Here’s a thought to ponder…If the collective conscious of the market loses faith in the Fed’s (and other central bankers around the world) power to command our economic destiny, where do stock prices go? Do we revert back to 2009? Is the general opinion correct that the Fed has been the main driver of the stock market’s appreciation since the Great Recession? If so, when the faith is lost, where does the market go? Most would say down and I would agree. Yet, how far down and how fast?
All these questions above presuppose the Fed will lose its way and/or a great awakening will occur that will end in a general loss of faith in the Fed. Those are pretty big ideas and they are ideas that are being discussed. Whether they occur or not is a different story. My thought is that if such a situation does come to pass, does this mean that we end up with an S&P 500 index plunging below 1,000 and everyone going into a panic as we saw in ’09?
Thoughts to ponder as we move down the path of investment returns.