Salient Summary
Bad news for the economy – recently on jobs – is actually good news for stocks at this point in the cycle.  You may not be getting the benefit of all the tax deductions you are entitled to.  Happy holidays, peace and joy to all!
Jobs gone, stocks gain, what’s up? 
The drumbeat of economic doom continues, most recently with confirmation of the worst employment outlook in decades. And make no mistake, friends, it will get far worse before it gets better.  Does that mean time to get out of stocks before the getting gets worse? Quite the contrary.  As we have mentioned ad nausea in these writings, the stock market tends to be a leading indicator of the economy:  down before the economy gets  bad (the markets started tanking nearly 14 months ago; a recession was just declared last week) and up while the economy is still in ICU, or even still in the ambulance. David Croney was kind enough to point out a recent piece from Smart Money (link below), from which I got these graphs plotting jobless claims against the stock market.  You can see clearly the trend:  the market tends to tank while the jobs picture still looks rosy, but begin to soar even while unemployment keeps getting worse.  The lesson?  While the economy will cause pain for too long to come (and, sadly, much opportunity – and not just in stocks; look for more on this next year), stocks, at least, should be bringing cheer soon.  Ho Ho Ho! (Still expecting another scary plunge before a solid year-end rally, by the way.) 
 

http://www.smartmoney.com/investing/economy/history-shows-stocks-recover-ahead-of-jobs/
A Thousand Fading Points of Light
Nearly 20 years ago, the first President Bush (one of my favorites) promulgated the (not new) proposition that each of us has a duty – beyond what the government should or could do – to help our fellow souls.  There is an important holiday message in this, offered below.  But there has arisen an unforgivable dark side to the “thousand points of light,” conjured by the demonic clown of the Internal Revenue Code.  The short of it are the so-called “stealth tax” provisions, whereby diabolical tax alchemy snatches the benefit of important deductions, in ways that even sophisticated taxpayers may never notice.  Common hits (and you should scrutinize all, every year, and ask your tax advisor – we do taxes now, by the way – for strategies to control this) are:  personal exemptions, itemized deductions like health care, property tax, and, the reason for this particular rant, charitable contributions.  Similar chicanery chisels Social Security benefits. But my big beef here is that those with a few nickels – who can best afford to give to those in need – have no tax incentive to do so, since the deduction disappears into the clown’s pockets. This is oppressive, and quite contrary to the widely held belief of what is and should be regarding charitable contributions: that you at least got a tax break if you gave to the poor. Not so.  You can give the money away, if you want, but you first have to pay the tax on it.  For those in the highest brackets – with the greatest ability to give but also the best tax advice, and most likely to know this – this means having to earn some $1.70 in order to give away $1.00 (IRS gets the $.70). Of those inclined to give, for some this is too much to ask. Especially in this dark time, this is most troubling.
A Great Depression Joke
Regarding the current economic “perfect storm,” my firstborn from my first marriage, Jennifer, offered this wry and adult observation…”…this is worse than a divorce.  I’ve lost half my net worth, and I still have my wife!”  Thanks, Jenn; don’t tell mama!

Peace and Goodwill
I offer a Christmas theme excerpted from the January 1989 inaugural address of George H. W. Bush, whom I personally count among the greatest of our Presidents. 
“Heavenly Father, we bow our heads and thank You for Your love. Accept our thanks for the peace that yields this day and the shared faith that makes its continuance likely. Make us strong to do Your work, willing to heed and hear Your will, and write on our hearts these words: “Use power to help people.” For we are given power not to advance our own purposes, nor to make a great show in the world, nor a name. There is but one just use of power, and it is to serve people. Help us to remember it, Lord. Amen… America is never wholly herself unless she is engaged in high moral principle. We as a people have such a purpose today. It is to make kinder the face of the Nation and gentler the face of the world. My friends, we have work to do. There are the homeless, lost and roaming. There are the children who have nothing, no love, no normalcy. There are those who cannot free themselves of enslavement to whatever addiction—drugs, welfare, the demoralization that rules the slums. There is crime to be conquered, the rough crime of the streets. There are young women to be helped who are about to become mothers of children they can’t care for and might not love. They need our care, our guidance, and our education…. The old solution, the old way, was to think that public money alone could end these problems. But we have learned that is not so. And in any case, our funds are low… We have more will than wallet; but will is what we need. We will make the hard choices, looking at what we have and perhaps allocating it differently, making our decisions based on honest need and prudent safety. And then we will do the wisest thing of all: We will turn to the only resource we have that in times of need always grows—the goodness and the courage of the American people.  I am speaking of a new engagement in the lives of others, a new activism, hands-on and involved, that gets the job done. We must bring in the generations, harnessing the unused talent of the elderly and the unfocused energy of the young. For not only leadership is passed from generation to generation, but so is stewardship. And the generation born after the Second World War has come of age. I have spoken of a thousand points of light, of all the community organizations that are spread like stars throughout the Nation, doing good. We will work hand in hand, encouraging, sometimes leading, sometimes being led, rewarding… The old ideas are new again because they are not old, they are timeless: duty, sacrifice, commitment, and a patriotism that finds its expression in taking part and pitching in.”