[jjoonathan]

When a company buys something (a capital expense) they are allowed to deduct its loss in value from their income every year to reduce their taxes. Calculating the exact value of things is hard to do without selling them, so for tax purposes things typically lose some fraction of their initial value every year. The number of years it takes the item to lose all of its value is typically 3, 5, 7, or 10 -- or my sample is biased. I am not an accountant.

In any case, the new "bonus depreciation" rules let companies take all of the depreciation in the first year. Effectively, they were able to shift their deductions from tax year 2019, 2020, 2021... into tax year 2018. I am sure many did/will. It's a nice trick to score a quick bump in profit, but it only works once.

If the market is full of dumb models that inappropriately extrapolate this bump into future years, the people investing money on the basis of those dumb models will be disappointed.

[thoughtstheseus]

For those that are not as familar with depreciation. You have to pay taxes on profits, when you buy equipment/machines/buildings/etc. (called PP&E) that last for many years the tax code forces you to recognize the expense for tax purposes over the useful life of the asset. So you pay $100 for a new piece of equipment that will last ten years, every year for ten years you get to recognize $10 of expenses, so your taxable income is lowered by $10 each year. The tax law let everyone expense the entire value in the first year, so it encouraged purchases of PP&E as $1 dollar saved today is worth more then $1 saved ten years from now.