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Your Financial Co-Pilot

By | Advice, News, Published Articles

If anything happens to you, your family has someone to consult.

If you weren’t around, what would happen to your investments? In many families, one person handles investment decisions, and spouses or children have little comprehension of what happens each week, month, or year with a portfolio.

In an emergency, this lack of knowledge can become financially paralyzing. Just as small business owners risk problems by “keeping it all in their heads,” families risk problems when only one person understands investments.

A trusted relationship with a financial professional can be so vital. If the primary individual handling investment and portfolio management responsibilities in a family passes away, the family has a professional to consult – not a stranger they have to explain their priorities to at length, but someone who has built a bond with mom or dad and perhaps their adult children.   

You want a professional who can play a fiduciary role. Look for a financial professional who upholds a fiduciary standard. Professionals who build their businesses on a fiduciary standard tend to work on a fee basis or entirely for fees. Other financial services industry professionals earn much of their compensation from commissions linked to trades or product sales.1

Commission-based financial professionals don’t necessarily have to abide by a fiduciary standard. Sometimes, only a suitability standard must be met. The difference may seem minor, but it really isn’t. The suitability standard, which hails back to the days of cold-calling stock brokers, dictates that you should recommend investments that are “suitable” to a client. Think about the leeway that can potentially provide to a commission-based professional. In contrast, a financial professional working by a fiduciary standard always has an ethical requirement to act in a client’s best interest and to recommend investments or products that clearly correspond to that best interest. The client comes first.1

You want a professional who looks out for you. The best financial professionals earn trust through their character, ability, and candor. In handling portfolios for myriad clients, they have learned to watch for certain concerns and to be aware of certain issues that may get in the way of wealth building or wealth retention. 

Many investors have built impressive and varied portfolios, but lack long-term wealth management strategies. Money has been made, but little attention has been given to tax efficiency or risk exposure.

As you near retirement age, playing defense becomes more and more important. A trusted financial professional could help you determine a risk and tax management approach with the potential to preserve your portfolio assets and your estate.

Your family will want nothing less. With a skilled financial professional around to act as a “co-pilot” for your portfolio, your loved ones will have someone to contact should the unexpected happen. When you have a professional who can step up and play a fiduciary role for you, today and tomorrow, you have a financial professional whose service and guidance can potentially add value to your financial life.  If you’re the family member in charge of investments and crucial financial matters, don’t let that knowledge disappear at your passing. A will or a trust can transfer assets, but not the acumen by which they have been accumulated. A relationship with a trusted financial professional may help to convey it to others.


American Wealth Management may be reached at 775.332.7000 or info@financialhealth.com.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities.

Strategic vs. Tactical Investing: How do these investment approaches differ?

By | Advice, News, Published Articles

Provided by American Wealth Management

Ever heard the term “strategic investing”? How about “tactical investing”? At a glance, you might assume that both these phrases describe the same investment approach.

While both approaches involve the periodic adjustment of a portfolio and holding portfolio assets in varied investment classes, they differ in one key respect. Strategic investing is fundamentally passive; tactical investing is fundamentally active. An old saying expresses the opinion that strategic investing is about time in the market, while tactical investing is about timing the market. There is some truth to that.1

Strategic investing focuses on an investor’s long-range goals. This philosophy is sometimes characterized as “set it and forget it,” but that is inaccurate. The idea is to maintain the way the invested assets are held over time, so that through the years, they are assigned to investment classes in approximately the percentages established when the portfolio is created.1

Picture a hypothetical investor. Assume that she starts investing and saving for retirement with 60% of her invested assets held in equities and 40% in fixed-income vehicles. Now, assume that soon after she starts investing, a long bull market begins. The value of the equity investments within her portfolio increases. Years pass, and she checks up on the portfolio and learns that much more than 60% of the value of her portfolio is now held in equities. A greater percentage of her portfolio is now subject to the ups and downs of Wall Street.

