The deadline is approaching for many investors to capitalize on tax strategies to minimize their bills moving forward. The most important thing investors can do is capitalize before the end of the year and claim losses they have. Special deductions are given to those with losers outpacing winners, up to $3000. However, investors should be wary of wash rules that may penalize them for repurchases within a 30-day period. The other most important strategy is to actually pay off excess medical expenses. Special provisions will mitigate your tax losses if they reach a certain portion of your income. Deferring income could also be a way out but it could be a risky strategy because next year could be even better than 2021.

FINSUM: Now is the time to capitalize on bond market blues and sell off those useless-yieldless tickets to save on the tax bill.

Everyone and their dog is searching for viable alternatives because omicron has the stock market skittish and there’s absolutely no yield in bond markets. This has many investors turning to REITs, but how do you find the outperformers. There are six key metrics to look out for: a high fund from operations, total cash from operations growth, high liquidity ratios, accelerated dividend growth rates, a good-sized market cap, and finally price gain. These are the most important factors when evaluating REITs. Some of the best examples in these leading categories are Prologis, Essential Properties, Innovative Industrial Properties, and Life Storage Inc.

FINSUM: Alternatives could have their most promising year yet with all the outflows from the bond market coming in.

There have been widespread attempts by the new administration and private financial companies to expand the access to retirement vehicles, but a ‘fiduciary only’ regulation will kill retirement hopes for many low-income communities. Nearly half of black families and almost two-thirds of Hispanic families have no retirement savings account, and a stricter fiduciary rule would make it virtually impossible for these communities to get access to financial securities like annuities which allow them access to guaranteed lifetime income. Previous strict fiduciary rules like in 2016 left 10 million small retirement account owners without financial advisor access and a new rule could have a similar impact. Regulators and public officials should look into alternative approaches if they are interested in building retirement savings in underserved communities.

FINSUM: Unintended consequences of policies most often impact those the policies are seeking to help!

Joe Manchin, Democratic Senator from West Virginia, made a splash last week when he pulled his support for the build back better citing a number of problems that keep him from backing the bill. However, this week Manchin did a 180 on the billionaire tax saying he would be willing to support it in a revised version of the bill. Manchin’s version of the bill includes many of the same spending appropriations such as pre-k care, climate change, and Obamacare, but omitted certain pieces like the child tax credit. Manchin’s vote is critical if Biden hopes to pass the bill, but with rising inflation, labor shortages, and spiking national debt, he’s still reluctant to throw his weight behind Biden’s bill.

FINSUM: Remember the House’s version of the bill didn’t include a billionaire tax, even if Manchin puts it back on the table it’s unlikely the final bill will include it.

The low rate environment has flipped the paradigm of many investors when it comes to the bond market, and most investors are leaning on higher-yield fixed income ETFs to augment their portfolios. Sure fixed-income ETFs are mainly used as a risk mitigator for most investors, but they also are the way to generate alpha. Investors can better manage the liquidity of Fixed income ETFs as opposed to individual bonds, so they pose fewer liquidity constraints when selling. With liquidity concerns off the table, investors can more freely move securities to look for an advantage of standard indices, hence alpha. On top of this, their broader exposure is a better source of risk mitigation as well.

FINSUM: Being able to flip a fixed income ETF faster than individual bonds is a leg up in decision making, and another reason to cast a wider net in the current fixed income market.

Omicron is sweeping the U.S. and once again threatening to cripple the economy, already major airlines are canceling flights and potential Christmas plans. This makes moderate Dems walkout on the Build Back Better even more critical as the country could desperately be in need of stimulus at the moment. This caused Goldman to cut its GDP growth by 1% annualized in Q1 2022 and a half a percent in Q2. CPI rose at a 39-year record in November, which could make the possibility of a big BBB bill even less likely as price pressures deter policy makers. Goldman still sees the possibility that congress will aid a bit with the new omicron surging.

FINSUM: It’s tough to justify another trillion-dollar stimulus package with roaring inflation, and it might be futile with the Fed pumping the breaks; lookout for stagflation!

Some trends were definitely starting to take hold in 2021, but those are going to continue to flourish in 2022. The first of which is an active fund take over, as it appears active fund starts will outpace passive funds and see huge inflows on top of it. The next biggest trend will be more RIA’s rolling up their proprietary model portfolios into ETF launches. These model-based funds are the best way for professionals to package their expertise and deliver it effectively to clients. A number of recent SEC policies make it easier for a variety of ETF launches to happen this year so expect this explosion to continue in 2022.

FINSUM: It makes sense that model portfolios will explode, firms can be more transparent about their areas of expertise by delivering them in fund form explicitly.

Wells Fargo is aggressively pushing branch managers to maintain and recruit new brokers with a variety of incentive-based packages. For example, penalties will be in place for a drop in headcount when it comes to year-end bonuses and will include headcount retention and arrivals rather than purely based on overall revenue. Managers say they could lose big if they don’t increase new brokers and retain old ones. Wells has suffered in its ability to retain advisors as of late and is trying to play catch up with the incentives. Separate recruiting and retention bonuses will also be part of next year’s pay incentive structure.

FINSUM: These are drastic pay changes to the management structure; Wells is serious about growing its working base.

The Biden administration has put a number of new policies that are affecting annuities, and while some of them may be unintentional a number of companies may be moving to offshore havens to escape the pressure. Annuity issuers are being acquired by private companies and then becoming nomadic firms that are mainly housing themselves in Bermuda. The current Build Back Better act will affect annuity and insurance contracts with updates to the base erosion and anti-abuse tax. Additionally, many annuity issuers aren’t positive that the variety of retirement vehicles that are offering annuities might not be so great moving forward. Finally, low yields in are tricky for annuity issuers because they rely on traditionally high yield debt to finance the pseudo insurance contracts.

FINSUM: Annuities are one of the oldest financial contracts, it’s bizarre how much new regulation is being sprung on them in 2021.

Biden’s latest $2 trillion stimulus/economic reform bill is stuck in congressional limbo, and that's because not even all Dems are on board. Speaking on behalf of moderates Joe Manchin, Democratic Senator of West Virginia listed an array of suggestions to Biden in order for there to be bi-partisan support. Some of Manchin’s suggestions included means testing and work requirements for expanded child tax credits in order to stop wealthier individuals from taking advantage of the program. Other democratic senator’s ae calling for a smaller corporate tax hike and lower income taxes on weather individuals. Manchin accused staff of adding in provisions that are limiting bi-partisan support, and even having a hard time garnering support in their own party.

FINSUM: The lofty aims of Biden’s original economic reform were a pipe dream, major changes will have to come if they want to have a chance of passing the bill.