Will you change your portfolio for "fiscal cliff"

[janeeyre]

I have been reading conflicting reports on investing for the fiscal cliff. Here is one article.....
Retiring on the edge of the fiscal cliff - Robert Powell's Retirement Portfolio - MarketWatch.

Are you making any changes? I did put an extra $20,000. in my money market.

 

[RE2Boys]

Only thing I've done in preparation of "fiscal cliff", if it happens, is to harvest some long term cap gains to lock in a 0% tax rate. Continuing to do Roth IRA conversions to use up any remaining 15% tax bracket. And put in stop orders if my dividend players take a sudden drop in value. 'Bout it.

 

[brewer12345]

I piled up cash earlier this year, mostly based on my view of valuations. I have now started buying a few things i thnk are too cheap. Other than that, I have ignored the Washington circus.

 

[FIREd]

I piled up cash earlier this year, mostly based on my view of valuations. I have now started buying a few things i thnk are too cheap. Other than that, I have ignored the Washington circus.

Same for me.

 

[Nords]

I piled up cash earlier this year, mostly based on my view of valuations. I have now started buying a few things i thnk are too cheap. Other than that, I have ignored the Washington circus.

That sounds like good advice regardless of a fiscal cliff or a valley or a ski jump...

 

[Midpack]

Nope. There's no fiscal "cliff" to begin with, it's self imposed and they can push it back just like they've skirted other (media hyped) deadlines in the past. Remember the debt ceiling and super committee imperatives? Yeah right. They'll need to come to grips with the debt/deficits sooner or later, but as for any actual date cliff, hogwash...

 

[donheff]

I liquidated some equities a while back so I have most of next year's cash already out. Hopefully, things will normalize by mid year. Or not.

 

[bizlady]

We also cashed in some long term gains to lock in a 0% tax. That resulted in us having 3 years of cash (one full year of which will be "pulled" for 2013) instead of 2, but we are pre- 59.5 for a few years yet, and will use that cash in year 3. Given the environment, we are comfortable with this.

 

[Ed_The_Gypsy]

Preparing to rebalance (it is the end of an election year), I sold some equities. Since it took several days for the cash to appear in the MM account, I started to think that I will wait a little while to see what happens. There is a 50% chance there may be a buying opportunity coming up. I haven't had this much cash on hand for a long time. The worst thing that can happen is that my target equities go up. After this year's run-up, that would not feel too bad.

Still targeting 100% equities, 50/50 US/non-US.

 

[frayne]

Staying the course.

 

[obgyn65]

No.

 

[pb4uski]

Only thing I've done in preparation of "fiscal cliff", if it happens, is to harvest some long term cap gains to lock in a 0% tax rate. Continuing to do Roth IRA conversions to use up any remaining 15% tax bracket. ....

+1 All I am doing is harvest long term gains to the extent that I can pay 0% tax and will reinvest and effectively just increase my cost basis at no additional cost and reduce future gains (compared to doing nothing). That, and normal rebalancing to my AA which includes a 6% cash bucket (~ 2 years expenses) and the rest is 60 stock/40 bonds; so effectively 6/56/38.

 

[heeyy_joe]

I agree with most on here that it's not a big deal. It's time to do your tax planning; only make trades that are part of smart tax plan.

 

[foxfirev5]

No reason to change now

 

[MDJO]

No. More concerned about getting the asset allocation right as I head into retirement

 

[skyvue]

For the last 2-3 months I have been investing all my 401k contributions and match into the money market option. I am doing this in anticipation of a market correction around the end of the year at which time I hope to buy stocks at a discount. I thought it a better strategy for now, than dollar cost averaging in for the rest of the year. Didn't touch the vast majority of my assets though.

I am contemplating whether to cash in some more company stock options before year end. Any more income will drive me up another tax bracket but then again, I also expect my taxes to rise next year. I really don't need to the money right now though and my company stock has vastly outperformed the market (up 100% in the last year). I am torn between taking profits and leaving it alone as I expect my company to still outperform the market in the next few years.

 

[target2019]

I'll follow the insiders:
http://www.marketwatch.com/m/story/...t-rally-2012-11-21?pageNumber=1&allPages=True

This probably just adds more conflicting data, but the article is interesting.

I wonder if insiders carried out their strategy earlier in the year.

