Congress made some permanent and some temporary changes to almost everything to avoid what became known as the fiscal cliff.
What does it mean for investors? Let’s take a quick look around the new landscape:
Tax rates will not go up and any changes to the tax code will be through changes in deductions. This shift in emphasis means some sectors and companies will be hit if and when there are changes in deductions.
Any attempts to reduce deficits will focus on the spending side. Entitlement programs will be altered for future beneficiaries; discretionary spending will take strong, selective hits; military spending will shrink for a decade, barring another war.
Winners and Losers
Not relevant. What you want are places in which to invest and/or generate income that will work for you regardless of current and future changes to taxes and spending.
Fracking is pushing U.S. oil production to multi-decade highs and insures a low-cost and multi-generational supply of natural gas. Winners are Terra Nitrogen (NYSE:TNH), US Steel (NYSE:X) and Martin Midstream Partners (NASDAQ:MMLP).
Apple (NASDAQ:AAPL) and its ecosystem thrived during the Great Recession and will thrive even as consumer spending is hit by increased payroll and health care taxes and trimmed government spending.
Other than AAPL winners are Corning (NYSE:GLW), Sandisk (NASDAQ:SNDK) and Verizon (NYSE:VZ).
The average car in the U.S. is more than 11 years old. Keep it simple — GM (NYSE:GM) and Ford (NYSE:F).
And, do not forget, part of this fiscal cliff fix is temporary. The debate on the debt ceiling, which must be raised before mid- March, has already begun.
Should be fun. And to make it profitable, pick those companies indifferent to what happens in D.C.