Earnings Are Important, But Psychology and Tax Cuts Matter


Nov. 20, 2017 –

“If you want something new, you have to stop doing something old,” Peter Drucker once admonished us.

At the author of 39 books, the late Dr. Drucker, of course, was the world’s premier business philosopher.

But not every Republican and business have heeded his simple advice.

Firstly, let’s consider business. With the long decline of former market stalwarts General Electric, General Motors and Proctor & Gamble, you might think the companies would have been quick to change.

For instance, during the Digital Age we’ve been seeing the emergence of artificial intelligence and robotics.

You might also think GE and GM would have been leaders in both. But no, they haven’t.

Meantime, the companies have fallen further behind the market capitalization of many other companies.

Indeed, stocks have jumped more than 27 percent in the first 12 months after the election of Donald Trump.

Certainly, the psychology of his policies on pro-growth tax reform, eliminating onerous business regulations and rebuilding the infrastructure along with strong earnings have motivated investors.

Much has been written about the growth of the stock market and U.S. economy during the era of Trumponomics. Three percent growth has returned in the gross domestic product.

The economy seems poised to achieve the high levels we haven’t enjoyed since President Reagan’s tenure in the 1980s.

Profits growth has propelled stock market gains. The S&P 500 continues to trade at around 25 times earnings.

Positive forecasts

The U.S. economic forecasts are mostly positive. Ditto for the global economies.

So many analysts believe corporate earnings will continue to grow in double-digit percentages for the near future.

Of course, this means the aggregate price to earnings ratio will be around 18. Concurrently, investors will likely be bullish on stocks. It’ll be a fait accompli on tax reform and a corporate-tax cut.

Inflation is almost unbelievably low. It appears the Federal Reserve will slowly hike interest rates and contract its balance sheet.

So, as technology has greatly impacted business, intellectual property has become increasingly important.

Bricks and mortar are less important in the Digital Age. Amazon has become a dominant factor in B2C and B2B sales. Online banking is prevalent. Car dealer showrooms are affected by the Internet.

All of this means lower operational costs, which is why big businesses are making bigger profits.

Economic red flag

But despite the improvements brought by Trumponomics, there is an economic red flag. The GOP-dominated U.S. Senate and House of Representatives seem unaware of Dr. Drucker’s common-sense warning.

Literally, they’ve accomplished nothing.

Republicans must deliver on their mandate for reforms in taxes, healthcare, business regulations and federal spending.

If not, the nation’s electorate might vote for the return of President Obama’s socialistic policies and culture of entitlements.

Already, entitlements – food stamps, Medicaid, and Section 8 housing subsidies for physically fit adults without small children as well as Social Security disability benefits – consume nearly 60 percent of federal revenue.

Unless there’s a new cultural approach, it will only get worse.

Federal debt

With such recipients eligible to vote, the federal debt is unsustainable. It is nearly $21 trillion.

For the time-being, the nation’s economy must grow to offset such problems. President Trump’s economic leadership will prove to be effective long-term, if Republicans stop blinking on the important issues.

Short of that and sans the psychology of Trumponomics, voters will react predictably. Then, everybody will lose. The nation’s culture must change.

So, Republicans remember: “If you want something new, you have to stop doing something old.”

From the Coach’s Corner, related articles:

To Become Relevant, What GOP Majority Must Do For SMEs — The U.S. economy is blossoming, despite the inept Congress. Small and medium-sized enterprises haven’t received their deserved nourishing fertilizer. Here’s what the Republican majority must do or face consequences.

On 9/11, America’s Economic Preparedness Worse than Ever — Unfortunately, today is the 16th anniversary of that tragic day, and hurricanes have devastated America. But America’s fiscal ability to deal with such crises is worse than ever. Here’s what Congress must do.

Flag Day Irony: Hateful Political Rhetoric Threatens America — A tragic event obliterated an historic day in America – Flag Day on Wednesday, June 14, 2017. It had to do with hateful politics.

Why President Trump’s Growth Budget, Reforms Matter — Deficit-spending and the resulting massive debt severely damages America’s economic prospects and hurts each American. But a disciplined approach will make America great again — by shrinking the national debt and implementing other needed reforms.

