I don't think the time is right for QE3.  I will go on a very contrarion view and say that the Fed should consider raising interest rates.

Why?

Because right now the markets are in 'Damned if you do, damned if you don't' mode.  Investors at this point have proven that they're just going to shrug off anything that would normally be perceived as 'good news' for the market.  In other words, they're going to send the market down regardless of whether QE3 happens or not, so at this point, I say hold off on QE3 at least until rational reasoning makes a return back to Wall Street.

Some of your points do make sense. It's true that in panics like this, investors tend to discount all good news. But if the Fed doesn't enact QE3, it means the markets are going into a freefall. But if they do, at least the Fed will buy some time, and the freefall won't be as bad as it would have been.

I don't think the time is right for QE3.  I will go on a very contrarion view and say that the Fed should consider raising interest rates.

Why?

Because right now the markets are in 'Damned if you do, damned if you don't' mode.  Investors at this point have proven that they're just going to shrug off anything that would normally be perceived as 'good news' for the market.  In other words, they're going to send the market down regardless of whether QE3 happens or not, so at this point, I say hold off on QE3 at least until rational reasoning makes a return back to Wall Street.

The Fed has no choice. If they don't then they'd better be prepared for an avalanche. A lot of investors who want to get out of the markets haven't gotten out yet.

Tony Chou @ Investorz' Blog said:

My Personal Finance Journey said:

Time to pump another $200 in to an index mutual fund.

All I'm saying is that you better watch out. If QE3 doesn't work (when it probably will be announced tomorrow), prepare for a fall to DOW 10k.

If you're expecting an announcement tomorrow, I might just move the guest post up so it doesn't seem dated. I haven't been keeping up with it enough to know.

Yes, please do that. I never knew that the current market events would happen so fast!

Tony Chou @ Investorz' Blog said:

My Personal Finance Journey said:

Time to pump another $200 in to an index mutual fund.

All I'm saying is that you better watch out. If QE3 doesn't work (when it probably will be announced tomorrow), prepare for a fall to DOW 10k.

Tony, what's your indicator of QE3 success?

In Chinese, we have a saying that translates roughly into this. If on the first punch, you don't knock out your opponent, then it's ok. You can try again. If on the second punch, you don't knock out your opponent, you're screwed. You've just lost a lot of energy, and your opponent's still standing. On the third punch, prepare to be knocked out by your opponent.

This means that QE2 is weaker than QE1, and QE3 will be weaker than QE2. Sure QE3 might have a temporary small effect (maybe up 5-10%), but QE3 probably won't be strong enough to hold the tide for a few months. That's just my guesstimate, and my guesses do change with more factors added into my opinion in the future.

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LifeAndMyFinances said:

I was watching it this afternoon and saw the Dow "battle back" to -350 or so, and then it plummeted to -600.... Crazy. I'm still young, so I don't feel that affected by the drop, but I work with some older folks and they are getting pretty nervous. In fact, one of them gave me a sad look and said, "Am I ever going to get out of this place!?"

It was pretty sad... Poor baby boomers.

Why?

Because right now the markets are in 'Damned if you do, damned if you don't' mode.  Investors at this point have proven that they're just going to shrug off anything that would normally be perceived as 'good news' for the market.  In other words, they're going to send the market down regardless of whether QE3 happens or not, so at this point, I say hold off on QE3 at least until rational reasoning makes a return back to Wall Street.

My Personal Finance Journey said:

Time to pump another $200 in to an index mutual fund.

All I'm saying is that you better watch out. If QE3 doesn't work (when it probably will be announced tomorrow), prepare for a fall to DOW 10k.

 

If you're expecting an announcement tomorrow, I might just move the guest post up so it doesn't seem dated. I haven't been keeping up with it enough to know.

My Personal Finance Journey said:

Time to pump another $200 in to an index mutual fund.

All I'm saying is that you better watch out. If QE3 doesn't work (when it probably will be announced tomorrow), prepare for a fall to DOW 10k.

Tony, what's your indicator of QE3 success?

Time to pump another $200 in to an index mutual fund.

All I'm saying is that you better watch out. If QE3 doesn't work (when it probably will be announced tomorrow), prepare for a fall to DOW 10k.

I was watching it this afternoon and saw the Dow "battle back" to -350 or so, and then it plummeted to -600.... Crazy. I'm still young, so I don't feel that affected by the drop, but I work with some older folks and they are getting pretty nervous. In fact, one of them gave me a sad look and said, "Am I ever going to get out of this place!?"

It was pretty sad... Poor baby boomers.

That's why I've mentioned before that only by being a full time investor can you achieve good returns.

It was pretty sad... Poor baby boomers.