Global Investing Advice: Don't Fight Your Central Bank

In a world where virtually every major economy is being flooded with cheap liquidity, investment professionals can only muster one solution: don't fight your central bank.

http://www.cnbc.com/id/100335415

(29-12-2012, 10:18 AM)Boon Wrote: In a world where virtually every major economy is being flooded with cheap liquidity, investment professionals can only muster one solution: don't fight your central bank.

http://www.cnbc.com/id/100335415

This probably explains why real assets and financial assets are defying grim economic outlook to keep outperforming.

Like what has happened in the US, the asset inflation around the healthier economies will eventually pull the real economy up with its wealth impact.

Stay invested but be highly selective in the event that the music stops and the fat lady starts to sing.

The real industrial return is low enough for central banks to provide such liquidity, plus all the pressure from the governments. Hardly central bank can be independent.

Will it cause hyperinflation like many afraid? Unlikely in short term. In longer term, central banks have means to withdraw liquidity. It just depends on their willingness.