QEInfinity and the Stock Market: A Chart

The bracing doomsayers at ZeroHedge think they are seeing some price-inflation effects of recent monetary policy, in the stock market:

Past Future is no Result Guarantee of Performance, and all that, Dow 36,000 is always just a shot away, and by definition half of the stock brokers in the world deliver below average performance.

Federal Reserve strongman Ben Bernanke, like Ben Bernanke do, sees no bubble problem on the horizon with stock prices.

My advice is: buy if you wanna buy, sell if you wanna sell, just so long as you're happy. (Note: not a licensed financial advisor.)

Comments

[some guy]

How many stock brokers in the world deliver below index performance? I bet it's a lot.

[Smilin' Joe Fission]

The Plug is making a killing, or so I have heard.

[Night Elf Mohawk]

After taxes and fees, the overwhelming majority. And, even for the ones who don't, you still have the problem of knowing in advance which ones they will be.

[GILMORE]

some guy|3.21.13 @ 1:14PM|#

How many stock brokers in the world deliver below index performance?

"brokers" dont offer any such service. Brokers are simply allowed to make transactions on clients behalf. Some actively solicit trades, but that is strictly regulated.

Fund managers and advisors aim for a specific type of strategy, only some of which are index based. Fu

The main thing an advisor does is invest client money with an aim for managing risk based on the client's profile. Taking 100% market-risk is not appropriate for most. ergo - they diversify and aim for the best risk-adjusted return possible.

The best managers don't 'beat the market' - but they provide a better risk-management approach than simply being long the SPY all the time.

below comment regarding fees is exactly right. expenses are a bitch. use cheap ETFs. I think the mutual fund world is a complete scam getting rich off people's retirement savings. unfortunately it is a collusion between 401k plans, many of which only allow people limited choices of funds. If i had to choose between a company plan with limited matching, and going it on my own with a cheaper (sub 1%) advisor, i'd do the latter.

[some guy]

You know what I meant... Forgive me for using the terminology of the OP.

[Adamsmith1776]

When BenBernanke sees no bubble, isn't that the surest sign of a bubble?

[DesigNate]

My sources say yes.

/magic 8 ball

[Doctor Whom]

I think the surest sign of a bubble is that the talking heads take great pains to insist that it's not a bubble this time.

[Doctor Whom]

Okay, scrap that comment.

[some guy]

The surest sign of a bubble is that a central reserve bank is in place and issuing fiat money.

[Fist of Etiquette]

Man, that Global Warming is getting out of hand.

[MikeP]

Indeed, the stock market rising on news that the Fed would continue its low interest rate policies is not expressing confidence in the economy, the Fed, or the government.

It's the natural result of yet more assurance that interest-tied investments will not perform well, and if you want even speculative returns the stock market is the only game in town.

[Sevo]

"It's the natural result of yet more assurance that interest-tied investments will not perform well, and if you want even speculative returns the stock market is the only game in town."

But the progs all assure us the money is 'hoarded' under the mattress.
BTW, I agree; money is going to look somewhere to find returns, and as for interest, you might as well bury it in the backyard.

[Night Elf Mohawk]

...and by definition half of the stock brokers in the world deliver below average performance.

I don't think so.

[Warty]

That housing bubble article is astounding. If only I could have gotten government funding for my murdercoaster and put Ben Bernanke on it 2005, I could have saved us all a lot of trouble. So, really, you damn meddling libertarians are to blame for all of this.

[Irish]

My whole life I've yearned for an economy that cannot sustain itself and relies on a constant state of Quantitative Easing.

Thankfully, George Bush, Barack Obama and Ben Bernanke arrived in order to bring my dream to life.

[Archduke Pantsfan]

This looks like another graph we keep seeing.
Coinquy-dink? Don't buy it.

[WC Varones]

Zero Hedge is a daily must read for libertarians on the subject of central planning and crony capitalism.

The ZH guys themselves are very anarcho-libertarian leaning.

