Hobson: I've Already Invested My New ISA Allowance

THE WEEK: Morningstar columnist Rodney Hobson navigates the buying opportunities created by the Fed, and benefits from a takeover bid

Rodney Hobson 7 April, 2017 | 5:10PM
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Stock markets reacted badly to the Federal Reserve indicating that the US central bank will, some time this year, start to unwind the bond portfolio it built up during quantitative easing. Shares fell sharply in New York, Tokyo and London.

Shareholders should not take fright. This is excellent news. Ten years on from the start of the financial crisis, another step has been taken to get back to normality. The Fed has $4.5 trillion of bonds on its books, a figure so huge it is beyond comprehension. This will not be dumped on the market unceremoniously. The Fed will probably simply redeem the bonds as they expire.

So the US economy is now strong enough to withstand a gentle un-easing, China continues to expand at an admittedly slower rate and the UK stays its patchy recovery. Let’s stay positive. In fact, after the initial reaction shares did start to pick up again on both sides of the Atlantic. Buying opportunities do not always last for long.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Domino's Pizza Group PLC364.20 GBP0.00

About Author

Rodney Hobson

Rodney Hobson  is a columnist for Morningstar.co.uk and author of several investing books, including The Dividend Investor and How to Build a Share Portfolio.