While people have flocked to Bank Stocks for yield due to the illusion of recovery in home prices or stabilization, it may have been a bad move. Protect your principle, taxes are going up to 43 - 44% for many successful people, meaning the largest holders of bank stocks, mutual funds will get hit with the higher taxes, hence they will sell. Another factor, earnings are expected to decline over the next half decade. The 164% tax hike increase will likely result in very significant share price declines to return yields to their after-tax equilibrium levels. Instead of 2.4% current yield, you have to get 3.6% yield to offset the additional taxes at the personal level. Mind you this is in 2013, every year after that rates have to rise to pay for the ballooning federal deficit that baby boomers taking retirement at 8-10 million a year will inundate the fiscal capacity of irrational funding flow estimates. On top of this higher dividend tax, the corporations paying dividends will be asked to pay additional corporate income taxes and Obama health care taxes. Not a pretty picture, Corporations will cut staffing to make up for all the additional taxes.
Anyone holding stocks is going to experience pain. I would like to discuss alternate views, but based on realistic expectations and estimates, I am very discouraged. Can anyone offer me some encouraging signs, facts or humor on the situation we are in.