“With Donald Trump’s inauguration a day away, investors are scrambling to ensure that their portfolios are best positioned to thrive under what’s expected to be the incoming administration’s new economic policies,” Ryan Vlastelica reports for MarketWatch. “While banks and industrial companies have been particular trading favorites, Goldman Sachs is looking less at industries and more at how companies spend their money.”
Vlastelica reports, “The firm’s advice: Buy companies that don’t spend a lot on salaries, and which pay a lot in taxes. Both qualities, the investment bank wrote in a note to clients published late Wednesday, are poised to outperform in the economic environment, with the former avoiding a cost as wages rise, while the latter has the most to gain from the massive tax cuts Trump is expected to pursue.”
“The investment bank created a ‘basket’ of securities with higher tax rates, the median stock of which had a 10-year median rate of 38%, compared with 31% for the median component of the S&P 500,” Vlastelica reports. “Technology companies, which tend to have fewer employees than other industries, were again the most heavily weighted sector in the basket, comprising 26% of the total. The components include Apple Inc., Skyworks Solutions Inc., and Qualcomm Inc.. The implied labor cost of Apple, as a percentage of its total revenue, is 2%, while it is under 1% for the others.”
Read more in the full article here.
MacDailyNews Take: Makes more sense than the readings of the entrails performed by the technical analysts.
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