Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
So what's new here? From the very beginning there's been that Fed split... it took all this time for folks to notice? A significant part of the market evidently thinks that the present Fed position is going to go on forever? And if there's even a hint that might not be true, get all upset and sell everything, pronto? So then in response the Fed backtracks and weasels about "tapers" and "we may, we might... maybe some other time" and then everything is sort of OK again for a week or two?
A rational market tries to anticipate the logical outcome of observable inputs and forces. The logical outcome of the present Fed position is that sometime in the pretty near future they will start to wean the economy off of the artificial stimulus that has kept things sort of on the rails since the crash.
So this market is saying that if there's even a hint of that it's panicksville? And that's supposed to be rational? This is totally ridiculous, and exactly why my cash is at 80% until the market sobers up, if it ever does.
Reply to @Old_Joe: "and exactly why my cash is at 80% until the market sobers up, if it ever does."
So you're going to be that way for a while I'd likely guess. Given that the mentality remains fixing financial alcoholism by giving more alcohol and you have Fed governors come out and act shocked that they have to calm the market down when they mention taking the alcohol away.... I don't see that changing. It should not be surprising to anyone that YEARS of the easiest monetary policy in history has created a market addicted to it and we have a GDP of what, like 1.8?
As I've said before, Senator Schumer's "Get to Work, Mr Chairman" is a perfect summary of the ridiculous world that we live in where the government does nothing because they can just let the Fed do what the Fed does. What the Fed has done, in some regards, has given the government some time to get its house in order and push forward with some degree of a plan for the next decade. (Infrastructure while interest rates were low, perhaps?) Yet, it's taken that time to do nothing of significance. Structural problems still are an issue and we haven't done much of anything to solve them.
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"So what's new here? From the very beginning there's been that Fed split.."
There has always been disagreements by one, two, three. Now you have what appears to be about half saying taper and half not.
This is a good summary: "We are not sure how you can go from ‘many’ needing to see labor gains before tapering begins to half seeing bond buying ending by year end. At the same time, ‘many’ other Fed officials saw bond buying into 2014” "We are pretty good at math, but we are having trouble adding up the ‘many,’ ‘several’ and ‘about half’ to equal 100% FOMC members appear to have ‘‘decided to cover every possible scenario," and "left us with no clear picture as to what the group is thinking” http://www.zerohedge.com/news/2013-07-10/even-experts-throw-all-over-fed-minutes
So it's not about Fed disagreements or agreements, but the idea that it would seem like a mess of disagreements and even less of a clear direction then before. ---
"The logical outcome of the present Fed position is that sometime in the pretty near future they will start to wean the economy off of the artificial stimulus that has kept things sort of on the rails since the crash."
I don't disagree, but the question is why. Some believe that they will taper because they have to, not because their goals have been met (and along those lines, a surprising amount of discussion on CNBC today at times about how wrong the Fed's GDP predictions have been in recent years.) All that said, if the market tanks again, I ab-so-lutely believe that you will just see QE again, especially if Grandma Yellen takes over for Bernanke. Expectations will be that any considerable market upset will be met with QE.
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I continue to like certain themes and am not selling (and will just continue reinvesting divs.) Doing a little buying here-and-there, but with a long-term view and an emphasis on dividends.
Reply to @scott: Don't disagree with your observations. I'll be looking hard at situation later in year after Fed issues (leader, direction) have some clarity.
Getting set up to dca into Buffalo Flexible Income BUFBX, Parnassus Equity Income PRBLX, and Vulcan Value Small Cap VVPSX, regardless of market swings. If market does take decent dive will accelerate those acquisitions and boost equity positions. Also will probably move more cash into PONDX & RPHYX rather than let it sit in bank.
Reply to @Old_Joe: Watching Bernanke Q & A - mentioning next-to-nothing about the possibility of tapering and a lot about being accommodative for the foreseeable future (normalization of monetary policy down the road in reasonable time, he "hopes".) Talking about how inflation is very low (lol) and will be out to defend against the evil of deflation. Fed Gov Bullard (who very publicly disagreed with Bernanke when tapering was mentioned) name-dropped regarding upset over "low" inflation. Dollar down nearly 1.5%, futures higher, yields down a bit. Oil still around $106. Easy monetary policy, market happy.
Comments
A rational market tries to anticipate the logical outcome of observable inputs and forces. The logical outcome of the present Fed position is that sometime in the pretty near future they will start to wean the economy off of the artificial stimulus that has kept things sort of on the rails since the crash.
So this market is saying that if there's even a hint of that it's panicksville? And that's supposed to be rational? This is totally ridiculous, and exactly why my cash is at 80% until the market sobers up, if it ever does.
So you're going to be that way for a while I'd likely guess. Given that the mentality remains fixing financial alcoholism by giving more alcohol and you have Fed governors come out and act shocked that they have to calm the market down when they mention taking the alcohol away.... I don't see that changing. It should not be surprising to anyone that YEARS of the easiest monetary policy in history has created a market addicted to it and we have a GDP of what, like 1.8?
As I've said before, Senator Schumer's "Get to Work, Mr Chairman" is a perfect summary of the ridiculous world that we live in where the government does nothing because they can just let the Fed do what the Fed does. What the Fed has done, in some regards, has given the government some time to get its house in order and push forward with some degree of a plan for the next decade. (Infrastructure while interest rates were low, perhaps?) Yet, it's taken that time to do nothing of significance. Structural problems still are an issue and we haven't done much of anything to solve them.
---
"So what's new here? From the very beginning there's been that Fed split.."
There has always been disagreements by one, two, three. Now you have what appears to be about half saying taper and half not.
This is a good summary:
"We are not sure how you can go from ‘many’ needing to see labor gains before tapering begins to half seeing bond buying ending by year end. At the same time, ‘many’ other Fed officials saw bond buying into 2014”
"We are pretty good at math, but we are having trouble adding up the ‘many,’ ‘several’ and ‘about half’ to equal 100%
FOMC members appear to have ‘‘decided to cover every possible scenario," and "left us with no clear picture as to what the group is thinking”
http://www.zerohedge.com/news/2013-07-10/even-experts-throw-all-over-fed-minutes
So it's not about Fed disagreements or agreements, but the idea that it would seem like a mess of disagreements and even less of a clear direction then before.
---
"The logical outcome of the present Fed position is that sometime in the pretty near future they will start to wean the economy off of the artificial stimulus that has kept things sort of on the rails since the crash."
I don't disagree, but the question is why. Some believe that they will taper because they have to, not because their goals have been met (and along those lines, a surprising amount of discussion on CNBC today at times about how wrong the Fed's GDP predictions have been in recent years.) All that said, if the market tanks again, I ab-so-lutely believe that you will just see QE again, especially if Grandma Yellen takes over for Bernanke. Expectations will be that any considerable market upset will be met with QE.
----
I continue to like certain themes and am not selling (and will just continue reinvesting divs.) Doing a little buying here-and-there, but with a long-term view and an emphasis on dividends.
Getting set up to dca into Buffalo Flexible Income BUFBX, Parnassus Equity Income PRBLX, and Vulcan Value Small Cap VVPSX, regardless of market swings. If market does take decent dive will accelerate those acquisitions and boost equity positions. Also will probably move more cash into PONDX & RPHYX rather than let it sit in bank.
Edited to add: gold now $1285, combined with record CFTC gold shorts (http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/07/Gold CFTC shorts.jpg) may make for an interesting time in precious metals.....
Nice choices regarding funds. I particularly like PRBLX.