I’ve been rather critical of Ben Bernanke’s lack of understanding about financial markets at times over the last 5 years, but he may have just pulled a brilliant market timing move. Consider this – if markets are cyclical (and they are) and the last 5 years have been an undoubtedly good expansionary period then maybe, just maybe, Ben Bernanke sold to Janet Yellen near the peak?
Just think – Bernanke assumes office in early 2006 just near the peak in the housing bubble. And within a few years he’s residing over the biggest financial crisis in the modern American economic era. So before him Alan Greenspan effectively sold to Ben Bernanke at the top. But Greenspan was no dummy. After all, Paul Volcker had sold to him at the top in 1987 when he stepped aside and handed the reins to Dr. Greenspan just months before the crash of 87. Then the “maestro” experiences an epic series of market and economic expansions before selling to Dr. Perfect Beard. Amazing timing. What is it about these Fed Chiefs and their impeccable timing?
Anyhow, it’s probably just a coincidence that the last two Fed Chiefs sold to their successor months before things began to unravel, but it’s pretty interesting to think about the potential reality that Janet Yellen now faces – if her predecessor is stepping aside after a fantastic cyclical bull market then maybe, just maybe, Ben Bernanke executed a great trade by selling to Yellen at the top.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.