Steady As She Goes

That the Fed decided to hold interest rates steady at 5.25% should come as no surprise to the long term investor. Fed Chairman Ben Bernake has been consistent in that his concern is inflation. The market dropped after the announcement probably as a result of weaker hands being shaken out by the news. The market then bounced back probably as a result of bargain hunters swooping. The Dow finished up about 38 points for the day.

Apparently some felt the Fed would at least indicate that a rate cut was a possibility due to problems in the credit market. This investor asks why should tax payers bail out hedge funds. People who invest in hedge funds should be market savy to begin with. Investors should know the risks that they are taken with a specific stock, bond or other equity instrument. While anyone hates to lose money, these sophisticated investors should know what risks they are taking by investing in these instruments.

If I as an amateur investor make a mistake and lose money, I take it as a lesson learned and go on. That is why they call it risk.

I did note that the financials in my portfolio all finished strong today, particularly after the sell off after the Fed announcement. The action of the past two days may have restored some confidence in investors.

AIG reports after the close of the market tomorrow. The stock has been up strong the past two days..The market is pricing in positive news in AIG. AIG had a recent sell off after investors became spooked that the company had a strong position in the subprime mortgage industry.

Disclaimer: I am long AIG. Before making an investment do your own due diligence.