MAKE UP TO BREAK UP?

With the recently announced split of General Electric (GE) into three parts and Johnson & Johnson (JNJ) into two, it seems like a good time to discuss why some companies split up. It’s also a good time to discuss why companies merge in the first place. The short answer is because their stock will go up. The foremost job of the CEO of a public company is to maximize shareholder value, which results in an increased stock price. While that may sound cynical, CEOs are largely compensated via company stock…

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YEAR-END GIFTING: STRATEGIES AND TAX BENEFITS

As the holiday season and the end of 2021 rapidly approaches, many Americans are contemplating their annual gifting strategies. Whether you are considering giving a gift this year as a tax shelter, to reduce your taxable estate, or just out of the kindness of your heart, it is important you understand the various regulations governing gifting and how they will impact your finances. Charitable Gifting Charitable gifting can have great impacts both for those in need and the donor. Donations to charitable organizations are tax-deductible for the donor. It may…

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NOT CHOOSING SIDES IN THE GROWTH VS. VALUE DERBY

While the global pandemic has impacted many facets of everyday life, it remains too early to say with certainty which changes will endure and which will prove temporary. In equity markets, the strong outperformance of Growth stocks relative to Value stocks has led many investors to question if they should be focusing their efforts solely on Growth investing. For the reasons discussed below, we remain committed to constructing a “Core” equity portfolio consisting of both Growth and Value stocks. Before diving into the numbers, the table below provides general characteristics…

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INVESTMENT COMMENTARY – THIRD QUARTER, 2021

Ripple Effects of Interest Rate Increases The stock market rallied consistently this year until the past month when the S&P 500 fell 5% due to several concerns. The Delta variant of COVID has slowed the economic rebound down due to less demand and persistent problems in supply chains. China also indicated that it would not financially support Evergrande, a financially unstable real estate development company, and the markets were spooked by fears of financial contagion. Finally, the Federal Reserve signaled that it would begin tapering its bond...

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LIQUIDITY AND HOW IT AFFECTS YOUR PORTFOLIO

Liquidity refers to the ability to purchase or sell an asset without drastically changing the price. Cash is considered to be the most liquid asset as it can easily be converted into other assets. Assets traded over an exchange like Exchange Traded Funds (ETFs) and most stocks, are liquid, as they are traded frequently and with relative ease. One way to measure liquidity is through the bid-ask spread. Bid refers to the price at which a buyer is willing to buy, and an ask is the price at which a…

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