It’s official: The Federal Reserve plans to hike short-term interest rates, perhaps as early as the body’s June meeting. The stock market, addicted to cheap money, goes into periodic withdrawal at this prospect. But fear not. As a number of smart advisors are telling their clients, this development should be good. Mostly.
What happens when interest rates rise? Or worse yet, when the markets decide the current bull run is over? A lot of people worry about these two questions. They shouldn’t.
Low oil prices will tank the energy industry. Controversy over fast-track trade will harm U.S. exports. Slow economic growth will stifle the stock market. You hear a lot of predictions, especially in the harrowing aftermath of the financial crisis. This augury is an insidious racket, though, as behavioral research shows.
Why do fewer people own stocks nowadays? Part of the answer is the bad karma of two horrible bear markets, and part of it is generational. Still, there is hope that this situation will turn around.
Anemic job gains in March aren’t the workforce’s biggest problem. The official unemployment rate is a sham. To get a more accurate picture of our nation’s torpid job situation, look at a more telling statistic: the still-lofty unemployment level using a broader measure of the labor force than the standard one.
Jumping into the market as a teen or a retiree makes no difference: You can use both quick and slow methods to build your portfolio, no matter your age. Here’s what to know – and what to do when.
The magic asset allocation number so often touted is a 60/40 split between stocks and bonds. This is supposed to give you the growth potential of equities and the stability of fixed-income. Trouble is, that mix didn’t do so well over the past 10 years.
The Federal Reserve bases its monetary policy on augury. Thousands of years ago, Roman soothsayers visited the oracles and interpreted the entrails of slaughtered animals. We haven’t advanced much since then, as a review of the Fed’s most recent prophecy shows.
Expect choppy markets ahead. That’s what we’ve seen lately, and there’s more reason than ever to expect this to continue. Bullish and bearish factors are at war, producing frustrating up-and-down stock market movements.
Focusing on market trends is a foolish way to invest – essentially betting that what has done well will continue to thrive. A new book from financial guru Tony Robbins, for instance, looks to the past to plan for the future. We all love, even need, predictability. But depending too much on what’s come before in the markets can turn your portfolio into a train speeding toward a wreck.