If Obama wins, what do you do with investments?

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If Obama wins, what do you do with investments?

Postby Rat Creek » Thu Oct 30, 2008 9:58 am

I am asking this seriously.

Stock Purchase- I participate in my company’s employee stock purchase plan. What this means is that after tax, I buy an allotted amount each quarter. The Obama plan is to take 28% of any gain I might make, if the stock goes up. If Obama wins, I will likely drop my participation because that seems like a heavy toll to pay, IF the stock happens to go up. Am I making a mistake?

401K Mutual Fund investing- As I see stock transactions dropping significantly when capital gains taxes go up, this will have a negative impact on the stock prices on the broader market. I don’t want to abandon the stock market, so long term, will I be better served to try to move funds focuses on stocks that pay dividends, and away from funds that look for growth in stock prices? A strong company that pays dividends will continue to reward share holders even if the stock price is pummeled. Am I looking at this wrong?

Other strategies you are considering? :huh:
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Postby goodkarmarising » Thu Oct 30, 2008 10:02 am

x
Last edited by goodkarmarising on Wed Jan 30, 2013 2:50 pm, edited 1 time in total.
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Postby GroundSwatter » Thu Oct 30, 2008 10:25 am

I don't know what company you work at or have stock in, but I would tell you first and foremost, even if Obama gets elected, don't freak out. He probably needs a year or so before that comes up in congress and ever passes across his desk.

Just keep an eye on what legislation is crossing the presidents desk. There is a fair chance a few dem's in congress could wake up and keep it from passing and who knows in a couple of years, congress may get another face lift.
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Postby SpinnerMan » Thu Oct 30, 2008 10:37 am

Obama is presumed to win with large majorities in Congress. Any impact is pretty well already priced into the stock market.

There is no reason to significantly change your plans. If you are far from retirement, everything into the stock market in a diversified way. I prefer total stock market index funds. If you are close to retirement, you should be in a less volatile mix of investments that will generate the income you need for your long retirement.

Definitely do not get too heavily weighted in your company. You don't want to lose your job and your retirement in one fell swoop. Any company can go belly up at any time with incompetent management.

I'm starting to consider buying some real estate. I will have my truck paid off in a month and my 20% equity loan paid off in a couple years. I'm think about taking this "extra" money and buying some real estate. Probably start small with some raw land with hunting potential :wink:
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Postby Rat Creek » Thu Oct 30, 2008 11:32 am

I may not have been very clear. I am very diversified in my 401K and self directed IRA (retirement accounts), and do not have stock with the company I work for in my retirement accounts.

The company stock purchase is outside of retirement accounts.

I may be thinking too deeply about this, but my thinking is that even if stocks go artificially low because investors will be punished for trading, the value of stocks that pay healthy dividends will be greater (though the stock price may not show it) because you will receive cash dividends that are reinvested in additional shares.

For instance-

Company XYZ’s stock may drop from $50 to $30, but if they pay a $5 dividend each year, you are still accumulating wealth.

Company ABC’s stock may drop as well from $50 to $30, but if they don’t payout dividends, you accumulate no wealth until the overall market returns, and that may not happen quickly if there is a 28% capital gains tax.

That is where my question was going. Would it be wise to look to diversify into funds that favor dividend paying companies?
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Postby Pumpgunner » Thu Oct 30, 2008 5:48 pm

You won't need it because if Obama win, the world will end within the year, and he will have changed the official language of the country to Arabic, which doesn't have a word for "stocks." The closest equivalent translates to "extra goat for future."
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Postby Rat Creek » Thu Oct 30, 2008 6:50 pm

Pumpgunner:

I had trouble keying my original question and later post without making light of things. The temptation is just too strong, but I really was curious what others were doing because when tax laws change this drastically in times like these, I am not sure we have any history to go by.

National healthcare, double in capital gains tax, recession, roll back of Bush tax cut, 700 billion bailout/earmark, potential govt control of mortgage industry. These things have never happened before, especially in combination.

There is a temptation to seek out tax free municipal funds. I just am not sure what a guy should be doing. Maybe nothing is the wise thing to do.

Or I could just wait for all the Free Stuff to start. See! Even I can't completely resist it.
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Postby semo88 » Thu Oct 30, 2008 7:15 pm

Watched a good bit on the news this evening. They ran the numbers on McCain’s tax plan versus Obama’s. Both were actually very similar when applied. The only difference was Obama’s gave a little more of a return to those making below $35K, while McCain’s gave a little bigger return to those making $35K to $50K (I THINK, don’t quote me on that salary range). The differences were very small, and other than that, both plans had about the same effect.
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Postby Pumpgunner » Thu Oct 30, 2008 8:53 pm

Rat Creek-Sorry, I didn't mean to make light of your post, I just can't resist sometimes. :biggrin:
Actually, I'm really interested to see where all this is headed too.
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Postby SpinnerMan » Fri Oct 31, 2008 7:44 am

semo88,

It's the spending and corporate taxes that will really hurt the economy.

Even CBS News says Obama's numbers don't add up.
http://www.cbsnews.com/stories/2008/10/29/eveningnews/realitycheck/main4557520.shtml?tag=rightRail;rightRailInner

You add that to a Democratically controlled Congress, or even the current RINOs and there is no way the spending cuts Obama claims will ever happen. Congress and Obama will not cut spending and they will not want a projected budget deficit in the trillion dollar range, so they will raise taxes further than Obama is proposing. Bill Clinton promised virtually the identical things as Obama and before inauguration he already ditched the plan because the numbers don't add up.

Corporation have to compete on the world market for capital. The U.S. is one of the highest cost markets (labor rates and tax rates) in the world. Increasing labor rates (higher minimum wage which automatically bumps many union contracts) and higher corporate tax rates will make U.S. corporations less competitive with their foreign counterparts. This will increase investments outside the country relative to inside the country. This will slow growth of the U.S. economy, slow growth rates in employment and income, etc. If these increases are too large, the rates could actually turn negative and we could see a deep recession.

If McCain gets out the veto pen and uses it frequently, it will help. This was one of Bush's big failings. No President wants to veto a bunch of his party's legislation. That is the boat Obama will be in. Do you think he will veto legislation coming from the Democratically controlled Congress if it isn't what he proposed during the campaign?
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Postby DuckinFool » Fri Oct 31, 2008 5:14 pm

I expect us all to end up on the government retirement plan that pays a whopping 3 percent before it is all said and done.
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