I have lost both of my staff members in the last 4 days. Both had offers for jobs paying more money. How can this be? Here I thought that jobless rates were soaring, no one could find a job, yet my staff found greener pastures with bigger companies. How is this possible?
I would venture to say that the economy is not that bad, gas prices are down, and I still can't find anyone that is in mortgage foreclosure. My house is for sale and people are still shopping for homes. My Realtor advised me not to lower the price on the home.
So why is the stock market still going down? The news programs ignore the polls that show Obama in the lead. Obama has pledged to hike the capital gains tax rate. Anyone with a low cost basis should be selling their stocks. If you invested in a stock that cost $10 and is now worth $100, you will pay Obama's increased capital gains tax on the $90 increase. If he makes this ordinary income and you make over $250,000 (or is it $200,000), your tax rate could cost almost half of your profit. Sell it today and pay $13.50 in tax or sell it next year and pay $36 or more of it in taxes. The stocks value would have to rise nearly 45% to return your same $87 hat you can get for it today if you wait for the tax changes that are promised.
Smart investors are cashing in because they know that the market will keep going down then eventually back up. Once they feel the bottom has been reached, they will buy again. Sure they lose 15% of their purchase power to current taxation, but they will make that back up. If Wal-Mart announced that they were going to lower the cost of their merchandise by 5% each week through Christmas, people would be flocking to their stores. Same idea, for those savvy investors who don't mind taking the risk, they are going to buy stock on sale and plan to let their investment rise when everything rebounds.