As she is investing strategically, this is undesirable. Rebalancing is in order. By the tenets of strategic investing, the assets in the portfolio need to be shifted, so that they are held in that 60/40 mix again. If the assets are not rebalanced, her portfolio could expose her to more risk than she wants – and the older she gets, the less risk she may want to assume.1

Tactical investing responds to market conditions. It looks at the present and the near future. A tactical investor attempts to shift the composition of a portfolio to reduce risk exposure or to take advantage of hot sectors or new opportunities. This requires something of an educated guess – two guesses, actually. The challenge is to appropriately decide when to adjust the portfolio in light of change and when to readjust it back to the target investment mix. This is, necessarily, a hands-on style of investing.1

Is it better to buy and hold, or simply, to respond? This question has no easy answer, but it points out the divergence between strategic and tactical investing. A strategic investor may be inclined to “buy and hold” and ride out episodes of Wall Street turbulence. The danger is in holding too long – that is, not recognizing the onset of a prolonged downturn that could bring losses without much hope for a quick recovery. On the other hand, the tactical investor risks buying high and selling low, for figuring out just when to increase or decrease a portfolio position can be difficult.

Investors have debated which strategy is better for decades. One approach may be better suited than another at a particular point in time. Adherents of strategic investing point to the failure of active asset management to beat the equity benchmarks. A 2018 Dow Jones Indices SPIVA Report noted that across the five years ending June 30, 2018, more than 76% of U.S. large-cap funds failed to return better than the S&P 500. A proponent of tactical investing might counter that by arguing that this percentage might be much lower within a shorter timeframe. Ultimately, an investor has to consider their risk tolerance, objectives, and investing outlook in evaluating both approaches.2

American Wealth Management may be reached at 775.332.7000 or info@financialhealth.com.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities.

Citations.

1 – money.usnews.com/investing/investing-101/articles/2018-07-25/whats-the-difference-between-strategic-and-tactical-asset-allocation [7/25/18]
2 – us.spindices.com/spiva/#/reports [2/5/19]

Staying Out of Debt Once You Get Out of Debt

By | Advice, News, Published Articles

Provided by American Wealth Management

Paying off a major debt produces a sense of relief. You can celebrate a financial milestone; you can “pay yourself first” to greater degree and direct more money toward your dreams and your financial future rather than your creditors.

Once you get out of excessive consumer debt, the last thing you want to do is fall right back in. What steps can you take to reduce that possibility, and what missteps should you avoid making?

Step 1: Save money

So often, an unexpected event can put you in debt: an auto breakdown, a job loss, a trip to the emergency room or a hospital stay. If you earmark $50 or $100 a month (or even $20 a month) for an emergency fund, you can create a pool of money that may help you deal with the financial impact of such crises. Every dollar you save for these events is a dollar you do not have to borrow through a credit card or a personal loan at burdensome interest rates.

Step 2: Budget

Think about a 50/30/20 household budget: you assign half of your income for essentials like housing payments and food, 30% to discretionary purchases like shopping, eating out, and entertainment, and 20% to savings and/or paying down whatever minor debts you must incur from month to month.

Step 3: Buy things with an eye on value

Do you really need a new car that will require financing, one that will rapidly depreciate as soon as you drive it off the lot? A late-model used car might be a much better purchase. Similarly, could you save money by eating in more often or bringing a lunch to work? You could find some very nice goods at very cheap prices by shopping at thrift stores or online used marketplaces. These are all smart consumer steps, net positives for your financial picture.

You should also be aware of some potential missteps that could lead you right back into significant debt, or negatively impact your credit rating. Some of them may be taken consciously, others unconsciously.

Misstep 1: Spending freely once you are free of debt

If you get rid of consumer debt, but retain the spending mentality that drove you into it, your financial progress may be short-lived. If the experience of getting into (and getting out of) debt does not change that mindset, then you risk racking up serious debt again.

Misstep 2: Living without adequate health, auto, or disability insurance

Sometimes people are forced to assume large debts as a direct consequence of being uninsured. Hopefully, you have not been one of them. If you must pay for your own insurance and the premiums seem high, remember that they will likely be lower than the bills you could be forced to pay out of pocket without such coverage.

