Investors Flee U.S. Stocks in Anticipation of Upcoming Scale Back

TheFed will be meeting Sept. 17-18 to decide whether to scale back its $85 billion in monthly bond purchases.

The factors that will determine their decision include:

  • We know that the bond purchasing has kept interest rates low but as we have seen, in anticipation of this upcoming pullback, interest rates have and will continue to go up. Is the economy strong enough to withstand higher interest rates? 
  • Has our jobs report changed significantly over the last year? 
  • Is the only thing holding up stock prices the Fed printing money? 

There is no doubt investor's recognize the possible affects of the Fed's decision whether to scale back.  According to a recent article from Investment News, Investors flee U.S. Stocks at fastest pace since 2008.

Domestic stock funds last week suffered their worst week since before the financial crisis as investors' fears over the Federal Reserve's plan to cut its asset- purchasing program spread to stocks.

More than $14 billion was pulled out of U.S. stock funds this week, the most in a single week since June 2008, according to Bank of America Merrill Lynch. 

Are Main Street investors being smart about this? My crystal ball doesn't say. But it does tell me that now one ever lost money selling a stock at a gain. Maybe you should think about that as well.