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You are correct that many are expecting QE3 but it is also correct that QE3 is already priced in the market.

Bob (aka d'Artagnan),

Continuing my earlier post (, I am still having difficulty with what that "priced into the market" argument conveys.

Sure, QE3 is expected by many and possibly already digested in the market prices. Only thing is that some think that a QE3 may improve the pace of economic growth, others that it may not have any effect, and still others that it may be disruptive. Not to mention that many influential politicians think about monetary engineering by the Fed more in terms of possible electoral gain than improving the situation for hoi polloi aka "we the people". See:

Then, Ray Dalio mentions something else that is already priced into the market: A “meaningful deleveraging for an extended period of time” is now priced into the market, Bridgewater said. With this pricing at a “midpoint of discounted expectations,” individual markets have an equal probability of outperforming or underperforming. See:

So, yes, if something is expected by lots of market participants and its impact is fairly unambiguous, then the effect can be pretty minimal when it finally happens. But when there are all kind of things that ought to be priced into the market and people have various ideas about their impact (inflation, deflation?), then the end result is just what the market is: it may go up, it may go down, or move sideways for a while...

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