Ever since Ben Bernanke mentioned tapering, investors have been worried about the implications on their portfolios.
When you look at the chart above, there is no question that the stock market has been a beneficiary of Bernanke's massive expansion of the Fed balance sheet. When QE1 and QE2 ended, the stock market violently reacted to the downside. Now just the mention of tapering has many participants shaking in their boots. Should you be worried?
NEW YORK (MainStreet)—For Penn State alumni like David Ketchen Jr., revelations about the Jerry Sandusky child abuse scandal were devastating. Adding to the pain for Penn Staters, Ketchen believes, was ESPN's coverage of the scandal, which he thought sensationalized the story and questioned “the integrity of an entire university.”
The bond bull market has been running hard for over 30 years but it appears to be over as long-term rates hit historic lows in 2012. Many investors have never lived through a rising interest-rate cycle and aren't prepared for a secular bear market in bonds. As you can see in the chart below, the last bond bear market lasted just as long as the current bull.
Rising rates can inflict significant damage to bond assets which are supposed to be the safe side of an investment portfolio. When interest rates rise, the market value of bonds falls and the losses can be substantial.
“Don't call it a comeback / I've been here for years.” – LL Cool J
The U.S. service sector expanded in July at its fastest pace in five months. The Institute for Supply Management (ISM) reported that its service index rose to 56 last month, exceeding economists' expectations for 53 and a significant improvement over June's 52.2. A reading above 50 indicates the sector is expanding.