Does the election effect where we put money?

[ShortInSeattle]

I expect federal tax rates to go up somewhat. I'm giving my clients incentive to pay up in 2012, in advance.

Not investments perhaps, but a bit of income shifting to the current tax year.

SIS

[youbet]

Quote:

Originally Posted by ShortInSeattle I expect federal tax rates to go up somewhat. I'm giving my clients incentive to pay up in 2012, in advance.

I'm more confident post election that fed income taxes on ordinary income, divs and cap gains will be heading upward, likely sooner rather than later. Therefore I'm going to add to the amount of IRA money I already converted to Roth earlier this year to reach at least the top of the 25% bracket.

I'm also looking over my div stocks and bonds thinking that municipals may be looking more attractive soon.

The past nine years have been very friendly towards investment income, a situation I knew wouldn't last forever. Forever ends in a few months IMHO.

And so be it........

[Tyro]

Quote:

Originally Posted by 67walkon Does the presidential election effect where anyone is putting their money? Just curious.

I think the midterm elections in '14 are probably more likely to have some possible effect on where I(we)'ll be putting money in the future.

Tyro

[bolt]

Everyone here is a crew of great folks. I've read here for years, not posting much at all. My experience and reading has me of the mindset that an election outcome of either consequence is already priced into the mkt beforehand. For the recent past the 02 crash, precipitated by events a yr earlier 9/11. The last crash to 666 on the SP500, 04 / 09, approximately a year after the meltdown began.

[Meadbh]

Yesterday's sell off means that some people are (over) reacting to the election, but I think it reflects the realization that now the fiscal cliff is looming. Expect volatility until it becomes clearer that this will be addressed, which of course it will be. Meanwhile the underlying fundamentals of the US economy are improving.

I am getting ready to do some rebalancing and will wait for the next bounce before selling some equities.

[Midpack]

Quote:

Originally Posted by Meadbh Yesterday's sell off means that some people are (over) reacting to the election, but I think it reflects the realization that now the fiscal cliff is looming. Expect volatility until it becomes clearer that this will be addressed, which of course it will be. Meanwhile the underlying fundamentals of the US economy are improving. I am getting ready to do some rebalancing and will wait for the next bounce before selling some equities.

I hope you're right, though the cliff is self-imposed, and there have been several past "cliffs" that were hyped by the media only to be easily pushed off/delayed by Congress.

Remember how terribly urgent the debt ceiling crisis and then the super-committee were, only to pass almost as non-events? The media couldn't seem to talk about anything else leading up to those "cliffs," and then when the supposed deadlines came, the story mostly evaporated...

[Meadbh]

Quote:

Originally Posted by Midpack I hope you're right, though the cliff is self-imposed, and there have been several past "cliffs" that were hyped by the media only to be easily pushed off/delayed by Congress. Remember how terribly urgent the debt ceiling crisis and then the super-committee were, only to pass almost as non-events? The media couldn't seem to talk about anything else leading up to those "cliffs," and then when the supposed deadlines came, the story mostly evaporated...

If you can access this video from TD Bank's chief economist, you may find it reassuring....

https://www.tdwaterhouse.ca/video/in...ortal=1&id=321

[Walt34]

Quote:

Originally Posted by MichaelB Looking at my food bill, I've been putting a whole lot of our money in my mouth, and washing it down with wine ...

Now that's a sound investment!

[antmary]

I am not going to change course...I am happy with our asset allocation.

[Midpack]

Quote:

Originally Posted by Meadbh If you can access this video from TD Bank's chief economist, you may find it reassuring.... https://www.tdwaterhouse.ca/video/in...ortal=1&id=321

Not really. As the TDW economist said, they could just kick the can down the road again. If history is any indication, that's what they may do, where I wish they would just deal with the debt/deficit long term and get it over with. Having the fiscal imbalance hanging over all of us, business and individuals isn't helpful. If we know exactly what sacrifices (Federal revenue & spending) we all have to make, we can plan accordingly and move on. Everyone who has actually looked at the numbers knows what has to be done in general, it's just ironing out the details which will require compromise and sacrifices from everyone.

I also meant that nothing really has to happen on Jan 1st, the cliff is self-imposed and changeable, though I expect the media to act as though something really has to be done by Jan 1 just as they did with the debt ceiling and then the super committee. In both those situations, all the supposed apprehension wasn't real. Regards...

[clifp]

Quote:

Originally Posted by Meadbh Yesterday's sell off means that some people are (over) reacting to the election, but I think it reflects the realization that now the fiscal cliff is looming. Expect volatility until it becomes clearer that this will be addressed, which of course it will be. Meanwhile the underlying fundamentals of the US economy are improving. I am getting ready to do some rebalancing and will wait for the next bounce before selling some equities.

I am not sure that it is an overreaction. I think the election which basically maintains the status quo, increases the likelihood that nothing will be done to deal with either the short term or long term fiscal problems.

The expiration of the Bush Tax cuts alone dramatically changes the investment situation, much less all of the other issues.

