Here Is the Biggest Worry Every Investor Should Have Once the Fed Starts Unwinding Its Monstrous Balance Sheet

The Federal Reserve recently told the markets that the unwinding of its $4.5 trillion balance sheet would start "relatively soon."

But if the Fed becomes less of a buyer of bonds in the marketplace, some sort of market readjustment may occur.

"Hopefully you have yesteryear's natural buyers come back in," said Danielle DiMartino Booth, author of Fed Up. "One of the reasons the Fed had to taper its purchases in the first place was that it had crowded out all of the natural buyers. So the question is what's that appetite going to look like when you don't have this price-agnostic buyer basically controlling a lot of these bonds?"

The Fed stopped adding to its balance sheet in late 2014 but has been spending money ever since to keep its balance sheet stable at $4.5 trillion.

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