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A friend mentioned that their CPA had warned them to jettison all of their growth funds and growth stocks because the fiscal cliff's imposition of higher capital gains rates would drive this investment category down in value.

Look. The fiscal cliff, if we jump off it, will not leave us splattered on the desert floor like so many Wylie Coyotes. U.S. Sen. Sheldon Whitehouse pointed out in an NPR interview that it will take months, if not years, for the effects to be felt. In the meantime, some of what we determine to be the more damaging aspects of the rise in taxes or the drop in expenditures will have time to be corrected -- selectively.

Any knee-jerk reaction to a single component of the vast matrix affecting stock prices is usually self-defeating. Witness the fact that we have had a steady barrage of things to worry about all year -- election results, Europe, more housing defaults, Syria, China's slowdown, etc. In the face of this persistent "wall of worry," the U.S. stock market has risen by 15 percent, Europe's by 18 percent, and Asia by 12 percent.

What could possibly explain the disconnection between hopelessly bad news on many fronts and the inexplicable rise in equity values throughout the world? For one thing, generally rising stock prices have since been held in check by persistent fear. Those trillions of investor dollars sitting in money market funds earning nothing and losing 2 percent per year (thanks to inflation) could otherwise have been boosting stock prices by greater amounts since the crash. Instead, highly profitable U.S. companies having their best years, overall, since 1942 were available at lower stock prices than the historical relationship between company profits and equity values.

What the numbers for 2012 tell us, then, is that the forces of good have trumped the voices of doom -- at least for the moment. Supporting the rise has been a resurgence of both the housing and automobile markets, increased consumer spending, persistently low interest rates with little sign of any immediate increase, more domestic manufacturing as foreign sources start costing more, and a shift in energy costs due to solar installations and cheap natural gas.

The value of stocks is never in lock step with the intrinsic value of the companies they represent. A company can be chugging along making record profits, like many were doing in 2008. At the same time, its stock can be tanking because of the public's panic and lack of demand for stocks overall. Therefore, it is impossible to make accurate short-term predictions of what the market will do in the immediate future. In my experience, nobody does it consistently over sustained periods of time.

We need to recognize that only our own circumstances can be a meaningful factor in selecting an investment mix. Markets in the short term are wildly unpredictable, but in the long run, we know that stocks will tend to earn around 10 percent per year.

A 50/50 mix of stocks and bonds will earn about 7 percent per year and will represent about half the volatility of an all-stock portfolio.

People like the popular Bob Brinker (whose weekend financial show is broadcast on over 400 radio stations) has gently suggested that people whose stocks have finally recovered might consider this to be a good time to rebalance -- which means taking a few chips off the table and adding them to the bond side of the mix.

The distinction here is that this is just a mechanical readjustment based on personal circumstances, introspection and simple arithmetic.

It is not some hopeless effort to distill the huge matrix of market forces into some decision about what to do next. Successful investing is personal -- not global -- which makes it pretty easy to succeed once we've defined our own terms and goals.