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Trading the Fiscal Cliff

Cliffs Of Moher #2

Cliffs Of Moher #2 (Photo credit: Jim Moran)

Depending on which newspaper or alternate source of news one pursues they can and will find reports that negotiations regarding the fiscal cliff are going well and almost finalized or that they are a disaster and nothing positive is happening.

One of the consequences of these positive and negative reports is that the financial markets reflect the confusion and react in different ways that no person can accurately predict. This leaves millions of investors totally confused and deeply concerned of their investments and their futures. Trading the volatility index (VXX) is probably your best bet since all the uncertainty will cause it to rise. Just be careful for a deal to get done which will make the Index reverse course quickly.

Probably the best and most popular advice the experts can offer is for the people involved to basically hold firm with their investment positions until things settle a bit and the markets get a hold of precisely how they are going to react. The fact of the matter is that in reality we are going to be trading the fiscal cliff drama in the very near future for some sort of a more consistent and stable path to follow.

The truth of the matter if they are willing to admit it is that even the most experienced investors have gotten burned attempting to find their way around the fiscal cliff and this again raises the point that it may be the time to hold steady until things get resolved.

Reacting to the daily happenings and rumors coming out of Washington can literally drive someone crazy. If the president smiles at the Speaker of the House reports will spread and agreement is near. If he frowns as they leave each other it is a disaster. The truth is that all of these reports are simply some one's personal effort to get an edge on their reporting competition and truly do not have any basis in reality.

The truth of the matter is that any and all of these reactions to outward signs or indications have no basis in what is really the truth of the matter.

None of this means that people should simply ignore or not pay any attention to what is going on in these fiscal cliff negotiations at all, but they must understand that until a committed agreement has been reached and announced, everything is simply speculation.

The bottom line is that people should pay attention to what is happening and when all is said and done, hold their representatives responsible for their decisions and actions.


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