In my case I have a portfolio heavily invested in dividend stocks. Over the last few years, my formerly unloved and sleepy dividend stocks, have become the hot new girl in school, gained popularity and the price has risen. In many cases to levels which I think are too high on absolute basis but not necessarily on a relative basis to other investments.

The tax cuts expiring means that dividends are now treated as ordinary income. In fact since the preferential treatment for dividends was not part of the original tax cuts but came about in 2003 (I think) law. There is a reasonable chance the Congress will drop it all together.

Now normally, I'd look at stock with a 4% yield at this time of year and think. Is the price above my target? If yes (and it generally is) I'd say is there an alternative investments that I can make that will provide me an after tax income stream greater than the stock. Right now after accounting for the 15% capital gains tax the answer is generally no.

However, if I think it is likely that dividends will be treated as income the numbers change. Now suddenly the 4% yield which was 3.4% after tax now only provides an a 2.88% yield for a 28% tax bracket. That number could drop to just 2% for wealthy person in California.

Then I factor in that I gain an additional 13% if I sale this year as opposed to this year and suddenly holding the stock looks far less attractive even if I don't have an alternative investment. Then I ask myself have I figured out something the rest of the market hasn't, of course not. All the hedge fund manager etc know this. On the other hand do I think the Joe Blow who a Dividend ETF or mutual fund has figured this out or even some of the guys passively managing money. No I don't. So maybe I should join the "smart money"and sell now. Of course if they do extend the tax cuts I am probably better off holding, rather than timing the market.

Still I figure the expiration of the tax cuts means a roughly 15% decrease in the after tax cash flow of stock investments. (This is completely ignoring any economic effect like triggering a recession). If the election result increased the probability of them expiring to say 50% than a 7.5% or 1,000 point in DOW is completely justified.

[Sirka]

Quote:

Originally Posted by 67walkon Does the presidential election effect where anyone is putting their money?

No changes in my investments. Waiting to invest more into stocks after this correction.

[frayne]

Staying the course here.

[ESRwannabe]

Quote:

Originally Posted by 67walkon Does the presidential election effect where anyone is putting their money? Just curious.

No, no change for me. I've always invested in a tax efficient manner. I've always used my retirement accounts and my taxable account in what I consider to be the best way, in terms of what assets go where.

What it does do, is reinforce the importance of becoming financially independent ASAP. Romney might have been able to improve the economy, but with Obama, I think nothing is going to change much. The next four years will probably be like the last four years (or worse).

I feel pretty confident that I will be able to maneuver around whatever new tax-schemes get implemented. My needs are minimal. I can be very mobile if I need to be. I have useful work skills. Lastly I have been very proactive. I started saving aggressively ten years ago.

I will adjust to whatever happens. I feel very confident that I will be able to ESR by age 45, as I have been planning to do.

[rbmrtn]

I guess it depends where you are starting from. I don't anticipate much of an impact for myself. I plan on maintining my div/interest below the 15% bracket. Since I'm already in the 15% level I don't see any additionl impact. If the big boys sell off the dividend payers I plan on buying some from my shopping list. Also depends on much of your dividends were qualified as opposed to ordinary.

[M Paquette]

Quote:

Originally Posted by ejman Actually, Oregon voted DOWN it's pot decriminalization proposal. It doesn't really matter though we already have "medical" dispensaries everywhere and the climate here is so ideal for growing the little herbs that the mexican mafia has moved into the forests and have elaborate plantations going on. Be careful with that little hike in the forest around these parts

Huh. "the mexican mafia has moved into the forests and have elaborate plantations going on"

Gosh. I wonder who funded the campaign to vote down legalization? Golly. Having law enforcement keep down the competition and provide that informal crop subsidy sure is handy...

[NW-Bound]

I did not know about the MJ propositions in OR, WA, and CO until this thread. And being the inquisitive type that I am, I have found a site that compares the 3.

Comparing Marijuana Legalization Measures In Oregon, Colorado, And Washington | The Weed Blog.

While CO allowed small amount of cultivation for personal use, WA did not, and OR had no limits. If the OR proposition passed, a resident could grow acres if he wanted, as long as he did not sell it and only gave it away. Yeah right! Sales would be allowed only to the state, which then resold it to individuals.

Could it be that the "unlimited personal cultivation" was what killed the proposition?

Anyway, regarding Mexican drug cartels, some Web sites I found said that the Mexican gangs would just stop smuggling/growing MJ and switch to other drugs. As long as there are Americans using drugs like cocaine and heroine, there will always be money for them to make.

Back to the OP, where do we put our money again?

[eytonxav]

Since nothing changed after the election, I took some $s out of equity side. I see a potential market decline due to impending fiscal cliff and gummit gridlock, which I suspect could be worse than the debt ceiling crisis back in August 2011. Hope I'm wrong, but I'd rather sit this out at a lower equity allocation until we are out of the woods, which I suspect may not be known for another couple of months.

[HFWR]

Quote:

Originally Posted by DFW_M5 Since nothing changed after the election...

Yep

[NW-Bound]

Surely, nothing has changed.

And the market hates uncertainty.