Monday, August 03, 2015 05:23pm
North Adams, MA now: 72 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
LOG IN | REGISTER NOW   

Home About Archives RSS Feed
@theMarket: Fed Gives Green Light to Stocks
By Bill Schmick On: 02:37PM / Saturday January 28, 2012
It wasn't quite a QE III but it came close. This week, the Federal Reserve Bank extended the time period in which they would keep a lid on short-term interest rates to 2014 while at the same time pushing longer-term rates lower. Investors liked that and bought stocks on the news.

The Fed also said it would consider launching a bond-buying program and it wouldn't wait for a recession to do it. Fed Chairman Ben Bernanke hinted he would act if the economy and unemployment simply continues to recover at its present slow pace. At the same time, the Fed dropped its forecast for economic growth this year from a range of 2.5-2.9 percent to 2.2-2.7 percent. He targeted a 2 percent inflation rate for the country but also said he would be willing to see inflation a bit higher if it meant producing more jobs for Americans.

What all of this means for you and I is that the Fed is determined to do all it can to goose the economy, the stock market and the housing markets. In the past, when the Fed conveyed this kind of message to investors, the stock markets climbed higher. I expect the same thing to happen again this time.

It is not yet clear to me how telegraphing their determination to push longer-term rates lower over the next two-plus years is going to help home buyers decide on purchasing, as opposed to renting. If, for example, I was in the market for a fixed rate mortgage and I know rates might trend lower between now and 2014, I would be in no hurry to sign a contract.

The Fed's announcement is also bad news for those retirees who have fled the stock market and have their money invested in "safe" assets such as CDs and U.S. Treasury bonds. They will continue to receive next to nothing for their money while struggling to make ends meet as food, energy, medical services and other necessary living expenses continue to rise.

On the plus side, investors can be pretty sure that the economy won't get any worse and that the stock market is about the only place one can hope to achieve a reasonable rate of return on your investments. Of course, there will be the inevitable piper to pay down the road but central banks around the world have decided to worry about the inflationary consequences of trillions of dollars in stimulus when it happens. Future inflation fears is one reason that commodities led by gold and silver raced higher after the Fed meeting.

So do the Fed's actions change the bottom line of my investment strategy? Not really. I believe defensive areas of the stock markets (those stocks and sectors that pay dividends) will do just fine in this environment. High yield and investment grade bonds will also do quite well. We will still have pullbacks in the market this year and some of them might even be serious. Overall, I believe we are exactly where we should be.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or email him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.



0 Comments
     
News Headlines
Berkshire Force Drops One-Run Decision to Gainesville, Fla.
Dalton Gets Upset Win in Berkshire Adult Baseball League
Red Lion Inn Receives Best of Award of Excellence from Wine Spectator
Berkshire Taconic Community Foundation Awards $2.1 Million in Summer Grants Cycle
Babe Ruth Team Raising Funds for World Series Trip
Southwestern Vermont Readies Pownal Campus
Multicultural BRIDGE Summer Program Returns
Paul Scores 28 to Lead MCLA to Giorgi League Win
Quadland's Flowers Seeks New Owners for Its Next Century
Clarksburg Bridge Bid High; Town Hires 2 Police Officers

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (176)
Independent Investor (238)
Archives:
August 2015 (1)
August 2014 (6)
July 2015 (6)
June 2015 (8)
May 2015 (6)
April 2015 (8)
March 2015 (6)
February 2015 (7)
January 2015 (9)
December 2014 (7)
November 2014 (4)
October 2014 (9)
September 2014 (5)
Tags:
Interest Rates Retirement Banks Taxes Election Energy Federal Reserve Bailout Currency Oil Debt Ceiling Markets Housing Economy Selloff Metals Congress Europe Debt Stocks Fed Fiscal Cliff Recession Crisis Stimulus Commodities Deficit Greece Euro Jobs Stock Market Japan Rally Europe Pullback
Popular Entries:
The Independent Investor: Don't Fight the Fed
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: How Will Wall Street II Play on Main Street?
Recent Entries:
@theMarket: Month-End Musings
The Independent Investor: Supermarkets Evolve to Survive
The Independent Investor: Are You Ready for El Niņo
@theMarket: O Ye of Little Faith
The Independent Investor: When 'No' Means 'Yes'
@theMarket: Global Markets Weather a Wild Week
The Independent Investor: Same-Sex Marriage Good for Business
@the Market: Second Quarter Earnings on Deck
The Independent Investor: Tiny Houses Gain Appeal
@theMarket: From Russia With love


Adams Aggie Demo Derby 2015
Crash! Boom! Bang! The annual Aggie Fair demolition derby...
Blue Moon Rooftop Party
Partygoers danced under a blue moon atop Greylock Gardens...
2015 Adams Aggie Fair
The 41st annual Adams Agricultural Fair opens this weekend...
Blue Moon Rooftop Party
A sold-out crowd partied under a blue moon and atop...
Down Street Art and Polish...
Thursday was a big night in the Northern Berkshires with...
Park Street Fair (Hi-Jinks...
Park St. was closed off to traffic Monday night for the...
Gather-In Festival 2015
The annual Gather-In, a celebration of Pittsfield's...
'Romeo & Juliet' @ Pittsfield...
Free performances of 'Romeo & Juliet' run through Aug. 2 at...
LaFesta Baseball 2015
The LaFesta Baseball Exchange marked its 25th anniversary...
Bulldogs Win Cal Ripken State...
The Lanesborough Bulldogs used a big base-running play to...
Spark @ Naumkeag
Berkshire Creative held its July Spark mixer at the...
LL: Pittsfield vs Longmeadow
The 10- and 11-year-old Pittsfield National Little League...
Pittsfield Polish Picnic
St. Joseph's Church in Pittsfield hosted the annual Polish...
Pittsfield Babe Ruth WMass...
The Pittsfield Babe Ruth 15-year-old All-Stars beat Holden...
Shire City Sessions July 2015
The inaugural Shire City Sessions drew a crowd to hear US...
3rd Thursday June 2015
Pittsfield's 3rd Thursday monthly street fair featured...
Adams Aggie Demo Derby 2015
Crash! Boom! Bang! The annual Aggie Fair demolition derby...
Blue Moon Rooftop Party
Partygoers danced under a blue moon atop Greylock Gardens...
2015 Adams Aggie Fair
The 41st annual Adams Agricultural Fair opens this weekend...
Blue Moon Rooftop Party
A sold-out crowd partied under a blue moon and atop...
Down Street Art and Polish...
Thursday was a big night in the Northern Berkshires with...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings |
Advertise | Recommend This Page | Help Contact Us
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2012 Boxcar Media LLC - All rights reserved

Privacy Policy| User Agreement