In his final official public act, Federal Reserve (FED) Chairman Ben Bernanke announced that the FED will begin tapering down its program of buying U.S. bonds to keep interest rates low (QE3). The markets had initially feared any tapering action, but Bernanke also said that the FED will keep interest rates very low for a long time so the economy can gain the momentum it needs. The markets rallied and recovered from the recent 2-week 2% drop by interpreting both actions as positive, believing the following:
- The tapering actions show that the FED views the U.S. economy as getting stronger and therefore will need less liquidity help.
- Maintaining low interest rates (0-.25%) for the long term will help businesses achieve higher profits from a hoped-for stronger economy going forward.
What this means for your investments
Maintain the same asset allocation as our TSOA Retirement Account Allocations, which have performed very well this year. At InvestBetterSpendSmarter.com, we see no immediate reasons to change these allocations going into early 2014. However, should there be any changes, we will announce them on this blog site, so we encourage you to subscribe for free alerts.
Also continue to take advantage of any short-term drops in the 15 holdings of our Fun Stocks Index, and accumulate your positions for 2014. [If you haven’t yet created your own Fun Stocks portfolio, please read our blog on how to do that.]
The Fun Stocks Index set another record (up 625.34% since January 1, 2009). Here are some comparisons with other indexes:
Since January 1, 2009
Fun Stocks Index Up 625.34%
Dow Jones 30 Index (DIA) Up 84.83%
NASDAQ (QQQ) Up 189.64%
S&P 500 (SPY) Up 101.35%
Wishing You Good Investing for 2014 and Beyond!