When Good is Bad, and Bad is Good - The Story of Global Stock Markets

The last few weeks have seen the global stock markets riding a roller coaster of volatility like we haven't seen in quite a while.  As the American economy starts to gain momentum towards a stronger recovery, we see the Federal Reserve (the Fed) starting to plan for tapering Quantitative Easing (QE).  

IT seems to defy logic that every time we get good economic news the markets seem to go down, as people start to worry what will happen when the Fed "turns off the tap" on its bond buying, which is largely credited for the gains in the stock market over the last number of years.  If there is a bit of disappointing news the markets move up in hopes that it will delay the Fed's reduction in QE. 

For those of us that enjoy investing in stock markets, I am afraid that we are going to have to weather a storm of illogical behaviour as the world tries to wean itself off of government stimulus.

Whether you agree with everything that the Fed has done since the Great Recession, you have to admit that the results have helped to "hold up" the U.S. economy "buying time" to shore things up and start moving in the right direction.  I am confidant that the pace and means of their exit from bond buying will be done very carefully with a goal of minimizing disruption. 

Unfortunately the irrational response of traders, investors and institutions is beyond their control.  Just remember, the reason that they are trying to get out of the markets is because the economy is in good shape.  How can that be a bad thing?????

  As always I can be found on Twitter and Linked-In.

Bill Roth
The Success Junkie