Forbes: The Fed Is Going To Buy Stocks

[pcsrini]

https://www.forbes.com/sites/kevincoldi ... 708a2feb49

Given the successful intervention by the Fed in 08-09, and the bigger one more recently in March, the article forecasts that the next act for the Fed is to buy stocks. There is also a brief discussion on carry trades, the importance of liquidity, and debt financed stock buybacks.

Thoughts?

[junior]

I think you shouldn't link to a random article on the internet unless you know anything about the authors track record.

[Sheepdog]

I think you shouldn't link to a random article on the internet unless you know anything about the authors track record.

Yes.......Anyway, not actionable..

[Robot Monster]

Someone should keep track of predictions like this and see how they play out. Instead of saying "ignore the noise" it would be better to be able to point out how often predictions fail and have proof.

[pcsrini]

I think you shouldn't link to a random article on the internet unless you know anything about the authors track record.

Thanks! I googled the author before posting, and he is a professor at UC Berkeley Haas school. Also, a bit harsh to say its random when it's not a subjective blog, but is on relatively widely circulated magazine. Sorry if I missed something ..

[JonnyB]

I think you shouldn't link to a random article on the internet unless you know anything about the authors track record.

Thanks! I googled the author before posting, and he is a professor at UC Berkeley Haas school. Also, a bit harsh to say its random when it's not a subjective blog, but is on relatively widely circulated magazine. Sorry if I missed something ..

Let's parse that, shall we. He is not a professor. He is a retired hedge fund manager who is a part time lecturer.

And widely circulated magazine does not automatically equate to reputable.

[Robot Monster]

...it's not a subjective blog, but is on relatively widely circulated magazine.

Here's another article from them, "Why The Fed Will Go Negative".
https://www.forbes.com/sites/vineerbhan ... 219421e3bc

I bet there are a lot of reputable people who think the Fed is going to do neither of these things who don't get their articles about such published. Why? Because of headline clickability, IMO.

[pcsrini]

Thanks, all but I don’t think a lot of folks would have expected the level of Fed support in March to inject liquidity and support corporate bonds. There are a number of threads expressing surprise at how well the market has done since March, and the reason cited most often is “don’t fight the fed”. If there is a prolonged downturn, is this a huge stretch ? Has the Bank of Japan not purchased stocks ? I would really like to be educated why this could not happen here. Thanks again ..

[DesertMan]

Let's make it actionable then.

The question is, is the notion that the Fed will be buying stocks already priced in to the market? If so, or not, how would that affect a person who has cssh on the side and is deciding whether to increase equity allocation?

IMO, I think that it is priced in and this fact explains the monster rally. As such the general principle of staying the course should apply. The person considering buying in may wish to hold off in the event that the recession worsens and the cash is needed for emergencies.

[pcsrini]

Let's make it actionable then.

The question is, is the notion that the Fed will be buying stocks already priced in to the market? If so, or not, how would that affect a person who has cssh on the side and is deciding whether to increase equity allocation?

Thanks for framing it correctly.

[Robot Monster]

If there is a prolonged downturn, is this a huge stretch ? Has the Bank of Japan not purchased stocks ? I would really like to be educated why this could not happen here. Thanks again ..

Isn't the article saying the Fed will buy stocks, not could conceivably?

[Misenplace]

This topic has run its course (non-actionable, US economic policy) and has been locked. See Non-actionable (Trolling) Topics:

If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include:

• US or world economic, political, tax, health care and climate policies
• conspiracy theories of any type
• discussions of the crimes, shortcomings or stupidity of other people, whether they be political figures, celebrities, CEOs, Fed chairmen, subprime mortgage borrowers, lottery winners, federal "bailout" recipients, poor people, rich people, etc. Of course, you are welcome to talk about the stupid financial things you have done.

Speculation on possible Federal monetary policy is off-topic for the forum.