Misstep 3: Getting rid of the credit cards you used to go into debt

You may think this is a great way to quickly improve your credit rating. It may not be. Closing out credit cards reduces the amount of credit you can potentially draw on per month, which hurts your credit utilization ratio. Having more accounts open (rather than less) improves that ratio.1

The key is how you use the accounts in the future. When you use about 10% of your available credit each month, that is a positive for your credit score. When you use more than 30%, you potentially harm your score. For the record, the length of your credit history accounts for about 15% of your FICO score, so if a card has more good payment history than bad, getting rid of it could be a slight negative.

Instead of closing these accounts, keep them open, and use the cards once a month or less. Should a card charge you an annual fee, see if you can downgrade to a card from the same issuer that does not.

If you can keep debt reined in, you will have an opportunity to make financial strides. Not everyone has such a chance due to the weight of their liabilities. Earlier this year, total U.S. credit card debt alone surpassed $815 billion.2

American Wealth Management may be reached at 775.332.7000 or info@financialhealth.com.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities.

Citations.

1 – cnbc.com/2018/01/19/why-you-should-keep-old-credit-card-accounts-open.html [1/19/18]

2 – usatoday.com/story/money/personalfinance/2018/08/15/simple-things-anyone-can-do-stay-out-debt/989168002/ [8/15/18]

Meidell: Markets seem optimistic despite disappointments

By | Published Articles

Given the disappointments caused by Congress over the past two weeks, its somewhat surprising the major market averages are holding up as well as they are.

A little over a week ago, Americans watched as Republican lawmakers in the House of Representatives failed to meet their own deadline to repeal and replace the Affordable Care Act, also known as Obamacare. Wall Street was particularly interested in the event not only because of its potential impact on the health care sector, but because the event itself would serve as a litmus test for how well President Donald Trump and the Republican Congress would work together to accomplish the president’s major campaign promises during his term.

U.S. stocks suffered their largest decline in over five months, two days before the scheduled House vote on the new health care bill, as it became evident that the bill lacked the necessary votes to pass. Investors had every right to be disappointed and interpret the Republican House’s inability to work together as a preview of what to expect in the future. The tax reform bill, expected to go before Congress later this year, is the real stimulus package that investors are interested in, and what’s generally believed to be creating most of the optimism seen in the stock market.

Surprisingly, investors appeared to overcome their disappointment relatively quickly, with the Standard & Poor’s 500 index building a base over the next four days, as investors used the dip as a buying opportunity. This was followed by a multi-day rally this past week that has regained a significant portion of the prior week’s losses. Though Republican lawmakers have clearly stumbled in some investors’ eyes, it does not appear that they have fallen.

Fortunately, there has been plenty of positive economic news this past week to shore up investor optimism. This included favorable comments from a Federal Reserve president and better than expected U.S. economic news.

Last Thursday in a prepared speech given in Sarasota, Florida, William Dudley, president of the Federal Reserve Bank of New York, said: “While there is still considerable uncertainty about fiscal policy and its potential contribution to economic activity, it seems likely that it will shift over time to a more simulative setting.” He went on to say: “Consequently, it appears that the risks for both economic growth and inflation over the medium term may be shifting gradually to the upside.” That’s “Fed Speak” for the economy is getting stronger. Dudley’s comments are distinctly more optimistic than a year ago when he along with other Fed officials felt the risks were to the downside, due to weak economic growth and diminishing inflation forecasts.

This past week, investors learned that pending home sales for the month of February rose by 5.5 percent. Additionally, during the fourth quarter, GDP rose by 2.1 percent, beating estimates, and personal consumption gained 3.5 percent, also above expectations.

At the moment, both stock and bond indexes appear to be trading sideways, with favorable economic news putting a floor under the stocks market, and a lack of direction out of Washington keeping stock prices from going much higher.