How Bad Policy and Journalists Hinder Economic Prosperity — The nation’s economy will strongly improve if we capitalize on lessons in common-sense economic-growth policies from two late presidents.

“Culture eats strategy for breakfast.”

-Peter Drucker



Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.


Big Surprise in Washington State Race for U.S. Senator


July 17, 2010

A new Rasmussen poll indicates a three-time incumbent senator might be in trouble.  Sen. Patty Murray (D-WA) continues to slide in popularity. A two-time unsuccessful gubernatorial candidate, Dino Rossi; and a former National Football League star turned-farmer, Clint Didier, now hold narrow leads in the Senate race.

“Incumbents that fall short of 50 percent at this stage of a campaign are considered potentially vulnerable, but worrisome for Murray is that this is her poorest showing of the year,” according to an article at Rasmussen. “She was reelected to a third term in 2004 with 55 percent of the vote.”

Mr. Rossi and Mr. Didier both have 48 percent of the responding voter preferences against Ms. Murray and her 45 percent. Fewer than 10 percent are undecided or indicate a preference for other candidates.

The poll was conducted with likely voters.

“Washington’s Senate race looks increasingly like a referendum on incumbent Democrat Patty Murray with two Republican candidates edging past her this month,” according to the article.

Rasmussen reports Ms. Murray and Mr. Rossi have been tied in every poll in 2010.

“Incumbents that fall short of 50 percent at this stage of a campaign are considered potentially vulnerable, but worrisome for Murray is that this is her poorest showing of the year,” “She was reelected to a third term in 2004 with 55 percent of the vote.”

The Washington state race is a toss-up – one of nine according to Rasmussen Reports’  Senate Balance of Power rankings.

But in Washington state, the biggest decline for Ms. Murray occurs in a matchup with Mr. Didier.

“Last month, Murray led Didier, a former professional football player, 48 percent to 40 percent,” states Rasmussen. “Prior to that survey, Didier’s support had ranged from 30 percent to 37 percent since January. In the same time period, Murray earned 47 percent to 51 percent in match-ups with Didier.”

A third Republican candidate is also faring better against Ms. Murray.

“… businessman Paul Akers, continues to trail Murray. But in the latest survey, the incumbent leads Akers 46 percent to 41 percent, while a month ago she was ahead 48 percent to 38 percent,” states Rasmussen.

In every matchup, Republicans are favored by men and Democrats get support from most women.

Among Independent voters, Mr. Rossi has a slightly more than two-to-one edge, and Mr. Didier performs almost as well. Mr. Akers is also ahead but not as much as either Mr. Rossi or Mr. Didier.

“Just seven percent of Washington voters now rate the economy as good or excellent, while nearly half (49 percent) say it’s poor,” reports Rasmussen. “Thirty percent think the economy is getting better, but 45 percent say it’s getting worse.”

The poll indicates 72 percent believe the U.S. is in a recession.

“Support for last year’s $787-billion economic stimulus plan which Murray supported is higher in Washington than it is nationally with voters in the state closely divided over whether it helped or hurt the economy,” states Rasmussen. “But even in Washington, only 30 percent think the increased spending in the stimulus plan created new jobs, while 52 percent disagree and say it did not create any new jobs.

As far as job creation is concerned, responding voters – by 58 percent to 25 percent – prefer cutting taxes vis-à-vis more government spending.

“Fifty-four percent of Washington voters favor repeal of the national health care bill, which Murray supported, while 44 percent oppose repeal,” according to the pollster. “This is in line with voter sentiments nationally and includes 43 percent who Strongly Favor repeal and 37 percent who are Strongly Opposed.”

The poll’s margin of error is plus or minus four percent.

From the Coach’s Corner, my sense is that factors for the changes reflected in this Rasmussen poll include voter unrest over new taxes and violation of transparency standards by the Washington State Legislature. See: Tax Increases Will Cost Washington Businesses, Consumers $6.7 Billion Next 10 Years.

Seattle business consultant Terry Corbell provides high-performance management services and strategies.