Central banker intervention or not, stick to your rule set

Today there is more speculation by some on a next round of QE from the Federal Reserve.  The recession in Europe, the UK, and Japan has already begun.  North America is very likely destined to couple and follow this global trend down.  If the Fed does announce more QE it will be the next desperate attempt to prop up the banking system and artificial asset values in the real estate and the finance sector.  It will not arrest the recession underway.  It will not revive consumer demand or create jobs.  It will not therefore change the fact that the stock market at current levels is over-valued, low yield and unattractive.  Prices may leap into yet another manic phase, but this will surely be even more fleeting and dangerous than the other manic phases which have followed each central bank intervention to date with increasingly diminishing returns.

For those who wish to ‘play’ the “QE trade”, you better have your rules clearly defined and you better have lots of luck on your side.  The road to financial ruin is thickly littered with decades of the brave, brilliant and foolish who have tried their hand at running the tables. 

For those who do not wish to gamble with their life savings, they may want to wait for the fatter pitch which will be come after the markets acknowledge that the next global recession is devouring the optimistic analyst community and their rosy estimates.

None of us individually control markets or other people.  All we can control, is when, and on what terms, we choose to participate.