Stocks are up
Of course, today’s move to the upside follows last week’s strong equity performance.
So here’s what I think, folks: This is as good a time as any for investors to think long and hard about taking some profits off the table.
Why, you ask?
As my old friend Art Laffercontinually reminds us, the Tax Man is coming to town on January 1, 2011. Taxes are going up across-the-board. So investors should seriously consider selling into any stock market strength ahead of the tax deadline. Doing this will enable investors to lock in a lower capital-gains tax this year and beat next year’s higher rates.
It’s a lesson investors literally cannot afford to forget: If after-tax investment returns decline, because the key capital-gains tax rate and other investment taxes go up, the future value of stocks is damaged.
In other worrisome news, despite some improvement in consumer sentiment, U.S retail sales fell on Friday for the first time in eight months. That was something of a shocker.