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Should investors worry QE3 has ended?

Originally published on RGJ.com ‘s website http://www.rgj.com/story/money/business/2014/11/16/robert-barone-investors-worry-qe-ended/19080941/

As October ended, the Fed announced an end to its controversial money printing policy, known as QE3 (the third round of quantitative easing). In QE3, the Fed purchased large quantities of U.S government securities. When the Fed purchases bonds, it creates new money in the form of bank reserves.

For the past five years, the liquidity created by the Fed via this process has found its way into the equity markets, causing the Standard & Poor’ s 500 to triple from its March ’09 low of 676.53 to 2,039.33 as of the close of business on Thursday. One thing of note in this particular business cycle is that rising equity prices go hand-in-hand with the growth of the Fed’ s balance sheet. So, now that this

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Did October’s volatility keep you up?

Originally published on Reno Gazette Journal ‘s website http://www.rgj.com/story/money/business/2014/11/02/robert-barone-octobers-volatility-keep/18306213/

In the middle of October, the equity markets became quite volatile, worrying about such things as a growth slowdown in Europe, China and the developed world; the impact of a stronger dollar on multinational corporate earnings; and Ebola, ISIS and other geopolitical issues. The worry was, and still is, that any one of these could have a negative impact on growth in the U.S.


Market volatility runs in cycles. About 85 percent of the time, the market is in a mode of low volatility and rising prices. It’ s the other 15 percent of the time that causes ulcers, as prices

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