By: Dividend Sensei
Many investors think that the main driver of the stock market’s epic 9 year bull market is the Federal Reserve’s massively accomodative policies of the last decade, specifically record low interest rates, and about $3.5 trillion worth of quantitative easing or QE. Thus, the Fed’s attempts to normalize interest rates, both by raising its Fed funds rate, and gradually rolling off its balance sheet, is viewed as a potential source of the next market correction, if not a catalyst for the next market crash.
However, the truth, as with all things in finance, is more nuanced. Let’s take a look at the good, the bad, and the ugly side of the greatest Fed accomodation in history, to give you a better idea of what might happen in both the economy, and the market in the coming years.