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Don’t Fight The Trend

Don’t Fight The Trend

The trend is FED(Federal Reserve System).

After seven years of rock-bottom interest rates held low to stanch the bleeding from the worst financial crisis since the Great Depression, and after months of unusually public hand-wringing over the precise timing of liftoff, the Federal Reserve in 2015 approved a rate hike intended to start easing U.S. monetary policy back to normal.
The historic decision marks the final break from an era of unprecedented interventionist monetary policy initiated in the wake of the 2008 financial crisis.

When the Federal Reserve Board hikes interest rates look out and when the do it 2 times in a row it is called “2 jumps and a stumble”.

Don't Fight The Trend

The stock market moves more on anticipation than fact. Another old saying is “Buy the rumor and sell the news”.

For the smart long term investors when they see the Fed raising interest rates they should immediately pay attention top their stock and mutual fund holdings with the idea of selling them and placing the funds in a money market account. The investors won’t be making any capital gains, but they also won’t be standing in front of the train as it comes barreling down the track and runs them over. No, you don’t have to sell immediately as it takes several months for interest rate increases to take effect – usually about 9 months.

When rates are lowered there will also be a time lag of 6 to 12 months which gives you opportunity to start picking some winners for the next bull market. Forget that Wall Street conventional wisdom of “do your research”. Research is basically worthless. If you can find it out then everyone else already knows it and it has been reflected in the price of the stock. Let me give you a method that is too simple for your broker. He will tell you it won’t work except it does.

Every Friday there is a listed in Investor’s Business Daily on the back page about 40 charts of the week’s best performing stocks. Notice they are all in uptrends. You could buy almost any one of these and check it weekly to see that it remains in the trend. When it falls out, sell it.

There are other equally simple methods your broker will not recommend. They want to keep the Wall Street mystique. Once you find out how easy it is to make money you won’t need them. It is your money. Are you willing to work a little to make it grow?

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