I don't play the Fed before
The Fed's decision about whether and by how much to cut its short-term interest rate target next week is a topic everyone is willing to predict or put down various scenarios in concert with as much ifs too.In a larger perspective a cut in interest rates next week by the Federal Reserve will improve financial conditions and further support growth and the global economy will sustain the U.S. expansion..Nothing very unfamiliar in it, the Fed is doing its job, an academic explanation might follow. In one way or another, the markets are going to react quite emotional, regardless of any decision.
Just one decision in any September imaginable has little impact on the decisions a long term investor might take, for that reason I don't play the Fed before at all, better to play Business Cycle Expansions and Contractions, the economy is going to face in the aftermath of Fed decision, if any.
According to NBER the committee determined that a trough in business activity occurred in the U.S. economy in November 2001. The trough marks the end of the recession that began in March 2001 and the beginning of an expansion. The recession lasted 8 months, which is slightly less than average for recessions since World War II.
What I note here is that one will be better off in the long run by stomaching recessions(don't last forever) and aggressively invest in such corrections. Maybe I'm wrong but I continue to run my portfolios at marketocracy that way, being buy and hold majority of time ; for this competition as well.
Comments: View Comments | Thursday September 13, 2007
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