Tom Robinson, PhD, CFA, CAIA, CFP®

The AICPA's latest working draft introduces some of the most meaningful refinements to private-company valuation practice in years. Read on for the updates VRC (Valuation Research Corporation)’s Adam Smith and Caroline Puiggali are watching most closely. https://hubs.ly/Q042Vk2t0 #AICPA #CheapStockGuide #PrivateCompanyValuation #ASC718

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Helen Brand chief executive, ACCA, and Lily Bi, president and CEO of AACSB International (Association to Advance Collegiate Schools of Business) sign a three-year memorandum of understanding (MOU) on October 17, 2025. The strategic partnership is designed to support business and accounting and finance education. Learn more: https://lnkd.in/ezahTb9U

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Market dynamics shifted dramatically following President Trump's #tariff announcements on April 2, 2025. The bond market reacted sharply, with the 10-year Treasury yield spiking to 4.5% (when China retaliated), prompting the administration to reconsider its tariff stance.  Trump did not bother when markets fell 20% but panicked to see bond yields at 4.5%. Bond yields fell to 4.3% after withdrawal but again reached 4.5% levels yesterday. Elon Musk's administration had pledged a $1 trillion expenditure reduction, but progress appears limited as the government approaches its 100-day mark. The federal budget deficit reached $1.3 trillion for the first half of fiscal year 2025, $245 billion more than the same period last year.  Consequently, the national debt is projected to approach $37 trillion by September 2025.​ The administration's aggressive tariff strategy, including a 145% levy on Chinese imports, has strained relationships with long-standing allies. China's retaliatory measures have further complicated global trade dynamics. Given the interconnected nature of modern economies, such unilateral actions risk significant disruptions across supply chains and international markets. ​ The recent volatility has shaken investor confidence in U.S. Treasuries, traditionally viewed as a safe-haven asset. Foreign holdings of U.S. debt, exceeding $8.5 trillion, add a layer of complexity, as geopolitical tensions may influence future investment decisions. ​ The imposition of a 10% tariff on imports from all countries, excluding China, poses a significant threat to SMEs, particularly export-oriented units operating on thin margins. These businesses may struggle to absorb increased costs, leading to potential closures and job losses Similarly now 145% tariff on China means imports amounting to $450 Billions or USD 37.5 Billions per month from China need to find new home. If they are routed through other country, then it amounts to higher trade deficit with US and then Trump bizarre tariff plan steps in. Can US manufacture what ever they are manufacturing today without Chinese products? Ultimately I consider economic activity and GDP are different GDP may not impact these countries as GDP = C+I+G+E-I but If I change this  Economic activity = C+I+G+I+E then whole picture changes. I really appreciate Ruchir Sharma who at the beginning of the year said - US currency will lose its prominence, markets may fall badly. Even investing in S&P may not be safe and it seems only one left is #Gold which is flying and flying. I don't think US can avoid #recession this year.

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THE OPPORTUNITY ZONE PROGRAM IS SET TO BECOME PERMANENT! The Senate Finance Committee yesterday issued its version (in Sec. 70421) of the House approved reconciliation tax bill, and Opportunity Zones (OZs) are to become permanent. This makes OZs a foundation of the country’s approach to addressing endemic poverty in low income communities nationwide. Unless sent back to the House and modified, this Senate version will be the language included in the Reconciliation Bill targeted to be signed by the President this summer. Rural America stands to gain significantly in OZ 2.0, including attracting new manufacturing facilities and infrastructure for the rebuild of America’s Defense Industrial Base (maritime & shipbuilding, additive manufacturing campuses, Space facilities, etc). The OZ asset class is poised become a strong engine for operating business growth and good job creation, and OZ equity investments over time may rival the $4 trillion municipal bond (debt) market in size and positive social impact and effect. Specific Senate version provisions include: - PERMANENCE. Legislation establishes a permanent OZ policy that builds off of the original OZ structure. The provision creates ROLLING, ten-year OZ designations beginning on January 1, 2027. - NEW OZ MAPS ADDRESSING POVERTY. The definition of "low-income community" is narrowed to census tracts that have a poverty rate of at least 20 percent or a median family income that does not exceed 70 percent of the area median income. - SIMILAR TO OZ 1.0 TAX BENEFITS PLUS ANNUAL BASIS STEP-UPS AND NO ONE-TIME INITIAL GAIN TAX CLIFF DATE. Preserves the three taxpayer benefits from the 2017 Tax Cuts and Jobs Act but allows investors to receive annual incremental reductions in gain totaling 10% starting on the first anniversary of investment. In the seventh year of the designation window, investors will be required to realize their initial gains reduced by any step-up in basis. - NEW RURAL OZs WITH 30% TAX ABATEMENT. Establishes a type of QOF (OZ fund) that invests solely in RURAL areas. Investment in these qualified rural opportunity funds will receive TRIPLE the step-up in basis (resulting in abating 30% of the investor’s initial capital gain tax due). - REPORTING REQUIREMENTS. Adds reporting requirements for the OZ program with stiff penalties for non-compliance, and provides $15 million in funding to the IRS to carry out the reporting requirements. https://lnkd.in/eRd7M75S

