The Fed is a poor guide for stock investors
The S&P 500 usually rises whether the US central bank is raising or cutting rates. There are more reliable ways to decide on portfolio allocations
Add BT as a preferred source
THE US Federal Reserve is widely expected to begin cutting interest rates this week, as moderating inflation allows the central bank to roll back some of its previous rate increases.
I expect that some investors will be tempted to chase stocks, given the stubborn conventional wisdom that interest rates and stock prices move in opposite directions. They should reconsider.
The theory is that stock prices reflect the present value of companies’ future earnings, a calculation that relies in part on prevailing interest rates to “discount” future earnings to the present.
TRENDING NOW
When every phone becomes a satellite phone, what happens to Asia’s telcos?
Too little, too late? Manila’s billion-dollar bid to ignite its sputtering EV industry
Japan Home closing outlets; staff say Valu$ taking over operations
Timah Partners lands S$60 million facility from lenders including UOB, RHB
