Another Fed cut, another boost for stocks?
Posted: Wed Nov 28, 2007 3:01 pmThe Fed is signaling that it might lower interest rates yet again in December, and the markets are taking the news with great enthusiasm (witness the rally we've seen already this week).
I guess rate cuts must be good for stocks, and the economy. Hmmm... But why is it that the Fed rate cuts that started in January 2001 didn't stop the stock markets from crashing by over 50% in the next 2 years? And if Fed rate cuts were so bullish why have stocks tanked after the last two Fed cuts this year?
Sarcasm aside, history seems to show that the Fed only cuts rates when it's clear there is economic turbulence ahead. The time to sell stocks is when you see the Fed cutting rates, buy when they start raising them.
I guess rate cuts must be good for stocks, and the economy. Hmmm... But why is it that the Fed rate cuts that started in January 2001 didn't stop the stock markets from crashing by over 50% in the next 2 years? And if Fed rate cuts were so bullish why have stocks tanked after the last two Fed cuts this year?
Sarcasm aside, history seems to show that the Fed only cuts rates when it's clear there is economic turbulence ahead. The time to sell stocks is when you see the Fed cutting rates, buy when they start raising them.