Flows by Year into Active vs. Passive Funds Passive funds are growing in popularity as investors prioritize lower fees, potential tax advantages, and doubt active fund managers’ ability to consistently outperform the market. As a result, active funds are facing capital outflows. Image: BofA US Equity & Quant Strategy
Average Net Buying (Selling) of U.S. Single Stocks by Institutional and Private Clients Can tax-loss harvesting improve investor returns? Image: BofA Securities
Potential Impact of Biden-Harris Policy Agenda on S&P 500 EPS The S&P 500 EPS forecast depends on fiscal stimulus and corporate tax reform. Image: Goldman Sachs Global Investment Research
Estimated S&P 500 Earnings Impact Based on Biden’s Proposals Joe Biden’s tax proposal could significantly reduce S&P 500 earnings, if passed into law. Image: BofA US Equity & Quant Strategy
Prediction Market Probability That Democrats Have Control Following 2020 Election According to Goldman Sachs, the odds of a “blue wave” in November have risen and could lift the effective S&P 500 tax rate from 18% back to 26%, reducing the 2021 EPS forecast from $170 to $150. Image: Goldman Sachs Global Investment Research
Does Quantitative Easing Affect Valuation? More fundamentally, low interest rates, high margins, low taxes, buybacks & free cash flow drive stocks higher. Image: Fidelity Investments
Japan GDP Japan’s economy shrunk at a 6.3% annual rate in late 2019 after sales-tax hike. Image: Financial Times
Economic Policy Uncertainty During U.S. Presidential Election Years Chart suggesting that historically, economic policy uncertainty is higher in U.S. presidential election years, particularly uncertainty related to tax policy. Image: Deutsche Bank
S&P 500 Capital Allocation – Dividends, Buybacks and Capital Expenditures 2018 corporate tax cut boosted dividends and buybacks, but not capital expenditures. Image: Oxford Economics
Cumulative S&P 500 Buybacks 2009-2019 Are buybacks driving the show? Thanks to tax cuts and low interest rates, corporate stock buybacks are booming. Over the past decade, S&P 500 companies bought back $5 trillion shares, while cumulative flows from households and foreigners are only a drop in the bucket. But what would happend if companies reinvested instead…
Stock Buybacks Since 2000 Thanks to tax cuts and low interest rates, the stock market should get around $1 trillion boost via buybacks this year. Image: Goldman Sachs Global Investment Research