The other day a friend told me that his advisor was encouraging him to sell all of his investment assets to steer clear of the impending "fiscal cliff." The 'cliff' refers to dire financial consequences should our Congress fail to act on certain measures before the new year, any one of which has the potential to derail our economy. They include $1.3 trillion in automatic government spending cuts (most aimed at defense, arguably the more productive part of government spending) set by Congress as a failsafe measure should they be unable to cut spending through their normal legislative processes. The Bush tax cuts are set to expire this year unless Congress reinstates once again. A slow economy is an awful time to raise taxes. Additionally, significant tax and fee increases are set to begin next year, particularly aimed at investors as part of Obama-care. Further impeding the flow of capital investment through higher taxes and fees, again is the wrong thing to do during a slow economy.
