The Federal Reserve just recently made a rather blunt confession — their monetary policy has doubled the stock market through manipulation. No, the economy isn’t twice as strong — not even close. But the stock market is twice the price it would have been alternatively.
Basically, they admitted recently that the stock market is “earning” more than it should in terms of risk, and this has been because of FOMC (Federal Reserve) announcements. The Fed is constantly manipulating prices, like with Operation Twist and it’s likely slight impact on gold.
Remember, we don’t live in a free market. The market is incredibly manipulated. That means that the price of things doesn’t necessarily reflect their true cost or natural value. Plenty of assets are cheap and plenty of assets are expensive right now. It’s essentially a jungle that is absurdly manipulated by regulations and artificially easy credit.
The only portfolio that has benefited from this easily has been the fail-proof portfolio we’ve talked about before and other regularly re-balancing portfolios.
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