"If it's too good to be true, it probably is." ~ adage
The Fed has done what it intended to do. Using easy monetary policy, the Fed is reflated the value of the stock market. In the past week, major stock market indices have reached new all time highs, rebounding over 100% from the 2009 lows. The easy monetary policy is also starting to lead to easier money for mortgages easier money for mortgages according to The New York Times.
Several bloggers I read note that their retirement and investment accounts have increased significantly in the past year. Several fellow retirees from my company have shared that their accounts are back at 2007 values or higher.
However, no one has exhibited what I would call bullish exuberance. Everyone seem to be cautious and aware the economy and stock market are only one event away from a significant decline, which could erase much of the gains since the 2009 bottom. That event could be as simple as the unwinding of the Fed's easy monetary policy.
Over the past year, our wealth has increased 23.8%, with a little over half (12.5%) occurring the first 3 months of 2013. To me, this rate of gain is unsustainable, despite the effects easy monetary policy has yielded so far.
For more on The Practice of Personal Finance, check back every Wednesday for a new segment.
This is not financial advice. Please consult a professional advisor.
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