Name: Raymond James Financial CEO Paul C. Reilly Talks Investing and Possible Tax Reforms
Uploaded: 2017-11-28
Duration: 5 min 26 s
Description: In the face of imminent legislation from Washington, he advises caution and long-term thinking.

Paul, what a great year this has been for stock investors. All of the major averages hitting new records. How does 2018 look to you? As we go into 2018, it looks like we have good earnings momentum. So earnings look strong, so that should continue to help, going into 2018. Certainly Europe is also looking stronger and Asia's doing, I think, okay. And so that should, from an earnings standpoint be a positive For stocks. But there is a lot of questions out there. So the questions would become what they can do with tax reform. And as they enter that debate most analysts have build a 25 % cooperate rate into their model. So if there is lower that will give it some momentum But if it doesn't pass I think it will be a fair correction in terms of stock prices .>> I'm sure you've seen some these forecast that are calling for a bare market, market correction or worse, I saw a headline the other day, is a market crash coming? How vulnerable is the market? I don't think there's a crash there's too much fundamental strength in the market place. And don't see any bubbles. The other big difference, there's a lot of liquidity. So even if prices go down in stocks, and money may rotate out to different investments, there's a lot of liquidity and investors will come back in. So Will there be adjustments? Yes. I don't see a crash. So Brandon James, you have almost 700 billion dollars under management. So you have a lot of clients. What are your advisors telling the individual investors what they should be doing with their portfolios right now? Overall, about 51 percent of our assets are inter- equities. 25 fixed incomes. Others are in cash or other investments, so keeping them diversified, and not running toward a bull market. I think they are telling them to look long term, look at your plan, stick to your plan, and investors always want to pull back. They get nervous. I think that reassurance of here's the five year plan, don't look at next week, and stay steady. There's really, you know, the value of an advisor. Tell us a little bit about investor confidence right now. What's the mood? It's, maybe, a little schizophrenic. I mean, people are positive but nervous. They're positive in that they just feel like the market is in good shape. But they're nervous at the highs. But again, our surveys are at record high. They're very They are very positive on the market right now, somewhat the positive versus negative. Do you see that positive upbeat feeling will carry over into 2018 or too hard to tell? From what we said today, I think absolutely and the downside would be some political. Not having tax reform would send a message that we're not gonna have a lot of other structural reforms. I think people are betting on regulatory lightening, tax burden lightening, and to the extent those don't happen. That's fueled a lot of the optimism even though there's been a plenty of international issues at the same time. So if those don't happen, I think those will be the headwinds for 2018. You've talked a lot about tax reform. And President Trump is counting on tax cuts or tax reform to be a nice economic boost for the economy. From the people that you're talking to, what are the chances that Washington law makers will pass some kind of serious tax plan this year. I think there seems to be a lot of unanimity around corporate tax rates should be lower. I don't hear a lot of disagreement on both sides on that. And I think the issues are going to be around individual. Is it fair to individual and small businesses too on the pass through rates and And then for lower income people, is the benefit fair? So, it's not all just about corporate taxes because it's a big package. It's individual and corporate. I hope that we get away from party line voting on all issues, but if we get party lines it's only a few votes that are gonna make a difference. So, That gives me concern. I think it will happen but a lot of things haven't happened too. So I think people are wondering and waiting to see it happen. Let's say there is some kind of corporate tax cut. What do you think that businesses will do with those tax savings? Will they hire more Will they invest more? I do believe that with some of the capital, the depreciation rules, and the write off of capital expenditures, most business people I think will invest. Because they wanna grow their businesses. So I think those parts of the reform will be very positive. And as long as there isn't a big rise in interests rates, which we don't see pressure in today, I think the businesses will continue to invest and grow. And hopefully hire people, that's what will fuel the economy. So what do you say to the argument that businesses will probably buy back their stock or pay down their debt, neither of which will do much in the case of boosting economic growth, or hiring more people. What are your thoughts on that? I believe most companies, if they believe the economy is good, and they believe there's a Overall administration and tone that's going to be pro business, they'll tend to invest. The extent they believe, it's not going to happen and taxes is a piece of that, they're going to be more conservative. But, right now I think global growth is a reasonable pace and that people have opportunities so they will invest.

In the face of imminent legislation from Washington, he advises caution and long-term thinking.