Bernanke Effect: What It Means For Investors

| About: Bank of (BAC)
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With all of the background noise that we in the world of investing hear on a minute to minute basis, I feel it is important to hone in on the one or two "noise makers" that will actually have a direct impact on what we do here at Seeking Alpha, and what we do with our investments to try to make money.

That is why we are all here.

As Jim Cramer says, he does not want to make friends, he wants to make money.

I want to make money and friends!

That being said, we ARE here to navigate through all of the noise to place our money where we believe we will see a positive return. Which brings me to the central figure in our cast of characters in the world of investing

Ben Bernanke.

Mr B has been front and center on virtually every move that our markets have made. We await every speech, every testimony and every action that the Fed takes or does not take. We seem to make our investment decisions more on what his stance is rather than the fundamentals of the market or of any particular stock.

I would argue that Bernanke has had the greatest impact in our market over the past 5 years than any other person, or event.

One only need to look at his words just yesterday to note how the investment world reacted.

Please note:

Ben Bernanke's favorable comments from Monday will likely linger in today's trading action as well, even if the consumer confidence and home price data on deck for release a little later turn to be less than exciting. Monday's market gains reconfirm that the 'Bernanke Put' is a fact of life.

The Fed Chairman clearly indicated the need for a supportive monetary policy stance to help the labor market heal. He took sides in the ongoing 'cyclical vs. structural' causes of the nation's current unemployment problem by favoring cyclical explanations, but acknowledged that the question was far from fully resolved. Bernanke characterized the labor market improvement of recent months as 'something of a puzzle' and appeared to be not too convinced of the trend's staying power.

The entire article can be read here but also please note further:

Following the last FOMC meeting and the overall positive run of recent economic readings, the market appeared to have given up on further quantitative easing. In fact, many in the market had started thinking in terms of an earlier end to the Fed's low interest rate policy than its declared commitment of late 2014. Bernanke's Monday comments effectively remove the early-exit fears. In fact, in the eyes of the many, the Fed Chairman's comments leave the door open for the further quantitative easing-type programs in the future.

I don't know about you, but to me this signaled another "all clear" for the broader markets, as evidenced by the immediate rise in all indices followed.

If anyone or any "thing" can move the markets, it is Ben Bernanke.

So What Do We Do

It is quite obvious to me that interest rates will be low for at least another 2 years and some are saying until 2016! I can live with 2014 for now.

The sectors will be benefit the most will be the financial sector in my opinion, because they do NOT have to take on risk to make money! Virtually NO RISK actually.......PLUS if mortgage rates tick up (which do, will, and HAVE, in spite of the Feds stance) then it is even a better picture for the financial's. They can actually make loans by taking on some risk for a better reward.

Bank of America (BAC) comes to mind immediately simply because I have been following their positive strategic actions of late as noted in my previous articles. (Check this out)

This article explains my over all opinion as well, and I think it warrants further reading.

I further believe that with the ZIRP still emphatically intact, that mREITs such as Annaly Capital (NYSE:NLY) can continue to benefit. In spite of the potential for a modest rise in pre-payments. The spread between the 2 and 10 year Treasury and the shorter term LIBOR rates are still very profitable!

Could I be completely wrong and we will suddenly see a dramatic reversal in the Feds policies, and the yield curve will flatten or inverse? Of course it can happen! ANYTHING can happen.

I simply do not believe so. That is my opinion. As for the overall markets it seems like it is full steam ahead to me!

What am I missing?

Disclaimer: Please remember to do your own research prior to making any investment decisions. This article is not a recommendation to buy or sell any securities or stocks, and is the opinion of the author.

Disclosure: I am long BAC, NLY.