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The proposed change would require firms operating under nontraditional business models to have their peer reviews administered by the AICPA's National Peer Review Committee, as opposed to one of the 23 state-administered entities.

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NEW ANALYSIS: Some state are considering decoupling from the OBBBA's business expensing provisions to preserve corporate income tax revenue. But even with OBBBA reforms, the CIT base states use is still vastly larger than pre-TCJA, and the costs of conformity are substantially timing effects, substantially diminishing in later years. In particular, decoupling from first-year expensing for research and experimentation (R&E) expenditures means abandoning a policy universally included in state corporate income tax codes from 1954 to 2022, and undermining states’ efforts to promote research and development. Given the windfall states received under the TCJA—and the degree to which they still enjoy it even after the restoration of § 168(k) and § 174 expensing—there is scant justification for scrapping these provisions in the name of preserving corporate income tax revenue. Full analysis: https://lnkd.in/eNaUTRfs

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🤔There are some very expected similarities between the House and Senate versions of the One, Big, Beautiful bill, such as an extension of the current tax brackets, the continued repeal of miscellaneous itemized deductions, etc. But here are some other similarities between the two bills that were, perhaps, less anticipated, but are now reasonably likely to find themselves in the final version of the package: 💸 The value of itemized deductions would be capped at 35% for the highest income taxpayers. In other words, those in the 37% bracket would only receive a deduction of 35%. 💰 The 2026 estate tax exemption would be increased to $15MM. This is particularly notable on the Senate side, where several Republican leaders had called for a complete repeal. 💲 While the limits and rules surrounding the proposals differ between the two bills, each calls for some level of tax-free tips, tax-free overtime, and a deduction for auto loan interest. To read some or all of the 549 page bill yourself⬇ https://lnkd.in/gQS5GxmJ

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Federal Budget 2025 Preview: A Budget Like No Other https://lnkd.in/gyF2UXH4 After a long delay, the 2025 federal budget is finally coming on November 4. While it’s difficult to know exactly how big the planned deficits will be, announced spending and tax cuts make clear that they will be among the largest in recent memory as a share of GDP outside of a recession or pandemic. Defence should take centre stage in Budget 2025, but there is likely to be plenty of other planned spending between its covers. Expenditures on infrastructure, housing, and tariff-impacted industries and workers are likely to have big price tags attached as well, not to mention the dozens of other smaller measures included in the 2025 election platform. This expansion in federal government spending is expected to be partially offset by substantial cuts to operating expenses and a reduction in public sector payrolls. These spending increases wouldn’t have as substantial an impact on the deficit if it weren’t for the accompanying reduction in tax and tariff revenues. Lower revenues without an offsetting spending reduction increase the government’s deficit and debt. Indeed, we’ve determined that the economic benefits of these measures will not generate sufficient revenues to offset the planned reduction. We expect the federal debt-to-GDP ratio to rise steadily over the next decade—a stark contrast to the decline projected in the prior federal fiscal outlook. Risks to this outlook are tilted to the downside, with the possibility of renewed trade shocks and rising global long-term interest rates all threatening the sustainability of federal finances. While a debt downgrade isn’t imminent, Canada’s AAA status shouldn’t be taken for granted.

