This Day On The Street
Continue to site
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

Investing Amid Quantitative Easing

NEW YORK ( TheStreet) -- I think there's method in the madness of the Federal Reserve policy of so-called quantitative easing.

The massive buying of Treasury securities, now in its third incarnation, has done its work of keeping interest rates low throughout the economy. In turn, these "low, low" rates have done their job. Investment capital in search of higher returns is, albeit slowly, migrating into riskier assets.

As an aside, let me say that if the Fed's purpose in this is to lift the stock market and enjoy the salubrious glow of the "wealth effect" felt by individuals as the value of their holdings rise, that's a radical departure from historical policy. The Fed's job is to lift the economy, not the market. Let's hope the Fed has not lost sight of this.

Retirees and near-retirees that are swept up in the policies of the Fed should indeed follow the prevailing tide and are advised, albeit reluctantly, to find assets that will deliver higher levels of income. The reason for this is very simple: the traditional near- or post-retirement portfolio simply isn't going to cut it anymore. This portfolio consisted of the following elements: U.S. Treasury securities, U.S. bond funds, certificate of deposits, high-yielding money market mutual funds, index growth funds and fixed annuities.

Collectively, such a portfolio is hard pressed to deliver a return over 3.5%. With inflation and taxes, today's retiree or near retiree is working to hard just to stay in place. Here is how someone with an IRA or 401(k) and other retirement savings should consider positioning their investments.

Cash and near cash: FDIC bank accounts, gold

Fixed income: Foreign bonds, corporate bonds, bank loan funds, mortgage backed securities

Equities: dividend-paying stocks

Here are some, but clearly not all, funds that investors could consider to fill out the fixed-income portion of a portfolio rebalanced for quantitative easing.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
SYM TRADE IT LAST %CHG
AAPL $126.44 0.00%
FB $87.28 0.00%
GOOG $523.40 0.00%
TSLA $280.02 0.00%
YHOO $39.38 0.00%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs