Why Is the Market Down So Much Today?

Kevin Matras

Whether your candidate won last ight or not -- the election is over and President Obama won four more years.

So now, as investors, it's time to start thinking about what that means for the stock market.

I was going to ask in this forum, where the best places are to put your money. This is different than figuring out which stocks or industries are 'election proof'. The election is over. Now it's about which stocks or industries should flourish and which industries might not.

BUT, with the stock market down over 2% at the time of this writing -- a better question might be, is the stock market the best place to be right now? And, whether yes or no, why do you think the market is falling so much?

I believe it has to do with the fear of the impending fiscal cliff. AND SPECIFICALLY, what a potentially increasing tax rate might mean for investors.

For example, the long-term captal gains tax is 15% at the highest level. However, if that low rate is not extended, then come January, it will increase to approx. 20%, and at the highest level will conceivably rise to approx. 25%. (I say approx. because there are other provisions out there that impose additional taxes on capital gains as a result of the Affordable Healthcare Act.)

Nonethless, it's possible that tax rates on long-term captal gains (and short-term gains as well) could go up. AND, the same goes for taxes on dividends.

I've read that many advisors are advising their wealthiest clients to lock in those gains at the current rates and not risk having to pay the higher rates after the first of the year.

We'll see how this all shakes out soon enough.

But why do you believe the market is down so much today?

(And feel free to tell us what industries you think will be the best going forward.)

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