US stocks outpaced non-US stocks in the first seven months of 2023, adding another data point to a decade-long stretch of US market dominance. While some investors may see this as further reason to question the benefit of global diversification, it’s important to note how much of this year’s US advantage stemmed from a handful of stocks. The top seven contributors to the US market—Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, and Meta—have returned a collective 66.3%, accounting for a sizable
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Insights
Over the Top
Focus on the Horizon: Tuning Out the Noise with Valuations and Returns
Valuations of publicly traded companies are a frequent topic of conversation among investors and for good reason. Valuation ratios tell us the price of stocks relative to fundamentals like earnings, sales and book value. In other words, valuation ratios are an excellent way to understand the long-term attractiveness of groups of stocks relative to: one another their historical norms. A large body of academic evidence ties valuation levels and long-term expected returns, and intuitively, that the price we pay for
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Sale to an Intentionally Defective Grantor Trust (IDGT)
Key Takeaways When looking to transfer large amounts of assets to future generations, selling assets to an intentionally defective grantor trust (IDGT) may create greater tax savings than other gifting strategies. With an IDGT, the grantor is considered the owner for income tax purposes and pays taxes on the income produced by the trust, but the trust assets are not considered owned by the grantor for estate tax purposes. Selling highly appreciating or income-producing assets to an IDGT effectively “freezes”
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Beware of Sample Periods
Anyone who’s ever bought a used car knows the importance of avoiding a cherry-picked depiction of history. Low mileage and regular oil changes don’t matter much if the seller fails to mention the car was once submerged in floodwater. Many investors have been drawn to the shiny-object stocks of the S&P 500 index on account of their recent performance—since 2010, the large cap S&P has outperformed US small cap value stocks(1) by an annualized 1.7 percentage points(2). However, this impressive
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