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‘Don’t fight the Fed’ takes on new meaning

Easy financial conditions of the past created the longest and strongest bull market in history. But that has changed, and investors will need to reconsider their portfolios

IN Winning on Wall Street, first published in 1970, Martin Zweig coined the famous phrase "Don't fight the Fed", a concept that is one of the keys to keeping a portfolio on the right side of history.

For most of the last few decades, "Don't fight the Fed" has meant a risk-on mode. Investors were rewarded for keeping their foot on the gas pedal as central bank liquidity dampened volatility and drove outsized beta returns. Those easy financial conditions were largely responsible for creating the longest and strongest bull market in history. But that is all changed now, and investors must consider their positioning accordingly.

Inflation is now at a 41-year high, and the Fed is in its most aggressive...

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