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How the Federal Reserve Has Completely Fooled Us for YearsBy
Monday, April 6, 2015
We must be idiots...
The Federal Reserve has completely fooled us for more than six years...
"Higher interest rates are just around the corner," they tell us today.
The thing is, they've told us that over and over – since the Fed first cut interest rates to zero back in 2008.
The Fed has cried wolf, for more than six years. And we're still panicking, looking for the wolf...
To show you what I mean, we've put together a simple table. This table shows the market's expectations of how long it will take for the Federal Reserve to raise interest rates. The message from this table is, an interest rate hike is always "just around the corner":
Earlier this year, it was nearly unanimous – the Fed was going to raise interest rates in June 2015. Then it slowly shifted... the consensus opinion was that the Fed would raise rates in September 2015. Now, according to a Bloomberg article last week, "Traders Are Now Expecting the Fed to Raise Rates Later Than Ever Before."
The subhead says, "Market expectations are for no rate increases from the Federal Reserve before the last week of November."
I suggest you ignore the Fed. I suggest you stick with my investing "script" – which my subscribers have been following for at least five years:
"The Fed will keep interest rates lower than you can imagine, for longer than you can imagine, and that will cause asset prices – including stocks and real estate – to soar higher than you can imagine."
If you had stuck with that script and listened to nothing else, you'd be very wealthy today.
Has the script changed?
No.
If you listened to the Fed – if you worried that higher interest rates are just around the corner – then you might have panicked at some point and sold.
Don't listen to the Fed. The Fed has cried wolf for more than six years. There is no wolf.
Instead, stick to our script. It has served us well for years.
It has made us a lot of money. And it will continue to do so... as I believe that stocks and real estate have not soared higher than you can imagine yet...
Good investing,
Steve
Further Reading:
Steve recently examined what a strong dollar means for stocks. "History shows the dollar has little effect on U.S. stocks," he writes. "And the market can actually outperform after the dollar does well (like today)." Get the full story here.
He also shared a brand-new stock indicator... and what it's telling him to buy today. "We have just begun our work with Google Trends data," Steve writes. "But we like what we see so far." Find out what it's telling Steve to buy today here.
Market NotesNEW HIGHS OF NOTE LAST WEEK
Moody's (MCO)... ratings agency
Cigna (CI)... health insurance
Aflac (AFL)... insurance
D.R. Horton (DHI)... homebuilder
Toll Brothers (TOL)... homebuilder
Foot Locker (FL)... shoe stores
Kohl's (KSS)... department stores
Target (TGT)... department stores
Rite Aid (RAD)... pharmacy
Prestige Brands (PBH)... over-the-counter medicine
WhiteWave Foods (WWAV)... organic food
Kraft Foods (KRFT)... snack food
General Mills (GIS)... snack food
Fresh Del Monte Produce (FDP)... snack food
McCormick (MKC)... spices
GNC Holdings (GNC)... vitamins
Lorillard (LO)... cigarettes
WD-40 (WDFC)... grease
AutoZone (AZO)... auto parts
CarMax (KMX)... used-car dealer
Carnival (CCL)... cruise lines
Expedia (EXPE)... discount travel
Hasbro (HAS)... toys
GoDaddy (GDDY)... virtual real estate
Palo Alto Networks (PANW)... cyber security
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