Review

     David M. Jones' novel, Fed Watching and Interest Rate Projections, offers a first person perspective of the job of a Fed Watcher.  To someone interested in monetary policy, this means that the Mr. Jones gives what he calls are the key rules for Fed Watching.  He shows that it is necessary not to learn what the Fed should do, but what the Fed does do, and how investors can use this information to time the market.  It tends to be true that during periods where the Federal Reserve is holding interest rates steady or decreasing them, the returns to the stock marker are much higher than when the Fed is increasing interest rates.  His proposal then is that if one could anticipate Fed actions then one could get better returns in the market.

     One major drawback to Fed Watching is that the novel was written in 1986.  This means that not only is all the statistical information outdated, but most of the tools that Mr. Jones suggests the Fed uses are also outdated.  This does provide a good way to study what the contemporary beliefs about the role of the Federal Reserve were during the late 1980's.  At the same time it reminds us that no matter how much we think we know, there is always room to learn more given time and experience.  David Jones is a good writer and if you are interested in the subject it makes for a good read.  It's a hard to come by novel, out of print, and your best bet of finding a copy is your local library.