Money managers urge calm in 'fiscal cliff' crisis
Posted December 5, 2012
Updated December 6, 2012
Raleigh, N.C. — From Wall Street to Main Street, talk of the fiscal cliff is in the air.
“I don’t think you can escape it,” said investor Bill Antczak. “It’s on every night.”
If Democrats and Republicans can't find a compromise before the end of the year, experts worry the country could plunge into a recession. Republicans say they want to sit down with the president and talk specifics, while President Barack Obama says there can't be a deal until GOP lawmakers drop their opposition to increasing rates on the top 2 percent of income earners.
All of the back-and-forth has investors worried about what to do with their money before Jan. 1.
“You can’t discount what you’ve already lost,” Antczak said. “Here we are on the road to recovery, so this looms large.”
Investor Jo Lawson said she feels somewhat helpless.
“(I’m) frustrated, irritated, very disappointed in our government overall. But what can you do?” she said.
Gerald Townsend, president of Townsend Asset Management Corp. in Raleigh, said investors shouldn’t panic.
“We’ve been through, and I’ve seen it many years, many ups and many downs,” he said.
Yet Townsend admits he's never seen anything quite like the so-called fiscal cliff. With 30 years in the business, he manages $100 million of other people's money.
“It will get addressed in some way or another,” he said.
Townsend thinks the cliff will create short-term volatility, but investors who pull out completely may miss a long-term gain.
“In that deal, there may be some negative long-term repercussions, but the market will probably still respond positively just because uncertainty has been taken off the table,” he said.
Abby Joseph Cohen, a senior investment strategist at Goldman Sachs, said stocks right now have a lot of room to run. She said stocks could rise 10 to 15 percent in 2013.
The cycle of market emotions is something Townsend discusses with many clients. Bottom line, he says, there’s reason to feel anxious.
Until the economy stabilizes, Lawson said she's keeping a close eye on her retirement accounts.
“I figure they’ll take another hit,” she said. “I won’t be able to retire when I want to.”