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Tue Dec 11th 12:57 PM | Rating: 0 0
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The Great Fed Rate Cutting Myth: Look Out Below

I looked up this phenomenon this fall when the Fed got ready for the first rate cut, because I remembered the last time the Fed STARTED to cut rates (after a series of hikes) the market slumped after an initial pop up. As I recall, I found that the market got to about 12% LOWER within a couple of months after the first cut.

I wasn't sure the idea held true on subsequent rate cuts, but this graph DOES seem to show that.

I think the reason this has been happening in recent years, and perhaps did not in the mid 90's, for example, is that the fed has been CHASING the economy (up and down) lately, but perhaps was on top of it (or ahead?) in earlier times.

Anyway, with the market toppy this year I avoid investing money from a May house sale in stocks, and sold more after the first rate cut--and so far I'm still glad I did.
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