Making Money Alert: And the Easy Money Keeps on Rolling

The Fed has spoken, and it’s more of the same from Chairman Ben Bernanke and his merry band of central bankers. The statement from today’s Federal Open Market Committee meeting was essentially the same as last month’s statement, with the Fed maintaining its current $85-billion-per-month bond buying program. No “taper” this time. Just the same, we didn’t get the much-anticipated taper in the September FOMC meeting.

Here’s the money quote from today’s Fed statement on just that subject:

“The Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.”

The translation here is that the money spigot is going to be open for a lot longer. According to most market watchers, including me, do not expect to see any kind of tapering until the spring of 2014.

What does this situation mean for the markets? Well, it means stocks are likely going to continue to be bought without regard to fundamentals. In other words, it’s all about quantitative easing, not the micro factors such as corporate earnings or even the macro factors such as economic growth — or the lack thereof.

Although there is a debate about just when the Fed will finally begin to pull back the reins on the easy money, the fact is that it’s more of the same from the central bank. As such, the market is likely to react the way it has for most of the year.

The one caveat that I think is important to note is what the Fed said about inflation. Today’s statement including the following line: “The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance…”

The translation here is that despite the massive amount of money the Fed has pumped into the system over the past several years, the central bank still has not been able to achieve its economic growth targets.

That situation, my friends, should be enough to make us all worried. It also is a reason to make sure you have the tools in place to protect your money and to allow you to weather any market downturn.

To find out more about how this is done, check out my Successful Investing advisory service today. It just might help you avoid the next Fed-created bust.

ETF Talk: China’s New Silk Road

Much like traders long ago who followed the Silk Road to prosperity in China, you too have the opportunity to profit from equities in the Far East. iShares MSCI China ETF (MCHI) tracks stocks in the world’s most populous nation and has the second-most assets of any China-focused exchange-traded fund (ETF), trailing only last week’s featured fund, FXI. With capital flowing into China from throughout the world, investing in this Asian giant is something you may want to consider.

MCHI is a non-diversified fund which seeks, before fees and expenses, investment results that generally correspond to the performance of a free float adjusted market capitalization-weighted index. The index measures the performance of equity securities in the Chinese equity market’s largest stocks — the top 85% based on market capitalization.

Even though this ETF has endured a minor decline of 4.11% so far in 2013, the fund had a swift rise in the closing months of 2012 — a trend which could be echoed this year. For investors interested in additional income, MCHI offers a dividend yield of 2.2%.

As an equity fund, MCHI invests most heavily in the financial services sector, with 34.03% of its assets residing there. It also has smaller allocations in a wide variety of sectors, including energy, communication services, technology and consumer cyclical, among others.

In terms of individually held companies, MCHI puts 52.33% of its total assets into its top 10 holdings. The top five of these are China Mobile Ltd., 9.33%; China Construction Bank Corp H Shares, 7.77%; Tencent Holdings Ltd., 7.51%; Industrial and Commercial Bank of China Ltd. H Shares, 7.17%; and CNOOC, Ltd., 5.08%.

As investors continue to pour money into China following the historic example of traders on the Silk Road of antiquity, you can capitalize on that trend by betting on Chinese equities through MCHI.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to email me by clicking here. You just may see your question answered in a future ETF Talk.

Refinance Your Life Insurance and Pocket Thousands Each Year

If you currently own a whole life insurance policy with a cash surrender value, you have a remarkable opportunity to put hundreds — maybe thousands — of dollars back in your pocket each year.

You see, for years now, insurance companies have been significantly overcharging policy holders for coverage.

Fabian Wealth Strategies has designed a unique strategy that already has enabled many of our clients to refinance their current whole life policies and take advantage of the following benefits:

• Saving hundreds or thousands of dollars each year in annual payments…
• Maintaining or improving your current benefits without increasing your cost…
• Ensuring that your policy doesn’t expire worthless, and
• Making sure your heirs get what’s coming to them, when it’s needed most.

And I’d like to give the same opportunity to you, again, at no charge to you whatsoever.

To take advantage of this offer, all you have to do is visit our Website at FabianWealth.com. It’s really just as easy as that.

NOTE: Fabian Wealth Strategies is a Securities and Exchange Commission registered investment adviser, and is not affiliated with Eagle Publishing.

On Inefficiency

“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.”

–Bill Gates

The Microsoft founder knows a little something about technology and efficiency. So, given all of the problems with the Healthcare.gov website, I thought it might be good to remind everyone that when it comes to government, inefficiency is always magnified.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Making Money Alert readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Email Doug.

Read my e-letter from last week’s Eagle Daily Investor, The Yellen Destiny. I also invite you to comment about my column in the space provided below my Eagle Daily Investor commentary.

Best,

Doug Fabian