Meidell: Trump’s shifts shake investors

By | Published Articles

It seemed easier for investors when they could just focus on big ideas like health care and tax reform, and the benefits they would bring to the U.S. economy. Since the start of the year, Wall Street has been taking its cues from Washington, D.C., but the tempo of Washington has changed since the health care bill failed to gather enough support in the house of representatives a few weeks ago, and foreign policy has taken center stage.

Investors began the year with a bounce in their step, on hopes that President Donald Trump’s policies would provide the stimulus necessary for the U.S. economy to achieve escape velocity and break free of the low-growth mode it’s been in over the past nine years. However, this past week it felt more like investors were driving around on flat tires, as stock prices erratically bumped and swerved into the closing bell on Thursday.

Though the past week was the start of earnings season, with several companies exceeding expectations, investors finished the shortened trading week on Thursday the most pessimistic they have been all year. This could be seen in the price of the Standard & Poor’s 500’s one month volatility index on Thursday, reaching price levels that haven’t been seen since last November in the days leading up to the presidential election. It should be noted that high volatility readings can also be an indication that the stock market is close to a short-term bottom, when nervousness is the highest.

Some could argue that a lot has changed the past two weeks, as investors witnessed the president, still in his first 100 days, make retaliatory missile strikes in Syria while dining with the Chinese president, and leaving it up to military leadership to use the largest non-nuclear bomb in an aggressive air strike in Afghanistan. Still, some investors may be trying to wrap their head around the idea that although candidate Trump appeared to be soft on Russia and hard on China, in the last two weeks Trump appears to have become hard on Russia and soft on China.

Trump seems to be showing a level of flexibility that few anticipated, and investors will need to adjust to the new administration’s bold way of doing business.

Though the stock market slipped this past week, the bond market has shown strength with investors pushing high quality bonds prices higher (and interest rates lower). To the surprise of many, bond prices have been in an uptrend for over a month, and sending the message that there are no concerns of reflation at this time. Trump’s comments this past week that the U.S. dollar is getting too strong sent the dollar into a short decline. If Trump gets his wish of a weaker U.S. dollar, contrary to candidate Trump’s rhetoric, it would mean that interest rates would remain low as well.

Though it would be easy for any president to get distracted by all the issues going on overseas, to keep stock investors happy Trump needs to quickly put his economic agenda back on the table and in the public eye. This means continuing to find ways to compromise and move forward with health care reform. If the Trump administration can do that, then investors will likely step back into the market and provide support near the current price levels.

Meidell: Market upbeat after Fed rate hike

By | Published Articles

Investors began the past week in a general malaise, with high expectations that the Federal Reserve would raise interest rates following its Federal Open Market Committee meeting on Wednesday, but with uncertainty about how both bond and stock markets would react to the news. In hindsight, the Fed pulled off something that would have made Houdini proud, not only raising the benchmark federal-funds rate by a quarter percentage point to the 0.75 percent to 1.0 percent range, and projecting two more rate increases later this year, but making investors feel good about it as well.

The Fed meeting is more than just a potential rate change announcement, it’s also an opportunity for economists and investors to learn the Federal Reserve’s opinion of the U.S. economy, along with its forecast for economic growth and inflation in the coming year.

In a news conference following the FOMC meeting, Fed Chairwoman Janet Yellen said, “The simple message is the economy’s doing well.” She went on to say that although the Fed had not changed its forecast for economic growth, unemployment or inflation, it expected further improvement. The central bank also reminded investors that its goal of 2.0 percent inflation “Is not a ceiling on inflation. It’s a target.” It also expects inflation will run above and below that mark from time to time.

Yellen also said, “We have confidence in the robustness of the economy and its resilience to shocks.”

Some are calling the Fed’s deliberate trajectory for higher rates later this year, and into next year, a new phase for the Federal Reserve. At the same time, this new phase comes with some challenges, such as keeping inflation under control while not stalling out the growth plans of President Donald Trump, who has hopes of boosting the economy to levels not seen for over a decade.

