David Sterman

The Federal Reserve is gearing up for its once-every-six-week policy move on Wednesday afternoon, June 20. All eyes will be on Fed Chairman Ben Bernanke. Investors are increasingly expecting the Fed to provide more juice to the economy, either at this meeting or the next one. 

And if history is any guide, then that could give the market a short-term lift.

Any resulting rally, thanks to Bernanke and his board of Fed governors, isn't something you should be applauding. At least that's the view of Narayana Kocherlakota. He's the president of the Federal Reserve Bank of Minneapolis, and he's been steadily expressing deep concerns about Fed policy, even as most of the Fed's other regional heads have largely moved in lock-step with Bernanke.

If Kocherlakota is right, and further Fed action will do more harm than good, then your portfolio may be carrying too much risk. 

Uncharted territory
Though he has been vilified by both inflation hawks and inflation doves, Ben Bernanke deserves a huge dose of credit. Faced with a weak economy and an intransigent Congress, he has sought to help stabilize markets while pulling off a series of moves that might jumpstart growth. 

Though economic growth is still quite weak, it could have been a lot worse. A glimpse across the Atlantic Ocean gives a sense of just how bad things might have been. 

Meanwhile, concerns that Bernanke's efforts to stimulate the economy would lead to ruinous inflation simply have not come to pass. The Fed has been pumping money into the system, and its balance sheet -- a broad gauge of its lending to the financial system -- now stands at an eye-popping $2.87 trillion. 

David Sterman

David Sterman has worked as an investment analyst for nearly two decades. He is currently an analyst for StreetAuthority.com

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