When he wants, Ben Bernanke can be a real party pooper. At his quarterly press conference on June 19, the Federal Reserve chairman signaled a potentially jarring shift in the highly stimulative monetary policy that the Fed began during the financial crisis and that has helped drive stocks to new highs of late. For Wall Street, his words were a major buzzkill. Bernanke announced that the Fed might start winding down its $85 billion in monthly bond purchases later this year and end the program entirely by mid-2014, provided that the economy keeps improving, as he expects. Over the next few days stocks, bonds, and commodities all plummeted in a synchronized swoon on fears that the now four-year-old bull market would stall without constant fuel from the Fed.
Today many investors are asking the inevitable question: Is this the beginning of a major selloff or just a blip that creates a buying opportunity? Indeed, the week after Bernanke's comments, stocks rallied. Now that the market has absorbed the bad news with minimal damage, is it time to go all-in on equities?