September Could Bring a Market Correction
By John Mylant, founder and CEO of OptionsWeekly.Org
NEW YORK (TheStreet) -- Investors, I believe it's important to be aware that September has an average loss of just over 0.5% when it comes to market movement. This makes September stick out like a warning flag.
With recent events, including the ongoing conflict in Syria, it seems as if investors should consider taking less risk this month. Two things make September 2013 such a high-risk month.
1.) The Tapering ProcessKeep Sept. 18 on your calendar. The Federal Reserve will have its usual Open Market Committee meeting and one of the main targets to be addressed will be when to begin pulling back on the $85 billion-a-month purchase of mortgage-backed securities. Stocks and bonds are already nervous about this, because it is thought that any reduction will cause interest rates to move up and throw a monkey wrench into the growth of the U.S. economy.
I think the indecision that we have experienced may be premeditated. The Feds don't have an answer on how to taper without causing interest rates to go up. And I don't think anybody knows how high they could go. The markets themselves have pushed interest rates higher and slowly brought asset prices down because of their fear of what the Fed's going to do.This is what the Feds like, because it helps them transition into a slower purchasing rate. At the same time, it eases the fear of a large movement of interest rates or asset prices all at once.
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