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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Bank Holding Company who wrote (289712)	11/7/2010 11:10:37 AM
From: Giordano Bruno	Respond to of 306849

...Currently the Fed is on a last ditch mission to blow another bubble in assets like they did in tech stocks in the 1990’s and then again in real estate only a few short years ago. One has to wonder, if pumping up the stock market artificially is a great wealth creator and is good for our nation, why would they ever stop? If wealth is made by printing money and forcing it into the stock market and by that, everyone is richer and spending money, wouldn’t it be a great idea to keep doing that all the time? I mean, why stop if you can lift the value of the Dow to 100,000 instead of 10,000? We would all be 10 times richer and spending so much money from the wealth effect that recessions and market crashes would be that of myth and folklore. The unfortunate thing most people do not see or understand is that these crashes and deep recessions would probably not happen if the Fed were not artificially inflating markets. Investors need to conclude that the Fed did not save us from market crashes, their policies provided the animal spirits that created the bubbles that crashed after reality set in. This time will be no different. Conservative strategies in an artificial world will lag in performance during the artificial rally. The temptation will be strong to throw reason, logic, and caution to the wind and join the party for most investors. If you can’t beat them, join them will be the mantra. Conservative strategies though will be standing when it all comes apart yet again as it has every time markets were artificially pumped up in the short term. seekingalpha.com