Forester Worried Tapering Will Lead To Sell-Off

Tom Forester, whose fund was the lone equity mutual fund not to lose money in 2008, says the unwinding of the Federal Reserve’s quantitative easing policies could be a catalyst for a stock market downturn. Forester tells that the Fed’s asset-purchasing plans have had unintended consequences, “one of these being that you’ve got kind of the stock market is bubbling, if you will. I won’t say it’s in a bubble but it’s going that direction without the fundamentals of the economy picking up and providing a strong foundation for it.” He also talks about why he thinks the housing market recovery — a big recent stock market driver — is being driven by short-term factors that won’t last. He has a significant portion of his portfolio in cash (23% at the end of the second quarter, according to Morningstar).