| Two factors control the
broad, intermediate trend of financial markets. |
| 1.) Interest
rates: As rates -- and the perception of their direction --
rise, markets decline. |
| 2.)
Taxes:
As rates -- and the
perception of their direction -- rise, markets decline. |
|
US Democrats have stated
that if they gain power -- especially the US presidency -- tax rates
will rise. The Federal Reserve Bank has stated that it is
vigilant and operating with a bias toward controlling inflation by
raising rates to stave off inflationary trends. |
|
It is not wise to buy
financial assets when interest rates and tax rates are poised to
rise. It can be wise to sell holdings and go short. |
|
One rule to avoid losing
money: Do not go long when interest rates and / or tax rates are rising. |
|
An economic phase
wherein politicians are unable to raise tax rates is when deflation
is a primary concern. |
|
An economic phase
wherein tax rates are not likely to rise is when the world is in the
midst of a global credit freeze, rising unemployment, and a decline
in nearly all business activity. |
|
Of course, within
a phase manifesting those features, business is not increasing its
profits, a larger-than-normal portion of businesses will fail, and
asset prices will tend to decline. |