Ask an expert: Should we fear the fiscal cliff?

MSN Money's Charley Blaine provides a reality check on the budget talks.

By MSN Money Partner Dec 12, 2012 3:57PM

While the fiscal cliff has been all market pundits would discuss in recent weeks, the Federal Reserve actions took center stage Wednesday.

 

Stocks rose to seven-week highs after the Fed announced further stimulus to boost the country's struggling economy and reaffirmed its commitment to low interest rates until the U.S. unemployment rate falls to 6.5%.

Does that mean Thursday's headlines will no longer mention the fiscal cliff? Not a chance. But in this video, MSN Money's Charley Blaine provides a reality check on budget concerns and related investment strategies.

Steve Allen Brand X Corbis


Politicians, economists, market experts and anyone who found an audience have been promising financial calamity if elected officials fail to reach a budget deal by their self-imposed deadline. Can it really be all that scary? And what can average investors do to protect themselves?

 

No doubt, the fiscal cliff is worrisome, Blaine says. The tax increases and spending cuts can have a real impact on the economy. But concerns may be exaggerated, and officials can still have ways around it.

 

And the smart investment strategy, assuming the parties reach a compromise? Blaine suggests to stick with sound and predictable companies.

 

The discussion about post-election trading strategies continues over in MSN Money's Facebook community.

10Comments
Dec 13, 2012 3:11PM
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Tyler Durden for Treasury Secretary !  There is more Hope and Change that you can Believe in !!
Dec 13, 2012 2:54PM
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The can will be kicked down the road again, the debt ceiling will be raise again and the U.S. will continue to borrow.   They will reach a compromise and the fiscal cliff will be much, much bigger next time around.  

Why not just go over the cliff now and feel the pinch instead of later because next time its going to be worst, speaking of the debt, economy,  and the purchasing power of the dollar.




Dec 13, 2012 2:10PM
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REALLY KINDREDHEART! what does it take; lets KISS, if you earn $1000 dollars and you spend $1100, and have your VISA card carry the deficit, how long until the amount on your VISA is max'd out, and the INTEREST is USING up more and more of your earnings!!!

I have 2 neighborhood friends that would be considered RICH by the DEMs definition; they both won SBs; one a plumbing outfit, he has a nicer home, nice truck, boat and a trailer, that he rarely uses because he works 65-70 per week.  His wife spends a huge portion of her day, do the accounting books, and getting new business.  When in the Heck did you (or those that collect the freebies---chill out with that comment, you know who you are if its you) work EVERYDAY for the last - say - even - 2 years?  I doubt it?

Look I HATE the money mongering super rich---and the richest of the bunch OUR POLITICIANS. take a look KINDRED, your precious DEMs are HYPOCRITICAL RICH FAT CATS.  HOW EZ IT IS TO PREACH TO OTHERS, WHEN YOU HAVE NO DAMN PLAN TO HAVE THE SAME RULES APPLY TO YOURSELF...

Dec 13, 2012 1:55PM
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The democratic party sure has some people brainwashed.  What a bunch of rubish.  Don't you think it is time we as a nation began to heal the wounds and gaps caused by this administration and started to think about what we are doing to our country?  You cannot spend our way out of this mess so deep cuts in federal spending must be done.  Now is not the time to place heavier burdens on any taxpayer whether "rich" or "middle class", and since when has it become necessary to place each other in classes?  With all of us living longer, don't you think it is about time we adjusted the retirement age for social security and medicare?  Obamacare will do more fiscal damage to our country than all the wars of the past combined.  But you voted for this "fiscal cliff" by reelecting the same leaders who didn't have the where withall to get us out of the last administration's mess.  So live with it and stop the name calling.
Dec 13, 2012 11:44AM
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Buying everything right now....Is buying most on the high end of their 52 weeks....

Maybe a few DIP possibilities ??

And some with good fundamentals and guidance, going forward..?

With a reasonable settlement on the "cliff", I would think most of the better equities, could pull off another 5% in a short term rally...IMO.

 

But the biggest gains have been over the last 3 years, now some of the "cash hoard" holders are increasing divs going forward, OR awarding shareholders with a "one time" return of capital..

To thwart the tax increases on on Cap. Gains or Div increases. going into 2013.

All that have been waiting these last couple years, may get in now, but don't expect stellar appreciation unless you get lucky or a stock has been beaten down because of a bad quarter report.

Dec 13, 2012 10:49AM
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Unemployment down, Inflation in check, gold down, It is party time.  Oh yea this is Street speak.  Best time to buy?  Right now. It is this constant barrage of BS attempting to paint a rosey picture most of us know to be untrue that drives me batty. Really I mean really.  Nearing 20 trillion in debt and another secret loan to the EU for 16 trillion and an inverse interest to inflation and all is good.  I think America is in spin cycle.  We are seen as the dopes we are for putting up with this nonsense.   We are walking on a knife edge where inflation is exploding and we will be unable to raise interest rates to control it because of our debt payment.  I believe the plan is to control inflation with unemployment.  The poorest working Americans always end up footing the bill.  Now where will we begin regenerating a tax base?  Certainly not with the rich paying more.  I just think someone else wants my money.   JMHO
Dec 13, 2012 9:56AM
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The Feds spoke and the Dow plunged with every word. No matter who wins, we the taxpayers will lose, we will pay more, the politicos will spend (waste) twice as much, same old stuff another day.  They will cut "entitlements" for Medicare and Social Security first which will hurt the eldery and disabled the most, sounds right, take it first from those who cannot defend themselves, how noble. Don't see them cutting their own salary or benefits do ya??  The media loves chicken litle and the sky is falling so we cannot believe what we read or hear but we will believe the impact on the wallet especially those of us in the average to below average income brackets.
Dec 13, 2012 1:44AM
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Wake up America

If the president gives into any of these outrageous demands from the Republicans

In their implacable obsession to make the rich, richer on the back of the middle class, many of us, friends, relatives, and neighbors that are hard core Democrats are saying we will for ever lose our Democrat Base. Its also obvious the Rolling Over of the Democrats one more time on the ridiculous, insidious, and inflexible demands from these fastidious people, wanting more bartering in their favor will terrible undermined the chances of Mrs. Clinton to run for president, and gain the presidency in 2016! We have suffer enough economical stagnation for many years  from the dismal political, and erratic socio-economical policies of Bush, and their dismal abuse of the people, in wars, unpaid taxes, lack of proper Big Business, and Banks regulations, disastrous economical expenditures that had brought us to this present fortuitous situation, to this living travesty of the present Fiscal Cliff. The loud voice from all the Democrats around here is that, we nearly lose the country to Bush economical debacles of 2008, we are ready to suffer some more pains not to tolerate any more further abuses of the House of Representatives Tea party, and Republicans in their relentless discard from the millions people’s hunger, and their perpetual discord putting our USA in chains against our wishes for food, and jobs any longer! This time it be much better, to win than losing our honor one more time.

Dec 12, 2012 7:15PM
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Who is this Charlie Blain??? Never heard of him....
Dec 12, 2012 5:15PM
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They should fire the Fed. We need inflation it keeps the dollar strong. What good is the dollar.if you can't buy anything with it. This guy is the biggest idiot. We need a strong dollar.
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