When uncertainty becomes taxing

Financial service firms do a good job of promoting their key messages—Vanguard and its mantra of reducing fees, T. Rowe Price and its call to maintain stock exposure throughout retirement. Other companies provide adequate boilerplate, such as American Funds’ drumbeat of steady investing in all environments. All sound strategy for the long-term investor, but not a lot of comfort in the short run.

When it comes to providing useful advice, there are a few standouts—Vanguard’s retiring Chief Investment Officer Gus Sauter (“Why stay in the stock market?”) and T. Rowe Price Chief Economist Alan Levenson (“Is the U.S. Approaching a Fiscal Cliff in 2013?”) come to mind. They balance corporate messaging with market realities. To that list I’d add Rande Spiegelman, a CPA who serves as vice president of financial planning at the Schwab Center for Financial Research.

Spiegelman has written a guide on how to play the impending fiscal cliff. He charts historic tax rates for income and dividends as well as figures that show what would happen should Congress allow Bush-era cuts to expire at the end of this year. It’s not only sound reporting but useful information. Case in point: some pundits urge investors to take gains and pay taxes now, while the long-term rate stands at 15 percent for high earners. Spiegelman suggests staying the course will yield a bigger net profit, charting a hypothetical investment at today’s rates as well as the higher rates politicians have floated.

Hats off to Schwab for trying to make sense out of uncertainty.

Continental divide

What a difference an ocean makes.

Reaction to the release Friday of U.S. GDP numbers varied depending on which side of the pond you’re from.

The headline on the Financial Times website read “US Growth Accelerates to 2.8%.” German’s Der Spiegel wrote “U.S. economy is growing strongly again.” It’s another story in the United States. Bloomberg said “U.S. economy grows 2.8%, less than forecast” and the Wall Street Journal added an element of doubt with “U.S. Economy Expands 2.8%, but Questions Persist.”

Do they ever. After an earlier relief rally the Dow, Nasdaq and S&P spent the rest of the week retracing their gains. This despite the Federal Reserve’s promise to keep interest rates near zero through the end of 2014, a clear signal that if you want to make money, you’ll have to shift the portfolio from cash to equities.

Of course everything is relative. In Europe the financial news of late doesn’t have traders dancing in the street. On Friday Fitch joined the Greek chorus of naysayers when it downgraded the credit of five Euro-zone countries including Italy and Spain. Europeans know they’re in financial trouble and may see the United States as a beacon of growth. Reflecting the sentiment of investors, American media apparently don’t agree. While U.S. housing and employment numbers seem to be improving they’re moving upward at a glacial pace.

So is the glass half empty or half full? Depends on where you stand.