The Investing Environment

     The investing environment includes things like where we are in an economic cycle, rate and direction of interest rates, rate and direction of income taxes and other taxes, legislative trends, geo-political trends. Each of these things influence the perceptions and illusions of investors which in turn influences  what prices they will value their investments.  Rising interest, taxes or regulation may result in lower stock prices. The reverse is true when they fall.  

     Interest rate and income tax rate trends have major influences on valuations. The trends can last for years which are long enough for people to forget the trend can reverse direction.  Geo-political events like the economic growth of China can have influences for decades and  change the balance of world power.  Different legislation and regulations around the world can also create problems and opportunities on investments.  An investor watchful for trend changes will have an advantage over many investors who ignore changes.