 

[ducky911]

I'll follow the insiders:
MarketWatch.com Mobile

This probably just adds more conflicting data, but the article is interesting.

I wonder if insiders carried out their strategy earlier in the year.

That sum up my gut to a tee. I think the shoppers will tell the story of how things are going in the next week.

All of my past november moves have been spot on.

I finished my year long project to get to a balanced portfolio yesterday with the final buys. I had also bought in early summer, with sales in april and sept....now I will nap while my portfolio is in the oven....next rebalance is april 2013.

 

[gomo]

No changes, but will continue to buy when something catches my eye.

 

[janeeyre]

I know I have a lot to learn about finance. So, I don't understand how you can pay 0% tax on long term capital gains. Can you give me an example. Thanks

 

[scrabbler1]

I know I have a lot to learn about finance. So, I don't understand how you can pay 0% tax on long term capital gains. Can you give me an example. Thanks

Try these numbers:

Single filer, taxable income $23k; of that, LT cap gains $5k. Because the marginal tax bracket is 15%, the LT cap gains is in the 0% bracket. The only income tax due is on the remaining $18k.

 

[mickeyd]

The Fiscal Cliff (FC) will be settled in December by those elected phonies in DC. I will make no change to my financial plan nor long term goals. My 60/40 mix will stay with me for a long time.

"Stay the course." Bogle

 

[Running_Man]

There seems to be agreement overall here that tax policy will have no effect that can be anticipated for stocks, but that one can still tell when stocks are generically "cheap" and buy or generically "overpriced" and sell, but that the actions taken in Washington have no effect on the market.
Recent evidence is that government decisions do have an impact on the markets. A quick look at the ASE - Greek stock market - down 70 percent from September 2009 to today - shows the type of impact that can occur when a goverment merely begins the process of trying to control it's spending.

As long as the US government continues 1 trillion plus deficits and buying all mortgages to hold interest rates for 30 years to citizens lower than any country could have obtained just a few years ago, then the US market will hold up fine. To me this argument is similar in nature to the one in 2007 on the housing market, that meaningful impacts from a decline in housing would never be allowed to occur. Both are well known, fully reported in the paper and generally not seen as a risk to the economy other than in theory that certainly the Fed and our government are well aware of and can control.

Most likely an agreement of some sort will be reached to kick the can at least for another year down the road, but that does not mean the agreement reached will be neutral for the outlook on stocks. I sold 50% of my stock holdings on October 21 when the S&P was at 1433, not too far from where it is now, because I believe the risk to stocks is very high in the coming months. I may miss a gigantic rally between now and early February, but I prefer to see exactly what is going to be offered going forward. Government policies are going to have a profound impact on overall business practices and conditions well into 2014, and I prefer to know what the financial rules are before I decide to play the game.

 

[yakers]

I sold 50% of my stock holdings on October 21 when the S&P was at 1433, not too far from where it is now, because I believe the risk to stocks is very high in the coming months. .

So did you go to cash or bonds? It does seem like a good time to get out of the stock market but doesn't seem like such a good time for bonds, they could take a hit. Based on avialable information about risk & return I figure on holding my AA since I can't figure anything better. I am 62 and my target AA is 60 stock/30bonds /10cash. It has worked for me, no idea about what will happen going forward.

 

[Running_Man]

I think it is most important to determine your own approach and stick to it, as that is the best way to ultimately be successful in investing. Otherwise you are adrift without a rudder and will ultimately for sure make a mistake and not even realize you are making a mistake.

However, for me and the non-rules follower that I am , I sold my shares in NS, thankfully in time has since imploded due to a decline in it's asphalt business, VFC which is a company I like very much but in valuation of dividend returns I let it go, AMGN same story, KMP, VVC a nice Indiana utility company I sold due to needing to sell something to get down by 50% and the dividend growth rate of VVC was the lowest in my portfolio. I kept MO, CHV, KO, ACN, and MCD.

With the proceeds, I used 5% of the total to increase my holdings in gold and silver, not because I think it is a great time to buy but merely to get my precious metal holdings in range with where I would like them and for now have the remainder in cash. If nothing comes up that I like I guess I'll be living on a 2.5% withdrawal rate, basically the same as the S&P500 dividend rate. But I would be very surprised if some good opportunities do not arise in the next couple of years before I retire.