As the likelihood of Obama being elected increases, do not be surprised by a sell-off in the stock market. Those with positive long positions in the market. who might want to sell in the the next 4-8 years, will be selling stocks. There are two reasons, the first is to offset loses. The second is to avoid an increase in the capital gain taxes. It would make sense for them to sell now and buy back after 30 days (wash sale rule). The savings of 5 or 10% in taxes might offset any possible rise the value of the stocks, especially in the current economic climate.
Should Obama be elected, there might be a further sell-off. Those waiting to move losses to the next year might wait to 2009, hoping the the capital gain tax increases will not be made retroactive.
Monday, October 6, 2008
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What we need is our generation's economic equivalent of the Manhattan project.
For the past 8 years, we have ignored our greatest strengths. We have disdained reason and science. We have lived in an imaginary fairytale land, where home prices never went down, where inflation and unemployment were low, and economic growth was strong.
That turned out to be a dream based upon an illusion.
We now know that much of the growth of the past few years was based on these faulty premises:
-- That we could borrow our way to a better lifestyle;
-- That our financial institutions could speculate their way to profits;
-- That we could deficit spend our way to prosperity.
Common sense tells us that is not how you achieve economic greatness. We need to strengthen the economic engine of the US in every way we possibly can. To do that, the next president of the United States needs to take counsel from the wisest men and women in the land.
This crisis is bigger than the election, it's more important than either candidate. It's of great significance to the country, indeed, to the world. (Far greater importance than you would have guessed from the response from the White House).
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Speech over.
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That said, an obama administration WITH a Dem Congress are not going to call on great minds, but on their one very old idea: raise taxes. In turn, every state, county, and city will raise taxes. Missouri has often done so under the guise of "fees." Maybe before he leaves office, Matt Blunt should go to Washington with his tin cup just like Schwarzeneggar and Massachusetts is doing today!
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