It’s been a big week! But don’t lose focus on the long term.
Too many people are making a big deal over the Fed’s announcement earlier this week, resulting in traders kicking up a lot of dust in the markets and the talking heads dissecting the meaning of the announcement. Let’s keep a few things in perspective:
1) Nothing substantially new was stated except that the Fed’s bond buying may begin to taper off at the end of this year as opposed to early next year.
2) This was not unexpected news. This was already hinted at a few weeks prior. We already knew this.
3) The life support, QE3, or Fed’s efforts to help the economy must end someday. Did everyone forget that it was bound to happen?
4) Bernanke even stated that any policy changes would be contingent upon the economy’s CONTINUED growth. As the economy strengthens and can stand on its own, the Fed would reduce aid accordingly. And at that time, shouldn’t it be celebrated rather than shunned?
There is some volatility in the markets as a result this announcement. It may continue for a while. Is it a little speed bump or is it the sign of something more? We will wait for the dust to settle to see where things stand. We may see opportunities as the market rebounds.