The FED announced today that they would begin their tapering this month. If this announcement was made a few months ago, the stock market would sell off and throw away a baby with bathtub water. The media would be all red screaming “end of the world.”
Yet today, after the FED’s announcement, the stock market jumped up hard. After a week of doing nothing. I know that there is the saying of buying the rumors selling the news, in this case possibly “doing nothing on rumors and buying the news…” or whatever. That probably didn’t apply. Well, this is what happened today:
The entire day – nothing. At 2 pm, the market rallied like it was also an end of the world.
I consider myself a seasoned investor and trader but this different perception of the same event still baffles me. I wonder why investors considered this a good thing when everybody considers the easing of easy money a bad thing and predicts the market to crash when the stimulus is taken away… Although history has proven that raising rates is not bad for the market. This time, it is only bad for the high-flying stocks with astronomical P/E and no “E” and revenue. But even ARKK that invests solely in this type of stock rallied.
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