Don’t Fight the Fed

Don’t Fight the Fed

It really is that simple. When the Federal Reserve policy is easing, meaning that they are in the process of lowering interest rates, stocks tend to rise.

The reasoning is that in a lower interest rate environment, U.S. corporations can borrow money more cheaply, which translates into higher profits as they invest the borrowed money to grow their business, or to refinance old debt at higher rates.

The Fed met this week and signaled that they are likely, or at least ready, to start lowering interest rates again for the first time in over 10 years.

Does that mean it is a guarantee that stocks will rise? Of course not. However, it does tilt the odds in our favor, and allows us to invest with confidence.

The investing climate does get more difficult however, as there is a changing of the guard in how investors should be positioned.

Although not as a big concern for a younger investor, it is monumental for retirees and those close to retiring. Put your master plan in place which includes a forward looking tax-strategy and invest “tactically”, never buy and hold. In addition, make sure your portfolio is stress tested against possible scenarios to protect you. These are the things we do for our clients every day.

If you need my help or you could use a free second opinion on your plan and portfolio, simply give me a call.

 

“Invest for need, not for greed!”™

Cheers -Keith

916-925-8900

Smart Money Newsletter

Written By: Keith Springer

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