Financial markets can be challenging to understand. But when markets enter a “bad news is good news” cycle, it becomes even more difficult to follow along.
At its November meeting, the Fed outlined its plan to taper monthly bond purchases, which will end this pandemic-era policy response by July 2022.1
Bad news, right? The bond purchases were one of the ways the Fed supported the economy. Stopping the program would be like removing the punchbowl just as the party was getting going.
Not so fast. This time around, the financial markets said that bad news was good news. Ending the program signaled that the Fed had confidence in the economic recovery, and it no longer needed to support the financial markets.
But just a month ago, the bad news was still bad news. The financial markets hit a rough patch in late September after the Fed said it was preparing to reduce its bond-buying program as soon as November.2
If you have been investing for any period of time, it should come as no surprise to hear that the financial markets changed their mind. So remember, we’re here to help you keep focused on your investing goals while the financial markets sort out what’s good news and what’s bad.
Give me a call if you want to review your portfolio and/or investment strategy for 2022 to make sure you are still on track to achieve your financial goals.
Saul Simon is a registered representative of Lincoln Financial Advisors.
Securities and advisory services offered through Lincoln Financial Advisors Corp., (Member SIPC) a broker/dealer and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. Simon Financial Group is not an affiliate of Lincoln Financial Advisors. CRN-3948567-120721
1. CNBC.com, November 3, 2021
2. WSJ.com, September 29, 2021
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When Bad News Is Good News
December 03, 2021