Roman Forum, Rome, Italy
Tax receipts in the US are lower than government expenditures causing deficits year after year. Another factor to consider is that just because the stock market keeps rising Uncle Sam is not going to earn higher taxes. Conventional wisdom would mean that soaring stocks would lead to higher taxes paid to Uncle Sam.But that is necesssarily not the case.
A very interesting chart showing the wide gap between rising S&P 500 and US Gross Tax Receipts is shown below:
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Source: In Gold We Trust by Ronald-Peter Stoeferle and Mark J Valek at Incrementum via MoneyWeek
The US market has outperformed the British and Japanese equity markets in terms of returns since October, 1987. The returns since that month are shown below:
+745% DJIA
+658% S&P 500
+214% FTSE 100
-24% Nikkei 225
Chart:
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Source: UK Almanc via Twitter
The Dow Jones crossed the 23,000 mark and closed at 23,157.60 yesterday. This year alone the Dow has crossed four thousand point thresholds. The following table shows the 1,000 point milestones of the index since its inception:
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Source: The Dow Crosses 23,000 by Jamie Farmer, Indexology Blog, S&P Global
The Dow Jones crossed 23,000 for the first time today. The S&P 500 has also made record gains since the Global Financial Crisis(GFC) of 2008-09. In fact, the current cyclical bull market is the second strongest in terms of returns and is also the second longest since World War II according to an article by Shane Oliver at AMP Capital.
The following table shows the many cyclical bull markets in US stocks since World War II:
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Source: Where are we in the global investment cycle and what’s the risk of a 1987 style crash? by Shane Oliver, AMP Capital
Shane used the definition that “a cyclical bull market is a rising trend in shares that ends when shares have a 20% or more fall (ie, a cyclical bear market). Source: Bloomberg, AMP Capital.”