33694 [Terms of Use]( [Privacy Policy]( To unsubscribe or change your email preferences, please [click here](. [tradesmith logo]