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General Investing and Economics Discussion - No Politics
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<blockquote data-quote="Deleted member 2897" data-source="post: 801544"><p>[URL unfurl="true"]https://finance.yahoo.com/news/gundlach-on-the-markets-and-opportunities-144019630.html[/URL]</p><p></p><p>Really interesting point I'd never heard before:</p><p><em>"We've had a relationship between the Fed growing its balance sheet and the value of the S&P 500 that's been in place for years now ever since they started quantitative easing, and it's almost like a law of physics. It's like if you take the capitalization of the S&P 500 and you divide it by the Fed's balance sheet, it looks a lot like a constant."</em></p><p></p><p>That's very well said, and also why its best to never try and predict which way the market will go. If the market is very overvalued (it is), but the fed artificially holds interest rates down (it does) and buys bonds from corporations and the treasury and mortgage companies at the tune of $150B/month (it does), it keeps propping the market up. After all, that's indeed why they do that in the first place.</p></blockquote><p></p>
[QUOTE="Deleted member 2897, post: 801544"] [URL unfurl="true"]https://finance.yahoo.com/news/gundlach-on-the-markets-and-opportunities-144019630.html[/URL] Really interesting point I'd never heard before: [I]"We've had a relationship between the Fed growing its balance sheet and the value of the S&P 500 that's been in place for years now ever since they started quantitative easing, and it's almost like a law of physics. It's like if you take the capitalization of the S&P 500 and you divide it by the Fed's balance sheet, it looks a lot like a constant."[/I] That's very well said, and also why its best to never try and predict which way the market will go. If the market is very overvalued (it is), but the fed artificially holds interest rates down (it does) and buys bonds from corporations and the treasury and mortgage companies at the tune of $150B/month (it does), it keeps propping the market up. After all, that's indeed why they do that in the first place. [/QUOTE]
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