9 new charts - US deficits, stock valuations & tech taxes

The US Government had the single biggest deficit year in 2021, largely due to fiscal stimulus during Covid. What’s new to me? Individual income taxes are $2T, yet corporate income taxes are just $372B! I didn’t know the difference was that big!

And it’s been 20 years since the government has had a surplus (the last one was in 2001). I honestly don’t know if it’s a problem or not that the US government is in deep deficit. When the problem is around for too long and no one has fixed it, psychologically, we all assume it’s not a problem…

At least in 2021, the average US household is in surplus. They take home $59K net salary and manage to save $12K by the end of the year. What’s changed in 2022? Inflation from food and transportation is the biggest. No hard data yet but I hope 2022 is another surplus year for us all.

‘Time in the market’ is always more important than ‘timing the market’. I firmly believe it’s true for any individual investor. The hard data in the past 50 years below shows me monthly return is always everywhere. To time the market, from this chart, is almost impossible to do repeatedly.

What’s all the fuss about rising interest rates? History shows us that when rates are high persistently, stock valuation across the whole market is low. And vice versa. So be prepared for a prolonged period of lower valuations than the last 15 years. And don’t blindly overpay for growth stocks.

Lots of you asked for more breakdowns of tech companies’ financial statements, especially their taxes and dividends. So here they are. No dividends at cloud giant #1 Amazon. Lots of dividends and buybacks from cloud giant #2 Microsoft.

Google at least has done share buybacks, whereas Facebook has never considered it.

Apple is the most generous in paying out dividends and doing share buybacks.

Within all the social media products, Messenger is the fastest to get to 1B MAUs, thanks to the big user base of Facebook already at its launch. TikTok came in 2nd at 5 years, truly impressive given that it was coming out of nowhere and became an overnight success after the Bytedance acquisition.

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See you next week!

Truman 🙌

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