Posts Tagged ‘fed’

Stock Returns The Year After A New Fed Chief Takes Over

February 11th, 2014

Janet-YellenKeith Fitz-Gerald: People are viewing the end of stimulus as a sunset. “My, what a wonderful day we’ve had,” they say. Read more…


How To Navigate Foreign Markets On A Fed Taper

August 26th, 2013

emerging marketsGarrett Baldwin: Hints from the U.S. Federal Reserve this week that the quantitative easing (QE) taper is near pushed the Dow down 105 points Wednesday – but the idea of less Fed stimulus has caused much more turmoil in certain overseas markets.   Read more…


The 30-year Bond Bull Market Is Over

June 13th, 2013

market bondsBen Gersten: Legendary bond guru Bill Gross doesn’t think too highly of the Federal Reserve and Ben Bernanke’s monetary policies. Read more…


Nothing Lasts Forever, Apparently Not Even Quantitative Easing

May 24th, 2013

dollar ben bernankeShah Gilani: Nothing lasts forever, apparently not even quantitative easing. Read more…


5 Shocking Facts About The Federal Reserve

May 9th, 2013

fiveDavid Zeiler: Most Americans assume the U.S. Federal Reserve is a powerful government institution that seeks only to safeguard the dollar, boost the economy and drive employment higher. Read more…


Why Crime Pays For “Too-Big-To-Fail” Banks

April 10th, 2013

banksShah Gilani: There’s a reason why the first few installments of my What Everyone Absolutely Needs to Know About Money series have been about banks. Read more…


Why We Really Don’t Need The Federal Reserve?

March 28th, 2013

federalreserveKeith Fitz-Gerald: Last week I spent two days speaking to senior government officials and business leaders in Bermuda, which is one of the world’s leading international insurance and reinsurance hubs.  The men and women in the room are responsible for hundreds of millions in assets worldwide. Read more…


Will The Fed’s Bloated Balance Sheet Stoke Inflation? Bank of America Corp (BAC)

March 12th, 2013

federalreserveJeff Uscher: The market has been looking ahead to the inevitable end of the U.S. Federal Reserve’s quantitative easing (QE) program with considerable apprehension. Read more…


Dow Jones Industrial Average Warning: Why Stocks Could Fall 50% From Here

March 1st, 2013

warningChris Martenson: I don’t relish the job of constantly pointing out the risks to the equity markets. But since few on Wall Street seem willing (or able) to do this, I’m “making the call” for a market correction, as enough variables have aligned to indicate a high likelihood of stocks heading Read more…


Whatever Happens To QE, ZIRP Remains: ProShares UltraShort 20+ Year Treasury ETF

February 22nd, 2013

interest-ratesJeff Uscher: Equity markets around the world yesterday expressed their distaste for the possible end of the Federal Reserve’s quantitative easing (QE) policy. Read more…


Why Is The Federal Reserve So Adamant About Maintaining Their Monopoly Over Money Creation

January 14th, 2013

Michael Snyder: Barack Obama has greatly expanded the powers of the presidency during his time in the White House, but there is one institution that he simply will not mess with.  There is one organization that is considered to be so sacred in Washington D.C. that Obama will not dare utter a single negative word against it. Read more…


Why The Federal Reserve Is So Dangerous

December 18th, 2012

Shah Gilani: The Federal Reserve System is a government-sanctioned private enterprise that functions as a socialist tool. Read more…


Expect Surprise Global QE3 To Shock Markets (GLD, SLV, AGQ, TZA, FAZ)

June 8th, 2012

Dominique de Kevelioc de Bailleul:  No hints from the Fed about QE3 is the latest ‘bad’ news coming out of  Bernanke’s testimony to Congress this week.  Gold sells off. Read more…


U.S. States Prepare For Hyperinflation (GLD, SLV, UUP, UDN, SGOL, IAU)

February 4th, 2012

Dominique de Kevelioc de Bailleul: CNN reports that 13 states seek approval to issue money in preparation for a U.S. dollar collapse. Read more…


ETF Expert: Should You Be Buying What China Buys?

April 14th, 2009

china3Historically speaking, U.S. Federal Reserve policy had a direct and sometimes predictable impact on investment direction. In the 20th century, lower overnight lending rates meant good things for stocks. And, if the Fed tightened its grip by raising target rates, you might cut back your equity exposure with great success.

As we arrived in the 21st century, however, the results of ”following the Fed’s lead” has had mixed results. The Fed’s rapid rate increases leading up to the dot-com collapse did little to deter Nasdaq euphoria… at least for several years. Then in March of 2000, the reality of the rate increases contributed to the quickness with which sentiment became bearish. (Only then did many exclaim, “See, you can’t fight the Fed and win.”)

In 2004/2005/2006 the Fed raised rates consistently, albeit slowly.Yet stocks prospered throughout a rate raising environment. And even the dramatic rate cuts throughout 2008 did little to stop the 2nd worst bear in 100 years. In other words, you could easily have fought the Fed’s rate cutting activity by deciding against the stock market… and won.

Now the Fed is buying U.S. treasuries.  Most seem to think it would be a better idea to sell them. And the Fed is also buying mortgage-backed securities. Most seem to think this is actually a good investment. (See “Rethinking Mortgage-Debt ETFs.”)

Following the Fed in the 21st century, then… mixed results. Similarly, we might have been inclined to buy what the U.S. government wished to buy through its TARP program. Former Secretary Paulson infused capital into banks via preferred shares acquisitions. Even uber-bank-bear Meredith Whitney agreed that preferred shares were a good buy for investors. Yet nearly all preferred shares of the majors are trading at lower prices today than they were trading at when TARP 1.0 went into effect.

In the end, one comes to the conclusion that there’s no sure-fire thing. Just because your government’s “doing it,” does that mean you should jump on the same bandwagon? Sometimes yes, sometimes no.

It follows that another major economic force in the world has been making scores of investment decisions. One has to wonder, might we choose to buy the things that China is buying?

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