The Market Damage History Shows You Can EXPECT From Fed Tapering

In an effort to prove the Fed’s tapering won’t matter, I recently saw one stock advisor claim that, when the Fed tapered its QE from late 2015 into 2016, “the stock market rallied 60% in an almost straight line higher.”

Wow! Let’s take a look at that! Here is what the stock market actually did from the last of half of 2015 through the first half 2016:

Apparently, any misrepresentation of history will do in order to try to maintain a long-lost argument. The Fed tapered its asset purchases during that time, and the bull was lying on the ground, panting and dripping with blood like it had faced a great Spanish matador. A look at the facts above will show you that from the latter half of 2015 through the middle of 2016, the market went absolutely nowhere! In fact, it went nowhere throughout the Fed’s full tapering period with a great deal of lunging and stumbling just to get to nowhere.

I presented only the part of that tapering period in the graph above because I wanted to focus the graph specifically on the false claim made above. A broader view would show that in late October of 2016, you could have bought in at the same price you sold out for at the start of 2015 right after tapering began.

Only the Trump Rally brought life back into the wasting bull. When Trump got elected in early November, 2016, everything changed because of his promised massive corporate tax cuts that would put enough cash back on the corporate board-room tables to offset all of the Fed’s tapering. (But this time Biden is promising to take most of that bottom-line cash back off the table at the same time the Fed tapers! Not a good combo for the market.)

It’s a shame when narratives that are proffered to support positions that have been wrongly argued have no basis in truth to the point of even trying to rewrite obvious historic facts.

Now, maybe you are generously thinking, “Perhaps it was much better for the roaring NASDAQ.”

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