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Author: oneinthespirit Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 265711  
Subject: Fiscal cliff Date: 12/4/2012 3:09 PM
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With changes in tax in 2013 what is your position on selling some stock holdings?
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Author: Fuskie Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 259774 of 265711
Subject: Re: Fiscal cliff Date: 12/4/2012 4:21 PM
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You tell me what the changes will be and we'll talk.

Fuskie
Whose portfolio is mostly in tax-advantaged accounts so whatever Congress and the President eventually decide (or don't) won't really affect him much...

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 259779 of 265711
Subject: Re: Fiscal cliff Date: 12/4/2012 9:13 PM
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I agree that no one knows what Congress will decide to do. So all of this is risky. But you have until Dec 24 to make changes this year. Congress probably will decide by the end of next week.

We do hear that some people are selling stocks taking profits this year in anticipation that capital gains rates will be higher next year.

Some are selling dividend stocks in anticipation that dividends may be taxed at ordinary income tax rates next year.

Some are selling defense industry stocks in anticipation of major reductions in federal defense spending.

Some fear that going off the fiscal cliff could produce another recession. That would impact all stocks, but it implies a defensive position. Cash or counter cyclical stocks. Recession should keep interest rates low and perhaps make bonds attractive, but a possible downgrade of the governments credit rating might cause lenders to demand higher interest rates--making bonds risky.

The major driver of the US economy is the consumer. Christmas sales have been going well, but that could change in the next quarter. Most at risk is probably the recovery of the US housing market.

Stay turned. We shall see how this all comes out.

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