Training Wheels

Remember when you first started to learn to ride a bike and your parents installed training wheels so you won’t take a hard spill? The reaction to Bernanke statement reminded me of that experience. For almost four years the “training wheels” or QE (buying bonds) have been the practice of the Fed, but now Bernanke has decided to raise the wheels a little to see how the economy reacts. I recall from my own experiences that after my father raised mine I was pretty shaky for a few days until I realized that it wasn’t so hard after all.  This is my observation of what has happened these last three weeks with the markets. As I am writing this on Tuesday morning the market is up 118 points.

As you know, I use various market indicators to get a sense of where the market is heading. What I find most interesting is there were a lot more red lights in February than there are today; in fact, green is the dominate color. No one can predict a market and maybe I missed something; but I thought that when a person of Bernanke’s stature says the economy is getting better this would be good for stocks.

Since 1945, the market has corrected 5% to 10% every year. What we experienced in the market this month is a classic example of behavioral finance; where focusing on negatives instead of positives is one of the most prominent mistake of investors. The bull market is still very much intact and this adjustment or correction was needed and healthy.

Bulls do stop and catch their breath once in a while.



About billriley

Chief Executive Officer, Chief Compliance Officer A co-founder and shareholder, William Riley is a 33 year industry veteran, who observed, many years ago, that over time institutional investors typically outperform individual investors while accepting less risk. In his role as Chief Executive Officer, Bill works tirelessly to make the wealth management strategies used by the world’s wealthiest families and largest institutions available to our firm’s individual clients. Bill combines fundamental and technical analysis to minimize investment portfolio risk and maximize potential returns. He uses a variety of non-correlated asset classes, including alternative investments, to minimize portfolio volatility and seek absolute returns in down or flat markets. Finally, Bill believes in a comprehensive approach to wealth management that fully coordinates and seamlessly integrates portfolio management, risk management and asset protection, trust, estate, tax and charitable planning. Prior to co-founding Riley Wealth Management ,LLC, Bill held management positions at Merrill Lynch, UBS, Raymond James, Paine Webber and J.C. Bradford. Bill founded Fort Worth branches for Raymond James and J.C. Bradford. Prior to entering the financial services industry, Bill ran his families closely held businesses. Bill’s experience operating family businesses combined with his wealth management experience makes him uniquely qualified to advise entrepreneurs and business owners on a variety of matters including complex and sensitive issues relating to business succession. Bill’s degrees and designations included a Masters Degree in Business Administration (MBA), the Chartered Financial Consultant designation (ChFC), the Chartered Life Underwriter designation (CLU) and the Wealth Management Specialist designation (WMS). A Fort Worth native, Bill is a TCU alum and active in many civic and charitable organizations. Bill and his wife, Marsha, now reside in Colleyville, and they have four grown children and four grandchildren. When he is not working on portfolios or studying financial markets, Bill can be found on the golf courses of Ridglea Country Club.
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