Relevant:
- Fed Mulls QE3, Skeptical Of The Recovery And Cautious On Policy
- Hussman: "These Go to Eleven" (The "Spinal Tap Market")
- Scotiabank Says Measures are not sufficient to ward off a Deterioration in U.S. Economy
- Fed's Quantitative Easing to Starve Middle Class Americans
- Money Markets "Easing" Despite Impotent Fed Policy (BLOWUP IMMINENT?)
2013-06-03 — hussmanfunds.com
One of the most strongly held beliefs of investors here is the notion that it is inappropriate to "Fight the Fed" -- reflecting the view that Federal Reserve easing is sufficient to keep stocks not only elevated, but rising. What's baffling about this is that the last two 50% market declines -- both the 2001-2002 plunge and the 2008-2009 plunge -- occurred in environments of aggressive, persistent Federal Reserve easing.
... the maximum drawdown of the S&P 500, confined to periods of favorable monetary conditions since 1940, would have been a 55% loss. This compares with a 33% loss during unfavorable monetary conditions. This is worth repeating -- favorable monetary conditions were associated with far deeper drawdowns.
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