An Opportunity in Crisis

When faced with a binary event such as the fiscal cliff, discretion is often the better part of valor. There is no need to gamble on an unpredictable outcome. In a world where the market could crash or skyrocket on a moment's notice, based on either a potential resolution or failure to find common ground, it makes little sense to commit too heavily to either the long or short side while awaiting an outcome.

Instead, the safer trade might be to assume that whatever the result of the negotiations in Washington, markets will overreact. Even if a deal is reached and the fiscal cliff is averted, it is unlikely that the root causes that led us to the cliff will be addressed. On the other hand, if a resolution can't be reached, that's bad news, but it doesn't mean that all efforts to correct the problem will terminate at that point. The initial reaction will likely be one of great relief or despair, followed by the realization that the result is inconclusive....360 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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