Investors could take heart from the rationale for the taper process

Investors could take heart from the rationale for the taper process. So the US Fed's policy of quantitative easing, which has supported financial markets for the best part of half a decade, will come to a close in two days. However, it is very important that investors interpret this correctly in that it means that the US Fed is taking their foot off the accelerator. But with rates to remain at record lows well into 2015, they are not applying pressure to the brake... So in the near-term markets may become more volatile but the key question for investors is will the US economy strengthen enough in the period ahead to justify the rise in shares prices and valuations since 2011. Current US earnings expectations for this financial year seem deliverable and valuations are not over the top, so investors could take heart from the rationale for the taper process and the end of ultra-low rates, rather than feeling threatened by its short-term impact. (VIEW LINK)