, Columnist
Markets Face a New Paradigm. Get Used to It
Investors have done well in recent years to "buy the dip," but three things have changed.
Is the Fed still your friend?
Photographer: Andrew HarrerThis article is for subscribers only.
The period of financial markets being supported by central banks' easy money policies is ending. Higher equity prices will now require evidence of stronger growth and moderate inflation, meaning it is unrealistic to expect selloffs to be followed by sharp rebounds as quickly as they have in the recent past.
Since 2009, investors have done well to "buy the dip" in equities and many other assets, as pullbacks were quickly reversed in a V-shaped pattern. But three things are different this time, and maybe what will emerge are trading strategies that look more like "buy the U" or "buy the drain pipe":