With all due apologies to Joe Strummer and the Clash “Should I stay or should I go?” What to do about Washington? We now have another go around with Washington but we’ve seen this act before haven’t we? Politicians seem to prefer to be giving interviews on TV rather than working for a bipartisan solution.
Gaming how the issues of healthcare and the debt ceiling will be resolved are pointless IMO and the markets seem to be taking the Washington dysfunction in stride. Last night Bank of America lowered their 4th quarter GDP estimate from 2.5% to 2.0%, still a very long way away from a recession especially when you consider that the Washington michegoss may prolong the Fed’s easy monetary policy.
What we do know is that the underlying economy is improving and will likely continue to do so for a quite a while. We’re not in the business of forecasting as that’s another fools errand, the early warning macro data at present shows no sign of recession within the next 9 months.
Others have asked “Should we take some profits now?” Again I would still say “No”. To do so would likely mean the investor would create an additional capital gains tax obligation with the hope that you’re selling high and have the dexterity to buy near the bottom. In my experience I’ve never seen an individual investor pull it off due to the psychological release of selling a position and yet truly have the emotional strength to buy back in a again. Once again a very low probability event.
Be cool out there
Brad Pappas