I suspect stocks will fall between now and the end of the year. This magical prediction is based on the fact that people will sell stocks to lock in their gains and be taxed at lower rates than they will be in 2013.
Right now capital gains and dividends are taxed at 15%. They could rise to 23.8% and 43.4% respectively “once the fiscal cliff arrives and also when tax hikes embedded in President Barack Obama’s Patient Protection and Affordable Care Act take effect next year,” predicts Goldman Sachs.
That’s a huge potential hike — nearly three times for dividends.
Goldman, however, expects that the rates will be negotiated to 23.8% for both capital gains and dividends. All this has to do with the “fiscal cliff” and the “automatic” expiring of the Bush tax cuts.
Washington’s budget is a mess. It spends much more than it takes it. And our national debt (to finance the excess spending) is out of control. There are three ways of “solving” this:
+ Raise taxes. Preferably on people richer than me.
+ Spend less. That’s almost impossible since entitlement spending — Medicare, Medicaid, Social Security — can’t really be cut. And the rest of the spending is peanuts.
+ Print more money. Bernanke’s been doing that for several years, using the “money” to buy garbage securities and mortgages, destroying the mortgage REIT business in the process.
If you’re a “trader” (also called a gambler), you will sell short obvious Obama-disliked stocks — like defense contractors, the big banks, and some others I haven’t thought of, yet.
I personally will hold my present shorts (like RadioShack and BestBuy) until somewhere in the middle of December. Maybe I’ll eke a few more gains.
I listened to Obama’s acceptance speech last night. I was searching for investment clues. There weren’t any.
The election really didn’t change anything. Same president. Same Republican house. Same divided mess in the Senate. A recipe for the same old stalemate.. The good news is that some of the extreme nut cases, especially those who said stupid stuff about rape, abortion, babies and God didn’t make it. Maybe the right wing of the Republican will learn that something like the middle of the road makes more sense?. Maybe it will become less intransigent? I’m looking for flying pigs.
Meantime, there is awful news out of Germany, the last remaining Euro-zone country that was doing OK. It no longer is. That’s not good.
The Feds has done us in. Yesterday I wrote about the mess in my muni bonds (click here). Several readers kindly sent in ideas. I’m sifting through them. I do like this approach from one reader:
The fed has absolutely killed savers and destroyed the great tax free yields of previous years. Longer bonds are also being called in, so maturity was not the answer. Call protection is the answer.
I’m buying dividend paying stocks and writing calls on them. I look for great companies with consistent earnings and rising dividends, that may continue to increase over time. I look for a current cash on cash return of 3-4% plus once call premiums are factored in. I try to get a 7-10% upside spread between cost and option strike price so if the stock is called clients will have a 10-14% potential return in a 3- 6 month time frame. I would rather have the stock risk with potential rising dividends, than a fixed coupon, when rates do rise eventually.
Sell covered calls on the stocks you own to replace bonds being called.
What to Do if You Are Coughing Up Green Mucus. I dumbly caught a cold from a young friend who had just got off the plane from Paris and had caught something awful from a fellow traveler. I’ve had colds before. They all follow a standard pattern: coughing up mucus — first clear, then yellow then green. In the past I’d rushed off to the doctor to secure antibiotics. Recent newspaper and magazine articles have suggested this was stupid (which it was). The green stuff freaked me. Was I over-reacting? I found this on a site called Nutra-Legacy. It seems to make sense (and conform to what other medical web sites said).
Many people tend to get worried if they cough up green mucus. Most of the time this is actually normal. Some believe that the presence of mucus indicates that there is something wrong with them, but in fact, it is just the natural immune response of the body to various invaders that attack it.
If you are coughing up green mucus, it actually means that whatever illness you had is coming to an end. If you see yellow mucus, it means that your immune system is still fighting the invader. If your mucus is clear, then you must be in the beginning stages of the illness.
Unfortunately, there are still many people who believe that if they cough up green mucus, then it means they have a bacterial infection. So, they hurry to their doctor and ask for an antibiotics prescription. It’s important to understand that this is the last thing you should be doing, because antibiotics will definitely not help. Even if you did have a viral infection, antibiotics will only make the bacterial resistance to the treatment stronger.
