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Dr. Fed

Gary Black

When a doctor takes a patient off his meds, he does so usually only after the patient has shown sure signs of recovery. Generally, the patient himself realizes when he no longer needs the meds.

What the market seems to be implying in today’s sell off is that Dr. Bernanke and his colleagues at Hospital Fed will begin tapering before the patient (the U.S. economy) is sufficiently healthy. And that is where the market has got it wrong– Bernanke made it clear in his testimony yesterday that the Fed won’t begin tapering until there is clear evidence that the economy is strong enough to sustain itself. Tapering by itself is not the issue. If the patient has recovered, he won’t need the meds. Based on his record over the past several years, we can trust that Dr. Bernanke and his colleagues will know when to withdraw the meds.

We should use today’s weakness to buy names we like.

The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Information contained herein is for informational purposes only and should not be considered investment advice.

The information in this report should not be considered a recommendation to purchase or sell any particular security. There is no assurance that any securities discussed herein will remain in an account’s portfolio at the time you receive this report or that securities sold have not been repurchased. The securities discussed do not represent the account’s entire portfolio and in the aggregate may represent only a small percentage of an account’s portfolio holdings.

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