“The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.” – Seth Klarman
Indeed, ahead of the race to the 2016 U.S. Presidential election, the investment scenario in the country looks rather tense. Investors are becoming more skeptic by the day as speculations fill the air about the best industry to bet on at the moment. Historical trends also portray a picture of disagreement between the stock market and the Presidential election. According to a MarketWatch analyst, historically, in presidential election years, the S&P 500 has posted an average return of 6.5% versus 7.9% in all years.
However, the present turmoil should not hold back investors in their quest for investment in the share market. Thorough market study always reveals that each moment of volatility also promises ample opportunities for investment.
For instance, the temporary suspension of the medical device excise tax (in Dec 2015) albeit for two years should encourage investors to make the most out of the MedTech industry, even as the stock market reels under the pressure of a pessimistic wave. After all, as Warren Buffett says, “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”
MedTech Tax Suspension: The Major Victims to Gain the Most
Over the last three years, all arguments have been exhausted as why the 2.3% MedTech tax was a failure in delivering the promised outcomes. The tax was projected to garner approximately $20 billion in revenues from 2013–19. But a 2014 report indicated that the IRS had only collected about 75% of the estimated total revenue expected to be generated by the tax. While as many as 15,000 filers had been projected, only 5,107 medical device tax forms were filed.
Although the Joint Committee on Taxation argued in favor of this tax, stating that revoking it will cost the economy $29 billion over a 10-year period, opposition against this tax has been rampant from the very beginning. Notably, this tax has taken a toll on small (often unprofitable) medical device manufacturers.