[DanD]

Yeah, but there's also some profound baloney in there. The last straw for me was when they mentioned a car lot in Germany that served as a holding channel for Audis fresh off their leases, where Audi chose to destroy them rather than risk cheaper cars and parts from getting on the market.

It sounded too ridiculous to be true and there were no sources provided. Sure enough I did some research and found that, indeed, the article was incorrect.

[DaveAnthony]

I also had to stop reading it because it gets a little too hokey-conspiracy-theory sometimes. There is definitely good stuff over there too, but I wish they'd just tighten up their posting quality controls a bit.

[hamilton]

I continue to read these articles at Zero Hedge, continue to believe they're on to something, and continue to have no fucking clue what to do with my 401k.

[The Sego Sago Kid]

Soooo.. withdraw all my money and put it under the mattress so it slowly devalues via inflation; or leave it in the stock market until it crashes and lose it all at once?

Decisions, decisions. Is K-Y publicly traded? Maybe it's time to move my entire portfolio into lube futures.

[GILMORE]

The Sego Sago Kid|3.21.13 @ 2:24PM|#

Decisions, decisions. Is K-Y publicly traded?

uh, johnson & johnson dude.

[The Sego Sago Kid]

As if I read the label.

[GILMORE]

right. you're face down i presume.

[darius404]

You can always store it in a bank so it slowly devalues via inflation or is appropriated by the government. That's an option too.

[BakedPenguin]

Are there no commodity based options?

[hamilton]

I actually did really well in the gold fund and even (sorta) pulled out of it and into growth at the right time. Wondering if/when to go back to gold.

[BakedPenguin]

It's tricky, as Europe looks like shit, and if the Euro plummets, that could actually help the dollar, which could make gold temporarily dip.v It sounds like you're still in gold a little bit, which is probably the best position.

If possible, short green energy stocks.

[R C Dean]

Libertarians like open borders too,

[R C Dean]

Oopsie. What I was trying to say is:

I held on to my gold mining stocks a little too long. I'm baffled by their performance, generally, so I'm not sure when I'll go back. I have this feeling that they are going to do a moonshot at some point, but I have no idea when.

I think gold itself may have put in a bottom,

[Auric Demonocles]

I wish that was a chart of the amount of alt-text Reason was using.

[hamilton]

You're Johnny One-Note on this topic, but your heart is in the right place.

[Auric Demonocles]

I talk about a lot of other stuff too. I just always make sure to comment on the alt-text first. At least I put some effort into making the complaint different each time...

[Tim]

Is there a chance the track could bend?

[A Mathematician]

By definition, half of the stock brokers in the world deliver below MEDIAN performance. Not average.

[John Thacker]

So the fact that the stock market has gone up (by considerably more than any measure of inflation expectations) is evidence that QE is bad?

Why do I get the feeling that if the stock market had gone down, that would also be used as evidence that QE is bad?

There are a lot of supply-side factors reducing real growth. I don't see how QE is one of them.

Tell me when we actually have high inflation, and the accompanying high interest rates one would expect.

[TheZeitgeist]

Tell me when we actually have high inflation, and the accompanying high interest rates one would expect.

The Federal Reserve currently buys ~50% of the Treasury's debt every month - with money they printed same time.

What do you think interest rates would be on those 'securities' without such banana republic shenanigans? If the price of those bonds matched the (non-inflated) demand?

And of course the investment houses that get the loot (primary dealers flip the bonds between Treasury and the Fed because its 'illegal' for the Fed to buy bonds) are smart enough not to go buy more Treasuries or other sovereign debt, so they go try their luck with their computer-whiz programs at their trading desks - which is to say stocks.

So John Thacker, what do you think happens when Bar Mitzvah Ben gets his Xerox turned off?

I don't think Ben can turn it off anymore, our 'modern financial system' would implode without its sugar-daddy dealer of last resort. Do you think otherwise?

[Harvard]

I think you're correct.

Truth be known Ben wished for a Romney win, and a Tea Party influenced return to fiscal sanity. The market would head south which (as it must/will whenever the Fed pumping comes to a close. Ben could then argue for his legacy that he was correct all along.