"CNBC anchor Simon Hobbs followed up, asking Damodaran to clarify:
So, what you're saying, just to elaborate, is that because the tax rates may rise, that you will see people effectively having to sell in order to book their gains now – their capital gains now – or indeed, to move away from stocks that are paying dividends. So, you are predicting, if i'm right, much more selling towards the end of the year?
Damodaran replied:
Exactly. Unless, of course, Congress pulls out one of its last-minute tricks on December 30, and they pass an extension of the tax law. It seems like the market is building in that presumption, but given the dysfunctionality of the political system, I wouldn't put it past them to do something incredibly dumb and let this kind of play out."
More pressure for a "Grand Bargain". If there is no deal, we will have a big markets crash this winter, virtually guaranteed.
My analysis on this has been spot on so far. We'll keep watching closely. - Wes
