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“Fiscal Cliff” Fears Overhyped? – By Laurie Itkin

Laurie Itkin

Hello SOTGC community,

Before I started The Options Lady, I worked in public policy and government relations.  I have lobbied Congress and over 30 state legislatures.  As an active investor, I am acutely aware of how partisan bickering over the federal budget, deficit, spending cuts, tax increases, and the debt ceiling can wreak havoc with the stock market.

The debacle this past December concerning the “fiscal cliff” was like nothing I had seen before.  Although I didn’t sell all my stocks and leave the money in cash like CNBC contributor Jon Najarian, I wasn’t buying more stock.  Remember, you want to buy low and sell high, not the other way around.  According to the following article, it appears that concerns that Jon and I shared might have been overblown.

http://www.chicagotribune.com/business/sns-rt-us-usa-fiscal-wrongbre91519v-20130206,0,343738.story

Despite the incredible bull market we are experiencing currently, I am hedging all my new stock positions by selling call options against them.  During January all my gains were capped, but I’d rather consistently eke out a small profit every month than have my portfolio be whipped around by the lack of Congressional  and White House cooperation.  For me, this bull market is simply the eye of the storm that’s going to hit our town in a couple of months.  Like it or not, active investors will have a front-row seat at the Congressional boxing match this spring.  Let’s hope we don’t get hit with too much blood.

Fiscal cliff

 

Photo credit: under30ceo.com

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