The key issue we are facing at present is Fiscal Cliff -
- If a deal is done in time then expect a short term rally, could be fast and furious
- If no deal in time then expect a swift decline as everyone wants to avoid bigger capital gains tax next year, could be fast and nasty
What does it mean for our Investments?
- 401k - Stay in cash or money market fund unless we get a deal. We might loose some gains but its better than loosing some capital.
- Stocks/ETFs - Considering market is currently in bearish territory and although it is improving, many stocks are not behaving as they should and have significantly broken down. In any case, if you remain invested then make sure you have STOP LIMIT in place for all your positions.
Stay alert and be cautious...