On Friday, we left on a cliffhanger after our retirement specialist Zach Scheidt detailed the ins and outs of the Dems’ ETF tax proposal.

A reader says succinctly: “Bad Idea. Will hurt the middle class.”

So, what will everyday investors do if this proposal becomes tax law? And how can you benefit regardless?

Here’s Zach Scheidt again: “If this proposal pans out, we will see a shift away from ETF investing. Instead, more investors will start buying individual stocks.

“This entire process has already been made easier (and cheaper) now that Robinhood and other brokerages offer commission-free trading and let you buy fractional shares of stock.

“Instead of sticking with an ETF that constantly kicks off tax liabilities,” he says, “more investors will avoid short-term tax bills by holding shares of quality companies for extended periods of time.

“That's great news for you and me! And it's really the way that free markets were designed to operate anyway…

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Your Rundown for Monday, September 27, 2021...

Survive a Middle Class Suckerpunch

“If investors decide to buy shares of stock because they want to be a part-owner in that company for a long period of time, it will change the way Wall Street works,” says Zach.

“More importantly, it will change the way individual stocks are priced.

“No longer will a company get more access to capital just because its stock represents a certain percent of the S&P 500 index.

“Instead, stock prices will be more closely tied to a company's earnings prospects, because investors will buy individual shares instead of just investing in the market.

“Higher stock prices for well-run companies will give the best firms better access to funds needed to expand their business,” Zach says. “And poorly run companies will have lower stock prices.”

“This will cause management teams to…

• “make better decisions for their investors
• use capital more efficiently for better returns for smart investors like you and me
• ultimately lead to a better economy.

“And if you haven't yet started on your investment journey, now is a great time to learn to pick great stocks to hold for long-term gains,” says Zach. (In case you’re wondering, Zach favors blue chip stocks which offer great dividends in thriving sectors. More on that to come.)

“As Washington looks for new ways to tax investors, money is already moving to stocks of high-quality companies,” he notes. “You can invest in these stocks today and participate in the gains as the market reacts to these new proposals.

“I'll keep you posted on new developments with this proposal and on the best stocks for growing and protecting your wealth.”

Market Rundown for Monday, September 27, 2021

S&P 500 futures are down 0.28% to 4,433.

Oil’s up almost 2% to $75.39 for a barrel of WTI.

Gold is up $2.00 per ounce to $1,753.70.

Bitcoin is up at the time of writing to $43,595.

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Happy Monday. Join us again on Wednesday…

For the Rundown,

Aaron Gentzler
Editor, The Rundown
TheRundownFeedback@StPaulResearch.com