Posted December 23, 2012 9:01
The fiscal cliff is only 10 days away and we still don’t have a deal. Both sides are on their holiday break and will come back this Wednesday. At that time, Congress and the President will have five days to work out a deal to save the country from going back into recession. The effects that the fiscal cliff has had on the market are already evident. From the time of the election to Thanksgiving there was a pretty significant pullback in the market due to fiscal cliff fears. Just this past Friday, the market fell around 1% due to fear that we might actually go over the fiscal cliff.
Just a couple of days ago, most people expected that there would be a deal. But recently, with the so called “Plan B” being rejected by both parties, the feeling on the street has gone from relief that there would be a deal to fear that there wouldn’t be a deal, literally in 24 hours. There is no doubt that the failure to reach a deal would wreak havoc across all markets and would leave us with a pretty dreadful year to come.
What you should take from the whole fiscal cliff debacle? What you should take is that in this kind of volatile market, where just a single rumor can move the market a few percentage points, is that it is always smart to be defensive and be safe when trading through this turbulence.