(05-12-2013, 11:54 PM)pianist Wrote: [ -> ]I just puzzled on how a pull on the QE plug can be a big crash trigger..any enlightenment?
see porkbelly's post #846
He put it across quite clearly!
(05-12-2013, 11:54 PM)pianist Wrote: [ -> ]I just puzzled on how a pull on the QE plug can be a big crash trigger..any enlightenment?
I think it is not the actual tapering that will cause a havoc, but rather the anticipation of a coming tapering that is creating nervous in the market. If tmr Feb comes out and say that they will start tapering on XX date at $XX, I am quite sure the market will cheer and rally. Not to forget that tapering means the Feb thinks that the economy is strong enough, or at least there are signs that the economy is strong enough to require less assistance. Can that be a bad news?
1) Interest rate rises by an independent Central Bank is usually based on heightened growth or inflation. If it is the former it is structurally positive but negative for the latter. Tapering is not the same as rising rates per se, but the mechanism transmission should be similar.
2) But that's from the perspective of the US. If the currency of the world start appreciating and withdrawing liquidity, what is the impact on Asian markets? For strong markets like Singapore and HK which liquidity is becoming more a problem in asset prices than help, it is longer term positive but short term pain. For weaker markets like TIP and even the recovering EU, it may be much more trickier
3) Those academics that think QE is useless should not fear QE withdrawal. I'm wondering if anyone wants to bet a dollar on that.
(06-12-2013, 09:59 AM)specuvestor Wrote: [ -> ]3) Those academics that think QE is useless should not fear QE withdrawal. I'm wondering if anyone wants to bet a dollar on that.
Wait, was that a pun ?
Everyone know that QE cannot go on forever. It has to end one day, and that one day is getting nearer and nearer. IMO, that is a good news as the world’s economy is somehow distorted by this flush of liquidity. No one can know for sure when the optimal time to start tapering is, there are definite risks involved, just as when the decision to start QE involves risk as well. Precisely because of this reason, I believe the Feb, or any central bank will be very conservative in their approach to tapering, the effect should be much less than what most are expecting, or imagine.
Perhaps it is time to take the short time pain for long term gain, IMHO.
When i read MAS concerns, i am surprise as after all we have gone through AFC. We are Veterans.
Will terminating the QE means 2008 crisis back again + Inflation ?
i think because of QE, many hard assets which are worth 100s, are now thousands, thousands are now 100s of thousands and thousands are now millions.
Can we consider stocks as soft or hard assets? Or is there such thing as in between assets?
Anyone diversifies into real estates, gold or any alternative investments?
Ah...! Thinking of Assets Allocation again.
“The Essence of Investment Management is the Management of Risks, not the Management of returns”, Benjamin Graham.
“Therefore Proper Allocation of Assets and Entry Level are the 2 most crucial actions.
Nothing you can do is better to Control Risks and Generate profit,” Dick Davis.
I do hold an investment property. But it does not turn into millions now... Still sub-million...
I think if our small investment property from 100s of thousand turning into a million or two, it also means now we need a lot more money for our daily living. So most people without capacity to do asset allocations will be affected most.
In fact it's happening to a certain extent now.
when the fundamental of the economy is still fragile, yet everyone are so happy to make money from stock markets, and corporates keep reporting bigger earnings, this is an obvious sign of bubbles. IMO we are at the bull run maturity stage but bubbles is still not big enough to burst, I think 2014 could be still good/stable year for stock market, but I prefer to prepare ahead of others.