Goldman Sachs: Get out before we reach the cliff

Posted: August 28, 2012 in Blog, Economics


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The Chief US Equity Strategist for Goldman Sachs has stressed to investors in his firm to get out of stocks before the “Fiscal Cliff” is reached.

He is not speaking of the same one we do, The ‘Big One” but of the end of the tax cuts that expire December 31 of this year.

That is the Payroll, Dividends and Capital Gains Taxes, but this is more than fat cats trying to make a buck.

A Lame Duck Congress and A possible Lame Duck President will be in office, the mandatory cuts will come about due to the lack of a balanced budget AND these tax “hikes” will come into effect all around the same time.

(Why do i parenthesis the “hike”, technically not a hike just going back to the Progressive level of taxation we had before where if you make money thats ok, just dont make too much that would be evil)

Last year when the Federal Government failed to reach an agreement on the Debt Ceiling the S&P 500 PLUNGED 11%.

After reading what i have for the past 6 months, looking back at old data and listening to voices that i trust in issues like this, such as THE SURVIVAL PODCAST.

My recommendations are this.

Start to move your stocks and bonds to a money market fund now, or at least have the option to do so very quickly.

What will happen is that sooner rather than later, the market is going to dive…and dive big. There will be massive stimulus to combat this, and probably in a shadowy unseen way, no TARP or public pronouncements, the market will stabilize, but at a much lower level than now, probably down 10-15% maybe even 20%.

there will be spikes up and back down as people try to cash in on stocks that were once much higher, to buy them at “bargain prices” then sell them when they gain a little value back.
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If you dont pull out early you may see a significant reduction in your retirement and investments.

Having them in Money Market Funds allows you to have a stable value, you wont make much maybe a few % or fractions of a percent, but for the time being you will guarantee your money is still worth its face value.

This isnt a long term plan, you will want to shift the bulk of this to tangible items of value, precious metals, commodities, food, etc.

The dollar will soon be recognized as inherently worth less than what it is said to be.

Im not a financial advisor or economist.  just my opinion, do your own research and do what is most comfortable for you.

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