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‘Stocks puke’: ZeroHedge. Why? ‘Biden’s Capital Gains Tax Reality Strikes’

Written By | Apr 22, 2021
stocks puke, ZeroHedge, Biden't capital gains taxRocket Companies, Quicken, tech shares, Redditors, short sellers, market crash, Wuhan coronavirus, stock portfolio, stock portfolios

Wile E. Coyote’s portfolio is doing almost as bad as everyone else’s today. (Warner Bros classic cartoon image, reimagined for satirical purposes. Fair use.)

WASHINGTON – As I indicated in my earlier article Thursday, Mr Market spent Thursday morning meandering around trying to digest Wednesday’s surprisingly vigorous, earnings-based stock market rally. The rally lifted stocks across the board, and rather nicely at that. But as I got back to my real-time investing screen, I saw that things had changed. Rather badly. Heading for my usually trusty online information sources, I noted the 1:14 p.m. ZeroHedge headline above. In full at the ZeroHedge site, it reads: Stocks Puke As Biden’s Capital Gains Tax Reality Strikes. As William Bendix used to say on that old 1950s TV sitcom, “The Life of Riley,” “What a revoltin’ development DIS is!”

That ZeroHedge header pretty well sums up the current market pounding that’s now damaging most portfolios on the block. Including mine, and probably yours as well. But ZH’s Twin Tylers really know how to report business and political outrages, so let’s give them the floor. (Bold text via ZH.)

So why did stocks puke so suddenly Thursday afternoon? ZeroHedge tells all…

“The reality of the Biden administration’s ‘soak the rich’ plan is finally hitting markets as the details of his new capital gains tax plan are hitting

“As Bloomberg reports, President Joe Biden will propose almost doubling the capital gains tax rate for wealthy individuals to 39.6%, which, coupled with an existing surtax on investment income, means that federal tax rates for investors could be as high as 43.4%, according to people familiar with the proposal.




“The plan would boost the capital gains rate to 39.6% for those earning $1 million or more, an increase from the current base rate of 20%, the people said on the condition of anonymity because the plan is not yet public.

“A 3.8% tax on investment income that funds Obamacare would be kept in place, pushing the tax rate on returns on financial assets higher than the top rate on wage and salary income, they said.

“The proposal could reverse a long-standing provision of the tax code that taxes returns on investment lower than on labor. Biden campaigned on equalizing the capital gains and income tax rates for wealthy individuals, saying it’s unfair that many of them pay lower rates than middle-class workers.

“For $1 million earners in high-tax states, rates on capital gains could be above 50%.

“For New Yorkers, the combined state and federal capital gains rate could be as high as 52.22%. [And] for Californians, it could be 56.7%.

“And investors know the implications… (and for everyone selling now, it’s too late – the tax will be retroactive!)”

Retroactive! Another standard Democrat bait-and-switch trick.




As stocks puke, so do individual portfolios

Averages are currently tanking across the boards, and the red ink is flowing in investors’ portfolios. As in “bleeding out.” Check out the following chart of the Dow at mid-afternoon, as provided by ZH.

stocks puke, ZeroHedge, Biden's capital gains tax

Biden’s capital gains tax plan instantly tanks US stocks. This is what it looks like when stocks puke across the board. (Chart via ZeroHedge)

As a small investor, my own investment strategy involves assembling a broadly diverse portfolio of small positions in representative stocks. It usually saves you from most of what I call those Maalox Moments©.

This afternoon, it didn’t. Out of dozens of positions, I can spot maybe 5-8 that are still in the green. That’s what happens when investors panic and most stocks puke.

As Instapundit often says, the Democrats are giving the voters what they want. And they’re giving it to them good and hard.

The Biden Junta: Obama Term 3? You be the judge…

I’d add at this point that it’s the Biden Junta – populated with radical leftists courtesy of Barack Obama and Susan Rice filled – that’s putting this stuff on Slow Joe’s teleprompter (or Jen Psaki’s if Joe’s cutting z’s in his Delaware basement).

Any sentient being should have known this sort of thing would transpire as Trump supporters watched in horror while Election 2020 was stolen in plain sight. (“Nothing to see here, folks, move along.”) Moreover, the apparent armada of corporate CEOs and mega corporations that channeled money to the Democrats to elect (falsely) America’s first Virtual President had to have known they were likely installing Obama 3 – something they failed to do in 2016. And they should have known what would come next.

I won’t cry a river over this predictable Administration move, or for any of the fat cats who’ll get affected by the Democrats’ proclivity to spend more and more and more of other people’s money to buy more and more votes. Why? Because a great many CEOs have all sorts of ways (which the Dems will never touch) to legally evade many of the new taxes.

But most of them will still pay more. And just to emphasize that fact, as the Tylers have explained, those with less tax dodges to use will have to add this new tax burden to the already asinine tax burden they have in the socialist states where they live. That’s primarily Connecticut, New York, Illinois and, of course, sunny California.

Corporate “wokeness” comes home to roost. Although all taxpayers will ultimately pay

All these now fully “woke” corporations and CEOs – and those of the rest of us who might have been “offended” by an occasionally over-the-top Trumpian tweet – could have gotten aboard the Trump Gravy Train for All and ridden it and a second Trump term to wealth and prosperity beyond avarice. But look at what they did by throwing tons of money at the Dems to accelerate the destruction of Amerikkka and the rise of some kind of weird, oligarch-dominated globalist empire.

But I digress. Back here on the now scorched and salted earth we still inhabit, it’s time to face the reality that Washington, D.C., New York, L.A., Chicago, and perhaps a few more enclaves are now occupied territory. Remaining voters in remaining states – including those election-stealing “swing states” – need to get serious about asserting their state’s 10th Amendment rights. Which includes clearing out the Marxist radicals who’ve taken over Capitol Hill in the 2022 elections. Assuming it won’t be too late to accomplish this.

Encore

Meanwhile, if you’re a small investor, let’s pay special attention to Goldman’s – and ZH’s – final bit of investment advice.

“As Goldman concluded, ‘the market’s current focus on other macro issues like interest rates also makes it hard to justify trading on uncertain potential future tax hikes.’

“That uncertainty just got clearer… and not in a good way.”

In other words, now more than ever, investors are traveling at their own risk.

Anyone miss The Donald yet?

 

 

Terry Ponick

Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17