I would add that bull markets create their own liquidity. And so long as “risk on” is fueled by self-reinforcing speculative leveraging, the marketplace would easily accommodate small portfolio sales from the Federal Reserve. It’s an altogether different story, however, when “Risk Off” materializes. De-risking/de-leveraging dynamics would rather abruptly emerge from hiding. That’s when the markets will sorely miss – and beckon for more – QE.
The SP500 index (C fund) has remained in the top half of its primary price channel through the normally weak summer months. Typically we see a pullback late in the unfavorable season […]
Historians will surely look back at this period and struggle to understand why global central bankers after all these years were so reticent in reducing extraordinary monetary stimulus. Bitcoin and the cryptocurrencies […]
With all the attention on the favorable season for equities, we decided to focus on the unfavorable season today. We asked the question, what would happen if instead of selling in May […]
The Lifecycle funds of TSP and Vanguard provide a good baseline for investors on how to allocate their accounts based on their age or years to retirement. We just finished updating our look at the current allocations of TSP and Vanguard Lifecycle funds.
Dollar Cost Averaging is not investment strategy but it could still be useful to re-enter the market after a bear market if your investment strategy moved you to the sidelines in time.
Alan Greenspan fashioned an asymmetrical approach to rate hikes: slash them aggressively in the event of de-risking/de-leveraging in the markets, while raising them cautiously to ensure that markets were not at risk […]
Yellen’s speech, “Financial Stability a Decade after the Onset of the Crisis,” somehow doesn’t address the historic experiment with quantitative easing (QE). There’s no mention of the Fed (and global central banks) […]
It’s all been so frustratingly predictable. Certainly not for the first time in history, the scourge of unsound money and inflationism has been so subtle that it goes virtually undetected. Instead of […]
The 2008/09 financial crisis should have concluded an incredible era of dangerous risk misperceptions and flawed calculations. But the Federal Reserve and global central bankers Doubled-Down. Instead of the markets reverting back […]