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I hear that once the PCAOB is eliminated, there are those in the SEC now who will go after the SOX 404 mandate, and maybe even the audit mandate for all public companies. I wrote this in January 2019: "Eliminating the audit mandate altogether is an idea that has been floated as the ultimate solution to the problems that plague the profession. https://lnkd.in/eja2isph '[Lynn] Turner argues that, for the system to work and investors to get the information they’ve paid for, major changes must be made. His first suggestion: provisions of the Securities Act of 1933 and the Securities Act of 1934 should be amended to remove the requirement that companies be audited. The audit firms are a “subsidized industry, like the credit rating agencies,” Turner told me, and companies are required to pay for “audits no matter the quality.” Instead, he recommends that every three to five years, investors vote on whether they want an audit. Turner says that would require auditors to “justify their existence to investors,” and this could “alter the behavior of auditors, as they would now be beholden to investors.”' Theranos was a wolf at the door, looking for pigs, that the accounting profession is, for now, ignoring. Given that most investors seem to be just fine with buying and selling trillions of private and public company shares based on unaudited earnings information filled with unaudited non-GAAP metrics, is it only a matter of time before the wolf —complete relief from all audit-related regulatory burden and expense — blows the whole house down?"

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#NFIB Research Center Executive Director Holly Wade joined CNN International to discuss #NFIB’s February Small Business Economic Trends survey: “Congress could go a long way to help the certainty factor in preserving those tax cuts that are set to expire at the end of the year that would help the vast majority of small businesses that are not structured as C-Corps, or as we say pass-through businesses that have the Small Business Deduction scheduled to expire.” Watch here: https://ow.ly/Ql4j50VmqoT

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Stanley Fischer, former Vice Chairman of the Federal Reserve and renowned economist, has left an indelible mark on the world of finance and economics through his influential work on monetary policy, particularly his research on inflation targeting and exchange rate regimes, as well as his leadership roles at the IMF and Fed. His contributions to economic thought and policy will continue to inspire and inform professionals in the field for generations to come.#federalbank #economists #centralbanks

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Getting back to portfolio construction and how it relates to the endowment Olympics that is about to get in full swing… What many don’t realize is that E&F portfolios are waayyyy more diverse than a simple equity index. And, portfolios are constructed based on what the institution needs. One school might be underfunded and face existential risk in an extended market downturn, thereby choosing a risk-averse setup. Another might attempt to grow its way into financial largess by taking on more risk, equity, leverage. Annual numbers are outputs from the approved portfolio allocation AND the given market environment that year. Because portfolios are diverse and can’t be re-configured in a year (or even two or three), multi-year return profiles that extend across cyclical market environments is a MUCH better way of assessing investment office capability than the annual comparisons that are kicking off presently. For example, 5-6 year returns that include the pandemic year (2020), the recent peak in tech (2021), the tech selloff (2022), and then the market recovery of the past 2-3 years is a much better, more fulsome assessment of a portfolio against peers than a 1-year comparison. I’ll demonstrate. Baylor has 20,000 students (75% undergrad), a $2.3B endowment that funds 10% of the budget and a more downside aware portfolio. Another university has 17,000 students (>50% grad students), a $12B endowment with a more concentrated, volatility-accepting portfolio. Over the past 5 years, annualized returns are nearly identical (4/100ths different), but with wide variation in individual years. If you looked at any individual year, returns might differ by 10-30 percentage points!! Neither portfolio has had a “bad” year as the returns were simply the result of a particular portfolio in a particular year. Over time (5 years in this case) market environments offset, resulting in nearly identical returns that are both “good” (top decile). As results from the 12 months ending June 30, 2025 are released, kindly pause before commenting and look at 5-year or 10-year return histories. Student newspapers will seize on 1 year comparisons in full color, but longer term results provide a MUCH better assessment of your alma mater’s or arch rival’s investment acumen!

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