WASHINGTON, November 9, 2017 – The Democrats are well known to at least some in this town as the “Evil Party.” But leave it to their opponents, the “Stupid Party” – aka, the Republicans, to make the most spectacular blunders. The latest gaffe is the Senate Republican Majority’s newly released version of a new U.S. tax plan. It would delay a much-needed corporate tax cut to 2019.
The delay in the corporate tax cut – one of the major lynchpins that underpinned Donald Trump’s surprising victory in Election 2016 – is yet another example, if indeed we needed one, of the GOP’s unerring ability to consistently alienate its own base of voters. Worse, the promise of a substantial corporate tax cut, if fulfilled, will result in more business being drawn to the U.S. One result: much of the purportedly trillions of offshore corporate dollars currently stashed elsewhere being repatriated to America’s financial institutions.
We no longer ask why the GOP acts like a unified phalanx of idiots whenever leadership is required. We already have the answer. They are the Stupid Party. But why they persist in that status, snatching defeat from the jaws of victory again and again, has likely become as ingrained in this party as Marxism has in the genetic code of the average Democrat. This current nonsense with regard to corporate tax reduction is only the most recent example of Republican tone deafness.
Now, the Dow is off some 215 points as we near 1 p.m. ET on Wall Street. That’s roughly a 1 percent loss. Sadly, the other two major averages, the S&P 500 and the NASDAQ are also teetering at minus 1 on the day.
When will these certifiable GOP morons wake up and start passing the personal and corporate tax cut legislation that voters elected them to pass? That’s a rhetorical question, of course. We all know the answer to that one.
We admit we’ve been completely confused by the market’s action this fall. Even as stocks have melted up, our portfolio has been consistently clobbered, primarily due to our misfortune with the convertible preferred “A” shares (symbol: AGN/PRA, your broker’s symbol may vary) of pharma giant Allergan (AGN). A pair of stinker IPOs didn’t help either, given that we had to carry them for 31 days after issue to maintain our IPO trading status with our discount brokerage.
We have put in for yet another IPO that will price this evening, the new shares of Workspace Property Trust (proposed symbol: WSPT), a REIT that, according to a short description by our brokerage house, describes itself as follows:
“Workspace Property Trust is a real estate investment company primarily focused on acquiring, owning and operating office and flex real estate in locations within the suburban office submarkets.”
WSPT seems to be structured as a standard REIT, which is okay given the lousy performance of recent IPOs that have done their best to rob the average shareholder of his or her voting power. REITs, however they are structured, have to deliver at least 90 percent of their profits back to shareholders (often described as “unit holders”), and generally offer reasonably fair voting rights to investors.
But new REITs often fail to deliver those fat dividends when they’re in startup mode, and WSPT seems pretty vague about exactly how much money new investors might receive as dividends.
Worse, we’ve participated in decent-looking REIT IPOs before and have found that almost universally, no matter how attractively they end up pricing, they usually sink rather badly from that price in the first few months of their existence, until and unless they establish a winning track record.
For that reason, although we’ve put in for shares of this new REIT, we’ll likely end up taking a pass after we see the pricing tonight.
On other fronts, as a way of restructuring our large portfolio while AGN/PRA drifts aimlessly in the speculative tides, we’re heavying up on investment sector ETFs offered by our discount brokerage, Charles Schwab. The performance of these ETFs has been quite good of late, and, frankly, has been beating our own stock picks.
Plus, any proven ETF in a broad sector – i.e., large cap stocks, large cap growth stocks, large cap international stocks – is going to smooth out the kind of bumps we’ve been experiencing lately in our own stock picking strategy.
Whether you’re playing cards, the slots, or the stock market, it’s always wise to step away from the table for at least a bit if you’re running a really bad streak. Once you get your head clear, it’s okay to come back to the game, but not until whatever has been jinxing you has left the room.
That’s the way we feel right now, so we’re doing some frankly profitable place-holding with some of our cash, letting the ETF managers play the game for us while we wait for our investing mojo to return. Corporate tax cuts might help.
Like the man says, you gotta know when to hold ‘em and know when to fold ‘em.