Up until last week’s FOMC announcement, the stock market had been experiencing a subtle erosion below the surface, as shares of smaller companies underperformed larger ones, like those found in the Standard & Poor’s 500 index, over the past month. This type of behavior is indicative of a lack of liquidity in the stock market, or in other words less money sloshing around as investors hold more cash. However, by the end of the trading day on Wednesday, the stock market had experienced a significant rebound, led by smaller companies. An indication that investors were feeling more comfortable with taking risk.

Heading into the FOMC meeting, the bond market’s apprehension was not so subtle, as bond prices fell and interest rates rose in anticipation of the rate adjustment. These concerns seemed justified, as investors recalled the two-day drop in bond prices following the rate increase just three months ago, in December. To the surprise of many, like the stock market, bonds also got a boost from the Fed announcement, with high quality and low quality bonds alike experiencing the largest one day gains since the middle of last year.

Most importantly, the market’s reaction to the rate increase this week is an indication that investors believe the financial conditions exist for the Fed to continue with its two additional rate hikes later this year, without hurting the economy and scaring markets.

Meidell: Investors’ eyes on health care debate

By | Published Articles

The state of Missouri is commonly known as the “Show-Me” state, a nickname that is said to have come from a speech given in 1899 by Missouri’s U.S. Congressman Willard Duncan Vandiver. During his speech, he said, “I come from a state that raises corn and cotton and cockleburs and Democrats, and frothy eloquence neither convinces nor satisfies me. I am from Missouri. You have to show me.”

This past week marked the beginning of the Republican rollout of the American Health Care Act, which if eventually passed will replace the Patient Protection and Affordable Care Act, also known as Obamacare. The choppiness in the broad market this past week almost appeared to be a reflection of the back-and-forth going on in Congress over the proposed health care bill. With the U.S. stock market riding high on campaign promises of major reform to both health care and tax laws, investors will be watching closely in the coming weeks to see how well Congress can work together to pass a health care bill that will benefit the majority of Americans.

Like Missourians, investors are at the point of saying to Congress: “You have to show me.” Should Congress lack the will to work together on health care reform, this would cause significant erosion in investor confidence and lower expectations that lawmakers can pass a meaningful tax reform bill later this year. As of Thursday’s market close, investors appeared to be in favor of the new health care bill, with the Dow Jones U.S. Healthcare index up 0.11 percent over the past five trading days, versus the Standard & Poor’s 500 index, which has slipped 0.71 percent over the same period.

Health care companies only make up approximately 14 percent of the S&P 500, so the success or failure of Congress to agree on a new health care bill will only directly impact a slice of the companies that make up the U.S. economy. Of course, most, if not all, American companies will be impacted in some way by any new health care law.

Though Washington, D.C., is having more of an impact on the stock market lately than the Federal Reserve, next week’s FOMC meeting seems to be having an impact on the bond market lately. As of Thursday’s close, the Fed fund futures were predicting a 100 percent probability of a rate increase at the conclusion of the Fed meeting this Wednesday, and a 47.6 percent probability of another rate increase at its June meeting.

Recently bond investors have become increasingly nervous, such that over the past two weeks the ICE U.S. Treasury 7-10 Year Bond index has declined 1.73 percent, and the ICE U.S. Treasury 20+ Year Bond index has fallen 3.17 percent over the same period.

However, the fact that the stock market is holding together as well as it is in the face of rising short term and long term interest rates is a good sign. It also means that investors will be looking for positive news from both economic reports and from Washington, that suggests the U.S economy can continue to grow in a higher rate environment.

Meidell: A pro-growth agenda is a powerful thing

By | Published Articles

Whether you loved or hated President Trump’s speech to Congress on Tuesday evening, it’s clear that the U.S. stock market went from nearly flatlining on Tuesday to receiving a huge adrenaline shot on Wednesday, lifting the major market averages to new all-time highs, and the Dow Jones Industrial Average by more than 300 points to close above 21,000 for the first time in history. Over that past two decades, large swings in the stock market were more likely to have been associated with comments or actions from a central banker, and not from a sitting president. We have to go back to President Bill Clinton’s term in office to find a time where the stock market was making new highs driven in part by a pro-growth presidential agenda.

