The Fed is going to stop buying bonds sooner or later. when that happens who wins?
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The Fed is going to stop buying bonds sooner or later. when that happens who wins?

This is a discussion on The Fed is going to stop buying bonds sooner or later. when that happens who wins? within the Economic, Precious Metals, Investing, Finance forums, part of the General Discussion category; Someone always wins and someone always looses when change occurs. The Federal Reserve is going to stop/slow down buying back bonds. When this occurs what ...

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Thread: The Fed is going to stop buying bonds sooner or later. when that happens who wins?

  1. #1
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    The Fed is going to stop buying bonds sooner or later. when that happens who wins?

    Someone always wins and someone always looses when change occurs.

    The Federal Reserve is going to stop/slow down buying back bonds. When this occurs what industries win and what industries loose? (granted we always seem to loose but we are the people).

    I ask as I have a small amount of money that I will be getting out of long term investment and converting into short term (months to only two years tops but spread out over this time period)

    I'm not looking for investment suggestions at this point, just what industries will and which loose. I believe this unsustainable buy back from the Fed of issued bonds must end at some point and it sooner rather than later.

    So winners and looser as this occurs both short term and long (people always loose).

    Thanks
    Dan O.
    Last edited by justdano; 07-15-2013 at 03:22 AM.

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    I'm no analyst, but it's a safe assumption that as the QE winds down, interest rates will climb and the cheap money for loans will begin to evaporate. I llok for things such as housiing starts and existing home sales, automobile sales/loans, and such to slow. Basically most manufacturing will see an increase in costs as they tend to fiancne raw materials with very short term loans at low interest rates to maximize profits and not tie up cash. Cash is on a significant run of being king in Corporate America and there are mountains of it sitting in corporate funds.

    With all that, I am looking toward industries/companies that provide the necesary, or at least perceived necessary, items for day to day life. Things such as energy and food.
    Piratesailor likes this.

  3. #3
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    Quote Originally Posted by Rigged for Quiet View Post
    I'm no analyst, but it's a safe assumption that as the QE winds down, interest rates will climb and the cheap money for loans will begin to evaporate. I llok for things such as housiing starts and existing home sales, automobile sales/loans, and such to slow. Basically most manufacturing will see an increase in costs as they tend to fiancne raw materials with very short term loans at low interest rates to maximize profits and not tie up cash. Cash is on a significant run of being king in Corporate America and there are mountains of it sitting in corporate funds.

    With all that, I am looking toward industries/companies that provide the necesary, or at least perceived necessary, items for day to day life. Things such as energy and food.
    I like your idea of "perceived necessary" as their reality and what investors need maybe another.

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    My philosphy has always been to invest for the long haul. If you have some discretionary funds to play with and are prepared to lose it all doing things like day trading can be fun, but it also requires a large learning curve and an enormous amount of time doing research and watching.

    If you will feel the pain of losing those funds then every transaction you make is like a football team facing 4th and long on every play.

    I'm personally looking to hunker down, since I feel what I have in the market is being artificially inflated and can't sustain the growth. There is no where to go but down when the printing presses run dry.

  6. #5
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    Quote Originally Posted by Rigged for Quiet View Post
    My philosphy has always been to invest for the long haul. If you have some discretionary funds to play with and are prepared to lose it all doing things like day trading can be fun, but it also requires a large learning curve and an enormous amount of time doing research and watching.

    If you will feel the pain of losing those funds then every transaction you make is like a football team facing 4th and long on every play.

    I'm personally looking to hunker down, since I feel what I have in the market is being artificially inflated and can't sustain the growth. There is no where to go but down when the printing presses run dry.
    So with the fed about to make a major change and stop buying bonds, what is your long haul philosophy in actual investment vehicles?

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    Each time its mentioned the market "collapses" a nifty sum. Its pretty clear this money is making its way into record high stocks. I'd find some that were over priced and sell a long term put option. Of course that's pretty risky stuff - I don't enjoy gambling like that but my brother does. He makes millions doing it - yes millions.

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    Ah, yes, the derivatives market.

    My brother and I used to make tidy little profits with the options. Money out of thin air, as we called it. A lot of fun, but a lot of anxiety comes with them. The same sort one feels when a white-knuckle sporting event is going to the wire.

    Something else that needs to be considered when one is trying to figure out how to survive the bleak economic future. China's currency is looking like the new reserve currency that will replace the petro-dollar.

    Yuan hailed as the world reserve currency | South China Morning Post

    I don't think we should be thinking only of the economic blow when the world turns en mass against the dollar, but consider that the military-industrial complex might not go out with a whimper.
    Ripon likes this.
    "Reality is almost always wrong."
    Dr. Gregory House

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    The loss of world reserve currency status will hurt. Will it cause complete economic collapse? Not if our leadership is smart. For example a lot of people thought England would never survive it in the early 70's and they did. I need to study that further to learn more. I'm sure it wasn't all peaches and cream but they did survive.
    Denton likes this.

  10. #9
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    Quote Originally Posted by Ripon View Post
    The loss of world reserve currency status will hurt. Will it cause complete economic collapse? Not if our leadership is smart. For example a lot of people thought England would never survive it in the early 70's and they did. I need to study that further to learn more. I'm sure it wasn't all peaches and cream but they did survive.
    Leadership? WE have no leadership. The foxes are watching over the hen houses, here. Our debt is beyond pale and the fiscal house is way out of order. We have no ally in the world so assist and a lot of enemies who want to plow us under. Times for us are not the same as they were for England.

    We, The People, would do well to get the heck out of debt and learn to live as frugally as possible. I'm guessing we can expect a whole lot worse than what the people of southern Europe have experienced.
    rice paddy daddy likes this.
    "Reality is almost always wrong."
    Dr. Gregory House

  11. #10
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    That is a strong point. I doubt England had debts exceeding a years GDP when they lost reserve status. Though I'm still not convinced debt will be as bad as you think. Debt would be a killer in deflation, but in hyper inflation or even just serious inflation its not
    Denton likes this.

 

 
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