Offer your thoughts or opinion on the input financial query or topic using your financial background.

As an investor or speculator, how might one respond to QE3 taper?
Any answer for what to do in a taper will assume ceteris paribus because how markets initially react when they suspect a taper may immediately change depending on what data are released after the taper. For instance, I've seen Soros and a few other hedge fund managers hold shorts when expecting a taper because the theory is that the market may fall.  However, suppose the market falls 5%, but then positive employment numbers are released.  What then?  The same holds true for betting against Emerging Markets (EM), something I've seen Jesse Colombo and others suggest; the claim that Emerging Markets are in a bubble thanks to the U.S. Federal Reserve (the more money they release, the more the money goes overseas ...).  Again, this is possibly true, but if good data are released after the taper for these emerging markets, they could see growth and those with the shorts could get killed. TL;DR - when we ask about what happens after the taper, we have to remember we're assuming some things about everything else.   I do think that the "safest play" post taper is what Bill Gross mentioned about bonds (basically a bubble), as we should see interest rates rise and the Chinese seem to be reluctant to buy as much of U.S. bonds as they have in the past (though some, like Mish, assert the U.S. would welcome this).  The other play I like is the VIX (if you think the market will fall) or against (if you think the market will rise).  SVXY has been one of the best plays since 2011 (compare it to the SPY for the same time period).