I wanted to touch base with you during this very busy and hectic time. Early last month and especially the day after the election we took profits in equity positions based on a number of factors. We felt it was necessary to take a more defensive stance. Because we felt that much of the recent gains were based on the market bidding in a change in the white house and/or congress, which we did not get, we thought it timely to lock up some profits. Instead, in our opinion the worst case scenario has developed. We have more of the same. Additionally, our concerns were magnified on the day after the election with discussions about Germany’s economy slowing and by Greece’s renewed resistance to austerity measures. Also, later in the day it became apparent that the key participants in negotiating an attempt to avoid the fiscal cliff are still deeply divided. Unfortunately, the truth is that even if we get a compromise to avoid the fiscal cliff all solutions will be drags on growth – both decreased spending and higher taxes are significant problems for an economy growing as slowly as ours is.
We know that in some cases we will be triggering gains on a number of positions, but we also felt that any solution to the fiscal cliff will likely mean higher taxes on investment-related income such as capital gains and dividends. And don’t forget that Obama Care will begin to impose a 3.8% tax for high income investors starting January 1, 2013.
I want to keep this brief because I am currently in Denver at an investment and tax conference to discuss the implications of the current environment and the results of our election. I will discuss some of those implications in a correspondence that I plan to write next week. I thought it was important to keep you abreast of what we are doing in an attempt to protect your profits and capital as well as navigate a clearly changing income and estate tax environment.
If you have any questions or would like to discuss anything with us in more detail, please feel free to contact me. Also, look for my update soon.
As always, we appreciate your trust and confidence. Have a great weekend!
Sincerely,
Donald J. Miller
CEO/Principal
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in this communication may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
