Do not fight the Fed

With the country sinking deeper into recession, the Federal Reserve launched a bold $1.2 trillion effort Wednesday to lower rates on mortgages and other consumer debt, spur spending and revive the economy. To do so, the Fed will spend up to $300 billion to buy long-term government bonds and an additional $750 billion in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.

The decision to hold rates near zero was widely expected. But the Fed's plan to buy government bonds and the sheer amount -- $1.2 trillion -- of the extra money to be pumped into the U.S. economy was a surprise.

Bottom line. It looks and feels good. The market rallied. Do not fight the Fed. My suggestion? Buy the same assets the Fed is buying.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD