I'm fairly new to macroeconomics but am trying to learn so my children will have something to gain. In an short ELI5; pull money from markets just prior to end of tapering when bond market interest increases substantially, wait for near bottom and reinvest, shortly after Fed will resume printing money because the US cannot sustain selling treasuries at high interest rates and those rates will subsequently plummet. This in turn will move money back to the stock market from treasuries.
I would say that we have the expectation that prices will fall so long as tapering is continuing, because the markets expect tapering to succeed. Recommend to Dollar Cost Average in for now with the expectation that prices will keep dropping while holding a larger amount of cash for a lump sum buy when instability starts to emerge in the treasury bond markets. At that point we will know a bottom is near and its time for a larger purchase. After the bottom occurs we go back to a dollar cost average while the Fed ramps up their emergency measures again. There will be a point when euphoria returns to the markets, at which point I would recommend ending the DCA, and simply spending cash on whatever is needed or wanted and watching to see how the Fed tries to spin the narrative and if another attempt at tapering will be made or if a pivot to some new market activities will occur.
Looking forward to this journey with my fellow frogs.
Thank you for all the work you are putting into this.
I'm fairly new to macroeconomics but am trying to learn so my children will have something to gain. In an short ELI5; pull money from markets just prior to end of tapering when bond market interest increases substantially, wait for near bottom and reinvest, shortly after Fed will resume printing money because the US cannot sustain selling treasuries at high interest rates and those rates will subsequently plummet. This in turn will move money back to the stock market from treasuries.
Not exactly.
I would say that we have the expectation that prices will fall so long as tapering is continuing, because the markets expect tapering to succeed. Recommend to Dollar Cost Average in for now with the expectation that prices will keep dropping while holding a larger amount of cash for a lump sum buy when instability starts to emerge in the treasury bond markets. At that point we will know a bottom is near and its time for a larger purchase. After the bottom occurs we go back to a dollar cost average while the Fed ramps up their emergency measures again. There will be a point when euphoria returns to the markets, at which point I would recommend ending the DCA, and simply spending cash on whatever is needed or wanted and watching to see how the Fed tries to spin the narrative and if another attempt at tapering will be made or if a pivot to some new market activities will occur.