Tags: alan greenspan | taper tantrum | investors | federal reserve

Greenspan: We're Going to Get Another Investor 'Taper Tantrum'

By    |   Wednesday, 13 May 2015 11:27 AM

Former Federal Reserve Chairman Alan Greenspan is among those joining the chorus warning that there is yet another ‘taper tantrum’ on the horizon for investors.

"Just remember we had the 'taper tantrum.' And we're going to get another one," CNBC reported as Greenspan saying Wednesday at the Global Private Equity Conference in Washington, DC.

"This is a very tough period to get through," he said, as the Fed considers just when it should start raising interest rates. "Normalization is great, but the process of getting there is going to be very rocky."

Greenspan said the economy had "improved somewhat" but: "We are still below normal."

However, economic data released Wednesday painted a mixed picture, at best.

Business inventories barely rose in March as sales recorded their biggest gain in eight months, the latest indication that the economy actually contracted in the first quarter, Reuters reported. Retail sales were unchanged last month after rising 1.1 percent in March.  Sales have risen just 0.9 percent over the past 12 months, the Associated Press reported.

Meanwhile, analysts at Morgan Stanley also recently warned that 2016 could be the year of the "triple taper tantrum" as the Fed, European Central Bank and Bank of Japan might all taper their super-loose monetary policies next year if growth and inflation across the three regions pick up enough, Reuters reported.

Investors were jolted by the "taper tantrum" of 2013, when global markets violently reacted to the Federal Reserve's first hint that it might taper its monetary expansion policy, also known as quantitative easing.

That's the prediction of, who argue that the Fed, European Central Bank and Bank of Japan might all taper their super-loose monetary policies next year if growth and inflation across the three regions pick up enough.

The world's three biggest central banks are at different stages of post-crisis management, so it's a bold call. But it shows just how much markets have turned since the start of the year, when deflation was their worst fear.

All that said, what is the average investor to do?

"The best strategy for equity investment has always been buy and hold, and forget it," he said.

"Once you start to try and trade the market. I don't care how good you are, how smart you are, you will not beat an index fund."

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Former Federal Reserve Chairman Alan Greenspan is among those joining the chorus warning that there is yet another 'taper tantrum' on the horizon for investors.
alan greenspan, taper tantrum, investors, federal reserve
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2015-27-13
Wednesday, 13 May 2015 11:27 AM
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