Also in this playlist...
This transcript is automatically generated
The stock market is on fire and you could argue it's all thanks to aggressive moves by the -- -- -- -- So what happens here investments when the spigot is turned off.
According to the Wall Street Journal a plan is already in place -- Federal Reserve officials have mapped out a strategy for winding down.
85 billion dollar a month bond buying program now that's according to John hills and -- writing in the Wall Street Journal he writes.
They plan to reduce the amount of bonds they buy in careful and potentially halting steps.
Joining me now Steve Crowley host of -- Crowley's American scene.
David not complaining CEO -- -- meaning financial group and Alan haft author of you can never be too rich David I'll start with you.
He told our producer -- bad and in this report carries a lot.
Of -- with professional investors why so.
Well a lot of people will listen to John and look at that as an indication from the -- what they're doing almost on -- -- announced basis.
But keep in mind that the Fed can try to move the market.
Without necessarily doing anything from a change in policy perspective they can just want to see investors move a certain direction.
And I think we're at a point where we want to see activity.
In the mortgage refinance area we -- -- see extra -- in real estate we wanna see some confirmation that the economy is gonna continue to move I get towards progressively better numbers.
And and they want to try to motivate that in -- market.
Steve do you you said that the Fed easing as what we feared it.
What are the potential downsides here.
Well a small investor Jerry asked to be very cautious at this point because they can buy high and sell low and that happens.
All the time it's called a small investor whipsaw slightly cautious I go with a dividend paying stocks that people watch list so -- stock because maybe 35 dollars now.
You may want to put on the stop loss of 31 dollars.
And let's say you want to buy a stock and that stock is 65 dollars.
You may want to buy that 55 or fifty dollars so people watch list from the market comes back down and it will love it.
Then you can buy that stock at a lower price and a.
So it's good to have plans it's always good to get your kids didn't have that I would have a shopping -- for a variety of things very quick.
Here's an interesting survey when will the Fed pull back was it as survey -- believe that economists.
55% said third or fourth quarter of this year next year -- later 45%.
Nobody expects the Fed to boost purchased at -- -- what do you make of this story and how are you telling your clients to react.
You know there's three things that will make the Fed actually start raising rates it's unemployment hitting about six and a half percent.
It's it's a pickup in the economy and it's also pickup in inflation and we're not seeing any three of those going on right now solemn -- people listen.
There's some risk out there you got to watch it -- the -- of the portfolios but don't jump to conclusions so fast and furious a lot of people are.
Well -- David Alan you're making a very good point that this economy it's not good.
Always told it was cracked up to date how does that influence what you're doing for clients right now.
You know we're looking at durable goods orders which continue to fade a major -- the S&P moves higher durable goods are moving lower -- moving lower.
Your standard in indicators of real economic activity.
They're not showing us what what the S&P S and so we see some weakness there would assume -- ten to 20% decline.
And that that could be that could be orchestrated here just again with the with the notion that the Fed's going to begin this taking the foot couch.
They may or may not do that Steve do you agree with a 20% decline in the -- and.
It's very possible I think eight to 10% even without the Fed backing off on their -- -- but.
I'd be very cautious here and you know set those stop losses.
And he'll stick with a dividend paying stocks.
And what that David's talking about -- of the resource stocks I like those and as the prices back off on those I'd be a buyer.
Alan you know what I see here -- is -- individual investors have been reluctant to get involved.
And just is they're starting to just is there thinking you may the stock market is a great place to and that.
Investing may be here comes a 20% sell locked you know that's likely.
I don't I'm taking a different opinion and what -- -- -- I think you know if people investing in good quality things and have a nice well diversified portfolio.
Stick with that if you have the time if you have the forecast of in a among the new law try to time the market stay with that -- an engine equality.
-- in a long way to get unfortunately.
Well unfortunately quality won't protect you in this environment to initiate a position in the S&P 500 at these levels.
If you look at a ten year rolling average of the price earnings multiple.
You locking in at best a 2% return over the next decade if you -- to take risk in the equity market for 2% return.
Which factoring in inflation is is kind of an ugly number.
That's really what you're signing on for here -- -- the best buddy is right at a -- when you're buying at lows not highs but then again somebody's front time and predict the market which nobody can do.
So although I understand what he's saying I also think that as long as you're as long as you understand where you going what you do with your money.
You shouldn't panic -- to try to digress a retreat from the market because once you retreat after 20% decline in what usually happens in the worst declines we've seen.
Right around the corners agreed and is a good grade increase and you don't want to miss those -- well.
Mark yeah that's a really good question Steve TOK I mean if we do you have some kind of pull back on what the feds do weighing.
Can market recover quickly or is gonna take a long time let me tell -- that last pull back after that financial crisis that was a doozy my friend I don't wanna go through that again.
Now well it could take a long time of economic indicators don't improve but you know I -- sir John -- -- -- -- many years ago.
And he said he made all the money in his life buying at the market lows when everybody was running for the doors is what is that.
Buy low and sell high and that was his advice back then in the eighties to small investor.
Not I -- figure out what -- -- -- highest steam -- now thanks for coming on tonight have real pleasure you guys did a great job thank you so much.
Filter by section