Fool Me Once, Shame on You. Fool Me Twice…..uhhhh

There is an old saying down in Texas that goes something like this.

Uhhhh yea!  There is another saying that says “You Can’t Fight The Fed”.  I learned this the hard way a couple years ago with my bearish ways.  I was fooled not once but twice.  I did not recognize the ability of our government to create so much liquidity in the market place.  As a result, nearly every asset class went up in value.  Everything except the dollar and financial stocks.

In the chart below, I have outlined the effects the Quantitative Easing programs have had on various asset classes.  It is easy to recognize the beneficiary of easy money.  Looking ahead, I expect these asset classes to continue to work in a similar fashion.  These asset classes behave in a particular way with stimulus, and without stimulus.

Without reading a lot into this chart, I would think that we would be well served exit our ultra short treasury ETF TBT.  It will be a great long term trade, but the next year could prove quite painful.  The positions we own in commodity related stocks will probably not perform as well either.  I won’t be fooled again.  I am no longer betting against the Fed.

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