The stock market usually does well in December: gaining ground in 75% of Decembers since 1928 while earning a 1.5% average monthly return … second best of the 12 months .
But , as we’ve harped before …
Capital gains taxes are scheduled to rise at the start of 2013 from a 15% rate to 23.8% (20% plus a 3.8% tax associated with ObamaCare.
According to Goldman Sachs:
The nearly 9 pp hike in capital gains taxes is similar in magnitude to the 9 pp rise in 1970 and the 8 pp rise in 1987.
In both prior cases S&P 500 posted negative returns in December as investors locked-in the lower tax rate.
The S&P 500 fell by 1.9% in December 1969 and 2.8% in December 1986.
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