Democrats Could Ding Dividend Stocks

Debra Borchardt interviews Jim Cramer regarding the "fiscal cliff." Jim, we keep hearing about the fiscal cliff, the fiscal cliff...it's looming. I feel like the sky is falling, the sky is falling...it's all going to happen in January. I want to ask you a couple questions...one, do you think it's really going to happen? And two, how do you position a portfolio for something like this? So do you think it's going to happen?

I am not going to change my investing style based on a fiscal cliff. I am thinking that if the House goes Democratic and Obama wins and I think there's a very good possibility of all this, then the dividend stocks won't do as well because the tax rate's going to go up. They don't respect the dividend tax rates as much as the capital gains. Capital gains are hallowed ground even though I hate that because the smartest accountants can always turn ordinary income into capital gains. But I am a believer that we're the best place to be and a fiscal cliff could drive us down four or five percent, but we might be at new highs before that happens.

Source: The Street

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