So, what can you do to speed up the natural process of mucus coming out? First of all, you should drink a lot of fluids of all kinds, since this makes the mucus thinner and decreases congestion levels. It is best to drink warm fluids, like chicken soup or hot lime green tea. Orange juice is also very good, since the Vitamin C it contains helps you recover from an illness faster.
The most natural way to get rid of chest congestion and green mucus is to mix eucalyptus oil with boiling water. Use 2-3 drops of eucalyptus oil for one pot of water when you make this mixture. For best results, put a towel over your head and lean over the pot to inhale all the steam you can, covering the pot with a towel as well.
If you want to get rid of green mucus, one thing not to do is take throat lozenges or cough suppressants. They might only make your problem worse. Anything that is designed to numb the pain or suppress a cough will actually create more mucus build-up, because you are basically turning off the necessary mechanisms in your body, which are supposed to fight the illness.
Another thing you shouldn’t do is swallow the green mucus if it wants to come out. This mucus is full of infection fighting substances, such as immunoglobulins and glycoproteins. Essentially, when you cough up green mucus, it’s a sign that the substance has already served its purpose and should be eliminated. If you swallow it instead, it will reintroduce the mucus back into your system, which only perpetuates the problem.
The perfect comeback.
A guy asked a girl in a university library: “Do you mind if I sit beside you?”
The girl replied with a loud voice: “I DON’T WANT TO SPEND THE NIGHT WITH YOU!”
All the students in the library started staring at the guy; He was truly embarrassed.
After a couple of minutes, the girl walked quietly to the guy’s table and said: “I study psychology and I know what a man is thinking. I guess you felt embarrassed, right?”
The guy then responded with a loud voice: “$500 FOR ONE NIGHT? THAT’S TOO MUCH!”
All the people in the library looked at the girl in shock.
The guy whispered in her ears: “I study law and I know how to make someone look guilty.”
Favorite New Yorker cartoon.
Harry Newton who wonders if there’s some significance to writing about green mucus the day after our wonderful presidential candidates just blew something like $2.3 billion running TV ads which you and I muted.
Romney could have won the election, had he played the game honestly, skipped the lies (Chrysler,etc.), told what he was actually going to do to stimulate jobs and business investment, and opened up to the American public through intelligent interviews with the press, etc. and not just proposed to reward the richest 1% with lower taxes. He’s still the president we need — a successful businessman who’s met a payroll and understands business.. I rue the next four years, with the same divided Congress and a president unwilling or unable to reach across the aisle and get things done. But maybe he’ll try harder this time? He sort of suggested that in last night’s acceptance speech. My fingers are crossed.
Record 50,000,000 (and growing) Americans on food stamps. We have a growing demographic
of people who value “free stuff” over freedom. These people are guaranteed votes for the Democratic party, until the money runs out. Greece, here we come!
President Kennedy “Ask not what your country can do for you, ask what you can do for your country”.
Sadly, that type of Democrat is long dead………..
Actually the number is 46.37 million. And it’s very high, a reflection of the continuing shortage of jobs. for many, many people it’s really bad out there. . But you are probably right: There are people out there who are scamming the system.I wish I knew a simple answer.
Romney was a massively capable executive and a descent human beingt… I’m afraid that the USA has squandered an opportunity to return to prosperity. ..
Instead we’re left with the butt-wipe from planet affirmative action.
“. He’s still the president we need — a successful businessman who’s met a payroll and understands business..” And you endorsed Obama. ??? As I heard recently, “you fascinate me.”
I enjoy reading your blog. But sometimes you say things that surprise me. Not sure why you think that a successful businessman guarantees a successful presidency – hasn’t in the past. Plus, I would characterize Romney at successful at making money. Romney was not even a successful governor. “Unwilling or unable to reach across the isle” – Obama tried but Republicans made it clear that they would do anything to prevent him from having a second term.
trid what, when they were in washington trying to settle budget, he was out on black bus raising money.
you sure it wasn’t a white bus?
