Warning Signs Investors Should Not Ignore

By David Karp, PagnatoKarp

"QE is one such event that will likely be disruptive..." - David Karp

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Don't Fight The Fed? It seems a day doesn’t go by when we are questioned as to why the stock market keeps rising. Despite relatively stagnant fundamental underpinnings, corporate earnings, and economic growth, new record highs are practically a daily headline. In the past, we have written on behavioral traits and similar historical occurrences to help explain this phenomenon. In this article, we provide another supporting factor of higher equity prices as we tackle a topic that is vitally important to investing, yet one that few investors truly grasp. Importantly, it decomposes the centerpiece of monetary policy of the post financial crisis (2008) era and offers additional perspective on the world as we see it.

In December 2008, during the peak of the financial crisis, the Federal Reserve (Fed) lowered the Federal Funds interest rate to zero. In taking this unprecedented step many investment professionals assumed the Fed was out of bullets to stem the crisis. Federal Reserve Chairman Ben Bernanke proved them wrong by introducing Quantitative Easing (QE)...

Read the full article here: "Warning Signs Investors Should Not Ignore"

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