Southampton - QE2 seems to permeate the airways this week. And we are not even talking about Her Majesty, the Queen Elizabeth II of England, but something known as the second iteration of "Quantitative Easing," little understood and much feared. So far this week, the U.S. government has yet to commit to QE2, as some voices in the markets protested the measure. This article looks at where the QE2 is likely to leave investors, in the event that the QE2 is executed and in the event that it falls through.

Interestingly, the menacingly-sounding Quantitative Easing is something innocuous: all the QE refers to is the U.S. government's decision to use its own money to buy its own bonds, in order to keep bond prices artificially high, and interest rates low. "Quantitative Easing" is just a term designed to make the buy-back look sexy and progressive, the term coined by the now Chairman of the Federal Reserve Ben Bernanke several years ago.

Should Quantitative Easing materialize, bond prices will rise - a welcome development for many fixed income investors. At the same time, interest rates are likely to fall: great news for real estate professionals and their clients. Selected stocks are bound to do well, too: consumer goods (e.g., General Mills, ticker: GIS), technology (Microsoft: MSFT, IBM, Trina Solar: TSL, Rambus Inc.: RMBS), and healthcare (Aetna Inc.: AET, Cigna Corporation: CI, Covidien plc: COV, Quest Diagnostics Incorporated: DGX, United Healthcare Group: UNH, Wellpoint: WLP, healthcare sector ETF: XLV) all tend to rise in response to quantitative easing.

Should the U.S. government decide to bypass Quantitative Easing and shrink the Fed's Balance Sheet, investors have many more stocks to choose from for buy-and-hold strategies in their portfolios. Real-estate trust companies like the American Capital Agency Corp. (AGNC) and Mid-America Apartment (MAA) rise on shrinking Fed Balance Sheet. Furthermore, agricultural services companies (e.g., Agrium Inc.: AGU), basic materials (AK Steel Holding Corp.: AKS), apparel and cosmetics (Ann Taylor Stores Corp.: ANN, Coach Inc.: COH, Under Armour Inc.: UA, Urban Outfitters: URBN, The Estee Lauder Companies: EL), jewelry, precious metals and diamonds (Tiffany & Co.: TIF, AngloGold Ashanti Limited: AU), and convenience food products (Campbell Soup Company: CPB) all tend to rise whenever quantitative easing is called off.

In a nutshell, QE2 brings profitable investment opportunities to many investors, whether it is adopted or not.