This wealthy American has had it and has put his home on the market to move to Europe for good. It’s not Obama’s reelection that troubles me so much as that we reelected most incumbents in the senate and the House. This is easily the stupidest country on Earth, and one of the worst. In FRance, England, etc. if they had a do nothing parliament with 8 percent approval they would not be so stupid as to relect the bums.
Americans collectively are very, very, very dumb, ignorant and moronic. I can understand the case for not electing Romney – who wants a president representing a party that believes women who are raped should carry the baby? This is mind boggling. And a party so lame and ignorant that it fails to try and reach out to Latino voters. I get why Romney lost. What I cannot abide is reelecting all the zeroes and dimwits and criminals and stalemate loving members of Congress.
So long, America. Good riddance.
You have a good point about why incompetent incumbents seem to keep getting re-elected. It has to do with how the political parties work, especially at the primary level.
As for the Republican party believing women must carry a rape baby – that is not the Republican party platform and the far right nuts do not define the party, just as the far left nuts don’t define the Democratic party.
Latinos? Yes another enigma why the Republicans don’t take the lead in reaching out to them. Hopefully the Republicans will learn from this election.
As for leaving America for Europe: good luck with that, and don’t let the door hit you in the ass on the way out.
Well, my only thought on the results of the election is that the Black Swan event has been established, the eggs have hatched and there is no turning back whether we like it or not. The Republican should Pass EVERY bill that Obama/Dems send to House. At the end of four years the people will have seen the results and can vote again. I kind of truly expect the Dems to push to allow Obama to run for a third term.
Harry if I did not know you were a New Yorker and Jewish, I would actually think you were depressed and be worried about you. But I know better.
That’s right, raise taxes, cut spending or print more more. Let’s not grow the economy to raise more revenue. That just never figures into the liberal equation.
No Harry, stocks are falling because Obama will do nothing to boost the economy and everyone including you knows it. I suppose things will have to get much worse before we clean up our act. And things will get much worse, around the world and in America. If you think things are bad now… in another 4 years it will most likely be doublely worse… that’s my stock tip of the day.
I have trouble with the term entitlement. I have been self employed for thirty years, as such I pay twice the employment tax….once for myself and then once for my company that employs me. The term entitlement has the connotation “sense of entitlement”, which I believe is simply government speak, and will end up as an excuse for future cuts.
Don, being self employed myself for over 7 years I understand the sentiment. I just want to point out that *everyone* pays the same employment tax – the fact that an employee only “sees” half of it on his check stub is just a sham perpetrated by our government. (Because as an employer you don’t count just “salary” as the cost of hiring someone; it includes other costs such as half the employment tax.)
The other thing to point out is that “employee taxes” do not entitle you to SS/Medicare, they are simply taxes, like any other tax, and the money is already spent. In addition, congress has ruled that SS/Medicare is an entitlement like Welfare is an entitlement – that is, the government is under no obligation to pay you anything and they can change the rules any time they want.
wrong harry… with the black, hispanic,union and female vote either beholden to or mesmerised by the democrats, romney never had a chance
Of course of course, and as we all know “those people” should not count, because the only true American is White, Male, and Non-Union.
Those are your words Bruuno, not smoke’s. Smoke says who are mostly democrats, and you make it a racist comment with your limited imagination.
“Beholden or mesmerised” you say, Smoke? Why? Because they actually address their needs too? Is that not what “representation” is about? The Republicans platform seems to exclude most of those who do not agree with them. They say less government but they want to legislate what goes on in Americans’ bedrooms and women’s wombs. They say fiscal responsibility but they continue to create the largest government agencies with most Republican administrations. Dept of Homeland Security anyone? Their message is inconsistent with what they party stood for. Abe Lincoln is probably spinning in his grave.
Actually he did. A a couple of weeks ago, I wrote that he’d win by a landslide. And I thought he would. But he didn’t do what was necessary in the last few weeks. Obama did not have those groups tied up.
Harry, you seem to expect Romney to play the game honestly, but you don’t expect the same from Obama. You want details from Romney, but not from Obama. You claim that Romney wanted to reduce taxes on the 1%, which he denied multiple times. Then you claim that Romney was the president we need, but you voted for Obama, and more gridlock. Maybe that makes sense in Australia, but it is completely illogical.