Imagine if Your Company Kept Changing Its Stragegy Like the Fed Does
This week's Fed meeting concluded with a statement that leaves open the possibility of a rate hike in December. This follows their last meeting where they announced they would likely not raise rates near term. It surprised some people.
Would you want to work for a company like that, especially if you were one of those managers in charge of production? Wouldn't you think, "What's wrong with these people? Whey can't they make up their minds?" In fact, you'd likely lose any confidence whatsoever that they knew what they were doing.
Now imagine that such waffling back and forth went on for years. Might you consider finding employment at a company that offered a clearer, more stable sense of direction - before the constant jerking around caused you to succumb to some stress-related disease?
Anyway, you get the point. The Fed has finally arrived at the point where they're incapable of smoothing out their "jerking around" comments. Now it's every month or so this way, then that way. Nothing's ever actually done - at least so far. But a lot of people who actually pay attention to what these pooh-bahs pronounce at each meeting are becoming frazzled.
No one wins now except for the speculators - the successful ones that is. But even here, the number of successful speculators (read "Hedge Fund managers") has dwindled. Over 1300 such funds have closed their doors in the last year. We might reasonably expect more to follow. Apparently Fed jerking around was too much for them.
So what's the solution? You can't just totally ignore these people if you're trying to prudently manage your money. Of course, you could take the "buy and hold" position and just stick with your current asset allocation come hell or high water. But those who took that approach in 2008 lost a lot more money than I, for one, would find acceptable. It really presents a dilemma, doesn't it? Maybe if we all just said, "End the Fed!" in a great chorus, we'd resolve this nonsense. But do you think that's happening anytime soon - either the chorus or the result? Too many make money - or try to - following these pooh-pahs' pronouncements. Too many believe we can't survive without a central bank. Besides, something you may not think about much, but the Fed Chairman, er, Chairperson, is one of the most powerful individuals in the world. And the minions that serve the Fed bask in the power and glory, never mind get paid rather well for the studies and commentary they provide. So the Fed-sters aren't giving up all that without a fight.
Looks like they're here to stay - for the moment. And we're stuck with being constantly jerked around.
Part of the reason for the surprise was that only last month officials seemed concerned that slowing growth abroad could delay progress toward attaining higher inflation, which Fed-watchers viewed as a warning that liftoff might get pushed into 2016.Imagine if you worked for a company that sells cars that changed its strategic plan every month or so. Last month your CEO announces a ramp-up in manufacturing to meet current and anticipated demand for vehicles. This month manufacturing is put on hold due to "new" data that shows that the old data wasn't quite right: demand will likely fall due to anticipated falling demand. Next month, your CEO cites additional data that confirms the need for more manufacturing. And so this continues month by month. Each month plant managers adjust their parts orders, work shifts, etc. Eventually chaos reigns. Nothing ever really changes, but the company managers spend more and more of their time rearranging their plans based on the latest trend prediction. Eventually everyone's frazzled and chaos reigns.
Would you want to work for a company like that, especially if you were one of those managers in charge of production? Wouldn't you think, "What's wrong with these people? Whey can't they make up their minds?" In fact, you'd likely lose any confidence whatsoever that they knew what they were doing.
Now imagine that such waffling back and forth went on for years. Might you consider finding employment at a company that offered a clearer, more stable sense of direction - before the constant jerking around caused you to succumb to some stress-related disease?
Anyway, you get the point. The Fed has finally arrived at the point where they're incapable of smoothing out their "jerking around" comments. Now it's every month or so this way, then that way. Nothing's ever actually done - at least so far. But a lot of people who actually pay attention to what these pooh-bahs pronounce at each meeting are becoming frazzled.
No one wins now except for the speculators - the successful ones that is. But even here, the number of successful speculators (read "Hedge Fund managers") has dwindled. Over 1300 such funds have closed their doors in the last year. We might reasonably expect more to follow. Apparently Fed jerking around was too much for them.
So what's the solution? You can't just totally ignore these people if you're trying to prudently manage your money. Of course, you could take the "buy and hold" position and just stick with your current asset allocation come hell or high water. But those who took that approach in 2008 lost a lot more money than I, for one, would find acceptable. It really presents a dilemma, doesn't it? Maybe if we all just said, "End the Fed!" in a great chorus, we'd resolve this nonsense. But do you think that's happening anytime soon - either the chorus or the result? Too many make money - or try to - following these pooh-pahs' pronouncements. Too many believe we can't survive without a central bank. Besides, something you may not think about much, but the Fed Chairman, er, Chairperson, is one of the most powerful individuals in the world. And the minions that serve the Fed bask in the power and glory, never mind get paid rather well for the studies and commentary they provide. So the Fed-sters aren't giving up all that without a fight.
Looks like they're here to stay - for the moment. And we're stuck with being constantly jerked around.
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