Today the Federal Reserve concludes its last policy-setting meeting of the year, and presumably the last of Ben Bernanke’s tumultuous run as chairman. He’s stepping down when his term ends next month.
All year long, the debate among economists and market-watchers is whether, and when, the Fed might begin to pull back on its bond-buying stimulus program. That plan, born of the financial crisis and the slow-growth economy that followed it, is reviled by some as reckless and cheered by others as a great economic stabilizer.
One thing almost everyone agrees on is that the $85 billion a month in bond buys has kept interest rates lower than they might otherwise be. It’s also almost certainly helped boost stock prices.
So, no wonder investors are worried about what will happen when the Fed starts pulling back. Whether that happens today, next month or next year, for individual investors the best tactic, as usual, is to make sure your portfolio is well diversified among stocks, bonds and alternative assets, and to avoid impetuous moves born of the headlines.