Goldman Sachs: Beware of Looming ‘Fiscal Cliff’ for Stock Market
Moneynews reports today that Goldman Sachs is advising their clients to sell stocks now, before the inevitable, and drastic, fiscal change at the end of the year.
Come December, the country faces a fiscal cliff as Bush-era tax cuts and other tax breaks are set to expire, and automatic cuts to public spending are scheduled to kick in. All of which leads Goldman Sachs to believe that the economy could slide into a recession early next year.
The economy could be spared with an intervention by Congress, but David Kostin, Goldman Sachs’ chief U.S. equity strategist warns, “Don’t expect Congress to act in an election year.”
In 2011, the country was nearly thrown into default and stocks plunged when Congress waited until the last minute to raise the government’s debt ceiling. And with the way things are looking, a repeat performance is likely.
The political realities and last year’s precedent suggest that the probability that Congress fails to address and settle the fiscal cliff is greater than what most investors seem to believe.
The last time Congress failed to reach an agreement that satisfied all factions, the S&P 500 plunged 11 percent in 10 trading days.
Do stock markets face a similar fate this year? With Goldman Sachs sounding caution and urging their clients to sell stocks now, it’s a great time to consider diversifying outside of traditional paper assets. Learn how you can protect yourself and your family from the decline many are forecasting – call (800) 355-2116 and talk to a Birch Gold specialist today.economy, stock market