In recent weeks, the market has experienced a slight pullback. This is due to the fact that short-term volatility spiked over fear that the Fed may begin a process called tapering, or reducing its bond purchasing program meant to keep short-term interest rates at zero. Why is this so alarming? If the Fed scales back on their Quantitative Easing (QE) program and start to raise interest rates, investors holding longer dated maturity bonds will face steeper price declines as rates rise. In other words, long-term bonds may lose a significant amount of face value.
Fortunately, our investment committee anticipated this pullback. As a result, we had already reduced our exposure to the sectors that are suffering the most right now and built up cash reserves. In fact, this recent pullback built on short-term volatility will open up ideal buying opportunities for long-term investors. Our reasoning is that we want to take advantage of fear and panic in the market and buy securities that “go on sale.”
Read this week’s Thought of the Week to hear why our investment committee believes this is a great time to take advantage of the recent pullback in the market.
Click Here for the Weekly Thought As an Investment Advisory Representative working in conjunction with Global Financial Private Capital (GFPC) we are provided weekly thoughts on what is happening in the economy and the market. Written by our investment committee at GFPC we find these thoughts to be informative and interesting.