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Pragmatic Capitalism

Practical Views on Money & Finance

5 Risks Besides the Fiscal Cliff

Barry Ritholtz has really been beating the table on the fact that there’s more to the current macro story than the one story everyone appears focused on – the fiscal cliff.  In a story yesterday he outlined 5 other (equally important) concerns:

“As we discussed last night, it behooves investors to consider what else is driving equity markets. I can think of at least five factors:

1) Earnings are the weakest in 3 years

2) Portfolios have been poorly positioned for higher Capital Gains and Dividend taxes

3) Europe crisis unresolved, and getting worse

4) The 17% rally in first 3 quarters had markets ahead of themselves

5) The decreasing impact of Federal Reserve QE.

The fiscal cliff amounts to about $600 billion in friction spread out over the course of 12 months. Fair estimates are that it will cost about 0.50% off of GDP, now estimated to be about 2.0% for the calendar year 2013.

I submit that these other factors weigh at least as much, if not more, in the markets current action.”

So now the question remains – wall of worry for the market to climb or risk that are not yet priced in?

Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC.Orcam is a financial services firm offering asset management, private advisory, institutional consulting and educational services.He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.
Cullen Roche

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