By the time this column hits the newsstands or the Internet, we, hopefully, will know who our next president will be. Whoever wins the election will find a place not dissimilar to the SEC East winner. Everyone wants to win but look what you face next.  Solving the looming fiscal cliff presents more problems than stopping Alabama. 

Making predictions is especially perilous particularly when it involves the future. While my crystal ball remains in the repair shop, I trust the words of Winston Churchill that Americans will do the right thing … after they have exhausted all other options.  Hopefully our elected officials will not kick the can down the road.  Don’t forget we elect these guys.

Hyperbolic news about the fiscal cliff worried a financially astute Bay County client. They wondered if putting everything in a money market fund would be appropriate. John Prine admonished us in Spanish Pipedream to blow up your TV — good financial advice.  Perhaps changing the channel or turning it off (my idea) works better. Don’t base your investment decision on what some talking head says.

Your personal financial situation dictates your investment strategy. In their case, retirement is 25 plus years down the road so, more than likely, they will endure two or three recessions. Going to cash in preparation for the next recession means you have to forecast when to reinvest, a skill often touted but seldom mastered.  Many went to cash in 2009 and missed a great opportunity to recoup losses from the Great Recession. I reminded them how we reduced their stock allocation last summer. If the market goes down next year and they continue to invest in their employer’s 401K, then they can take advantage of lower prices. 

Investment plans do not fail, investors fail; either they become too aggressive when times are good or they abandon their plan when things look bleak. Have a plan, stick with it and remember market timing is a fool’s errand.

Funds earmarked for the next two to four years should never be invested in stock mutual funds or ETFs. The market does not care what your needs are. A house down payment, an emergency fund or college tuition are examples of short to intermediate term goals where principal security trumps everything else.

Congress, no doubt, will extend the Bush-era tax cuts, in part or totally. This means we have to pay for them.  James Kwak and Simon Johnson in White House Burning suggest reducing spending gradually in order to avoid shocking the economy into another recession (see Europe). Politicians like low taxes and high spending because that keeps people happy.

Solving the fiscal cliff dilemma is as difficult as beating Alabama; neither is impossible though. 



Leonard Hortick, who runs Lion Properties LLC in Colorado, responded to last week’s column assuring me his firm’s (and his capital) is at risk. He attached a column pointing out how real estate is different from hedge funds and his fund qualifies for favorable capital gains tax rates.  Decades ago, an Auburn grad/banker told me as we watched two bird dogs hunt quail (not pen-raised birds), nothing is more dangerous than raw land, a prescient observation. 

Buz Livingston,CFP, is a fee-only certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Contact him directly at 850-267-1068 or at