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Editor鈥檚 note: More than 500 Carroll School alumni and others turned out virtually for the 2021 Carroll School Webinars, collectively titled 鈥�Post-Pandemic Trajectories: Politics, the Economy, and Global Markets.鈥� The live webinars began on May 3 with a talk by well-known political scientist and prognosticator Larry J. Sabato of the University of Virginia, who predicted that the Democrats would lose their congressional majority in 2022. 鈥淗e鈥檚 got two years,鈥� Sabato said of President Biden and his legislative agenda. Closely watched by news media was a May 5 presentation by Eric Rosengren, president of the Federal Reserve Bank of Boston, who sought to tamp down fears of runaway inflation. Articles about the talk appeared in the , , and other major outlets. The final webinar on May 7 brought together a panel of experts who addressed questions of particular interest to both retail and professional investors, as reported in the following article.

Investors looking for a hint of how the pandemic has affected the outlook for global markets received a message of somewhat restrained encouragement during the Carroll School of Management鈥檚 2021 webinars. Despite the occasional blip in statistics like April鈥檚 anemic monthly employment gain, the participants were bullish, if not ecstatic, on the durability of the economy鈥檚 trending recovery and approving of the 鈥渄emocratization鈥� of investing enabled by new technology.聽

Worries about geopolitical trends might be misplaced over the near term. For the professional community, 鈥淓conomics typically trumps the noise of geopolitical headlines,鈥� Pasquariello said, alluding to international issues such as the tension between the U.S. and China over Taiwan, which could become a 鈥渇lashpoint鈥� in the next decade.

Regarding domestic policy, how the Biden administration鈥檚 proposed tax rates settle out is an imponderable that鈥檚 causing some hesitation in the market. While Bernstein acknowledged that the government budget deficit demands that more revenue be raised, he said that if the capital gains and income tax rates were too similar (which could happen if capital gains taxes are raised), it would dissuade investors from taking longer-term risk. 鈥淭hat鈥檚 the last thing we want,鈥� Bernstein said. For his part, however, Pasquariello said he believed final tax rates would be 39.6 percent for the highest-earning households, as the Biden administration has proposed, but would top out at around 25 percent for corporations and capital gains at 28 percent鈥斺�渘ot a sincere threat to stock prices鈥� after a brief initial impact.

The technology making it easier and less costly for nonprofessionals to get into the market has been a boon for capital formation, the experts said. 鈥淚t isn鈥檛 healthy that 90 percent of the stock market is owned by the top 10 percent of American households,鈥� Pasquariello noted, 鈥渘ot an admirable statistic.鈥� What he termed a 鈥渇erocious鈥� wave of retail investment kicked off last year as the pandemic quarantines kept people at home, government relief checks went out, baby boomers continued unloading their holdings, and younger generations took advantage of low-cost fintech newcomers like robinhood.com.聽

Despite resulting in welcome capital formation, the new mobile apps for investing may also lead to an unfortunate consequence: impulsive, short-term trading. 鈥淪tatistics show day trading for free is very close to flipping a coin,鈥� Bernstein asserted, 鈥渕ore like betting on a horse than the longer-term process of buying a horse and training it, whereas wealth and capital are only built with long-term horizons.鈥澛�

Earlier this year, the runup to 鈥渆ye-popping鈥� highs of GameStop stock, driven by social media, raised an alarm about the dangers of so-called gamification of investing and 鈥渞un-and-gun鈥� investors. The panelists concurred that professional investors have reacted by exercising more caution, but whether or when regulators would step in is unclear.聽

Another new technology investors are buzzing about is crypto (digital) currency, which operates without the need for a central banking authority because it relies on decentralized blockchain. Although China has created a pilot program for a digital version of the yuan, most governments still haven鈥檛 decided how to approach cryptocurrency. While cryptocurrencies are likely here to stay, Bernstein argued, 鈥淭hat doesn鈥檛 mean that Bitcoin at $50,000 or $60,000 is a good investment today.鈥�

Pasquariello noted that Goldman is beginning to take cautious steps to work with certain clients who are looking to get into the digital currency market. The tokens 鈥渕ay not be rat poison, but they might be fuel for speculation,鈥� he said.

Marilyn Harris is a reporter, writer, and editor with expertise in translating complex or technical material for online, print, and television audiences.聽