Stocks Rise 100% of the time When This Happens

Stocks Rise 100% of the time When This Happens

Something extraordinary is happening in the financial world. The Federal Reserve looks to be attempting to make a preemptive strike against a possible future recession by lowering interest rates BEFORE the economy is in recession. Will miracles never cease?

Although this seems like common sense, we must remember who we are dealing with. It was just a short time ago, last December, that Fed Chairman Powell declared that they expected to raise rates 2-3 times this year. The market took what he said in stride, for about two seconds, and promptly crashed about 20%.

Seemingly with egg on their face, Powell and his Fed cronies need to show that they are on the ball.  According to Thomas Lee, managing partner at Fundstrat, “The last two rate cuts in 2001 and 2007 came too late, the U.S. was already in a recession”.

Clearly, they need to get ahead of the game. To do so they would have to take the unusual action of lowering interest rates in advance of a recession, which is expected when they meet at the end of July.

Is this good news? The thought of an impending recession is no fun however, I will say this, according to data compiled by Fundstrat going back to 1971, the lowering of interest rates by the Fed before the economy is in a recession has led to a stock market rally almost 100% of the time. That’s some good odds!

So we are back to the old adage: “Don’t fight the Fed”. Although stocks should react very well to this news, the risks are certainly rising, especially for retirement investors.

Those in retirement or getting close, need to take a different approach by being properly invested “tactically”; never buy and hold (or buy and hope) with an asset protection firmly in place, before venturing into the dangerous waters. The very things we help our clients with every day.

If you think you could use a little help with a free 2nd opinion of your portfolio and/or your overall Retirement Master Plan, including a forward-looking tax-strategy, just give us a call. We’re happy to help with a free consultation today.

 

“Invest for need, not for greed!”™

Cheers –Keith Springer

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Smart Money Newsletter

Written By: Keith Springer

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