You have to admit this current year has been a wild ride. One which has witnessed strong gains in major U. S. Indexes as well as scary drops like we saw in April and May.

Should You Stay or Should You Go

But Goldman Sachs Chief Equity Strategist, David Kostin, scared everyone straight with his stern warning about the coming fiscal cliff along with its possible impact on the domestic market and economy.

In his note to clients he just about begs clients to take money out of stocks and reiterates his position the S&P 500 will drop to 1250 (at that time it was 1418). His justification for these thoughts is the belief that Congress will do nothing before or after the election. This would cause payroll, capital gains, and dividend tax cuts to run out at the end of the year. It could also freeze a great deal of spending due to last years debt ceiling compromise.

Uncertainty Kills The Market

This uncertainty seems to be keeping a lot of investors in the pause position. Trading has been running at some of the lowest volumes in recent memory. Also the trading ranges within the market are staying pretty tight which may be an indicator investors are waiting for a reason for flight or value purchasing.

Is he right? Only time will tell but now is the time to have a plan in place to protect your portfolio as well as make the most of any short term corrections.

Matt Golab

Matt is an Investment Adviser Representative and the Chief Adviser of Aaron Matthews Financial Resources headquartered in Elk Grove, CA. To find out more about Matt and how he can help you click here.

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