The Fiscal Cliff Brings Opportunities

 | Nov 12, 2012 | 12:41 PM EST
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The past week has been intriguing, to say the least. I've talked to people who are scared stiff about the looming fiscal cliff and about what it could mean for them financially. More than a handful of business owners have expressed an intense interest in selling their businesses before year-end. 

I must admit that as a long-term-oriented investor -- it certainly doesn't hurt that I'm still in my 30s -- I am getting excited about the opportunities that the so-called fiscal cliff is presenting (in addition to seeking partial equity investments, my holding company is also an interested buyer of quality small businesses that are looking for a long-term home, so if you have a small business for sale, I want to hear about it!).

Readers of my columns know that I'm an optimist when it comes to the U.S. America has endured some calamities over the past 200-plus years, but the country has always succeeded in picking up the pieces and prospering. The resolve here in the U.S. is unlike what you find anywhere else in the world. But America has succeeded because our leaders have come together to do what is in the best interest of the nation, not the best interest of the right or left. 

I believe a compromise will occur because it has to. I believe that the threat of the fiscal cliff is exactly what the U.S. needs to bring two extremely opposing viewpoints together.

While I'm an optimist, I'm not living in a fairy tale either. The political landscape in the U.S. is dangerously divided. Such a division, if not settled, could pose a bigger threat to our economic might than any other global threat we face. As in a well-functioning marriage, everyone is going to have to give up a little for the greater good. I believe that will happen. Whether that occurs before Jan. 1, 2013, or after is anyone's guess. But if last week's election proved anything, it is that the country won't tolerate a leadership that refuses to compromise. And given the more subtle rhetoric already coming out of Washington, our elected officials seem to be getting the message. 

So if investors continue to pound the markets like they did last week, I believe such a market reaction will be overblown and perhaps present an opening to invest at more attractive valuations. Chesapeake Energy (CHK) has dropped by more than 15% in the past couple of weeks on a less than rosy earnings report. But that doesn't change the fact the company continues to monetize assets and pare down debt. McDonald's (MCD) has sold off to the point that it now almost yields 4%. I don't ever advocate investing solely for the dividend, but McDonald's has been successfully at re-defining itself with newer, healthier options. And the price point is obviously attractive. Dare I say that Apple (AAPL) watchers may get another chance should the stock continue sliding into year-end?

My two key takeaways? First, I believe the market is overblowing the fiscal cliff, and second, investors should be attentive to opportunities that may arise from the fear that may continue to develop in the market.



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