G-7 Conference and Happy Spending
At the most recent G-7 conference finance ministers agreed on a minimum corporate tax rate of 15%. There are actually 2 pieces to the proposal: one piece taxes corporations in line with the country they operate in by taxing profits over 15%, and the second establishes a minimum corporate tax rate among the G-7 of 15%. The details are far from being worked out and, of course, the devil is in the details. What impact will this movement have on corporate profits/earnings and therefore stock prices? 15% is a relatively low rate and implementation will take many years so the impact should be limited. “Earlier this year, Goldman Sachs’ David Kostin calculated that a 15% minimum rate would be a $1 drag on S&P 500 earnings per share in 2022” (Barron’s June 9, 2021).
Pandemic and its Impact on Mental Health
Part of the research on the pandemic was the mental health impact on people. A meta study of mental health research studies had some surprising observations. The Atlantic has an article documenting their observations with a bottom line that although there was much suffering financially, mentally, and medically, as the pandemic wore on we adapted pretty well to the limitations and changes demanded in behavior. They attribute our relative success to a human mechanism called “psychological immunity.”
Psychological immunity enables us to recover from personal and societal challenges that at first seem overwhelming and impossible to recover from psychologically. An easy example is how we recover from ending relationships by finding fault with the ex-partner not previously seen. In the case of the pandemic, we found value in working at home, Zoom meetings with friends and family, new recipes and a newfound interest in baking! Research conducted later into the pandemic found loneliness and depression have similar rates as before the pandemic. This does not minimize the impact the pandemic had on much of our population, but the temporary nature underestimated humans’ ability to adapt.
One of the authors of the above article co-authored a book “Happy Money: The Science of Smarter Spending.” She proposes 5 ways to make spending more meaningful. She found links between those that spent their money more focused on experiences, ie: treats to be enjoyed together or the act of giving provided space for more happiness rather than the acquisition of ‘things’ or spending on one’s self. The article sheds some interesting light contrary to what is often touted to equal success. Our culture’s fixation on constantly ‘leveling up’ might be limiting our ability to enjoy what we have. Here is a link to the article where she outlines her recommendations to make spending more meaningful: https://www.psychologytoday.com/us/blog/sex-murder-and-the-meaning-life/201308/are-you-spending-money-in-ways-make-you-unhappy
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