It used to be that investors turned to central bankers like the Federal Reserve or the European Central Bank for direction on the economy and how to allocate their capital within the financial markets. Over the past two decades, from Federal Reserve Chairman Alan Greenspan to Chairman Ben Bernanke, and now Chairwoman Janet Yellen, investors have tried to follow the money in order to ride the coattails of the central bank where possible. I say used to because that’s the way it was up until last week just before President Donald Trump spoke to Congress on Tuesday. In fact, following Monday’s close of this past week it was beginning to appear as though the stock market’s recent advance was likely running out of steam, particularly after posting a gain for the 12th consecutive day in a row, an event that has only taken place two other times in the last 120 years (there has never been a 13-day streak).

To be fair, Trump’s comments shouldn’t get all the credit for the market’s oversized rally on Wednesday, but it clearly lit the fuse. Don’t forget there were a fair number of investors early in the week who thought the market was going lower, at least for a few days, and had started to short the market in hopes of making some money on the way down. Some of these investors likely decided to reverse their short position, creating what is called a short covering rally. Additionally, in a report earlier this year, Aldridge and Krawciw estimated that in 2016 the daily trading volume on the stocks exchanges by computers, also referred to as algorithmic trading, accounted for 10 to 40 percent of the daily volume here in the U.S. This means that some of Wednesday’s rally, and Thursday’s decline, can also be attributed to computer programs trying to make a buck, and not just enthusiastic investors.

The point is not to diminish the impact of Trump’s comments on the stock market, but to keep a sober view of the short-term nature of some market rallies. In a larger context, what we are likely seeing, and maybe relearning, is that a pro-growth economic agenda is a powerful thing and should not be underestimated, if it can be supported by Congress later this year. This is a time when patience is a virtue. The problem some investors may have, particularly those who support the president, is becoming overly aggressive with their portfolio at a time in their life when they should be reducing their risk.

Looking ahead, the stock market still has to maneuver past the March FOMC meeting to be held on March 14 and 15. Like a 5-year-old on Christmas Eve, investors tend to get a little anxious just before the Fed’s interest rate announcement. Give that Yellen has left the door open for an interest rate increase this month, this time shouldn’t be any different.

Meidell: S&P 500’s value — a cool $20 trillion

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The big news Monday was the value of stocks listed on the Standard and Poor’s 500 surpassing $20 trillion for the first time, due to expectations of rising U.S. economic growth and improving corporate profits.

The major market averages continued their assent Monday, led by the Dow Jones Industrial Average, up 142 points or 0.7 percent. Though larger-company stocks received the largest boost from Monday’s rally, the advance was still broad-based, with the Russell 2000 small-company index gaining 0.25 percent and closing at an all-time high. Both the Standard and Poor’s 500 and the Nasdaq Composite rose 0.52 percent. Monday’s gains are a continuation of the rally that began Thursday after President Trump said he would unveil a “phenomenal” business tax package very soon.

According to Credit Suisse, smaller companies like those that make up the Russell 2000 have less access to international tax loopholes. As a result, smaller companies typically have to pay a 32 percent effective tax rate, versus the larger companies that make up the S&P 500 (a roughly 26 percent rate). For this reason, may investors believe smaller companies will benefit more if President Trump is successful in convincing congress to lower the corporate tax rate from 35 percent, the highest rate of any developed nation.

Investors appear to be anticipating the U.S. economy heating up in the coming months by how they are investing today. The top-performing sectors Monday were led by the Dow Jones U.S. Basic Materials index, up 1 percent, followed by the Dow Jones U.S. Financial index gaining 0.92 percent. These sectors appear to be anticipating inflation, which includes not only rising commodity prices, but rising interest rates, as well.

This week the top-performing commodities were led by the S&P GSCI Unleaded Gasoline index, up a staggering 16.54 percent over the past five trading days, followed by the S&P GSCI Wheat index, higher by 10.53 percent.