Commentary With the Federal Reserve rapidly scaling back its large-scale asset purchase program, or quantitative easing, and likely to indicate a faster tightening cycle at the next Federal Open Market Committee meeting at the end of the month, investors are celebrating by continuing to funnel money into risk assets. As the fiscal spigots go dry, investors are also dumping bonds in hopes of profiting on a sure bet of higher interest rates. In a normal economic cycle, investors should be taking on more risk and betting on higher interest rates. However, the recent economic expansion has been anything but normal. Investors are running the same playbook without fully understanding just how different this expansion is from prior economic cycles. Economic cycles typically start with a major collapse of asset prices as credit dries up and defaults rise. The healing process from the economic destruction of a collapse in credit usually …
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