Volatile trading on Wall Street is ramping up the heated debate between the bulls and bears.
The bears say the market is due -- overdue really -- for a correction of 20 percent or more. The bulls counter by saying the economy is picking up steam and corporate profits remain strong. Investors are caught in the middle.
The Dow Jones industrial average (^DJI) tumbled 267 points Thursday, the Nasdaq composite (^IXIC) plunged 129 and the Standard & Poor's 500 index (^GPSC) dropped 39 points.
It was the Nasdaq's biggest point loss in nearly 2½ years. Since hitting a 14-year high on March 5, the Nasdaq has lost 7 percent. The stocks that had been trendy -- mainly biotech, Internet and smaller technology companies -- have been getting hammered.
%VIRTUAL-article-sponsoredlinks%The so-called "Heartbleed" bug that has infected many thought-to-be secure websites might even more dangerous than previously thought. Two of the biggest makers of network gear -- Cisco Systems (CSCO) and Juniper Networks (JNPR) -- say some of their equipment has been infected by the bug, but not their big routers and servers. This added wrinkle could make it much harder to stamp out the bug.
Meanwhile, federal regulators are warning the nation's banks that their internal security networks could be exposed to hackers. As you've probably heard by now, we are all supposed to change our passwords right away.
And the Obama administration is encouraging businesses to cooperate with each other and share information about hackers -- without running afoul of antitrust laws. Officials say the increasing threat of cyberattacks requires companies to work together to strengthen their information-technology defenses.
Finally, online gambling in New Jersey has been a flop so far. The state had predicted it would generate $1 billion in revenue by July, but through the end of February, gamblers in the state had bet just $27 million since the sites were launched last November.
The 1099 forms you received from brokerages and other financial institutions might not be the last ones they send. It's common for them to issue corrected versions a little later. Consider getting your tax return ready to go, then waiting until close to April 15 before submitting it. That way, you can incorporate any last-minute changes and avoid having to file an amended return.
Pay attention to when you sell any holding, because the capital gains tax rates differ for long-term and short-term holdings. Short-term capital gains are taxed at your ordinary income tax rate, which could top 30 percent. Long-term gains (those held for more than a year) get preferential rates, which are zero percent for those in low-income brackets and 15 percent for most of us.
If you own underwater stocks, consider selling them for a loss. You can use those losses to offset gains from other sales, reducing your taxes owed. You can always buy back the asset later, if you still believe in it -- just be sure to wait for 31 days to pass, to observe the "wash sale rule."
If you're planning to sell one or more holdings that will give you a really big gain, submit an amended W-4 form to increase your withholding, or send the IRS an estimated tax payment. Underpaying your taxes significantly during the year can lead to a penalty at tax time. You may be protected by a "safe harbor" provision, though, which can save you from having to jump through those hoops.
If you're planning to buy shares of a mutual fund, determine when it will distribute its dividends. Many funds do so near the end of the year, and when that happens, the fund's share price will drop by the amount of the distribution -- which is taxable to shareholders. It's better to just wait until after that payout to buy in.
Mutual funds with high turnover ratios (reflecting a lot of buying and selling in a fund) have expenses for these trades. It's worth favoring funds with low turnover ratios, especially index funds and index-tracking ETFs, which simply hold onto the mix of securities in a given index, without a lot of trading activity. (Index funds generally outperform their higher-turnover counterparts, too.)
Boost the power of your Individual Retirement Accounts by making your annual contributions early in the year, giving the funds more time to grow. Over decades, it can make a significant difference.