This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Stocks to Consider for the End of QE2

Stocks in this article: MO RAI LO PM NFLX VZ T NGG MCP USO GLD OIH

WINDERMERE, Fla. ( Stockpickr) -- The end of quantitative easing is quickly approaching, and investors need to be prepared for how the markets will behave once the Federal Reserve stops its bond-buying program.

In just 24 days, the Fed will have completed its controversial stimulus program in which it bought $600 billion in Treasuries beginning back in November 2010. There's no debating that QE lifted U.S. equity prices and helped to maintain low interest rates. That said, the new debate that's going to play out now is whether or not QE actually helped or hurt the economy.

Fears that QE might have had little effect on the overall U.S. economy were fueled with Friday's jobs report. The Labor Department report showed that only 54,000 jobs were created in May, vs. a rise in nonfarm payrolls of 232,000 jobs in April. The report also showed that the unemployment rate jumped to 9.1% in May from 9% in April.

Why has all of the QE the Fed has initiated had such little effect so far on the U.S. economy? The simple answer is the events did not unfold as the Fed had hoped. The Fed wanted to see banks lend money and for large companies to hire new workers. Instead, corporations did little hiring and used their cash for strategic takeovers. The banks hoarded cash and instead of lending, raised their credit standards so high that few consumers were able to borrow money.

Related: 5 Strength Plays for June's Weak Market

The only winners off of all of the QE were the speculators in things such as soft commodities, gold, silver and U.S. equities. The U.S. dollar was a big loser, as were retirees who received little return on their savings that they had worked so hard for. All of the cheap cash found its way onto Wall Street, where liquidity is always king. Hedge funds and other large speculators used the easy money to put on their favorite "risk-on" trades to take advantage of QE. That excessive liquidity is what drove silver to close to $50 and gold to over $1,500 an ounce.

1 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs