I Don't See a Let Up in Sight for the Great Migration Going on in This Country

Stocks sold off yesterday after the administration walked away from talks on the fourth Covid-19 relief package. I am still trying to get my head around how the $1.6 trillion on the table was not enough for Congress to get the deal done. To put in perspective, after the worst financial crisis since the Great Depression, we had one approximate $800 billion stimulus package that was passed in 2009. We are now talking twice that amount after some $3 trillion has already been provided via other stimulus legislation since the pandemic hit the country. I obviously would make a lousy politician. I also don't understand how a 'Biden Bump' is going to propel equities. The prospects of a Democratic 'clean sweep' come November 3rd seem to be rising - if you believe the polls. Doug Kass and Goldman Sachs have both recently articulated this will be good for the markets. I understand this would likely mean a massive stimulus package in amounts much more than are being discussed come early 2021. I certainly understand the 'sugar high' this could temporarily supply stocks. However, the prospects of higher taxes and additional regulations would hardly be good for corporate profits, the economy, or the markets in the long run. Personally, I think we have added more than enough to the national debt in the 21st century already. One thing I do think a clean sweep would do is to continue or even accelerate the exodus out of high tax cities like New York City, an investment theme I have articulated many times on this pages in 2020 and one that has worked out well in the markets to this point. Moving requests out of D.C., NYC and San Francisco surged over this summer according to the president of United Van Lines. It is almost like the politicians in high tax locales are trying to get rid of more of their populations. Illinois and California, which are already possess some of the highest state tax rates in the country, are in the process of bumping rates for top earners even higher. New Jersey just hiked its tax rate on gasoline by 22% and bumped its top individual tax rate to 10.75% from just under 9% previously. According to IRS tax records in 2018, the last year available, some $3.2 billion worth of its tax base left the state. $2 billion of that found its way to the Sunshine State. It is hard to see how that out of state migration doesn't accelerate in the years ahead. I added a new name to my 'Escape from New York' investment thesis this week. It is a name I see being in my portfolio for a long time. The name of the company is The St. Joe Company . The firm consists of a land bank that holds some 175,000 acres in rapidly growing Northwest Florida. It also owns myriad other real estate assets in the area including hotels, private clubs, apartments, and various other real estate facilities. Basically St. Joe is a bet that this part of Florida will continue to develop. Given the exodus out of certain parts of the Midwest and Northeast into my state, I think that is a safe bet for the foreseeable future. This should mean increasing valuations for the real estate assets in St. Joe's portfolio which seem significantly undervalued by existing valuation metrics. Regardless of the election outcome, I don't see a let up in sight for the great migration going on in this country. JOE is the latest addition to my portfolio to profit off that long term trend.

I Don't See a Let Up in Sight for the Great Migration Going on in This Country

One thing a Democratic sweep would do is to continue or even accelerate the exodus out of high tax cities.

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