What Was The Fed Thinking?

Dynamic Wealth Report  |  July 21, 2014 Why this "Super-Trend" is our BEST FRIEND EVER. Worried this bull market is on its last legs?  Heck no!  Get this... Over the last 18 years, whenever the S&P 500 has posted a 30% year-over-year gain, the index has been up 100% of the time over the next 12 months.  And the average gain has been 17.7%. Peek inside for my "insiders secret" to cashing in a trader's ransom of $237,050 in 2014. What Was The Fed Thinking? By Gordon Lewis, Options Trading Research Ever since interest rates hit zero, we've come to expect consistent, mostly boring talk out of the Fed.  The central bank has pledged to keep rates low for the foreseeable future.  And, quantitative easing is slowly winding down. There's not a whole Yellen and the Fed could say or do at this point that hasn't already been discussed ad nauseum… or is there? Just when we expected another boring testimony by Janet Yellen to the Senate Banking Committee, the Fed Chair threw an unexpected wrench into the works.  In a virtually unprecedented move, Yellen called out certain sectors as being overvalued. More specifically, she mentioned small caps, social media stocks, and biotechs as having "stretched" valuations. Back in 2000, the Fed did comment on tech stocks being overheated.  But, that was a far more general comment than this.  It's really the first time the Fed has targeted specific sectors. Clearly, Yellen and the Fed believe there is some bubble risk in those industries. They don't want to raise rates to combat a few overvalued areas of the market… and these comments are their attempt to address the situation. Yellen did say the market overall is tracking in line with historical averages. She obviously doesn't want to hammer asset prices in general.  But, apparently the central bank isn't willing to risk even sector-specific bubbles. So was this the right move by the Fed? On one hand, it does make some sense.  It was the easiest way for the Fed to tackle a potential sector bubble without hitting the whole market.  And, raising interest rates clearly doesn't make sense in a case like this. On the other hand, I tend to agree with Jim Cramer's comments on CNBC.  That is, the Fed could have just raised margin requirements on stocks in those industries. I'm not sure why the Fed didn't go that route – perhaps they felt it was too extreme. Regardless, the damage is done.  Investors are going to have to be far more careful in making investing or options trading decisions on small caps, biotechs, and social media companies. Bottom line, if you're looking to go long on any of the targeted sectors, make sure the company has strong fundamentals.  Now's the time to seek out the best-in-class companies. Yours in Profit, Gordon Lewis A 'Sneaky' Way To Easily And Consistently Profit From Sector ETFs... Everyone knows there's a lot of money to be made if you happen to invest in a hot sector at the right time. The problem has always been knowing which sectors are about to take off... until now! You see, there's an obscure document published by the US Government that acts almost like a crystal ball... tipping you off to sectors of the economy that are about to get red-hot! Click here to see how it works... Copyright 2014 Hyperion Financial Group, LLC.  All Rights Reserved.  Protected by copyright laws of the United States and international treaties. This email may only be used pursuant to the subscription agreement controlling use of the Dynamic Wealth Report website and any reproduction, copying, or redistribution of this email or its contents, in whole or in part, is strictly prohibited without the express written permission of Hyperion Financial Group, LLC. 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