New Fed Chair Kevin Warsh Wants to Blow Up the Playbook That's Kept Stocks Rising for 15 Years. Here's What Investors Should Do Now.
View original at nasdaq.comNew Fed Chair Kevin Warsh Wants to Blow Up the Playbook That's Kept Stocks Rising for 15 Years. Here's What Investors Should Do Now. Key Points New Fed chair Kevin Warsh wants to shrink the Fed's balance sheet…
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Investors should reduce exposure to QE-dependent stocks, increase exposure to financials like Berkshire Hathaway, shift bonds to shorter durations, build cash, and maintain a long-term perspective.
60% confidenceTech stocks with sky-high earnings multiples could see their valuations reduced as higher discount rates are applied to their projected future earnings if the Fed reduces its balance sheet.
60% confidenceThe Fed's balance sheet disproportionately helps those with financial assets.
60% confidenceStock Advisor has a total average return of 993% compared to 207% for the S&P 500.
60% confidenceKevin Warsh wants to aggressively reduce the Fed's balance sheet and believes the Fed should use interest rates rather than its balance sheet as a policy tool.
60% confidenceWarsh's desire for a smaller Fed balance sheet means that the Fed Put is somewhat deeper out of the money but remains present in the event of a real crisis.
60% confidenceA shrinking Fed balance sheet won't be catastrophic; markets will adapt over time to any changes under Warsh's leadership.
60% confidence
Data points we hold from this source
| S&P 500 Index Fund · benchmark return | 207 percent |
| S&P 500 Index Fund · price appreciation | 6 multiple_x |