This week’s Sentiment Survey special question asked AAII members how the recently passed tax legislation affects their expectations for stock market returns. More than half of all respondents (54%) believe the tax cuts will lead to higher stock prices. Many of these respondents anticipate earnings growth, economic growth or more stock buybacks and dividend hikes as a result. Several used the word “positive” in their responses. Approximately 19% of respondents think the new legislation will have little or no impact on stock prices. Many of these respondents perceive the tax cuts as already being priced in. Nearly 7% of respondents anticipate a mixed impact either with a market decline following a short-term increase or for the cuts to only impact certain sectors or industries.
Here is a sampling of the responses:
- “I expect it to have an overall positive impact on the stock market, at least in the short term.”
- “Positive impact on corporate profits, which should improve the economy.”
- “Not much; I believe the increase was already priced in.”
- “Short term, positive; medium to long term, negative.”
- “Corporations will have more money to buy back shares, increase dividends or pay special dividends.”
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