What’s your CPA saying?
Everyone seems to be very happy that the Dow has broken 14,000 for the first time in years, and the S&P 500 is north of 1,500. But the big question is; are the good times here to stay?
Many people today are very cautious, because they have been burned often in the past with market corrections. Many people wonder; how do I know when the good times are over? When is it time to lock in my gains? When do I take the chips off the table?
Most people realize that we can’t just sit back and enjoy a good ride, because we’re not dealing with your grandfather’s stock market. The old market stock is very different from the one today. The old stock market was like taking the old Studebaker out for a Sunday drive with relatively little worries. Today, it’s more like a race day at the Indianapolis 500 with huge risks and danger at every turn.
Let’s take note of what some national experts out there are saying. We start with Mark Hulbert tracking insider selling. (http://www.marketwatch.com/story/insiders-now-aggressively-bearish-2013-02-06?link=home_carousel)
Mark tracks trends with insider buying and selling and in his words, “insiders are aggressively selling.” Insider activity (corporate executives buying and selling their own company shares) are one of the best indicators we have of future market direction. The huge percentage of insiders being on the sell side should tell investors to tread carefully.
Next, we have junk bond warnings from Yahoo Finance (http://finance.yahoo.com/blogs/breakout/junk-bonds-warning-stocks-fall-153404184.html).
Junk bonds often move in tandem with the stock market, but lately, they’ve been going down while the markets have been going up. In the article, Jonathan Krinsky, chief market technical strategist at Miller Tabak, is quoted as saying, “It just makes you wonder, why is the S&P still rallying?”
And both Bill Gross and Jim Rogers (two legendary investors) are predicting huge trouble ahead for Treasuries. (http://www.bloomberg.com/news/2013-02-07/u-s-30-year-bond-losses-pass-5-as-fed-price-gauge-rises.html)
With all this going on, it’s no wonder so many people are moving to cash. Right now you might be thinking; wait a minute, Brian. Did you just say cash, as in make no money on my money? Why in the world would I want anything to do with an investment where I didn’t make a good return?
Well, for whatever reason, there is a lot of money moving to cash right now. Maybe these people are thinking that since they have made a few bucks in the market; now is the time to cash in on the gains before they get “corrected” right out of those gains?
But what are the tax consequences if you sell right now? Better call your CPA, right? Oh, wait a minute; they are swamped right now doing tax returns they have no time to do a consultation.
Well then, better call your financial advisor. But wait, they don’t understand all the tax consequences, they’re not CPA’s.
Seems like you might be on your own for now; it also seems like maybe that arrangement is not in your best interest. Maybe you should look for a company that can give you great CPA and financial planning advice no matter what time of year.
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